Post COD Performance Tests
1.19 The Contractor must give the Owner prior written notice of when it intends to carry any of the Post COD Performance Tests at the times and in accordance with the requirements set out in Schedule 8 (Tests).
1.20 As soon as reasonably practicable after receipt of a notice under clause 1.19, the Owner must issue a notice to the Contractor specifying the date for commencement of the Post COD Performance Tests at the times and in accordance with Schedule 8 (Tests).
1.21 The Contractor must notify the Owner at least 10 Days before whole of the Works and Facility will, in the opinion of the Contractor, reach the stage of Final Completion.
1.22 As soon as the whole of the Works and Facility have, in the opinion of the Contractor, satisfied each of the preconditions for achieving Final Completion the Contractor must notify the Owner.
1.23 Not later than 10 Days after receipt of the Contractor's notice under clause 1.21, the Owner must either:
1.23.1 issue a Certificate of Final Completion stating that the Facility has reached Final Completion and the date on which the Facility reached of Final Completion; or
1.23.2 notify the Contractor that the Facility has not achieved of Final Completion and indicate any defects and/or deficiencies.
1.24 If the Owner notifies the Contractor of any defects and/or deficiencies, the Contractor must then correct those defects and/or deficiencies and the procedures described in clauses 1.21 to 1.23 must be repeated until the Owner issues a Certificate of Final Completion.
1.25 The Certificate of Final Completion will be evidence of accord and satisfaction, and in discharge of each Party's obligations in connection with this Contract except for obligations in relation to Spare Parts, Warranted Component Parts, indemnities or unresolved issues the subject of any Dispute of which notice has been given prior to the issue of the Certificate of Final Completion.
1.26 Despite any other provision of this Contract, no partial or entire use or occupancy of the Project Site, the Works or the Facility by the Owner after the Commercial Operation Date, whether during the Post COD Performance Tests or otherwise, in any way constitutes an acknowledgment by the Owner that Final Completion has occurred, nor does it operate to release the Contractor from any of its warranties, obligations or liabilities under or in connection with this Contract including the satisfactory performance of its obligations during the Defects Liability Period, the carrying out of the Post COD Performance Tests and meeting the Post COD Performance Guarantees.
2 PERFORMANCE GUARANTEES
2.1 The Contractor guarantees that the Facility and all component parts will meet all of the Performance Guarantees as specified in the Performance Guarantees Schedule, including the Commercial Operation Performance Guarantees and the Post COD Performance Guarantees.
Minimum Acceptance Capacity not achieved
2.2 Following the completion of the Commercial Operation Performance Tests, if the Capacity of the Facility is not greater than the Minimum Acceptance Capacity, the Contractor must at its cost and expense make changes, modifications or additions to the Facility, or any part of the Facility, as may be necessary for the Facility to reach a Capacity greater than the Minimum Acceptance Capacity. The Contractor must notify the Owner upon completion of the necessary changes, modifications or additions and must, subject to the Owner's rights under clause 2.3, continue to repeat the Commercial Operation Performance Tests until the Capacity of the Facility is greater than the Minimum Acceptance Capacity.
[Drafting Note: this is a pass through of clause 4.5.6 of the PPA.]
2.3 If, for reasons not attributable to the Owner, the Capacity is not greater than the Minimum Acceptance Capacity by the Last COD, the Owner may terminate this Contract. If, for reasons not attributable to the Owner, the Capacity is not greater than the Minimum Acceptance Capacity by the Last COD, and any of the Project Documents is terminated, in addition to having the right to terminate this Contract, the Owner may also reject the Facility.
Commercial Operation Performance Guarantees not achieved
2.4 If, after carrying out the Commercial Operation Performance Tests, any of the Commercial Operation Performance Guarantees have not been met, the Owner may direct the Contractor to make changes, modifications or additions to the Facility or any part of the Facility as may be necessary to meet the Commercial Operation Performance Guarantees. Without limiting the Owner's rights in this clause, the Contractor may within 7 Days of the performance of any Commercial Operation Performance Test which revealed that any of the Commercial Operation Performance Guarantees have not been met, notify the Owner that it wishes to make changes, modifications or additions to the Facility or any part of the Facility as may be necessary to meet the Commercial Operation Performance Guarantees, provided such notice is given at least 3 Months prior to the Last COD.
