HomeMy WebLinkAboutResolution - 2021-R0201 - Settlement Agreement with Southwestern Public Service CompanyResolution No. 2021-R0201
Item No. 2.2
May 27, 2021
RESOLUTION
WHEREAS, Lubbock Power & Light is the municipally owned electric
utility of the City of Lubbock ("LP&L");
WHEREAS, LP&L and Southwestern Public Service Company, a New
Mexico corporation ("SPS"), are parties to that certain Master Power Purchase
and Sale Agreement dated as of November 12, 2009 (the "Master
Agreement"), and that certain Transaction Agreement of the same date entered
into under the Master Agreement (the "Transaction Agreement", and together
with the Master Agreement and any other transactions entered into under the
Master Agreement, the "PPA"), pursuant to which LP&L is purchasing 170
megawatts of Partial Requirements Power Service, as defined in the
Transaction Agreement, from SPS;
WHEREAS, LP&L and SPS are also parties to that certain Letter
Agreement entitled "Letter Agreement between SPS and LP&L re Future
Costs under SPP NITSAs", dated March 21, 2017 (the "Transmission Letter
Agreement"), related to transmission charges allocable to LP&L in connection
with the PPA;
WHEREAS, LP&L previously received all necessary approvals to transfer
a portion of its load (the "Affected Load") from the electric transmission
system and market operated by the Southwest Power Pool, Inc. (such
transmission system and market, "SPP") to the electric transmission system
and market operated by the Electric Reliability Council of Texas, Inc. (such
transmission system and market, "ERCOT") and is in the process of
implementing the integration of such Affected Load into ERCOT;
WHEREAS, LP&L currently intends to seek all necessary approvals to
transfer its entire remaining load (the "Remaining Load") from SPP to ERCOT
(the "Remaining Load Integration");
WHEREAS, upon integration of LP&L's Remaining Load into ERGOT,
LP&L will no longer need the Partial Requirements Power Service being
provided under the PPA; therefore, LP&L's payment obligations under the
PPA (including the obligations under the Transmission Letter Agreement
related thereto) will be stranded costs of LP&L (as contemplated by Chapter
40 of the Texas Public Utility Regulatory Act) and the Parties have agreed to
terminate the PPA and the Transmission Letter Agreement;
WHEREAS, LP&L and SPS have agreed to certain terms and conditions
outlined in the attached Settlement Agreement to terminate the PPA and the
Transmission Letter Agreement; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
LUBBOCK:
THAT the City Council of the City of Lubbock hereby approves that certain
Settlement Agreement by and between the City of Lubbock, acting by and
through Lubbock Power & Light, and Southwestern Public Service Company,
as attached hereto and incorporated herein as though set forth fully herein in
detail, and approves and agrees to payment in the amount and methods
described therein.
BE IT FURTHER RESOLVED BY THE CITY COUNCIL OF THE CITY
OF LUBBOCK:
THAT the Mayor of the City of Lubbock is hereby authorized and directed
to execute that certain Settlement Agreement by and between the City of
Lubbock, acting by and through Lubbock Power & Light, and Southwestern
Public Service Company, as attached hereto and incorporated herein as though
set forth fully herein in detail.
Passed by the City Council this 27th day of May, 2021
DANIEL M. POPE, MAYOR
ATTEST:
Beck Garza, City Se e ary
APPROVED AS TO CONTENT:
avid McCa la, Director of Electric Utilities
APPROVED AS TO FORM:
J y th, LP&L General Counsel
Chad Mills, Haynes and Boone, LLP, Outside Counsel
Execution Version
SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is made and entered into as of May 27,
2021 (the "Execution Date"), by and between the City of Lubbock, acting by and through
Lubbock Power & Light ("LP&L"), and Southwestern Public Service Company, a New Mexico
corporation ("SPS"). Each of LP&L and SPS may be referred to as a "Party" and together as the
"Parties".
WHEREAS, LP&L and SPS are parties to that certain Master Power Purchase and Sale
Agreement dated as of November 12, 2009 (the "Master Agreement"), and that certain
Transaction Agreement of the same date entered into under the Master Agreement (the
"Transaction Agreement", and together with the Master Agreement and any other transactions
entered into under the Master Agreement, the "PPA"), pursuant to which LP&L is purchasing 170
megawatts of Partial Requirements Power Service, as defined in the Transaction Agreement, from
SPS;
WHEREAS, LP&L and SPS intend to implement certain scheduling protocol changes in
connection with the PPA, effective June 1, 2021, in a form substantially similar to the attached
amendments in Exhibit 1, which is being attached for informational purposes only;
WHEREAS, LP&L and SPS are also parties to that certain Letter Agreement entitled
"Letter Agreement between SPS and LP&L re Future Costs under SPP NITSAs", dated March 21,
2017 (the "Transmission Letter Agreement"), related to transmission charges allocable to LP&L
in connection with the PPA;
WHEREAS, LP&L previously received all necessary approvals to transfer a portion of its
load (the "Affected Load") from the electric transmission system and market operated by the
Southwest Power Pool, Inc. (such transmission system and market, "SPP") to the electric
transmission system and market operated by the Electric Reliability Council of Texas, Inc. (such
transmission system and market, "ERGOT") and is in the process of implementing the integration
of such Affected Load into ERCOT;
WHEREAS, LP&L currently intends to seek all necessary approvals to transfer its entire
remaining load (the "Remaining Load") from SPP to ERCOT (the "Remaining Load
Integration");
WHEREAS, upon integration of LP&L's Remaining Load into ERCOT, LP&L will no
longer need the Partial Requirements Power Service being provided under the PPA; therefore,
LP&L's payment obligations under the PPA (including the obligations under the Transmission
Letter Agreement related thereto) will be stranded costs of LP&L (as contemplated by Chapter 40
of the Texas Public Utility Regulatory Act) and the Parties have agreed to terminate the PPA and
the Transmission Letter Agreement in accordance with the terms of this Agreement;
WHEREAS, SPS has agreed to (a) support LP&L's regulatory filings necessary for the
Remaining Load Integration, and (b) make any and all necessary regulatory filings required to
terminate the PPA early; and
WHEREAS, LP&L has agreed to make certain payments to SPS as set forth herein; and
NOW, THEREFORE, in consideration of the premises above, the mutual covenants and
agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:
Section 1. Definitions
"Affected Load" has the meaning specified in the recitals.
"Affiliate" means, with respect to either Party, any entity which is a direct or indirect parent
or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is
owned or controlled by such Party, or (iii) is under common ownership or control with such Party.
For purposes of this definition, "control" of an entity means the power, directly or indirectly, either
to (a) vote 50% or more of the securities having ordinary voting power for the election of directors
or Persons performing similar functions or (b) direct or cause the direction of the management and
policies, whether by contract or otherwise.
"Agreement" has the meaning specified in the preamble.
"Annual Payment" has the meaning specified in Section 2.1.
"Asset Purchase Agreement" means that certain Asset Purchase Agreement by and
between SPS and the City of Lubbock dated as of November 12, 2009.
"Business Day" means any day other than (i) a Saturday or Sunday, and (ii) any other day
on which commercial banks generally in the State of Texas are authorized or required by law to
close.
"ERCOT" has the meaning specified in the recitals or any successor entity or entities
thereto that operate(s) the independent system currently operated by ERCOT.
"Execution Date" has the meaning specified in the preamble.
"FERC" means the Federal Energy Regulatory Commission or any successor thereto.
"Governmental Approval" means any authorization, consent, approval, license or
exemption of, registration or filing with, or report or notice to, any Governmental Authority.
"Governmental Authority" means any federal, state, provincial, local or municipal
government, any political subdivision thereof or any other governmental, congressional or
parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau,
or entity with authority to bind a Party at law; provided, however, that "Governmental Authority"
shall not in any event include any Party.
