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POWER PURCHASE AGREEMENT

Between

insert details(Registration number insert details)

and

ETHEKWINI MUNICIPALITY

insert details / ETHEKWINI POWER PURCHASE AGREEMENT

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INDEX

1 DEFINITIONS..........................................................................................................................3

2 BASIS OF AGREEMENT........................................................................................................5

3 DURATION..............................................................................................................................5

4 CONDITION PRECEDENT......................................................................................................5

5 SALE AND PURCHASE OF ELECTRICITY...........................................................................6

6 EMBEDDED GENERATOR’S OBLIGATIONS.......................................................................6

7 DISTRIBUTOR’S OBLIGATIONS...........................................................................................6

8 METERING..............................................................................................................................7

9 INVOICING AND PAYMENT...................................................................................................7

10 VALUE ADDED TAX...........................................................................................................8

11 FORCE MAJEURE...............................................................................................................8

12 DISPUTE RESOLUTION...................................................................................................10

13 MISCELLANEOUS PROVISIONS.....................................................................................10

14 NOTICES...........................................................................................................................10

15 COSTS...............................................................................................................................11

16 WARRANTY BY SIGNATORIES......................................................................................11

ANNEXURE A...............................................................................................................................13

ANNEXURE B...............................................................................................................................14

ANNEXURE C…………………………………………………………………………………...………. 15


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1 DEFINITIONS

1.1 In this agreement, the following words shall bear the following meanings:-

1.1.1 “this agreement” means this agreement and the annexures thereto;

1.1.2 “Business Day” means a day, other than a Saturday or a Sunday or an official public

holiday in South Africa;

1.1.3 “Connection Application” means the Application for the Connection of Embedded

Generation submitted by the Embedded Generator to the Distributor in the required form

attached as annexure A;

1.1.4 “the Distributor” means ETHEKWINI MUNICIPALITY, a municipality formed in

accordance with the Local Government: Municipal Structures Act No. 117 of 1998, which

carries on business at 1 Jelf Taylor Crescent, Durban;

1.1.5 “Effective Date” means the date on which this agreement is signed by the last party

doing so;

1.1.6 “Embedded Generator” means insert details registered in accordance with the laws of

the Republic of South Africa, (registration number insert details), which carries on

business at insert details;

1.1.7 “Export” means to supply to the System and “exported” has a corresponding meaning;

1.1.8 “the Facility” means the plant at which the Embedded Generator generates electricity

situated at insert details, comprising all plant, machinery and equipment, including all

interconnection facilities up to the nearest point of connection to the System owned

and/or operated by the Embedded Generator, which plant will have the following export

capacity:

1.1.8.1 insert details ;

1.1.8.2 insert details

1.1.9 “Import” means to receive from the System and “imported” has a corresponding

meaning;

1.1.10 “Metering Installation” means an installation at the Point of Common Coupling for the

purposes of measuring electricity exported by the Embedded Generator , comprising an

electronic main meter and an electronic check meter;

1.1.11 “Month” means a calendar month;

1.1.12 “NERSA” means the National Energy Regulator of South Africa established in terms of

the National Energy Regulator Act, (Act 4 of 2004), or its legal successor;


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1.1.13 “NRS 048’ means the Code of Practice for Electricity Supply - Quality of Supply, issued

by the South African Bureau of Standards, as revised or replaced from time to time;

1.1.14 “NRS 057’ means the Code of Practice for Electricity Metering for Residential and

Commercial Customers, issued by the South African Bureau of Standards, as revised or

replaced from time to time;

1.1.15 “NRS 097’ means the Code of Practice for Grid Interconnection of Embedded

Generation, as revised or replaced from time to time;

1.1.16 “Point of Common Coupling” means the physical point where the electricity is to be

exported by the Embedded Generator and metered by the Distributor as described in

Annexure A;

1.1.17 “System” means the distribution system operated by the Distributor to which the Facility

will be connected;

1.1.18 “System Operating Procedures” means the written documents and guidelines that

describe best practice procedures to ensure the correct and safe operation of the System

annexed hereto as annexure D; and

1.1.19 “VAT” means value-added tax payable in terms of the Value Added Tax Act 89 of 1991.

1.2 Clause headings in this agreement are for convenience only and shall not be taken into account

in the interpretation hereof.

1.3 Words denoting a particular gender shall be deemed to include the other genders, words

denoting natural persons shall be deemed to include corporate bodies and associations of

persons, and words denoting the singular shall be deemed to include the plural, and vice versa.

