Section 170IAC4-4.1-11. Filing of standard contracts

   (a) Within sixty (60) days of the effective date of this rule each generating electric utility shall submit for approval via the commission's thirty (30) day filing process a standard form contract which it would enter into with a qualifying facility in connection with the generating electric utility's purchase of energy or capacity or both. The standard form contracts shall be prepared in a manner and form which will permit their use in the majority of circumstances with only minor modifications, although it is recognized that in unique situations a standard form contract may have to be revised significantly.

  (b) The standard form contract for the purchase of a nonfirm energy should contain provisions addressing the following, at a minimum:

(1) The basis for the determination of energy rate.

(2) The expected maximum electrical output to be made available to the generating electric utility.

(3) The interconnection and metering requirements.

(4) The operation, protection, and maintenance of the qualifying facility.

(5) The liability and indemnification between parties.

  (c) The standard form contract for the purchase of capacity and energy shall additionally contain the following:

(1) The term of the contract.

(2) The rate to be paid by the generating electric utility for the capacity being purchased.

(3) The amount of capacity the qualifying facility shall guarantee to make available to the electric utility during each year of the contract.

(4) The events of force majeure.

(5) The adjustments of capacity payments due to a premature termination of the contract or a reduction in the capacity provided by the qualifying facility below the level specified in the contract.

  (d) The commission will not approve the standard form contracts submitted unless they contain provisions which reasonably allocate the risks and benefits of the transaction between the qualifying facility and the electric utility. Insurance provisions contained in the contract shall require a party to obtain only reasonable amounts of insurance against risks for which there is a reasonable likelihood of occurrence.

  (e) The following provisions are illustrative of what the commission would consider to properly balance the interests of parties with respect to indemnification, events of force majeure, and premature termination of the contract or reduction in the capacity provided by the qualifying facility:

(1) Each party shall indemnify and hold the other party harmless from and against all claims, liability, damages, and expenses, including attorney's fees, based on any injury to any person, including loss of life, or damage to any property, including loss of use thereof, arising out of, resulting from, or connected with, or that may be alleged to have arisen out of, resulted from, or connected with an act or omission by such other party, its employees, agents, representatives, successors, or assigns in the construction, ownership, operation, or maintenance of such party's facilities used in connection with this agreement. Upon the written request of the party seeking indemnification under this provision, the other party shall defend any suit asserting a claim covered by this provision. If a party is required to bring action to enforce its indemnification rights under this provision, either as a separate action or in connection with another action, and said indemnification rights were upheld, the party from whom the indemnification was sought shall reimburse the party seeking indemnification for all expenses, including attorney's fees, incurred in connection with such action.

(2) "Force majeure" means any cause or event not reasonably within the control of the party claiming force majeure, including, but not limited to:

(A) acts of God;

(B) strikes;

(C) lockouts or other industrial disturbances;

(D) acts of public enemies;

(E) orders, permits, or the absence of the necessary orders or permits of any kind which have been properly applied for from the government of the United States, the state of Indiana, any political subdivision, municipal subdivision, or any of their departments, agencies, or officials, or any civil or military authority;

(F) unavailability of a fuel or resource used in connection with the generation of electricity;

(G) extraordinary delay in transportation;

(H) unforeseen soil conditions;

(I) equipment, material, supplies, labor, or machinery shortages;

(J) epidemics;

(K) landslides;

(L) lightning;

(M) earthquakes;

(N) fires;

(O) hurricanes;

(P) tornadoes;

(Q) storms;

(R) floods;

(S) washouts;

(T) drought;

(U) arrest;

(V) war;

(W) civil disturbances;

(X) explosions;

(Y) breakage or accident to machinery, transmission lines, pipes, or canals;

(Z) partial or entire failure of utilities;

(AA) breach of contract by any supplier, contractor, subcontractor, laborer, or materialman;

(BB) sabotage;

(CC) injunction;

(DD) blight;

(EE) famine;

(FF) blockade; or

(GG) quarantine.

If either party is rendered wholly or partly unable to perform its obligations because of force majeure, both parties shall be excused from whatever obligations are affected by the force majeure and shall not be liable or responsible for any delay in the performance of, or the inability to perform, any such obligations for so long as the force majeure continues. The party suffering an occurrence of force majeure shall, as soon as is reasonably possible after such occurrence, give the other party written notice describing the particulars of the occurrence and shall use its best efforts to remedy its inability to perform, provided, however, that the settlement of any strike, walkout, lockout, or other labor dispute shall be entirely within the discretion of the party involved in such labor dispute.

(3) The parties agree that the amount of the capacity payment which the utility is to make to the qualifying facility is based on the agreed value to the utility of the qualifying facility's performance of its obligation to provide capacity during the full term of this agreement. The parties further agree that in the event the utility does not receive such full performance by reason of a termination of this agreement prior to its expiration or reduction in the amount of capacity agreed to be provided by the qualifying facility as specified in this agreement:

(A) the utility shall be deemed damaged by reason thereof;

(B) it would be impracticable or extremely difficult to fix the actual damages to the utility resulting therefrom;

(C) the reductions, offsets and refund payments as provided hereafter, as applicable, are in the nature of adjustments in prices and are to be considered liquidated damages, and not a penalty, and are fair and reasonable; and

(D) such reductions, offsets, and refund payments represent a reasonable endeavor by the parties to estimate a fair compensation for the reasonable damages that would result from such premature termination or failure to deliver the specified amount of capacity.

(4) In the event this agreement is terminated or the contract capacity is reduced prior to the end of the contract term, the qualifying facility shall refund to the utility the capacity payments in excess of those capacity payments which would have been made had all of the reduced capacity been subject to a capacity rate based on the actual term of delivery to the utility.

(5) Except in the event of force majeure as defined in this section, if, within any twelve (12) month period during the term of this agreement ending on the anniversary date of the date of the qualifying facility first provided capacity to the utility under this agreement, the qualifying facility fails to provide the utility with the capacity specified in this agreement, the capacity for which the qualifying facility shall be entitled to capacity payments during the subsequent twelve (12) month period ("the probationary period") shall be reduced to the capacity provided during the prior twelve (12) month period. If, during the probationary period, the qualifying facility provides the capacity specified in this agreement, the utility, within thirty (30) days following the end of the probationary period, shall reinstate the full capacity amount originally specified in this agreement. If, during the probationary period, the qualifying facility again fails to provide the capacity specified in this agreement, the utility may permanently reduce the capacity purchased from the qualifying facility for the remainder of the term of this agreement. The utility may also require that the reduction in the capacity be subject to the refund provisions of (2) [sic., subdivision (2)].

(Indiana Utility Regulatory Commission; 170 IAC 4-4.1-11; filed Mar 7, 1985, 10:04 a.m.: 8 IR 764; filed Jun 8, 1989, 2:00 p.m.: 12 IR 1838; readopted filed Jul 11, 2001, 4:30 p.m.: 24 IR 4233; readopted filed Apr 24, 2007, 8:21 a.m.: 20070509-IR-170070147RFA; readopted filed Aug 2, 2013, 2:16 p.m.: 20130828-IR-170130227RFA)