"Integration Approvals" means all ERCOT, FERC, and PUCT approvals, in each case,
to the extent that LP&L reasonably determines such approvals are necessary or appropriate for the
Remaining Load Integration and for the implementation of the transactions contemplated by
Section 2.5 of this Agreement.
"Integration Date" shall be defined as the first date that the Remaining Load is integrated
into ERCOT, which date shall occur after all transmission facilities necessary to integrate the
Remaining Load into ERCOT are operational, all necessary Integration Approvals have been
received, and all other Governmental Approvals necessary for such integration have been received.
"Integration Filings" means all applications, comments, petitions or other filings made by
the Parties to obtain the Integration Approvals, including any rehearing, reconsideration, or court
review as may be reasonably necessary or appropriate.
"Interest Rate" means an annual rate of interest equal to the amounts provided in Texas
Government Code § 2251.025.
"Junior Lien Notes" shall mean the notes of the City issued pursuant to Ordinance No.
2019 — 00046 adopted by the City Council of the City of Lubbock on April 23, 2019.
"LP&L" has the meaning specified in the preamble.
"LP&L Load" has the meaning set forth in the LP&L NITS Agreement.
"LP&L NITS Agreement" shall mean the service agreement for Network Integration
Transmission Service between SPP and SPS, designated as SPP Seventh Revised Service
Agreement No. 1139, as amended from time to time.
"Lump Sum Payment" has the meaning specified in Section 2.2.
"Master Agreement" has the meaning specified in the recitals.
"Net Revenues" has the meaning assigned to such term in the Senior Lien Bond Ordinance.
"Party" and "Parties" have the meaning specified in the preamble.
"Payment Start Date" means the later of (a) the 151h day of the first month that commences
after the Termination Date, and (b) June 15, 2023.
"Person" means any natural person, corporation, limited liability company, partnership,
trust, joint venture, company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.
"PPA" has the meaning specified in the recitals.
"PUCT" means the Public Utility Commission of Texas or any successor agency or
agencies thereto that provides regulatory oversight of ERCOT or the electric power industry in
Texas.
"Remaining Load" has the meaning specified in the recitals.
"Remaining Load Integration" has the meaning specified in the recitals.
"Reserved Contracts" has the meaning specified in Section 5.3.
"Senior Lien Bond Ordinance" shall mean Ordinance No. 2018 — 00073 adopted by the
City Council of the City of Lubbock on June 28, 2018.
"Senior Lien Bonds" has the meaning assigned to the term "Bonds Similarly Secured" in
the Senior Lien Bond Ordinance.
"SPP" has the meaning specified in the recitals.
"SPP Charges" shall mean all charges or credits applicable to the service provided under
the LP&L NITS Agreement under SPP's Open Access Transmission Tariff.
"SPS" has the meaning specified in the preamble.
"Termination Date" means the Integration Date, provided that if all necessary FERC
approvals have been granted but the Integration Date has not occurred on or prior to May 31, 2023,
the Termination Date shall be such date as selected by LP&L in its sole discretion upon thirty (30)
days' prior written notice to SPS.
"Transaction Agreement" has the meaning specified in the recitals.
"Transmission Letter Agreement" has the meaning specified in the recitals.
Section 2. Payment by LP&L; Termination.
Section 2.1 Annual Pats. Not later than (a) the Payment Start Date and (b)
each yearly anniversary of the Payment Start Date until, and including on, the fifth
anniversary thereof, LP&L shall make a payment (the "Annual Payment") to SPS in the
amount of $14,950,223, subject to adjustment pursuant to the applicable provisions of
Section 2.3. If the due date for an Annual Payment does not fall on a Business Day, then the
due date for such Annual Payment shall be the following Business Day. Late payments of
any Annual Payment shall bear interest at the Interest Rate until paid.
Section 2.2 Lump Sum Option. LP&L may elect, in its sole discretion on the
Payment Start Date, to prepay all Annual Payments by paying a lump sum (the "Lump Sum
Payment") in an amount equal to $77,500,000, subject to adjustment pursuant to Section
2.3. After one or more Annual Payments have been made, LP&L may elect, on an
anniversary of the Payment Start Date, to pay off the remaining Annual Payments in
accordance with the Payoff Amount Table:
Payoff Amount Table
On the first anniversary of the Payment Start Date, after one
$66,459,138
Annual Payment has been made to SPS:
On the second anniversary of the Payment Start Date, after two
$54,728,223
Annual Payments have been made to SPS:
On the third anniversary of the Payment Start Date, after three
$42,264,125
Annual Payments have been made to SPS:
On the fourth anniversary of the Payment Start Date, after four
$29,021,021
Annual Payments have been made to SPS:
Section 2.3 PPA Payment and Annual Payment Credits.
If the Termination Date occurs on or after March 1, 2023, and prior to May 31, 2023, then
the Lump Sum Payment amount under Section 2.2 will be increased by $61,000.00 for
each day by which the Termination Date occurs prior to May 31, 2023. If, for any reason,
the Termination Date occurs after May 31, 2023, then the Lump Sum Payment will be
reduced by $61,000.00 for each day by which the Termination Date occurs after May 31,
2023, but no reduction will apply for any day that occurs after December 31, 2023. If
LP&L elects to use Annual Payments rather than a Lump Sum, then the total amount of
any increases or reductions under this Section 2.3 shall be applied to the first Annual
Payments that become due until exhausted.
Section 2.4 Limited Obligation; Pledge and Perfection of Pledge.
(a) LP&L's payment obligations under Sections 2.1 and 2.5(c) of this Agreement are
limited obligations of the City of Lubbock, payable from the Net Revenues and
such obligations shall be junior and subordinate in rank and dignity to the Senior
Lien Bonds and Junior Lien Notes. The payment obligations of Sections 2.1 and
2.5(c) do not constitute a prohibited indebtedness of the City of Lubbock and the
Annual Payments shall never be payable out of funds raised or to be raised by
taxation. Nothing in this provision excuses LP&L's payment obligations of
Sections 2.1 and 2.5(c) under this Agreement, and the Parties expressly
acknowledge that SPS's obligations under this Agreement are conditioned on
satisfaction of LP&L's full payment obligations under Sections 2.1 and 2.5(c) of
this Agreement.
(b) To provide security for the payment of the payment obligations of Sections 2.1 and
2.5(c) (including principal and interest) under this Agreement, there is hereby
pledged, subject to the provisions of the documents governing and evidencing the
Senior Lien Bonds and the Junior Lien Notes, the Net Revenues, such pledge of
Net Revenues, however, being junior and subordinate in rank and dignity to the lien
and pledge securing the payment of the Senior Lien Bonds and the Junior Lien
Notes, whether now in effect or arising hereinafter.
(c) To the extent that Chapter 1208 of the Texas Government Code applies to the
pledge of the Net Revenues granted by LP&L herein, such pledge is, therefore,
valid, effective, and perfected. For the avoidance of doubt, to the extent that the
pledge of the Net Revenues granted by LP&L is subject to the filing requirements
of Chapter 9, as amended, of the Texas Business & Commerce Code, in order to
preserve to SPS the perfection of the security interest in this pledge, LP&L agrees
to take such measures as are reasonable and necessary under Texas law to comply
with the applicable provisions of Chapter 9 and enable a filing to perfect the
security interest in this pledge to occur, reflecting LP&L as debtor and SPS as
creditor
(d) To ensure the full and prompt payment under this Agreement, LP&L covenants and
agrees that rates and charges for electric power and energy or transmission and
distribution services afforded by the City of Lubbock's Electric Light and Power
System are established and will be maintained to provide revenues sufficient at all
times to timely pay:
(i) all necessary and reasonable expenses of operating and maintaining the City
of Lubbock's Electric Light and Power System;
(ii) the amounts required to make all payments and deposits in respect of the
Senior Lien Bonds;
(iii) the amounts required to make all payments and deposits in respect of the
Junior Lien Notes; and
(iv) all payment obligations under Sections 2.1 and 2.5(c) of this Agreement.
