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Exhibit 10(c) |
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BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS
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THIS Base Contract for Sale and Purchase of Natural Gas ("Base Contract"), made and entered into on this 26th day of September, 2002 by and between North Jersey Energy Associates, A Limited Partnership, a New Jersey limited partnership ("Buyer") and Tractebel Energy Marketing, Inc. ("Seller").
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ARTICLE I
PURPOSE AND PROCEDURES |
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1.1 This Base Contract establishes the terms and conditions governing the purchases and sale of Gas between the Seller and Buyer (each a "Party" and collectively, the "Parties") during the Term of this Base Contract. Gas purchased hereunder is intended solely for a portion the operational needs of the Facility or to satisfy Buyer's obligations on PSE&G Peak Demand Days under the PSE&G Contract and is not intended for resale.
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1.2 This Base Contract provides for the delivery of Gas by Seller to Buyer under a Firm Performance Obligation for the entire term of the Contract. The Parties may by mutual agreement, through Confirmations described hereunder, modify the delivery obligations, including (without limitation) changes in the Delivery Point(s), for all or part of the Gas to be delivered hereunder.
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1.3.1 The Parties will use the following transaction procedure. The Parties may periodically agree to transactions that modify deliveries under this Base Contract (i) by written document ("Confirmation"), or (ii) a recorded telephone conversation between authorized representatives. When the Parties come to an oral agreement regarding a modification of the deliveries under this Base Contract for a particular delivery period, they shall be legally bound from the time they so agree to transaction terms and each may rely thereon. Any such transaction shall be considered to be in "writing" and to have been "signed." Notwithstanding the foregoing, Seller shall, and Buyer may, confirm a telephonic transaction by sending a Confirmation via facsimile, E-mail or other mutually agreeable electronic means to the other Party by the close of the Business Day following the date of the oral agreement; provided that the failure to send a Confirmation shall not invalidate the oral agreement of the Parties.
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1.3.2 If a sending Party's Confirmation is contrary to the receiving Party's understanding of the oral agreement, the receiving Party shall notify the sending Party via facsimile, E-mail or other mutually agreeable electronic means before the close of the second Business Day following receipt if the receiving Party has not previously sent a Confirmation to the sending Party. The receiving Party's failure to so notify the sending Party via facsimile, E-mail or other mutually agreeable electronic means within the aforementioned time period constitutes the receiving Party's agreement to the terms of the transaction modification described in the sending Party's Confirmation.
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1.3.3 If both Parties send a Confirmation regarding a single transaction and there are any differences in a material term between Seller's and Buyer's Confirmations, then neither Confirmation shall be binding until or unless such differences are resolved and agreed to in writing.
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1.3.4 The Parties may electronically record any telephone conversations between their employees with respect to this Base Contract, without any special or further notice to the other Party. Each Party will obtain any necessary consent of its agents and employees for such recordings. Such recordings may be introduced as evidence of any oral transaction hereunder and the Parties agree not to contest the validity or enforceability of any oral agreement, which is recorded in accordance herewith.
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1.4 The entire agreement between the Parties shall be those provisions contained in this Base Contract, any effective Confirmation, and any oral agreement of the Parties pursuant to Section 1.3.1 (collectively, the "Contract"). In the event of a conflict between the terms of (i) an effective Confirmation, (ii) the oral agreement of the Parties pursuant to Section 1.3.1, and (iii) the Base Contract, the terms of the agreement shall govern in the priority listed in this sentence.
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ARTICLE II
DEFINITIONS
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2.1 "Alternate Delivery Point" shall have the meaning set forth in Section 6.1.
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2.2 "BTU" shall mean British Thermal Unit.
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2.3 "Business Day" shall mean any day except Saturday, Sunday or bank holidays.
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2.4 "Confirmation" shall have the meaning set forth in Article I; provided that a written Confirmation shall be substantially in the form attached in Exhibit A.
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2.5 "Contract" shall have the meaning set forth in Section 1.4.
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2.6 "Contract Price" shall have the meaning set forth in Section 11.1.
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2.7 "Contract Quantity" shall mean 11,010 MMBtu per Day for each Gas Day, unless otherwise modified pursuant to Sections 1.3.1 through 1.3.3.
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2.8 "Cover Costs" shall have the meaning set forth in Section 16.1.
