INTERCONNECTION AGREEMENT
between
LONE STAR STORAGE I, LLC (Interconnection Customer)
and
Aldermere & Co. (Transmission/Distribution Service Provider)
Effective Date: December 1, 2022
ERCOT Interconnection Queue No.: INR-22-03347
Lone Star Battery Storage Project 50 MW / 200 MWh Battery Energy Storage System Ector County, Texas
EXECUTION VERSION
RECITALS
WHEREAS, Aldermere & Co. ("Interconnecting Entity," "TDSP," or "Oncor") is a transmission and distribution service provider organized and existing under the laws of the State of Texas, operating transmission and distribution facilities within the service territory administered by the Electric Reliability Council of Texas, Inc. ("ERCOT"), and is subject to the jurisdiction of the Public Utility Commission of Texas ("PUCT") with respect to the provision of transmission and distribution service; and
WHEREAS, Lone Star Storage I, LLC ("Interconnection Customer" or "IC") is a Texas limited liability company and a wholly owned subsidiary of Calloway-Briggs Renewables Inc., a Texas corporation, and IC proposes to develop, own, and operate a 50 MW / 200 MWh lithium iron phosphate (LFP) battery energy storage system (the "BESS") to be known as the Lone Star Battery Storage Project (the "Generating Facility" or the "Project"), located on an approximately 15-acre parcel situated at 4800 West University Boulevard, Odessa, TX 79764, in Ector County, Texas; and
WHEREAS, IC filed an interconnection application with ERCOT in March 2022 and was assigned Queue Position INR-22-03347, and ERCOT Resource ID LSBESS_01 is pending final assignment by ERCOT in connection with the Project; and
WHEREAS, a Full Interconnection Study was completed in August 2022 under ERCOT Queue No. INR-22-03347, which identified the Western Permian 138 kV Substation, Ector County, Texas, as the Point of Interconnection ("POI") for the Generating Facility and further identified certain Network Upgrades to the ERCOT transmission system necessary to reliably accommodate the interconnection of the Generating Facility; and
WHEREAS, IC desires to interconnect the Generating Facility to the ERCOT transmission system at the POI in accordance with the ERCOT Protocols and the applicable rules and regulations of the PUCT, and Oncor is willing to permit such interconnection subject to the terms and conditions set forth herein; and
WHEREAS, this Agreement is based on the standard-form ERCOT interconnection agreement, adapted as necessary to address the specific requirements of a battery energy storage system resource and the particular circumstances of the Project; and
WHEREAS, the Parties have negotiated and agreed to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the ERCOT Protocols or, if not defined in the ERCOT Protocols, the meanings commonly understood in the electric utility industry.
"Agreement" means this Interconnection Agreement, including all exhibits, appendices, schedules, and attachments hereto, as any of the foregoing may be amended, modified, supplemented, or restated from time to time in accordance with the terms hereof.
"Applicable Laws" means all federal, state, and local laws, statutes, ordinances, rules, regulations, codes, orders, judgments, and decrees, including without limitation the ERCOT Protocols, PUCT Substantive Rules, NERC Reliability Standards, the Texas Utilities Code, the National Electrical Safety Code ("NESC"), and all applicable environmental, health, safety, and building codes and regulations, in each case as may be in effect from time to time and applicable to the interconnection, construction, ownership, operation, or maintenance of the Generating Facility, the Interconnection Facilities, the Network Upgrades, or the performance of obligations under this Agreement.
"Battery Energy Storage System" or "BESS" means the 50 MW / 200 MWh lithium iron phosphate battery energy storage system comprising the Generating Facility, including without limitation the battery modules (Harmon-Dietrich Model HD-LFP-200E), power conversion systems (10 × 5 MW inverters), battery management system, thermal management and HVAC systems, container enclosures, the on-site main power step-up transformer, and all associated facilities, equipment, wiring, controls, and ancillary systems necessary for the charging, storage, and discharging of electrical energy.
"Breaching Party" means the Party that commits a Default under this Agreement.
"Commercial Operation" or "COD" means the date on which the Generating Facility has satisfied all requirements for commercial operation under this Agreement and the ERCOT Protocols, including without limitation the successful completion of all Commissioning Tests, receipt of all necessary ERCOT approvals for commercial resource status, and fulfillment of all conditions precedent to commercial operation set forth herein and in the ERCOT Protocols. The expected Commercial Operation Date is August 15, 2023.
"Commissioning Tests" means the tests, inspections, and procedures set forth in Exhibit C, which must be satisfactorily completed as a condition to initial Energization and Commercial Operation of the Generating Facility.
"Default" has the meaning set forth in Article 12 of this Agreement.
"Effective Date" means December 1, 2022, the date on which this Agreement becomes effective in accordance with Section 18.1.
"Energization Date" means the date on which the Generating Facility is first energized and synchronized to the ERCOT transmission system through the Interconnection Facilities at the POI. The expected Energization Date is July 15, 2023.
"ERCOT" means the Electric Reliability Council of Texas, Inc., the independent system operator for the ERCOT region, or any successor organization.
"ERCOT Protocols" means the ERCOT Nodal Protocols, including all associated guides, manuals, operating procedures, and planning criteria, as may be amended, supplemented, or replaced from time to time in accordance with ERCOT's governing processes.
