Commercial Letter of Intent to Lease with Purchase Option by slq20900


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                                     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:

                         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

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


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

      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

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