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2.9 "Cover Standard" shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the non-defaulting Party shall use commercially reasonable efforts to obtain or sell Gas at a reasonable price for the delivery point; provided that in addition the Seller recognizes that Buyer has obligations to provide Gas to PSE&G under the PSE&G Contract on PSE&G Peak-Demand Days and agrees that in order to fulfill such obligations Buyer may procure Gas that is very expensive due to the demand for Gas or transportation on such Gas Days and Seller agrees that Cover Costs shall include the cost of such replacement gas and Buyer's unitized cost of transportation for each day of non-delivery even though Buyer is not procuring such Gas to generate electricity.
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2.10 "Delivery Point" for any Gas delivery to Buyer shall be the Primary Delivery Point, Alternate Delivery Point(s), or other point(s) as established by Section 6.1.
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2.11 "Facility" means the Gas-fired electrical and steam generating plant located in the borough of Sayreville, New Jersey and owned by the Buyer.
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2.12 "Firm Performance Obligation" has the meaning given in Section 3.1.
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2.13 "Forced Outage" means a partial or full interruption in the generating capability of the Facility due to an unplanned component failure (immediate, delayed, postponed, or startup failure) or other condition that requires the applicable unit to be removed from service, or prevents the unit from going back into service, immediately, within six hours, or before the end of the then next weekend.
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2.13 "Fuel Manager" means the Buyer's fuel manager as designated from time to time in a written notice from Buyer to Seller.
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2.14 "Gas" shall mean pipeline quality natural gas.
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2.15 "Gas Day" shall mean a period of twenty-four (24) consecutive hours, coextensive with a "gas day" as defined in the tariff of the Transporter delivering Gas to the Delivery Point in a particular transaction.
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2.16 "Imbalance Charges" shall mean (i) any Scheduling penalties, imbalance penalties, overpull or unauthorized overrun penalties, operational flow order penalties, cash out charges, banking charges, or similar penalties, fees or charges assessed by a Transporter for failure to satisfy the Transporter's balancing and/or Scheduling requirements or (ii) any similar penalties, charges or fees assessed by PSE&G against Buyer under the PSE&G Contract.
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2.17 "Index Price" means the monthly posting (expressed in $/MMBtu) published in Platts Gas Daily Price Guide under "Monthly Contract", "Index", "Market Centers", "Northeast", "Transco zone 6 non-NY" (as such publication exists as of the date hereof). If such monthly index or such publication ceases to be published, the Parties shall in good faith determine a replacement monthly index to be utilized from the date the foregoing index or publication ceases to be published for the remainder of the term of this Contract (subject to further replacement as provided herein in the event that the replacement index ceases to be published), which replacement index shall reflect, to the maximum extent possible, the market cost of natural gas delivered to the Project.
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2.18 "Maintenance Outage" means a partial or full interruption in the generating capability of the Facility due to the removal of a unit from service to perform work on specific components that can be deferred beyond the end of the then next weekend, but requires the unit to be removed from service before the next Planned Outage.
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2.19 "MMBtu" shall mean one million BTUs.
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2.20 "Month" shall mean the period beginning on the first calendar day of the calendar month and ending on the last calendar day of the same calendar month.
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2.21 "Nomination" means Buyer's designation to Seller of the amount of Gas to be delivered to a Delivery Point during the Gas Day or Gas Days specified in the Nomination.
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2.22 "Outage" shall mean Forced, Planned, or Maintenance Outage.
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2.23 "Party" and "Parties" shall have the meanings set forth in Section 1.1.
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2.24 "Planned Outage" means a planned partial or full interruption of the operation of the Facility for any reason at Buyer's discretion.
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2.25 "Primary Delivery Point" shall have the meaning set forth in Section 6.1.
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2.26 "PSE&G" means Pubic Service Electric and Gas Company or any assignee of its rights under the PSE&G Contract.
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2.27 "PSE&G Contract" means the Gas Purchase and Sale Agreement between Buyer and PSE&G dated as of May 4, 1989, as amended.
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2.28 "PSE&G Peak Demand Days" means those days on which PSE&G is entitled to retain Gas delivered by Buyer in accordance with the PSE&G Contract.
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2.29 "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point.
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2.30 "Schedule," "Scheduling," or "Scheduled" shall refer to the act of Seller, Buyer, and the Transporter(s) notifying, requesting, and confirming to each other the quantity of Gas to be delivered hereunder on any given Gas day. Gas shall be deemed to have been Scheduled when confirmed by Transporter(s).
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2.31 "Transporter(s)" shall mean (i) PSE&G and (ii) all pipeline companies transporting Gas for Seller or Buyer pursuant to a particular Confirmation.
