EXHIBIT 10(f)
INTERIM AGREEMENT
This Interim Agreement is entered into as of and is effective as of May
5, 2006, by and between Wisconsin Electric Power Company (hereinafter "WEPCo"),
an electric utility having its principal offices at 000 X. Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, and Empire Mining Partnership ("Empire"), and Xxxxxx
Mining Company, L.C. ("Xxxxxx"), by their managing agent, The Cleveland-Cliffs
Iron Company, a corporation having its principal offices at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, (hereinafter "Cliffs"). Empire Iron Mining
Partnership and Xxxxxx Mining Company, L.C. are herein referred to collectively
as "the Mines".
WHEREAS, the Mines and WEPCo are parties in pending American
Arbitration Association Xxxx Xx. 00 000 X 00000 ("Xxxxxxxxxxx" and the panel of
arbitrators deciding the Arbitration "Arbitrators"), which proceeding involves
claims related to the pricing of electric service under the Power Purchase
Agreements ("PPAs"), dated as of January 22, 1996, between WEPCo and the Mines,
and additional disputes have arisen in connection with the billing and payment
for services;
WHEREAS, the parties have reached an agreement intended to address
billing and payment arrangements on an interim basis pending completion of the
Arbitration proceeding, and without prejudice to the parties' rights under the
PPAs;
NOW THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties hereby agree to the following terms and
conditions:
1. RELEASE OF FUNDS FROM ESCROW
Within two business days from the effective date of this Agreement,
WEPCo and Cliffs will deliver the "Notice of Interim Agreement and Joint
Instructions for Partial Disposition of Funds Held in Escrow," in the form
attached hereto as Exhibit A, to the escrow agent identified in the Escrow
Agreement attached hereto as Exhibit B. As specified in Exhibit A, this partial
disposition of funds from escrow shall be in the amount of $25,687,080.08
delivered to Xxxxxx and the amount of $34,866,868.06 delivered to Empire. Within
two business days of the effective date of this
Agreement, WEPCo shall also deliver to Xxxxxx the amount of $4,756,336.54 and
deliver to Empire the amount of $6,479,494.86, pursuant to Section 4(b)(ii) of
the PPAs.
2. OVER-THE-CAP PAYMENTS
The amounts released from escrow plus the amounts paid by WEPCo to the
Mines, as described in paragraph 1 above, represent a return to the Mines of the
following amounts due to the Mines pursuant to the Energy Price Cap provisions
in Section 4(b)(ii) of the parties' PPAs:
A. Over-the-cap payments that Cliffs has deposited into the escrow
account described in Exhibit B for firm and curtailable service
to the Empire Mine during the period from April 1, 2005, through
December 31, 2005 ($34,866,868.06);
B. Over-the-cap payments that Cliffs has deposited into the escrow
account described in Exhibit B for firm and curtailable service
to the Xxxxxx Mine during the period from April 1, 2005, through
November 14, 2005 ($25,687,080.08);
C. Over-the-cap payments that Cliffs paid directly to WEPCo for firm
and curtailable service to the Empire Mine during the period from
January 1, 2005, through December 31, 2005 ($6,479,494.86);
D. Over-the-cap payments that Cliffs paid directly to WEPCo for firm
and curtailable service to the Xxxxxx Mine during the period from
January 1, 2005, through November 14, 2005 ($4,756,336.54).
3. PAYMENT OF BILLS FOR SERVICE RENDERED IN FEBRUARY AND MARCH 2006
Within five (5) business days after WEPCo complies fully with paragraph
1 above, the Mines will make the following payments related to energy delivered
to the Mines during the billing months of January, February and March of 2006:
A. The Mines will reverse the credits that were previously applied
to these bills;
B. The Mines will make cash payments to WEPCo as follows: for
February 2006 - Xxxxxx $3,397,644.36 and Empire $3,401,843.13;
and, for March 2006 - Xxxxxx $4,089,984.58 and Empire
$3,513,160.72 (for a total of $14,402,632.79); and
C. The Mines, acting through Cliffs, will deposit into the escrow
account the following amounts that are disputed portions of the
amounts billed for energy delivered: For January 2006 - Xxxxxx
$91,729.16 and Empire $89,009.67; for February 2006 - Xxxxxx
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$1,906,815.51 and Empire $1,887,303.44; and for March 2006 -
Xxxxxx $2,849,058.27 and Empire $2,233,151.93 (for a total of
$9,057,067.98).
D. The Mines, acting through Cliffs, will deposit into the escrow
account the following late payment fees (billed as part of the
April 2006 bills) for energy delivered during March 2006: Xxxxxx
$104,085.64 and Empire $86,194.69.
4. XXXXXXXX FOR ELECTRIC SERVICE PROVIDED ON AND AFTER APRIL 1, 2006
With respect to electric service provided by WEPCo to the Mines
beginning on April 1, 2006, and continuing until such time as the Arbitrators
issue their award:
A. WEPCo will xxxx the Mines for energy delivered under firm and
curtailable service up to the production limits specified in the
PPAs at the applicable Energy Price Cap set forth in Section
4(b)(ii) of the PPAs.
