Requirements contract clause samples

Section 3:Operation of Member’s System. Except to the extent that failure shall be due to a cause beyond its control (such as failure of facilities, flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance, labor disturbance, sabotage, inability to obtain permits, licenses, rights-of-way or authorizations from any local, state or federal agency or any person, orrestraint by court or public authority), which by exercise of due foresight the member could not have reasonably been expected to avoid, and which by exercise of due diligence it shall be unable to overcome, each member shall continuously operate and maintain its system for the full term of its all-requirements contract with this Corporation, using reasonable diligence to supply therefrom to patrons within its service area (without contraction due to acts of omission of the member) electric energy provided by this Corporation pursuant to the all-requirements contract.This provision is enforceable by specific performance and/or injunction.

Our Bylaws require each Member, unless otherwise specified in a written agreement, to purchase all electric power and energy used by the Member from us. This requirement in our Bylaws is further specified in the wholesale electric service contract with each Member, which is an all-requirements contract. Each wholesale electric service contract obligates us to sell and deliver to the Member, and obligates the Member to purchase and receive, at least 95 percent of its electric power requirements from us.

In November2019, the contract committee recommended to the Board and the Board approved a community solar garden program, which is in addition to the 5 percent self-supply provision of the wholesale electric service contracts. Each Member is eligible for community solar garden projects up to, in aggregate, the lesser of 4.6million kWhs or 2percent of such Member’s 2018 energy sales from us. The community solar garden program, if acted upon by all Members, would be approximately 63MWs of community solar projects. In February2020, the contract committee recommended to the Board and the Board announced a commitment to provide our Members with the option of entering into a partial requirements contract.The partial requirements option is subject to further refinement, but is expected to include holding an open season for Members to choose to enter into a partial requirements contract and the open season would permit Members collectively to self-supply up to 300MWs, approximately 10percent of our Members’ peak demand. The 300MWs is in addition to the 5percent self-supply provision of the wholesale electric service contracts and the community solar garden program.In addition, additional open seasons could be offered in the future and Members that choose the partial requirements option will make other Members financially whole through a buy-down payment or payments. The Board further directed the contract committee to make recommendations to the Board on the specific details for the partial requirements contracts, including the partial requirements buy-down number methodology and the process for implementing the offering.

In November 2019, United Power, Inc., or United, filed a formal complaint with the COPUC alleging that we have hindered United’s ability to explore its power supply options by either withdrawing from us or continuing as a member under a partial requirements contract. United alleges, among other things, that we have failed to provide a just, reasonable, and non-discriminatory make-whole number. United seeks for the COPUC to issue an order establishing a make-whole number.We are evaluating the complaint filed by United.

requirements contract. United alleges, among other things, that we have failed to provide a just, reasonable, and non-discriminatory make-whole number. United seeks for the COPUC to issue an order establishing a make-whole number.We are evaluating the complaint filed by United. United constitutes approximately 16.3 percent of our revenue from Member sales for the nine months ended September 30, 2019.

LPEA and United COPUC Complaints. Pursuant to our Bylaws, a Utility Member may only withdraw from membership in us upon compliance with such equitable terms and conditions as our Board may prescribe provided, however, that no Utility Member shall be permitted to withdraw until it has met all its contractual obligations to us, including all obligations under its wholesale electric service contract with us. On November5, 2019, LPEA filed a formal complaint with the COPUC alleging that we hindered LPEA’s ability to seek withdrawal from us. On November6, 2019, United filed a formal complaint with the COPUC, alleging that we hindered United’s ability to explore its power supply options by either withdrawing from us or continuing as a Utility Member under a partial requirements contract. On November20, 2019, the COPUC consolidated the two proceeding into one, 19F-0621E.