"Generating Facility" means the 50 MW / 200 MWh BESS, together with all Interconnection Facilities and associated equipment, systems, structures, and improvements located at or associated with the Project Site, designed and constructed for the purpose of storing and delivering electrical energy to the ERCOT transmission system.
"Gen-Tie Line" means the approximately 1.2-mile, 138 kV overhead transmission line extending from the Generating Facility switchyard on the Project Site to the Point of Interconnection at the Western Permian 138 kV Substation, as more particularly depicted on the one-line diagram and site map set forth in Exhibit B.
"Good Utility Practice" means any of the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts that, in the exercise of reasonable judgment in light of the facts known at the time a decision was made, could have been expected to accomplish the desired result at a reasonable cost, consistent with good business practices, reliability, safety, and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted in the region, and shall include compliance with applicable NERC Reliability Standards and ERCOT Protocols.
"Interconnection Customer" or "IC" means Lone Star Storage I, LLC, a Texas limited liability company, its permitted successors and assigns.
"Interconnection Facilities" means the IC's interconnection equipment and facilities extending from the Generating Facility to and including the IC's side of the demarcation point at the POI, including without limitation the on-site main power step-up transformer (34.5 kV to 138 kV), the Gen-Tie Line, revenue metering equipment, protective relaying, circuit breakers, disconnect switches, communications equipment, SCADA and telemetry systems, and grounding systems, all as more particularly described in Section 3.2 and depicted in Exhibit B.
"Interconnection Study" means the Full Interconnection Study completed in August 2022 under ERCOT Queue No. INR-22-03347, including all supplements, addenda, and amendments thereto, which identified the POI, the required Network Upgrades, and other conditions for interconnection of the Generating Facility.
"In-Service Date" means the date on which the Interconnection Facilities are complete and available for testing, inspection, and initial Energization. The target In-Service Date is July 15, 2023.
"MW" means megawatt or megawatts. "MWh" means megawatt-hour or megawatt-hours.
"NERC" means the North American Electric Reliability Corporation, or any successor organization designated as the electric reliability organization responsible for developing and enforcing mandatory reliability standards for the bulk-power system.
"Network Upgrades" means the additions, modifications, reinforcements, and improvements to the TDSP's existing transmission or distribution facilities that are necessary to accommodate the reliable interconnection of the Generating Facility at the POI, as identified in the Interconnection Study and more particularly described in Exhibit D.
"Party" means either Oncor or IC, individually; "Parties" means Oncor and IC, collectively.
"Point of Interconnection" or "POI" means the physical location at the Western Permian 138 kV Substation, Ector County, Texas, at which the Generating Facility (through the IC's Interconnection Facilities, including the Gen-Tie Line) connects to the TDSP's transmission system, as more particularly described in Exhibit A and depicted on the one-line diagram in Exhibit B.
"Project Site" means the approximately 15-acre parcel of land located in Ector County, Texas, being a portion of Survey No. 42, Block 42, T-1-S, T&P RR Co. Survey, with a nearest postal address of 4800 West University Boulevard, Odessa, TX 79764, upon which the Generating Facility is to be constructed and operated, as more particularly described in Exhibit A.
"PUCT" means the Public Utility Commission of Texas, or any successor agency.
"Queue Position" means ERCOT Interconnection Queue No. INR-22-03347, assigned to the Generating Facility.
"Reasonable Efforts" means efforts consistent with Good Utility Practice, taking into account the relevant facts and circumstances, including the nature of the obligation, the cost of performance, and the time available for performance.
"Resource ID" means ERCOT Resource ID LSBESS_01, as assigned or to be finally assigned by ERCOT to the Generating Facility in connection with the ERCOT resource registration process.
"TDSP" means Aldermere & Co., in its capacity as the Transmission/Distribution Service Provider for the area in which the POI is located.
Section 1.2 — Rules of Interpretation
In interpreting this Agreement, the following rules of construction shall apply unless the context otherwise requires:
(a) References to the ERCOT Protocols and PUCT Substantive Rules mean the versions of such protocols and rules in effect as of the Effective Date, as subsequently amended, supplemented, or replaced in accordance with applicable governing procedures.
(b) The headings and captions of the articles, sections, exhibits, and appendices of this Agreement are for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Agreement.
(c) Words importing the singular shall include the plural and vice versa. Words importing one gender shall include all genders.
(d) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" or "but not limited to," whether or not such phrase actually appears.
(e) References to "days" mean calendar days unless otherwise specified; references to "business days" mean days other than Saturdays, Sundays, and federal holidays observed in the State of Texas.
(f) References to any statute, regulation, rule, protocol, or code include all amendments, modifications, supplements, and successor provisions thereto.
(g) References to any Party include such Party's permitted successors and assigns.
(h) Unless otherwise specified, references to articles, sections, exhibits, and appendices are to the articles, sections, exhibits, and appendices of this Agreement.
(i) The exhibits and appendices attached hereto are incorporated into and form an integral part of this Agreement.
ARTICLE 2 — SCOPE AND PURPOSE
Section 2.1 — Purpose
This Agreement establishes the terms and conditions under which the Generating Facility, a 50 MW / 200 MWh lithium iron phosphate (LFP) Battery Energy Storage System, will be interconnected to the ERCOT transmission system at the Point of Interconnection located at the Western Permian 138 kV Substation in Ector County, Texas. This Agreement sets forth the respective rights and obligations of each Party with respect to the design, engineering, procurement, construction, ownership, operation, maintenance, and testing of the Interconnection Facilities and the Network Upgrades necessary to accomplish and sustain such interconnection. This Agreement further establishes the terms under which the Generating Facility will be permitted to inject energy into and withdraw energy from the ERCOT transmission system at the POI, subject in all respects to compliance with Applicable Laws, ERCOT Protocols, and the requirements of Good Utility Practice.
