Ordinance No. 7,893ORDINANCE NO. 7893`
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970213 -2
® AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY MANAGER
TO EXECUTE AND THE CITY CLERK TO ATTEST TO AN AGREEMENT
WITH PLANERGY, INC., FOR IMPLEMENTING . , AN ELECTRIC
CURTAILMENT PROGRAM; AND PROVIDING FOR THE EFFECTIVE DATE
THEREOF.
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BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS:
Section 1: That the City Council of the City of Baytown, Texas, hereby authorizes and
directs the City Manager and City Clerk of the City of Baytown to execute and attest to an agreement
with Planergy, Inc. for implementing an electric curtailment program. A copy of said agreement is
attach'gd hereto, marked Exhibit "A," and made a part hereof for all intents and purposes.
Section 2: This ordinance shall take effect immediately from and after its passage by the
City Council of the City of Baytown. o
INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City
of Baytown this the 13th day of February, 1997.
ATTEST:
A
EILEEN P. HALL, City Clerk
APPROVED AS TO FORM:
4A2CSI�ORAMIRWSR., City Attorney
• c:\ legal \meetings\february\planergy.13
PETE C. ALFAR , Mayor
CAPACITYPURCHASE AGREEMENT
Purpose: Planergy, Inc., through a contractual arrangement with the Houston Lighting &
,Power Company (HL &P), is responsible for implementing a Load Curtailment Program (also
referred 10 as the Program and/or Power Partners). The Program will provide 30,000
kilowatts of peak capacity reduction by swnmer 1998. CUSTOMER agrees to provide
curtailable electric power to the Program in return for incentive payments and access to
meter - quality load data.
The parties to this Agreement are:
PLANERGY: Planergy, Inc.
901 MoPac Expressway South
Plaza II, Suite 495
Austin, TX 76746
CUSTOMER:
ARTICLE I: SCOPE. Further details regarding the design and scope of the Load Curtailment
Program, and definition of terms used in this Agreement, are provided in Appendix B, Program
Description.
ARTICLE II: AGREEMENT. CUSTOMER agrees to provide curtailable electric power by its
active participation in the Program. In return, Planergy agrees to pay cash incentives for
curtailable /interruptible power made available between June I and September 30 of each year in which
this Agreement is in effect. Following are the limits of CUSTOMER's commitment:
Maximum Total Hours of Curtailment Per Year: 45
Maximum Hours of Curtailment In Any Day: 3
Maximum Number of Curtailments Per Year: 15
Curtailment Possible Between: 12 noon and 8:00 p.m.
Weekdays (Monday - Friday) only June I- September 30
(excluding Independence Day and Labor Day)
Contract Period:
Other Limitations:
Annual renewal
Maximum of 3 consecutive days
CustomerAgreement 1 Load Curtailment Pro ;ram
EXHIBIT A
Responsibilities of Planergy are:
® 1. To provide all engineering and design necessary for establishing and operating the
Program, including assistance in preparing an operations plan for curtailments.
To provide the necessary computer, data logging, and signaling devices, including
software and normal installation, and related telephone service, provided that
CUSTOMER may be held responsible for damage to equipment or other losses caused
by its personnel.
To provide training of CUSTOMER personnel.
To pay for the services provided in accordance with this Agreement.
Responsibilities of CUSTOMER are:
To make available the loads identified in Appendix A when called for by Planergy, and
to consistently curtail these loads except in cases of valid and overriding emergencies
(defined as situations where personnel could be endangered, and /or the plant or
equipment could be damaged by interruption, and does not extend to decisions made for
reasons of economics or convenience).
2. To be available "on- call" to begin curtailments up to the limits specified in this
Agreement.
To provide the personnel and any incidental equipment or fuel necessary for the proper
monitoring, control, and curtailment of the loads identified in Appendix A, and to
control these loads during a called curtailment at or below the announced average
Target Firm Service Level for each curtailment.
4. To permit installation and inspection (at Planergy expense) of data monitoring and
communications equipment necessary to operate the Program, and to permit the removal
of this equipment if CUSTOMER ceases to be a member of the Program.