(e) LP&L represents, warrants, and agrees that this Agreement, including LP&L's
payment obligations under Sections 2.1 and 2.5(c) of this Agreement, is fully
enforceable against LP&L and otherwise complies with applicable Texas law,
including but not limited to the Texas Government Code and Article XI, Section 5
of the Texas Constitution. LP&L and the City of Lubbock waive any right to claim
that this Agreement, including LP&L's payment obligations under Sections 2.1 and
2.5(c), is not enforceable under Texas law.
Section 2.5 Termination of PPA and Transmission Letter Agreement.
(a) Upon acceptance by FERC of this Agreement, the PPA and Transmission Letter
Agreement will terminate on the Termination Date without any further obligation
or liability of either Party except as provided in Section 2.5(c) and Section 2.5(d).
88.92% of all payments by LP&L pursuant to Section 2.1 and/or Section 2.2, as
adjusted by Section 2.3, constitutes compensation for power sales -related shifted
costs under the PPA. 11.08% of all payments by LP&L pursuant to Section 2.1
and/or Section 2.2, as adjusted by Section 2.3, constitutes compensation for
transmission -related shifted costs under the Transmission Letter Agreement.
(b) SPS shall file tariff sheets in a form acceptable to LP&L to effectuate FERC's
acceptance of the termination of the PPA and the Transmission Letter Agreement.
(c) Pursuant to invoices issued under the PPA, SPS currently recovers SPP Charges
that are assessed to SPS under the LP&L NITS Agreement and that are attributable
to service to LP&L Load. Notwithstanding anything herein, SPS invoices to LP&L
shall include any and all SPP Charges incurred, apportioned, or assigned to SPS to
serve LP&L Load under the LP&L NITS Agreement, including such SPP Charges
(e.g., Schedule IA, Schedule 11 and Attachment Z2, etc.) billed to SPS after LP&L
departs the SPP system (e.g., because SPP uses lagging billing determinants for
Schedules I and 11). For the avoidance of doubt, SPS shall continue to invoice
LP&L for the SPP Charges described in this sub -section as they are charged or
credited to SPS, notwithstanding the termination of the PPA on the Termination
Date, until the time specified in Section 2.4(d) or in Section 2.4(e), as applicable.
To the extent LP&L notifies SPS that LP&L believes any SPP Charges have been
improperly calculated or charged under the LP&L NITS Agreement, the SPP tariff
or applicable law, SPS shall cooperate with LP&L in resolving such issue,
including, to the extent reasonably requested by LP&L, disputing the SPP Charges
with SPP or assisting LP&L if LP&L initiates a proceeding with respect to such
SPP Charges at FERC; provided, however, that LP&L shall be responsible for the
litigation costs associated with such assistance provided by SPS.
(d) Except as provided in Section 2.5(e), SPS shall invoice LP&L for all SPP Charges
(charges and credits) described in Section 2.5(c) for twenty-four (24) months
following the Termination Date. Any SPP Charges consisting of charges shall be
due from LP&L to SPS and any SPP Charges consisting of credits shall be due from
SPS to LP&L, in each case in a manner and pursuant to timing that would have
applied absent the Termination Date. Unless the SPP Charges are those described
in Section 2.5(e), LP&L shall have no further obligation or entitlement to pay or
receive SPP Charges that are assessed or credited by SPP to SPS after the twenty-
fourth (241h) month following the Termination Date.
(e) Without prejudice to LP&L rights and SPS's obligations under the last sentence of
Section 2.5(c), to the extent that SPP at any time bills or credits SPS for Attachment
Z2 credit payments that are or were associated with SPS's service to LP&L under
Transmission Service Reservations 77917219 or 84123608, SPS shall bill or credit
LP&L for such costs or credits.
Section 2.6 Default.
(a) In addition to all the rights and remedies provided by the laws of the State of Texas
during the continuance of an Event of Default, SPS shall be entitled to enforce
under applicable law its rights against the Net Revenues, including foreclosing on
the pledge securing same, all in accordance with the applicable provisions of
Chapter 9 of the Uniform Commercial Code as in effect in the State of Texas and
other applicable Texas law. Upon the existence and during the continuance of an
Event of Default, SPS shall be entitled to proceed to protect and enforce all rights
to payment in full of all unpaid portions of the payment obligations under Sections
2.1 and 2.5(c) conferred hereunder by such appropriate judicial proceedings as it
shall deem most effectual to protect and enforce any such rights, either by suit in
equity or by action at law, or by a writ of mandamus issued by a court of proper
jurisdiction, compelling and requiring LP&L and its officers to observe and
perform any payment, covenant, condition or obligation prescribed in this
Agreement. No delay or omission to exercise any right or power accruing upon
any default shall impair any such right or power, nor shall such delay or omission
be construed to be a waiver of any such default or acquiescence therein, and every
such right and power may be exercised from time to time and as often as may be
deemed expedient.
(b) An "Event of Default" means any of the following:
(i) failure of LP&L to make any payment hereunder when due and such failure
continues for a period of 60 days;
(ii) Failure of LP&L to perform in any material respect any of its other
obligations hereunder and such failure continues for 60 days after notice by SPS to
LP&L thereof; or
(iii) LP&L becomes a debtor in a proceeding under the United States
Bankruptcy Code provided that, if that proceeding is an involuntary proceeding,
that proceeding is not dismissed within 60 days of the date of its filing.
(c) No remedy herein conferred or reserved is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder now or hereafter
existing at law or in equity.
Section 3. Effectiveness and Regulatory Filings.
Section 3.1 FERC Filing. The Parties acknowledge that, except as set forth in
Section 3.3, this Agreement will not become effective unless and until it is approved or
accepted by FERC. LP&L acknowledges that, once approved or accepted by FERC, this
Agreement cannot be modified, abrogated, or set aside in any forum except FERC; provided
that if FERC declines or refuses to exercise jurisdiction, then any judicial proceeding
(excluding appeals of FERC orders) seeking to modify, abrogate, or set aside this
Agreement shall be brought exclusively in any court of competent jurisdiction located in
the State of Texas; provided further that, for the purposes of the immediately preceding
clause, until such time as FERC declines or refuses jurisdiction, neither party shall present
any argument or support any argument that FERC does not have jurisdiction over this
Agreement. As soon as practicable after this Agreement is approved by the PUCT (or earlier
if the Parties, acting reasonably, agree that an earlier filing is prudent), SPS, at its sole cost
and expense, shall make all filings with FERC necessary to implement the transactions
contemplated hereby. Prior to making such filings, SPS shall provide LP&L meaningful
advance opportunity to review and provide comment on the filings. LP&L will keep such
drafts confidential to the extent permitted by law and will support such filings at its own
expense.
Section 3.2 PUCT Review. The Parties acknowledge that, except as set forth in
Section 3.3, this Agreement will not become effective unless and until it is approved by the
PUCT. The Parties agree to request approval of the Agreement from the PUCT as a part of
Integration Approval. The Parties agree to reasonably cooperate and undertake all steps
necessary to obtain PUCT approval of the Agreement, including findings that the terms of
the Annual Payment and Lump Sum Payment are in the public interest and a necessary part
of the Remaining Load Integration. Each Party will be solely responsible for its respective
costs associated with seeking PUCT approval.
