Exhibit 10
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TRANSACTION NO. 4
UNDER
THE PURCHASE AND SALE AGREEMENT FOR UNFORCED CAPACITY, ENERGY
AND ANCILLARY SERVICES BETWEEN CONECTIV ENERGY SUPPLY, INC. AND
DELMARVA POWER & LIGHT COMPANY
Date: September 1, 2001
Seller: Conectiv Energy Supply, Inc. ("CESI" or "Seller")
Buyer: Delmarva Power & Light Company ("DPL" or "Buyer")
A. General Terms and Conditions: This Transaction is executed under the
Purchase and Sale Agreement for Unforced Capacity, Energy and Ancillary
Services Between Conectiv Energy Supply, Inc. and Delmarva Power & Light
Company (the "Umbrella Agreement"). Except as herein specifically
modified, the terms and conditions of the Umbrella Agreement are
incorporated herein by reference.
B. Intent: The intent of this Transaction is that, with adjustments
described below, CESI will provide to DPL its full supply-related
requirements. During each month of the Term of this Transaction CESI
will sell to DPL, and DPL will purchase from CESI, sufficient Energy,
Supply-related Ancillary Services and Unforced Capacity (the "Products")
to meet the DPL supply-related requirements as described herein. It is
further the intent of the parties that CESI's costs to fulfill its
obligations under this Transaction will not be flowed-through directly
or indirectly to DPL, but will be solely CESI's responsibility and that
the price that DPL will pay to CESI for the Products purchased in any
month hereunder shall be equal to the supply-related components of the
invoices rendered by DPL in said month.
C. Term: September 1, 2001 through January 31, 2002; provided, however,
that if all required regulatory approvals are obtained, the term shall
be extended until June 30, 2004.
D. Definitions for use in this Transaction:
"DPL's DEMEC Obligations" shall mean quantities of Products that DPL
sells to the Delaware Municipal Electric Corporation ("DEMEC") or to the
Delaware Cities and Towns of Xxxxxxx, Smyrna, New Castle, Newark,
Middletown, Milford, Lewes, and Seaford (referred to jointly herein as
the "DEMEC Members") under contracts scheduled to expire on December 31,
2003 (the "DEMEC Agreements").
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"DPL's PLR Obligations" shall mean quantities of Products that DPL sells
to retail customers ("PLR Customers") who have not selected service from
a competitive supplier, have not entered into Special Contracts (as
defined below) with Delmarva and whom DPL is obligated to serve as a
supplier of last resort under the Delaware SOS, Maryland ESS or Virginia
Retail tariffs. DPL's PLR Obligations, according to state jurisdiction
and customer class, are follows:
Delaware:
September 1, 2001 through September 30, 2002, all customer
classes October 1, 2002 through September 30, 2003,
residential customers only
Maryland:
September 1, 2001 through June 30, 2003, all customer
classes July 1, 2003 through June 30, 2004, residential
customers only
Virginia:
September 1, 2001 through December 31, 2003, all customer
classes
"DPL's Special Contract Obligations" shall mean quantities of Products
that DPL sells to retail customers ("Special Contract Customers") under
contracts ("Special Contracts") approved by a state regulatory
commission having jurisdiction over Delmarva's service. DPL's Special
Contract Obligations shall be limited to base quantities of Products
provided for in the Special Contracts and shall be further limited to
the term provided for in each Special Contract as of the effective date
of this Transaction.
"DPL Supply Related Revenues" shall mean the supply component of
revenues billed in any month by DPL to (i) DEMEC and the DEMEC Members;
(ii) Special Contract Customers; and (iii) PLR Customers.
"Non-DPL Obligations" shall mean quantities of Products that appear on
either the PJM Invoice (Energy and Supply Related Ancillary Services) or
the Installed Capacity Position Report (Unforced Capacity) as DPL
consumption but which are not associated with DPL's DEMEC Obligations,
DPL's Special Contract Obligations or DPL's PLR Obligations. Examples of
Non-DPL Obligations are: (i) Usage by the City of Dover; (ii) Sales by
third party suppliers to retail or wholesale customers within the DPL
service territory; and (iii) Sales by DPL to PLR Customers during
periods within the Term of this Transaction but outside of the periods
defined in this Section for DPL's PLR Obligation.
"PJM" means the PJM Interconnection, LLC, or successor organization.
"PJM Invoice" shall mean the invoice that is issued by PJM to DPL each
month that reflects the quantities of Products that DPL consumed in the
prior month.
