Exhibit 10-21
PRODUCER - CUSTOMER NMP-2
REVENUE SHARING AGREEMENT
This Revenue Sharing Agreement ("Agreement"), dated as of the 11th day of
December, 2000, by and between Constellation Nuclear, LLC, ("PRODUCER"), a
Maryland limited liability company with offices located at 00 Xxxx Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, XX 00000, and Niagara Mohawk Power Corporation
("CUSTOMER"), a New York corporation with offices located at 000 Xxxx Xxxxxxxxx
Xxxx, Xxxxxxxx, XX 00000 (PRODUCER and CUSTOMER are each referred to herein as a
"Party", and collectively as the "Parties").
W I T N E S S E T H:
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WHEREAS, PRODUCER and CUSTOMER have entered into an Asset Purchase
Agreement pursuant to which CUSTOMER has agreed to sell and PRODUCER has agreed
to purchase, certain interests in the Nine Mile Point Unit 2 Nuclear Generating
Station ("NMP-2"), dated December 11, 0000 (xxx "XXX-0 XXX");
WHEREAS, simultaneously with the execution of this Agreement, PRODUCER and
CUSTOMER have entered into a Power Purchase Agreement of even date herewith
pursuant to which PRODUCER has agreed to sell and CUSTOMER has agreed to
purchase certain energy and installed capacity from NMP-2 (the "NMP-2 PPA"); and
NOW, THEREFORE, in consideration of these premises, the mutual agreements
set forth herein and other good and valuable consideration, and intending to be
legally bound, the Parties agree as follows:
1. DEFINITIONS.
1.1 "Contract Month" shall mean each consecutive calendar month
starting with the calendar month in which the Effective Date
occurs and ending with (but including) the calendar month during
which the Agreement expires.
1.2 "Contract Quarter" shall mean each consecutive period comprised
of three (3) consecutive Contract Months beginning with the
Contract Month in which the Effective Date occurs. If the
Agreement does not expire on the last day of a Contract Month,
then the Contract Month during which the Agreement expires shall
constitute a Contract Quarter.
1.3 "Effective Date" shall mean the first full day after the
expiration or termination of the NMP-2 PPA pursuant to its terms.
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1.4 "Energy" shall mean a quantity of electricity that is bid,
produced, consumed, sold, or transmitted over a period of time,
and measured or calculated in megawatt hours (MWh).
1.5 "Floor Price" shall mean the price as defined in Section 4.3 of
this Agreement.
1.6 "Interest Rate" shall mean, for any date, the interest equal to
the prime rate of Citibank as may from time to time be published
in The Wall Street Journal under "Money Rates".
1.7 "Market Capacity Price" shall mean the price as defined in
Section 4.3 of this Agreement.
1.8 "Market Energy Price" shall mean the price as defined in Section
4.3 of this Agreement.
1.9 "Market Price" shall mean the price as defined in Section 4.3 of
this Agreement.
1.10 "Monthly Price Adjustment" shall mean the value as calculated
under Section 4.3 of this Agreement.
1.11 "Monthly "New York Independent System Operator" or "NYISO" shall
mean the organization formed in accordance with orders of the
Federal Energy Regulatory Commission to administer the operation
of, to provide equal access to, and to maintain the reliability
of the bulk-power transmission system in New York State, or any
successor organization.
1.12 "Negative Price Adjustment Amount" shall mean the value as
calculated under Section 4.4 of this Agreement.
1.13 "Net Electric Output" shall mean the Energy production generated
by NMP-2 less (a) the Energy used to operate NMP-2, but excluding
Off-site Power Service used to operate NMP-2 as defined in the
NMP-2 ICA, and (b) the Energy used in the transformation and
transmission of electric power to the Delivery Point, provided
that for purposes of this Agreement, such Net Electric Output
shall not be less than zero.
1.14 "Positive Price Adjustment Amount" shall mean the value as
calculated under Section 4.5(i) of this Agreement.
1.15 "Price Adjustment" shall mean the value as calculated under
Section 4.3 of this Agreement.