Section 3.3 Initial Effectiveness and Termination. Notwithstanding the
conditional effectiveness of this Agreement as set forth in Section 3.1 and Section 3.2, the
following provisions of this Agreement are effective as of the Execution Date: Section 3,
Section 4, Section 7, Section 8 and all definitions and references needed to interpret such
provisions. If this Agreement has not become fully effective as set forth in Section 3.1 and
Section 3.2 by December 31, 2025, or the Termination Date has not occurred on or prior to
such date, then, unless the Parties agree (each in its sole discretion) to extend such deadline,
this Agreement will terminate, any pending filing with FERC or the PUCT for approval of
this Agreement will be withdrawn, and neither Party will have any remaining obligations
under this Agreement after such date other than in respect of breaches of this Agreement
that arose prior to such date.
Section 3.4 Integration Filing Support. At its sole cost and expense, SPS will
support LP&L's Integration Filings and Integration Approval so long as the Integration
Filings and Integration Approval are consistent with the terms of this Agreement. SPS's
support shall include:
(a) reasonably cooperating with LP&L in (i) the preparation of applications for and
prosecution of all Integration Filings to be made by LP&L, including any rehearing,
reconsideration, or court review as may be reasonably necessary or appropriate, and
(ii) otherwise seeking or obtaining the Integration Approvals and approval of the
Agreement;
(b) not opposing, nor permitting any Affiliate to oppose, any Integration Filing made
by LP&L or make any public statements opposing the Remaining Load Integration;
(c) supporting all Integration Filings made by LP&L, as LP&L may reasonably request
which shall include the statement that the settlement adequately protects SPS
customers; and
(d) provide LP&L such information as LP&L may reasonably request from time to
time in order to prepare and prosecute the Integration Filings.
SPS shall have complete discretion to determine the content and manner of filing its
pleadings, testimony, and any other filings it makes in support of the Integration Filings and
Integration Approval; provided that SPS shall use best efforts to apprise LP&L of the content and
scope of any such support prior to filing or submission.
Section 3.5 No Other Payments. SPS agrees that it will not seek, nor permit any
Affiliate to seek, on behalf of itself or any customers, and SPS will not encourage or support
any filings by third parties, at FERC, at the PUCT, in front of any other Governmental
Authority or in any other forum, any exit payments, hold -harmless payments or any other
payments in any way related to the termination of the PPA, the Remaining Load Integration,
or LP&L ceasing to purchase electricity that is transmitted in SPP or to purchase any other
products or services from SPP and that SPS's sole compensation related thereto is LP&L's
payment of the Annual Payments or the Lump Sum Payment, as applicable.
Section 3.6 Allocation of Pam. In all relevant Integration Filings, SPS and
LP&L shall, in such filings, reflect that the Annual Payments or Lump Sum Payment will
be allocated by SPS consistent with the relative shifted cost compensation percentages
(transmission vs. power supply) described in Section 2.5(a).
Section 3.7 Modifications to Terms. If, in the course of preparing any
Integration Filing or pursuing any Integration Approval, either Party reasonably determines,
based on responses or input from any Governmental Authority (including non -binding input
from staff of the PUCT), that modifications to the terms of this Agreement or the
transactions contemplated hereby may be necessary in order to obtain an Integration
Approval, then, upon request of such Party, the Parties will negotiate in good faith with
respect to such modifications to the extent necessary to obtain Integration Approvals and
approval of this Agreement, provided that neither Party is obligated to modify any such
terms if such modification would either (a) require an additional payment from such Party,
(b) reduce the amount of, or eliminate, any payment required under this Agreement, or (c)
in the reasonable judgment of such Party, result in a material adverse impact on such Party.
Section 4. SPS Rates.
Following the Execution Date, SPS shall not submit any new rate filings at FERC that would alter
LP&L's payment obligations under the PPA; provided that, the foregoing: (a) does not apply to
annual updates of the formula rate under the PPA; (b) shall not prohibit SPS from continuing to
seek acceptance for the rates it has previously filed at FERC or from submitting any filings at
FERC necessary to implement the termination of the PPA pursuant to the terms of the Settlement
Agreement; and (c) shall not prohibit SPS from seeking acceptance for rate changes in connection
with changes in law or regulation, changes directed by FERC, or natural disasters or any force
majeure event. With respect to the foregoing, '!force majeure" means events beyond the
reasonable control of SPS that cannot be anticipated as of the Execution Date and cannot be
overcome by the exercise of reasonable efforts.
Section 5. Other Contracts.
Section 5.1 Other Contracts. The Parties intend that, following the
Termination Date, the contractual relationship between the Parties be limited to this
Agreement and certain easements and crossing agreements necessary for the operation of
each Party's respective system; provided that the foregoing intent does not apply to the
existing water use agreement between SPS and the City of Lubbock (which agreement was
not entered into by and through LP&L) or to the franchise agreement pertaining to SPS's
retail service territory in the City of Lubbock. Following the date hereof until December
31, 2022, the Parties will cooperate in good faith to: (i) identify any other contracts existing
as of the Execution Date between the Parties that the Parties reasonably believe should not
continue beyond the Termination Date; and (ii) take all reasonable and necessary steps to
terminate any such contracts so identified and release any claims related thereto in a manner
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consistent with Section 6 below. Neither Party will unreasonably withhold consent to the
(a) termination of or (b) termination of and release of and from such contracts. In addition,
following the date hereof until December 31, 2022, the Parties will cooperate in good faith
to: (i) identify any real property described in Section 7.21 of the Asset Purchase Agreement
or any other real property of LP&L where SPS equipment is lawfully located and for which
a separate recorded easement does not exist; and (ii) negotiate separate easement agreements
for such real property, which easement agreements shall be consistent with industry practice
and shall address removal and restoration obligations for SPS property that ceases to be
necessary for the operation of SPS's transmission system.
Section 5.2 Delegation of Authority. The Electric Utility Board and the City
Council of the City of Lubbock hereby delegate authority to the Director of Electric Utilities,
or his designee, to effectuate the requirements of Section 5.1.
Section 5.3 Reserved Contracts. Section 5.1 of this Agreement will not apply
to, and will in no way effect any of the following ("Reserved Contracts"): (1) Section 2.3
of the Asset Purchase Agreement; (2) Section 2.4 of the Asset Purchase Agreement; and (3)
the Amended and Restated Contract for Sale and Purchase of Treated Sewage Effluent
Water, dated November 12, 2009, which was attached to the Asset Purchase Agreement as
Exhibit F. The obligations of the Parties related to the foregoing Reserved Contracts is
expressly reserved in this Agreement and shall survive the Termination Date. This Section
5.3 does not exclude the possibility that additional other contracts may, consistent with
Section 5.1, continue after the Termination Date.
Section 6. Release.
Effective as of the Termination Date, LP&L and SPS, hereby FULLY AND FINALLY
RELEASE, ACQUIT, AND DISCHARGE each other and all of their related Affiliates, members,
entities, officers, directors, elected officials, appointed officials, partners, agents, employees,
successors, attorneys, shareholders, and insurers, of and from any and all claims, demands, and
causes of action of whatsoever nature or character which either may now have or hereafter have
against the other, arising out of or in any way connected to or related to the Asset Purchase
Agreement, PPA, the termination of the PPA, LP&L ceasing to purchase electricity that is
transmitted in SPP, and/or LP&L purchasing capacity or other products in SPP, in each case
whether known or unknown, including by example, but not limited to, damages for breach of
contract, common law claims, statutory penalties, administrative proceedings or charges,
attorney's fees, costs, interest, and expense of any type whatsoever arising out of or in any way
connected with or related to any of the foregoing. It is expressly agreed that all Parties intend this
RELEASE to be as broad and comprehensive as possible so that each Party shall never be liable,
directly or indirectly, to the other for any claims, demands, actions, or causes of action arising out
of or in any way connected with or related to the Asset Purchase Agreement, the PPA, the
termination of the PPA, and/or LP&L ceasing to purchase electricity that is transmitted in SPP, it
being the Parties' express intention that the consideration stated herein fully and completely
resolves any and all such claims and potential causes of action, whether asserted or unasserted.