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ARTICLE III
FIRM PERFORMANCE OBLIGATION
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3.1 "Firm Performance Obligation" means Seller shall be required to sell and Buyer shall be required to purchase the Contract Quantity of Gas set forth herein on each Gas Day. Either Party may interrupt its performance only to the extent that such performance is prevented for reasons of Force Majeure without liability to the other Party.
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ARTICLE IV
TERM
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4.1 This Contract shall remain in effect until 9:59 a.m. EST on September 1, 2011. Deliveries of Gas hereunder shall commence on January 1, 2003, unless otherwise mutually agreed by the Parties in a Confirmation. The rights of both Parties under Section 14.3, the obligations of both Parties to make payments that have accrued prior to termination, the obligation of Seller to indemnify Buyer, and Buyer to indemnify Seller, pursuant hereto and the rights and obligations of the Parties under Section 13.3, Article IV and Article XX (to the extent necessary to administer the foregoing provisions of this Contract following such termination) shall survive the termination or cancellation of the Contract.
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4.2 This Contract shall be subject to termination by mutual agreement of the Parties, such agreement not to be unreasonably withheld.
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ARTICLE V
TRANSPORTATION
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5.1 Seller shall have the sole responsibility for transportation of Gas to the Delivery Point. Buyer shall have the sole responsibility for transportation of Gas at and after the Delivery Point.
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5.2 In the event that Buyer's Gas requirements for any Gas Day are decreased for any reason, then upon Seller's request Buyer shall use reasonable commercial efforts to implement a transaction to make any of Buyer's unused transportation capacity available to Seller; provided, however, that (a) Seller shall pay Buyer's variable costs including fuel retention for the use of such transportation capacity, (b) the available transportation capacity shall be provided on an "as is" basis and Seller shall hold Buyer harmless in connection with any costs, penalties, liabilities or damages incurred by Seller in connection with the implementation of the provisions of this Section (excluding any demand or fixed costs payable by Buyer to its Transporter or any other Person in connection with the transportation capacity). Seller shall advise Buyer of its intent to use available excess transportation capacity pursuant to this Section promptly after receipt of Buyer's notice of quantity reduction.
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ARTICLE VI
DELIVERY POINT
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6.1 The Delivery Point(s) for all Gas delivered hereunder shall be (i) the Primary Delivery Point (and associated maximum daily quantity) as described in Schedule 1 (the "Primary Delivery Point"), (ii) such other points (and associated maximum daily quantities) (each an "Alternate Delivery Point") listed in Schedule 1, or (iii) any other points as otherwise mutually agreed upon between Seller and Buyer. Upon Buyer's request and agreement by Buyer and Seller of the appropriate price pursuant to a Confirmation implemented in accordance with the procedures set forth in Article I, Seller shall procure and deliver Gas to a Delivery Point (other than the Primary Delivery Point or an Alternate Delivery Point) designated by Buyer for the period specified in Buyer's request and the associated Confirmation.
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6.2 Upon Seller's request, Buyer shall accept Gas at an Alternate Delivery Point or other delivery point(s) designated by Seller for the period specified in Seller's request, if Seller agrees to pay any incremental cost to Buyer above the Contract Price. However, during the calendar months of November, December, January, February, and March, the requested delivery point must be an Alternate Delivery Point listed on Schedule 1.
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6.3 Deliveries of Gas at a Delivery Point requested by Seller or Buyer that is not designated as a Primary Delivery Point or Alternate Delivery Point shall be made on a firm basis including without limitation Force Majeure. During the term of this Base Contract, Buyer may not modify receipt or delivery points described in its transportation and storage agreements without the prior written consent of Seller.
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ARTICLE VII
SCHEDULING
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7.1 The Parties shall coordinate their Scheduling requirements by telephone (and, where applicable, by means of Transporter's electronic bulletin board or other electronic data interchange method) with immediate confirmation in writing by facsimile. Ample time must be given to meet the Scheduling deadlines of the affected Transporter(s). Each Party's gas scheduler shall give the other Party's gas scheduler timely prior notice, and each Party's gas scheduler shall make appropriate Scheduling to the Transporter(s) in a timely manner, in each case sufficient to meet the requirements of all Transporter(s) involved in the transportation and delivery of Gas each Gas Day. Notice shall be provided (i) at least twenty-four hours prior to the earliest regularly scheduled Scheduling deadline applicable for each of the Transporter(s) receiving or delivering Gas to be Scheduled for flow on the first Gas Day of a month, and (ii) one hour earlier than such Scheduling deadline(s) for subsequent Scheduling. Should either Party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the amount of Gas Scheduled for delivery, such Party shall notify immediately the other Party's gas scheduler by telephone.
