EXHIBIT 10.1
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NIAGARA MOHAWK
NIAGARA MOHAWK POWER CORPORATION/300 ERIE BOULEVARD WEST, SYRACUSE, NEW YORK
00000-0000/TELEPHONE (315\000-0000
April 18, 1997
Xx. Xxxxxx X. Xxxxxxxx
Vice President, Operations
Selkirk Cogen Partners, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Transmission Service Agreement dated as of December 13, 1990
Dear Xxxxxx:
This letter agreement sets forth certain understandings regarding the future
interpretation of the Transmission Services Agreement between Niagara Mohawk
Power Corporation ("Niagara") and Selkirk Cogen Partners, L.P. ("Selkirk")
dated as of December 13, 1990 as amended (the "Agreement").
Niagara and Selkirk both acknowledge that either party may, at its option,
commence a proceeding, respectively, under Section 205 or Section 206 of the
Federal Power Act to amend the terms and conditions of the Agreement
applicable to the loss determination methodology. However, such option may
only be exercised if the petitioner in FERC Docket EL95-38-000 prevails
either in its complaint in that docket or in another proceeding, and
successfully changes the loss determination methodology applicable in its
transmission service agreement with Niagara to an average system-wide basis.
To the extent that either party commences such proceeding, it will be obliged
to demonstrate therein that the rates it proposes are just and reasonable and
otherwise satisfy the requirements of applicable law and regulation.
The Agreement shall apply only to the 265 MW of capacity and energy Selkirk
delivers to Consolidated Edison, pursuant to the Power Sales Agreement dated
as of April 14, 1989 between Selkirk and Consolidated Edison ("Coned PSA").
To the extent that Selkirk delivers capacity and energy in excess of 265 MW
to ConEd or another party, Niagara shall provide transmission services for
such excess pursuant to the then applicable tariff, which may be a joint
tariff of Niagara and other utilities administered by an independent system
operator ("ISO"), or, at Selkirk's option and to the extent the Agreement
provides for such service, pursuant to the Agreement. In the event that the
ConEd PSA terminates or the amount and price of capacity and energy Selkirk
delivers to ConEd pursuant to the ConEd PSA are substantially modified, the
Agreement with Niagara shall, at Selkirk's option, terminate without further
obligation, except as to services provided prior to the effectiveness of such
termination, by Selkirk providing Ni agara with notice of such termination in
accordance with the Agreement, provided that such termination
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Xx. Xxxxxx X. Xxxxxxxx
April 18, 1997
Page 2
of the Agreement shall not be effective prior to the beginning of the sixth
year following the execution of this letter agreement regardless of the date
of any modification or termination of the ConEd PSA. The foregoing shall not
limit in any way Selkirk's right to terminate the Agreement under the
circumstances described in Section 17.4(ii) of the Agreement.
From this date forward, Niagara and Selkirk agree that (i) losses under
Section 9.1 of the Agreement shall continue to be calculated using the
incremental loss calculation methodology referenced and described in Niagara
Mohawks' Answer to the Complaint in FERC Docket No. EL95-3 8-000, and may
change to a marginal loss calculation methodology if and when such a
methodology is made effective under a joint transmission tariff administered
by an ISO in New York, and (ii) the rate for transmission service (including
scheduling and dispatch and reactive support services ancillary to such
transmission service) shall be $1.76//kW-mo. Items i) and ii) will remain as
stated for the remaining term of the Agreement or until changed pursuant to a
Section 205 or Section 206 filing made in accordance with the second
paragraph of this letter. Notwithstanding the foregoing:
(1) if, during the first three years after the execution of this
letter agreement: (a) use of the marginal loss calculation methodology, as
described in clause (i) of the preceding sentence results for any reason,
over the course of a period of twelve consecutive months ending with the
month for which the calculation is being made, in losses applicable to
Selkirk averaging 3.3% or greater, and (b) application of the incremental
loss calculation methodology described in clause (i) of the preceding
sentence would have resulted in losses applicable to Selkirk averaging less
than 3.3% over such period; or
(2) if, commencing with the first month of the fourth year after the
execution of this letter agreement: (a) use of the marginal loss calculation
methodology, as described in clause (i) of the preceding sentence results for
any reason, over the course of a period of twelve consecutive months ending
with the month for which the calculation is being made, in losses applicable
to Selkirk averaging 1.4% or greater during on-peak hours or averaging 0.5%
or greater during off-peak hours, and (b) application of the incremental loss
calculation methodology described in clause (i) of the preceding sentence
would have resulted in losses applicable to Selkirk averaging less than 1.4%
during on-peak hours during such period or averaging less than 0.5% during
off-peak hours during such period, as applicable;
then Selkirk may, at its option, terminate the effectiveness of this letter
agreement without further obligation upon thirty days' advance written notice
and the parties shall have the rights and obligations set forth in the
Agreement as in effect prior to this letter agreement.
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Xx. Xxxxxx X. Xxxxxxxx
April 18, 1997
Page 3
If the foregoing accurately reflects our understanding, please execute at the
space provided below and return one executed copy of this letter agreement to
me.
Respectfully offered by Niagara Mohawk Power Corporation
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X Xxxxxx
Vice President Marketing & Planning
Accepted by Selkirk Cogen Partners, L.P.
By: JMC Selkirk, Inc., its
General Partner
/s/ Xxxxxx X. Xxxxxxxx May 2, 1997
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Name: Xxxxxx X. Xxxxxxxx Date:
Title: Vice President
c:\jjc\3030723. 1
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