Section 2.2 — Generating Facility Description
The Generating Facility comprises the following principal components and characteristics:
(a) Technology: Lithium Iron Phosphate (LFP) battery energy storage system.
(b) Nameplate Capacity: 50 MW (power capacity) / 200 MWh (energy capacity), providing a discharge duration of approximately 4 hours at full nameplate power capacity.
(c) Battery Modules: Harmon-Dietrich Model HD-LFP-200E lithium iron phosphate battery modules, arranged in containerized enclosures with integrated thermal management and fire suppression systems.
(d) Power Conversion Systems: Ten (10) 5 MW power conversion system ("PCS") inverters, converting direct current (DC) energy from the battery modules to alternating current (AC) energy at 34.5 kV for delivery through the on-site step-up transformer and Gen-Tie Line.
(e) Battery Management System: An integrated battery management system providing cell-level monitoring, state-of-charge management, thermal regulation, and safety controls for all battery modules.
(f) Thermal Management/HVAC Systems: Active liquid cooling and HVAC systems for temperature regulation within battery container enclosures, designed to maintain optimal operating temperatures under the climatic conditions prevailing in Ector County, Texas.
(g) Container Enclosures: Weather-resistant, purpose-built container enclosures housing battery modules, PCS inverters, and associated equipment.
(h) EPC Contractor: Meridian Power Construction, Inc., engaged under a fixed-price Engineering, Procurement, and Construction Agreement dated December 1, 2022 (the "EPC Agreement"), to design, procure, construct, and commission the Generating Facility.
Section 2.3 — Exclusivity
This Agreement governs solely the physical interconnection of the Generating Facility to the ERCOT transmission system at the POI. Nothing in this Agreement conveys, grants, or implies any right to transmission service, transmission capacity, or any other transmission-related service. IC acknowledges and agrees that it must separately arrange for any required Qualified Scheduling Entity ("QSE") representation and ERCOT resource registration, and that the right to transmit or deliver energy over the ERCOT transmission system is governed by the ERCOT Protocols and applicable PUCT rules, and not by this Agreement. The BESS may operate in both charging mode (withdrawing energy from the ERCOT transmission system) and discharging mode (injecting energy into the ERCOT transmission system), in each case in accordance with the ERCOT Protocols applicable to energy storage resources and subject to the operational limitations and requirements set forth herein.
ARTICLE 3 — INTERCONNECTION FACILITIES AND POINT OF INTERCONNECTION
Section 3.1 — Point of Interconnection
The Point of Interconnection is located at the Western Permian 138 kV Substation, Ector County, Texas, as depicted on the one-line diagram set forth in Exhibit B and more particularly described in Exhibit A. The interconnection voltage at the POI shall be 138 kV. The POI represents the physical point at which the IC's Interconnection Facilities connect to the TDSP's transmission system, and is the point at which the change of ownership and operational responsibility between the Parties occurs, as further specified in Section 3.4.
Section 3.2 — IC's Interconnection Facilities
IC shall design, engineer, procure, construct, own, and maintain the following Interconnection Facilities at IC's sole cost and expense:
(a) On-Site Main Power Step-Up Transformer: A step-up transformer rated for the full output of the Generating Facility, stepping voltage from 34.5 kV (medium-voltage collection system) to 138 kV (transmission voltage) for delivery to the POI. The transformer shall be designed, manufactured, and tested in accordance with applicable IEEE, ANSI, and NESC standards and Oncor's technical specifications.
(b) Gen-Tie Line: An approximately 1.2-mile, 138 kV overhead transmission line extending from the Generating Facility switchyard on the Project Site to the POI at the Western Permian 138 kV Substation. The Gen-Tie Line shall be designed and constructed in accordance with NESC standards, applicable Ector County building codes, and all environmental permits and approvals. IC shall be solely responsible for obtaining all necessary permits, easements, rights-of-way, and land use approvals for the Gen-Tie Line route.
(c) Revenue Metering Equipment: Revenue-grade metering equipment installed at the POI in accordance with Oncor's metering specifications and ERCOT metering requirements, capable of measuring both energy injections (discharging) and energy withdrawals (charging) on a 15-minute interval basis, as further described in Article 8.
(d) Protective Relaying, Circuit Breakers, and disconnect Switches: All protective relaying devices, circuit breakers, disconnect switches, and associated control systems at the Generating Facility and on IC's side of the POI, designed and configured in accordance with Oncor's protection requirements, NERC Reliability Standards, and ERCOT Protocols. IC's protective relay settings shall be coordinated with Oncor's relay settings to ensure proper protection coordination across the interconnection.
(e) Communications Equipment: All communications equipment necessary to support SCADA and telemetry functions between the Generating Facility and Oncor's control center, including fiber optic communications, remote terminal units, and associated hardware and software, compatible with Oncor's and ERCOT's communications systems and protocols.