Owner directs changes to Facility
2.5 If the Owner directs the Contractor in accordance with clause 2.4 or the Contractor notifies the Owner in accordance with clause 2.4, the Contractor must:
2.5.1 at the Contractor's cost and expense, make the changes, modifications or additions to the Facility or any part of the Facility as may be necessary to meet the Commercial Operation Performance Guarantees;
2.5.2 notify the Owner upon completion of the necessary changes, modifications or additions; and
2.5.3 continue to repeat the Commercial Operation Performance Tests until the Commercial Operation Performance Guarantees have been met or until the Last COD, whichever is earlier.
2.6 Notwithstanding that t any of the Commercial Operation Performance Guarantees have not been met, but provided that all of the other requirements for Commercial Operation have been met, or waived in writing by the Owner, and the Contractor has not given a notification contemplated in, and within the 7 Day period contemplated in, clause 2.4, the Owner may at any time prior to the Last COD issue a Certificate of Commercial Operation, in which case the process set out in clauses 2.23 to 2.26 must be followed.
[Drafting Note: this is a pass through of clauses 220.127.116.11 and 18.104.22.168 of the PPA.]
Owner issues Certificate of Commercial Operation
2.7 If the Owner issues a Certificate of Commercial Operation under clause 2.6, the Contractor must do all things reasonably necessary to assist the Owner to ensure that the requirements for the issue of a Certificate of Commercial Operation in relation to the Facility are met.
Reduction in Contract Price for failure to achieve the Commercial Operation Performance Guarantees
2.8 Despite any provision of this Contract, if any of the Commercial Operation Performance Guarantees have not been met at the earliest of:
2.8.1 the Last COD;
2.8.2 when the Contractor is liable for Delay Liquidated Damages up to the aggregate liability; or
2.8.3 when the Owner issues a notice deeming Commercial Operation to have been achieved (notwithstanding that any of the other Commercial Operation Performance Guarantees have not been met) under clause 2.6,
the Owner will be entitled to a reduction in the Contract Price determined in accordance with the Liquidated Damages Schedule and the Contract Price will be reduced accordingly.
Performance Liquidated Damages for failure to achieve the Post COD Performance Guarantees
2.9 Despite any provision of this Contract, if the Contractor does not meet the Post-COD Performance Guarantees in accordance with the Performance Guarantees Schedule after the Commercial Operation Date, the Contractor must pay to the Owner the Performance Liquidated Damages in the amounts specified in the Liquidated Damages Schedule and at the times specified in clause 2.11.
Satisfaction of Performance Guarantees
2.10 The Owner's entitlement to a reduction in the Contract Price under clause 2.8 and the payment of Performance Liquidated Damages under clause 2.9 will be in satisfaction of the relevant Performance Guarantees.
Due and payable
2.11 Performance Liquidated Damages must be invoiced in accordance with clause 2.8 by the Owner and payment will be due within 30 Days of issue of such invoice. At the expiration of 30 Days the amount invoiced will be a debt due and payable to the Owner on demand and may be deducted from any payments otherwise due from the Owner to the Contractor and the Owner may also have recourse to the security provided under this Contract.
2.12 The aggregate liability of the Contractor for Performance Liquidated Damages for breach of Post-COD Performance Guarantees under clause 2.9 (but excluding any reduction in the Contract Price pursuant to clause 2.8 or any other amounts expressly excluded in the Liquidated Damages Schedule from the cap on Performance Liquidated Damages under this clause 2.12) will not exceed the amount specified in the Liquidated Damages Schedule.
2.13 Nothing in this clause 2 entitles the Owner to claim duplicate damages under this Contract and under law regarding the failure of the Contractor to meet the Performance Guarantees.
Part II – Extension of Time Regime
2.1 The Contractor must give notice to the Owner of all incidents, circumstances or events (Events) of any nature affecting or likely to affect the progress of the Works which might be reasonably expected to result in a delay to the Works achieving Commercial Operation by the Scheduled COD as soon as reasonably possible after the Contractor has become aware that such Event has arisen.
