NUCLEAR POWER SUPPLY AGREEMENT Between FirstEnergy Nuclear Generation Corp., Seller and FirstEnergy Solutions Corp., Buyer
FirstEnergy
Nuclear
Generation Corp. Exhibit
10.8
FERC
Electric
Tariff, Original Volume No. 1
Service
Agreement
No.1
[Execution
Copy]
Between
FirstEnergy Nuclear Generation Corp., Seller
and
FirstEnergy
Solutions Corp., Buyer
This
Nuclear Power
Supply Agreement ("Agreement") dated October 14, 2005 is made by and between
FirstEnergy Nuclear Generation Corp., ("FENGenco" or "Seller"), and FirstEnergy
Solutions Corp. ("Solutions" or "Buyer"). FENGenco and Solutions may be
identified collectively as "Parties" or individually as a "Party." This
Agreement is entered into in connection with the transfer of the ownership
interests of The Cleveland Electric Illuminating Company, Ohio Edison Company,
Pennsylvania Power Company, and The Toledo Edison Company in the Beaver Valley
Power Station, Xxxxx-Xxxxx Nuclear Power Station, and Perry Nuclear Power Plant
(“Nuclear Generating Plants”) to FENGenco.
WHEREAS,
Seller is a
newly formed, nuclear generation only company that intends to acquire certain
interests in Nuclear Generating Plants owned by The Cleveland Electric
Illuminating Company, Ohio Edison Company, Pennsylvania Power Company, and
The
Toledo Edison Company (collectively "the FirstEnergy Operating Companies");
and
WHEREAS,
Seller will
be a wholly owned subsidiary of FirstEnergy Corp; and
WHEREAS,
the Nuclear
Generating Plants are operated by FirstEnergy Nuclear Operating Company, a
wholly owned subsidiary of FirstEnergy Corp. and affiliate of FENGenco; and
WHEREAS,
Seller will
also purchase the electrical output of Ohio Edison Company and The Toledo Edison
Company’s sale/leaseback interests in Beaver Valley Power Station Unit 2 and
Perry Nuclear Power Plant (“Leased Nuclear Generation Facilities”);
and
WHEREAS,
Seller will
be engaged exclusively in the business of owning the Nuclear Generating Plants
and selling Power from the owned Nuclear Generating Plants and Leased Nuclear
Generation Facilities (collectively, the “Nuclear Generating Facilities”) at
wholesale; and
WHEREAS,
Buyer
desires to obtain the entire electric output of the Nuclear Generating
Facilities, pursuant to the rates, terms and conditions set forth herein.
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Issued
by: Xxxx X. Xxxxxxx, President
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Effective
Date:
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|
Issued
on: October 14, 2005
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December
1, 2005
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1
It
is agreed as follows:
I.
TERM
The
sale and purchase of Power pursuant to this Agreement shall begin on December
1,
2005, or such later effective date authorized by the FERC, for an initial term
ending December 31, 2010. This Agreement shall remain in effect from year to
year thereafter unless terminated by either Party upon at least sixty days
written notice prior to the end of the calendar year.
II.
SALE
AND
PURCHASE OF CAPACITY AND ENERGY
| A. |
Seller
shall
provide Buyer all of the Capacity, Energy, and Ancillary Services
available from the Nuclear Generating Facilities identified in Exhibit
C
to this Agreement, and Buyer shall purchase and pay for such Capacity,
Energy, and Ancillary Services, in accordance with the terms of this
Agreement. Seller shall make Capacity, Energy, and Ancillary Services
available at the Delivery Points. Buyer shall arrange and will be
responsible for all transmission, congestion costs, losses, and related
services at and from the Delivery Points. The Capacity, Energy, and
Ancillary Services, supplied by Seller are collectively referred
to as
Buyer's "Power Supply Requirements." Capacity and Energy supplied
shall be
sixty-hertz, three phase alternating current. The Power Supply
Requirements will be provided in accordance with Good Utility Practice,
and where applicable, the provisions of the applicable Transmission
Provider OATT, and the requirements of the NRC.