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2. CONDITION PRECEDENT. It is a condition precedent to the obligations of
PRODUCER and CUSTOMER under this Agreement that the Closing shall have occurred.
3. TERM. The term ("Term") of this Agreement shall begin on the Effective
Date and shall expire at 12:00, midnight, prevailing Eastern Time as applicable
on the day that is exactly ten (10) years after the Effective Date.
4. PURCHASE PRICE ADJUSTMENT.
4.1 As adjustments to the purchase price for NMP-2, PRODUCER shall
pay to CUSTOMER the Price Adjustments as calculated in this
Section 4. An example of the calculation and application of the
Price Adjustment described in this Section 4 is set forth in
Appendix A hereto.
4.2 A Price Adjustment shall be calculated for each Contract Quarter
starting with the Effective Date through the Term of this
Agreement.
4.3 The Price Adjustment for each Contract Quarter shall be equal to
the sum of the Monthly Price Adjustments for each Contract Month
in the Contract Quarter. The Monthly Price Adjustment for each
Contract Month shall be calculated as follows:
Monthly Price
Adjustment = [Market Price - (Floor Price x Monthly Base
Price Factor)] x forty-one percent (41%) x
(the sum of the Net Electric Output during
each hour of the Contract Month up to a
maximum total amount of Energy in each such
hour of 1,148 MWh).
where:
Market Price = Market Energy Price + Market Capacity Price
for the respective Contract Month.
Market
Energy Price = The average over all hours of the respective
Contract Month of the day-ahead locational
based market price ("LBMP") paid to producers
for energy at the NMP-2 Delivery Point
(defined in the NMP-2 Interconnection
Agreement) specified and published by the
NYISO or, if the NYISO does not specify or
publish an LBMP for the NMP-2 Delivery Point,
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the LBMP specified and published by the NYISO
for the region in which the NMP-2 Delivery
Point is located. In the event the NYISO
ceases to provide such prices, the Parties
shall in good faith undertake commercially
reasonable efforts to agree on a substitute
indices to reflect the value of Energy
located at the NMP-2 Delivery Point. Failure
of the parties to agree to such alternative
indices shall constitute a dispute to be
resolved in accordance with the provisions of
Section 5.4.
Market
Capacity Price = The market value of the installed capacity of
NMP-2, expressed in $/MWh. The measure will
reflect the weighted average of the market
prices paid to producers for installed
capacity at the NMP-2 Delivery Point as
published by the NYISO in its installed
capacity auctions. Where Market Capacity
Prices are posted in units of $/kW-month,
such conversion to units of $/MWh shall be
the result of the posted price in $/kW-month,
multiplied by 41.66666, divided by the number
of days in the month. (For example, if the
posted price was $1.50 /kW-month for a month
which is 30 days long, the $/MWh would be
$2.0833/MWh [($1.50 x 41.6666)/30]. Note
41.6666 = 1000kW/MWh/24 hours per day). In
the event NYISO ceases to provide such
prices, the Parties shall in good faith
undertake commercially reasonable efforts to
agree on a substitute indices to reflect the
value of installed capacity located at the
NMP-2 Delivery Point. Failure of the parties
to agree to such alternative indices shall
constitute a dispute to be resolved in
accordance with the provisions of Section
5.4.
Floor Price = Set forth in Schedule 1.
Monthly Base
Price Factor = Set forth in Schedule 2.
4.4 If the Price Adjustment for a Contract Quarter is negative,
PRODUCER shall accrue eighty percent (80%) of that negative
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Price Adjustment (that 80% defined herein as the "Negative Price
Adjustment Amount") to be credited against Positive Price
Adjustment Amounts, if any, for subsequent Contract Quarters,
thereby reducing such Positive Price Adjustment Amounts until the
full amount of such Negative Price Adjustment Amounts has been so
credited.