2.2 Within 21 Days after the Contractor becomes aware that an Event has first arisen, the Contractor must give a further notice to the Owner which must include:
2.2.1 the material circumstances of the Event including the cause or causes;
2.2.2 the nature and extent of any delay caused by the Event;
2.2.3 the corrective action already undertaken or to be undertaken;
2.2.4 the effect on the critical path noted on the Program;
2.2.5 whether in its opinion, the Event qualifies as one which entitles the Contractor to an extension of time to the Scheduled COD;
2.2.6 the period, if any, by which in its opinion the Scheduled COD should be extended; and
2.2.7 a statement that it is a notice under this clause.
2.3 Where an Event has a continuing effect or where the Contractor is unable to determine whether the effect of an Event will actually cause delay to the progress of the Works so that it is not practicable for the Contractor to give notice under clause 3.2, a statement to that effect with reasons together with interim written particulars (including details of the likely consequences of the Event on progress of the Works and an estimate of the likelihood or likely extent of the delay) must be submitted by the Contractor in place of the notice required under clause 3.2. The Contractor must then submit to the Owner, at intervals of 14 Days or less, further interim written particulars until the actual delay caused (if any) is ascertainable, at which time the Contractor must as soon as practicable but in any event within 42 Days give a final notice to the Owner including the particulars specified in clause 3.2.
Determination by Owner
2.4 Within 42 Days after receipt of the notice in clause 3.2 or the final notice in clause 3.3, the Owner must issue a notice notifying the Contractor's Representative of its determination as to whether the relevant Event qualifies as one which entitles the Contractor to an extension to the Scheduled COD, and if it does, the period, if any, by which the Scheduled COD is to be extended.
2.5 Any extension of time given in relation to a delay caused by an event of Force Majeure, Compensation Event or System Event must not exceed the duration of any extension to the Scheduled COD under the Power Purchase Agreement which the Owner receives in relation to the same events provided that the Contractor's right to receive an extension of time will apply irrespective of whether or not the Owner actually claims an extension of time under the Power Purchase Agreement (where it is entitled to claim an extension of time under the Power Purchase Agreement).
Causes of delay
2.6 Subject to the provisions of this clause, the Contractor is entitled to an extension of time to the Scheduled COD as the Owner assesses where a delay to the achievement of Commercial Operation is caused by any of the following events, whether occurring before, on or after the Scheduled COD:
2.6.1 any act, omission, breach or default by the Owner or its Personnel;
2.6.2 a Variation, except where that Variation is caused by an act, omission or default of the Contractor, its Personnel or its Subcontractors;
2.6.3 a suspension of the Works under this Contract, except where that suspension is caused by an act, omission or default of the Contractor, its Personnel or its Subcontractors;
2.6.4 a Compensation Event;
2.6.5 a System Event;
2.6.6 Unforeseeable Conduct;
2.6.7 an event of Force Majeure; or
2.6.8 such other events specified in this Contract which entitle the Contractor to an extension of time.
Extension of time
2.7 Despite any other provisions of this clause, and notwithstanding that the Contractor is not entitled to or has not claimed an extension of time to the Scheduled COD, the Owner may, in its absolute sole and unfettered discretion, at any time grant an extension of the Scheduled COD. The Owner has no obligation to grant, or to consider whether it should grant an extension of time and is not required to exercise this discretion for the benefit of the Contractor.
2.8 If the Contractor fails to submit the notices required under this clause within the times required, or fails to comply with any other notice requirement under this Contract regarding the event then:
2.8.1 the Contractor has no entitlement to an extension of time; and
2.8.2 the Contractor must comply with the requirements to perform the Works by the Scheduled COD.
Must impact on critical path
2.9 It is a further condition precedent of the Contractor's entitlement to an extension of time that:
2.9.1 the Contractor is or actually will be prevented from achieving Commercial Operation by the Scheduled COD by an Event, and the Event qualifies as one which entitles the Contractor to an extension of time to the Scheduled COD under this clause; and
2.9.2 the relevant delay is demonstrable on an assessment of the actual and then current critical path to achieving Commercial Operation by the Scheduled COD.
