Exhibit 10(u)
COGENERATION AGREEMENT
THIS AGREEMENT is entered into as of the 16th day of December, 1993, by and
among MIDWEST GRAIN PRODUCTS, INC. ("MWG"), a Kansas corporation, CENTRAL
ILLINOIS LIGHT COMPANY ("CILCO"), an Illinois corporation, and CILCORP
DEVELOPMENT SERVICES INC. ("CILCORP"), an Illinois corporation.
WITNESSETH:
WHEREAS, MWG operates a processing plant located on South Front Street in
Pekin, Illinois; and
WHEREAS, CILCO is engaged, among other things, in the generation and sale
of electricity in the State of Illinois and is a public utility subject to the
jurisdiction of the Illinois Commerce Commission ("Commission"); and
WHEREAS, CILCOPR is an affiliate of CILCO, and CILCORP and MWG have entered
into a Steam Heat Service Agreement dated December 16, 1993, under which CILCORP
will construct, operate and maintain a Boiler Plan on MWG's property leased to
CILCORP, from which CILCORP will supply MWG's requirements for steam heat at
MWG's Plant; and
WHEREAS, the steam produced by the Boiler Plan can also be used by CILCO to
operate electric generators, and the parties hereto wish to enter into this
Agreement to set forth the terms and conditions under which CILCO will be
authorized to install, operate and maintain electric generators on the Leased
Site.
NOW, THEREFORE, in consideration of the promises and undertakings
hereinafter set forth and the execution by MWG and CILCORP of the Steam Heat
Service Agreement, the parties hereto agree as follows:
Article I: Definitions
"Agreement" means this Cogeneration Agreement.
"Boiler Plant" means the boilers and the structure housing them which are
to be constructed, operated and maintained pursuant to the provisions of the
Steam Heat Service Agreement.
"Facility" means the electric generating units and related fixtures and
equipment to be installed, operated and maintained by CILCO on the Leased Site.
"Lease Agreement" means the lease between MWG and CILCORP dated December
16, 1993, a copy of which is attached to the Steam Heat Service Agreement.
"Leased Site" means the property leased to CILCORP pursuant to the Lease
Agreement.
"MWG Plant" is the processing plant owned by MWG located on Xxxxx Xxxxx
Xxxxxx in Pekin, Illinois.
"Steam Heat Service Agreement" means the contract entered into between MWG
and CILCORP under date of December 16, 1993 for the construction of the Boiler
Plant on the Leased Site, a copy of which contract is attached hereto as Exhibit
A and made a part hereof.
Article II: Cogeneration Units
1. CILCO's Obligations
(a) Subject to the prior approval of the Commission, CILCO shall finance,
build, own, operate and maintain on the Leased Site electric generating units
which shall be driven by steam produced by
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the Boiler Plant. CILCO shall be solely responsible for acquiring and installing
all generating equipment and related fixtures on the Leased Site and for all
costs of interconnecting, operating and maintaining the generating equipment and
related fixtures.
(b) CILCO, at its own cost and expense, shall secure all permits and
authorizations necessary to install, operate and maintain the Facility, except
to the extent such permits and authorizations are obtainable only by MWG or
CILCORP, in which event MWG or CILCORP, as applicable, shall obtain the permits
and authorizations at its own expense.
2. MWG's Obligations
(a) MWG shall execute the Steam Heat Service Agreement and the Lease
Agreement attached to the Steam Heat Service Agreement and shall provide at no
expense to CILCORP or CILCO reasonable access and easements to the Leased Site
and surrounding areas owned by MWG as are reasonably necessary for CILCO to
install, operate and maintain the Facility and interconnect the same with
CILCO's electric transmission and distribution system, provided, however, such
access and easements shall not unreasonably interfere with the operation of
MWG's Plant or CILCORP's operation of the Boiler Plant.
(b) MWG shall provide such assistance as CILCO may reasonably request in
obtaining any permits required for the performance of this Agreement.
(c) MWG shall cooperate in any audit by the Commission of the cost of the
Boiler Plant and the Facility, and shall make available to CILCO and the
auditors all data relating to such costs.
3. CILCORP's Obligations
(a) CILCORP shall allow CILCO access to the Boiler Plant for the purposes
of installing, interconnecting, operating and maintaining the Facility, and
CILCORP shall provide the steam required to operate the Facility.