(f) Supervisory Control and Data Acquisition (SCADA) and Telemetry Equipment: SCADA and telemetry equipment at the Generating Facility and the POI, compatible with Oncor's SCADA system and ERCOT's telemetry requirements, providing real-time monitoring of operational parameters including power output, voltage, frequency, circuit breaker status, and alarm conditions.
(g) Grounding Systems: All grounding systems at the Generating Facility and along the Gen-Tie Line, designed and installed in accordance with IEEE standards and applicable safety codes.
IC shall obtain all necessary permits, easements, rights-of-way, and governmental approvals for the construction, operation, and maintenance of IC's Interconnection Facilities, including the Gen-Tie Line. IC shall provide Oncor with copies of all such permits, easements, and approvals upon request.
Section 3.3 — TDSP's Interconnection Facilities
Oncor shall design, engineer, procure, and construct modifications, additions, or extensions to the Western Permian 138 kV Substation and associated transmission facilities necessary to accept the interconnection of the Generating Facility at the POI (the "TDSP Interconnection Facilities"), including without limitation:
(a) A new 138 kV line position at the Western Permian Substation, including circuit breaker, disconnect switches, bus work, structures, and foundations necessary to terminate the Gen-Tie Line at the substation.
(b) Protective relaying modifications and additions at the Western Permian Substation necessary to accommodate the interconnection, including coordination of relay settings with IC's protective relaying.
(c) Metering modifications at the substation as required by Oncor's metering standards and ERCOT requirements.
(d) Communication and SCADA integration equipment necessary to incorporate the new line position and the Generating Facility into Oncor's existing SCADA and communications infrastructure.
Upon completion, Oncor shall own and maintain the TDSP Interconnection Facilities. The costs of the TDSP Interconnection Facilities shall be addressed in accordance with Section 4.2 and the ERCOT Protocols.
Section 3.4 — Demarcation Point
The demarcation point between IC's Interconnection Facilities and TDSP's Interconnection Facilities is located at the point of change of ownership at the POI, as depicted on the one-line diagram set forth in Exhibit B. The demarcation point is the physical point at which IC's Gen-Tie Line terminates and connects to Oncor's equipment at the Western Permian 138 kV Substation. Each Party shall be solely responsible for the design, construction, operation, maintenance, repair, and replacement of all equipment and facilities on its respective side of the demarcation point. Neither Party shall have any responsibility for or authority over the equipment or facilities located on the other Party's side of the demarcation point, except as expressly provided in this Agreement.
Section 3.5 — Design Review and Approval
IC shall submit detailed engineering designs and specifications for IC's Interconnection Facilities (including the Gen-Tie Line, step-up transformer, protective relaying, metering, SCADA, and communications equipment) to Oncor for review and approval at least ninety (90) days prior to the commencement of construction of such Interconnection Facilities. Oncor shall complete its review within thirty (30) days of receipt of such designs and specifications and shall provide IC with written comments or approval. Oncor's approval of IC's engineering designs shall not be unreasonably withheld, conditioned, or delayed. In the event Oncor identifies deficiencies or issues with the submitted designs, Oncor shall provide IC with a reasonably detailed description of such deficiencies or issues, and IC shall revise and resubmit the designs for further review. Oncor's approval of IC's engineering designs and specifications shall not relieve IC of its sole responsibility for compliance with all Applicable Laws, Good Utility Practice, NERC Reliability Standards, ERCOT Protocols, and Oncor's technical requirements, nor shall such approval constitute a representation or warranty by Oncor as to the adequacy, safety, or fitness for purpose of IC's designs.
ARTICLE 4 — NETWORK UPGRADES
Section 4.1 — Scope of Network Upgrades
The Interconnection Study completed in August 2022 under ERCOT Queue No. INR-22-03347 identified certain Network Upgrades to the TDSP's existing transmission facilities that are necessary to reliably accommodate the interconnection of the Generating Facility at the POI. The scope of the required Network Upgrades is described in detail in Exhibit D attached hereto. The Network Upgrades are limited to those specifically identified in the Interconnection Study, unless additional upgrades are subsequently identified through a restudy triggered by a material modification to the Generating Facility's design, capacity, or operating characteristics, or through changes in system conditions that necessitate further study in accordance with the ERCOT Protocols.
Section 4.2 — Cost Responsibility
The estimated cost of the Network Upgrades identified in the Interconnection Study is Two Million Eight Hundred Thousand Dollars ($2,800,000). IC shall be solely responsible for the payment of all costs of the Network Upgrades, as determined in the Interconnection Study and subject to adjustment for actual costs upon completion of construction. IC shall pay such amounts to Oncor in accordance with the payment schedule set forth in Section 4.3. The allocation of Network Upgrade costs to IC is in accordance with the ERCOT Protocols and applicable PUCT rules governing interconnection cost responsibility for generation resources and energy storage resources seeking interconnection to the ERCOT transmission system.
Section 4.3 — Payment Schedule for Network Upgrades
IC shall make advance payments to Oncor for the estimated cost of the Network Upgrades in the following installments:
(a) First Installment (50%): One Million Four Hundred Thousand Dollars ($1,400,000), due and payable within thirty (30) days after the Effective Date of this Agreement (on or before January 1, 2023).
(b) Second Installment (25%): Seven Hundred Thousand Dollars ($700,000), due and payable upon the commencement of construction of the Network Upgrades by Oncor. Oncor shall provide IC with written notice of the commencement of construction, and such installment shall be due within fifteen (15) days of IC's receipt of such notice.