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| B. |
FENGenco
shall
cause the Nuclear Generating Facilities to be operated and maintained
in
accordance with Good Utility Practice, the applicable requirements
of the
FERC, NRC and NERC, as well as the requirements of the regional
reliability councils or Regional Entity, and Regional Transmission
Organizations where the Nuclear Generating Facilities are located.
FENGenco will enter into agreements with FirstEnergy Nuclear Operating
Company, other FirstEnergy affiliates, Transmission Provider, or
Government Authority if necessary to ensure compliance with this
Section
II.B.
|
III.
SCHEDULING
AND SYSTEM PLANNING
| A. |
In
order for
Solutions to be able to plan adequately to market and sell all of
the
Capacity, Energy, and Ancillary Services, available from the Nuclear
Generating Facilities identified in Exhibit C, FENGenco shall notify
Solutions on or before November 1 of each year during the term of
this
Agreement of the amount of Capacity, Energy, and Ancillary Services,
it
expects to have available for each day in each month of the next
calendar
year. The information provided in this notification shall include,
but not
be limited to, the time and expected duration of any planned outage
of the
Nuclear Generating Facilities.
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2
| B. |
FENGenco
shall
update its annual forecast of available Capacity, Energy, and Ancillary
Services for any change or expected change in the operation of the
Nuclear
Generating Facilities that would materially affect the annual forecast
provided to Solutions. FENGenco shall provide the updated forecast
to
Solutions for any full month(s) remaining in the calendar year within
thirty days of becoming aware of the change or expected change in
the
operation of the Nuclear Generating
Facilities.
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| C. |
FENGenco
will
supply Solutions, upon request, any such information as is necessary
to
meet the requirements of the applicable Transmission Provider OATT,
FERC,
NERC, NRC, Electric Reliability Organization, regional reliability
council, Regional Entity or Government
Authority.
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IV.
PRICE
Seller
shall charge,
and Buyer shall pay, for Buyer's Power Supply Requirements, as follows on a
monthly basis.
A. Charges
Buyer
will pay
Seller the Monthly Charge under the cost-based formula set forth in Exhibit
A
for the Power Supply Requirements available from the Nuclear Generating
Facilities identified in Exhibit C.
B.
Billing
and
Payment
Unless
otherwise
specifically agreed upon by the Parties, the calendar month shall be the
standard period for all xxxxxxxx and payments under this Agreement. As soon
as
practicable after the end of each month, the Seller will render an invoice
to
Buyer for the amounts due for Power Supply Requirements for the preceding month.
Payment shall be due and payable within ten days of receipt of the invoice
or,
if such day is not a Business Day, then on the next Business Day. Buyer will
make payments by electronic funds transfer or by other mutually agreeable
method(s) to the account designated by Seller. Any amounts not paid by the
due
date will be deemed delinquent and will accrue interest at the Interest Rate
until the date of payment in full.
C.
Records
Each
Party shall
keep complete and accurate records of its operations under this Agreement and
shall maintain such data as may be necessary to determine the reasonableness
and
accuracy of all relevant data, estimates, payments or invoices submitted by
or
to it hereunder. All records regarding this Agreement shall be maintained for
a
period of three years from the date of the invoice or payment, or for such
longer period as may be required by law.
3
D. Audit
and
Adjustment Rights
Buyer
shall have the
right, at its own expense and during normal business hours, to audit the
accounts and records of Seller that reasonably relate to the provision of
service under this Agreement. If the audit reveals an inaccuracy in an invoice,
the necessary adjustment in such invoice and the payments therefore will be
promptly made. No adjustment will be made for any invoice or payment made more
than one year from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the date of
termination for the purpose of such invoice and payment objections. To the
extent that audited information includes Confidential Information, the Buyer
shall keep all such information confidential under Section VII.C.