Notwithstanding the foregoing, except as otherwise provided in this Agreement, the obligations of
the Parties expressly set forth in this Agreement shall survive the Termination Date. This Section
6 will not apply to, and will in no way effect the Reserved Contracts. The obligations of the Parties
11
related to the foregoing Reserved Contracts are expressly reserved in this Agreement and shall
survive the Termination Date.
Section 7. Representations and Warranties.
As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby
represents and warrants to the other Party as of the Execution Date as follows:
(a) it has all requisite power and authority, corporate or otherwise, to enter into, deliver
and to perform its obligations under this Agreement and to carry out the terms and
conditions hereof and the transactions contemplated hereby;
(b) there is no litigation, action, suit, proceeding with service of process accomplished
with respect to such Party or investigation pending or, to the best of such Party's
knowledge, threatened, in each case before or by any Governmental Authority and,
in each case, which could reasonably be anticipated to materially and adversely
affect such Party's ability to perform its obligations under this Agreement or that
questions the validity, binding effect or enforceability hereof, any action taken or
to be taken by such Party pursuant hereto, or any of the transactions contemplated
hereby;
(c) the execution, delivery and performance of this Agreement by such Party have been
duly authorized by all necessary action on the part of such Party and its governing
body and do not require any approval or consent of any security holder of such
Party or any holder (or any trustee for any holder) of any indebtedness or other
obligation of such Party;
(d) this Agreement has been duly executed and delivered on behalf of such Party by an
appropriate officer or authorized Person of such Party and constitutes the legal,
valid and binding obligation of such Party, enforceable against it in accordance with
its terms, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors' rights
generally and by general principles of equity;
(e) the execution, delivery and performance of this Agreement by such Party shall not
violate any provision of any law, order, writ, judgment, decree or other legal or
regulatory determination applicable to it;
(f) the execution, delivery and performance by such Party of this Agreement, and the
consummation of the transactions contemplated hereby, including the incurrence
by such Party of its financial obligations under this Agreement, shall not result in
any violation of any term of any material contract or agreement applicable to it, or
any of its charter or bylaws or of any license, permit, franchise, judgment, writ,
injunction or regulation, decree, order, charter, law, ordinance, rule or regulation
applicable to it or any of its properties or to any obligations incurred by it or by
which it or any of its properties or obligations are bound or affected, or of any
determination or award of any arbitrator applicable to it, and shall not conflict with,
12
or cause a breach of, or default under, any such term or result in the creation of any
lien upon any of its properties or assets;
(g) it is not aware of any claims, demands, and causes of actions of whatsoever nature
that currently exist that would be released pursuant to Section 6 if the Termination
Date occurred on the Execution Date;
(h) to the best of the knowledge and belief of such Party, no Governmental Approval
is required in connection with the valid authorization, execution, delivery and
performance by such Party of this Agreement or the consummation of any of the
transactions contemplated hereby other than those Governmental Approvals that
have been obtained, the Integration Approvals, approval or acceptance of this
Agreement by FERC and the PUCT, and the associated approvals or acceptance by
FERC to terminate the PPA; and
(i) it enters this Agreement as a bona -fide, arms -length transaction involving the
mutual exchange of consideration and, once executed by both Parties, considers
this Agreement a legally enforceable contract.
Section 8. Miscellaneous Provisions.
Section 8.1 Standard of Review. The Parties agree that the standard of review
for changes proposed by a Party to the Settlement Agreement that are not agreed to by both
Parties shall be the most stringent standard under the Mobile -Sierra doctrine. United Gas
Pipe Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332 (1956); Federal Power Comm'n v.
Sierra Pac. Power Co., 350 U.S. 348 (1956). The standard of review for changes to the
Settlement Agreement proposed by a non -Party or the Federal Energy Regulatory
Commission acting sua sponte shall be the ordinary "just and reasonable" standard under
the Mobile -Sierra doctrine.
Section 8.2 Governing Law; Jurisdiction; and Venue. EXCEPT IN THE
EVENT OF A CONFLICT BETWEEN THE LAWS OF THE STATE OF TEXAS AND
THE LAWS AND REGULATIONS OF THE UNITED STATES AND THE FEDERAL
ENERGY REGULATORY COMMISSION, IN WHICH CASE SUCH FEDERAL LAW
SHALL GOVERN, THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY CONFLICTS OF
LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER
STATE' S LAW.
Subject to and without limiting the provisions of Section 3.1, any disputes arising out of or
related to this Agreement shall be brought either: (i) in a state or federal court of competent
jurisdiction located in the State of Texas; or (ii) at FERC. Notwithstanding the foregoing,
nothing herein shall limit either Party's right to invoke FERC's jurisdiction over any dispute
arising out of or related to this Agreement or to appeal any FERC order related thereto in
any U.S. court of appeals that would otherwise have jurisdiction over the appeal.
13
Section 8.3 Notices. Any notice, demand, statement, or request required or
authorized by this Agreement to be given by one Party to the other Party (or to any third
party) shall be in writing and shall either be sent by email transmission, courier, or personal
delivery (including overnight delivery service) to each of the notice recipients and addresses
specified in the attached Schedule 8.3 for the receiving Party. Any such notice, demand, or
request shall be deemed to be given (i) when delivered by email transmission, or (ii) when
actually received if delivered by courier or personal delivery (including overnight delivery
service); provided that, if a Party delivers a notice, demand or request by any means other
than email transmission, such notice shall not be effective unless and until the Party also
delivers a copy thereof to the other Party's email address specified in Schedule 8.3. Each
Party shall have the right, upon ten (10) days' prior written notice to the other Party, to
change its list of notice recipients and addresses in Schedule 8.3. The Electric Utility Board
and the City Council of the City of Lubbock hereby delegate to the Director of Electric
Utilities the authority to update Schedule 8.3 as provided herein.
Section 8.4 Entirety; Amendments. This Agreement, including the Exhibits,
Schedules and attachments hereto, constitutes the entire agreement between the Parties and
supersedes all prior discussions and agreements between the Parties with respect to the
subject matter hereof. There are no prior or contemporaneous agreements or representations
affecting the same subject matter other than those expressed herein. No amendment,
modification, supplement, or change hereto shall be enforceable unless reduced to writing,
and duly executed by both Parties.
Section 8.5 No Waiver. No waiver of any breach of any of the terms of this
Agreement shall be effective unless such waiver is in writing and signed by the Party against
whom such waiver is claimed. No waiver of any breach or breaches shall be deemed a
waiver of any other subsequent breach.
Section 8.6 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity
or unenforceability, the remainder of this Agreement and the application of such provision
to other Persons or circumstances shall not be affected thereby, but rather shall be enforced
to the maximum extent permissible under applicable law, so long as (1) the economic and
legal substance of the transactions contemplated hereby is not affected in any materially
adverse manner as to either Party and (2) LP&L remains fully obligated to make all
payments under Sections 2.1, 2.2, 2.3, and 2.5(c) of this Agreement.
Section 8.7 Costs. Each Party shall bear its own costs and expenses incurred
in connection with the negotiation of this Agreement and the performance of such Party's
duties and obligations hereunder.
Section 8.8 Schedules. Any and all Exhibits, Schedules, and attachments
referenced in this Agreement are hereby incorporated herein by reference and shall be
deemed to be an integral part hereof.