2.10 The Owner may direct the Contractor's Representative to accelerate the Works for any reason.
2.11 The Contractor must submit within 5 Days after an acceleration direction under clause 3.10, a revised Program for the approval of the Owner. The Contractor must set out any likely effects the direction has on the Works and the Scheduled COD.
Contractor entitled to additional costs
2.12 The Contractor will be entitled to all extra costs necessarily incurred (which do not include off-Site overheads, profit or loss of profit), by the Contractor in complying with an acceleration direction, except where the direction was issued as a consequence of the failure of the Contractor to fulfil its obligations under this Contract. The Owner must assess and decide as soon as reasonably practical, the extra costs necessarily incurred by the Contractor.
Concurrent causes of delay
2.13 If there are 2 or more Events which constitute concurrent causes of delay and at least one of those concurrent causes is a cause of delay which would not entitle the Contractor to an extension of time under this Contract, the Contractor is not entitled to an extension of time for the period of that concurrency.
Part III - Grid Access Regime
3 GRID ACCESS
[Note: This GC is an either/or choice of the Distribution System and the Transmission System depending upon which System the Owner wishes to connect with. The difference between the 2 systems is that the Distribution System is a distribution network of any Distributor which operates at a nominal voltage of 132 kV or less, as described in the Codes. The Transmission System is the national transmission system of the NTC, consisting of all lines and substation equipment which operate at a nominal voltage of above 132 kV. Item 14 of Part A (General Requirements, Rules and Provisions) of the RFP sets out that the Owner will need to either connect to the Transmission System via the Transmission Agreement or the Distribution System by either the Distribution Agreement or a Pro-forma Municipal Distribution Agreement. As a result, the Owner and Contractor will need to select and modify the below provisions based upon the choice of system]
Managing Connection to the System
3.1 The Contractor must undertake and co-ordinate the Connection Works with the NTC, Independent Engineer and Distributor, and provide termination facilities specified in the Specification.
3.2 The Contractor must liaise with NERSA, the NTC, Distributor, DOE, Buyer, Responsible Authorities, Independent Engineer, the Owner and other Parties to avoid delays in undertaking the Connection Works and connecting the Facility to the Transmission System and/or Distribution System.
Transmission and Connection System
3.3 On the Date for First Synchronisation the Owner must ensure that there is in place a Transmission System and/or Distribution System which is capable of receiving the generated net output the Facility is physically capable of producing at any given time.
3.4 The Owner's obligation to ensure that the Transmission System and/or Distribution System is in place is subject to the Facility being able to be connected to the Transmission System and/or Distribution System and the Contractor being able to import and/or export power.
First Synchronisation before Date for First Synchronisation
3.5 If the Contractor notifies the Owner that First Synchronisation is likely to take place before the Date for First Synchronisation, the Owner must use its reasonable endeavours to ensure that the Transmission System and/or Distribution System is in place to enable First Synchronisation to take place in accordance with the Contractor's revised estimate of First Synchronisation. The Contractor is not entitled to claim any additional cost or expense or any adjustment to the Contract Price or to claim any extension to the Scheduled COD or to make any claim under any applicable Law, at law, in equity or otherwise, if the Distribution System is not in place to enable First Synchronisation to take place in accordance with the Contractor's revised estimate of First Synchronisation.
Export of power
3.6 At the time of and following First Synchronisation the Owner will ensure that the Contractor is permitted to export to the Transmission System and/or Distribution System power which the Facility is physically capable of exporting, provided that:
3.6.1 it is necessary for the Contractor to export that amount of power if the Contractor is to obtain Commercial Operation;
3.6.2 the Contractor has complied in all respects with its obligations under the 'Code Requirements'; and
3.6.3 in the reasonable opinion of the Owner and/or the NTC, Distributor or NERSA the export of power by the Facility will not pose a threat to the safety of persons and/or property (including the Transmission System and/or Distribution System).
© DLA Piper
This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.
DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com