E. Section
205
Rights
Nothing
contained
herein shall be construed as affecting in any way the right of the Party
furnishing service under this Agreement to unilaterally make application to
the
FERC for a change in rates under Section 205 of the Federal Power Act and
pursuant to the FERC's Rules and Regulations thereunder. Provided, however,
that
nonrate terms and conditions may be amended only by a written agreement signed
by the Parties.
V.
METERING
Generation
metering
will be installed, operated and maintained in accordance with the applicable
generator interconnection agreements between the FENGenco, Transmission
Provider, and Transmission Owner. Metering between control areas shall be
handled in accordance with the applicable Transmission Provider OATT. Retail
metering shall be provided in accordance with applicable state law. Nothing
in
this Agreement requires Seller or Buyer to install new metering facilities.
VI.
NOTICES
All
notices, requests, statements or payments shall be made as specified below.
Notices required to be in writing shall be delivered by letter, facsimile or
other documentary form. Notice by facsimile or hand delivery shall be deemed
to
have been received by the close of the Business Day on which it was transmitted
or hand delivered (unless transmitted or hand delivered after close in which
case it shall be deemed to have been received at the close of the next Business
Day). Notice by overnight mail or courier shall be deemed to have been received
two Business Days after it was sent. A Party may change its addresses by giving
notice as provided above.
4
NOTICES
& CORRESPONDENCE:
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To
Seller:
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FirstEnergy
Nuclear Generation Corp., President
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|
00
Xxxxx Xxxx
Xx.
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|
|
Xxxxx,
Xxxx
00000
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To
Buyer:
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FirstEnergy
Solutions Corp., Director, Wholesale Energy
Transactions
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000
Xxxxx
Xxxx
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|
|
Xxxxx,
Xxxx
00000
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INVOICES
& PAYMENTS:
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To
Seller:
|
FirstEnergy
Nuclear Generation Corp., President
|
|
00
Xxxxx Xxxx
Xx.
|
|
|
Xxxxx,
Xxxx
00000
|
|
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To
Buyer:
|
FirstEnergy
Solutions Corp., Director, Wholesale Energy
Transactions
|
|
000
Xxxxx
Xxxx
|
|
|
Xxxxx,
Xxxx
00000
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SCHEDULING:
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To
Seller:
|
FirstEnergy
Nuclear Generation Corp., President
|
|
00
Xxxxx Xxxx
Xx.
|
|
|
Xxxxx,
Xxxx
00000
|
|
|
To
Buyer:
|
FirstEnergy
Solutions Corp., Director, Wholesale Energy Transactions
|
|
000
Xxxxx
Xxxx
|
|
|
Xxxxx,
Xxxx
00000
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VII.
MISCELLANEOUS
A. Performance
Excused
If
either Party is rendered unable by an event of Force Majeure to carry out,
in
whole or part, its obligations hereunder, then, during the pendency of such
Force Majeure but for no longer period, the Party affected by the event shall
be
relieved of its obligations insofar as they are affected by Force Majeure.
The
Party affected by an event of Force Majeure shall provide the other Party with
written notice setting forth the full details thereof as soon as practicable
after the occurrence of such event and shall take all reasonable measures to
mitigate or minimize the effects of such event of Force Majeure. Nothing in
this
section requires Seller to deliver, or Buyer to receive, Power at Delivery
Points other than those Delivery Points designated under this Agreement, or
relieves Buyer of its obligation to make payment under Section IV of this
Agreement.
5
Force
Majeure shall
be defined as any cause beyond the reasonable control of, and not the result
of
negligence or the lack of diligence of, the Party claiming Force Majeure or
its
contractors or suppliers. It includes, without limitation, earthquake, storm,
lightning, flood, backwater caused by flood, fire, explosion, act of the public
enemy, epidemic, accident, failure of facilities, equipment or fuel supply,
acts
of God, war, riot, civil disturbances, strike, labor disturbances, labor or
material shortage, national emergency, restraint by court order or other
Government Authority, interruption of synchronous operation, or other similar
or
dissimilar causes beyond the control of the Party affected, which causes such
Party could not have avoided by exercising Good Utility Practice. Nothing
contained herein shall be construed to require a Party to settle any strike,
lockout, work stoppage, or other industrial disturbance or dispute in which
it
may be involved or to take an appeal from any judicial, regulatory or
administrative action.