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"Supply-Related Ancillary Services" shall mean:
a. Scheduling, System Control and Dispatch Service (PJM and RTO)
b. Reactive Supply and Voltage Control Service
c. Regulation and Frequency Response Service
d. Energy Imbalance Service
e. Operating Reserve Service
E. Products:
1. Energy required to meet DPL's supply requirements
2. Supply-related Ancillary Services required to meet DPL's supply
requirements
3. Unforced Capacity required to meet the DPL's supply requirements
F. Quantity:
1. During each month of the term of this Transaction CESI shall sell
to DPL and DPL shall purchase from CESI the quantities of Products
required by DPL to meet the requirements of its DEMEC, Special
Contract and PLR Obligations.
a. Energy and Supply-related Ancillary Services sold by CESI and
purchased by DPL shall be equal to the Energy and Ancillary
Services appearing on the monthly PJM Invoice as being
attributable to DPL adjusted to eliminate (i) quantities of
Energy and Supply-related Ancillary Services associated with
Non-DPL Obligations; (ii) quantities of Energy and Supply-
related Ancillary Services that DPL purchases under an
agreement from a third party; (iii) quantities of Energy and
Supply-related Ancillary Services that DPL purchases from a
third party pursuant to a regulatory commission order or
requirement; (iv) quantities of Energy and Supply-related
Ancillary Services that DPL purchases from third parties
pursuant to a requirement of state or federal law, including
the Public Utility Regulatory Policies Act; and (v) quantities
of Energy and Supply-related Ancillary Services that DPL
purchases to meet a state or federal requirement that it
obtain a portfolio of contracts that include specific
characteristics, including but not limited to an order
requiring DPL to make available a PLR service that includes
"green power." With respect to subparts (iii) and (v), DPL
agrees that it will not seek to obtain such a Commission
order, but reserves the right to enter into settlement
agreements that may contain such requirements.
b. Unforced Capacity sold by CESI and purchased by DPL shall be
equal to the Unforced Capacity appearing on the daily PJM
Installed Capacity Position Report as being attributable to
DPL, adjusted to eliminate (i) quantities of Unforced Capacity
associated with Non-DPL Obligations; (ii) quantities of
Unforced Capacity that DPL purchases under an agreement from a
third party; (iii) quantities of Unforced Capacity that
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DPL purchases from a third party pursuant to a regulatory
commission order or requirement; (iv) quantities of Unforced
Capacity that DPL purchases from third parties pursuant to a
requirement of state or federal law, including the Public
Utility Regulatory Policies Act; and (v) quantities of
Unforced Capacity that DPL purchases to meet a state or
federal requirement that it obtain a portfolio of contracts
that include specific characteristics, including but not
limited to an order requiring DPL to make available a PLR
service that includes "green power." With respect to subparts
(iii) and (v), DPL agrees that it will not seek to obtain such
a Commission order, but reserves the right to enter into
settlement agreements that may contain such requirements.
2. Nothing herein shall be deemed to prevent DPL from increasing its
supply requirements either through (i) modification to the existing
terms of the Special Contracts; (ii) modification to the existing
terms of the DEMEC or DEMEC Member Agreements; (iii) supply to
DEMEC or the DEMEC Members under the Part I Power Block or the
energy component of the Part III Power Block of the DEMEC
Agreements; or (iv) extension of the term during which it is
obligated to serve PLR Customers. All such increases in the DPL
supply requirements shall be referred to herein as "Additional
Requirements". CESI shall be obligated to sell to DPL quantities of
Products required to meet the Additional Requirements only if the
Parties specifically agree to the price and other terms related to
such additional quantities of Products.
3. The effects of corrections, true-ups, and/or adjustments to the PJM
Invoice or other quantities described in Section F or the Price
described in Section G for prior periods will be reflected in the
month in which such adjustments are booked by DPL.
G. Price:
1. The Price that DPL will pay to CESI for the Products supplied in
any month during the term of this Transaction shall be equal to the
DPL Supply Related Revenues as described in Section G(2) less
adjustments described in Section G(3).
2. The DPL Supply Related Revenues in any month shall be equal to the
sum of:
a. The unbundled line items appearing in Sections 1, 2, 3 and 4
of the example attached hereto as Attachment No. 1 shall be
allocated between "TUB", "CPD" and "CESI" as provided for on
said example. The sum of the amounts assigned to "CESI,"
appearing in the box entitled "DPL Grand Total" shall
constitute the DPL Supply Related Revenues associated with
Special Contract Customers and PLR Customers for said month.
changes in the allocation procedure appearing on attachment
no. 1 shall be agreed to by the parties if they will result in
a more precise calculation of the revenues associated with the
supply components of
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DPL's PLR obligations and DPL'S special contract obligations.
such a change will be required when, and if, certain rate
classes within a jurisdiction are no longer part of DPL's PLR
obligations; and
b. Revenues billed by DPL to DEMEC and to the DEMEC Members for the
Part II Power Block and the demand component of Part III Power
Block (as those terms are used in the DEMEC Member Agreements)
shall constitute the DPL Supply Related Revenues associated with
DEMEC and the DEMEC Members.
