Document:

Exhibit 10.5

 

ASSIGNMENT
AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of
April 22, 2009 (the “Assignment Agreement”) by and between First Wind
Acquisition IV, LLC (formerly known as UPC Wind Acquisition IV, LLC), a
Delaware limited liability company (“FWA IV”), and Milford Wind Corridor Phase
I, LLC, a Delaware limited liability company (“Milford I”). FWA IV and Milford
I may be referred to individually as a “Party,” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, FWA IV and Clipper Turbine Works, Inc. (“CTW”) are
parties to (a) that certain Amended and Restated Turbine Supply Agreement
dated as of December 31, 2007, by and between FWA IV and CTW, as amended
by Amendment No. 1 to Amended and Restated Turbine Supply Agreement and
Amended and Restated Warranty Agreement dated as of December 30, 2008, and
as further amended by Amendment No. 2 to Amended and Restated Turbine
Supply Agreement and Amended and Restated Warranty Agreement dated as of April 22,
2009 (as such agreement may be amended or modified from time to time, the “Turbine
Supply Agreement”), and (b) that certain Amended and Restated Warranty
Agreement dated as of December 31, 2007, by and between FWA IV and CTW, as
amended by Amendment No. 1 to Amended and Restated Turbine Supply
Agreement and Amended and Restated Warranty Agreement dated as of December 30,
2008 and as further amended by Amendment No. 2 to Amended and Restated
Turbine Supply Agreement and Amended and Restated Warranty Agreement dated as
of April 22, 2009 (as such agreement may be amended or modified from time
to time, the “Warranty Agreement”, and together with the Turbine Supply
Agreement, the “CTW Agreements” or individually referred to as a “CTW Agreement”);

 

WHEREAS, FWA IV desires to assign and delegate all of its rights,
obligations, title and interest in, to and under the CTW Agreements to Milford
I (the “Assignment”) pursuant to the terms of each CTW Agreement;

 

WHEREAS, (a) CTW has agreed to provide written acknowledgement to
the Assignment and (b) CTW and FWA IV, in connection with Milford I’s
assumption and unconditional acceptance of FWA IV’s rights, obligations,
liabilities, title and interest in, to, and under the CTW Agreements, have
agreed to release each other of and from their respective obligations and
liability to each other under the CTW Agreements as set forth in Exhibit A
attached hereto; and

 

WHEREAS, by the execution and delivery of this Assignment Agreement,
FWA IV will irrevocably assign and delegate to Milford I, and Milford I will
irrevocably and unconditionally assume and accept all of FWA IV’s rights,
obligations, liabilities, title and interest in, to, and under the CTW
Agreements.

 

NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows intending to be legally
bound:

 

 

AGREEMENT

 

1.                                       FWA IV does hereby
irrevocably sell, transfer, assign, convey, set over and deliver to Milford I
all of FWA IV’s rights, title and interest in, to, and under each CTW Agreement
and FWA IV does hereby delegate to Milford I all of FWA IV’s obligations and
liabilities in, to and under each CTW Agreement.

 

2.                                       Milford I irrevocably and
unconditionally accepts the assignment and delegation set forth above and does
hereby (i) irrevocably and unconditionally assume and agree to pay and/or
perform when due, all liabilities, obligations and contractual commitments of
FWA IV, in each case relating to each CTW Agreement occurring at any time,
prior to, on or after the date of this Assignment Agreement, including, without
limitation, the obligation to pay CTW all amounts owed or becoming due and
payable under or pursuant to the CTW Agreements and (ii) agrees to be
bound by all of the terms and conditions of the CTW Agreements.

 

3.                                       Milford I and FWA IV shall,
from time to time after the delivery of this Assignment Agreement, at the
request of either Party, prepare, execute and deliver to the requesting Party
such other instruments of assumption, transfer and security and take such other
action as the requesting Party may reasonably request so as to more effectively
sell transfer, assign, convey, set over and deliver and vest in Milford I all rights,
title and interest in, to and under each CTW Agreement.

 

4.                                       Representations and
Warranties.

 

4.1             Each Party hereby represents and warrants that (a) it
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) the execution, delivery and
performance of this Assignment Agreement (i) are within its power, (ii) have
been duly authorized by all necessary action on its part, (iii) do not
require or will not require any approval (which has not been obtained) of its
shareholders or members, or approval or consent of any trustee or holders of
any of its indebtedness or obligations, and (iv) will not violate (A) any
provision of applicable law or (B) any order of any governmental
authority, which, in the case of either (A) or (B), could reasonably be
expected to have a material adverse affect on it or which calls into question
the validity or enforceability of this Assignment Agreement; (c) this
Assignment Agreement has been duly executed and delivered by it and constitutes
a legal, valid and binding obligation enforceable against it in accordance with
the terms thereof; and (d) there are no actions, proceedings, claims,
suits, investigations, inquiries or similar actions pending, or to its
knowledge, threatened, against it before any governmental authority or arbitral
tribunal that question the validity or enforceability of this Assignment
Agreement or that would materially and adversely affect its ability to perform
its obligations under this Assignment Agreement.

 

4.2              Milford I hereby warrants and represents that it is
not a wind turbine design or manufacturing competitor of CTW.

 

5.                                       Milford I hereby agrees that
it, and its successors and assigns, are and shall be bound by all of the
releases, disclaimers, exclusions, remedies and limitations on liability set
forth under the CTW Agreements.

 

 

6.                                       This Assignment Agreement
and all of the provisions hereof shall be binding upon and shall inure to the
benefit of the Parties and their respective successors and assigns.

 

7.                                       This Assignment Agreement
shall be governed by and construed in accordance with the laws of the State of
New York (without giving effect to conflict of laws or choice of laws
principles other than Section 5-1401 of the General Obligations Law).

 

8.                                       This Assignment Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

[Signature page follows]

 

 

IN WITNESS WHEREOF, this Assignment Agreement has been duly executed
and delivered by the duly authorized officers of the Parties as of the date
first above written.

 

 

	
   

  	
  FIRST WIND ACQUISITION IV, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ Evelyn Lim

  
	
   

  	
  Name:

  	
  Evelyn
  Lim

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MILFORD WIND CORRIDOR PHASE I, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ Robert S.
  Schauer

  
	
   

  	
  Name:
  

  	
  Robert
  S. Schauer

  
	
   

  	
  Title:

  	
  Assistant
  Treasurer

  

 

 

EXHIBIT A

 

April 22, 2009

 

ACKNOWLEDGEMENT
AND RELEASE

 

1.                                       Clipper Turbine
Works, Inc., a Delaware corporation (“CTW”), with respect to that certain
Assignment and Assumption Agreement by and between First Wind Acquisition IV,
LLC (formerly known as UPC Wind Acquisition IV, LLC), a Delaware limited
liability company (“FWA IV”), and Milford Wind Corridor Phase I, LLC, a
Delaware limited liability company (“Milford I”), dated as of the date hereof
(the “Assignment Agreement”), hereby:

 

(a)        acknowledges the foregoing Assignment Agreement; and

 

(b)       agrees that in connection
with Milford I’s assumption and unconditional acceptance of FWA IV’s rights,
obligations, liabilities, title and interest in, to, and under the CTW
Agreements (as defined below) pursuant to the Assignment Agreement, from and
after the date of the Assignment Agreement, Milford I shall be the “Purchaser”
as defined in the CTW Agreements.

 

2.                                       Pursuant to Section 1(a) and
(b) above, from and after the date of the Assignment Agreement, CTW and
FWA IV shall have no obligations or liability toward one another arising out
of, in connection with, under or as a result of the CTW Agreements.
Accordingly, CTW and FWA IV hereby release each other from all obligations
contained in and liabilities arising out of or in connection with, under or as
a result of (a) that certain Amended and Restated Turbine Supply Agreement
dated as of December 31, 2007, by and between FWA IV and CTW, as amended
by Amendment No. 1 to Amended and Restated Turbine Supply Agreement and
Amended and Restated Warranty Agreement dated as of December 30, 2008, as
further amended by the Clipper Windpower, Inc. letter dated as of January 30,
2009 re modification of insurance provisions, and as further amended by
Amendment No. 2 to Amended and Restated Turbine Supply Agreement and
Amended and Restated Warranty Agreement dated as of April 22, 2009 (as
such agreement may be amended or modified from time to time, the “Turbine
Supply Agreement”), and (b) that certain Amended and Restated Warranty
Agreement dated as of December 31, 2007, by and between FWA IV and CTW, as
amended by Amendment No. 1 to Amended and Restated Turbine Supply
Agreement and Amended and Restated Warranty Agreement dated as of December 30,
2008 and as further amended by Amendment No. 2 to Amended and Restated
Turbine Supply Agreement and Amended and Restated Warranty Agreement dated as
of April 22, 2009 (as such agreement may be amended or modified from time
to time, the “Warranty Agreement”, and together with the Turbine Supply
Agreement, the “CTW Agreements”).

 

 

IN WITNESS WHEREOF, this Acknowledgement and Release has been duly
executed and delivered by the duly authorized officers of the parties as of the
date first above written.

 

 

	
   

  	
  CLIPPER TURBINE WORKS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Gates

  
	
   

  	
  Name:
  

  	
  Robert
  Gates

  
	
   

  	
  Title:

  	
  Sr. Vice President

  

 

 

	
   

  	
  FIRST WIND ACQUISITION IV, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Evelyn Lim

  
	
   

  	
  Name:
  

  	
  Evelyn
  Lim

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MILFORD WIND CORRIDOR PHASE I, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert S. Schauer

  
	
   

  	
  Name:
  

  	
  Robert
  S. Schauer

  
	
   

  	
  Title:

  	
  Assistant
  TreasurerExhibit 10.6

 

 

Power Purchase Contract

For

As Available Energy

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Parallel Operation:

  	
  2

  
	
  2.

  	
  Purchase and Sale of Energy; Rate for Purchase and
  Sale; Billing and Payment:

  	
  2

  
	
  3.

  	
  Facility Owned and/or Operated by the Seller:

  	
  4

  
	
  4.

  	
  Interconnection Facilities Owned by the Company:

  	
  4

  
	
  5.

  	
  Seller Payments:

  	
  5

  
	
  6.

  	
  Continuity of Service:

  	
  5

  
	
  7.

  	
  Personnel and System Safety:

  	
  7

  
	
  8.

  	
  Metering:

  	
  7

  
	
  9.

  	
  Permits, Licenses and Land Rights:

  	
  9

  
	
  10.

  	
  Term:

  	
  9

  
	
  11.

  	
  Indemnification:

  	
  11

  
	
  12.

  	
  Insurance:

  	
  12

  
	
  13.

  	
  Assignment:

  	
  13

  
	
  14.

  	
  Sale of Energy to
  Third Parties:

  	
  13

  
	
  15.

  	
  Force Majeure:

  	
  13

  
	
  16.

  	
  Warranties and Representations:

  	
  14

  
	
  17.

  	
  Financial Compliance:

  	
  15

  
	
  18.

  	
  Good Engineering and Operating Practices:

  	
  17

  
	
  19.

  	
  Equal Employment Opportunity and Employment of Disabled
  Veterans and Veterans of the Vietnam Era:

  	
  17

  
	
  20. 

  	
  Set Off:

  	
  18

  
	
  21. 

  	
  Miscellaneous:

  	
  18

  
	
  APPENDIX
  A - Description of Seller’s Generation and Conversion Facility

  	
  A-1

  
	
  APPENDIX
  B - Facility Owned by the Seller

  	
  B-1

  
	
  1. 

  	
  Seller’s Facility

  	
  B-1

  
	
  2. 

  	
  Operating Procedures

  	
  B-10

  
	
  APPENDIX
  B-1 - Methods and Formulas for Measuring Performance Standards

  	
  B-1-1

  
	
  APPENDIX
  B-2 - Consultants List

  	
  B-2-1

  
	
  APPENDIX
  C - Interconnection Facilities Owned
  by the Company

  	
  C-1

  
	
  1:

  	
  Description
  of the Company-Owned Interconnection Facilities

  	
  C-1

  
	
  2.

  	
  Seller
  Payment to the Company for the Company-Owned Interconnection Facilities and Review
  of Seller’s Facility

  	
  C-9

  
	
  3.

  	
  Ongoing
  Operation and Maintenance Charges

  	
  C-11

  
	
  4.

  	
  Relocation
  of Interconnection Facilities

  	
  C-12

  
	
  5.

  	
  Guarantee
  for Interconnection Costs

  	
  C-12

  
	
  6

  	
  Site Restoration

  	
  C-13

  
	
  7.

  	
  Transfer
  of Ownership/Title

  	
  C-13

  
	
  8.

  	
  Government
  Approvals for Any Company-owned Interconnection Facilities to be Constructed by
  Seller

  	
  C-14

  
	
  9.

  	
  Easements, Rights of Way, Licenses and Leases

  	
  C-14

  
	
  APPENDIX D - Energy Purchases by the Company

  	
  D-1

  
	
  APPENDIX E - Termination Events

  	
  E-1

  
	
  APPENDIX F - Definitions

  	
  F-1

  
	
  APPENDIX G - Dispute Resolution

  	
  G-1

  

 

 

POWER PURCHASE CONTRACT FOR AS-AVAILABLE ENERGY

 

THIS
CONTRACT (“Contract”) is made this 3rd day of December, 2004, by and between Maui Electric Company,
Limited (hereinafter called the “Company”) and Kaheawa Wind Power, LLC
(hereinafter called the “Seller”).

 

WHEREAS,
the Company is an operating electric public utility on the Island of Maui, subject
to the Hawaii Public Utilities Law (Hawaii Revised Statutes, Chapter 269) and
the rules and regulations of the Hawaii Public Utilities Commission
(hereinafter called the “PUC”); and

 

WHEREAS,
the Company operates its power system as an independent power grid and must maximize system reliability for its customers by ensuring that sufficient
generation is available, the system (including transmission and distribution) meets
the requirements for voltage stability, frequency stability, and reliability
standards; and

 

WHEREAS,
the Seller desires to build, own, and operate a cogeneration facility or a small power production facility as a Qualifying Facility under the Public Utility
Regulatory Policies Act of 1978, as amended (“PURPA”), and Subchapter 2 of the PUC’s Standards for Small Power Production and Cogeneration in the State of Hawaii, Chapter 74 of Title 6, Hawaii Administrative Rules (“PUC’s Standards”); and

 

WHEREAS,
the Seller agrees to use all reasonable efforts to maximize the overall Company
System reliability; and

 

WHEREAS,
the Seller’s Facility will be located at Kaheawa Pastures, Ukumehame, Island of
Maui, State of Hawaii and is more fully described
in Appendix A and Appendix B attached hereto and made a part
hereof; and

 

WHEREAS,
the Seller desires to sell to the Company electric energy generated
by the Seller’s Facility, and the Company agrees to purchase such energy from the Seller, upon the terms and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the premises and the respective promises herein,
the Company and the Seller hereby agree as
follows:

 

1

 

1.             Parallel Operation:

 

The Company agrees to allow the Seller to interconnect and operate in parallel with the Company’s
System provided that such interconnection and operation shall not: a) adversely affect the Company’s property or the operations of its customers and customers’ property; b) present safety hazards to the Company’s System, property or employees or the Company’s customers or the customers’ property
or employees; or c) otherwise materially fail to comply with this Contract. Such parallel
operation shall be contingent upon the satisfactory completion, as determined solely by the Company, of the Acceptance Test and, to the extent
applicable, the Control System Acceptance Tests.

 

2.             Purchase and Sale of Energy; Rate for Purchase and Sale; Billing and
Payment:

 

(a)           The Company agrees to purchase.energy from the Seller pursuant to the terms and conditions which are
more fully described in Appendix D, Energy Purchases By the
Company, attached hereto and
made a-Part hereof. The company will not reimburse the Seller for any taxes or fees imposed on the Seller including,
but not limited to, State of Hawaii general excise tax.

 

(b)           The price for sales of energy by the Company to the Seller shall be governed by an applicable rate schedule
filed with the PUC and not by this
Contract, except with respect to
the reactive amount adjustment referred to in Appendix B.

 

(c)           By the fifth working day (i.e. excluding Saturdays, Sundays and legal holidays of either the federal government or the Hawaii
state government) of each
calendar month, the Company
shall provide the Seller or its designated agent with the appropriate
data for the Seller to compute the energy charge for electricity delivered to the Company in the preceding
calendar month as determined in
accordance with this Contract.

 

(d)           By the tenth working day of each calendar month, the Seller shall submit to the Company an invoice
that separately states the following for the preceding month: (l) the
energy delivered to the Company
during on-peak and off-peak periods; (2) the energy charge for
energy purchased by the Company as set forth in Appendix D of this Contract;
and (3) the monthly metering charge as set forth in Section 5 of this
Contract.

 

2

 

(e)           By the twentieth working day of each calendar
month (but, except as otherwise provided in the following sentence, no later
than the last working day of that month if there are less than twenty working days in that month), the
Company shall make payment on such invoice, or provide to the Seller an
itemized statement of its objections to all or any portion of such invoice and
pay any undisputed amount. The time in which the Company must make payment to
Seller shall be increased on a day-for-day basis for each day that Seller is
delinquent in providing to the Company the information under Section 2(d) of
this Contract. If the Company is not timely in providing data required in Section 2(c)
and the Seller’s invoice is subsequently not received by the Company in accordance
with Section 2(d), the company must still meet the twentieth working day
payment date. An estimated payment, subject to reconciliation with the complete
invoice, may be made by the Company as an interim provision until a complete
invoice can be prepared by the Seller and received by the Company.

 

(f)            Notwithstanding all or any portion of such invoice
in dispute, any payment not made to the Seller by the twentieth
working day of each calendar month (or the last working day of that month if
there are less than twenty working days it that month), or by the due date for such payment if extended
pursuant to subsection (e), above, shall accrue interest at the
average daily prime rate at the Bank of Hawaii for the period until the
outstanding interest and invoiced amounts
(or amounts due to the Seller if determined to be less than the invoiced amounts) are paid in full. Partial payments shall be applied first to outstanding interest and then to outstanding invoice amounts.

 

(g)           In the event adjustments are required to
correct inaccuracies in an invoice
after
payment, the party requesting adjustment shall recompute and include in the party’s request the amounts
due during the period of the inaccuracy. The difference between the amount paid
and that recomputed for the invoice shall either be (i) paid to Seller, or set-off by the Company against the next invoice payment to Seller, as
appropriate, together with interest from the date that such invoice was payable
until the date that such recomputed
amount is paid at the average daily prime rate at the Bank of Hawaii for the period, or (ii) objected to by
the party responsible for

 

3

 

such payment within thirty (30) days following its receipt
of such request. All claims for adjustments by either party shall be waived for
any deliveries of electricity made more than thirty-six (36) months preceding
the date of any such request.

 

The Seller, after giving reasonable advance
written notice to the Company, shall have the right to review all billing,
metering and related records relating to the Seller’s Facility during normal
working hours on working days. The Company shall maintain such records for a
period of not less than thirty-six (36) months from the date of creation of such
records.

 

3.             Facility Owned and/or Operated by the Seller:

 

The Seller agrees to furnish, install,
operate, and maintain suitable and sufficient equipment, to maintain adequate
records, and, to follow such operating procedures, as may be specified by the Company
to protect the Company’s System from
damage resulting from the
parallel operation of the Seller’s Facility, including such equipment, records
and operating procedures as more fully described in Appendix
B. The Seller agrees that no material changes or additions to the Seller’s
Facility shall be made without prior written approval by the Company and
amendment to the Contract.

 

The net instantaneous MW output from the
Seller’s Facility may not exceed the Allowed Capacity as specified in Appendix A. The Company may take appropriate action to limit the Allowed Capacity
pursuant to, but not limited to, Section 6(a) (Continuity of
Service), Section 7 (Personnel and System Safety), Section 18 (Good Engineering and Operating Practices), Appendix B (Facility Owned by the Seller), Appendix D (Energy
Purchases by the Company) and Appendix E (Termination Events) of
this Contract.

 

The Point of Interconnection is
shown on the final single-line
diagram, provided by the Seller and reviewed by the Company, which is
attached to Appendix B. The
Point of Interconnection will be at the voltage level of the Company’s System.
If it is necessary to step up the voltage at which the Seller’s
energy is delivered to the Company’s System, the Point of Interconnection will be on the high
voltage side of the step-up transformer.