(b) Upon approval of this Agreement by the Commission, and payment by CILCO
to CILCORP of the book value of CILCORP's investment in the Boiler Plan, CILCORP
shall assign to CILCO all CILCORP's rights, duties, claims and obligations under
this Agreement, the Steam Heat Service Agreement and the Lease Agreement, and
all CILCORP's rights and interest in and to the Boiler Plant. As used herein,
"book value" shall have the same meaning such term has under generally accepted
accounting principles, after deducting straight line depreciation over the life
of the property or thirty-four years, whichever is less. Notice of such
assignment shall be given to MWG, whereupon CILCO shall assume and have all the
rights, duties, claims and obligations of CILCORP under this Agreement, the
Steam heat Service Agreement and the Lease Agreement for the period after the
assignment, and CILCORP shall have no further rights, duties, claims or
obligations under those contracts for any period after the assignment. No
approval of MWG shall be required in connection with such assignment.
(c) CILCORP shall cooperate in any audit by the Commission of the costs of
the Boiler Plant and the Facility, and shall make available to CILCO and the
auditors all data relating to such costs.
4. Operation of Facility
(a) Any electric power generated from the Facility will be supplied to
CILCO's transmission and distribution system.
(b) CILCO shall procure and be solely responsible for the cost of any gas
required to produce steam from the Boiler Plant to the extent such gas exceeds
the amount that would have been required to operate the Boiler Plant pursuant to
the Steam Heat Service Agreement if the Facility had not
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been in operation. In determining CILCO's responsibility for gas used to produce
steam, the gas shall be allocated between the requirements of the Boiler Plant
as a stand-alone plant and the additional requirements for gas because the
Facility is operating, in accordance with the formula specified in Exhibit H to
the Steam Heat Service Agreement. For regulatory purposes, that part of the
capital investment in the Boiler Plant that is incurred to increase steam
production to meet the requirements of the Facility and, to that extent, exceeds
the capital investment that would have been required solely to meet the steam
heat requirements of MWG's Plant, shall be included in CILCO's electric rate
base. The balance of the capital investment in the Boiler Plant shall be deemed
to be related solely to the production of steam heat for MWG's plant.
(c) It is CILCO's intention to operate the Facility as a dispatchable unit,
and to generate electricity from the Facility when the cost of such electricity
is less than the cost of electricity from other sources available to CILCO, but
CILCO shall be under no obligation to operate or refrain from operation of the
Facility at any time, and CILCO retains sole discretion as to when and whether
to operate the Facility.
5. Commission Approval
(a) CILCO's obligations under this Agreement are subject to the approval of
the Commission, and CILCO shall promptly seek Commission approval of this
Agreement.
(b) If the Commission fails to approve this Agreement, or approves the
Agreement subject to conditions that are unacceptable to CILCO or that
materially change the rights or obligations of any other party to this
Agreement, CILCO or such other party as the case may be, shall have the option,
within thirty days after the Commission's final action approving the Agreement
with such conditions, to terminate this Agreement by giving written notice of
such termination to the other parties. Failure to give notice of termination
within such thirty-day period shall preclude any party from terminating this
Agreement under this Subsection (b) of Section 5, Article II.
(c) If, for any reason, the Facility is not constructed, that failure shall
not impair or release the respective rights and obligations of CILCORP and MWG
under the Steam Heat Service Agreement and the Lease Agreement.
Article III: Terms and Conditions
1. Term of Agreement
This Agreement shall become effective on the date first set forth above,
and shall terminate upon the expiration of the Lease Agreement.
2. Payments by CILCO of Fuel Cost
(a) CILCO acknowledges that because the Boiler Plant will be used to
produce steam to meet the steam heat requirements of MWG, authorization for
CILCO to use steam from the Boiler Plant to operate the Facility will in many
cases reduce the cost of fuel that would otherwise be incurred by CILCO to
generate the same quantity of electric energy from its other generating units.
Therefore, as further consideration for authorization by MWG to install, operate
and maintain the Facility and connect it to the Boiler Plan, CILCO agrees to pay
MWG for a portion of the fuel costs incurred by MWG for production of steam in
the Boiler Plant. The payment shall be related to the net savings actually
realized by CILCO during any calendar month by generating electricity from the
Facility and delivering it to CILCO's electric transmission and distribution
system. The monthly payment, if any, toward MWG's share of the fuel costs shall
be calculated according to the following formula:
Payment = (A-B) x C x .333
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where
A = the average variable production cost per kwh of CILCO's electric
generating stations, other than the Facility, during the calendar
month for which the payment is being calculated.
B = the average variable production cost (fuel, operating and
maintenance expense) per kwh of the Facility during the calendar
month for which the payment is being calculated.
