RPS Bidders Workshop 1 Guidance for Inputs to 2008 RPS PPAs April 11, 2008 Disclaimer: Not to be considered or construed as legal advice or counsel; in the event of any inconsistency with the Protocol, the Protocol shall govern.

RPS Bidders Workshop 2 Article One: General Definitions Article Two: Governing Terms and Term No Modification AllowedPG&E PPA Reference CPUC ApprovalArticle One Definitions, “CPUC Approval” Green AttributesArticle One Definitions, “Green Attributes”, and Section 3.2, Conveyance of Green Attributes CEC CertificationSection 10.2(b) Seller Representations and Warranties Governing LawSection Articles One and Two: Definitions and Governing Terms

RPS Bidders Workshop 3 Section 3.1(a) – Product –Two forms (Attachments G and H): Select applicable PPA form for As- Available or for Baseload, Peaking, or Dispatchable Product Section 3.1(c) – Delivery Term –Select 10, 15, or 20 Contract Years –Other is allowed –Use Attachment G or H for offers with Delivery Terms of 5 years or greater from existing resources, and for all offers from new resources Section 3.1(d) – Delivery Point –PPA template set up for delivery to PG&E at NP15 –Mark-up PPA for delivery outside of NP15 or at the busbar (cross-reference Section 3.1(h)) –Use best available information to complete Section 3.1(d) Article Three: Obligations and Deliveries

RPS Bidders Workshop 4 Article Three: Obligations and Deliveries (continued) Short Term Offer: Any offer with a term less than 10 years –Minimum term = 1 month Offers less than 5 years in length from existing resources should use short term offer form (Attachment M) –Price may be fixed or indexed If indexed pricing is selected, TOD factors do not apply If fixed pricing is selected, bidder can elect to apply TOD factors Offers of 5 years or greater from existing resources, and all offers from new resources should use long-term offer forms (Attachment G or H) –Price must be fixed –TOD factors apply

RPS Bidders Workshop 5 Section 3.1(e) – Contract Quantity –Enter the expected annual energy output (annual MWh) –For As-Available, also enter % of Contract Quantity guaranteed over consecutive 24 month period; this is Guaranteed Energy Production (GEP) Required to deliver no less than GEP in any period of 24 consecutive months Section 3.1(f) – Contract Capacity –Enter the maximum capacity available for delivery (in MW) Section 3.1(h) – Interconnection Facilities –Enter the interconnection point (substation or transmission line), or best available information regarding location of interconnection point Article Three: Obligations and Deliveries (continued)

RPS Bidders Workshop 6 Section 3.4(b) – EIRP Requirements (for As-Available only; does not apply to Baseload) –Pick the applicable paragraph depending on EIRP eligibility as of Execution Date Section 3.4(c) – Option for PG&E to be Scheduling Coordinator –If Seller selects this option in Attachment D, PG&E may elect to perform the administrative function of SC for Seller, which involves submitting Seller’s schedules to the CAISO (PG&E not responsible for determining schedules) –Seller remains responsible for forecasting, scheduling and providing schedules to PG&E in accordance with the terms and conditions of the PPA Section 3.9(c)(iii) – Guaranteed Project Milestones –Enter the Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date Up to 180 day allowance for early COD Up to 90 day delay for Force Majeure Up to 60 day cure period for missing Guaranteed Milestones –Not applicable for existing resources Article Three: Obligations and Deliveries (continued)

RPS Bidders Workshop 7 Section 4.1 – Contract Price –For each Contract Year, enter the price per MWh Price can be flat or vary by Contract Year Add rows to table if price escalates annually Include Contract Price that assumes and does not assume availability of PTC or ITC Section 4.3 (As-Avail) or 4.4 (Baseload) – Monthly TOD Payment –Sum of each hour’s Scheduled Energy times the Contract Price times the TOD Factor –Example: 3-4 pm on a Tuesday in June 50 MWh scheduled x ($80/MWh Contract Price x 2.01 TOD factor) = 50MWh x $160.8/MWh = $8,040 Article Four: Compensation; Monthly Payments