B.
Transfer
of Title
and Indemnification
Title
and risk of
loss related to the Power Supply Requirements shall transfer to the Buyer at
the
Delivery Points. Seller warrants that it will deliver the Power Supply
Requirements to Buyer free and clear of all liens, security interests, claims
and encumbrances or any interest therein or thereto by any person arising prior
to the Delivery Points. Each Party shall indemnify, defend and hold harmless
the
other Party from and against any claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period
when
control and title to the Power Supply Requirements is vested in the other Party.
C.
Confidentiality
Neither
Party shall
disclose to third parties Confidential Information obtained from the other
Party
pursuant to this Agreement except in order to comply with the requirements
of
FERC, NRC, NERC, Electric Reliability Organization, applicable regional
reliability councils or Regional Entity, Regional Transmission Organization,
or
Government Authority. Each Party shall use reasonable efforts to prevent or
limit the disclosure required to third parties under this section.
D.
Further
Assurances
Subject
to the terms
and conditions of this Agreement, each of the Parties will use reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and effectuate the transactions contemplated hereby.
6
E.
Assignment
No
assignment, pledge, or transfer of this Agreement shall be made by any Party
without the prior written consent of the other Party, which consent shall not
be
unreasonably withheld. No prior written consent shall be required for (i) the
assignment, pledge or other transfer to another company or affiliate in the
same
holding company system as the assignor, pledgor or transferor, or (ii) the
transfer incident to a merger or consolidation with, or transfer of all, or
substantially all, of the assets of the transferor, to another person or
business entity; provided, however, that such assignee, pledgee, transferee
or
acquirer of such assets or the person with which it merges or into which it
consolidates assumes in writing all of the obligations of such Party hereunder
and provided, further, that either Party may, without the consent of the other
Party (and without relieving itself from liability hereunder), transfer, sell,
pledge, encumber or assign such Party's rights to the accounts, revenues or
proceeds hereof in connection with any financing or other financial
arrangements.
F.
Governing
Law
The
interpretation and performance of this Agreement shall be according to and
controlled by the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
G.
Counterparts
This
Agreement may
be executed in two or more counterparts and each such counterpart shall
constitute one and the same instrument.
H.
Waiver
No
waiver by a Party of any default by the other Party shall be construed as a
waiver of any other default. Any waiver shall be effective only for the
particular event for which it is issued and shall not be deemed a waiver with
respect to any subsequent performance, default or matter.
I.
No
Third Party
Beneficiaries
This
Agreement shall
not impart any rights enforceable by any third party other than a permitted
successor or assignee bound to this Agreement.
J.
Severability
Any
provision of this Agreement declared or rendered unlawful by any Government
Authority or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement.
K.
Construction
The
term "including" when used in this Agreement shall be by way of example only
and
shall not be considered in any way to be a limitation. The headings used herein
are for convenience and reference purposes only.
7
IN
WITNESS WHEREOF, the Parties have caused their duly authorized representatives
to execute this Agreement on their behalf as of October 14, 2005.
| FirstEnergy Solutions Corp. | ||
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President, FirstEnergy Solutions Corp. |
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| FirstEnergy Nuclear Generation Corp. | ||
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President, FirstEnergy Nuclear Generation Corp. |
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8
EXHIBIT
A
FirstEnergy
Nuclear Generation Corp.
Monthly
Charge Formula
EXHIBIT
B
DEFINITIONS
In
addition to terms defined elsewhere in this Agreement, the terms listed below
are defined as follows:
Affiliate
means,
with respect
to any person, any other person (other than an individual) that, directly or
indirectly, through one or more intermediaries, controls, or is controlled
by,
or is under common control with, such person. For purposes of the foregoing
definition, control means the direct or indirect ownership of more than fifty
percent (50%) of the outstanding capital stock or other equity interests having
ordinary voting power or ability to direct the affairs of the affiliate.