 

4.           Interconnection Facilities Owned by the
Company:

 

Subject to the terms and conditions included
in Appendix C, attached hereto and made a part hereof, the Company
agrees to furnish, install (or, pursuant to Appendix C, Section 1(d), may

 

4

 

allow
the Seller to install in whole or in part), own, operate and maintain such
Interconnection Facilities on the Company’s side of the Point of
Interconnection with the Seller’s Facility as required to accept energy from
the Seller’s Facility and for parallel operation of the Seller’s Facility with
the Company’s System as more fully described in Appendix C.
Where any Company-Owned Interconnection Facilities are
to be located on the site of the Seller’s Facility, the
Seller shall provide, at no expense to the Company, a location and access
acceptable to the Company for
all such facilities. If power sources (120/240VAC) are required, the Seller shall provide such
sources, at no expense to the
Company.

 

5.             Seller Payments:

 

Seller shall pay to the Company a) all amounts pursuant to Appendix C, and b) a monthly metering charge of $25.00 per
month, which is in addition to any charges due the Company pursuant to the applicable rate schedule in Section 2(b) of this Contract.

 

6.             Continuity of Service:

 

(a)           The Company may require
the Seller to temporarily
curtail, interrupt or reduce deliveries of energy when necessary in
order for the Company to
construct, install, maintain, repair, replace, remove, investigate, test or inspect any of its equipment or any part of the Company System including, but not limited to, accommodating the installation and/or Acceptance Test
of non-utility owned facilities
to the Company’s System; or if
the Company determines that such
curtailment, interruption or reduction is necessary because of a system emergency, forced outage,
operating conditions on its system such as, but not limited to, those
described in Appendix B, Section 2; or the inability to accept deliveries of energy due to light loading conditions; or
if either the Seller’s Facility
does not operate in compliance with
Good Engineering and Operating Practices or acceptance of energy from the Seller by the Company would require the Company to operate the
Company’s System outside of Good Engineering
and Operating Practices which in
this case shall include, but not be limited to, excessive system frequency fluctuations or excessive voltage
deviations, and any situation that
the Company’s System Operator determines, at his or her sole discretion, could
place in jeopardy system reliability. In the event that the Company temporarily curtails,
interrupts, or reduces deliveries of energy pursuant to this Section 6(a), the Company shall not
be obligated to accept or pay for any

 

5

 

energy from the Seller except for such energy
that the Company notifies the Seller that it is able to take during this period due to the
aforesaid circumstances.

 

(b)           The
Company shall not be required to purchase energy during any period during
which, due to operational circumstances, purchases from the Seller will result
in costs
greater than those which the
Company would incur if it did not make those purchases, but instead generated an
equivalent amount of energy itself.
The Company shall provide the Seller with at least twenty-four (24) hours
advance oral or written notice of any such period to allow the Seller to cease the delivery of energy to the Company. All oral
notices given under this paragraph shall be addressed to the Seller’s Operation Representative (defined in Appendix B, section 2 of this Contract). The Company and the Seller will work to develop a mutually acceptable format for this notice, including, but not limited to, a listing of typical parameters that define anticipated constraints in purchases from the Seller. If the Company fails to provide such notice, it will pay the same rate for
such purchase of energy as would be required had the period not occurred. Without limiting the foregoing, conditions when curtailment of energy delivery by the Seller may be implemented by the Company may include when, during light loading conditions, the company would have to (i) cycle off-line any Base Load Unit,
or (ii)
remove one or more components of a combined cycle unit (such as shutting off one combustion turbine or one combustion turbine and the steam turbine of a dual-train combined cycle unit (consisting of two
combustion turbines and one steam turbine)) in order to purchase energy from the Seller.
The Company shall not curtail pursuant to
this Section 6(b) of
the Contract solely as a consequence of the Company’s filed Avoided Energy Cost Data (as identified in Appendix D) being lower than the applicable Energy Payment Rate paid to the Seller under this Contract.

 

(c)           Section 6 of this Contract is not
intended to permit the Company to
require the Seller to curtail, interrupt or reduce deliveries of energy based on the Company’s economic dispatch
(for example, as a consequence
of the Company’s filed Avoided Energy Cost Data [as identified in Appendix D] being lower than the applicable Energy Payment Rate paid to the Seller under this Contract, or to make purchases of less expensive energy from a Qualifying
Facility or other facility).

 

6

 

(d)           The
Company shall take all reasonable steps (such as reducing the output of base-load
generation, including its own base-load generating units, during light loading
conditions, taking into consideration factors such as the need to maintain
system reliability and stability under changing system conditions and configurations,
the need for downward regulating reserves, the terms and conditions of power
purchase agreements for base-loaded firm capacity, and the normal minimum
loading levels of such units) to minimize the number and duration of
curtailments, interruptions or reductions, subject to and in accordance with Appendices
B and B-1. For purposes of this Section 6, as of the Execution Date, light
loading conditions typically occur between the hours of 12:00 midnight and 7:00 a.m., but the timing of such conditions may
change over time.

 

7.             Personnel and System Safety:

 

Notwithstanding any other provisions of this
Contract, if at any time the Company reasonably determines that the Seller’s
Facility may endanger the Company’s personnel, and/or the continued operation
of the Seller’s Facility may endanger the integrity of the Company’s System or
have an adverse effect on the Company’s other customer’s electric service, the Company
shall have the right to curtail or disconnect, as determined in the sole
discretion of Company’s System Operator, the Seller’s Facility from the Company’s
System. The Seller’s Facility shall remain curtailed or disconnected, as the
case may be, until such time as the Company is satisfied that the condition(s) referred
to above have been corrected, and the Company shall not be obligated to accept
or pay for any energy except for such energy as is accepted by Company from the
Seller during such period. If the Company curtails or disconnects the Seller’s
Facility from the Company’s System for personnel or system safety reasons, it shall
as soon as practicable notify the Seller by telephone and thereafter confirm in
writing the reasons for the curtailment or disconnection.

 

8.             Metering:

 

(a)           Meters - The Company shall purchase and own
meters suitable for measuring the net energy output of the Seller’s Facility
sold to the Company in kilowatts and kilowatthours on a time-of-day basis and
of reactive power flow in kilovars and true root mean square kilovarhours. The metering point shall be at the Point of Interconnection. The Seller shall supply, at no
expense

 

7

 

to the Company, a mutually agreeable location
and mounting structure for meters and associated equipment. The Company will
calibrate these devices in accordance with the latest edition of the American
National Standards Institute (ANSI) Code for Electricity Metering. All meters
shall be ratcheted to prevent reversal. The Company shall install, maintain and
annually test such meters and shall be reimbursed by Seller for all reasonably incurred costs for
such installation, maintenance and testing work.

 

(b)           Meter Testing - The Company shall provide at Least
twenty-four (24) hours notice to Seller prior to any test it may perform on the metering or
telemetering equipment. The Seller shall have the right to have a representative
present during each such test seller may request, and the Company shall perform if requested, tests in addition to the
annual test and Seller shall pay the cost of such test. The Company may, at its
own discretion, perform tests in addition to the annual test and the Company shall pay the cost of such test. If any of the metering equipment is found to
be inaccurate at any time, as determined by testing in accordance with this Section 8(b),
the Company shall promptly cause such equipment to be made accurate, and the period
of inaccuracy, as well as an estimate for correct meter readings, shall be determined in accordance
with Section 8(c).

 

(c)           Corrections - If any test of metering equipment
conducted by the company indicates that the meter readings are in error by one
percent (1%) or more, the meter readings shall be corrected as follows: (i) determine
the error by testing the meter at approximately ten percent (10%) of the rated current (test amperes) specified
for the meter; (ii) determine the error by testing the meter at
approximately one hundred percent (100%) of the rated current (test amperes) specified for the meter; (iii) the average
meter error shall then be computed as the sum of one-fifth (1/5) the error determined
in (i) and four-fifths (4/5) the error determined in (ii). The average
meter error shall be used to adjust the bills for the amount of electric energy
supplied to the Company for the previous six (6) months from the Seller’s
Facility, unless records of the Company conclusively establish that such error
existed for a greater or lesser period, in which case the correction shall cover such actual period
of error.

 

8

 

9.        Permits, Licenses and Land Rights:

 

(a)           The Seller shall
obtain, at its expense, any and all authorizations, permits and licenses
required for the construction and operation of the Seller’s Facility, including but not limited to rights-of-way,
easements or leases. The Seller shall install, operate and maintain the Seller’s Facility
safely and
in compliance with all applicable laws and
regulations. To the extent private land or land owned by a government entity is involved, the seller
shall obtain, at its expense, any necessary authorizations, permits, licenses,
rights-of-way, easements and leases required in order that the Seller’s Facility
can be interconnected
with the Company’s System.

 

(b)           If the land on
which the Seller’s Facility is located is not owned by the Seller’s Facility’s owner, a
copy of the agreement with the owner of the land which establishes the right of the
Seller’s Facility’s owner to put the Seller’s Facility on the land and the existence of required rights-of-way, easements and leases shall be provided to
the Company before the Initial In-Service Date.

 

(c)           Seller shall, prior to
commencement of construction of the Company-owned Interconnection Facilities
(whether to be built by the Seller or by the Company), provide the Company with
a copy of the necessary authorizations, permits, licenses, rights of way, easements, leases and/or
rights-of-entry for construction, ownership, operation and maintenance of the Company-owned Interconnection
Facilities. Seller shall also provide the Company access to occupy
designated space, operate, maintain, modify, and remove such Company-owned Interconnection
Facilities pursuant to the terms of this Contract.

 

10.      Term:

 

(a)           Subject to Section 10(b) of this Contract, the Term of this Contract shall commence upon the
In-Service Date and shall remain in effect for an initial Term of twenty (20) years, and
shall continue in effect thereafter until terminated by either party as provided for
herein. Either the Company or Seller may terminate this Contract at any time after the end
of the initial twenty (20) year Term upon not less than ninety (90) days advance written
notice to the other party.

 

9

 

(b)           Except where obligations of the
parties are explicitly stated as being effective before the Non-appealable PUC Approval Order
Date, only Section 3 (Facility Owned and/or Operated by the Seller), Section 10
(Term), Section 11 (Indemnification), Section 16 (Warranties and Representations), Section 21
(Miscellaneous) and Appendix F (Definitions) of this Contract shall become
effective on the Execution Date. All other portions of this Contract become
effective on the Non-appealable PUC Approval Order Date. Subject to Appendix D, section 4 relating to Test
Energy, for the period following the Execution Date and prior to the later of the Initial In-Service Date or
the Non-Appealable PUC Approval Order Date, the Company shall not be obligated to
accept or pay for any energy delivered by the Seller, provided further,
that prior to the completion of the Interconnection Facilities, the Company shall not be obligated to
accept
or pay
for any energy delivered by the Seller.

 

(c)           Upon execution of
this Contract, the parties shall use their reasonable efforts to obtain a Non-appealable PUC Approval Order satisfactory to the parties. A satisfactory
Non-appealable PUC Approval Order shall include authorization for the purchased
energy
charges to be paid by the Company to the Seller hereunder (and related revenue taxes) to be included in the Company’s Energy Cost Adjustment Clause (or
equivalent) for the Term of this Contract. If the satisfactory Non-appealable PUC Approval Order is not obtained within twelve (12) months of the
PUC Submittal Date, as may be extended by mutual agreement of the parties, the Company
or the
Seller may,
by
written notice delivered within 30 days of such date, declare this Contract null and void and the parties hereto shall thereafter be
free of all obligations hereunder and shall pursue no further remedies against one another; except,
however, that-the provision of Section 11 shall continue to remain in effect. However,
if the Seller
had requested the Company to incur costs
associated with the Company-owned Interconnection Facilities prior to receipt of a satisfactory
Non-appealable PUC Approval Order, the Seller shall pay the Company the actual costs and cost
obligations incurred by the Company as of the date the Contract is declared null and void for the Company-owned
Interconnection Facilities and any reasonable costs incurred thereafter.

 

(d)           Notwithstanding any
of the foregoing, the Company or Seller may terminate the Contract at any
time upon
the

 

10

 

occurrence
of any condition described in Appendix E attached hereto and made a part
hereof.

 

11.      Indemnification:

 

a)             The Seller shall indemnify, defend and hold
harmless the Company and its directors, officers, employees and agents
(including but not limited to affiliates and contractors and their employees) from
and against any and all liabilities, damages, losses, penalties, claims,
demands, suits, costs, expenses (including attorneys’ fees), and proceedings of
every kind, including those for damage to the property or real property of any
person or entity (including the Seller)
and/or for injury to or death of any person (including the Seller’s
employees and agents) (collectively “Injury or Damage”), directly or indirectly arising out of or attributable to or in any manner
connected with the location, construction, interconnection or parallel
operation of the Seller’s Facility with the Company’s System, including any defects in the Company-owned
Interconnection Facilities constructed by Seller (provided any such defects
manifest themselves within 12 months of the transfer of title, to Company from Seller, of the Company-owned Interconnection
Facilities constructed by Seller) and land restoration costs for which the Seller is
responsible, if any, and/or directly or indirectly arising out of or
attributable to or in any manner connected with the breach of any of Seller’s representations or warranties herein, except to the extent that such Injury or Damage is attributable to the gross negligence or willful misconduct of the Company.

 

b)            The Company shall indemnify, defend and hold harmless the Seller and
its directors, officers, employees and
agents (including but not limited
to affiliates and
contractors and their employees) from and against any and all liabilities, damages, losses, penalties, claims, demands, suits, costs, expenses (including attorneys’ fees), and proceedings of
every kind, including those for damage to the property or real property
of any person or entity (including the Company) and/or for injury to or death of any person (including the Company’s employees and agents) (collectively “Injury
or Damage”), directly or indirectly
arising out of or attributable
to or in any manner connected with the location, construction, interconnection
or parallel operation of the Company’s
System with the Seller’s Facility,
including any claims to the
extent attributable to Company’s ownership,

 

11

 

maintenance or operation of the Company-owned Interconnection Facilities constructed
by Seller, and/or directly or indirectly arising out of or attributable to or
in any manner connected with the breach of any of the Company’s representations
or warranties herein, except to the extent that such Injury or Damage is
attributable to the gross
negligence or willful misconduct
of the Seller.

 

12.      Insurance:

 

The Seller shall, at its own expense and during the term of the
Contract and during any other time that the Seller’s Facility is interconnected
with the Company’s System, secure and maintain in effect with a responsible
insurance company authorized to do insurance business in Hawaii commercial
general liability insurance with respect to the Seller’s Facility, the Seller’s
operations, and the Seller’s interconnection with the Company’s System, with a
bodily injury and property damage combined single limit of at least TWO MILLION
DOLLARS ($2,000,000) for any occurrence. Said insurance shall name the Company
as an additional insured, shall include contractual liability coverage for
written contracts and agreements including this Contract, and shall be
non-cancelable and non-alterable without thirty (30) days’ prior written notice
to the Company and the affected insurance companies shall use reasonable
efforts to notify the Company of any cancellation or alteration with thirty
(30) days advance notice. “Claims made” policies are not acceptable. The
coverage limits may be reviewed annually by the Company and if, in the
Company’s discretion, acting reasonably, the Company determines that the
coverage limits should be increased, the Company shall so notify the Seller.
The amount of any increase of the coverage limits, when considered as a
percentage of the then existing coverage limits, shall not exceed the
cumulative amount of increase in the Consumer Price Index occurring after the
coverage limits herein were last set. The Seller shall within thirty (30) days
of notice from the Company increase the coverage as directed in such notice and
the costs of such increased coverage limits shall be borne by the Seller. The
insurance required hereunder shall provide that it is primary with respect to the
Seller and the Company. The Seller shall provide evidence of such insurance by
providing certificates of insurance to the Company prior to construction of the
Company’s Interconnection Facilities and within 30 days of any material change
to insurance policy(ies). The Seller’s indemnity and other obligations under
this Contract shall not be limited by the foregoing insurance requirements. Any
deductible shall be the responsibility of the Seller.

 

12

 

13.      Assignment:

 

This
Contract may not be assigned by either the Company or the Seller without the
prior written consent of the other party (such consent not to be unreasonably
withheld, conditioned, or delayed); provided that Seller shall have the right,
without the consent of the Company, to:

 

(a)           assign all or any part of its rights, benefits, or obligations to a
wholly-owned subsidiary or to an affiliated company under common control with
the Seller; and,

 

(b)           for the purposes of arranging
or rearranging debt and/or equity and/or tax based financing for Seller’s
Facility, assign all or any part
of its rights or benefits, but
not its obligations, to any lender
providing debt financing, or tax
based investor, for Seller’s Facility.

 

In
the case of (a) or (b) above, Seller shall
immediately provide written notice to the Company of any assignment of all or
part of the Contract and Seller shall provide to the Company all information
about the assignment and the assignee
reasonably requested by the
Company.

 

14.      Sale of Energy to
Third Parties:

 

The
Company shall accept and
pay for energy produced for sale by the
Seller’s Facility at the price and on the terms and conditions stated in this Contract; provided, however, that the
Seller may consume energy produced at the Seller’s Facility for its own use. The
Seller shall not sell energy from the Seller’s Facility to any Third Party, which includes subsidiaries or affiliates of the Seller.

 

15.      Force Majeure:

 

(a)           If
either party shall be wholly or partially
prevented from performing any of its obligations under this Contract by reasons of or through acts reasonably beyond
its control and not attributable
to its neglect, including
strikes, lightning, rain,
earthquake, wind, riots, fire,
flood, invasion, insurrection, lava
flow or volcanic activity, tidal wave, civil commotion,
accident, action or inaction of
any court, judge, administrative,
regulatory or civil authority of the Federal, State, or local governments,
war, any act of God or the public enemy, or any other similar or dissimilar
cause reasonably beyond

 

13

 

its
control and not attributable to its neglect, then and in any such event, such
party shall be excused from whatever performance is prevented by such event to
the extent and during the period so prevented, and the party shall not be liable for any
damage or loss resulting
therefrom.

 

(b)           The party claiming an event of Force Majeure shall use reasonable efforts to give written notice of such event to the
other party within fourteen (14)
days after the party claiming an
event of Force Majeure has knowledge that such event may affect
its performance hereunder. In addition, the party claiming an event of Force Majeure shall use reasonable diligence, to the extent
practicable, commencing immediately
from when it has knowledge that such event may affect its
performance hereunder, to limit the impact of such event on the performance of its obligations
under this Contract; provided,
however, that the requirement to
use reasonable diligence shall not be construed to require the resolution of labor disputes involving employees of parties other than the Seller or the Company. The party claiming an
event of Force Majeure shall resume performance
under this Contract as soon as it is able, and shall promptly give notice of such resumption to the other party.

 

(c)           Notwithstanding the foregoing, Section 15(b) shall not excuse any payment
obligation that has theretofore accrued under this Contract.

 

16.      Warranties and
Representations:

 

(a)           Both
the Company and the Seller
represent and warrant, respectively, that:

 

(1)       Each respective party has all necessary right, power and authority to execute, deliver and perform this Contract.

 

(2)       The execution, delivery and performance of this Contract by
each respective party will not result
in a violation of any law or
regulation of any governmental authority, or conflict with, or result in a breach of, or cause a default under, any agreement or instrument to which such party is also a party or by which it is bound.

 

14

 

(b)      Seller
represents and warrants that it is an entity in good standing with the Hawaii
Department of Commerce and Consumer Affairs and shall provide the Company with
a certified copy of a certificate of good standing by the Execution Date.

 

(c)       Seller
shall provide the Company with certification as a Qualifying Facility on or
before the Initial In-Service Date or the Company shall not be obligated to
accept or pay for any energy delivered by the Seller and the Contract may be
terminated pursuant to Appendix E.

 

17.      Financial Compliance:

 

Seller shall provide or cause to be provided to Company on a timely basis, as reasonably determined by
Company, all information including but not limited to information that may be
obtained in any audit referred to below (the “Information”), reasonably
requested by Company for purposes of permitting the Company and its parent
companies, Hawaiian Electric Industries, Inc. (“HEI”) and Hawaiian
Electric Company, Inc. (“HECO”) to comply with the requirements of (a) Interpretation
No. 46 (revised December 2003) of the FASB, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (“FIN No. 46R”), (b) Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”) and (c) all clarifications, interpretations and revisions of and
regulations implementing FIN No. 46R and
SOX 404 issued by the FASB, Securities and Exchange Commission, the Public Company Accounting
Oversight Board, Emerging Issues Tax Force or other governing agency. In
addition, if required by Company in order to meet its compliance obligations,
Seller shall allow Company or its independent auditor to audit, to the extent
as is reasonably required,
Seller’s financial records, including its system of internal controls over financial reporting;
provided that Company shall be
responsible for all costs associated with the foregoing, including but not
limited to Seller’s reasonable internal costs. Company shall limit access to
such Information to persons involved with such compliance matters and restrict persons involved in Company’s monitoring, dispatch or scheduling of Seller and/or Seller’s Facility, or the administration of the Contract, from having access to such
Information, and persons
reviewing such Information shall
(i) not participate in negotiations of amendments, modifications or
clarifications of the Contract and (ii) not disclose any information to any persons participating in such negotiations (unless
such participation is approved, in writing in advance, by Seller).