14
Section 8.9 Interpretation. References to "Sections," "Schedules" and
"Exhibits" shall be to Sections, Schedules and Exhibits, as the case may be, of this
Agreement unless otherwise specifically provided. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect. Any of the terms
defined herein may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference. The use herein of the word "include" or "including",
when following any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately following
such word or to similar items or matters, whether or not nonlimiting language (such as
"without limitation" or "but not limited to" or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or matters that fall
within the broadest scope of such general statement, term or matter. Except where expressly
provided otherwise, any reference herein to any agreement or document includes all
amendments, supplements or restatements to and of such agreement or document as may
occur from time to time in accordance with its terms and the terms hereof, and any reference
to a party to any such agreement includes all successors and assigns of such party thereunder
permitted by the terms hereof and thereof.
Section 8.10 Counterparts. This Agreement may be executed and acknowledged
in multiple counterparts and by the Parties in separate counterparts, each of which shall be
an original and all of which shall be and constitute one and the same instrument.
Section 8.11 Non -Boycott of Israel. SPS hereby warrants that it is in compliance
with Chapter 2271, Subtitle F, Title 10 of the Texas Government Code by verifying that:
(1) it does not boycott Israel and (2) it will not boycott Israel during the term of this
Agreement.
Section 8.12 Amendment to Scheduliniz Protocol. The Parties agree to enter into
an amendment to the scheduling protocol to the PPA promptly following the execution
hereof, which amendment shall be substantially in the form attached hereto as Exhibit 1.
The City Council of the City of Lubbock and the Electric Utility Board of the City of
Lubbock hereby delegate authority to the Mayor of the City of Lubbock and the Chairman
of the Electric Utility Board, respectively, to execute this amendment, substantially in the
form attached hereto as Exhibit 1.
Section 8.13 Texas Public Information Act.
(a) The requirements of Subchapter J, Chapter 552, Government Code, may apply to
this Agreement and SPS agrees that the Agreement can be terminated if SPS
knowingly or intentionally fails to comply with a requirement of that subchapter.
The preceding sentence applies only to the extent that this Settlement Agreement is
deemed by a court of competent jurisdiction or the Texas Attorney General to be a
contract described by Section 552.371(a) of the Texas Government Code. No
provision of this Settlement Agreement shall be deemed an agreement by the
Parties that Subchapter J, Chapter 552 of the Texas Government Code applies to
this Settlement Agreement.
15
(b) To the extent Subchapter J, Chapter 552, Government Code applies to this
Agreement, SPS agrees to: (1) preserve all contracting information related to the
Agreement as provided by the records retention requirements applicable to the
governmental body for the duration of the contract; (2) promptly provide to the
governmental body any contracting information related to the Agreement that is in
the custody or possession of the entity on request of the governmental body; and
(3) on completion of the contract, either: (A) provide at no cost to the governmental
body all contracting information related to the Agreement that is in the custody or
possession of the entity; or (B) preserve the contracting information related to the
Agreement as provided by the records retention requirements applicable to the
governmental body.
IN WITNESS WHEREOF, this Agreement has been executed, approved, and agreed to by
the Parties hereto in multiple counterparts, each of which shall be deemed an original, on the date
Execution Date by the Parties hereto by and through their undersigned duly authorized
representatives.
[Separate Signature Page(s) Attached]
16
CITY OF LUBBOCK, a Texas Home Rule
Municipal Corporation, acting through its City
Council
DANIEL M. POPE, MAYOR
ATTEST:
Beck Garza, City Secretark
APPROVED AS TO CONTENT:
David McCalla, Directo of Electric Utilities
APPROVED AS TO FORM:
Jenny iith eneral Counsel
,/01�'
Chad Mills, Haynes and Boone, LLP, Outside Counsel
CITY OF LUBBOCK, acting through the
Electric Utility Board of the City of Lubbock
DAN ODOM, CHAIRMAN
ATTEST:
APPROVED AS TO CONTENT:
G. C+O z
David McCalla, Director of Electric Utilities
APPROVED AS TO FORM:
Je Smi General Counsel
Chad Mills, Haynes and Boone, LLP, Outside Counsel
SOUTHWESTERN PUBLIC SERVICE
COMPANY
By:
Name: David Hudson
Title: President, Southwestern Public
Service Company
Exhibit 1
Amendment to Scheduliniz Protocol
[Attached]
ATTACHMENT 3
Amended and Restated Partial Requirements Power Service Agreement
Scheduling Protocol
The City of Lubbock, Texas, a home rule municipal corporation organized under the laws of
the State of Texas, acting by and through Lubbock Power & Light (the "Customer" or
"LP&L") and Southwestern Public Service Company (the "Company" or "SPS"), hereby
enter into this Amended and Restated Partial Requirements Power Service Agreement
Scheduling Protocol (the "Protocol") on the 27th day of May, 2021. This Protocol
supplements, forms part of, and is expressly subject to that certain Transaction Agreement
for the sale of Partial Requirements Power Service (the "PRPS" or "Agreement") executed
by the Parties on the 12`h day of November, 2009, which is on file with the Federal Energy
Regulatory Commission ("FERC" or "Commission") under the SPS designation Rate
Schedule No.138. Each of SPS and LP&L may be referred to individually herein as a "Party"
and, collectively, as the "Parties".
The initial level of energy and capacity that SPS will sell to LP&L pursuant to the PRPS shall
be 170 MW on June 1, 2019, and shall increase by one and a fifth percent (1.2%) each
succeeding June 1, through the term of the Agreement (the "Contract Quantity"). The PRPS
contains transaction scheduling provisions and terminology suited more toward operations
within a bilateral or Energy Imbalance Market design as the transaction agreement was entered
into prior to the inception of the Southwest Power Pool, Inc. ("SPP") Integrated Marketplace
("IM"). The purpose of this Protocol is to memorialize an understanding between LP&L and
SPS regarding Section 5 of the PRPS, "Scheduling", as well as resulting charges, given present
operations under the SPP IM. In the event of a conflict between this Protocol and the PRPS,
the PRPS shall prevail.
1) Load Scheduling and Market Settlements in the SPP IM.
Upon termination of that certain Capacity and Load Scheduling Service Protocol, entered
into by SPS and LP&L on March 21, 2017, SPS will continue as the Load Responsible
Entity, as defined in SPP's Open Access Transmission Tariff ("OATT"), for LP&L, and
as the Market Participant, as defined in the SPP OATT, bidding LP&L load into the SPP
IM until May 31, 2022 (the "Load Scheduling and Market Settlements Period"). The
Parties further agree to discuss prior to December 1, 2021 whether to extend the Load
Scheduling and Market Settlements Period and, to the extent the Parties mutually agree,
to modify this Protocol as necessary to extend the Load Scheduling and Market
Settlements Period by no later than December 1, 2021. The remaining rights and
obligations set forth in this Section 1 shall be limited to the duration of the Load
Scheduling and Market Settlements Period unless specified otherwise. Notwithstanding
anything herein, the Parties may mutually agree in writing to shorten this Load Scheduling and
Market Settlements Period.
a) Resource Adequacy. LP&L will be responsible to provide, or procure as necessary,
sufficient capacity resources for SPS to meet the applicable SPP resource adequacy
and planning reserve obligations for the LP&L loads within SPP that exceed the
Contract Quantity delivered to LP&L by SPS pursuant to the PRPS. SPS will not have
any responsibility for any LP&L load located outside of SPP.
The PRPS provides LP&L with the Contract Quantity of capacity resources that can
be used to satisfy the SPP resource adequacy and planning reserve obligations for
LP&L loads within SPP. This capacity may be used by LP&L, in conjunction with
other generation LP&L or their agent registers in the SPP IM' and other third -party
agreements LP&L may secure in the future that would be recognized by SPP as a
capacity resource, to meet the SPP resource adequacy and planning reserve obligations
for the LP&L load served within SPP.