4.5 If the Price Adjustment for a Contract Quarter is positive,
PRODUCER shall:
(i) take 80% of that positive Price Adjustment (the 80% defined
herein as the "Positive Price Adjustment Amount"); then
(ii) credit against and reduce the Positive Price Adjustment
Amount by the sum of any Negative Price Adjustment Amounts
for prior Contract Quarters, to the extent that any such
Negative Price Adjustment Amounts have not been credited
against Positive Price Adjustment Amounts; then
(iii) make payment of the Purchase Price Adjustment in an amount
equal to any Positive Price Adjustment Amount remaining
after crediting any Negative Price Adjustment Amounts as
described in (ii) above.
4.6 Negative Price Adjustment Amounts calculated with respect to a
Contract Quarter shall only be credited against Positive Price
Adjustment Amounts, if any, for subsequent Contract Quarters.
CUSTOMER shall have no obligation to make any payment to PRODUCER
in respect of any Negative Price Adjustment Amount, whether by
way of refund of payments made by PRODUCER in respect of Positive
Price Adjustment Amounts for prior Contract Quarters, payment for
Negative Price Adjustment Amounts which are not followed by
Positive Price Adjustment Amounts against which such Negative
Price Adjustment Amounts may be credited, or otherwise.
4.7 Extraordinary Inflation: On each anniversary of the date hereof,
if the United States Gross Domestic Product Implicit Price
Deflator (as reported quarterly by the United States Department
of Commerce; the "GDP Deflator") for the most recently reported
quarterly period has increased by more than 5% from the same
quarterly period in the prior year, the Floor Price for each
subsequent Contract Year set forth in Schedule 1 hereof, shall be
increased by the percentage amount such increase is greater than
5%. For example, if on the first anniversary date hereof the GDP
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Deflator for the most recent quarter equals 112, and the GDP
Deflator for the same quarter reported in the previous year was
105, each Contract Year in Schedule 1 hereof shall be increased
by 1.66%.
5. PAYMENT AND DISPUTES.
5.1 Statements and Payments. PRODUCER shall prepare a statement
("Statement") for each Contract Quarter showing the Price
Adjustment Payment due to CUSTOMER, if any, for such Contract
Quarter and the calculation of the Price Adjustment Amount for
such Contract Quarter (whether positive or negative). PRODUCER
will provide to CUSTOMER such Statement on or before the tenth
(10th) Business Day after the final Contract Month of each
Contract Quarter. PRODUCER shall pay the amount due, if any, by
wire transfer of immediately available funds to an account
specified by CUSTOMER not later than the fifth (5th) Business Day
after the date on which PRODUCER provides the Statement.
5.2 Overdue Payments. Overdue payments shall accrue interest at the
Interest Rate from, and including the due date to, but excluding,
the date of payment.
5.3 Billing Disputes. If CUSTOMER, in good faith, disputes any
Statement or part thereof, CUSTOMER shall notify PRODUCER in
writing of the basis for the dispute within ten (10) business
days of receipt of the Statement. If it is subsequently
determined by arbitration or agreed that an adjustment to the
Statement is appropriate, PRODUCER will prepare and issue a
revised Statement not later than ten (10) Business Days after it
is determined that an adjustment is appropriate. Any Price
Adjustment Payment due to CUSTOMER pursuant to the revised
Statement shall be paid by wire transfer of immediately available
funds to the account specified by CUSTOMER not later than three
(3) Business Days from the date the revised Statement is issued
and shall include interest accrued at the Interest Rate until the
date paid.
5.4 Dispute Resolution.
5.4.1 All claims, disputes, and other matters concerning the
interpretation and enforcement of this Agreement, shall be
submitted to binding arbitration in New York, NY and shall
be heard by three neutral arbitrators under the Commercial
Arbitration Rules of the American Arbitration Association.