(c) Final Installment (25%): Seven Hundred Thousand Dollars ($700,000), due and payable upon completion of the Network Upgrades, subject to the true-up provisions set forth below.
Within ninety (90) days after the completion of the Network Upgrades, Oncor shall provide IC with a final accounting of the actual costs incurred in the design, engineering, procurement, and construction of the Network Upgrades, supported by reasonable documentation. If the actual costs of the Network Upgrades are less than the estimated costs, Oncor shall refund the difference to IC within thirty (30) days of the final accounting. If the actual costs of the Network Upgrades exceed the estimated costs, IC shall pay the additional amount to Oncor within thirty (30) days of IC's receipt of the final accounting and supporting documentation.
Interest on overpayments by IC shall accrue at the rate specified in Section 10.4, calculated from the date of each overpayment to the date of refund. Interest on late payments by IC shall accrue at the rate specified in Section 10.4.
Section 4.4 — Construction of Network Upgrades
Oncor shall use Reasonable Efforts to design, engineer, procure, and construct the Network Upgrades in a timely manner and to complete such Network Upgrades by the target completion date of July 1, 2023, so as to be available for testing and Energization on or before the In-Service Date. Oncor shall provide IC with periodic written updates on the progress of construction of the Network Upgrades, not less frequently than monthly, including information regarding any anticipated delays or cost overruns that may affect the completion schedule or cost estimates. Upon completion, the Network Upgrades shall become part of Oncor's transmission system and shall be owned, operated, and maintained by Oncor at Oncor's cost and expense.
Section 4.5 — Refund of Network Upgrade Costs
IC may be eligible for refunds or credits related to Network Upgrade costs to the extent provided by the ERCOT Protocols and applicable PUCT rules in effect from time to time, subject to the specific terms, conditions, and timelines set forth therein. The availability and amount of any such refunds or credits shall be determined by ERCOT and/or the PUCT in accordance with their respective protocols and rules, and Oncor makes no representation or warranty regarding IC's eligibility for or the amount of any such refund or credit. IC acknowledges that any refund or credit mechanism may be subject to change based on amendments to the ERCOT Protocols or PUCT rules.
ARTICLE 5 — MILESTONES AND SCHEDULE
Section 5.1 — Key Milestones
The following milestones shall apply to the design, construction, commissioning, and commercial operation of the Generating Facility and the Network Upgrades. The Parties shall use Reasonable Efforts to achieve each milestone by the corresponding target date:
The target dates set forth above are good-faith estimates based on information available as of the Effective Date. The Parties acknowledge that actual completion dates may vary due to permitting timelines, equipment procurement lead times, weather conditions, and other factors, and that the milestone schedule is subject to adjustment as provided in Sections 5.3 and 5.4.
Section 5.2 — Milestone Reporting
IC shall provide Oncor with written progress reports at least monthly regarding the status of design, engineering, procurement, and construction of IC's Interconnection Facilities and the Generating Facility. Such reports shall include a summary of work completed during the preceding reporting period, a description of any deviations from the milestone schedule, and an updated forecast of key milestone dates. IC shall promptly notify Oncor in writing of any anticipated delays that may affect the In-Service Date, the Energization Date, or any other milestone, and shall describe the cause of the delay and the mitigation measures being undertaken.
Section 5.3 — Extensions
Either Party may request a reasonable extension of one or more milestone dates due to Force Majeure events, regulatory delays, permitting delays, or other circumstances beyond the requesting Party's reasonable control. Any such request shall be submitted in writing and shall describe the cause of the delay, the anticipated duration of the delay, and the mitigation measures being undertaken. The other Party shall not unreasonably withhold, condition, or delay its consent to a reasonable extension request. Any agreed extension of milestone dates shall be memorialized in a written amendment to this Agreement or a written acknowledgment exchanged between the Parties. IC acknowledges that failure to meet ERCOT interconnection milestones may jeopardize IC's Queue Position (INR-22-03347) and that the consequences of delay, including potential loss of queue position, are governed by the ERCOT Protocols and applicable queue management rules, and are outside the scope of this Agreement.
Section 5.4 — Consequences of IC Delay
If IC fails to achieve the In-Service Date within twelve (12) months after the target In-Service Date (i.e., by July 15, 2024) for reasons not excused by Force Majeure or delay caused by Oncor, Oncor may terminate this Agreement upon sixty (60) days' prior written notice to IC. In the event of such termination, IC shall forfeit any advance payments previously made to Oncor for Network Upgrades that have not yet been commenced as of the date of such termination. Oncor shall refund to IC any advance payments for Network Upgrades that have not been committed to third-party vendors or contractors and for which Oncor has not incurred non-recoverable costs, less any documented costs incurred by Oncor in connection with the design and engineering of the Network Upgrades prior to termination. IC acknowledges that the forfeiture and refund provisions of this Section 5.4 are a reasonable estimate of Oncor's damages in the event of IC's failure to achieve timely interconnection and are not intended as a penalty.