Ancillary
Services
means Reactive
Supply and Voltage Control from Generation Resources Service, Regulation and
Frequency Response Service, Operating Reserve - Spinning Reserve Service, and
Operating Reserve - Supplemental Service, and such additional Ancillary Services
as defined in the Transmission Provider OATT and to the extent available from
the Nuclear Generating Facilities.
Business
Day
means any day on
which Federal Reserve member banks in New York City are open for business.
Capacity
means the resource
that produces electric Energy, measured in megawatts.
Confidential
Information means
any
confidential, proprietary, trade secret, critical energy infrastructure
information, or commercially sensitive information relating to the present
or
planned business of a Party that is supplied under this Agreement, and is
identified as confidential by the Party supplying the information.
Delivery
Point
means where
Capacity, Energy and Ancillary Services are supplied by the Seller at the point
of interconnection between the Nuclear Generating Facilities and the
transmission facilities of Transmission Owner.
Electric
Reliability Organization
has the meaning
given in Section 215(a)(2) of the Federal Power Act.
Energy
means electric
energy delivered under this Agreement at three-phase, 60-hertz alternating
current measured in megawatt hours.
FERC
means The Federal
Energy Regulatory Commission or its regulatory successor.
Force
Majeure
has the meaning
given in Section VII.A.
Good
Utility
Practice
means any of the
practices, methods and acts engaged in or approved by a significant portion
of
the electric utility industry during the relevant time period or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, and expedition. Good Utility
Practice includes compliance with the standards adopted by NRC, NERC, its
applicable regional councils, or an Electric Reliability Organization or
Regional Entity as approved by the FERC. Good Utility Practice is not intended
to be limited to the optimum practice, method or act to the exclusion of all
others, but rather to be acceptable practices, methods or acts, generally
accepted in the region and consistently adhered to by utilities in the region.
Government
Authority means
any federal,
state, local, municipal or other governmental entity, authority or agency,
department, board, court, tribunal, regulatory commission, or other body,
whether legislative, judicial or executive, together or individually, exercising
or entitled to exercise any administrative, executive, judicial, policy,
regulatory or taxing authority or power over Buyer or Seller.
Interest
Rate
means the lesser of
Prime Rate plus two percent and the maximum rate permitted by applicable law.
NERC
means The North
American Electric Reliability Council or any superceding organization with
responsibility for establishing reliability standards for the interstate
transmission grid.
NRC
means the Nuclear
Regulatory Commission or its regulatory successor.
Power
means
Capacity
and/or Energy.
Prime
Rate
means for any date,
the per annum rate of interest announced from time to time by Citibank, NA
as
its prime rate for commercial loans, effective for such date as established
from
time to time by such bank.
Regional
Entity
has the meaning
given in Section 215(a)(7) of the Federal Power Act.
Regional
Transmission Organization
has the meaning
given in Section 3(27) of the Federal Power Act.
Taxes
means all
ad
valorem,
property,
occupation, utility, gross receipts, sales, use, excise and other taxes,
governmental charges, licenses, permits and assessments, other than taxes based
on net income or net worth.
Transmission
Owner
means the entity
that owns facilities used for the transmission of Power from the Nuclear
Generating Facilities.
Transmission
Provider
means the utility
or utilities, including Regional Transmission Organizations, transmitting Power
on behalf of Buyer from the Delivery Point(s) under this Agreement.
Transmission
Provider OATT
means the Open
Access Transmission Tariff, Open Access Transmission and Energy Markets Tariff,
or any other tariff of general applicability on file at the FERC under which
the
Transmission Provider offers transmission service.
EXHIBIT
C
Nuclear
Generating Facilities
NDC
in
XX
Xxxxxx
Valley Xxxx
0 000
Xxxxxx
Xxxxxx Xxxx
0
831
Xxxxx
Xxxxx 883
Perry 1260
Total
3,795