If LP&L or its agent has other generation or third -party purchased capacity resources
that are to be used by SPS to meet LP&L's must -offer requirement for its load in the
SPP IM, then LP&L or its agent must identify the asset for SPS, include and update
the data repository maintained by the SPP Market Monitoring Unit, as defined in the
SPP OATT, and take any other steps necessary so that these other LP&L capacity
resources can be used by SPS, as necessary, to meet the SPP IM must -offer
requirement. SPS will not be the Market Participant for LP&L's other generation or
for any other third -party purchased capacity resources.
b) Scheduling load in the SPP IM. SPS will be the SPP Market Participant for LP&L
and will bid LP&L load into the SPP IM as instructed by LP&L pursuant to the
Protocol. SPS will timely submit demand bids on behalf of LP&L into the SPP IM.
LP&L must provide hourly demand bid schedules to SPS two (2) hours prior to the
close of the SPP IM Day -Ahead ("DA") Market ("DA Market") on the last business
day prior to the operating day for the volume of energy it intends for SPS to bid into
the DA Market for the following day(s).' If LP&L fails to do so, SPS will carry forward
the last demand bid schedule provided by LP&L and submit it to SPP for the next
day(s). LP&L may request that SPS adjust demand bid schedules already provided to
SPS up until two (2) hours prior to the close of the DA Market on the last calendar
day prior to the operating day and SPS will use commercially reasonable efforts to
make the adjustments for LP&L. SPS will confirm the adjusted demand bid schedule
volumes submitted to SPP for LP&L.
c) Charges for Load Scheduling and Market Settlements in the SPP IM. All verified
out-of-pocket costs reasonably incurred and paid by SPS to serve LP&L load in the SPP
IM, including, but not limited to, charges related to participation in the DA Market and
Real -Time CRT") Market ("RT Market"), LP&L's pro-rata share of any SPP IM Ancillary
Service charges and administrative fees, and, unless otherwise specified herein, LP&L's
pro-rata share of any other charges and/or credits SPS incurs to serve LP&L's load in the
SPP IM, shall be passed through to and paid by LP&L to SPS unless incurred as a result
of SPS' negligence or willful misconduct.
1 Any such generators must adhere to and comply with SPP requirements, including SPP Planning Criteria Accredited
Capability Test specifications.
'- Currently this deadline shall be 7:30 AM Central Prevailing Time ('CPT) or 0630 AM Mountain Prevailing Time CTOT ).
2
(1) DA Market. SPS will charge LP&L for the volume cleared in the DA Market at a
rate equal to the volumes cleared for each hour of each operating day multiplied
by the DA Locational Marginal Price ("LMP") at the Delivery Point for the same
hour. SPS will also pass through LP&L's pro-rata share of any other SPP IM
charges and/or credits specific to the DA Market incurred by SPS on LP&L's
behalf, including but not limited to SPP IM Ancillary Service charges and
administrative fees.
(2) Real-time ("RT") Market. Any deviations between the DA cleared energy volumes
and the actual LP&L load for any period will be settled at the RT LMP. SPS will
pass along the applicable RT charges to LP&L at a rate equal to the difference
between the DA cleared load and the actual load for each period multiplied by the
RT LMP at the Delivery Point.
a. As an example, if LP&L scheduled 150 MWh of load that cleared for an hour
in the DA Market and the actual load for the period is 155 MWh, LP&L would
be required to pay SPS for 150 MWh at the DA LMP at the Delivery Point
and pay for 5 MWh at the RT LMP at the Delivery Point.
b. In another example, if LP&L scheduled 150 MWh of load that cleared for an
hour in the DA Market and the actual load for the period is 145 MWh, LP&L
would be required to pay SPS for 150 MWh at the DA LMP at the Delivery
Point and would get a credit from SPS for 5 MWh at the RT LMP at the
Delivery Point.
SPS will also pass through LP&L's pro-rata share of any other SPP IM charges
and/or credits specific to the RT Market incurred by SPS on LP&L's behalf,
including but not limited to SPP IM Ancillary Service charges and administrative
fees.
(3) Settlement Statements. SPS will issue settlement statements to LP&L that include
the charges and/or credits applicable to SPS serving LP&L's load as part of the
billing process under the PRPS. Such settlement statements will reflect interim
and final SPP IM settlements consistent with the updates described in the
Wholesale Fuel Cost and Economic Purchased Power Adjustment Clause, which
is Attachment 2 of the PRPS. This Section 1(c) (3) shall survive beyond the Load
Scheduling and Market Settlements Period and the expiration or termination of
this Protocol to the extent necessary to reflect final SPP IM settlements.
2) Partial Requirements Scheduling and Related Charges.
SPS's obligation to provide energy to LP&L shall be determined based on Bi-lateral
Schedules (`BS") from SPS to LP&L and confirmed by the Parties.
LP&L may schedule any quantity of the Contract Quantity during a 24-hour period,
provided, however, that the smallest quantity scheduled by LP&L for any hour must be
no less than 50% of the largest quantity scheduled for any hour during that same twenty-
four hour period as a DA BS. LP&L may opt to utilize and schedule additional energy
3
either as DA or RT BS. The combination of BS schedules may not collectively exceed the
Contract Quantity for any hour.
a) PRPS Schedules.
(1) No later than the 22°a calendar day of each month SPS will provide LP&L a written
good faith estimate of its system average fuel costs for the following month.
(2) LP&L must inform SPS of its election to utilize a DA BS and its desired hourly
energy no later than two (2) hours prior to the close of the SPP DA Market on the
last calendar day prior to the operating day. Currently this deadline is 7:30 AM
Central Prevailing Time ("CPT") or 06:30 AM Mountain Prevailing Time
("MPT"). The DA BS volume may not be adjusted after the close of the SPP DA
Market without mutual agreement of the Parties.
(3) LP&L may submit a new RT BS energy schedule for any additional available energy
not previously scheduled as a DA BS under the Agreement by notifying SPS of its
additional desired hourly energy volume at least thirty (30) minutes prior to the
operating hour. These RT BS schedule changes are limited to three (3) updates
per twenty-four (24) hour operating day period. The RT BS volume may not be
adjusted after thirty (30) minutes prior to the start of the operating hour without
mutual agreement. The combined DA BS and RT BS scheduled volume may not
exceed the energy available to LP&L under the Agreement.
b) PRPS Charges.
Charges for energy scheduled under each BS shall be based on scheduled volumes at
the rates prescribed by the Agreement.
Because each BS is transacted outside the SPP IM and all LP&L load is separately
settled in the SPP IM, each BS shall be offset by a separate BS from LP&L to SPS
(each, an "Offsetting BS") and the charge for this Offsetting BS, payable from SPS to
LP&L, shall be calculated for each hour as follows:
(1) For a DA BS, the hourly volume scheduled and confirmed for the hour between
SPS and LP&L as a DA BS, multiplied by the DA LMP at the Delivery Point; and
(2) For a RT BS, the hourly volume scheduled and confirmed by the parties for the
hour between SPS and LP&L as a RT BS, multiplied by the DA LMP at the
Delivery Point.
As charges for each Offsetting BS are based on the DA LMP and RT LMP published
by SPP, such charges shall be subject to true -up if the relevant LMP is subsequently
revised by SPP.
H
3) Delivery Point.
For purposes of this Protocol, as long as SPS remains the SPP customer under the SPP Network
Integration Transmission Service Agreement ("NITSA") on behalf of LP&L for LP&L's load in
SPP, the Delivery Point shall be "SPS—SPS" or the commercial pricing node for SPS's network
load that contains LP&L's load.