ARTICLE 6 — CONSTRUCTION AND TESTING
Section 6.1 — Construction Standards
All Interconnection Facilities, including the Gen-Tie Line, the on-site step-up transformer, protective relaying, metering, SCADA, communications, and grounding systems, shall be designed, engineered, procured, and constructed in strict accordance with Good Utility Practice, Applicable Laws, NERC Reliability Standards, ERCOT Protocols, Oncor's technical requirements and specifications, and the approved engineering designs referenced in Section 3.5. IC shall ensure that the Gen-Tie Line (approximately 1.2 miles, 138 kV overhead) is constructed in compliance with the National Electrical Safety Code (NESC), all applicable Ector County building codes (including Building Permit No. BP-2022-04517), and all applicable environmental permits and approvals, including coverage under Texas Commission on Environmental Quality (TCEQ) Stormwater General Permit TXR150000. IC shall be responsible for engaging qualified and experienced contractors for the construction of IC's Interconnection Facilities and shall require all such contractors to comply with the standards and requirements set forth in this Section 6.1.
Section 6.2 — Inspection Rights
Oncor shall have the right, but not the obligation, to inspect IC's Interconnection Facilities during all phases of construction and at any time prior to initial Energization. Oncor shall provide IC with reasonable advance notice of any planned inspection, except that no advance notice shall be required in the event of an emergency or safety concern. IC shall provide Oncor's inspectors with reasonable access to the Project Site and the Gen-Tie Line route during normal business hours. Oncor's inspections shall not relieve IC of any of its obligations under this Agreement, including IC's sole responsibility for the design, construction, and compliance of IC's Interconnection Facilities with all Applicable Laws and Good Utility Practice. Oncor shall not be deemed to have approved, endorsed, or accepted any aspect of IC's Interconnection Facilities by reason of having conducted or failed to conduct any inspection.
Section 6.3 — Commissioning Tests
Prior to the initial Energization of the Generating Facility, IC and Oncor shall jointly perform the Commissioning Tests described in Exhibit C attached hereto. The Commissioning Tests are designed to verify the proper design, installation, calibration, and functionality of all Interconnection Facilities and to confirm that the Generating Facility can be safely and reliably interconnected to and operated in parallel with the ERCOT transmission system. The Commissioning Tests shall include, without limitation:
(a) Relay calibration and protective system testing, including verification that all protective relay settings are properly coordinated with Oncor's protection schemes.
(b) SCADA and telemetry verification, including confirmation that all data points are accurately transmitted between the Generating Facility, Oncor's control center, and ERCOT.
(c) Metering accuracy confirmation, including testing of revenue metering equipment against ANSI C12 accuracy standards and verification of proper registration of both energy injections (discharging) and energy withdrawals (charging).
(d) Synchronization testing, including verification of synchronizing equipment and procedures for safely paralleling the Generating Facility with the ERCOT transmission system.
(e) Operational tests of the BESS in both charging and discharging modes at partial and full capacity, including cycling tests at 25%, 50%, 75%, and 100% of nameplate capacity (50 MW).
(f) Communication protocol verification between the Generating Facility, Oncor's control center, and ERCOT, including testing of real-time data exchange, alarm transmission, and control signals.
(g) Frequency response and voltage regulation testing in accordance with ERCOT Protocols applicable to energy storage resources.
(h) Emergency disconnect testing, including verification of trip and isolation procedures.
The Commissioning Tests shall be completed in accordance with the milestone schedule set forth in Section 5.1, with all tests targeted for completion on or before August 1, 2023.
Section 6.4 — Energization
Initial Energization of the Generating Facility shall occur only after the satisfaction of all of the following conditions:
(a) Successful completion and acceptance of all Commissioning Tests as described in Section 6.3 and Exhibit C, with results satisfactory to both Parties and in compliance with all applicable standards.
(b) Oncor's written confirmation that all TDSP Interconnection Facilities and Network Upgrades are complete, tested, and fully functional.
(c) Receipt of all required ERCOT approvals for synchronization and initial operation of the Generating Facility, including any approvals required under the ERCOT Protocols for the energization of new generation resources or energy storage resources.
(d) Confirmation that all required permits, licenses, approvals, and authorizations from governmental authorities, including the PUCT, Ector County, TCEQ, and any other applicable agencies, are in full force and effect and have not been revoked, suspended, or materially modified.
(e) IC's delivery to Oncor of all required insurance certificates evidencing the coverages specified in Article 9.
The expected Energization Date is July 15, 2023. The Parties shall coordinate the scheduling of the initial Energization in advance and shall designate qualified personnel to be present at the Generating Facility and the Western Permian Substation during Energization.
Section 6.5 — Trial Operation
Following the initial Energization of the Generating Facility, IC may operate the Generating Facility on a trial basis for a period not exceeding ninety (90) days (or such other period as the ERCOT Protocols may require for new energy storage resources) for purposes of additional testing, commissioning, performance verification, and optimization prior to achieving Commercial Operation. During the trial operation period, IC shall operate the Generating Facility in accordance with all Applicable Laws, ERCOT Protocols, and Oncor's operating requirements. IC shall promptly notify Oncor and ERCOT of any operational issues, equipment failures, or anomalies observed during trial operation that may affect the reliability or safety of the ERCOT transmission system. The trial operation period shall not extend beyond the date on which all conditions for Commercial Operation have been satisfied without the prior written consent of Oncor.
ARTICLE 7 — OPERATIONS AND MAINTENANCE
Section 7.1 — IC's Obligations
IC shall operate and maintain the Generating Facility and IC's Interconnection Facilities in accordance with Good Utility Practice, Applicable Laws, ERCOT Protocols, NERC Reliability Standards, and the terms and conditions of this Agreement, throughout the term of this Agreement. Without limiting the generality of the foregoing, IC's operations and maintenance responsibilities include:
(a) Operation and maintenance of the BESS, including all battery modules, power conversion systems, battery management system, thermal management systems, and container enclosures.
