Or. Admin. Code § 860-029-0123

Current through Register Vol. 63, No. 11, November 1, 2024

Section 860-029-0123 - Default, Damages, and Termination

(1) The following events, if uncured within the applicable cure period, may constitute a default by the qualifying facility under a standard power purchase agreement for which the purchasing utility may terminate the power purchase agreement subject to the provisions of this rule:

(a) Failure to begin power deliveries by scheduled commercial operation date;

(b) Failure to provide Project Development or Default Security in the applicable time frame;

(c) Failure to maintain qualifying facility status;

(d) Failure to meet the PPA obligation to sell entire Net Output to the purchasing public utility;

(e) Failure to make a payment when due under the power purchase agreement, if amount of payment is not the subject of good faith dispute;

(f) Abandonment of the Facility;

(g) Failure to satisfy applicable MAG for two (2) consecutive years;

(h) Failure to satisfy applicable MDG for three (3) consecutive years;

(i) Breach of any warranty or representation in the power purchase agreement; and

(j) Failure to comply with any other material obligation under the power purchase agreement.

(2) The following events, if uncured within the applicable cure period, may constitute a default by the purchasing public utility under the standard power purchase agreement for which the Qualifying Facility may terminate the power purchase agreement subject to the provisions of this rule:

(a) Failure to receive or purchase Net Output;

(b) Failure to make a payment when due under the power purchase agreement, if amount of payment is not the subject of good faith dispute;

(c) Breach of any warranty or representation in the power purchase agreement; and

(d) Failure to comply with any material obligation under the power purchase agreement.

(3) Unless otherwise excused under the standard power purchase agreement, Force Majeure, or otherwise, the non-defaulting party is authorized to issue a Notice of Default upon any of the events described in sections (1) and (2).

(4) Cure periods:

(a) The qualifying facility has one year in which to cure the default for failure to meet the scheduled commercial operation date, as specified in OAR 860-029-0120(7).

(b) Except with a respect to a failure to meet the MAG or MDG, which failures are not curable, the non-defaulting party has 30 days following written notice from the non-defaulting party in which to cure the event of default. This 30-day period shall be extended by an additional 90 days if:

(A) The failure cannot reasonably be cured within the 30-day period;

(B) The default is reasonably capable of being cured within the additional 90-day period; and

(C) The defaulting party commences the cure within the original 30-day period.

(5) Damages. If damages are incurred as a result of a breach under the standard purchase agreement, the breaching party must remit payment in the full amount of the damages to the non-breaching party no later than 30 days after the breaching party receives an invoice for damages from the non-breaching party if the amount of payment is not the subject of good-faith dispute. The invoice for damages must include a written statement explaining in reasonable detail the calculation of the damages amount.

(6) Subject to the cure periods in section (4), the non-defaulting party may issue a notice of termination to terminate a standard power purchase agreement for a default under sections (1) or (2), as applicable.

(7) The non-defaulting party must provide the defaulting party a notice of termination at least 30 days prior to date of termination. The notice period for termination may run concurrently with the applicable cure period.

(8) Termination of Duty to Buy. If a standard power purchase agreement is terminated because of default by the qualifying facility and the qualifying facility wishes to sell Net Output to the purchasing utility following such termination, the public utility may require the qualifying facility do so subject to the terms of the terminated agreement, including but not limited to the Contract Price, until the scheduled end date in the terminated agreement. The purchasing utility may also require the qualifying facility to post default security. The qualifying facility may not take any action or permit any action to occur the result of which avoids or seeks to avoid the restrictions in this section through use or establishment of a special purpose entity or other affiliate.

(9) Termination Damages. If the standard power purchase agreement is terminated by the public utility as a result of an event of default by the qualifying facility, termination damages owed by the qualifying facility to the public utility will be the positive difference, if any, between

(a) The public utility's estimated costs to secure replacement power and Renewable Energy Credits, if applicable, for a period of 24 months following the date of termination, including any associated transmission necessary to deliver such replacement power; and

(b) The contract price for such 24-month period ("Termination Damages"), provided the damages may not exceed the cost the utility would have incurred to purchase the qualifying facility's power and Renewable Energy Credits under the terminated power purchase agreement. The public utility must calculate the Termination Damages on a monthly basis and in a commercially reasonable manner and provide to the qualifying facility a written statement explaining in reasonable detail the calculation of Termination Damages in the Notice of Termination. Termination damages are due by qualifying facility within 30 days of receipt of the written Notice of Termination from the public utility.

(10) Duty/Right to Mitigate. Both the purchasing public utility and qualifying facility have a duty to mitigate damages and must use commercially reasonable efforts to minimize any damages it may incur as a result of the other party's performance or non-performance under a standard power purchase agreement.

(11) Security. If a standard power purchase agreement is terminated because of the qualifying facility's default, the purchasing public utility may, in addition to pursuing any and all other remedies available at law or in equity, proceed against any security held by the purchasing public utility in whatever form to reduce the amounts that the qualifying facility owes the purchasing public utility arising from such default.

(12) Cumulative Remedies. Except in circumstances in which a remedy provided for in the power purchase agreement is described as a sole or exclusive remedy, the rights and remedies provided to the parties in the standard power purchase agreement are cumulative and not exclusive of any other rights or remedies of the parties.

Or. Admin. Code § 860-029-0123

PUC 8-2023, adopt filed 07/25/2023, effective 7/26/2023

Statutory/Other Authority: ORS 183, ORS 756, ORS 757 & ORS 758

Statutes/Other Implemented: ORS 756.040 & ORS 758.505-758.555