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Commercial Letter of Intent to Lease with Purchase Option document sample
Draft Letter of Intent VEPP Inc. the designated “SPEED Facilitator” under Vermont Public Service Board Rules 4.300 and _____________________________________ (the “Producer”) hereby agree to enter into a long-term “standard offer agreement” with a term of ______ years substantially in the form of the model agreement attached hereto as Attachment A or in such subsequent form as shall be approved by the Vermont Public Service Board (the “Standard Offer Agreement”). The Standard Offer Agreement is for the sale of power and attributes produced by the generating facility described in Attachment B (the “Facility”). The rate to be paid by the SPEED Facilitator to the Producer pursuant to the Standard Offer Agreement shall be the “Standard Offer Rate” for project type as in effect on the date this Letter of Intent is signed by the Parties hereto (the “Signing Date”). The obligation of the SPEED Facilitator to enter into the Standard Offer Agreement with the Producer is subject to the satisfaction of the following conditions: 1. On the Signing Date the Producer shall have provided a non-refundable deposit in an amount calculated according to the following as applicable to the Facility: Non- Nameplate refundable Capacity Deposit (KW) ($) 0-15 $300 15-50 $500 50-250 $1,500 250-2,200 $2,000 2. On the Signing Date the Producer shall have provided to the SPEED Facilitator proof of site control for the real property on which the Facility will be located for the duration of the Standard Offer Agreement term requested by the Producer. Proof of site control shall be i) fee simple title to such real property or ii) a valid written leasehold interest for such real property or iii) a valid written option, exercisable solely by the Producer or its assignee, to purchase or lease such the real property or iv) a duly executed contract for the purchase or lease of such real property. The documents establishing site control shall be attached hereto as Attachment C and shall provide unconditional control subject to reasonable commercial or permitting conditions. 3. Within 30 days from the Signing Date, the Producer shall apply to the Vermont Public Service Board for a certificate of public good under 30 V.S.A. Section 248, and shall have provided complete information for said application as required under Board Rule 5.400. 4. The Producer shall provide to the SPEED Facilitator by the Signing Date, a list of all other governmental permits, licenses or authorizations required prior to construction or operation of the Facility, the date upon which application is expected to be made and the expected date of approval. Such list is Attachment C hereto. Upon the satisfaction of the foregoing conditions, the SPEED Facilitator and the Producer shall enter into the Standard Offer Agreement, provided that i) upon the date requested by the Producer for the execution of the Standard Offer Agreement, the aggregate amount of capacity subject to such Agreements, including the capacity of the Facility, does not exceed 50 MW, ii) said date shall not be later than three months after issuance of the CPG and iii) all conditions applicable on the execution date of the Standard Offer Agreement as specified therein shall be satisfied. The Standard Offer Agreement shall require and be subject to the Facility becoming commercially operational within eighteen months of the Signing Date. If any of the foregoing conditions are not met by the Producer, the SPEED Facilitator shall be relieved of the obligation to enter into the Standard Offer Agreement with the Producer and the non-refundable deposit shall be forfeited. The SPEED Facilitator’s obligations hereunder shall also be deemed to be terminated if, for any reason, including but not limited to legal challenges to its authority, it becomes impossible or substantially impracticable for it to perform. Neither party shall be obligated to the other to purchase or sell power generated by the Facility until the Standard Offer Agreement has been approved by the Board and executed by both parties, and all terms and conditions therein have been satisfied. In the event of any dispute under this Letter of Intent, either party may request the Public Service Board to resolve such dispute. Dated at ________________, Vermont, this _____ day of _____________, 2009. ____________________________ VEPP Inc., SPEED Facilitator ____________________________ Producer By execution of this document the Producer is placed in the ____MW of the 50 MW standard offer authorized by 30 V.S.A. 8005 (b)(2). Cc: Vermont Public Service Board Interconnecting Utility Issues for Consideration 1. Should there be a queue process? 2. One proposal with respect to the establishment of queue milestones is to have those milestones that must be met after the contract is signed be contained in the contract. The rationale being that only document would be in effect at any one time and any disputes would only need to reference one document. The following queue milestones would then be included in the contract: a) Within 3 months of issuance of a certificate of public good, Producer shall execute the standard offer agreement referred to herein. b) Within 6 months of issuance of a certificate of public good, Producer shall have commenced construction of the facilities described in Attachment B or have placed major equipment orders. c) Within 18 months of issuance of a certificate of public good, Producer shall complete construction of the generating facilities and shall be prepared to deliver power to the SPEED Facilitator. An alternative to a separate letter of intent and contract is to have only a contract with conditions that need to be met or the contract would terminate. Which process is preferable? 3. One proposed addition to the list of queue milestones is a requirement that the developer initiate an interconnection study request through an application under Board Rule 5.500. Are there other milestones that are appropriate? Should certain milestones be deleted? 4. Act 45 states: “These standard offers shall be available until the cumulative plant capacity of all such resources commissioned in the state that have accepted a standard offer under this subdivision (b)(2) equals or exceeds 50 MW; provided, however, that a plant owned and operated by a Vermont retail electricity provider shall count toward this 50-MW ceiling if the plant has a plant capacity of 2.2 MW or less and is commissioned on or after September 30, 2009.” Given that the statute uses the word “commissioned” with reference to the 50 MW cap, are there problems with the proposed queue process establishing a cut- off for which projects receive the standard offer prices? How does the queue process address projects that are proposed when the 50 MW cap is almost met (for example there are 48 MW in the queue and a 2.2 MW project is proposed)? 5. In 1991, the Vermont Supreme Court upheld the Public Service Board denial of rates set forth in a letter of intent signed by a small power producer. Petition of Department of Public Service, 157 Vt. 120; 596 A.2d 1303; 1991 Vt. LEXIS 163 (1991). Are there any lessons from this case that should inform the queue process?
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