 

Company shall, and shall cause HEI and HECO
to, maintain the confidentiality
of the Information
as provided in this Section 17.

 

15

 

Company
may share the Information on a confidential basis with HEI and HECO and the independent auditors and
attorneys for HEI and HECO. (Company,
HEI, HECO and their respective
independent auditors and attorneys are collectively referred to in
this Section 17 as “Recipient.”) If either Company, HEI or HECO, in the exercise of their respective reasonable judgments, concludes that consolidation or financial reporting with
respect to Seller and/or this PPC is necessary, Company,
HEI and HECO each shall have the right to
disclose such of the Information as
Company, HEI or HECO, as applicable, reasonably determines
is necessary to satisfy applicable disclosure and reporting or other requirements provided that Company gives Seller fifteen (15) days advance written notice thereof (to
the extent practicable under the
circumstances). If Company, HEI or HECO disclose Information pursuant to the preceding sentence, Company, HEI and HECO shall, without limitation to the generality of the preceding sentence, have the right to disclose Information to the PUC and the Division of Consumer Advocacy of the Department of
Commerce and Consumer Affairs of
the State of Hawaii (“Consumer Advocate”) in connection with the PUC’s
rate making activities for Company
and other HEI affiliated entities, provided that, if the scope or content of the Information to be disclosed to
the PUC exceeds or is more detailed than that disclosed pursuant to the preceding sentence, such Information will not be disclosed until the PUC first issues a protective order
to protect the confidentiality
of such Information. Neither
Company, HEI nor HECO shall use the
Information for any purpose
other than as permitted under
this Section 17.

 

In
circumstances other than
those addressed in the
immediately preceding paragraph, if any
Recipient becomes legally compelled
under applicable law or by legal process (e.g., deposition, interrogatory, request
for documents, subpoena, civil investigative demand or similar process) to disclose all or a  portion of the
Information, such Recipient shall undertake reasonable efforts to provide
Seller with prompt notice of such legal requirement prior to disclosure so that Seller may seek a protective order or other appropriate
remedy and/or waive compliance with
the terms of this Section 17. If such protective order or other remedy is not obtained, or if
Seller waives compliance with the provisions at this
Section 17, Recipient shall
furnish only that portion of the Information which it is legally required to so furnish and to use
reasonable efforts to obtain assurance that confidential treatment will be
accorded to any disclosed material.

 

The obligation of
nondisclosure and restricted use imposed on each Recipient under this Section 17 shall
not extend to any portion(s) of the Information which (a) was known
to such Recipient prior to receipt, or (b) without the fault of such Recipient is

 

16

 

available or becomes available
to the general public, or (c) is received by such Recipient from a third
party not bound by an obligation or duty of confidentiality.

 

18.           Good Engineering and
Operating Practices:

 

(a)           Each party agrees to
install, operate and maintain its respective equipment and facility and
to perform all obligations required to be performed by such party
under this Contract in accordance with Good Engineering and Operating Practices in the electric industry and
applicable laws, rules, orders
and tariffs.

 

(b)           Wherever in this Contract
and the attached appendices the Company
has the right to give specifications, determinations or approvals, such specifications,
determinations or approvals shall be given in accordance with the Company’s standard practices, policies and procedures and any such determinations or approvals
shall not be unreasonably withheld, conditioned or delayed.
Any such specifications, determinations,
or approvals shall not be deemed to be an endorsement, warranty, or waiver of any right of the Company.

 

19.           Equal
Employment Opportunity and Employment of Disabled Veterans and Veterans of the
Vietnam Era. (Applicable to all contracts of $10,000 or more in the whole
or aggregate. 41 CFR 60-1.4 and 41 CFR 60-741.5(a).)

 

Seller
is aware of and is fully informed of Seller’s responsibilities under Executive
Order 11246 (reference to which include amendments and orders superseding in whole
or in part) and shall be bound by and agrees to the provisions as contained in Section 202 of
said Executive Order and the
Equal Opportunity Clause as set forth in 41 CFR 60-1.4 and 41 CFR 60-741.5(a), which
clauses are hereby incorporated by reference.

 

Employment of Disabled Veterans and Veterans of the Vietnam Era. (Applicable to all contracts of $10,000 or more in the whole
or aggregate. 41 CFR 60-250.4 and 41 CFR 60-741.5.)

 

Seller
agrees that it is and will remain in compliance with the rules and
regulations promulgated under The Vietnam Era Veterans Readjustment Assistance Act of 1974, The Affirmative Action Clause set forth in 41 CFR 60-250.4, the Rehabilitation Act of 1973 and the Equal Opportunity Clause set forth in 41 CFR 60-741.5, which
clauses are incorporated by reference herein.

 

17

 

20.           Set Off:

 

The
Company shall have the right to set off any payment under this Contract and any
past due payment under the rate schedule referenced in Section 2(b) which
is not paid by the Seller against the Company’s payments of subsequent monthly
invoices as necessary.

 

21.           Miscellaneous:

 

(a)           Amendments. Any amendment or modification of this Contract or any part hereof
shall not be valid unless in writing and signed by the parties. Any waiver
hereunder shall not be valid unless in writing and signed by the party against
whom waiver is asserted.

 

(b)           Binding Effect. This Contract shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives, and permitted assigns.

 

(c)           Notices. Any written notice provided hereunder shall
be delivered personally or sent by registered or certified first class mail,
with postage prepaid, to the other party at the following address:

 

Company:

 

	
  1)

  	
   

  	
  By
  Mail:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MECO

  
	
   

  	
   

  	
   

  	
  P.O. Box
  398

  
	
   

  	
   

  	
   

  	
  Kahului, HI
  96733-6898 

  
	
   

  	
   

  	
   

  	
  Attn:  President

  
	
   

  	
   

  	
   

  	
   

  
	
  2)

  	
   

  	
  Delivered:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MECO

  
	
   

  	
   

  	
   

  	
  210
  West Kamehameha Avenue 

  
	
   

  	
   

  	
   

  	
  Kahului,
  HI 96732-2253 

  
	
   

  	
   

  	
   

  	
  Attn: 
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  3)

  	
   

  	
  By
  facsimile:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MECO

  
	
   

  	
   

  	
  Main
  Office

  
	
   

  	
   

  	
  210
  West Kamehameha Avenue

  
	
   

  	
   

  	
  Kahului,
  HI 96732-2253 

  
	
   

  	
   

  	
  Attn:
   President

  
	
   

  	
   

  	
  Fax
  No.: (808) 871-2350

  

 

18

 

Seller:     The mailing address listed in Appendix A
attached hereto.

 

Notice
sent by mail shall be deemed to have been given on the date of actual delivery
or at the expiration of the fifth day after the date of mailing, whichever is
earlier. Any party hereto may change its address for written notice by giving
written notice of such change to the other party hereto.

 

Any
notice delivered by facsimile must be followed by personal or mail delivery and
the effective date of such notice shall be the date of personal delivery or, if
by mail, the earlier of the actual date of delivery or the expiration of the
fifth day after the date of mailing.

 

(d)           Effect of Section and Appendix Headings. The headings or titles of the several
sections and appendices hereof are for convenience of reference and shall not affect
the construction or interpretation of any provision of this Contract.

 

(e)           Non-Waiver. No delay or forbearance of the Company or the Seller in the exercise
of any remedy or right will constitute a waiver thereof, and the exercise or
partial exercise of a remedy or right shall not preclude further exercise of the
same or any other remedy or right.

 

(f)            Relationship
of the Parties. Nothing in
this Contract shall be deemed to constitute either party hereto as partner,
agent or representative of the other party or to create any fiduciary
relationship between the parties.  The
Seller does not hereby dedicate any part of the Seller’s Facility  to serve
the Company, the Company’s customers or the public.

 

(g)           Entire Agreement. This Contract and the IRS Letter Agreement,
incorporated by reference, constitutes the entire understanding and agreement
between the parties.

 

(h)           Governing Law. This Contract shall be governed by and
construed in accordance  with the laws of the State of
Hawaii. The venue for a civil action related to this Contract shall be the
judicial circuit in which the Seller’s Facility is located.

 

19

 

(i)            Limitations. Nothing in this Contract shall limit the
Company’s ability to exercise  its rights as specified in the
Company’s Tariff  as filed with the PUC, or as
specified in General Order No.7 of the PUC’s Standards for Electric Utility
Service in the State of Hawaii, as either may be amended from time to time.

 

(j)            Further
Assurances. Each of the
parties shall from time to time and at all times do such further acts and
deliver all such further documents and assurances as shall be reasonably
necessary fully to perform and carry out this Contract.

 

(k)           Counterparts. This Contract may be executed in one or
more counterparts,  each of which  shall be deemed an original and all of which, when
taken together, shall constitute one  and the same agreement.

 

(l)            Definitions.
Terms used in this Contract not otherwise defined in the context in which they
first appear  are defined in Appendix F attached hereto and made a part hereof.

 

(m)          Severability. If any
term or provision of this Contract, or the application thereof to any
person, entity or circumstances is to any extent invalid or unenforceable, the
remainder of this Contract, or the application  of such term or provision to
persons, entities or circumstances other than those as to which it is invalid or unenforceable,  shall
not be affected thereby, and  each term and provision of  this
Contract shall be valid and  enforceable
to the fullest extent permitted by law.

 

(n)           Settlement
of Disputes. Except as
otherwise expressly provided, any
dispute or  difference
arising out of this Contract or concerning the performance or the non-performance  by either party of its obligations
under this Contract shall be determined in accordance with the dispute
resolution procedures set forth in Appendix G attached hereto and made a part
hereof.

 

(o)           Recovery
of Payments. No change may  be made in terms and conditions of this Contract except by agreement of
the parties hereto. The parties to this Contract
believe,  and have entered
this Contract relying on the belief, that,
under and pursuant to Subchapter 3, Rule 6-74-22 of the PUC’s  Standards,
after a satisfactory, Non-appealable PUC

 

20

 

Approval Order has been obtained: (i) no adjustment in the
payments to be paid Seller under the provisions of this Contract is either
appropriate or lawful; and, (ii) that, also  in light of
the foregoing and of the fact that PURPA and 18 Code of Federal Regulations (“CFR”)
Part 292, require the Company to offer to purchase from a Qualifying
Facility at a price equal to or less  than avoided cost, it is neither appropriate
nor lawful for the PUC or any successor entity to deny the Company the recovery
of any or all amounts paid to Seller pursuant to the terms of this Contract.
Both parties will extend their reasonable efforts to resist and appeal any PUC
actions, decisions, or orders denying or having the effect of denying or
otherwise preventing the Company from recovering any or all amounts paid to
Seller pursuant to the terms of the Contract.

 

(p)           Environmental Credits. To the extent
not prohibited by law, any Environmental Credit shall be the property of the
Company; provided, however, that such Environmental Credits shall be to the
benefit of the Company’s ratepayers in that the value must be credited “above
the line”. Seller shall use all  reasonable efforts to ensure such
Environmental Credits are vested in the Company, and shall execute all
documents, including, but not limited to, documents transferring such
Environmental Credits, without further compensation, provided, however, that
the Company agrees to pay for all reasonable costs associated with such efforts
and/or documentation.

 

(q)           Appendices. Each Appendix is an
essential and necessary part of this Contract.

 

(r)            Patents. Seller agrees that in
fulfilling its responsibilities under this Contract, it will not use any
process, program, design, device or  material that infringes on any
United States patent. Seller agrees to indemnify, defend and hold harmless the
Company from and against all losses, damages, claims, fees and costs, including
but not limited to reasonable attorneys’ fees and costs, arising from or
incidental to any suit or proceeding brought against the Company for patent
infringement arising out of Seller’s performance under this Contract, including
but not limited to patent infringement due to the use of technical features of
Seller’s Facility to meet the performance standards specified in the Contract.

 

21

 

IN WITNESS WHEREOF, the Company and the Seller have executed
this Contract as of the day and year first above written.

 

 

	
   

  	
  Maui
  Electric Company, Limited (MECO)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Edward
  L. Reinhardt

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Willy
  Bennett

  
	
   

  	
   

  	
  Its Vice President

  
	
   

  	
   

  
	
   

  	
  (“Company”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Kaheawa Wind Power, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Paul
  Gaynor

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  
	
   

  	
  (“Seller”)

  

 

22

 

APPENDIX A

 

DESCRIPTION OF SELLER’S GENERATION AND CONVERSION FACILITY

 

1.                                       Name of Seller’s Facility: Kaheawa Wind Farm

 

a.                                  Location: Ukumehame, Maui, Hawaii

 

b.                                 Telephone number (for system emergencies):

(   )             –

[To
be provided prior to Acceptance Test]

 

2.                                       Owner (If different from Seller):

N/A

 

By the Execution Date, Seller shall provide the Company with a
certified copy of a certificate warranting that the owner is a corporation,
partnership or limited liability company in good standing with the Hawaii
Department of Commerce and Consumer Affairs.

 

3.                                       Operator: UPC Wind  Management, LLC
or one of its affiliates

 

4.                                       Name of person to whom payments are to be
made:

 

Kaheawa
Wind Power, LLC

 

a.                                  Mailing address: c/o UPC Wind Management, LLC

100 Wells Avenue, Suite 201

Newton, MA 02459

 

b.                                 Facsimile number:  617.964.3342

 

c.                                  Hawaii Gross
Excise Tax License number: [To be provided prior to Acceptance Test]

 

5.                                       Equipment:

 

a.                             Type of facility and conversion equipment:

 

Small
production facility designated as a Qualifying Facility that produces
electricity using wind turbine generators.

 

b.                            Design and capacity

 

Total Seller’s Facility Capacity: 30,000 kW

 

Total Number of Wind Turbine Generators:

Twenty (20) each GE Wind Energy model 1.5se (1.5 MW) wind turbine
generators

 

A-1

 

Description of Equipment: GE
Wind Energy 1.5se (1.5 MW), 60 Hz three-bladed upwind horizontal axis turbine.
The machines will be mounted on 55 meter tubular towers and will employ active
yaw control, active pitch control, and a generator/power electronic converter
system from the variable speed drive train. Electricity is generated by the individual
turbines at 575 volts, stepped up to 34.5 kV by an adjacent pad-mount transformer,
gathered and transmitted to the Wind Farm Substation by underground cables,
stepped up to 69 kV by the Wind
Farm Substation, and interconnected to Company’s transmission system by a three
breaker ring.

 

Individual unit:

 

	
   

  	
   

  	
   

  	
   

  	
  kVAR Consumed

  	
   

  	
  kVAR Produced

  	
   

  
	
   

  	
   

  	
  kW

  	
   

  	
  (by Seller)

  	
   

  	
  (by Seller)

  	
   

  
	
  Full load

  	
   

  	
  1,500

  	
   

  	
  726

  	
   

  	
  493

  	
   

  
	
  Startup

  	
   

  	
  0

  	
   

  	
  726

  	
   

  	
  493

  	
   

  

 

(each of the twenty (20) individual wind turbine generators is capable of
delivering or absorbing reactive power within the range of +493 to -726 kVAr,
respectively)

 

A-2

 

	
  Generator:

  	
   

  
	 
	
   

  	
   

  
	 
	
  Type

  	
  Doubly-fed
  induction generator, variable speed, pitch regulated wind turbine generator

  
	 
	
  Rated
  Power

  	
  1,500
  kW each

  
	 
	
   

  	
   

  
	 
	
  Voltage

  	
  575
  V, 3 phase,

  
	 
	
   

  	
   

  
	 
	
   

  	
  floating
  wye

  
	 
	
   

  	
   

  
	 
	
  Frequency

  	
  60
  HZ

  
	 
	
   

  	
   

  
	 
	
  Class of
  Protection

  	
  IP54

  
	 
	
   

  	
   

  
	 
	
  Number
  of Poles

  	
  6

  
	 
	
   

  	
   

  
	 
	
  Rated
  Speed

  	
  1,440
  rpm

  
	 
	
   

  	
   

  
	 
	
  Rated
  Current

  	
  1,673
  A

  
	 
	
   

  	
   

  
	 
	
  Uncorrected
  Power Factor

  	
  N/A

  
	 
	
   

  	
   

  
	 
	
  Corrected
  Power Factor

  	
  –0.90
  leading (reactive power absorbed) to 0.95 lagging (reactive power delivered)
  at full power (1,500 kW) and rated voltage (575 V).

  
	 
	
  Corrected
  Current

  	
  N/A

  
			

 

c.                             Single or 3 phase: 3 phase

 

d.                            Name of manufacturer: GE Wind Energy

 

e.                             Allowed Capacity

 

The Allowed Capacity of this Contract shall be the lower of (i) 30,000
kW, or (ii) the net nameplate capacity (net for export) of the wind
turbine generators that have been installed and have successfully completed the
Control System Acceptance Test(s), to the extent applicable, by the In-Service
Date.

 

6.                                       Insurance carrier(s): AIG and Allianz. The
Seller shall have the ability to change carriers, in which case it must provide
notice to the Company within 60 days of such a change.

 

A-3

 

7.                                       If the Seller is
not the operator, the Seller shall provide a copy of the agreement between the
Seller and the operator which requires the operator to operate the Seller’s Facility
and which establishes the scope of operations by the operator and the
respective rights of the Seller and the operator with respect to the sale of
electric energy from the Seller’s Facility no later than the Initial In-Service
Date. The Seller shall provide a certified copy of a certificate warranting
that the operator is a corporation, partnership or limited liability company in
good standing with the Hawaii Department of Commerce and Consumer Affairs.

 

8.                                       If the Seller is
the operator, the Seller shall provide a certified copy of a certificate
warranting that the Seller is a corporation, partnership or limited liability
company in good standing with the Hawaii Department of Commerce and Consumer
Affairs.

 

9.                                       The Seller, owner
and operator shall provide the Company a description of its ownership
structure. Such descriptions of ownership structure provided to the Company,
and designated in writing by the Seller, owner and operator as being
confidential, shall be treated as confidential. The Company may disclose such
information to the PUC and the Consumer Advocate, subject to the PUC issuance
of a protective order.

 

10.                                 Any certificate or
description of ownership structure required under Appendix A shall be provided
to the Company by the Execution Date. In the event of a change in ownership or identity
of the Seller, owner or operator, such entity shall provide, within 30 days
thereof, a certified copy of a new certificate and a revised ownership
structure.

 

A-4

 

APPENDIX B

 

FACILITY OWNED BY THE SELLER

 

1.                                       Seller’s Facility

 

a.                                       A preliminary single-line diagram, relay list and trip
scheme of the Seller’s Facility
shall, after Seller has obtained prior
written consent from the Company, be attached to this Contract on the Execution
Date as Exhibit B-1. A final single-line diagram, relay list and trip scheme of the Seller’s Facility
shall, after having obtained prior
written consent from the Company (such consent not to be unreasonably withheld
or delayed), be attached to this Contract and made a part hereof at least sixty (60) days prior to the Initial In-Service Date as Exhibit B-2. The  single-line
diagrams shall expressly identify the Point of Interconnection of the Seller’s
Facility to the Company’s System. The Seller agrees that no
material changes or additions to the Seller’s Facility as reflected in
the final single-line diagram,
relay list and trip scheme shall be
made without the Seller first
having obtained prior written
consent from the Company, such consent not to be unreasonably withheld or
delayed. If any changes in or additions to Seller’s Facility, records and operating procedures are required by the
Company, the Company shall specify such changes or additions to the
Seller in writing, and, except in the case
of an emergency, Seller shall have the opportunity to review and comment upon any such changes or
additions in advance.

 

b.                                      (1) The Seller
shall furnish, install, operate and maintain the Seller’s Facility including
breakers, relays, switches, synchronizing equipment, monitoring equipment and control and protective devices designated by the Company as suitable for parallel
operation of the Seller’s  Facility with the Company’s
System. Seller’s Interconnection Facilities shall be accessible at all times to authorized Company
personnel.