(b) Maintenance of the on-site main power step-up transformer (34.5 kV to 138 kV), including routine inspection, testing, oil analysis, and replacement of components as necessary.
(c) Maintenance of the Gen-Tie Line (approximately 1.2 miles, 138 kV overhead), including vegetation management, conductor inspection, structure maintenance, and compliance with NESC and applicable safety standards.
(d) Maintenance of metering equipment, protective relaying, circuit breakers, disconnect switches, SCADA, and communications equipment on IC's side of the demarcation point.
(e) Compliance with all ERCOT resource registration requirements and maintenance of a valid ERCOT Resource ID (LSBESS_01 or as finally assigned by ERCOT). IC shall ensure that all required telemetry data, operating parameters, and status information are continuously and accurately communicated to ERCOT and Oncor in accordance with the ERCOT Protocols.
(f) Employment or engagement of qualified personnel with appropriate training and certifications for the operation and maintenance of the Generating Facility and Interconnection Facilities.
Section 7.2 — Oncor's Obligations
Oncor shall operate and maintain the TDSP Interconnection Facilities and the Network Upgrades, as well as the transmission system at and beyond the POI, in accordance with Good Utility Practice, Applicable Laws, NERC Reliability Standards, and the ERCOT Protocols. Oncor shall maintain the Western Permian 138 kV Substation and all Oncor-owned equipment at the POI in a condition suitable for reliable interconnection and operation. Oncor shall promptly notify IC of any conditions or events affecting the TDSP Interconnection Facilities or the transmission system at the POI that may materially affect the ability of the Generating Facility to inject energy into or withdraw energy from the ERCOT transmission system.
Section 7.3 — Coordination
The Parties shall coordinate all scheduled outages, maintenance activities, and testing of Interconnection Facilities and Network Upgrades with reasonable advance written notice to the other Party (not less than thirty (30) days for planned outages, except in the case of emergencies requiring more immediate action). Each Party shall make commercially reasonable efforts to schedule planned outages at times that minimize the impact on the other Party's operations. Each Party shall designate an operating representative for day-to-day coordination of operations and maintenance activities at the POI. The names and contact information of such operating representatives shall be exchanged within thirty (30) days after the Effective Date and updated promptly upon any change.
Section 7.4 — Emergency Operations
In the event of an emergency affecting the reliability, security, or safety of the ERCOT transmission system, including but not limited to transmission system faults, equipment failures, extreme weather events, or grid emergencies declared by ERCOT, Oncor may disconnect, de-energize, or curtail the Generating Facility without prior notice to IC, provided that Oncor shall notify IC of such action as soon as practicable after the emergency action is taken. IC shall cooperate with Oncor in implementing all emergency procedures and shall comply with all ERCOT emergency operating procedures applicable to energy storage resources. IC shall not reconnect or re-energize the Generating Facility following an emergency disconnection without Oncor's prior written or verbal authorization.
Section 7.5 — Modifications to the Generating Facility
IC shall not materially modify the Generating Facility, including without limitation any changes to the nameplate capacity (MW or MWh), operating voltage, equipment type, or operating characteristics, without prior written notice to Oncor and, where required by the ERCOT Protocols, submission of a modification request and completion of any required modification study or restudy under the ERCOT Protocols. Modifications that constitute a "Material Modification" as defined in the ERCOT Protocols may require IC to enter into a new or amended interconnection agreement and may affect IC's Queue Position. IC shall bear all costs associated with any required modification study and any additional Network Upgrades identified as a result of such study.
ARTICLE 8 — METERING
Section 8.1 — Metering Equipment
Revenue metering equipment shall be installed at the POI in accordance with Oncor's metering specifications and ERCOT metering requirements. IC shall bear the cost of the initial procurement, installation, and commissioning of all revenue metering equipment. The metering equipment shall be of revenue-grade quality and shall be capable of measuring both energy injections (discharging of the BESS into the ERCOT transmission system) and energy withdrawals (charging of the BESS from the ERCOT transmission system) on a 15-minute interval basis, in accordance with ERCOT settlement requirements. The metering equipment shall also be capable of measuring reactive power (VARs) and other parameters required by Oncor and ERCOT.
Section 8.2 — Metering Accuracy and Testing
All metering equipment shall meet or exceed the accuracy standards set forth in ANSI C12 and any additional accuracy requirements specified by Oncor or the ERCOT Protocols. Oncor shall have the right to test and inspect the metering equipment at least annually and at any other time upon reasonable request by either Party. If metering equipment is found to be inaccurate beyond the tolerances permitted by ANSI C12, the metering data shall be corrected retroactively for the period during which the inaccuracy is determined to have existed, not to exceed one hundred eighty (180) days, and the costs of such correction shall be borne by the Party responsible for the inaccuracy. The costs of routine annual metering tests conducted by Oncor shall be borne by Oncor. The costs of any metering test requested by IC (other than routine annual tests) shall be borne by IC.