1.4 If any provision in a definition is a substantive provision conferring rights or imposing obligations

on any party, notwithstanding that it is only in the definition clause, effect shall be given to it as if it

were a substantive provision in the body of the agreement.

1.5 When any number of days is prescribed in this agreement, same shall be reckoned exclusively of

the first and inclusively of the last day unless the last day is not a business day (a business day

being a calendar day excluding a Saturday, Sunday or public holiday in the Republic of South

Africa) in which case the last day shall be the next succeeding business day.

1.6 Where figures are referred to in numerals and in words, if there is any conflict between the two,

the words shall prevail.

1.7 Definitions and expressions defined in this agreement shall bear the same meanings in schedules

or annexures to this agreement which do not themselves contain their own definitions.


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1.8 References to "including" and "in particular" shall not be construed restrictively but shall mean

"including, without limitation to the generality of the foregoing" and "in particular, but without

limitation to the generality of the foregoing" respectively;

1.9 Any reference to any Act is to such Act as at the date of last signature hereof and shall be

deemed to include also a reference to any such Act as amended or re-enacted from time to time.

1.10 The terms of this agreement having been negotiated, the contra proferentem rule (i.e. the rule of

construction that in the event of ambiguity an agreement shall be interpreted against the party

responsible for the drafting or preparation thereof) shall not be applied in the interpretation of this

agreement.

2 BASIS OF AGREEMENT

2.1 It is recorded that, as at the Effective Date, the Embedded Generator will be in a position to

produce electricity at the Facility which is surplus to its own needs.

2.2 With effect from the Effective Date, the Embedded Generator wishes to sell and the Distributor

wishes to purchase metered electricity at the Point of Common Coupling generated by the Facility

on the terms and conditions contained in this agreement.

2.3 This agreement constitutes the connection agreement referred to in the Connection Application.

2.4 The terms and conditions set out in the approved Connection Application shall be deemed to be

incorporated in this agreement. (Refer to Annexure A)

3 DURATION

3.1 This agreement shall commence on the Effective Date and shall continue thereafter for a period

of 3 (three) years (“the Initial Period”) unless terminated by either party in accordance with the

terms of this agreement.

3.2 Provided that it is not in breach of this agreement, the Embedded Generator together with the

Distributor shall have the option to renew this agreement for a further period of 3 (three) years on

the same terms and conditions, subject to compliance with legislative requirements and authority

being obtained from the eThekwini Municipal Council and/or National Treasury for this agreement

to extend beyond the Initial Period.

3.3 If the Embedded Generator wishes to exercise the option to renew aforesaid, the Embedded

Generator shall give the Distributor written notice of its intention to do so not less than 6 (six)

months prior to the expiry of the Initial Period, failing which the option to renew shall lapse and be

of no further force and effect.

4 CONDITION PRECEDENT

If the Embedded Generator is not granted a cogeneration licence by NERSA, either party may

elect to resile from this agreement upon 30 (thirty) days’ written notice to the other.


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5 SALE AND PURCHASE OF ELECTRICITY

5.1 Subject to System conditions, the Distributor hereby undertakes to purchase and the Embedded

Generator undertakes to sell, with effect from the Effective Date, all such metered electricity as

the Embedded Generator will make available (subject to clause Error: Reference source not

found) for export at the Point of Common Coupling at the rates set out in Annexure C, duly

adjusted from time to time in accordance with item number 3 thereof.

5.2 It is recorded that the rates payable to the Embedded Generator shall not exceed the rates as

payable to Eskom (Megaflex - Local Authority Rates / > 132kV / 300-600km tariff structure or

closest equivalent in the event that the Megaflex rate no longer exists.)

5.3 The Distributor has the right to monitor the Embedded Generator and measure compliance with

all regulatory standards. Where an instance of non-compliance exists, the Embedded Generator

shall remedy the non compliance within a reasonable timeframe prior to any further electricity

being exported.

6 EMBEDDED GENERATOR’S OBLIGATIONS

6.1 The Embedded Generator shall operate the Facility in accordance with all applicable laws, by-

laws, regulations and orders and requirements of NERSA or any other competent authority,

affecting or which may affect the conduct by the Embedded Generator of its activities or the

fulfilment of its obligations, including NRS 048 and NRS 097 and any other relevant standards.

6.2 The Embedded Generator shall comply with the terms and conditions set out in the approved

Connection Application so as to ensure that the operation of the Facility will not have an adverse

effect on the System.