 

(2) The Seller’s Facility shall include, without limitation, the following,
all to be designed and constructed in accordance with Good Engineering and Operating Practices and meeting all
applicable code requirements:

 

B-1

 

1)                                      A 69 kV overhead bus that runs from the Wind
Farm Substation (as defined in Appendix B, 1.b. (2)3)) to the Point of
Interconnection. The point of demarcation (Point of Interconnection) (where
Seller shall be responsible to maintain facilities on the Seller’s Substation
side of the Point of Interconnection and the Company shall be responsible to
maintain the facilities on the Company-owned 69 kV Switching Station side of
the Point of Interconnection) shall be at the 69 kV bus immediately adjacent to,
and on the Company-owned 69 kV Switching Station side of, the Seller’s motor
operated disconnect switch described below, as illustrated in Exhibit B-1. One
(1) motor operated switch 69 kV Turner type “THI” or equivalent, connecting the
Point of Interconnection with the 69 kV tie line that runs between the 69/34.5
kV Tie Autotransformer and the Company-owned 69 kV Switching Station, and
associated equipment (the “69 kV Tie Line”) shall be installed outside of the
Company-owned 69 kV Switching Station on the 69 kV Tie Line. This switch will
be used to isolate the Seller’s Facility when the Company-owned 69 kV Switching
Station or 69 kV metering equipment must be worked on.

 

2)                                      Approximately fifteen (15) feet of 69 kV Tie
Line from the Point of Interconnection to the Seller’s Tie Autotransformer as
described in section 1.b(2)3)b. of this Appendix B).

 

3)                                      A 69/34.5 kV wind farm substation (“Wind Farm
Substation”) as outlined below:

 

a.               a single 34.5 kV bus with a bus connection
for the Tie Autotransformer; two (2) 34.5 kV rack-out circuit breakers (800 Amp
with busing CT’s 1200/5 MR, 20 kA, 3 cycle interrupt) to connect four 34.5 kV,
360 amp distribution circuits; a rack-out fuse unit to connect the station
service transformer; three (3) sets of 3, 21kV/120V bus potential transformers
(PT); and multiple sets of 1200/5 MR, C400, current transformers (CT) for the
metering, controls, and protective relaying.

 

b.              25/34 MVA, 69 kV
grounded Y/34.5 kV grounded Y, standard taps, 13.8 kV delta tertiary station

 

B-2

 

step-up autotransformer (“Tie Autotransformer”), connecting the 69 kV
Tie Line with the 34.5 kV bus with 27 kV MCOV lightning arrestors on the 34.5
kV terminal of the Tie Autotransformer.

 

c.                    One (1) fused 25KVA (or larger, up to 100 KVA),
20kV – 120/240V (single phase) station service transformer to service panel
with automatic throw over switch for station back-up power (provided by a
diesel or natural gas fueled generator).

 

d.                   The Seller’s
Facility will provide a control room for the Seller’s Facility. The control
room will contain the Windfarm Management System (“WFMS”) cabinet and equipment
for the windfarm voltage and power factor regulation and windfarm power output
control. The control room will also contain
the host computer for the centralized
windfarm SCADA system.

 

4)                                      Four (4) 34.5 kV,
three 4/0 Al conductors, directly buried
underground distribution circuits
interconnecting five (5) 1.5 MW wind turbine generators to the 34.5
kV bus. One set of 27 kV MCOV lightning
arrestors, fault indicators, and
one (1) 34.5 kV “lockable” solid
blade disconnects, (600 amp, S&C type or equivalent) to each 34.5
kV underground distribution circuit.

 

5)                                      The WFMS and centralized
windfarm SCADA system as necessary, to implement the MW monitoring, curtailment functions, and voltage control interface as required by
Appendix B, Section 1.g, 2.e, and Appendix
B-1.

 

a.               The WFMS control
system will monitor and provide coordinated
control of  the total power production, real and reactive, delivered by the Seller’s Facility to the Point of
Interconnection. The voltage at the Point of Interconnection will be regulated
by WFMS coordination of the individual wind
turbines’ production or absorption
of reactive power. The WFMS will
provide voltage regulation by receiving a 4-20 mA analog output sent from the
Company’s System Operator to the Company’s substation RTU. The WFMS will then
hold the voltage setpoint at the 69 kV
designated Point

 

B-3

 

of
Interconnection until the next setpoint command is received from Company’s
System Operator. The deadband of the regulation about the setpoint would
initially be set at 0.005 p.u. of RMS primary voltage. The Seller and the
Company will evaluate the adequacy of the initial deadband, which may be
adjusted with Seller’s concurrence. Voltages in the range of the setpoint
deadband will not cause a correction to be made. The frequency of the voltage
control changes will be  controlled
by the Company’s System Operator.

 

b.              Seller intends to satisfy the requirement for
a centralized windfarm SCADA system through use of a standard windfarm SCADA
system. This SCADA system will monitor and control the individual wind turbines
within the Seller’s Facility. The SCADA system will be connected to individual
wind turbines through a 100 Mbit Ethernet fiber optic network.

 

6)                                      Twenty (20) sets of 1500 kVA, 575 V grounded
Y/34.5 kV delta, loop-feed dead-front pad mount transformers with S&C SMD-2C,
40 Amp fuses, standard speed (or as specified by the final relay coordination
study); 34.5 kV, 3-phase gang operated load break oil switch; and 575V, 2,000
amp breaker. The loop-feed pad mount transformer fuses shall be selected such
that they will clear faults within their zone of protection before the
undervoltage protection of the GEWE 1.5 MW wind turbine generators operate and
trip the wind turbine generators.

 

7)                                      Twenty (20) GEWE 1.5se (1.5 MW) doubly fed
induction wind turbine generators (as described in “Kaheawa Wind Power, LLC.
Response to 30 MW UPC Kaheawa Wind Farm Interconnection Requirement Study
Request for Data –July 13, 2004,” Submitted August 18, 2004, Revised by Excel
Engineering in e-mails received on October 29, 2004). Each wind turbine
generator will have a local controller, responsible for the operation and
protection of the individual wind turbine generator, as well as executing
commands sent from the WFMS and SCADA system. The wind turbine generator will
be provided with

 

B-4

 

Overvoltage (59), Undervoltage (27), Overfrequency (810),
Underfrequency (81U), and Voltage imbalance (60) protection through the
multifunctional relay in addition to Overcurrent (51) protection through the
main circuit breaker.

 

8)                                      Seller will
install a disturbance monitor in the Wind Farm Substation. The TESLA_Vision 3 monitor
(or equivalent) will be in continuous service and on a rolling window basis
monitor sub-cycle voltages, currents and harmonics as well as disturbance
events. The disturbance monitor will be placed in service on a continuous basis
as soon as interconnection is energized and will be capable of remote
interrogation after any event.

 

9)                                      Protective
relaying at Seller’s Facility.

 

The Wind Farm Substation will have an enclosure for relaying equipment.
The relaying equipment will be as indicated on  the single line
diagram, relay list, and trip schemes attached hereto as Exhibits B-1 and B-2.

 

10)                                Communications system
from the Wind Farm Substation to a location adjacent to the Company-owned 69 kV Switching Station. The communications
system will provide sufficient channels to interface between Company’s
SCADA/EMS system (as defined in Appendix C, section 1(b)(2)a)) and the
equipment at Seller’s Facility. A demarcation box will be installed in the
Company-owned 69 kV Switching Station on a pedestal at a location near the
fence line next to Seller’s communications facility. Seller will mark hard wire
connections on one side of the terminal blocks to its communications facility
and Company will hardwire the other side to its remote terminal unit (RTU)
output and input points. Additional telemetered analog and status and control
functions may need to be detailed later upon review of Seller’s design drawings
of Seller’s Facility and interface. The interface must include as a minimum,
interfaces for the telemetry and control to effect the Curtailment

 

B-5

 

Control Interface described in Appendix B, section 1.g; the monitoring
required for performance standards as described in Appendix B-1; and the
reactive control interface described in Appendix B, sections 1.b.(2)7) and 1.b.(2)5)
and required by Appendix B, section 2.f. These interfaces include, but are not
limited to:

 

a.               Interface with Company’s RTU output
control momentary dry contacts for the following functions:

 

•                  To incrementally
curtail and restore wind turbines.

 

•                  To allow Company’s
System Operator to incrementally raise or lower the voltage target level at
Seller’s Facility.

 

•                  The momentary
closures for the above controls
are about 500 milliseconds in duration.

 

b.              Interface with Company’s RTU input for
wind-speed and wind direction analog readings.

 

c.               Interface with Company’s RTU input for
total windfarm  MW, Mvar  and
power factor analog telemetering at the Point of Interconnection.

 

d.              Other telemetered, status and control
functions that need to be interfaced with the RTU. Additional status and
control functions, if any, will be identified by the Company prior to the
installation of the Company-owned 69 kV Switching Station.

 

e.               Wiring
between the demarcation box  in the  Company-owned
69 kV Switching Station to Seller’s communications facility.

 

f.                 All analog measurements shall use
transducers with a 0-1 ma output with a +/– 0.1% accuracy.

 

If the Seller adds, deletes
and/or changes any of its equipment, or changes its design in a manner that
would change the characteristics of the equipment and specifications used in
the IRS, Seller will be required to obtain Company’s prior written approval,
such approval not to be unreasonably withheld or delayed. If an analysis to

 

B-6

 

revise parts of the IRS is
required, Seller will be responsible for the cost of revising those parts of
the IRS, and modifying and
paying for the cost of the modifications to Seller’s Facility based on the
revisions to the IRS.

 

c.                                       The Seller shall
provide to the Company for its review the design drawings, Bill of Material, relay
settings and fuse selection for the Seller’s Facility and the Company shall
have the right, but not the obligation, to specify the type of electrical
equipment, the interconnection wiring, the type of protective relaying
equipment, including, but not limited to, the control circuits connected to it
and the disconnecting devices, and the relay settings and fuse selection that
affect the reliability and safety
of operation of the Company’s and Seller’s interconnected system. Seller shall
provide the relay settings, fuse selection,
and AC/DC Schematic Trip Scheme (part of design drawings) for Seller’s Facility
to Company at least sixty (60) days prior to the Acceptance Test. The Company,
at its option, may, with reasonable frequency, witness the Seller’s operation
of control, synchronizing, and protection schemes and shall have the right to
periodically re-specify the settings. The Seller shall utilize relay settings by the Company, which may
be changed over time as the Company’s electrical system’s requirements
change.

 

d.                                      The Seller shall
provide a manually operated motorized disconnect device, which provides a
visible break to separate the Seller’s Facility from the Company’s System. Such
disconnect device shall be lockable in the OPEN position and be readily
accessible to Company personnel at all times.

 

e.                                       The Seller shall
furnish, install and maintain in accordance
with the Company’s requirements all conductors, service switches, fuses,
meter sockets, meter (includes revenue metering structure, CT(s) and PT(s) and
accessories) and instrument transformer housing and mountings, switchboard
meter test buses, meter panels and similar devices required for service
connections and meter installations on the Seller’s premises.

 

f.                                         The Seller
shall develop a maintenance plan to maintain the Seller’s Interconnection
Facilities. The plan shall be submitted to the Company for review and comment,
and

 

B-7

 

shall be finalized prior to energizing any of
the Interconnection Facilities. The plan shall include, the 69 kV Tie Line, Tie
Autotransformer, 34.5 kV bus, two (2) 34.5 kV breakers, four (4) 34.5 kV
distribution circuits, communication and control system that interfaces with
the Company-owned 69 kV Switching Station, Wind Farm Substation and wind farm
protective relaying system. Seller shall furnish to Company a copy of records
documenting such maintenance, within thirty (30) days of completion of such
maintenance work.

 

g.                                      The Seller shall provide and maintain in good working
order all equipment, computers and software (the “Curtailment Control Interface”)
necessary to initiate, control the level of, and remove curtailments when
required under Section 6 of this
Contract and Section 2.h of this Appendix B. The implementation of the Curtailment Control Interface will allow the Company’s System Operator to
initiate the curtailment, vary the level of curtailment, and remove the
curtailment remotely from the Company’s System Operations Control Center
through control signals from the Company’s computerized control system
(SCADA/EMS). The Company shall review and provide prior written
approval of the design for the Curtailment Control Interface to ensure
compatibility with the Company’s SCADA/EMS system, such approval not to be unreasonably
withheld or delayed. If Seller materially changes the approved design, such changes will also require Company’s review and prior
written approval. The Curtailment
Control Interface shall include, but not be limited to, a demarcation cabinet, and ancillary equipment
and software necessary for Seller to connect to the Company’s RTU, located in the Company’s
portion of Seller’s Facility switching
station which shall provide the control
signals to the Seller’s Facility and
send feedback status to the Company’s System Operations Control Center. The types of controls presently supported by
the Company’s SCADA/EMS system are fixed-length digital output controls, variable
length digital output (pulse-width
output) controls, and analog output
(setpoint) controls. The Curtailment
Control Interface shall also include provision for a feedback point from the
Seller’s Facility indicating when curtailment is in effect, and the net
instantaneous MW output of Seller’s Facility at the Point of Interconnection.
Seller shall provide an analog signal for the total MW output at the Point of
Interconnection. When a curtailment lower control signal is received by the

 

B-8

 

Seller’s
Facility through the Curtailment Control Interface, the corresponding action
(e.g., decrease in Seller’s Facility’s output) shall be initiated without
delay. The Curtailment Control Interface shall be capable of receiving from the
Company up to eight curtailment control signals during a one minute period.
Each curtailment lower control signal shall initiate a reduction in the output
of the Seller’s Facility by 250 kW. The Seller’s Facility shall be capable of
and allow the Company to curtail output at a rate of up to 2 MW per minute. The
requirements of the Curtailment Control Interface may be modified as mutually
agreed upon in writing by the parties. Under this section, it shall be
permissible for Seller’s Facility to respond to a curtailment lower control
command by reducing production by more than the specified amount if necessary
to accommodate Facility operating characteristics, provided the Seller’s
Facility does not violate the ramp rate and power fluctuation rates in Section
2.g. (1).

 

h.                                      Control System Acceptance Test procedures. To the extent reasonably and technically feasible, provided that
the Acceptance Test has been successfully completed, Company shall
conduct the first Control System Acceptance
Test for the generators in Seller’s Facility
within one (1) normal working
day after the Acceptance Test,
provided that Seller has given Company at least seven (7) days advance
written notice that one (1) or more of the generators in Seller’s
Facility are ready to generate
and deliver energy to the Company.
Thereafter, Company shall conduct each
Control System Acceptance Test during regular business hours not later than five (5) normal working days after Seller provides Company with written notice that one (1) or more new generators is ready to generate
and deliver energy to the Company, provided that: (1) except for the initial and the last Control System Acceptance Tests,
such tests shall be conducted for no
fewer than five (5) generators at a time; (2) Company shall conduct only one
Control System Acceptance Test at
a time; (3) following the initial Control System Acceptance Test, Company shall only commence a Control System Acceptance Test following the successful completion of the preceding
Control System Acceptance Test, unless agreed to in writing in advance by the Company; and (4) the Company shall not be
required to start a Control System Acceptance Test if Company reasonably
determined that such test cannot be successfully completed during regular
business hours. To

 

B-9

 

the extent applicable, each Control System Acceptance Test shall test
the new generator(s) that are ready to generate and deliver energy to the
Company in addition to the generators that have previously been placed in
service.

 

2.                                       Operating
Procedures

 

The Company and the Seller will each designate their respective
official points of contact person, Operation Representative (“OR”), and back-up
OR, through which all operation issues, events and operation actions or directives will be communicated
between the Company and Seller. The OR will establish formal written operation,
switching, inspection and safety procedure. The ORs, will after each stage of connection commissioning and
testing, and at least annually thereafter, jointly review and update the
O&M manual and conduct an annual training of all involved personnel and
after completion will each sign off on a report to the Company and Seller’s
Management Representatives.

 

a.                                       The Company may
require periodic reviews of the Seller’s Facility, maintenance records,
available operating procedures and policies, and relay settings, and Seller
shall implement changes the Company deems necessary, for parallel operation or
to protect the Company’s System from damages resulting from the parallel
operation of the Seller’s Facility with the Company’s System.

 

b.                                      The Seller must
separate Seller’s Facility from the Company’s System whenever requested to do
so by the Company’s  System
Operator pursuant to Sections 6 and 7 of the Contract.

 

c.                                       Logs shall be
kept by the Seller for information on unit availability including reasons for
planned and forced outages; disturbance monitor event recordings, circuit
breaker trip operations, relay operations, including target initiation and
other unusual events. The Company shall have the right to review these logs,
especially in analyzing system disturbances. Seller shall maintain such records
for a period of not less than thirty-six (36) months.

 

d.                                      Under no
circumstances shall the Seller, when separated from the Company’s System for
any reason, reclose into the Company’s System without first obtaining specific
approval to do so from the Company’s System Operator.

 

B-10

 

e.                                       Voltage
regulation. The Seller shall regulate the voltage at the Point of Interconnection
to a voltage specified by the Company’s System Operator. The power factor at
which energy is to be delivered by the Seller to the Company shall be
adjustable and adjusted as necessary to maintain voltage at the specified
level, but in no event shall the voltage deviate more than 0.5% from the
voltage specified by the Company’s System Operator. The design for the voltage
regulation will be reviewed and approved by the Company as part of the
Interconnection Requirements Study.

 

f.                                         Reactive
Amount.

 

(1)                                  The Seller shall install sufficient equipment to have the ability to deliver energy
to the Company at power factors ranging from 95% leading at the Seller’s
Facility (Seller receiving reactive power from the Company. while delivering real power to the Company) to
97% lagging power factor at the Point of Interconnection.

 

(2)                                  If
the Seller’s Facility does not operate in
accordance with Section 2.f (1) of this Appendix B, the Company may
disconnect all or a part of the Seller’s Facility from the Company’s System
until the Seller corrects its operation (such as by installing capacitors at
the Seller’s expense) to conform to the requirements of this Section 2.f (1).

 

(3)                                  The Seller shall
maintain records regarding the power factor at which energy is delivered to the
Company at the Point of Interconnection, and shall provide these records to the
Company when reasonably requested by the Company. The Company shall have the
right to inspect these records.

 

g.                                      (1)                                  Ramp rate and power fluctuation. The Seller
shall ensure that the ramp rate and power fluctuation rate of the Seller’s
Facility are less than the following limits:

 

	
  Ramp Rate

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   Sustained:

  	
  2 megawatts/minute ramp up, and

  
	
   

  	
   

  	
  2 megawatts/minute ramp down
  when

  operationally possible

  

 

B-11

 

Power Fluctuation Rate

 

	
  Instantaneous:

  	
  1.2 megawatt/2-second scan

  
	
  Sub-minute Average:

  	
  an average of 0.35 megawatt/2-second scan for any 60-second period

  

 

The methods and formulas for measuring these performance standards are
included in Appendix B-1. If the ramp rate or power fluctuation rate is greater
than or equal to the above limits, the Company shall have the right to curtail
the Seller’s Facility, or to disconnect the Seller’s Facility from the
Company’s System if such curtailment does not adequately resolve the problem.
The Company, after actual experience with the Seller’s generation or after
upgrades on the Company electrical system, will review the ramp rates.

 

(2)          Undervoltage
ride-through.     Either the undervoltage relays for
the Seller’s wind turbine generators shall be set, or a compensation device
external to the wind turbine generators shall be installed at the Seller’s
Facility, so that the Seller’s Facility will meet the following undervoltage
ride-through requirements during an undervoltage disturbance affecting one or
more of the three voltage phases (“V” is the terminal voltage of Seller’s
Facility’s equipment):

 

	
  V  3 0.90 pu

  	
   

  	
  Seller’s Facility remains connected to the Company’s System.

  
	
  0.75 pu £
  V < 0.90 pu

  	
   

  	
  Seller’s Facility may initiate disconnection from the Company’s
  System if voltage remains in this range for more than 2 seconds.

  
	
  0.00 pu £
  V < 0.75 pu

  	
   

  	
  Seller’s Facility may initiate disconnection from the Company’s system
  if voltage remains in this range for more than 600 milliseconds.

  

 

(3)          Underfrequency
ride-through.     The underfrequency relays for the
Seller’s wind turbine generators shall be set so that the Seller’s Facility
will meet the following underfrequency ride-through requirements during an
underfrequency disturbance (“f” is the Company’s System frequency at the Point
of Interconnection):

 

B-12

 

	
  f
   3 57.0 Hz 

  	
   

  	
  Seller’s Facility remains connected to the Company’s System. 