RPS Bidders Workshop 8 Section 4.6 (As-Avail) and 4.7 (Baseload) – Imbalance Energy –If in EIRP (As-Avail), all imbalances between Scheduled and Delivered Energy are settled between Seller and CAISO –If not in EIRP (As-Avail and Baseload), true-up between Seller and Buyer based on price differences for Imbalance Energy and the TOD- adjusted Contract Price –If Delivered > Scheduled (defined as Positive Imbalance Energy) and if the Imbalance Price > (Contract Price x TOD factor), Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)] –If Delivered < Scheduled (defined as Negative Imbalance Energy) and if the Imbalance Price < (Contract Price x TOD factor), Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)] Article Four: Compensation; Monthly Payments (continued)

RPS Bidders Workshop 9 Example: Positive Imbalance Energy –50 MWh scheduled, 55 MWh delivered –Contract Price is $80/MWh, TOD factor is –Applicable Imbalance Price is $200/MWh –Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)] (55 MWh – 50 MWh) x [$200/MWh – ($80/MWh x 2.037)]= $ –If Imbalance Price < ($80/MWh x 2.037), then no true up Example: Negative Imbalance Energy –50 MWh scheduled, 45 MWh delivered –Contract Price is $80/MWh, TOD factor is –Applicable Imbalance Price is $100/MWh –Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)] (45 MWh – 50 MWh) x [($100/MWh - $80/MWh x 2.037)]= $ –If Imbalance Price > ($80/MWh x 2.037), then no true up Article Four: Compensation; Monthly Payments (continued)

RPS Bidders Workshop 10 Performance Adjustments for Baseload/Peaking PPA only Section Capacity Factor –To avoid incurring any Performance Adjustments, Seller must deliver no less than the specified Capacity Factors over all hours in each TOD Period (Performance Requirements) Section 4.6 –Settlement of Performance Adjustments –For each of the TOD periods (Super-Peak, Shoulder, Night) within each of the months of Period A (June, July, August, and September), performance measured and settled monthly –For each of the TOD periods in Period B (Oct-Feb) and Period C (Mar- May), performance measured and settled monthly, but then trued up on an aggregated basis for each Period B or C Article Four: Compensation; Monthly Payments (continued)

RPS Bidders Workshop 11 The first table (from Attach. H Baseload Section 4.5) shows minimum required Capacity Factors (including maintenance allowance) for each TOD Period The second table (from Attach. H Baseload Section 4.6) shows the % adjustment for each 1% that the actual Capacity Factor is below the minimum Performance Requirement Performance Adjustments for Baseload/Peaking PPA Monthly Period1. Super-Peak2. Shoulder3. Night A.June – September95%90%80% B.Oct.– Dec.;Jan.&Feb.90%85%65% C.Mar.– May80%75%65% Performance Requirements: Capacity Factor For Each TOD Period Monthly Period1. Super-Peak2. Shoulder3. Night A.June – September B.Oct.– Dec.,Jan.&Feb C.Mar.– May Performance Adjustment Factors For Each TOD Period

RPS Bidders Workshop 12 Example: Super-Peak period in June –10 MW Contract Capacity, 1554 MWh Delivered –176 hours in TOD period, 8 Seller Excuse Hours –Contract Price $80/MWh, TOD factor Capacity Factor = Delivered Energy / [Contract Capacity x (Hours in TOD Period minus Seller Excuse Hours)] = 1554 MWh / [10 MW x (176 hours – 8 hours)] = 92.5% Maximum Performance Adjustment = Contract Price x TOD Factor x x Contract Capacity x (Hours in applicable TOD Period minus Seller Excuse Hours) = $80/MWh x 2.01 x x 10 MW x (176 hours – 8 hours) = $270,144 Performance Adjustment = (Performance Requirement - Capacity Factor) x Performance Adjustment Factor x Maximum Performance Adjustment = (95% %) x 3.00 x $270,144= $20,261 Performance Adjustments for Baseload/Peaking PPA (cont’d)