ARTICLE III: PAYMENT. Financial incentives will be paid to CUSTOMER so long as it is a
Member in Good Standing of the Program (see Article IV). Payments will be made monthly for the
active period, according to the following schedule:
1997: 55.20/kW /month x 4 months (total of $20.80 /kW /year)
1998 -2006 Increased 4% annually
Planergy will estimate the available curtailable load (the Contracted Capacity) based on a site inspection,
operating information provided by CUSTOMER's representative, and meter data from HL &P. Payment
will be based on actual savings (the Capacity Savings) determined from analysis of meter data.
Questions regarding the incentive payment should be made to Planergy at the location listed in Article X
following. Records and calculations will be open for inspection at Planergy's premises at any reasonable
time. CUSTOMER may request a review of payment amounts, but the decision of Planergy and HL &P
regarding payment is final.
Customer Agreement 2 Load Curtailment Program
ARTICLE IV: MEMBER IN GOOD STANDING. A Member in Good Standing is a
® participating CUSTOMER in the Program which meets each of the following criteria:
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Is operating under a valid Capacity Purchase Agreement.
Has not resigned from the Program, and has not received written notice of cancellation
from Planergy.
Has not failed to curtail at least 75 percent of the Contracted Capacity (Appendix A), on
more than one occasion in any calendar year, when called for by Planergy.
ARTICLE V: TERM OF AGREEMENT. This Agreement is valid for one year from the date of
execution, with automatic renewal unless canceled by either party in accordance with Articles IV or VI.
This Agreement will otherwise remain in effect up to 10 years for as long as the Planergy /HL &P Load
Curtailment Program is in effect. In either event, the limit of Planergy's liability is payment of any
incentive payments or escrowed amounts then owing to CUSTOMER.
ARTICLE VI: TERMINATION AND SECURITY. CUSTOMER may resign from the Program
without penalty, provided that: (1) written notification is given, and (2) the effective date of resignation
occurs between October 1 and January 1. If the CUSTOMER fails to provide the full Contracted
Capacity during curtailment, Planergy may deduct a proportional amount from the incentives earned by
CUSTOMER. In addition, twenty (20) percent of incentives will be held in escrow for a period of one
year as security against a CUSTOMER resigning from the Program without proper notice.
Planergy may terminate this Agreement by written notice in the event that CUSTOMER fails to remain a
Member in Good Standing. In the event of termination, CUSTOMER's sole liability to Planergy, and
Planergy's exclusive remedy for any failure of CUSTOMER to remain a Member in Good Standing, shall
be forfeiture of unpaid incentives and security escrow.
ARTICLE VII: START -UP AND TESTING. CUSTOMER may be asked to participate in an
unpaid testing of the dispatch/notification system prior to the start of actual program operation.
Incentives will be earned beginning the later of June 1, 1997, or upon testing and approval of monitoring
equipment by Planergy.
ARTICLE VIII: MEASUREMENT AND VERIFICATION. Planergy will measure and verify
actual Capacity Savings through computerized metering and data logging equipment to be furnished and
installed by Planergy, which reserves the right of access for inspection, repair or replacement, and
removal. CUSTOMER will be provided read-only access to appropriate data at Planergy expense.
ARTICLE IX: LIABILITY. CUSTOMER agrees to hold Planergy and HL &P harmless for damages
and injuries occurring to persons or property (including loss of life), which do not result directly from
actions or omissions under this Agreement. The sole liability of Planergy, except for instances of gross
negligence, and CUSTOMER's exclusive remedy, shall be for payment of the incentives earned during
the term of this Agreement.
Customer Agreement 3 Load Curtailment Program
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ARTICLE X: NOTIFICATION. Official representative {s} of the parties are:
PLANERGY: 901 MoPac Expressway South
Building 11, Suite 495
Austin, TX 78746
Phone: 512/327 -6830
Fax #: 512/327 -2530
Attn: Jerry Golden
CUSTOMER:
Admin. Phone:
Fax #:
Admin. Contact:
Dispatch 9:
Dispatch Contact:
ARTICLE XJ: COMPLETE AGREEMENT. This Agreement and attachments constitute the full
and complete agreement. Revisions and amendments must be in writing and signed by both parties.