  
	
  56.0 Hz
  £ f <
  57.0 Hz 

  	
   

  	
  Seller’s Facility may initiate disconnection from the Company’s System
  if frequency remains in this range for more than 6 seconds. 

  
	
  f
  < 56.0 Hz 

  	
   

  	
  Seller’s Facility may initiate disconnection from the Company’s System
  immediately. 

  

 

h.             (1)           Pursuant to Sections 6 and 7 of the
Contract, the Company may at times have limited ability to integrate energy
produced by the Seller into the Company’s System for engineering and/or
operating reasons and may be required to curtail energy deliveries by the
Seller. When a curtailment control signal is received by the Seller’s Facility
through the Curtailment Control Interface, the corresponding action (e.g.,
decrease in Seller’s Facility’s output) shall be initiated by the Seller
without delay. The Company shall send up to eight curtailment control signals
to the Seller’s Facility during a one minute period, which corresponds to a
rate of [2 MW/minute]. Unless agreed to in writing by both parties, the
curtailment signals will consist of raise and lower signals. Each curtailment
lower control signal shall signal a reduction in the output of the Seller’s
Facility by 250 kW. Further curtailment may be implemented if conditions
warrant and the Company’s System Operator deems it necessary. The Seller shall
not override the Company’s curtailment. As conditions warrant, the Company
shall end or reduce the curtailment when it is reasonably determined that the
reason for the curtailment is no longer in existence. The Company’s System
Operator shall end or reduce the curtailment by sending raise control signals
to the Seller’s Facility through the Curtailment Control Interface. Seller may
request that Seller’s Facility be restored no sooner than one hour after the
Company has curtailed the Seller’s Facility.

 

(2)       When the Company determines that curtailment of
energy becomes necessary for reasons other than those directly attributable to
the Seller’s Facility, curtailments shall be made to the extent possible in
reverse chronological order of the chronological seniority

 

B-13

 

dates
determined by the Company for the contracts, with deliveries under the contract
with the most recent chronological seniority date being the first curtailed,
and deliveries under the contract with the earliest chronological seniority
date being the last curtailed. The chronological seniority date shall be the
PUC Approval Order Date of the Non-appealable PUC Approval Order. If the Seller
does not achieve an In-Service Date on or before twelve (12) months following a
satisfactory Non-appealable PUC Approval Order Date, the chronological
seniority date for curtailment will change by adding one day for each day the
In-Service Date is later than twelve (12) months after the Non-Appealable PUC
Approval Order Date. When the Company determines that curtailment of energy
becomes necessary for engineering and/or operating reasons that are directly
attributable to the Seller’s Facility, reverse chronological curtailment order
may not apply. The Company shall not be liable to the Seller for any such
curtailments unless they were in violation of Section 6 or 7 of the Contract.
Seller shall not override Company’s curtailment.

 

(3)       Seller will provide a microwave interface to
allow the Company’s relays at the Company’s Maalaea Switching Station and
Lahaina substation to communicate with the Company-owned 69 kV Switching Station
to automatically and instantaneously trip the Seller’s Facility’s main circuit
breakers with a permissive overreaching transfer trip scheme.

 

(4)       If the control system interface is unavailable,
due to loss of communication link, RTU failure, or other event resulting in the
loss of the remote control by the Company, provision must be made for the
Seller to be able to institute, within 30 minutes or such other period as the
Company accepts in writing, local curtailment raise and lower control and
change in voltage regulation target via the local controls upon verbal request
by the Company’s System Operator.

 

i.              [Reserved]

 

j.              Seller’s
authorized personnel shall be allowed reasonable access to the Company-owned 69
kV Switching Station, as necessary, to operate Seller’s Facility and perform
Seller’s obligations under this Contract. Prior to entering the Company-owned
69 kV Switching Station, the

 

B-14

 

Seller’s authorized personnel shall (1) receive authorization from
Company’s Transmission and Distribution Department to enter the Company-owned
69 kV Switching Station; (2) comply with all current policies regarding
entry in Company’s switching stations; and (3) notify the Company’s System
Operator and Company’s dispatcher immediately prior to entering and upon
departure from the Company-owned Switching Station. Company may determine that
its personnel should be present whenever Seller’s personnel access the
Company-owned 69 kV Switching Station.

 

k.             The Seller shall start one wind turbine
generator at a time to minimize voltage and frequency fluctuations on the
Company’s System, provided that Seller’s Facility shall be limited to ramping the
wind farm generation at the ramp rate designated in Appendix B, section 2.g.  The Seller shall coordinate the start-up
protocol with the Company’s System Operator. Provided that Seller’s Facility
complies with the performance standards
in Appendix B, section 2.g, the process of starting one wind turbine generator
at a time is not applicable when the Seller’s Facility is starting production after a low wind condition.

 

1.             Voltage Flicker

 

Any voltage flicker at the Point of Interconnection caused by the Seller’s
Facility shall not exceed the limits defined by the “Borderline of Visibility
Curve” identified in IEEE Standard 519-1992 “Recommended Practices and
Requirements for Harmonic Control in Electrical Power Systems”.

 

m.            Harmonics

 

Harmonic distortion at the Point of Interconnection caused by the
Seller’s Facility shall not exceed the limits stated in IEEE Standard 519-1992
“Recommended Practices and Requirements for Harmonic Control in Electrical
Power Systems”. The Seller shall be responsible for the installation of any
necessary controls or hardware to limit the voltage and current harmonics
generated from the Seller’s Facility to defined levels.

 

B-15

 

n.            Maintenance of Seller’s Interconnection
Facilities

 

(i)        Seller must address any Disconnection (as
defined below) according to the requirements of this Appendix B, section 2.n.
For this purpose, a Disconnection is a disconnection from the Company’s System
of at least 13.9 MW from Seller’s Facility over a “rolling 120-second period”,
if such disconnection is due to a defect in or a failure of the Seller-owned
Interconnection Facilities. A “rolling 120-second period” means a period that
is comprised of 120 seconds and such rolling period will change as each new one
(1) second elapses. With the elapse of each new one (1) second, the
newest one (1) second would be added to the 120-second period, and the oldest
one (1) second would no longer be included in the rolling 120-second
period. A disconnection shall not be deemed to be caused by a fault on
Company’s System if, in accordance with Good Engineering and Operating
Practices and such plans and specifications for Seller-owned Interconnection
Facilities, the disconnection should not have occurred despite the system fault.
Seller-owned Interconnection Facilities, as described in Appendix B Section 1.b.(2) items
1)-6) and 8)-10), shall be subject to this Appendix B, section 2.n. This
Appendix B, section 2.n shall not apply to the wind turbine generators
described in Appendix B, Section 1.b.(2)7. A “rolling 120-second period”
means a period that is comprised of 120 seconds and such rolling period will
change as each new one (1) second
elapses. With the elapse of each new one (1) second, the newest one (l) second
would be added to the 120-second period, and the oldest one (1) second
would no longer be included in the rolling 120-second period.

 

(ii)       For every disconnection from the Company’s
System of at least 13.9 MW from Seller’s Facility over a rolling 120-second period
(“Disconnection Event”), the Seller shall investigate the cause of the
Disconnection Event, and determine if it is a Disconnection as defined in
Appendix B, section 2.n(i). Within three (3) business days of the
Disconnection Event, the Seller shall provide, in writing to the Company, an
incident report that summarizes the sequence of events and probable cause of
the Disconnection Event, and states whether the Seller believes the
Disconnection Event is a Disconnection.

 

(iii)      Within forty-five (45) calendar days of a
Disconnection the Seller shall provide, in writing to the Company, the Seller’s
findings, data relied upon for such findings, and proposed actions to prevent
reoccurrence of

 

B-16

 

a Disconnection (“Proposed Actions”). The Company with the aid of its
operating recordings and the disturbance monitor history of the event or
disconnection may assist the Seller in determining the root causes of and
recommendations to remedy or prevent a future Disconnection (“Company’s
Recommendations”). The Seller shall implement such Proposed Actions (as
modified to incorporate the Company’s Recommendations, if any) and the
Company’s Recommendations (if any) in accordance with the time period agreed to
by the parties.

 

(iv)     In the event the Seller and the Company, after
jointly reviewing the recorded event history obtained from the disturbance
monitor or SCADA data, disagree as to (1) whether a Disconnection Event
occurred, (2) the sequence of events and/or probable cause of the
Disconnection Event, (3) whether the Disconnection Event is a
Disconnection, (4) the Proposed Actions, (5) the Company’s
Recommendations, and/or (6) the time period to implement the Proposed
Actions and/or the Company’s Recommendations, then the parties shall follow the procedure set forth in Appendix
B, section 2.0.

 

(v)      Upon the fourth (4th) Disconnection (and each subsequent
Disconnection) within any Contract Year, the parties shall follow the
procedures set forth in Appendix B, section 2.n(iii) and (iv) above,
to the extent applicable. If after following the procedures set forth in Appendix
B, section 2.n(iii) and (iv), the Seller and the Company continue to have a
disagreement as to (1) the probable cause of the Disconnection, (2) the Proposed
Actions, (3) the Company’s Recommendations, and/or (4) the time period to
implement the Proposed Actions and/or the Company’s Recommendations, then the
parties shall commission a study to be performed by a qualified independent
thirty-party consultant (“Qualified Consultant”) chosen from the Qualified
Independent Third-Party Consultants List (“Consultants List”) to be attached to
the Contract as Appendix B-2. Such study shall review the design of, review the
operating and maintenance procedures dealing with, recommend modifications to,
and determine the type of maintenance that should be performed on the
Seller-owned Interconnection Facilities (“Study”). The Seller and the Company
shall each pay for one-half of the total cost of the Study. The Study shall be
completed within ninety (90) calendar days from its commissioning after a
fourth Disconnection (and each subsequent

 

B-17

 

Disconnection) within any Contract Year, unless otherwise agreed to in
writing by the Seller and the Company. The Qualified Consultant shall send the
Study to the Company and the Seller. The Seller (and/or its third-party consultants and contractors), at the
Seller’s expense, shall change the design of, change the operating and maintenance
procedures dealing with, implement modifications on, and/or perform the
maintenance on the Seller-owned Interconnection Facilities recommended by the
Study. Such design changes, operating and maintenance procedure changes, modifications,
and/or maintenance shall be completed no later than forty-five (45) calendar
days from the day the completed Study is issued by the Qualified Consultant,
unless otherwise agreed to in writing by the Company. In the event the time
requirement for the (a) commissioning of the Study, (b) completion of the
Study, or (c) completion of the design change, operating and maintenance
procedure change, modifications, and/or maintenance recommended by the Study is
not achieved, the Company may limit the total Allowed Capacity to 13.9 MW for
the period that such requirement has not been achieved. Nothing in this provision
shall affect the Company’s right to curtail Seller’s Facility a provided for in
this Contract.

 

(vi)     The Consultants List to be attached hereto as
Appendix B-2 will contain the names of engineering firms which both parties
agree are fully qualified to perform the Study. The parties shall agree on such
Consultants List by the Initial In-Service Date. At any time, except when a
Study is being conducted, either party may remove a particular consultant from
the Consultants List by giving written notice of such removal to the other
party. However, neither party may remove a name or names from the Consultants
List without approval of the other party if such removal would leave the list
without any names. Intended deletions shall  be effective upon receipt of notice by the other
party, provided that such deletions do not leave the Consultants List without
any names. Proposed additions to the Consultants List shall automatically
become effective thirty (30) calendar days after notice is received by the
other party unless written objection is made by such other party within said
thirty (30) calendar day period. By mutual agreement between the parties, a new
name or names may be added to the consultants List at any time.

 

B-18

 

o.            If
there is a disagreement between the Company and the Seller regarding (1) the
Seller’s compliance with the standards set forth in sections 2.e, 2.f(1), 2.g,
2.h(1), 2.1, 2.m of this Appendix B, and/or (2) the provisions set forth
in section 2.n(ii), (iii), and (v) of this Appendix B such as (a) whether
a Disconnection Event occurred, (b) the sequence of events and/or probable
cause of the Disconnection Event, (c) whether the Disconnection Event is a
Disconnection, (d) the Proposed Actions, (e) the Company’s
Recommendations, and (f) the time period to implement the Proposed Actions
and/or the Company’s Recommendations, then  authorized representatives from the Company and
the Seller, having full authority to settle the disagreement, shall meet in
Hawaii (or by telephone conference) and attempt in good faith to settle the
disagreement. Unless otherwise agreed in writing by the parties, the parties
shall devote no more than ten (10) business days to settle the
disagreement in good faith. In the event the parties are unable to settle the
disagreement after the expiration of the time period, then either party may pursue the dispute resolution
procedure set forth in Appendix G.

 

B-19

 

Exhibit B-1

 

Preliminary Single Line Diagram, Relay List and Trip Scheme

 

 

B-1-1

 

KAHEAWA PASTURES: INDEX TO
NUMBERED ITEMS ON SINGLE LINE DIAGRAM

 

1.                                       Line lightning arrestor
42 kV MCOV, MOV type, station class

 

2.                                       Potential
transformer for metering and/or relaying 39,600L-N/115/66 V.

 

3.                                       Motor operated
switch 69 kV Turner type “THI” or equivalent

 

4.                                       CT for relaying
1200:5 MR, S.F. 1.5 C400

 

5.                                       CT for revenue
metering dual range 300:5, S.F. 20; metering accuracy class

 

6.                                       69 kV breaker
Siemens or equivalent – SPS2-72.5-20-1200 with 12-l200:5A MR BCT’s 125VDC CLOSE
TRIP/230VAC MOTOR, 20 kA, 3 cycle interrupt

 

7.                                       69 kV 800 amp
solid blade disconnects

 

8.                                       Station class MOV
arrestors, 42 kV MCOV

 

9.                                       Station step up
autotransformer 25/34 MVA 69 grdy / 34.5 kV grdy Std. taps, 13.8 kV delta
tertiary, BIL 350/200 kV

 

10.                                 1200:5 MR bushing CT, S.F.
1.5 C400

 

11.                                 Bus PT(3) 21kVL-N/l20V,
grdY-grdY

 

12.                                 Low side / feeder breakers,
800A with bushing CT’s 1200/5 MR for 34.5 kV 360 amp feeder to generators, 20
kA, 3 cycle interrupt

 

13.                                 34.5 kV solid blade
disconnects 600 amp S&C or equivalent to generator feeder.

 

14.                                 Station service transformer
25KVA 20kV to 120/240 volt secondary, single phase.

 

I5.                                   Alternate generation source
(diesel or natural gas) with positive throw over switch provided

 

16.                                 GSU transformers 1500 KVA
delta) Y gnd 34.5 kV / 575 volt

 

17.                                 Single Phase PT for line
voltage 21KV/120V

 

18.                                 Arrestors 27KV MCOV, MOV
type

 

19.                                 34.5KV 3ph gang operated
load break oil switch 300 Amps

 

20.                                 575V 2000A breaker

 

21.                                 GE – DFIG(doubly fed
induction generator) 1500KW

 

22.                                 S&C SMD-2C 40A fuse,
standard speed or equivalent

 

23.                                 Fault indicator

 

B-1-2

 

	
  Protected
  Equip

  	
   

  	
  Device

  	
   

  	
  Function

  	
   

  	
  Mfr

  	
   

  	
  Type

  	
   

  	
  Device
  Tripped

  
	
  Lahaina 69KV Line

  	
   

  	
  21P

  	
   

  	
  Ph & G Dist,
  Dir, O/C

  	
   

  	
  SEL

  	
   

  	
  311C

  	
   

  	
  52U1, 52U3

  
	
  Lahaina 69KV Line

  	
   

  	
  21S

  	
   

  	
  Current
  Diff,Ph & G Dir, O/C

  	
   

  	
  SEL

  	
   

  	
  421

  	
   

  	
  52U1,52U3

  
	
  Maalaea 69KV Line

  	
   

  	
  21P

  	
   

  	
  Ph & G Dist,
  Dir, O/C

  	
   

  	
  SEL

  	
   

  	
  311C

  	
   

  	
  52U2, 52U3

  
	
  Maalaea 69KV Line

  	
   

  	
  21S

  	
   

  	
  Current
  Diff,Ph & G Dir, O/C

  	
   

  	
  SEL

  	
   

  	
  421

  	
   

  	
  52U2,52U3

  
	
  52U1-69KV Breaker

  	
   

  	
  50BF

  	
   

  	
  Breaker Failure

  	
   

  	
  SEL

  	
   

  	
  501

  	
   

  	
  86BF/52U1->52U2,52U3 &
  T

  
	
  52U2-69KV Breaker

  	
   

  	
  50BF

  	
   

  	
  Breaker Failure

  	
   

  	
  SEL

  	
   

  	
  501

  	
   

  	
  86BF/52U2->52U1,52U3 &
  T

  
	
  52U3-69KV Breaker

  	
   

  	
  50BF

  	
   

  	
  Breaker Failure

  	
   

  	
  SEL

  	
   

  	
  501

  	
   

  	
  86BF/52U3->52U1,51U2 & T Breaker

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  69/34.5KV Trans

  	
   

  	
  87T,51B

  	
   

  	
  Xfmr Diff, Back Up O/C

  	
   

  	
  SEL

  	
   

  	
  387

  	
   

  	
  86T1-> 52U1, 52U2,
  52M1, 52M2

  
	
  69/34.5KV Trans

  	
   

  	
  51H

  	
   

  	
  Ph & G (Dir),
  Inst, 81 O/U,

  27/59,32,25

  	
   

  	
  SEL

  	
   

  	
  351A

  	
   

  	
  86T2-> 52U1, 52U2,
  52M1, 52M2

  
	
  69/34.5KV Trans

  	
   

  	
  63SP

  	
   

  	
  Sudden Pressure Relay

  	
   

  	
  Qualitrol

  	
   

  	
   

  	
   

  	
  86T2-> 52U1, 52U2,
  52M1, 52M2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.5KV Feeder #1

  	
   

  	
  51M1P

  	
   

  	
  Ph & G (Dir), Inst, 81 O/U,

  27/59,32,25

  	
   

  	
  SEL

  	
   

  	
  351A

  	
   

  	
  52M1

  
	
  35.5KV Feeder #1

  	
   

  	
  51M1S

  	
   

  	
  Ph & G (Dir), Inst, 81 O/U,

  27/59,32,25

  	
   

  	
  SEL

  	
   

  	
  351A

  	
   

  	
  52M1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.5KV Feeder #2

  	
   

  	
  51M2P

  	
   

  	
  Ph & G (Dir), Inst, 81 O/U,

  27/59,32,25

  	
   

  	
  SEL

  	
   

  	
  351A

  	
   

  	
  52M2

  
	
  35.5KV Feeder #2

  	
   

  	
  51M2S

  	
   

  	
  Ph & G (Dir), Inst, 81 O/U,

  27/59,32,25

  	
   

  	
  SEL

  	
   

  	
  351A

  	
   

  	
  52M2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WTG Breaker

  	
   

  	
  Breaker

  	
   

  	
  Phase Over Current, O/U
  Voltage & Freq

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  WTG Breaker &
  Controller

  

 

B-1-3

 

Exhibit B-2

 

Final Single Line Diagram, Relay List and Trip Scheme

[To be provided at least 60 days prior to the Initial In-Service Date]

 

B-2-1

 

APPENDIX B-1

 

METHODS AND FORMULAS FOR MEASURING PERFORMANCE STANDARDS

 

Performance
Standards as defined below shall be used, in part, to govern actions by the
Company to curtail the electric output of the Seller’s Facility for purpose of maintaining
power quality on the Company’s System. Specific standards are defined for:

 

·                  Ramp Rate (RR)

 

·                  Instantaneous
Power Fluctuation Rate

 

·                  Sub-minute
Power Fluctuation Rate

 

Formulas
for measuring the performance standards are presented below, and assume that
the power fluctuations will be monitored on the SCADA/EMS system. These formulas
are based on the periodicity at which analog data is retrieved from the RTU.
This periodicity is called the “scan rate”. The Company presently uses a two-second
analog scan rate. The formulas below are based on the two-second scans. The
transducer used to obtain the instantaneous power (MW) output from the wind
farm is accurate to +/– 0.1%. The two-second scan rate, characteristics of
transducers and RTU reporting, and SCADA method of calculation, were considered
and included in the proposed values for the performance standards.