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5.4.2 Only the Parties hereto and their designated
representatives shall be permitted to participate in any
arbitration initiated pursuant to this Agreement. The
arbitration process shall be concluded not later than six
(6) months after the date that it is initiated. The award
of the arbitrators shall be accompanied by a reasoned
opinion if requested by either Party. The award rendered in
such a proceeding shall be final. The Parties shall keep
the award, and any opinion issued by the arbitrators,
confidential unless the Parties agree otherwise. Any award
of amounts due shall include interest accrued at the
Interest Rate until the date paid. Judgment may be entered
upon the arbitration opinion and award in any court having
jurisdiction.
5.4.3 The procedures for the resolution of disputes set forth
herein shall be the sole and exclusive procedures for the
resolution of disputes. Each Party is required to continue
to perform its obligations under this Agreement pending
final resolution of a dispute. All negotiations pursuant to
these procedures for the resolution of disputes will be
confidential, and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules
of Evidence and State Rules of Evidence and similarly
applicable rules or regulations of any state or federal
regulatory agency with jurisdiction over a Party.
6. CONTRACT ADMINISTRATION AND OPERATION.
6.1 Company Representative. PRODUCER and CUSTOMER shall each appoint
a representative (collectively, the "Company Representatives"),
who will be duly authorized to act on behalf of the Party that
appoints him/her, and with whom the other Party may consult at
all reasonable times, and whose instructions, requests, and
decisions shall be binding on the appointing Party as to all
matters pertaining to the administration of this Agreement.
6.2 Record Retention and Access. PRODUCER and CUSTOMER shall each
keep complete and accurate records and all other data required by
either of them for the purpose of proper administration of this
Agreement, including such records as may be required by state or
federal regulatory authorities. All such records shall be
maintained for a minimum of five (5) years after the creation of
the record or data and for any additional length of time required
by state or federal regulatory agencies with jurisdiction over
PRODUCER or CUSTOMER. PRODUCER and CUSTOMER, on a
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confidential basis, will provide reasonable access to records
kept pursuant to this Section of this Agreement. The Party
seeking access to such records shall pay 100% of any out-of-
pocket costs the other Party incurs to provide such access.
6.3 Notices. All notices pertaining to this Agreement not explicitly
permitted to be in a form other than writing shall be in writing
and shall be given by same day or overnight delivery, electronic
transmission, certified mail, or first class mail. Any notice
shall be given to the other Party as follows:
If to PRODUCER:
Constellation Nuclear, LLC
00 Xxxx Xxxxxxxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Title: President
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to CUSTOMER:
Niagara Mohawk Power Corporation
000 Xxxx Xxxxxxxxx Xxxx
Attn: Xxxxxxx X. Xxxxxx
Title: Vice President
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If given by electronic transmission (including telex, facsimile
or telecopy), notice shall be deemed given on the date received
and shall be confirmed by a written copy sent by first class
mail. If sent in writing by certified mail, notice shall be
deemed given on the second business day following deposit in the
United States mails, properly addressed, with postage prepaid. If
sent by same-day or overnight delivery service, notice shall be
deemed given on the day of delivery. PRODUCER and CUSTOMER may,
by written notice to the other, change its representative(s)
including its Company representative and the address to which
notices are to be sent.
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7. CONFIDENTIALITY. Except as otherwise required by law, the Parties
shall keep confidential the terms and conditions of this Agreement and the
transactions undertaken pursuant hereto. If a Party is required to file this
Agreement with any regulatory body or court, it shall seek trade secret or
similar protection from such authority and promptly notify the other Party.
8. GOVERNMENT REGULATION. This Agreement and all rights and obligations
of the Parties hereunder are subject to all applicable federal, state and local
laws and all duly promulgated orders and duly authorized actions of governmental
authorities having proper and valid jurisdiction over the terms of this
Agreement. Further, if at any time following receipt of any regulatory approvals
required for the initial effectiveness of the NMP-2 Sale, the New York Public
Service Commission, any legislature, any agency, or any court takes any action
relating to or affecting this Agreement, the payments required to be made
hereunder, or CUSTOMER's reflection in rates thereof, neither CUSTOMER or
PRODUCER shall have any right to seek damages from the other, to discontinue
performance under this Agreement, or to modify or seek to modify any of the
terms and conditions in any way as a consequence of such action.