If LP&L requests that the NITSA be reassigned from SPS to LP&L, SPS will work with SPP to
establish a generation Resource Hub representing SPS's portfolio of capacity resources, and the
Delivery Point shall become a new SPS generation Resource Hub in SPP for LP&L.
4) Meter Data.
Each Party will provide all meter data it has in its possession necessary to settle the energy sales
under the PRPS, as described further under this Protocol.
5) Congestion Rights.
As long as SPS remains the SPP customer under the SPP NITSA on behalf of LP&L, SPS will
allocate, by separate line item in monthly invoices, to LP&L its pro-rata share of SPS's total net
system Auction Revenue Rights ("ARR") and Transmission Congestion Rights ("TCR") charge
type settlement charges/credits from SPP. The pro-rata share of ARR/TCRs allocated to LP&L
will be based on the energy LP&L schedules under the PRPS divided by the SPS total net system
load during the same period. SPS will not allocate LP&L any ARR and TCR charge type settlement
charges/credits from SPP should the SPP NITSA be reassigned to LP&L.
For periods where SPS is not the SPP customer under the SPP NITSA on behalf of LP&L, no
amounts shall be credited to LP&L for ARRs/TCRs under this Protocol.
6) Term.
The procedures and processes established herein shall remain in effect until such time as
the PRPS terminates on its own or pursuant to that certain Settlement Agreement
between SPS and LP&L dated May 27, 2021, at which time this Protocol shall also
terminate, unless otherwise amended or terminated by mutual agreement of the Parties
at an earlier date.
7) General.
All terms not otherwise defined herein shall have the meaning set out in the PRPS.
The services provided by the Parties to each other hereunder, and any agents thereto, will
be provided consistent with Good Utility Practice and applicable protocols, tariffs, and
business practices promulgated by SPP in furtherance of the SPP IM. Except as expressly
provided therein, nothing in this Protocol, amends, modifies, or replaces any provisions
of the PRPS (or any Service Schedule attached thereto).
This Protocol may be executed in multiple original counterparts and any counterpart
hereof having attached thereto the signatures of the Parties hereto (whether on one page
or on separate pages) shall be deemed a fully executed original.
Southwestern Public Service Company,
a New Mexico corporation
Is
John Welch �e�a= o'�61;50.04
Name: John Welch
Title: Vice President, Commercial Operations
Xcel Energy Services Inc. as Agent for
Southwestern Public Service Company
The City of Lubbock, Texas, a home rule municipal corporation organized under the laws of
the State of Texas
CITY OF LU OCK, TEXAS
DANIEL M. POPE, MAYOR
[signatures continued on next page]
ATTEST:
Re e ca Garza, City Secre ry
APP OVEN AS TO CONTENT:
David McCalla, Director of Electric Utilities-LP&L
APPROVED AS TO FORM:
jennrriitg,Eeneral Counsel-LP&L
Craig Enochs, Outside Legal Counsel
ELECTRIC UTILITY BOARD OF THE CITY OF LUBBOCK, TEXAS
DAN ODOM, CHAIRMAN
ATTEST:
Gwer rd, Board Secretar
APPROVED AS TO CONTENT:
a.:;k N
David McCalla, Director of.Eoleecc,•triicc Utilities-LP&L
APPROVED AS TO FORM:
jennGpnutV, General Counsel-LP&L
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Craig Enochs, Outside Legal Counsel
Schedule 8.3
Notice Information
[Attached]
City of Lubbock
David McCalla
Director of Electric Utilities
Lubbock Power & Light
1314 Avenue K.
Lubbock, Texas 79401
Tel: 806-775-2704
Email: DMcCalla@mail.ci.lubbock.tx.us
Southwest Public Service Company
David Hudson
President
Southwestern Public Service Company
790 S. Buchanan, Suite 700
Amarillo, TX 79105
Te1:806-378-2824
Email: David.Hudson@xcelenergy.com
RESOLUTION
WHEREAS, Lubbock Power & Light is the municipally owned electric
utility of the City of Lubbock ("LP&L");
WHEREAS, LP&L and Southwestern Public Service Company, a New
Mexico corporation ("SPS"), are parties to that certain Master Power Purchase
and Sale Agreement dated as of November 12, 2009 (the "Master Agreement"),
and that certain Transaction Agreement of the same date entered into under the
Master Agreement (the "Transaction Agreement", and together with the Master
Agreement and any other transactions entered into under the Master
Agreement, the "PPA"), pursuant to which LP&L is purchasing 170 megawatts
of Partial Requirements Power Service, as defined in the Transaction
Agreement, from SPS;
WHEREAS, LP&L and SPS are also parties to that certain Letter
Agreement entitled "Letter Agreement between SPS and LP&L re Future Costs
under SPP NITSAs", dated March 21, 2017 (the "Transmission Letter
Agreement"), related to transmission charges allocable to LP&L in connection
with the PPA;
WHEREAS, LP&L previously received all necessary approvals to transfer
a portion of its load (the "Affected Load") from the electric transmission system
and market operated by the Southwest Power Pool, Inc. (such transmission
system and market, "SPP") to the electric transmission system and market
operated by the Electric Reliability Council of Texas, Inc. (such transmission
system and market, "ERCOT") and is in the process of implementing the
integration of such Affected Load into ERCOT;
WHEREAS, LP&L currently intends to seek all necessary approvals to
transfer its entire remaining load (the "Remaining Load") from SPP to ERCOT
(the "Remaining Load Integration");
WHEREAS, upon integration of LP&L's Remaining Load into ERCOT,
LP&L will no longer need the Partial Requirements Power Service being
provided under the PPA; therefore, LP&L's payment obligations under the PPA
(including the obligations under the Transmission Letter Agreement related
thereto) will be stranded costs of LP&L (as contemplated by Chapter 40 of the
Texas Public Utility Regulatory Act) and the Parties have agreed to terminate
the PPA and the Transmission Letter Agreement;
WHEREAS, LP&L and SPS have agreed to certain terms and conditions
outlined in the attached Settlement Agreement to terminate the PPA and the
Transmission Letter Agreement; NOW, THEREFORE,
BE IT RESOLVED BY THE ELECTRIC UTILITY BOARD OF THE CITY
OF LUBBOCK:
THAT the Electric Utility Board of the City of Lubbock hereby approves that
certain Settlement Agreement by and between the City of Lubbock, acting by
and through Lubbock Power & Light, and Southwestern Public Service
Company, as attached hereto and incorporated herein as though set forth fully
herein in detail, and approves and agrees to payment in the amount and methods
described therein.
BE IT FURTHER RESOLVED BY THE ELECTRIC UTILITY BOARD OF
THE CITY OF LUBBOCK:
THAT the Chairman of the Electric Utility Board is hereby authorized and
directed to execute that certain Settlement Agreement by and between the City
of Lubbock, acting by and through Lubbock Power & Light, and Southwestern
Public Service Company, as attached hereto and incorporated herein as though
set forth fully herein in detail.
BE IT FURTHER RESOLVED BY THE ELECTRIC UTILITY BOARD OF
THE CITY OF LUBBOCK:
THAT this resolution shall be null and void if the City Council of the City of
Lubbock does not approve a similar resolution approving the Settlement
Agreement by and between the City of Lubbock, acting by and through
Lubbock Power & Light, and Southwestern Public Service Company within
thirty (30) days of this resolution.
Passed by the Electric Utility Board this 27th day of May, 2021.
Dan Odom, Chairman
ATTEST:
Owentafford, Bo ecretary
APPROVED AS TO CONTENT:
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David McCalla, Director of Electric Utilities
APPROVED AS TO FORM:
Ten6 S it , LP&L General Counsel
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ad Mills, Haynes and Boone, LLP, Outside Counsel