C = the number of kilowatt-hours produced by the Facility and delivered
to CILCO's electric transmission and distribution system during the
month for which the payment is being calculated.
Provided, however, in no event shall the payments by CILCO to MWG under this
Section 2 exceed the actual fuel costs incurred by MWG for the operation of the
Boiler Plant for the month for which the payment is given.
(b) The payment due to MWG under this Section 2 of Article III shall be
made in the month immediately following the month for which the payment was
calculated. The amount of the payment shall be recovered by CILCO through its
fuel adjustment clause.
(c) No payment shall be provided under this Section 2 until the first full
calendar month after CILCO synchronizes the Facility with CILCO's electric grid.
3. Further Assurances
Each party hereto shall execute, acknowledge, and deliver any further
documents or instruments that are necessary or desirable to carry out the terms
of this Agreement, including, without limitation, a consent or consents to
assignment or similar documents, and shall take any other action reasonably
necessary and proper to carry out the terms and provisions of this Agreement or
consistent with the terms of this Agreement that may reasonably be requested by
the other party, for the purpose of consummating the transactions described in
this Agreement, including, without limitation, cooperating in obtaining any and
all required approvals, consents, permits and authorizations.
4. Successors and Assigns
All of the terms and provisions of this Agreement and the parties'
respective rights and obligations hereunder shall be binding upon and inure to
the benefit of the parties hereto and their respective and permitted successors
and assigns. Except as specifically provided herein, this Agreement is not
assignable by any party herein without the prior written approval of the other
parties.
5. Entire Agreement; Amendments
This Agreement and the documents made a part hereof contain the entire
agreement and understanding between the parties with respect to the subject
matter of this Agreement and supersede all prior oral or written negotiations,
understandings and agreements. No party shall be bound by or shall be deemed to
have made any representations, warranties or commitments except those contained
in this Agreement and the documents made a part hereof. No provision of this
Agreement may be changed, waived, modified, discharged, or terminated except by
a written instrument executed by the parties hereto.
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6. Waiver
Either party's delay or failure to enforce or exercise any provision of
this Agreement or rights existing hereunder shall not in any way be construed as
or constitute a waiver of any such provision or right, or prevent that party
thereafter from enforcing that provision or right and each and every other
provision or right of this Agreement.
7. Survival Of Obligations
Termination of this Agreement for any reason shall not relieve, MWG,
CILCORP or CILCO of any obligation accruing or arising prior to such
termination.
8. Notices
Except as provided herein to the contrary, any notice or other
communication required or permitted hereunder shall be in writing, and shall be
deemed to have been given when delivered in person, when received by telephone
facsimile (provided such receipt is verified by telephone ), or when deposited
in the United States mails, postage prepaid, for mailing by certified or
registered mail, return receipt requested, addressed as follows:
If to MWG:
Midwest Gain Products, Inc.
0000 Xxxxx Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx, XX 00000
If to CILCO:
Central Illinois Light Company
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to CILCORP:
CILCORP Development Services Inc.
000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, XX 00000
Or to such other person or address as the party entitled to notice may specify
from time to time in a notice duly given as provided herein.
9. Choice of Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois.
10. Venue
Venue for any judicial action arising from this Agreement shall be in
Tazewell County, Illinois.
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11. No Partnership or Joint Venture
MWG does not in any way or for any purpose become, by nature of this
Agreement, an agent, partner or joint venturer of CILCORP or CILCO and CILCORP
and CILCO shall not be deemed agents, partners or joint venturers of MWG for any
purpose.
12. Compliance with Laws
Each party shall, at its own cost and expense (except as herein otherwise
specifically provided), obey and comply with all laws, ordinances, rules,
requirements, regulations and orders of the federal, state, and local
governments, or any of them, and of any and all of their departments and
bureaus, and of any other competent authority, as they may pertain to the Boiler
Plant or the MWG Plant or the Facility, to the protection and maintenance
thereof, to the business operated therein, or the sanitary conditions thereof,
or otherwise to the performance of any party under this Agreement.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first hereinabove
written.
MIDWEST GRAIN PRODUCTS, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President & CEO
Witness: /s/ Xxxxx X. Xxxxxx
CILCORP DEVELOPMENT SERVICES INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: President
Witness: /s/ illegible signature
CENTRAL ILLINOIS LIGHT COMPANY
By: /s/ Xxxxxxxx Xxxxx
Name: Xxxxxxxx Xxxxx
Title: Vice President
Witness: /s/ Xxxx X. Xxxxx
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EXHIBIT A: THE STEAM HEAT SERVICE AGREEMENT
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