6.3 The Embedded Generator shall be responsible for any damages caused by the generation plant

to the Distributor’s network.

6.4 The Embedded Generator shall be responsible for the costs of all work and equipment required in

providing a connection between the Facility and the System.

6.5 The Embedded Generator shall comply with all System Operating Procedures agreed to between

the parties.

7 DISTRIBUTOR’S OBLIGATIONS

7.1 The Distributor shall at all material times provide, at the cost of the Embedded Generator:

7.1.1 a connection between the Facility and the System;

7.1.2 the Metering Installation.

7.2 The Distributor shall take all reasonable steps to enable the Embedded Generator to export

electricity from the Facility.


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7.3 The Distributor shall provide half-hourly metering data obtained from the Metering Installation to

the Embedded Generator on a Monthly basis.

7.4 The Distributor shall pay for the electricity exported by the Embedded Generator in accordance

with the rates set out in Annexure C and by the dates as set out in clause 9 below.

8 METERING

8.1 The Metering Installation shall measure the electricity imported and exported by the Embedded

Generator at the Point of Common Coupling pursuant to this agreement.

8.2 The Metering Installation shall be managed by the Distributor in accordance to NRS 057.

8.3 The Distributor shall provide the Embedded Generator with the meter test report from the meter

manufacturer upon installation of the meters.8.4 The Embedded Generator shall not, and shall ensure that its contractors shall not, interfere in any

manner whatsoever with the functioning of the Metering Installation save in the course of an

inspection, testing, maintenance or agreed adjustment in the presence of duly authorised

representatives of both parties.

8.5 The Distributor shall be responsible for interrogating and retrieving data from the Metering

Installation and to that end shall collect all meter readings from both the main meter and the

check meter included in the Metering Installation.

8.6 Account billing will be based on the main meter reading unless there is a discrepancy greater

than 2% between the main and check meter readings. In this event, the main meter readings

shall be normalised using the check meter readings to reflect the true reading.

8.7 In the event of a total failure of the main meter then the check meter data shall be used.

8.8 Metering will be of the bi-directional, 4-quadrant type in line with NRS 057.

8.9 The cost of upgrading existing meters and metering equipment shall be for the account of the

Embedded Generator.

9 INVOICING AND PAYMENT

9.1 The Distributor shall incorporate the metering data into a report setting out the electricity delivered

by the Embedded Generator to the System during a particular Month, and shall deliver such

report to the email address nominated in writing by the Embedded Generator by the 9 th (ninth)

day of the following Month, for verification.

9.2 If the Embedded Generator agrees with the data in the report, the Embedded Generator shall

provide the Distributor with a valid tax invoice for payment based on the rates set out in Annexure

C.

9.3 If the Embedded Generator disputes the accuracy of the report, the parties shall attempt to

resolve the dispute, by re-interrogating the metering data and recalculating the report, failing

which the matter shall be dealt with in accordance with clause 12 below.

9.4 The Distributor shall pay the amount set out in the tax invoice within 21 (twenty-one) Business

Days from the day the invoice is received.


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9.5 Should the Distributor dispute an amount stated in any invoice, the Distributor shall:

9.5.1 serve notice on the Embedded Generator specifying the amount and basis of the dispute;

and

9.5.2 pay the amount to which both parties agree to by the due date, failing which the

provisions of clause 12 shall apply

9.6 Where the Embedded Generator has overcharged the Distributor and the Distributor has paid

such overcharged amount, the Embedded Generator will reimburse the Distributor by crediting

the next invoice with such overcharged amount

9.7 Where the Embedded Generator has undercharged the Distributor, the Embedded Generator

shall debit the subsequent invoice with the amount undercharged and such amount shall be paid

by the Distributor.

9.8 The Embedded Generator shall pay for electricity imported in accordance with the prevailing

Municipal Industrial Time of use tariff (ITOU) structure and rates including all fixed and mandatory

network charges as detailed in Annexure B, it being recorded that the fixed network access

charge is based on the highest kVA that may be imported or exported and that the fixed service

charge is payable irrespective of whether electricity is imported or exported.

9.9 The Embedded Generator shall receive a municipal account for payment of imported electricity

and related fixed charges.

9.10 Interest shall be payable by each party to the other on any overdue amounts at 0.5% per annum

above the prevailing publicly quoted prime overdraft rate charged by the Standard Bank of South

Africa from time to time, calculated and compounded monthly in arrear from due date to date of

payment.