RPS Bidders Workshop 13 Payments and Performance Adjustments for Dispatchable PPA Section 4.10 –Capacity Payments based on Time of Availability (TOA) Factor and actual availability –Monthly Capacity Payment = Capacity Price x TOA Factor x Contract Capacity For months with minimum of 90% and 95% availability, 4% Capacity Payment reduction for each 1% that actual is below minimum For months with minimum of 70% availability, 1.5% Capacity Payment reduction for each 1% that actual is below minimum

RPS Bidders Workshop 14 Article Five: Events of Default –The failure to pay an amount due, if not remedied within 5 Business Days after written Notice –A representation or warranty made by a Party that was materially false or misleading when made or with respect to Section 10.2(b), becomes materially false or misleading during the Delivery Term Non-modifiable Section 10.2(b) Seller Representations and Warranties regarding ERR eligibility Change in Law after Execution Date and Seller’s use of commercially reasonable efforts to comply with change in Law

RPS Bidders Workshop 15 Article Five: Events of Default –The failure to perform a material covenant, if not remedied within 30 days after written Notice –Becoming Bankrupt or Insolvent – cross reference definition of “Bankrupt” –A surviving/transferee/resulting entity of a Party fails to assume all of the Party’s obligations under the PPA Cross Reference Section 10.6, Assignment

RPS Bidders Workshop 16 For As-Available Products, the failure to achieve the Guaranteed Energy Production requirement For Baseload and Peaking Products, Capacity deficiency or Capacity Factor deficiency –Net Rated Output Capacity is less than specified amount at COD or specified percent after COD –Capacity Factor is less than specified percent for 12 consecutive months (for reasons other than Seller Excuse Hours) For Dispatchable Products only, Availability Factor deficiency Article Five: Events of Default

RPS Bidders Workshop 17 Article Five: Events of Default Any delivery or attempted delivery of Energy for sale under the PPA that was not generated by the Project, except with respect to Imbalance Energy An outage resulting from Force Majeure that prevents the Project from delivering at least 60% of Contract Quantity to the Delivery Point for a consecutive 12 month period Failure to meet either of the “Guaranteed Project Milestones” after the 60-day cure period has expired Failure to meet credit or collateral requirements in Sections 8.3, 8.4 or 8.5 (Note: if submitting alternative credit proposals, clearly identify each proposal in PPA mark-up; do not submit multiple PPA mark-ups) Granting and perfecting of first-priority security interest Posting of Project Development Security and Delivery Term Security (Performance Assurance) Letter of Credit obligations, if applicable

RPS Bidders Workshop 18 Article Six: Payment Article Seven: Limitation (Remedies, Liability and Damages) Article Eight: Credit and Collateral Requirements – Choose Option A (Seller’s financial information) or Option B (financial information for specified entity, i.e., a guarantor) –Specify security amounts per Protocol standards and any alternative proposals, and form of security Article Nine: Governmental Charges Articles Six through Nine

RPS Bidders Workshop 19 Article Ten: Miscellaneous –Production Tax Credit (“PTC”)/Investment Tax Credit (“ITC”) termination –Representations, Warranties and Covenants –Indemnities –Assignment –Confidentiality (check box) –Audit –Insurance –Access to Financial Information –Governing Law (non-modifiable) Article Ten

RPS Bidders Workshop 20 Article Eleven: Conditions Precedent/CPUC Approval Article Twelve: Dispute Resolution Article Thirteen: Notices Articles Eleven through Thirteen

RPS Bidders Workshop 21 Appendix IForm of Letter of Credit Appendix IIInitial Energy Delivery Date Confirmation Letter Appendix IIIMilestones Schedule (propose Schedule) Appendix IVProject Description Including Description of Site (Seller to complete) Appendix VForm of Certification Appendix VICommercial Operation Certification Procedure and Procedure for Subsequent Capacity Terms Appendix VII Form of Monthly Progress Report Appendix VIIIOutage Notification Form (do not alter) Appendix IXCounterparty Notification Requirements for Outages and Generation Schedules Appendix XResource Adequacy Appendix XINotices (Seller to complete its respective Sections) Appendices