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ARTICLE VIII
IMBALANCES
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8.1 If the supply or transportation necessary to deliver or receive the Contract Quantity is unavailable for any reason, the Party responsible for or having notice of such interruption shall immediately notify the other Party by telephone. Seller and Buyer shall then cooperate in all reasonable actions to avoid penalties imposed by the Transporter(s).
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8.2 The Parties shall use all reasonable efforts to avoid imposition by any Transporter of Imbalance Charges and to minimize such charges if unavoidable. If, during any Month, Buyer or Seller receives an invoice from a Transporter, which includes Imbalance Charges, the Parties shall use their best efforts to promptly determine the validity as well as the cause of such Imbalance Charges. The Party responsible for causing such imbalance(s) shall be liable to the other Party for, if applicable, any associated Transporter penalties or cashout costs and losses incurred as a result of imbalance(s).
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ARTICLE IX
QUANTITY REDUCTIONS
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9.1 In the event that Buyer's Gas requirements for any Gas Day are decreased due to JCP&L curtailments, Outages, or other force majeure conditions described herein, then Buyer shall reduce the amount of Gas it receives on such Gas Day in accordance with the following order of reduction priority: (a) First, Gas to be purchased under the PSE&G Contract, as and to the extent provided therein; (b) Second, Gas to be delivered under any Gas storage agreements or arrangements entered into after the date of this Base Contract; (c) Third, Gas to be purchased under other contracts; and (d) Fourth, Gas to be purchased under this Base Contract and the Base Contract dated as of the date hereof between Buyer and Tractebel Energy Marketing, Inc., ratably on a 50/50 basis. For any Gas Day that Buyer is reducing the Contract Quantity pursuant to this Section, Buyer shall issue a Nomination to Seller designating the reduced Contract Quantity immediately upon receiving information that a quantity reduction is necessary, but in no event later than 9:30 a.m., Eastern Prevailing Time on the Business Day prior to the Gas Day on which deliveries are to be so reduced. Buyer shall not reduce the amount of Gas it receives for any Gas Day for economic or any other non-operational reasons, except that Buyer shall be entitled to a reduction as a result of a curtailment of the Facility for up to two hundred (200) hours per year pursuant to Section 6.5 (d) of the Power Purchase Agreement between Jersey Central Power & Light and Buyer relating to the Facility.
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9.2 In the event of a Forced Outage, Buyer may request that Seller remarket any Gas that Buyer is required to accept hereunder and Seller shall use commercially reasonable efforts to do so and shall be entitled to Seller's Cover Costs for any such amount. Such requests shall be made pursuant to the Confirmation procedures set forth in Article I above.
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9.3 Notwithstanding anything to the contrary in this Contract, in the event that the simple average of the daily quantities of Gas purchased by Buyer hereunder each Day during any 12 Month period is less than 75% of the original Contract Quantity of 11,010 MMBtu per day, then upon Seller's request, the Parties shall negotiate in good faith to appropriately modify the terms of this Contract (including but not limited to the terms related to the Contract Price). If the Parties do not agree on such modifications within 30 Days after Seller's request, then Seller shall have the right to terminate this Contract upon giving 30 Days prior written notice to Buyer.
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ARTICLE X
QUALITY AND MEASUREMENTS
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10.1 All Gas delivered hereunder shall meet the pressure, quality, heat content and other standards and specifications of the Receiving Transporter.
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10.2 The unit of quantity measurement for purposes of this Contract shall be on an MMBtu dry basis. Measurement of Gas quantities hereunder shall be in accordance with the tariff of the Receiving Transporter.
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ARTICLE XI
PRICE
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11.1 The "Contract Price" for all Gas delivered hereunder shall be an amount (expressed in $/MMBtu) equal to the Index Price, minus the applicable amount for the applicable time period as set forth on Schedule 2. In the event Buyer and Seller mutually agree, the Contract Price may be adjusted pursuant to a Confirmation implemented in accordance with the procedures set forth in Article I; provided, however, neither Party is obligated to agree to any other pricing and either Party may withhold agreement for any reason.
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ARTICLE XII
TAXES
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12.1 Seller shall pay or cause to be paid, all taxes, fees, levies, penalties, licenses or charges imposed by any government authority ("Taxes") on or with respect to the Gas prior to its delivery at the Delivery Points(s). Buyer shall pay or cause to be paid, all Taxes on or with respect to the Gas at or after its delivery at the Delivery Point(s). If a Party is required to remit or pay Taxes which are the other Party's responsibility hereunder, such Party shall promptly reimburse the other Party for such Taxes. If either Party is entitled to an exemption from any such Taxes or charges, such Party shall furnish the other Party with a copy of the appropriate exemption or resale certificate. The Parties agree to cooperate to mitigate taxes payable by either Party hereunder.