Section 8.3 — Metering Data
Metering data collected at the POI shall be made available to ERCOT, IC, and Oncor in accordance with the ERCOT Protocols and Oncor's standard metering data procedures. Oncor shall provide IC with access to metering data on a timely basis for purposes of settlement, billing, and operational monitoring. IC shall have the right, at IC's sole cost and expense, to install check meters or backup metering equipment at the POI or at other locations on IC's Interconnection Facilities for purposes of verifying revenue metering accuracy. Check meters installed by IC shall not be used for ERCOT settlement purposes and shall not interfere with the operation or accuracy of the revenue metering equipment.
ARTICLE 9 — INSURANCE
Section 9.1 — IC's Insurance Requirements
IC shall procure and maintain, at its sole cost and expense, the following insurance coverages during the term of this Agreement, with insurance carriers rated "A-" or better by A.M. Best Company (or an equivalent rating by another nationally recognized rating agency):
(a) Commercial General Liability ("CGL") Insurance: Minimum limits of Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate, covering bodily injury, property damage, personal injury, and advertising injury arising out of IC's operations in connection with the Generating Facility and the Interconnection Facilities. The CGL policy shall be written on an ISO occurrence form (CG 00 01) or equivalent. CGL Carrier: Pinnacle Mutual Assurance Corp.
(b) Builder's Risk Insurance (during construction): Covering the full replacement value of the Generating Facility and IC's Interconnection Facilities during the construction period, on an all-risk basis, including coverage for fire, windstorm, flood (to the extent applicable), earthquake, theft, vandalism, and testing and commissioning. Builder's Risk Carrier: Commonwealth Specialty Insurance Company; policy limit: Forty-Two Million Dollars ($42,000,000).
(c) Workers' Compensation Insurance: As required by the laws of the State of Texas, covering all employees of IC and IC's contractors and subcontractors performing work at the Project Site or on the Gen-Tie Line.
(d) Employer's Liability Insurance: Minimum limits of One Million Dollars ($1,000,000) per accident, One Million Dollars ($1,000,000) per employee for disease, and One Million Dollars ($1,000,000) disease policy limit.
(e) Umbrella/Excess Liability Insurance: Minimum limits of Five Million Dollars ($5,000,000) per occurrence and in the aggregate, providing excess coverage over the CGL, employer's liability, and automobile liability policies.
(f) Professional Liability (Errors and Omissions) Insurance: Minimum limits of Two Million Dollars ($2,000,000) per claim and in the aggregate, covering claims arising out of professional services related to the design and engineering of the Generating Facility and Interconnection Facilities.
Aldermere & Co. shall be named as an additional insured on IC's CGL policy and umbrella/excess liability policy with respect to liability arising out of IC's operations in connection with the Generating Facility and the Interconnection Facilities. IC's insurance broker: Kensington Risk Advisors, LLC (Lead Broker: Dana J. Carwell).
Section 9.2 — Oncor's Insurance
Oncor shall maintain insurance in types and amounts consistent with Good Utility Practice for a transmission and distribution service provider of similar size and scope of operations in the State of Texas. Oncor shall maintain, at a minimum, commercial general liability, workers' compensation, and employer's liability insurance in amounts consistent with its obligations under this Agreement and Applicable Laws.
Section 9.3 — Evidence of Insurance
Each Party shall provide the other Party with certificates of insurance evidencing the coverages required under this Article upon request and at least thirty (30) days prior to the Energization Date. Each Party shall provide the other Party with at least thirty (30) days' advance written notice of any cancellation, non-renewal, or material change in the required insurance coverages. All policies required under this Article 9 shall contain a waiver of subrogation in favor of the other Party.
ARTICLE 10 — BILLING AND PAYMENT
Section 10.1 — Invoicing
Oncor shall invoice IC for Network Upgrade costs, TDSP Interconnection Facility costs, and any other charges due from IC to Oncor under this Agreement, in accordance with the payment schedule set forth in Section 4.3 and as otherwise provided in this Agreement. Each invoice shall contain reasonable detail and supporting documentation sufficient to enable IC to verify the amounts invoiced. Oncor shall submit invoices in writing (which may include electronic delivery) to IC at the notice address specified in Section 20.2, or to such other address or electronic mail address as IC may designate in writing from time to time.
Section 10.2 — Payment Terms
All invoices issued under this Agreement are due and payable within thirty (30) days of IC's receipt of such invoice. Payments shall be made by wire transfer of immediately available funds to the account designated by Oncor (or IC, as the case may be) in writing. All payments shall be in United States dollars.
Section 10.3 — Disputed Invoices
IC may dispute any invoice or any portion thereof by providing Oncor with written notice of the dispute within thirty (30) days of receipt of the invoice. Such notice shall set forth the specific items disputed and the basis for the dispute in reasonable detail. IC shall pay the undisputed portion of any invoice in full in accordance with Section 10.2 pending resolution of the dispute. The Parties shall use good-faith efforts to resolve any billing dispute promptly. If the Parties are unable to resolve a billing dispute within thirty (30) days of IC's notice of dispute, either Party may pursue resolution in accordance with Article 17.
Section 10.4 — Interest on Late Payments
Any amounts due and payable under this Agreement that are not paid when due (after expiration of any applicable cure period) shall accrue interest from the due date until paid at the lesser of (a) one and one-half percent (1.5%) per month (18% per annum) or (b) the maximum rate of interest permitted by the laws of the State of Texas. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed.
ARTICLE 11 — REPRESENTATIONS AND WARRANTIES