10 VALUE ADDED TAX

Unless indicated to the contrary, the amounts payable in terms of this agreement are exclusive of

VAT, and in addition to such amounts each party shall pay to the other VAT at the prevailing rate

from time to time in terms of the Value-Added Tax Act 89 of 1991.

11 FORCE MAJEURE

11.1 In this clause the expression “force majeure” means any cause beyond the control of a party

and for which it is not responsible, which, if qualifying as such, shall include, but not be limited to:

11.1.1 acts of God, earthquake, fire, explosion, flood, frost, tempest, drought, cyclone, hail, pest,

disease, epidemic, and impassable public road conditions;

11.1.2 orders, decrees or restraints or acts of Government or military authority or any other

competent authority (but excluding the cancellation or suspension of any permits,

licences or authorities caused by or attributable to any breach of this agreement or the


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fault or neglect of the Embedded Generator or its employees or agents), war (whether

declared or not), civil disorder and boycotts, sabotage, civil commotion and riots;

11.1.3 strikes and other industrial disputes or labour unrest or disputes strikes, or lock-outs

(which are not provoked or prolonged by or is attributable to any unreasonable action or

omission on the part of the management of the affected party);

11.1.4 plant or machinery or other installation malfunctions or break-downs,

provided that inability to meet any obligation hereunder because of lack of funds, or lack of

maintenance of vehicles or plant or machinery, shall under no circumstances be treated as an

event of force majeure.

11.2 In the event that either party is rendered unable to carry out the whole or any part of its

obligations under this agreement by reason of an event of force majeure, the performance of the

obligations hereunder of the party affected thereby shall be excused for the duration of, and to the

extent caused by such inability, and the party affected thereby shall not be liable for any loss or

damage resulting therefrom.

11.3 The party claiming any such inability shall, when that party:

11.3.1 knows that it is likely to occur, and when it occurs, as soon as is practical thereafter, notify

the other party thereof, which notification shall be confirmed in writing;

11.3.2 knows that it is likely to terminate, and when it does terminate, as soon as is practical,

notify the other party thereof, which notification shall be confirmed in writing.

11.4 Should any occurrence as referred to above arise, then:

11.4.1 the parties shall co-operate with each other and use all reasonable efforts to overcome,

or failing which, to minimise the effect of such inability (provided that the party claiming

such inability shall not be obliged to settle labour disputes) and provided that

performance by the affected party of its obligations in terms of this agreement shall be

resumed as soon as is reasonably practicable after the disability has ceased;

11.4.2 during any period in which a party hereto is prevented from fulfilling any of its obligations

hereunder, the other party shall be entitled to take such steps as may be reasonably

necessary in the circumstances, to deal with the situation as it may deem fit, in order to

meet the requirements in the normal and ordinary course of its operations, but shall have

no claim against the party affected thereby, whether for damages, loss of profits or

otherwise.

11.5 Notwithstanding anything to the contrary contained herein, if either party is precluded by an event

of force majeure from fulfilling its obligations for a period of more than 90 (ninety) days, then the

other party shall be entitled, but not obliged to cancel this agreement, but shall not be entitled to

claim damages as a result of such cancellation.


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12 DISPUTE RESOLUTION

12.1 Save as otherwise provided herein, if any dispute arises between the parties in relation to any

matter pertaining to this agreement, such dispute shall be referred in the first instance to the

Head: Electricity and Managing Director of the Embedded Generator or their respective

nominees, at the written request of any party, who shall meet and endeavour to resolve the

dispute amicably.

12.2 If the dispute remains unresolved within 14 (fourteen) days after referral to the Head: Electricity

and Managing Director of the Embedded Generator or their respective nominees in terms of

clause 12.1, then such dispute shall be referred to NERSA for resolution.

13 MISCELLANEOUS PROVISIONS

13.1 Neither party shall be entitled to cede or assign any of its rights and obligations in terms of this

agreement without the prior written consent of the other party/parties, which consent will not

unreasonably be withheld.

13.2 This agreement constitutes the sole record of the agreement between the parties in regard to the

subject matter hereof.

13.3 No party shall be bound by any express or implied term, representation, warranty, promise or the

like not recorded herein.

13.4 No addition to, variation or consensual cancellation of this agreement shall be of any force or

effect unless in writing and signed by or on behalf of the parties.

13.5 No indulgence which either of the parties ("grantor") may grant to the other ("grantee") shall

constitute a waiver of any of the rights of the grantor, which shall not hereby be precluded from

exercising any rights against the grantee which may have arisen in the past or which might arise

in the future.