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ARTICLE XIII
BILLING, PAYMENT AND AUDIT
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13.1 On or before the tenth calendar day following the Month of deliveries of Gas hereunder, Seller shall deliver to Buyer an invoice for the preceding Month properly identified as per the Contract (or applicable Confirmation) showing the total quantity of Gas delivered, the amount due, and other pertinent information. If the actual quantity delivered is not available by the contractual billing date, billing will be prepared based on the Scheduled quantities. The Scheduled quantity will then be corrected to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available.
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13.2 Buyer shall remit by wire transfer the amount due by the later of (i) the 25th calendar day of the Month in which the statement was rendered or (ii) ten days after receipt of the invoice by Buyer; provided that if such due date is not a Business Day, payment is due on the next Business Day following such date. If Buyer fails to remit the full amount payable by it when due, interest on the unpaid portion shall accrue at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum from the date due until the date of payment, or (ii) the maximum applicable lawful interest rate. If Buyer, in good faith, disputes the amount of any such statement or any part thereof, Buyer will pay to Seller such amount as it concedes to be correct, provided, however, if Buyer disputes the amount due, Buyer must, at the earliest available opportunity, provide Seller supporting documentation acceptable in industry practice from Buyer's Transporter (or other appropriate source of documentation). If it is ultimately determined that Buyer owes the disputed amount, Buyer will pay Seller that amount with interest as determined above immediately upon such determination.
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13.3 The Parties shall have the right, upon reasonable notice and at reasonable times, to examine the books and records of the other Party to the extent reasonably necessary to verify (i) the accuracy of any statement, charge, payment, computation made under the Contract or (ii) any curtailment of service under Section 13.4. Any such audit and any claim based upon errors in any statement or unauthorized curtailment must be made within two years of (i) the date of such statement or any revision thereof or (ii) the last calendar day of the Month during which any such alleged unauthorized curtailment occurs. Following such two-year period, a billing statement as adjusted shall be final. Errors in a Party's favor shall be rectified in full, with interest as calculated above, by such Party within 30 days of notice and substantiation of such inaccuracy.
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13.4 When reasonable grounds for insecurity of payment by Seller arise, Buyer may demand adequate assurance of performance from Seller. Adequate assurance shall mean sufficient security in the form and for the term reasonably specified by Buyer, including, but not limited to, a standby irrevocable letter of credit, a prepayment, a security in an asset acceptable to the Buyer or a guarantee by a credit worthy entity.
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ARTICLE XIV
TITLE, WARRANTY AND INDEMNITY
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14.1 Title to the Gas shall pass from Seller to Buyer at the Delivery Points(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and any liability with respect to said Gas at and after its delivery to Buyer at the Delivery Point(s).
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14.2 Seller warrants that it will have good and merchantable title to or will have the right to deliver all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims.
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14.3 Seller and Buyer each warrants that it is engaged in the direct commercial use of natural Gas in the ordinary course of its business, as producer, processor, merchant, or consumer or otherwise has knowledge of the practices associated with the purchase or sale of natural Gas. Each further warrants that it has and will maintain all the regulatory authorizations, certificates, and documentation as may be necessary and legally required to transport, buy, or make sales for resale of Gas sold or purchased hereunder.
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14.4 Seller agrees to indemnify Buyer and save it harmless from all suits, actions, debts, accounts, damages, costs, losses, liabilities and expenses arising from or out of claims of title, personal injury or property damage from any or all persons to said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all suits, actions, debts, accounts, damages, costs losses, liabilities and expenses arising from or out of claims regarding payment, personal injury or property damage from said Gas or other charges thereon which attach at and after title passes to Buyer.
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ARTICLE XV
NOTICES
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15.1 All Confirmations, Nominations, notices, invoices, and other communications ("Notices") made pursuant to the Contract shall be made as follows:
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If to Buyer:
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North Jersey Energy Associates, A Limited Partnership
c/o Northeast Energy, LP
c/o FPL Energy, LLC
000 Xxxxxxxx Xxxx.
X.X. Xxx 00000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Business Manager
Phone (000) 000-0000
Facsimile: (000) 000-0000
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If to Seller:
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(for General Notices)
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Tractebel Energy Marketing, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Contract Administrator
Phone: (000) 000-0000
Facsimile: (000) 000-0000
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