THIS AGREEMENT IS HEREBY APPROVED:
CUSTOMER:
Title
Date
PLANERGY:
W
Title
Date
Customer Agreenrent 4 Load Curtailment Prograin
® CONTRACTED .CAPACITY
.(Appendix A)
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The following loads comprise the interruptible. loads to be supplied under this Agreement, and subject to
change, will be curtailed upon call by Planergy in accordance with the terms of this Agreement.
LOCATION/DESCRIPTION-
TOTAL CONTRACTED CAPACITY *:
CURTAILABLE LOADS
*Contracted Capacity is the forecasted demand reduction. Planergy will assist the CUSTOMER in
developing a curtailment strategy (plan) to achieve the Contracted Capacity during each curtailment.
Contracted Capacity is subject to adjustment, with agreement of both parties, if warranted by changes in
the overall energy use requirements of CUSTOMER. Incentive payments will be based on [lie actual
Capacity Savings. The Program Description (Agreement Appendix B) contains the methods by which
Capacity Savings are determined.
Customer Agreement 5 Load Gulailment Program
® PROGRAM DESCRIPTION:
POWER PARTNERS LOAD CURTAILMENT PROGRAM
(Appendix B)
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1. What is the Load Curtailment Program?
Planergy, Inc., in its role as a contractor to HL &P, will in turn contract with HL &P customers who agree
to turn off (curtail) specified portions of their electric loads for short periods during summer peak use
conditions. This provides relief from system peaks and can help extend the time in which additional
peaking power plants are needed. This helps to hold down rates for all customers, while offering
environmental natural resource benefits as well.
2. What are the Qoals?
By 1998, up to 30,000 kilowatts (kW) of electric power capacity reduction will be provided on call
during the peak summer periods.
What are the exact commitments?
Customers commit to a limited number of calls and hours of curtailment:
a. Maximum of 45 total hours per year.
b. Maximum of 3 hours in one day.
c. Maximum of IS occurrences per year.
d. Curtailments cannot begin before noon or last beyond 8 PM., Monday- Friday,
June I through September 30, and may not occur on holidays.
e. No more than 3 consecutive days of curtailment will be called.
Notification may be as short as 45 minutes prior to commencement of the curtailment period, but will
normally be at least one hour.
4. What are the benefits to the Program participants?
From June 1 through.September 30, for as long as the Agreement is in effect, members who meet their
obligations will earn incentives beginning at the rate of $5.20 per kW /month for each month during
which capacity is available for curtailment. This payment is made even for periods during which no calls
for curtailment occur and will increase 4% each year to account for inflation.
A customer which fails to meet its full capacity obligations during curtailment will incur deductions.
These deductions can never exceed the amount of incentives which would have otherwise been earned,
however. Twenty percent of incentives will be held in escrow and repaid with interest to members who
meet their contractual obligations.
Customer Agreement 6 Load Curtailment Program
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5. How are the incentives and deductions calculated?
The computation of earnings will be made by Planergy based on procedures agreed upon by HL &P. The
terms and methods are designed to reward those members who participate and provide the capacity
pledged every time a call is made. Important definitions are:
Contracted Capacity: The amount of kW to be available on call (listed in Appendix A of the
Customer Agreement). Contracted Capacity is subject to renegotiation. Adjustment will be
initiated by Planergy if it seems clear that the estimated Contracted Capacity is too high or low.
The member may also request a review at any reasonable time.
Baseline kW: The average of kW demand readings one hour prior to curtailment, or during the
previous two or three weekdays (or day -types) during the same time period as the curtailment, or
other approved methodology which most accurately predicts the Customer load shape.
Target Firm Service Level (Target FSL): The average kW demand to be maintained by a
participating customer during curtailment. The Target FSL is set by the computer. Payment is
based on actual Capacity Savings, however.