9. GOVERNING LAW/CONTRACT CONSTRUCTION. This Agreement shall be
interpreted, construed, and governed by the law of the State of New York. For
purposes of contract construction, or otherwise, this Agreement is the product
of negotiation and neither Party to it shall be deemed to be the drafter of this
Agreement or any part hereof. The Section and Subsection headings of this
Agreement are for convenience only and shall not be construed as defining or
limiting in any way the scope or intent of the provisions hereof.
10. WAIVER AND AMENDMENT. Any waiver by either Party of any of the
provisions of this Agreement must be made in writing, and shall apply only to
the instance referred to in the writing, and shall not, on any other occasion,
be construed as a bar to, or a waiver of, any right either Party has under this
Agreement. The Parties may not modify, amend, or supplement this Agreement
except by a writing signed by the Parties.
11. BINDING EFFECT; NO THIRD-PARTY RIGHTS OR BENEFITS. This Agreement is
entered into solely for the benefit of PRODUCER and CUSTOMER, and their
respective successors and permitted assigns, and therefore is not intended and
shall not be construed to confer any rights or benefits on any third-party.
12. ENTIRE AGREEMENT. This Agreement contains the complete and exclusive
agreement and understanding between the Parties as to its subject matter.
13. ASSIGNMENT. CUSTOMER shall have right to assign the Agreement in whole
or in part without consent of PRODUCER. Partial assignments are subject to a 50-
MW minimum. PRODUCER shall not have the right to assign this Agreement
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without CUSTOMER's prior written consent, provided that PRODUCER or its
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permitted assignee, without CUSTOMER's consent, may assign, transfer, pledge or
otherwise dispose of (absolutely or as security) its rights and interests
hereunder to an Affiliate (an "Assignee Entity") of PRODUCER at least 68% of the
equity securities of which are owned by PRODUCER; provided, however, (i) any
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minority owner of the Assignee Entity shall be that entity contemplated to
become an equity owner of PRODUCER's affiliated merchant energy group as set
forth in that certain press release issued by Constellation Energy Group on
October 23, 2000, (ii) no minority owner of the Assignee Entity may have any
control or management or operational rights or role with respect to the Assignee
Entity , and (iii) no such assignment shall relieve or discharge PRODUCER from
any of its obligations hereunder or shall be made if it would reasonably be
expected to prevent or materially impede, interfere with or delay the
transactions contemplated by this Agreement or materially increase the costs of
the transactions contemplated by this Agreement.
14. SIGNATORS' AUTHORITY/COUNTERPARTS. The undersigned certify that they
are authorized to execute this Agreement on behalf of their respective Parties.
This Agreement may be executed in two or more counterparts, each of which shall
be an original. It shall not be necessary in making proof of the contents of
this Agreement to produce or account for more than one such counterpart.
15. NO DEDICATION OF FACILITIES. No undertaking by PRODUCER or CUSTOMER
under any provision of this Agreement shall be deemed to constitute the
dedication of any portion of NMP-2 to the public, to CUSTOMER, or to any other
entity.
IN WITNESS WHEREOF, and intending to be legally bound, the Parties have
executed this Agreement by the undersigned duly authorized representatives as of
the date first stated above.
PRODUCER CUSTOMER
By:_________________________ By:_______________________
Name:_______________________ Name:_____________________
Title:______________________ Title:____________________
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SCHEDULE 1
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Floor Price
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Contract Year 1 2 3 4 5 6 7 8 9 10
Floor Price 40.75 41.57 42.40 43.25 44.11 44.99 45.89 46.81 47.75 48.70
($/MWh)
SCHEDULE 2
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Monthly Base Price Factor
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For every year of the Term:
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BASE PRICE
MONTH FACTOR
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January 0.9176
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February 0.9192
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March 0.7729
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April 0.7707
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May 1.0461
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June 1.1687
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July 1.3861
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August 1.4450
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September 1.1275
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October 0.7801
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November 0.7707
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December 0.8954
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