B. WEPCo will xxxx the Mines a Base Energy Cost for energy delivered
under auxiliary service up to the production limits specified in
the PPAs at the system average real time locational marginal
prices (LMP) equal to .873 multiplied by the WEC South LMP plus
.127 multiplied by the WEC North LMP.
C. The xxxxxxxx described in this section will be issued in
accordance with WEPCo's normal billing schedule.
D. The Mines agree to pay directly to WEPCo the charges specified in
this paragraph 4 in accordance with the normal monthly payment
schedule. Both parties acknowledge that the xxxxxxxx and payments
for auxiliary service, as specified herein, are disputed amounts
and such payments will be subject to refund or additional charges
upon resolution of the Arbitration proceeding via a future
settlement agreement, arbitration decision or court order.
E. Demand and environmental remediation charges, losses, taxes and
power movement and service fees shall continue to be governed by
the existing terms and conditions of the PPAs.
5. INTEREST
A. Timely payments for service rendered on and after April 1, 2006,
as provided in Paragraph 4 of this Agreement, shall not include
interest.
B. Any refunds required by the Arbitrators' final award to the Mines
of disputed amounts paid for energy delivered under auxiliary
service pursuant to Paragraphs 3 and 4 of this Agreement shall
bear interest at the rate otherwise applicable to funds held in
escrow during the same period as specified in the Escrow
Agreement, attached hereto as Exhibit B. Any additional charges
due to WEPCo required by the Arbitrators' final award for energy
delivered under auxiliary service pursuant to Paragraphs 3 and 4
of
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this Agreement shall bear interest at the prime rate as specified
in the PPAs and the Escrow Agreement.
C. The Arbitrators, as part and parcel of their final award, shall
determine the manner in which interest is to be allocated and
awarded to the Mines and to WEPCo with respect to any funds that
have been placed into escrow by the Mines.
6. WAIVER AND DISCHARGE
Upon the timely payment of the amounts set forth in Paragraph 3, above,
WEPCo expressly waives and forever discharges the Mines from any claim for
additional payments, damages or termination of the PPAs based upon the timing or
form of Mines' payment of the invoices for January, February, and March 2006;
however, the parties expressly acknowledge and agree that the issue of whether a
late fee is due pursuant to Section 11(a) of the PPAs with respect to such
payments remains a disputed issue to be resolved by the Arbitrators.
7. UNRESOLVED ISSUES
The parties agree that this Interim Agreement does not finally resolve
any of the disputes between them, which are at issue in the Arbitration. Except
as provided otherwise in Paragraph 6, hereof, the billing and payment provisions
of this Agreement are expressly stated and recognized by all parties to be
without prejudice to any position any party may take in the pending Arbitration.
8. GENERAL PROVISIONS
Any dispute under this Agreement shall be submitted to the Arbitrators,
and any arbitration award rendered in the Arbitration may be filed with the
appropriate court having jurisdiction and shall be enforced in accordance
therewith. The parties expressly acknowledge and agree that this Interim
Agreement shall be admissible before the Arbitrators only for the limited and
specific purpose of enforcing its terms and shall not be used or considered for
any other purpose. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Michigan. This Agreement is not
intended to, and does not, amend the provisions of PPAs, but is designed to
direct the actions of WEPCo and Cliffs for the interim period, which runs from
the date when the
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parties execute this Agreement through the date when the Arbitrators enter a
final opinion, with regards to interim payments during the pending Arbitration.
The first sentence of paragraph 2 of the parties' Escrow Agreement is hereby
amended to read as follows: "Once each month, on or before the due date for
Empire's and Xxxxxx'x monthly payments to WEPCo under the terms of the PPAs,
Cliffs shall deposit with and deliver to the Escrow Agent that portion of the
amounts billed by WEPCo that are in dispute, except for the disputed amounts
that Cliffs has agreed to pay to WEPCo under protest pursuant to the terms of
the Interim Agreement dated May 5, 2006." All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives and successors of the
parties hereto. Any assignment of this Agreement must comply with the applicable
assignment provisions of the PPAs. No amendment to this Agreement shall be
effective unless made in writing and signed by duly authorized representatives
of each of the parties.
IN WITNESS WHEREOF, the parties hereto, by their authorized
representatives, have executed this Agreement as set forth below.
WISCONSIN ELECTRIC POWER COMPANY XXXXXX MINING COMPANY, L.C.
By The Cleveland-Cliffs Iron Mining
Company, its Managing Agent
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Its: Executive Vice President & Its: President
General Counsel ----------------------------------
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Date: May 5, 2006 Date: May 5, 2006
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EMPIRE IRON MINING PARTNERSHIP
By The Cleveland-Cliffs Iron Mining
Company, its Managing Agent
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: President
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Date: May 5, 2006
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