Capacity Savings: The amount of kW actually reduced in each 15- minute demand interval.
This is determined by subtracting the metered average kW during curtailment from the Baseline
M.
Computing the Capacity Savings and Deductions:
Example: Customer A's Contracted Capacity is 1,000 kW. The'actual performance during a
sample curtailment is shown below:
Baseline kW: 1,500 kW
Actual Average kW during Curtailment: -600 kW*
Net Capacity Savings: 900 kW
*In this case, the Target FSL would have been 500 kW (posted on the PC screen 45 -60 minutes
prior to curtailment).
In this example, the actual Capacity Savings is less than 100 % of Contracted Capacity. The customer
receives its monthly incentive (1,000 kW x $5 /kW = $5,000), but the shortfall of 100 kW (1,000 versus
900) results in a deduction at the rate of 46.2¢ /kWh (annual incentive _ 45 hrs). The payment, then, is
computed as follows:
Customer Agreement
Regular monthly payment
($5.20/kW x 1,000 kW)= $5,200
Less Deductions
($0.462/kWh x 100 kW x 3 hrs)= -139
Net Payment for the Month: $5,061
Load Curtailment Program
6. Isn't there a potential problem with maintainin production capacity?
® This has to be answered by the prospective Program member. A customer that cannot consistently
curtail because of production or economic concerns should not be a member. It is important to note,
however, that neither Planergy or HL &P will have operational control over a customer's equipment; the
decision to interrupt remains in the control of the plant staff.
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Total interruption is not necessary for membership. If loads can be decreased while maintaining
production capacity, the reduction can be a viable contribution to the Program.
7. Can we elect to not participate, or to participate only artiall in a curtailment?
Yes, as indicated in number 6. However, a deduction will be made from earned incentives to reflect the
non - compliance. In cases of substantial non - compliance, membership in the Program may be forfeited if
the non - compliance is considered serious enough to warrant such action.
8. Once in, how do we ect out ... or can eve?
The Load Curtailment Program is purely voluntary. A member can resign at anytime. However, since
reliability is important, one -fifth of the earned incentives will be held in escrow as security to protect
against (a) non - participation during calls for curtailment, and (b) members resigning between January l
and September 30. The escrow is payable with interest at average T -Bill rates to members who remain in
good standing or who give us notice and leave the Program between September 30 and January 1.
Contracts are one -year, automatically renewable agreements. We will not cancel members who are
productive, reliable participants, and we expect that members who join at the outset won't want to give
up their membership. The hope is that members will remain in the program for the full 10 years.
So what is the catch?
It is hard not to be leery of proposals that promise benefits for everyone. However, if you look at this
concept logically, it makes sense that all parties, including the public and the environment, win. Here's
why:
• HL &P can delay the construction of new plants, thereby saving money and holding
down rates.
• Program members earn money by providing "conserved power ". This power is saved at
the utility peak, so can be as valuable as adding new generating facilities, and can be less
expensive.
The environment gets a break because every kilowatt/hour of electricity not consumed
represents coal, oi[, or other fuel that isn't burned to produce electricity.
• All ratepayers ultimately benefit, because it helps hold down our electric rates.
Customer Agreement 8 Load Curtailment Program
10. So. Nvhcn do we start?
isThe first day of operation was June 1, 1996, and subsequent operating years start June 1. To meet this
annual deadline, Customer agreements need to be in place by about January of each year. Initially, lamer
customers are targeted, and additional smaller customers will be contacted as the program marketing
continues. Because of strict limitations on the total amount of Capacity Savings the Program may
provide each year, membership is on a "first- come" basis. It may also be necessary to limit the amount
of Contracted Capacity any one member may provide.
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Members certified as "on- line" after June I of each year will be paid for the time available. For purposes
of their right to as much as 10 years' participation, each member's start date will be considered to be
June 1 of the first year of membership.
11. Information Contacts:
For information, call: Jerry Golden or Richard Patton
Planergy, Inc.
800/531 -5114
Customer Agreement 9 Load Curtailment Program