3. The Price provided for herein shall include credits to the DPL Supply
Related Revenues for the following: (i) amounts paid by DPL to NRG
for the Unforced Capacity under the NRG Unforced Capacity
transaction; (ii) amounts paid by DPL to PECO for Unforced Capacity
and Energy acquired by DPL under the PECO Peach Bottom Reciprocal
Sale; (iii) amounts paid by DPL to NRG for the Energy acquired by DPL
under the NRG 500 MWh/hr firm transaction (unless and until said
transactions are assigned to CESI); (iv) amounts paid by DPL for
Products purchased from a third party pursuant to a regulatory
commission order or requirement; (v) amounts paid by DPL for Products
purchased from third parties pursuant to a requirement of state or
federal law, including the Public Utility Regulatory Policies Act;
and (vi) amounts paid by DPL for Products purchased to meet a state
or federal requirement that it obtain a portfolio of contracts that
include specific characteristics, including but not limited to an
order requiring DPL to make available a PLR service that includes
"green power."
H. Delivery Point: Energy delivered to the DPL Zone.
I. Other Conditions:
1. CESI shall be responsible for all congestion charges for all services
provided to DPL under this Transaction irrespective of whether those
congestion charges reflect differences in Locational Marginal Pricing
between portions of PJM and the DPL Zone or reflect differences
within the DPL Zone. Congestion charges will be deemed to equal the
amount of congestion charges reflected on the PJM Invoice, adjusted
only by congestion charges for Non-DPL Obligations. To the extent
that DPL is allocated or otherwise obtains Fixed Transmission Rights
("FTRs") with respect to the Energy delivered by CESI to the DPL Zone
for DPL's DEMEC, Special Contract and PLR Obligations, the economic
value of those FTRs will be provided to CESI. Nothing herein
precludes CESI from obtaining additional FTRs on its behalf. In
furtherance of this provision, CESI agrees to supply to PJM at the
appropriate time(s) its designated capacity resources that it will
use to meet obligations hereunder and DPL agrees to supply to PJM at
the appropriate time(s) its network load transmission and capacity
requirements.
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2. The Parties agree that if, at any time during the term of this
Transaction, CESI does not supply any of the Product to DPL that CESI
is obligated to provide, and DPL is deemed by PJM or other entity to
have acquired the Products from another source, CESI shall pay to DPL
the amount billed to DPL by PJM or that third party.
3. DPL agrees to remain a Network Service Customer as that term is
defined by PJM and pay for any transmission and/or distribution
services from the Delivery Point to its customers. To the extent that
CESI incurs costs associated with transmission or transmission-related
ancillary services from regions outside of PJM or point-to-point
service within PJM, CESI shall be responsible for such costs.
J. Payment Terms:
As soon as reasonably practicable after the end of a calendar month, DPL
shall provide to CESI its computations of the Price that it is required to
pay for Products purchased hereunder and shall pay that amount to CESI.
CESI shall have the right to audit the calculations. Any dispute shall be
resolved through good faith discussions and negotiations by individuals at
the Vice-President level. DPL and CESI agree to discharge mutual payment
obligations due and owing to each other on the same date through netting,
so that only the excess amount remaining due shall be paid by the Party who
owes it.
K. Information:
As soon as reasonably practicable, DPL shall program and modify changes to
its computerized systems so that DPL can post on its public web-site its
energy usage for its PLR Obligations from the prior day. CESI shall be
responsible for forecasting the hourly capacity requirements and energy
requirements for DPL's DEMEC, Special Contract and PLR Obligations.
L. Miscellaneous Terms and Definitions:
1. Nothing herein shall be deemed to obligate DPL to assign or CESI to
accept assignment of a supply contract that is in effect between DPL
and a third party.
2. Required regulatory approvals means an order of the Virginia State
Corporation Commission.
3. Unforced Capacity is defined consistently with the definition of such
term as used by PJM. To the extent that PJM begins to use different
nomenclature, or modifies the method by which Unforced Capacity or the
new term for a similar product is calculated, the parties intend that
this Transaction continue in full force and effect with the new term
or product being automatically substituted into this Transaction.
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4. DPL will be responsible for collecting and paying any state utility
taxes related to the supply of its tariff and contract obligations.
5. The parties recognize that the structure of PJM may be substantially
modified to include regions not currently within PJM. To the extent
that such a restructuring results in a substantial economic hardship
to either party, which hardship is the result of expanding the regions
subject to the control of PJM or a successor organization and not the
result of market forces, either party may terminate this Transaction
by providing one-years' notice of termination, during which time, the
parties will negotiate in good faith an adjustment to the Transaction
to reflect the changed circumstances.
6. Terms can only be modified by mutual agreement of both parties.
7. This Agreement shall be void and without effect and with no continuing
obligation on the part of either Party to the extent that a regulatory
commission with jurisdiction issues a final, non-appealable order that
prohibits such Agreement.
DELMARVA POWER & LIGHT COMPANY CONECTIV ENERGY SUPPLY, INC.
By: _________________ By: _________________
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx
Title: Sr. Vice President Title: Sr. Vice President
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