 

Ramp
Rate Calculation:

 

 

Where:

 

RR = Ramp Rate, may be calculated once every scan

 

MWs-30 = The instantaneous MW analog value 30 scans
(60 seconds) prior the present scan

 

MWs = The instantaneous MW analog value for the
present scan

 

B-1-1

 

Power
Fluctuation Rate Calculations:

 

Instantaneous

 

 

Where:

 

I = Instantaneous Power Change, calculated once every
scan

 

MWs-1 = The instantaneous MW analog
value for the previous scan

 

MWs = The instantaneous MW analog value for the
present scan

 

Subminute
Average:

 

 

Where:

 

A1 = Subminute Average, calculated once every 30
scans

 

MWs-1 = The instantaneous MW analog
va1ue for the previous scan

 

MWs = The instantaneous MW analog value for the
present scan

 

B-1-2

 

PT3

 

Job
: 610

Date:
2/15/2005

Time:
2:28:08 AM

 

 

APPENDIX B–2

 

CONSULTANTS LIST

 

[To be completed prior to the Initial In-Service Date]

 

B-2-1

 

APPENDIX C

 

INTERCONNECTION FACILITIES OWNED BY THE COMPANY

 

1.             Description of the Company-Owned
Interconnection Facilities

 

(a)                                  The Company will construct (or may allow
Seller to construct, in whole or in part), own, operate and maintain all
Interconnection Facilities required to interconnect the Company’s System with
the Seller’s Facility at 69,000 volts, up to the Point of Interconnection. The
Seller shall furnish space at no expense to the Company for those
Interconnection Facilities required to be placed at Seller’s premises, as well
as easements for and rights of access to any Company-owned Interconnection
Facilities located on the site of the Seller’s Facility.

 

An
IRS addressing Seller’s Facility requirements was completed for the project in
accordance with the IRS Letter Agreement, and the results have been
incorporated in this Appendix C as appropriate.

 

(b)                                 The Company-owned Interconnection Facilities,
for which the Seller has agreed to pay, in accordance with Section 2 of this
Appendix C, include:

 

	
  (1)

  	
   

  	
  Two
  69 kV Line Drops

  
	
   

  	
   

  	
   

  
	
  a)

  	
   

  	
  69kV
  Line 1 Drop (from Maalaea 69 kV Switching Station): Includes the labor and
  materials to install one or two transmission poles, disconnect switches,
  insulators, conductors and shield wire, and terminate the 69kV line onto the
  new deadend structure in the Company-owned 69 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  69kV
  Line 2 Drop (from Lahaina Substation): Includes the labor and materials to
  install one or two transmission poles, disconnect switches, insulators,
  conductors and shield wire, and terminate the 69kV line onto the new deadend
  structure in the Company-owned 69 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  Preliminary
  Engineering:

  
	
   

  	
   

  	
   

  
	
  a)

  	
   

  	
  Includes
  the labor to develop a specifications manual that Seller will use as the
  design criteria or

  
	
   

  	
   

  	
   

  

C-1

 

	
   

  	
   

  	
  standard
  to design and construct the Company-owned 69 kV Switching Station and the
  supervisory control and data acquisition (“SCADA”) remote terminal unit
  (“RTU”) (which transmits information to the Company’s Energy Management
  System (“EMS”)). This manual will also include items such as equipment
  specifications, construction standards, sample design drawings, and a drawing
  numbering standard.

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  Includes
  the labor to perform a Company system protection coordination study as a
  result of generation being added at the Seller’s wind farm site.

  
	
   

  	
   

  	
   

  
	
  e)

  	
   

  	
  Includes
  the labor to design the relay upgrades for Maalaea Switching Station and
  Lahaina Substation and develop specifications that the Seller will use to
  procure materials for the Maalaea Switching Station and Lahaina Substation
  relay upgrades.

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  Engineering
  Design Review

  
	
   

  	
   

  	
   

  
	
  a)

  	
   

  	
  Includes
  the labor and expense to review Seller’s design drawings for the
  Company-owned 69 kV Switching Station and the SCADA RTU to ensure that they
  comply with the Standards (as defined in section 1(g) of this Appendix C).
  Also, includes a review of the manufacturers’ approval drawings to ensure
  that they meet the Standards.

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  Includes
  the labor and expense to review Seller’s relay protection settings for the
  Company-owned 69kV Switching Station, Wind Farm Substation, Maalaea relay
  upgrades to interface with the relaying at the Company-owned 69 kV Switching
  Station and the Lahaina relay upgrades to interface with the relaying at the
  Company-owned 69 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  Field
  Follow: Includes the labor and expense to be on-site, to inspect the
  construction activities at the Company-owned 65 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  Company-owned
  69 kV Switching Station Microwave Link: Includes the labor and expense to
  conduct the communications study, develop the Company’s specifications for
  the microwave links, field follow and acceptance testing for the two
  (2) digital microwave links.

  

 

C-2

 

	
  i)

  	
   

  	
  Preliminary
  investigation by the Company engineers shows that microwave links between the
  Company-owned 69 kV Switching Station and the Pukalani Substation and the
  Company-owned 69 kV Switching Station and the Kealahou Substation are
  feasible. If the Company-owned 69 kV Switching Station microwave site is not
  feasible, Company will investigate alternative microwave paths and, if no
  such paths are available, possible fiber optics or other cost-effective
  technologies, and the estimated costs of such alternatives, and inform Seller
  of the information. Seller will be responsible for the final cost of the
  communication links.

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  SCADA:

  
	
   

  	
   

  	
   

  
	
  a)

  	
   

  	
  Company-owned
  69 kV Switching Station: Includes the labor to make final connects (if
  necessary) and test the remote terminal unit (RTU), DC battery system,
  interface equipment to Company’s communications system and to Seller’s
  communications system, and the control and telemetering functions at the
  Company-owned 69 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  Company’s
  Maalaea Generating Station: Includes the labor to program the system
  operations computer at Maalaea Generating Station for the various control and
  telemetering points of the Company-owned 69 kV Switching Station and Seller’s
  equipment.

  
	
   

  	
   

  	
   

  
	
  c)

  	
   

  	
  Acceptance
  Testing of the Company-owned 69 kV Switching Station: Including, but not
  limited to, the labor to do the joint testing and/or witnessing of the
  Acceptance Test. Acceptance Test procedures are to be developed and proposed
  by Seller for Company’s review and acceptance at least 60 days, and shall be
  agreed upon by Company and Seller no later than 30 days, in advance of
  performing the tests.

  
	
   

  	
   

  	
   

  
	
  d)

  	
   

  	
  Control
  System Acceptance Testing of Seller’s Facility: Including, but not limited
  to, the labor to do the Control System Acceptance Test.

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  Maalaea
  Switching Station Relay Upgrade: Includes the labor to design, install, and
  test the new relays at the Maalaea 69 kV Switching Station required to
  interface with the relaying at the Company-owned 69 kV Switching Station.

  

 

C-3

 

	
  (8)

  	
   

  	
  Lahaina
  Substation Relay Upgrade: Includes the labor to design, install, and test the
  new relays required at the Lahaina 69 kV Substation to interface with the
  relaying at the Company-owned 69 kV Switching Station.

  

 

The
list of Company-owned Interconnection Facilities, and engineering and testing
costs for Company-owned Interconnection Facilities, for which Seller agree to
pay in accordance with Section 2 of this Appendix C, are subject to
revision if (a) before approving this Contract, the PUC approves a power
purchase contract for another non-Company owned electric generating facility (“Second
NUG Contract”) to supply energy to Company using the same line to which Seller’s
Facility is to be connected or (b) the line to which the Seller’s Facility is
to be connected and/or the related transformer(s) need(s) to be
upgraded and/or replaced as a result of this Contract and a Second NUG Contract,
and the PUC, in approving this Contract, determines that seller should pay for
all or part of the cost of such upgrade and/or replacement.

 

	
  (c)

  	
   

  	
  Company-owned
  Interconnection Facilities, which Seller (and or its third-party consultants
  or contractors (collectively referred to as “Contractors”)) shall design and
  construct, at Seller’s expense, except to the extent otherwise indicated
  herein, include:

  

 

	
  (1)

  	
   

  	
  Company-owned
  69 kV Switching Station

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Seller will provide a separate, fenced area with separate access for the
  Company for a Company-owned 69 kV Switching Station. The Seller will design,
  procure materials, construct and test the Company-owned 69 kV Switching
  Station in accordance with the Company’s Standards (as defined in
  Section 1(g) of this Appendix C). The Company-owned 69 kV Switching
  Station includes items such as three 69 kV outdoor circuit breakers,
  associated protective relays for each line and bus, station power system, 69kV
  three-phase disconnecting switches, potential transformers, current transformers,
  42 kV MCOV lightning arrestors, bus tubing and/or conductors, connectors,
  control house, 125 volt DC system for controls and protective relaying, and
  control circuits necessary to meet Company’s Standards.

  

 

C-4

 

	
  (2)

  	
   

  	
  Seller
  will provide revenue metering PT’s and CT’s (as reviewed by the Company) and
  all conduits and accessories necessary for the Company to install the
  Company-supplied revenue meters. The Seller will provide a telephone line, or
  alternate mutually-agreed communication method, for the Company-owned meters.

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  The
  Seller will provide within or adjacent to the Company-owned 69 kV Switching
  Station, space for the two (2) digital microwave communication links,
  SCADA RTU and certain relaying if necessary for the interconnection.

  

 

	
  a)

  	
   

  	
  The
  Seller will design, procure materials, attain the necessary FCC and FAA
  licensing, construct and test two (2) digital microwave communications
  links in accordance with Company’s Standards (as specified in the
  communication study and design specification in
  Section 1.(b)(3) and Section 1.(g) of this Appendix C). The
  two (2) digital microwave links will provide communication paths between
  the Seller’s Facility and Pukalani Substation and the Seller’s Facility and
  the Kealahou Substation, which integrate into the Company’s existing
  communication system to provide the necessary communication to implement a
  permissive overreaching transfer trip protection scheme as specified in
  Appendix B, Section 2.h.(4).

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  The
  Seller will design, procure materials, construct and test the SCADA RTU in
  accordance with Company’s Standards (as specified in the specification manual
  for the Company-owned 69 kV Switching Station in Section 1.-(b) (2) a)i) and
  Section 1.(g) of this Appendix C.

  

 

	
  (4)

  	
   

  	
  The
  Seller will procure all materials for the Maalaea Switching Station and
  Lahaina Substation relay Upgrades in accordance with Company’s Standards (as
  specified in the specification manual for the Company-owned 69 kV Switching
  Station in Section 1.(b)(2)a)i) and Section 1.(g) of this
  Appendix C.

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  The
  Seller will provide relay settings for the relays installed at the
  Company-owned 69 kV Switching Station, Wind Farm Substation, Maalaea
  Switching

  

 

C-5

 

	
   

  	
   

  	
  Station
  relay upgrades required to interface with the relaying at the Company-owned
  69 kV Switching Station and Lahaina Substation relay upgrades required to
  interface with the relaying at the Company-owned 69 kV Switching Station.

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  In
  addition to the items mentioned in the preceding paragraph, Seller shall be
  responsible for the following in relation to the Company-owned Switching
  Station and associated requirements:

  

 

	
  a)

  	
   

  	
  Identifying
  the location of the Company-owned Switching Station and providing Company
  with that information by the Execution Date:

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  The
  Seller will work with the Company to determine an acceptable location for and
  size of the fenced-in area;

  
	
   

  	
   

  	
   

  
	
  c)

  	
   

  	
  Providing,
  at Seller’s expense, easements to Company to cover the Company-owned
  Switching Station and the area where the 69 kV metering equipment will be
  installed so that Company’s meter readers and operations/maintenance
  personnel can access the equipment; and

  
	
   

  	
   

  	
   

  
	
  d)

  	
   

  	
  If
  not issued in the Company’s name, transfer the Federal Communications Commission
  and Federal Aviation Administration license (s) for the two (2) digital
  microwave links to the Company upon completion and testing of the digital
  microwave links.

  

 

	
  (d)

  	
   

  	
  If
  Seller adds, deletes and/or changes any of its equipment, or changes its
  design in a manner that would change the characteristics of the equipment and
  specifications used in the IRS, Seller will be required to seek prior
  approval from Company. If an analysis to revise parts of the IRS is required,
  Seller will be responsible for the cost of revising the IRS, and modifying
  and paying for the cost of the modifications to the Interconnection
  Facilities based on the revisions to the IRS.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  This
  list of Company-owned Interconnection Facilities, and engineering and testing
  costs for Company-owned Interconnection Facilities, for which Seller agrees
  to pay in accordance with Section 2 of this Appendix C, together with
  the estimated costs identified in this Appendix C, are subject to revision if
  (a) before approving this Contract, the PUC approves a power purchase
  contract for

  

 

C-6

 

	
   

  	
   

  	
  another
  non-Company owned electric generating facility (“Second NUG Contract”) to
  supply energy to Company using the same line to which Seller’s Facility is to
  be connected, or (b) the line to which Seller’s Facility is to be
  connected and/or the related transformer need(s) to be upgraded and/or
  replaced as a result of this Contract and a Second NUG Contract, and the PUC,
  in approving this Contract, determines that Seller should pay for all or part
  of the cost of such upgrade and/or replacement.

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  If
  the In-Service Date is not achieved within twelve (12) months of a
  satisfactory Non-appealable PUC; Approval Order or thirty (30) months from
  the PUC Submittal Date, whichever is less, the listing of the Interconnection
  Facilities required in this Contract is subject to review and revision. This
  listing includes the cost of such Interconnection Facilities. Such revision
  may include, but not be limited to, such items as reconductoring an existing
  transmission or distribution line, construction of a new line, increase
  transformer capacity, and alternative relay specifications.

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  Seller
  (and/or its third party consultants or contractors collectively, “Contractors”))
  will install, test and place in service, at Seller’s expense, the Company-owned
  Interconnection Facilities as specified in Section 1.(c) of this
  Appendix C. Prior to Seller engaging the Contractors, Seller must obtain
  Company’s written approval, which approval shall not be unreasonably
  withheld, conditioned or delayed. Prior to Seller and/or its Contractors
  first starting to work on the construction plans for the Company-owned
  Interconnection Facilities to be consultants by Seller (and/or its Contractors),
  such as the civil, structural, and construction drawings, specifications to
  vendors, vendor approved final drawings and materials lists (collectively,
  the “Plans”), Seller and/or its Contractors shall meet with Company to
  discuss the construction of such Company-owned Interconnection Facilities,
  including but not limited to subjects concerning coordination of construction
  milestone dates, agreement on areas of interface design, and Company’s
  design/drawing layout and symbols standards, equipment specifications and
  construction specifications and standards. Company will provide the design
  and specifications information so Seller can incorporate such information in
  its bid documents. No later than sixty (60) days before Seller and/or its
  Contractors first start

  

 

C-7

 

	
   

  	
   

  	
  to
  order materials and equipment for the Company-owned Interconnection
  Facilities to be constructed by Seller and/or its Contractors, Seller must
  provide Company with the Plans. The Plans for the Company-owned
  Interconnection Facilities to be constructed by Seller (and/or its
  Contractors) shall comply with (i) all applicable laws;
  (ii) Company’s design/drawing layout and symbol standards, equipment specifications,
  and construction specifications and standards; and (iii) Good
  Engineering and Operating Practices (collectively, the “Standards”). Unless otherwise
  agreed to by the parties, Company shall have thirty (30) days following receipt
  of the Plans for it to review and comment on the Plans, and verify in writing
  to Seller that the Plans comply with the Standards, which verification shall
  not be unreasonably withheld, conditioned or delayed. If Company reasonably
  determines that the Plans are not in accordance with the Standards, then it
  may request in writing a response from Seller to its comments and Seller
  shall respond in writing within thirty (30) days of such request by providing
  (i) its justification for why its Plans conform to the Standards or
  (ii) changes in the Plans responsive to Company’s comments and in accordance
  with the Standards. Construction work will be subject to Company inspections
  to ensure that construction is done in accordance with the Standards. Company
  inspectors will be allowed access to the construction sites for inspections
  and to monitor construction work. The inspector must have the authority to
  work with the appropriate construction supervisor to stop any work that does
  not meet the Standards. All equipment and materials used in the Company-owned
  Interconnection Facilities to be constructed by Seller and/or its Contractors
  must meet the Standards. Company will be present when the Acceptance Test is
  conducted, and Seller must timely correct any deficiencies identified during
  the Acceptance Test. Seller will be responsible for the reasonable cost of
  the Company personnel (and/or Company contractors) performing the duties
  (such as reviewing the Plans and reviewing the construction) necessary for
  the Company-owned Interconnection Facilities to be constructed by Seller
  (and/or its Contractors). If the Company (1) does not make any
  inspection or test, (2) does not discover defective workmanship,
  materials or equipment, or (3) accepts the Company-owned Interconnection
  Facilities (that were constructed by Seller and or its Contractors), such
  action or inaction shall not relieve Seller from its obligation to do and

  

 

C-8

 

	
   

  	
   

  	
  complete
  the work in accordance with the Plans approved by Company.

  

 

	
  2.

  	
   

  	
  Seller
  Payment to the Company for the Company-Owned Interconnection Facilities and
  Review of Seller’s Facility

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  (1) For
  Company-owned Interconnection Facilities to be designed, engineered and
  constructed by the Company, the Seller shall pay the Total Estimated
  Interconnection Cost which is comprised of the estimated costs of
  (i) acquiring and installing such Company-owned Interconnection
  Facilities, (ii) the engineering and design work (including but not
  limited to Company, affiliated Company and contracted engineering and design
  work) associated with a) developing such Company-owned Interconnection
  Facilities and b) reviewing and specifying those portions of the Seller’s
  Facility which allow interconnected operations as such are described in
  Appendix B, and (iii) conducting the Acceptance Test and Control System
  Acceptance Tests. The Total Actual Interconnection Cost (the actual cost of
  items (i) through (iii)), together with the cost of the IRS (which will
  be paid pursuant to the IRS Letter Agreement), are the “Total Interconnection
  Cost”.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2) Summary
  List of Company-owned Interconnection Facilities and Related Services

  

 

	
  ·

  	
   

  	
  Company-owned
  69 kV Transmission Line Drops

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Company-owned
  69 kV Switching Station Project Review and Relay Coordination

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Company-owned
  69 kV Switching Station Microwave Links Project Review

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Company-owned
  69 kV Switching Station SCADA and associated equipment Project Review

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Maalaea
  Switching Station relay upgrades

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Lahaina
  Substation relay upgrades

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Relay
  acceptance testing

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Control
  System Acceptance Testing of Seller’s Facility

  
	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Company-owned
  69 kV Switching Station Acceptance Test

  

 

C-9

 

(3)     The following summarizes the Total Estimated Interconnection
Cost:

 

	
  a.
  Two 69 kV Line Drops

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  b.
  Preliminary Engineering

  	
   

  	
  $

  	
  94,000

  
	
   

  	
   

  	
   

  
	
  c.
  Engineering Design Review

  	
   

  	
  128,000

  
	
   

  	
   

  	
   

  
	
  d.
  Field Follow

  	
   

  	
  49,000

  
	
   

  	
   

  	
   

  
	
  e.
  Company-owned 69 kV

  	
   

  	
  23,000

  
	
  Switching Station

  	
   

  	
  28,000

  
	
  Microwave Links

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  f.
  SCADA & Acceptance Testing

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  g.
  Maalaea Switching Station

  	
   

  	
  58,000

  
	
  Relay Upgrades (no materials)

  	
   

  	
  36,000

  
	
   

  	
   

  	
   

  
	
  h.
  Lahaina Substation Relay 

  	
   

  	
  36,000

  
	
  Upgrades (no materials)

  	
   

  	
   

  

 

The Total Estimated Interconnection
Cost is $452,000.

 

	
  (b).

  	
   

  	
  The
  Total Estimated Interconnection Cost, which, except as otherwise provided
  herein, is non-refundable, shall be paid in accordance with the following
  schedule:

  

 

 

	
  (i)

  	
   

  	
  On
  the Execution Date, $10,000.00 is due and payable by Seller to the Company;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Thirty
  (30) days after the Execution Date, the additional amount in excess of
  $10,000.00, up to that portion of the Total Estimated Interconnection Cost
  described in Section 2(a)(3)b. and c. above, is due and payable by Seller
  to the Company;

  

 

	
  (1)

  	
   

  	
  The
  Company shall not be obligated to perform engineering and design work on the
  Company-owned Interconnection Facilities until the Seller pays the amounts in
  section 2(b)(3)b. and c.; and

  

 

	
  (iii)

  	
   

  	
  Fourteen
  (14) days after receipt of an invoice from the Company, which shall be
  provided not less than thirty (30) days prior to start of procurement of the
  Company-owned Interconnection Facilities, the difference between the portion
  of the Total Estimated Interconnection Cost paid to date and the Total
  Estimated Interconnection Cost is due and payable by Seller to the Company.