14 NOTICES

14.1 All notices by one party to the other shall be given in writing by prepaid registered post, telefax or

delivered by hand –

14.1.1 to the Distributor at:-

Physical Address: insert detailsinsert details

Postal Address: insert detailsinsert details

Telefax no: insert details

Marked for the attention of: insert details

Email: insert details


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14.1.2 to the Embedded Generator at

Physical Address: insert details insert details

Postal Address: insert detailsinsert details

Telefax no: insert details

Marked for the attention of: insert details

Email: insert details

CC to: insert detailswhich physical addresses the parties choose as their respective domicilia citandorum et

executandorum.

14.2 In the absence of proof to the contrary, any notice sent by one party to another:-

14.2.1 by registered post, shall be deemed to have been received five (5) days after it is posted;

14.2.2 by hand, shall be deemed to have been received on the date of delivery;

14.2.3 by telefax or email, shall be deemed to have been received on the next business day

after it is successfully transmitted.

14.3 The parties shall be entitled to change the addresses referred to herein above from time to time

provided that any such change shall only become effective upon receipt of notice in writing by the

other party of such change.

14.4 Notwithstanding anything to the contrary herein contained, a written notice or communication

actually received by a party shall constitute adequate notice to it notwithstanding that it was not

sent to or delivered at its chosen domicilium citandi et executandi.

15 COSTS

15.1 Each party shall pay its own costs of preparation, drafting, settling and signature of this

agreement.

15.2 Any costs incurred by a party in connection with or arising out of the breach of this agreement by

the other party shall be borne by the party in breach.

16 WARRANTY BY SIGNATORIES

Each of the signatories to this agreement hereby warrants that he is duly authorised to conclude

this agreement by the party on whose behalf he appends his signature hereunder, and that such

party is duly authorised to enter into this agreement.


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SIGNED at __________________ on this _____ day of _______________ 2012

AS WITNESSES:

1. _________________________ _____________________________________

For: insert detailsinsert detailsinsert details

2. _________________________

SIGNED at ________________ on this _____ day of ________________ 2012

AS WITNESSES:

1. _________________________ _____________________________________

For: ETHEKWINI MUNICIPALITY

insert details

insert details

2. _________________________


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ANNEXURE A

CONNECTION APPLICATION


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ANNEXURE B

TARIFF STRUCTUREINDUSTRIAL TIME OF USE – APPLICABLE FOR ELECTRICITY IMPORTED

INDUSTRIAL TIME OF USE TARIFF (ITOU) – 2011/2012

Peak

HIGH DEMAND SEASON

June - August

183.91 c/kWh

Standard 52.64 c/kWh

Off-Peak 31.11 c/kWh

Peak

LOW DEMAND SEASON

September - May

55.94 c/kWh



Network Demand Charge

(Based on Actual Maximum demand)

57.00 R / kVA

Network Access Charge

(Based on highest Maximum demand envisaged to either

import or export)

Note: This is a mandatory fixed charge

17.10 R / kVA

Service Charge

Note: This is a mandatory fixed charge

2046.00 R

Voltage Surcharge (Based on the sum of electricity and

network charges)

Voltage (kV) Surcharge (%)

275 0

132 2.25

33 3

11 10.5

6.6 12.75

400 22.5

Note: This tariff structure and the relevant rates are subject to the following:

1. Standard tariff rules and policies as adopted by eThekwini Electricity

2. Tariff structure variations as approved by the National Energy Regulator of South Africa (NERSA)

3. Rate variations as approved by the National Energy Regulator of South Africa. (NERSA)


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ANNEXURE C

TARIFF STRUCTUREAPPLICABLE TARIFF FOR ELECTRICITY EXPORTED

INDUSTRIAL GENERATION TIME-OF-USE TARIFF – 2011/2012

Peak

HIGH DEMAND SEASON

June – August

177.80 c/kWh



Peak

LOW DEMAND SEASON

September – May

49.73 c/kWh



Network Charge

Payable according to date and time of co-incident

maximum demand of EThekwini’s 275kV account

14.79 R / kVA

Voltage Surcharge A maximum of 10.05 %,

dependant on generation

voltage.

Applied to the sum of

electricity and network

charges

Note: This tariff structure and the relevant rates are subject to the following:

1. Standard tariff rules and policies as adopted by eThekwini Electricity

2. Tariff structure variations as approved by the Municipal Council

3. Rate variations corresponding to the Megaflex tariff increase or decrease as approved by the National Energy Regulator of South Africa (NERSA)

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