  

 

C-10

 

	
  (1)

  	
   

  	
  The
  Company shall not be obligated to procure and construct the Company-owned
  Interconnection Facilities until the Seller pays the amount in paragraph (iii) of
  this section 2(b).

  

 

	
  (C)

  	
   

  	
  Within
  thirty (30) days of the final accounting (“Final Accounting”), which shall
  take place within thirty (30) days of completion of construction of the Company-owned
  Interconnection Facilities, the Seller shall remit to the Company the
  difference between the Total Estimated Interconnection Cost paid to date and
  the Total Actual Interconnection Cost, which is the Final Accounting of the
  Total Interconnection Costs. If in fact the Total Actual Interconnection Cost
  is less than the payments received by the Company as the Total Estimated
  Interconnection Cost, the Company shall repay the difference to the Seller within
  thirty (30) days of the Final Accounting.

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  If
  any Event of Default by the Seller occurs such that termination of the
  Contract pursuant to Appendix E results, or if the Contract is declared null
  and void by either party pursuant to Section 10 or as otherwise provided
  herein, the Seller shall pay to the Company the actual costs and cost
  obligations reasonably incurred by the Company for the Company-owned
  Interconnection Facilities as of the date the Contract is terminated or
  declared null and void. Such payment shall be made within thirty (30) days of
  receipt of an invoice from the Company.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  All
  the Company-owned Interconnection Facilities including those portions, if
  any, provided, or provided and constructed, by the Seller shall be the
  property of the Company.

  

 

3.          Ongoing Operation and Maintenance
Charges

 

Seller
shall operate and maintain, at its cost, the Company-owned Interconnection
Facilities that it or its Contractors constructed, if any, prior to the
Transfer Date. On and after the Transfer Date, Company shall own, operate and
maintain the Company-owned Interconnection Facilities. The Company shall bill
the Seller monthly for any reasonable costs incurred in operating, maintaining
and replacing (to the extent not covered by insurance) the Company-owned
Interconnection Facilities. The Company’s costs will be determined on the basis
of, but not limited to, direct payroll, material costs, applicable overheads at
the time incurred,

 

C-11

 

consulting fees and applicable taxes. The Seller shall, within thirty
(30) days after the billing date, reimburse the Company for such monthly billed
operation and maintenance charges.

 

4.          Relocation of
Interconnection Facilities

 

The Company shall bill the Seller for any costs incurred in relocating
the Company-owned Interconnection Facilities in the event that Seller’s land
rights require a relocation clause and such clause is exercised or if the
Company-owned Interconnection Facilities must be relocated for another reason
not caused by the Company. By Grant of Easement dated August 15, 1988 and
recorded in the Bureau of Conveyances of the State of Hawaii in Liber 22246 Page 142,
the State of Hawaii by its board of Land and Natural Resources granted to Maui
Electric Company, Limited an easement for transmission line purpose,
hereinafter referred to as the “State Easement”. The State Easement contains a
relocation clause which allows the State of Hawaii to request relocation as
many times as they deem necessary, of all or any portion of the Company’s
facilities within the easement area at the sole cost and expense of the
Company. At any such time as the State of Hawaii exercises its right to
relocate any of the Company’s existing facilities, Seller hereby agrees to pay
for any and all costs to reconnect Company-owned Interconnection Facilities and/or
Seller-owned Interconnection Facilities to the newly relocated facilities;
provided that Company and Seller will first jointly examine the least cost solution
to such reconnection. The Seller shall, within thirty (30) days after the
billing date, reimburse the Company for such billed relocation charges.
Notwithstanding anything else herein contained, to the extent practicable in
light of any such relocation requirement, Company shall not relocate, the
Company-owned Interconnection Facilities without providing Seller thirty (30)
days advance written notice.

 

5.          Guarantee for
Interconnection Costs

 

To ensure that the Company is paid by the Seller for the Company-owned
Interconnection Facilities to be provided and/or constructed by the Company
described in Section 2 of this Appendix C, the Seller shall obtain an
Irrevocable Standby Letter of Credit with no Documentary Requirement (“Standby
Letter of Credit”), wherein the Company shall receive payment from the bank
upon request by the Company. The Standby Letter of Credit shall be (i) at
least in the amount of twenty-five percent (25%) of the Total Estimated
Interconnection Cost, (ii) issued by a bank in Hawaii which is reasonably
acceptable to the Company, and (iii) in form and

 

C-12

 

substance reasonably acceptable to the Company. The Standby Letter of
Credit shall be effective from the earlier of (i) thirty (30) days
following the date of the issuance of a satisfactory Non-appealable PUC
Approval Order, or (ii) the date that the Seller requests the Company to
order equipment or commence construction on the Company-owned Interconnection
Facilities. The Standby Letter of Credit shall be in effect through the earlier
of forty-five (45) days after the Final Accounting or seventy-five (75) days
after the Contract is terminated. The Seller shall provide to the Company
within fourteen (14) days of the effective date of the Standby Letter of Credit
a document from the bank which indicates that such a Standby Letter of Credit
has been established. Notwithstanding the foregoing, in lieu of a Standby
Letter of Credit, Seller may provide such other form of security as is agreed
to by the Company in writing.

 

6.          Site Restoration

 

After termination of this Contract, the Seller shall, at its expense,
remove all (1) the Company-owned Interconnection Facilities from the site
and (2) Seller-owned Interconnection Facilities designated by the Company.
Provided that, the company may elect to remove all or part of such designated
Company-owned Interconnection Facilities and/or 
designated, Seller-owned Interconnection 
Facilities because of operational concerns over the removal of such
Interconnection Facilities, in which case the Seller shall reimburse the
Company for its reasonable costs to remove such Company-owned Interconnection
Facilities and/or Seller-owned Interconnection Facilities. After the
termination of this Contract, Seller shall, at its expense, restore the site to
its condition prior to construction of such the Company-owned Interconnection
Facilities, reasonable wear and tear excepted. For the purposes of this Section
6, this site includes the land where the Seller’s Facility is located and the
land where the Interconnection Facilities are located. Site restoration shall
be completed within ninety (90) days of termination of this Contract, or as
otherwise agreed to by both parties in writing. Notwithstanding the above,
Seller shall not be required to remove any roads which have been built or
enlarged as a result of the construction of the Interconnection Facilities.

 

7.          Transfer of
Ownership/Title

 

	
  (a)

  	
   

  	
  On the Transfer Date, Seller
  shall transfer to Company all right, title and interest in and to the
  Company-owned Interconnection Facilities to the extent such facilities were
  designed and constructed by Seller and/or its

  

 

C-13

 

	
   

  	
   

  	
  Contractors. In connection with the transfer of the Company-owned
  Interconnection Facilities, Seller shall transfer and assign to Company all
  applicable manufacturers’ or Contractors’ warranties which are assignable.
  Seller shall provide a written list of the manufacturers’ and Contractors’
  warranties which will be assigned to Company and the expiration dates of such
  warranties no later than thirty (30) days before the Transfer Date.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Company’s title to and ownership of the Company-owned Interconnection
  Facilities that were designed and constructed by Seller and/or its
  Contractors shall be free and clear of liens and encumbrances.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  In connection with the transfer of the Company-owned Interconnection
  Facilities to Company, Seller shall grant, transfer or assign to Company,
  such easements, rights of way, licenses or leases, as the case may be,
  necessary to operate and maintain the Company-owned Interconnection
  Facilities on and after the Transfer Date.

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  On and from the date of transfer of the Company-owned Interconnection
  Facilities constructed by Seller, Company shall obtain and maintain property
  and liability insurance covering the Company-owned Interconnection Facilities
  constructed by Seller.

  

 

 

8.          Government
Approvals for Any Company-owned Interconnection Facilities to Constructed by
Seller

 

Seller shall obtain all required permits, licenses, approvals and other
governmental authorizations (the “Government Approvals”) required to construct,
own, operate and maintain the Company-owned Interconnection Facilities (that
Seller and/or its Contractors will construct) and shall provide these to Company
prior to the Transfer Date. On or before the Transfer Date, Seller shall
provide Company with (i) copies of all such permits and approvals obtained
by Seller regarding the construction, ownership or operation of the
Company-owned Interconnection Facilities (that Seller and/or its Contractors
constructed) and (ii) documentation that all such permits and approvals
have been obtained from the issuing governmental agency.

 

9.          Easements, Rights
of Way, Licenses and Leases

 

Seller shall obtain all easements, rights of way, licenses and leases
(collectively, “Land Rights”) on the site of Seller’s

 

C-14

 

Facility and any other affected property, which are required to
construct, maintain and operate the Company-owned Interconnection Facilities.
Such Land Rights shall contain terms and conditions which are acceptable to
Company, acting reasonably, and shall be provided in advance to Company for its
review. Commencing when Company’s payment obligations under such Land Rights
first commence, and for so long as Seller has the right under this Contract to
sell energy to Company, Seller shall pay Company for any rents and other
payments due under such Land Rights that are associated with Company-owned
Interconnection Facilities, no later than five (5) days before such
payments are due under such Land Rights.

 

C-15

 

APPENDIX D

 

ENERGY PURCHASES BY THE COMPANY

 

1.      Rates for Purchase and Rate of Delivery.
Subject to the other provisions of this Contract, the Company shall accept and
pay for energy generated by the Seller’s Facility and delivered by the Seller
to the Company at the rates set forth in Section 3 of this Appendix D,
provided, however, that the instantaneous MW output from the Seller’s Facility
of such energy shall not exceed the Allowed Capacity as set forth in Section 3
of this Contract and Appendix A at any given time, and the Company shall not be
obligated to pay for energy in excess of such amount.

 

2.      On-Peak and Off-Peak Hours. Energy
furnished by the Seller to the Company shall be metered by a time-of-use meter.
The on-peak hours shall be those between 7:00 a.m. and 9:00 p.m.
daily, and the off-peak hours shall be those between 9:00 p.m. on one day
and 7:00 a.m. on the following day.

 

3.      Payment for Energy Delivered During
On-Peak and Off-Peak Hours.

 

	
      (a)

  	
   

  	
  The Total Energy Payments paid by the Company to the Seller shall be
  the sum of the On-Peak Energy Payment and the Off-Peak Energy Payment.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The On-Peak Energy Payment shall be the on-peak energy purchased from
  Seller’s Facility multiplied by the On-Peak Composite Energy Payment Rate,
  where the On-Peak Composite Energy Payment Rate shall be seventy percent
  (70%) of the applicable annual Fixed On-Peak Payment Rate from Table D-1 plus
  thirty percent (30%) of the Company’s filed Avoided Energy Cost Data, On-Peak
  Rate, in effect at the time that the energy is delivered by Seller to the
  Company. The Company’s Avoided Energy Cost Data is filed with the PUC pursuant
  to Subchapter 3, Rule 6-74-17(b) of the PUC’s Standards, as may be
  amended from time to time or as may be superseded by applicable laws, rules or
  PUC orders.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Off-Peak Energy Payment shall be the off-peak energy purchased
  from Seller’s Facility multiplied by the Off-Peak Composite Energy Payment
  Rate, where the Off-Peak Composite Energy Payment Rate shall be seventy
  percent (70%) of the applicable annual Fixed Off-Peak Payment Rate from Table
  D-1 plus thirty percent (30%) of the Company’s filed Avoided Energy Cost
  Data, Off-Peak Rate, in effect at the time that the energy is delivered by
  Seller to the Company.

  

 

D-1

 

	
   

  	
   

  	
  New On-Peak and Off-Peak Composite Energy Payment Rates shall be
  calculated each time the Company files updated Avoided Energy Cost Data with
  the PUC pursuant to Subchapter 3, Rule 6-74-17(b), as may be amended
  from time to time or as may be superseded by applicable laws, rules or
  PUC orders. Such new On-Peak and Off-Peak Composite Energy Payment Rates
  shall be used to calculate On-Peak and the Off-Peak Energy Payments for the
  given period.

  
	
   

  	
   

  	
   

  
	
    (b)

  	
   

  	
  Example One of Purchased Energy Payment Calculation:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Example One Assumptions:

  
	
   

  	
   

  	
   

  

 

	
  Month and Year Energy Purchased:

  	
   

  	
  March 2008

  
	
  On-Peak Energy Purchased:

  	
   

  	
  5,600 MWh

  
	
  Off-Peak Energy Purchased:

  	
   

  	
  4,600 MWh

  
	
  Total Energy Purchased:

  	
   

  	
  10,200 MWh

  
	
   

  	
   

  	
   

  
	
  Avoided Energy Cost Data effective January 1, 2008 (for purposes
  of Example One only):

  
	
   

  	
   

  	
   

  
	
  Company’s Filed Avoided Energy Cost Data,
  On-Peak Rate

  
	
  15.00 cents/kWh

  	
   

  	
   

  
	
  Company’s Filed Avoided Energy Cost Data,
  Off-Peak Rate 

  
	
  14.00 cents/kWh

  	
   

  	
   

  

 

Example One Energy Payment Calculation:

 

Total Energy Payment = On-Peak Energy Payment + Off-Peak Energy Payment

 

i.           On-Peak Energy
Payment = On-Peak Energy Purchased x On-Peak Composite Energy Payment Rate

 

ii.   On-Peak
Composite Energy Payment Rate = { [ (0.7) x (Applicable Annual Fixed On-Peak
Payment Rate from Table D-1) ] + [ (0.3) x (Company’s filed Avoided Energy Cost
Data, On-Peak Rate) ] }

 

iii.  Off-Peak
Energy Payment = Off-Peak Energy Purchased x Off-Peak Composite Energy Payment
Rate

 

iv.  Off-Peak
Composite Energy Payment Rate = { [ (0.7) x (Applicable Annual Fixed Off-Peak
Payment Rate from Table D-1) ] + [ (0.3) x (Company’s Filed Avoided Energy Cost
Data, Off-Peak Rate) ] }

 

On-Peak Energy Payment = (5,600,000 kWh) x

{ [ (0.7) x (8.711 cents/kWh) ] + [ (0.3) x (15.00 cents/kWh) ] }

 

= 5,600,000 kWh x { [6.0977 cents/kWh + 4.500 cents/kWh] }

 

D-2

 

= 5,600,000 kWh x { [10.5977 cents/kWh] }

= $593,471.20

 

Off-Peak Energy Payment = (4,600,000 kWh) x

{ [ (0.7) x (7.683 cents/kWh) ] + [ (0.3) x (14.00 cents/kWh) ] }

 

= 4,600,000 kWh x { [5.3781 cents/kWh + 4.200 cents/kWh] }

= 4,600,000 kWh x { [9.5781 cents/kWh] }

= $440,592.60

Total Energy Payment = $593,471.20 + $440,592.60 =$1,034,063.80

 

	
   

  	
   

  	
   

  
	
    (c)

  	
   

  	
  Example Two of Purchased Energy Payment Calculation:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Example Two Assumptions:

  
	
   

  	
   

  	
  Month and Year Energy Purchased:

  	
  January 2006

  
	
   

  	
   

  	
  On-Peak Energy Purchased:

  	
  5,600 MWh

  
	
   

  	
   

  	
  Off-Peak Energy Purchased:

  	
  4,600 MWh

  
	
   

  	
   

  	
  Total Energy Purchased:

  	
  10,200 MWh

  

 

Avoided Energy Cost Data effective January 1, 2006 (for purposes
of Example Two only):

 

Company’s Filed Avoided Energy Cost Data, On-Peak Rate 8.00 cents/kWh

Company’s Filed Avoided Energy Cost Data, Off-Peak Rate 7.00 cents/kWh

 

Example Two Energy Payment Calculation:

Total Energy Payment = On-Peak Energy Payment + Off-Peak Energy Payment

 

On-Peak Energy Payment = (5,600,000 kwh) x

{ [(0.7) x (8.455 cents/kwh) ] + [ (0.3) x (8.00 cents/kWh) ] }

 

= 5,600,000 kWh x { [5. 9185 cents/kWh + 2.400 cents/kWh] }

= 5,600,000 kWh x { [8.3185 cents/kWh] } = $465,836.00

 

Off-Peak Energy Payment = (4,600,000 kWh) x

{ [ (0.7) x (7.457 cents/kWh) ] + [ (0.3) x (7.00 cents/kWh) ] }

 

= 4,600,000 kWh x { [5.2199 cents/kWh + 2.100 cents/kWh] }

= 4,600,000 kWh x { [7.3199 cents/kWh] } = $336,715.40

Total Energy Payment = $465,836.00 + $336,715.40 =$802,551.40

 

D-3

 

	
  (d)

  	
   

  	
  Fixed
  Pricing Rate prior to January 1, 2006. If the Seller’s
  Facility’s Initial In-Service Date or In-Service Date is prior to
  January 1, 2006, the Fixed On-Peak
  and Off-Peak Rates indicated in Table D-1 for year 2006 will be used to calculate the Total Energy Payments for energy delivered
  prior to January 1, 2006.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Fixed
  Pricing Rate subsequent to
  December 31, 2025. For energy
  delivered subsequent to December 31, 2025, the Fixed
  On-Peak and Off-Peak Rates to be used to calculate the Total Energy Payments shall be the Fixed On-Peak and
  Of- Peak Rates indicated in
  Table D-1 for year 2025.

  

 

4.          Test Energy. The Company shall use its reasonable efforts
to accept test energy that is delivered
as part of the normal testing for generators (such as energy delivered to the Company during
the Control System Acceptance Tests but not during the Acceptance
Test), at the on-peak and
off-peak energy rates in Section 3 above; provided the Seller must use its reasonable best efforts to coordinate such normal testing with the Company so as to minimize adverse impacts on the Company’s System and operations.

 

D-4

 

Table D-1

 

Fixed Energy Payment Rates (Current Year
cents/kWh)

 

	
   

  	
   

  	
  On-Peak

  	
   

  	
  Off-Peak

  	
   

  
	
  Payment

  	
   

  	
  Payment

  	
   

  	
  Payment

  	
   

  
	
  Year

  	
   

  	
  Rate

  	
   

  	
  Rate

  	
   

  
	
  2006

  	
   

  	
  8.455

  	
   

  	
  7.457

  	
   

  
	
  2007

  	
   

  	
  8.682

  	
   

  	
  7.569

  	
   

  
	
  2008

  	
   

  	
  8.711

  	
   

  	
  7.683

  	
   

  
	
  2009

  	
   

  	
  8.842

  	
   

  	
  7.798

  	
   

  
	
  2010

  	
   

  	
  8.974

  	
   

  	
  7.916

  	
   

  
	
  2011

  	
   

  	
  9.109

  	
   

  	
  8.034

  	
   

  
	
  2012

  	
   

  	
  9.245

  	
   

  	
  8.154

  	
   

  
	
  2013

  	
   

  	
  9.384

  	
   

  	
  8.276

  	
   

  
	
  2014

  	
   

  	
  9.525

  	
   

  	
  8.401

  	
   

  
	
  2015

  	
   

  	
  9.668

  	
   

  	
  8.527

  	
   

  
	
  2016

  	
   

  	
  9.813

  	
   

  	
  8.655

  	
   

  
	
  2017

  	
   

  	
  9.960

  	
   

  	
  8.784

  	
   

  
	
  2018

  	
   

  	
  10.109

  	
   

  	
  8.916

  	
   

  
	
  2019

  	
   

  	
  10.261

  	
   

  	
  9.050

  	
   

  
	
  2020

  	
   

  	
  10.415

  	
   

  	
  9.186

  	
   

  
	
  2021

  	
   

  	
  10.571

  	
   

  	
  9.323

  	
   

  
	
  2022

  	
   

  	
  10.571

  	
   

  	
  9.323

  	
   

  
	
  2023

  	
   

  	
  10.571

  	
   

  	
  9.323

  	
   

  
	
  2024

  	
   

  	
  10.571

  	
   

  	
  9.323

  	
   

  
	
  2025

  	
   

  	
  10.571

  	
   

  	
  9.323

  	
   

  

 

D-5

 

APPENDIX E 

 

TERMINATION EVENTS

 

Upon
termination, the Company and the Seller shall have no further obligation to
each other except as otherwise specifically provided for in the Contract.

 

1.                                     Termination by the Company.

 

In
addition to the rights of termination contained in the body of the Contract, the Company may
terminate the Contract at any
time if any of the following conditions (each an “Event of Default”) occur:

 

a.                                       The Seller fails to install, operate,
maintain, or repair the Seller’s Facility in accordance with Good Engineering
and Operating Practices within thirty (30) days of written notice of such breach from the Company, and subject to the same extension of cure
periods as set forth in Section 1.e. below; or

 

b.                                      The Seller fails (1) to timely provide Qualifying Facility. certification pursuant
to Section 16(c), or (2) to
be a Qualifying Facility under Subchapter 2 of the PUC’s Standards or such
similar status in the event that
the PUC’s Standards are replaced
with other applicable law; or

 

c.                                       The Seller does not complete Seller’s
Facility and achieve an In-Service Date within 24 months of the
Non-appealable PUC Approval Order Date, whether or not Force Majeure interferes
with the completion of Seller’s Facility, its operation, or sale of energy from it; or

 

d.                                 The Seller fails to provide energy to the
Company for a period of three hundred sixty-five (365) or more consecutive
days, or fails to sustain the technical capability to provide power to the
Company under the Contract for a period of ninety (90) or more consecutive
days, unless such failure is caused by Force Majeure or the inability of the
Company to accept such energy. This provision shall be subject to the same
extension and cure periods as set forth in Section 1.e below. For purposes
of this Section 1.d., technical capability to provide power shall mean
that the Seller’s Facility could be operated in a safe manner at that time in
accordance with Good Engineering and Operating Practices; or

 

E-1

 

e.                                       The Seller, by act or omission,
materially breaches or defaults on any material covenant, condition or other provision of this Contract, and fails to
cure such breach or default within thirty (30) days after written notice of such breach or default from
the Company, unless (1) such
breach or default is due to
Force Majeure; provided,
however, that if Seller does not cure such breach or default
within (180) days of such notice, whether or not the breach or default resulted from Force Majeure or Force Majeure interferes with the cure,
the Company may terminate this Contract
or, (2) such breach or default cannot be cured within thirty (30) days and the Seller is making diligent efforts to cure such
breach or default; provided,
however, that if such breach or default is not cured within 180 days of such notice, the Company may terminate this Contract.

 

2.                                     Termination by Seller.

 

The Seller may terminate the
Contract at any time if the following condition (an “Event of Default”) occurs;

 

The
Company, by act or
omission, materially breaches or defaults on any material covenant, condition or other provision of this Contract, and fails to cure such breach or
default within thirty (30) days after written notice of such breach or default from the Seller, unless (i) such breach or default is due to Force  Majeure provided, however, that if the Company does not cure such breach or default
within 180 days of such notice, whether or not the breach or default resulted from Force Majeure or Force Majeure interferes with the cure, Seller may terminate this Contract-or,
(ii) such breach or default cannot be cured within thirty (30) days and the Company is making diligent efforts to cure such
breath or default; provided, however, that if such breach or default is not cured within 180 days of such notice, Seller may terminate this Contract.

 

E-2

 

APPENDIX F

DEFINITIONS

 

Acceptance
Test: A test conducted by Seller and, at Company’s option, witnessed by
Company, within thirty (30) days of completion of all Interconnection
Facilities, and in accordance with criteria determined by the Company of the
Company-owned Interconnection Facilities and the interconnection portion of the
Seller’s Facility to determine conformance with Section 3 and Appendix C
and Good Engineering and Operating Practices. Successful completion of the
Acceptance Test to Company’s satisfaction shall be a condition Precedent for
the Initial In-Service Date and the performance of the initial Control System
Acceptance Test. Seller shall provide Company with at least seven (7) days
advance written notice of the Acceptance Test. No energy will be delivered from
Seller to Company during this Acceptance Test. No later than thirty (30) days
prior to conducting the Acceptance Test, Company and Seller shall agree on a written
protocol setting out the detailed procedure and criteria for passing the
Acceptance Test. Within two (2) business days of successful completion of
the Acceptance Test, Company shall notify Seller in writing that the Acceptance
Test has been passed and the date upon which the Acceptance Test was passed.

 

Allowed
Capacity:   The maximum electrical output
of the Seller’s Facility in kilowatts for purposes of the Contract, as defined
in Appendix A, Section 5.e, which is used by the Company for establishing
a maximum instantaneous MW output from the Seller’s Facility Pursuant to Section 3
and for planning and operating the Company’s System.

 

As-Available
Energy:   Energy provided to the Company on an unscheduled
basis as Seller determines it to be available from Seller’s Facility, rather
than at prearranged times and in prearranged amounts.

 

Base
Load Unit:   A unit that is normally
on-line twenty-four (24) hours a day. This includes any unit that is scheduled
to be on-line continuously for a given day because a unit which is normally a
Base Load Unit is on maintenance or otherwise temporarily out of service.

 

Bill
of Material:   A list of equipment to be
installed at the Seller’s Facility including, but not necessarily limited to,
items such as relays, breakers, and switches.

 

F-1

 

Company’s
Dispatch:   The Company’s sole and absolute right to
control, from moment to moment, through supervisory equipment, or otherwise,
and in accordance with Good Engineering and Operating Practices in the electric
utility industry, the rate of delivery of energy offered by the Seller to the
Company.

 

Company’s
System:   The electric system owned and
operated by the Company (to include any non-utility owned facilities)
consisting of power plants, transmission and distribution lines, and related
equipment for the production and delivery of electric power to the public.

 

Company’s
System Operator:   The authorized representative of Company who
is responsible for carrying out Company’s Dispatch.

 

Contract
Year:   A twelve calendar month period
which begins on the first day of the month coincident with or next following
the In-Service Date and, thereafter, anniversaries thereof; provided, however,
that, in the event the In-Service Date is not the first day of the calendar
month, the initial Contract Year shall also include the days from the
In-Service Date to the first day of the succeeding month.

 

Control
System Acceptance Test:   A test
performed on the centralized control system and Curtailment Control Interface,
as defined in Section 1.g of Appendix B, of Seller’s Facility, consisting of
a functional demonstration of such equipment through the successful completion
of each such test to Company’s satisfaction, and conducted in accordance with
procedures set forth in Section l.h of Appendix B.Following the successful
completion of the Acceptance Test, a new Control System Acceptance Test shall
be conducted before any new generators are placed in service and included in
the Seller’s Facility. No later than thirty (30) days prior to conducting the
Control System Acceptance Test, Company and Seller shall agree on a written
protocol setting out the detailed procedure and criteria for successfully
completely a Control System Acceptance Test. Within two (2) business days
of successful completion of the Control System Acceptance Test, Company shall
notify Seller in writing that the Control System Acceptance Test has been
passed and the date upon which such Control System Acceptance Test was passed.

 

Energy
Cost Adjustment Clause:   The provision
in the Company’s rate schedules that allows the Company to pass through to its
customers the Company’s costs of fuel and purchased power.

 

Environmental
Credits:   Any environmental credit,
offset, or other benefit allocated, assigned or otherwise awarded by any
governmental

 

F-2

 

or
international agency to the Company or the Seller based in whole or in part on
the fact that the Seller’s Facility is a non-fossil fuel facility. Such
Environmental Credits shall include, but not be limited to, emissions credits,
including credits triggered because such facility does not produce carbon
dioxide when generating electric energy, or any renewable energy credit, but in
all cases shall not mean federal, state or local tax or Government subsidies in
lieu of tax credits.

 

Execution
Date:   The date referred to in the first
paragraph of this Contract.

 

Force
Majeure:   Any event defined in Section 15(a) of
this Contract.

 

Good
Engineering and Operating Practices:   The
practices, methods and acts engaged in or approved by a significant portion of
the electric utility industry for similarly situated U.S. facilities that at a
particular time, in the exercise of reasonable judgment in light of the facts
known or that reasonably should be known at the time a decision is made, would
be expected to accomplish the desired result in a manner consistent with law,
regulation, reliability, safety, environmental protection, economy and
expedition. With respect to the Seller’s Facility, Good Engineering and
Operating Practices include, but are not limited to, taking reasonable steps to
ensure that:

 

1.             Adequate materials, resources and supplies,
including fuel, are available to meet the Seller’s Facility’s needs under
normal conditions and reasonably anticipated abnormal conditions.

 

2.             Sufficient operating personnel are available
and are adequately experienced and trained to operate the Seller’s Facility
properly, efficiently and within manufacturer’s guidelines and specifications
and are capable of responding to emergency conditions.

 

3.             Preventive, routine and non-routine
maintenance and repairs are performed on a basis that ensures reliable
long-term and safe operation, and are performed by knowledgeable, trained and experienced
personnel utilizing proper equipment, tools, and procedures.

 

4.             Appropriate monitoring and testing is done to
ensure equipment is functioning as designed and to provide assurance that
equipment will function properly under both normal and emergency conditions.

 

F-3

 

5.             Equipment is operated in a manner safe to
workers, the general public and the environment and in accordance with
equipment manufacturer’s specifications, including, without limitation, defined
limitations such as steam pressure, temperature, moisture content, chemical
content, quality of make-up water, operating voltage, current, frequency,
rotational speed, polarity, synchronization, control system limits, etc.

 

In-Service
Date:   The date that the Acceptance Test and the
Control System Acceptance Tests for all generators are deemed by the Company to
have been successfully completed.

 

Initial
In-Service Date:   The date, on or after the Acceptance Test is
successfully completed, on which Seller’s first new generator(s) has been
installed and has successfully completed the Control System Acceptance Test.

 

Interconnection
Facilities:   The equipment and devices
required to permit Seller’s Facility to operate in parallel with and deliver
electric energy to Company’s System, such as, but not limited to, transmission
lines, transformers, switches, and circuit breakers.

 

Interconnection
Requirements Study (“IRS”):   A study,
performed in accordance with the terms of the IRS Letter Agreement and with Section
4 and Appendix C of this Contract, to assess the projected interaction of the
Seller’s Facility with the Company’s System.

 

Interconnection
Requirements Study Letter Agreement (“IRS Letter Agreement”):   The
letter agreement and any written, signed amendments thereto, between the
Company and the Seller that describes the scope, schedule, and payment
arrangements for the Interconnection Requirements study.

 

KV:                            Kilovolt.

 

KW:                       Kilowatt.

 

MW:                    Megawatt.

 

Non-appealable
PUC Approval Order: (l) A PUC Approval Order that is not subject to appeal
to any Circuit Court of the State of Hawaii or the Supreme Court of the State
of Hawaii, because the thirty (30) day period (accounting for weekends and
holidays as appropriate) permitted for such an appeal has passed without the
filing of notice of such an appeal, or (2) a PUC Approval Order that was
affirmed on

 

F-4

 

appeal
to any Circuit Court of the State of Hawaii or the Supreme Court, or the
Intermediate Appellate Court upon assignment by the Supreme Court, of the State
of Hawaii, or was affirmed upon further appeal or appellate process, and that
is not subject to further appeal, because the jurisdictional time permitted for
such an appeal (and/or further appellate process such as a motion for
reconsideration or an application for writ of certiorari) has passed without
the filing of notice of such an appeal (or the filing for further appellate
process).

 

Non-appealable
PUC Approval Order Date:   The date that
the PUC Approval Order becomes a Non-appealable PUC Approval Order.

 

Point
of Interconnection:   The point of
delivery of energy and/or Capacity supplied by Seller to Company where Seller’s
Facility interconnects with Company’s System.

 

PUC
(Public Utilities Commission):   The
Public Utilities Commission of the State of Hawaii.

 

PUC
Approval Order Date:   The date upon
which the PUC Approval Order is issued.

 

PUC
Approval Order:   The decision and order
of the PUC approving the application or motion as filed on the PUC Submittal Date
by the parties seeking approval of this Agreement.

 

PUC’s
Standards:   Standards for Small Power
Production and Cogeneration in the State of Hawaii, issued, by the Public
Utilities Commission of the State of Hawaii, Chapter 74 of Title 6, Hawaii
Administrative Rules, currently in effect and as may be amended from time to
time.

 

PUC
Submittal Date:   The date of submittal
of the Company’s complete application or motion for approval to include the
costs of purchased energy under this Contract in the Company’s Energy Cost
Adjustment Clause (or equivalent).

 

PURPA:
  Public Utility Regulatory Policies Act
of 1978 (P.L. 95-617) as amended from time to time and as applied in Hawaii by
the Public Utilities Commission.

 

Qualifying
Facility:   As defined under PURPA and
the regulations issued thereunder.

 

Seller’s
Facility:   All equipment, devices, and
associated appurtenances owned, controlled, operated and/or managed by Seller

 

F-5

 

in
connection with, or to facilitate, the production, generation, transmission,
delivery and/or furnishing of electricity by Seller to Company and required to
interconnect with Company’s System.

 

Term:   The
Term of this Contract is as defined in Section 10 of the Contract.

 

Third
Party:   Any person or entity other than the Company or
the Seller, and includes, but is not limited to, any subsidiary or affiliate of
the Seller.

 

Total
Actual Interconnection Cost:   Actual costs
for the Interconnection Facilities, to be designed, engineered and constructed
by Company, as provided in Appendix C.

 

Total
Estimated Interconnection Cost:   Estimated costs for the Interconnection
Facilities, to be designed, engineered and constructed by Company, as provided
in Appendix C.

 

Transfer
Date:   The date, prior to the Initial
In-Service Date, upon which Seller transfers to Company all right, title and
interest in and to the Company-owned Interconnection Facilities to the extent,
if any, that such facilities were constructed by Seller and/or its Contractors.

 

F-6

 

APPENDIX G

 

DISPUTE RESOLUTION

 

1.                                     Good Faith Negotiations

 

Before any dispute under this Contract is subjected to the provisions
of Section 2 of this Appendix G or any litigation, the presidents, vice
presidents, or authorized delegates from both the Seller and the Company having
full authority to settle the dispute, shall personally meet in Hawaii and
attempt in good faith to resolve the dispute.

 

2.                                     Dispute Resolution Procedures

 

If the parties are unable to resolve any dispute under this Contract
under the procedures of Section 1 of this Appendix G, such dispute shall
be resolved in Hawaii by binding arbitration in accordance with the
requirements of this Section 2; provided that,this agreement to
arbitrate shall be specifically enforceable and this Appendix G shall not
preclude either party from pursuing its equitable remedies to enforce this
agreement to arbitrate, including without limitation, seeking injunctive
relief. Company and Seller agree that the procedures in this agreement to
arbitrate shall be followed to the extent not Prohibited by Hawaii Revised
Statutes Chapter 658A (“Chapter 658A”). If any of such procedures conflict with
Chapter 658A, then except as otherwise prohibited in Chapter 658A, Company and
Seller agree to waive, or vary the effect of, the requirements of Chapter 658A.

 

a.                                     Initiation of Arbitration

 

Either party shall give to the other written notice in sufficient
detail of the existence and nature of any dispute proposed to be arbitrated
under this Section 2 and the remedy sought as well as a detailed statement
of its contentions of law and fact. Such notice shall be made within a
reasonable time after the dispute in question arose, and in no event shall such
notice be made after the date when institution of legal or equitable
proceedings based on such dispute would be barred by the applicable statute of
limitations but for this Appendix G. Such notice will be signed by the
president of the party issuing the notice and be delivered to the president of
the other party. The other party shall file an answering statement within
twenty (20) days of receipt of the

 

G-1

 

notice.
After the answering statement is filed, the parties shall diligently negotiate
in good faith for a period of sixty (60) days.

 

b.                                    Appointment of Arbitrator

 

If
the dispute is not resolved through the negotiations required by Section 2.a
of this Appendix G, the parties shall attempt to agree on a person with special
knowledge and expertise with respect to the design, construction and operation
of electric generating facilities to serve as an arbitrator panel of one. If
the parties cannot agree on an arbitrator within twenty (20) days after the
negotiation period required by Section 2.a of this Appendix G, each party
shall within five (5) days, appoint one person to serve as an arbitrator
and the two arbitrators thus appointed shall select a third arbitrator to serve
as chairman of the panel of arbitrators; and such three arbitrators shall
determine all matters by majority vote; provided, however, if the
two arbitrators appointed by the parties are unable to agree upon the
appointment of the third arbitrator within twenty (20) days after their
appointment, both shall give written notice of such failure to agree to the
parties and, if the parties fail to agree upon the selection of such third
arbitrator within twenty (20) days thereafter, then either of the parties upon written
notice to the other may require such appointment from and pursuant to the rules for
commercial arbitration of the American Arbitration Association. In selecting
arbitrators under this Section 2.b, the parties shall give preference to
qualified Hawaiian domiciliaries.

 

Each
arbitrator appointed pursuant to this Section 2.b shall swear to conduct
such arbitration in accordance with the terms of this Section 2, the laws
of the state of Hawaii, and the Code of Ethics of the American Arbitration
Association. Each arbitrator who would be disqualified for any reason that
would disqualify a judge under the Code of Judicial Conduct shall immediately
resign or be withdrawn as an arbitrator. The arbitration panel may choose legal
counsel to advise it on the remedies it may grant, procedures and such other
legal issues as the panel deems appropriate. Copies of the notice, the
statement of contentions of law and fact, the answering statement and this
Contract shall promptly be furnished by the initiating party to the arbitrator(s) selected.

 

c.                                     Arbitration Procedures

 

(1)          The parties shall have one hundred and twenty
(120) days from the date of the formation of the arbitration panel to perform
discovery and present evidence and argument to the arbitrators. During this
period, the arbitrators shall be available

 

G-2

 

to
receive and consider all such evidence as is relevant, within reasonable limits
due to the restricted time period, and to hear as much argument as is feasible,
giving a fair allocation of time to each party to the arbitration. This period
may be extended for sufficient cause by the arbitration panel or by agreement
the parties. The arbitration panel shall have the general powers of a court and
may proceed in accordance with established rules of evidence and
procedure, liberally construed to promote justice and expeditious resolution of
the dispute. The arbitration panel shall have complete discretion over the mode
and order of discovery, presentment of evidence, and the conduct of the
hearing. The arbitrators shall not consider any evidence or argument not
presented during such period. To the extent not prohibited by law and to the
extent not in conflict with the procedures set forth in this Section 2,
such arbitration shall be held in accordance with Chapter 658A, and the
prevailing rules of the American Arbitration Association for commercial
arbitration.

 

(2)          The arbitrators shall use all reasonable
means to expedite discovery and to sanction non-compliance with reasonable
discovery requests or any discovery order. The Seller shall require and warrant
that (i) all records of the Seller, its partners, members, or affiliates
pertaining to the negotiation, administration, and enforcement of this Contract
shall be maintained in the possession of the Seller, and (ii) each of its
officers, employees, general partners, or managing members will submit to the
jurisdiction of the arbitration panel appointed pursuant to this Appendix G and
shall respond to all reasonable discovery requests of such arbitration panel. All
documents and deponents made available in response to reasonable discovery
requests shall be made available in Maui, Hawaii.

 

(3)          At the conclusion of such one hundred and
twenty (120) day period, the arbitrators shall have thirty (30) days to reach a
determination and to give a written decision to the parties, stating their
findings of fact, conclusions of law and final order.

 

(4)          Pending resolution of disputes pursuant to
this Appendix G, which disputes relate to or impact the Seller’s construction
schedule for the Seller’s Facility, all applicable deadlines and cure periods
under this Contract shall be extended on a day-for-day basis.

 

d.                                    Arbitrator Limitations

 

The
arbitrators shall have authority to interpret and apply the terms and
conditions of this Contract and to order any

 

G-3

 

remedy
allowed by this Contract, but may not change any term or condition of this
Contract, deprive either party of a remedy expressly provided hereunder, or
provide any right or remedy that has been excluded hereunder.

 

e.                                     Decision Binding on the Parties

 

The
decision of the arbitrators shall be binding on the parties at such time as the
decision is confirmed by order of a court of competent jurisdiction pursuant to
Chapter 658A.

 

f.                                       Cost of Arbitration

 

The
arbitrators in rendering their decision shall also state which party prevailed
over the other party, or that neither party prevailed over the other. The costs
of arbitration (including the attorney fees and costs of the parties and legal
counsel appointed pursuant to Section 2.b of this Appendix G) will be
borne by the party which is not the prevailing party. In the event neither party
prevails, the parties shall each pay fifty percent (50%) of the cost of the
arbitration, arbitrator/chair of the panel, and any legal counsel appointed
pursuant to Section 2.b of this Appendix G. Also, in the event neither
party prevails, the parties each shall bear their own costs, including attorney
fees, and those of the arbitrator they appointed to the panel of three
arbitrators.

 

G-4

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