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Exhibit 10.11.6
AGREEMENT FOR THE PURCHASE OF
ELECTRICAL POWER AND ENERGY
BETWEEN
CAPITOL COGENERATION COMPANY, LTD.
AND
TEXAS-NEW MEXICO POWER COMPANY
POWER AGREEMENT
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AGREEMENT FOR THE PURCHASE OF ELECTRICAL POWER AND
ENERGY FROM CAPITOL COGENERATION COMPANY, LTD.
BY TEXAS-NEW MEXICO POWER COMPANY
WHEREAS, Capitol Cogeneration Company, Ltd. (CCC) plans to operate a
cogeneration facility (the "Facility") located on the Celanese Chemical Company
plant site at Pasadena, Texas, said facility to have capability for generating
approximately 375 MW of electric output; and
WHEREAS, CCC has entered into an Application and Agreement for Purchase of
Cogenerated Electricity with Houston Lighting and Power Company (HL&P) for the
supply and sale of electrical output from the Facility; and
WHEREAS, Texas-New Mexico Power Company (TNP) operates a distribution utility
plant in Galveston and Brazoria County, Texas, and at other locations in Texas
and New Mexico, and purchases power for distribution to its retail customers;
and,
WHEREAS, CCC may at some future date wish to sell to TNP all or a part of its
electrical output capability which is not purchased by HL&P when arrangements
for such sale to TNP are agreed upon pursuant to this Agreement;
NOW THEREFORE, CCC and TNP (Party or Parties) do hereby agree as follows:
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ARTICLE I. CONDITIONS OF SALE
TNP agrees to purchase whatever amount of the electrical power output of the
Facility owned by CCC is tendered to TNP by CCC, subject to the following
conditions:
1) It will be the responsibility of CCC to reimburse TNP for all
interconnection costs, if any, required for TNP to accomplish the Facility's
delivery of electrical power into TNP's transmission system at the time of the
first such delivery and sale. Interconnection costs will include the total cost
of improvements or revisions to the TNP transmission system as well as
improvements or revisions to systems belonging to either CCC or to the system of
any other electric utility over which power flows. Costs shall include all
improvements or revisions to relaying or communication systems associated with
above transmission systems and improvements or revisions to metering which may
be required for TNP to accept power delivery. TNP shall have the responsibility
of obtaining the consent of any other electric utilities with which
interconnection is required and shall be responsible for any wheeling agreements
and for payment of any wheeling charges associated with its receipt of power
hereunder. TNP will accept the delivery of power by CCC after 90 days prior
written notice by CCC to TNP, subject to the following:
a) The acceptance of power delivered by CCC will actually
commence whenever the system improvements or revisions to
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be done by CCC as required are completed such that the physical flow of
the power from CCC to TNP's system can be accomplished. b) On receipt of
the above written notice from CCC by TNP, TNP will immediately undertake
to accomplish any system improvements or revisions on its own system and
will advise CCC of any required improvements or revisions on the CCC
system or on the system of another utility and TNP will proceed
immediately, if required, to contract with any other utility so that
revisions or improvements on the other utility's system can be made.
ARTICLE II. PAYMENT FOR COGENERATED POWER
TNP will pay to CCC Ninety-Eight Percent (98%) of the cost which TNP actually
avoids from a supplying utility or utilities by purchasing the power from CCC as
an alternative to taking the same amount of power supply from the electric
utility or utilities which would otherwise supply the wholesale power to TNP.
The determination of actual cost avoided from a supplying utility or utilities
will be calculated as provided in Exhibit "A", attached hereto and made a part
of this Agreement.
All costs as determined according to Exhibit "A" are to be determined using the
tariff(s) of the supplying utility or utilities in effect for the period during
which deliveries of power occurred. All tariffs are subject to change upon
approval of the appropriate regulatory authority. TNP agrees to pay or cause to
be paid to CCC monthly, the amount as described above within 20 days from
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the receipt of invoice. TNP also agrees to furnish any information necessary to
the determination of said costs. When necessary, adjustments to xxxxxxxx will be
made such that fuel usage to produce electric power and energy will coincide
with the period for which xxxxxxxx are calculated.
ARTICLE III. INTERCONNECTION STANDARDS
CCC must meet the following interconnection standards:
1) The voltage supplied by the Facility will be that voltage normally
available on TNP's transmission system at the Facility's site, or such
other standard voltage as may be agreed to by the CCC and TNP, and is in
compliance with A.N.S.I. Standard C 84.1 and other applicable codes and
standards.
2) The frequency of electricity supplied will be 60 hertz.
3) The number of phases of the produced voltage will be compatible with
the phase (phases) available on TNP's system at the Facility site.
Normally the number of phases shall be the same as those of TNP's system.
4) The protective devices connected between the output of the Facility
and TNP's system must be rated for the maximum available fault current
which the Facility or TNP's system may be capable of developing at the
point of interconnection. Such devices shall disconnect the Facility's
generation from TNP's system in the event of a fault on the system
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belonging to the Facility in order to maintain continuity of service to
other customers connected to other portions of TNP's system.
5) The Facility generator output will not affect TNP's distribution
system. This includes, but is not limited to:
Overload of distribution equipment
Abnormal harmonic voltages
Interference with automatic voltage regulation equipment
Electronic noise that would interfere with communications
6) The Facility's system shall be capable of protecting itself from
damage resulting from impact loading and/or overloading under both normal
operating and emergency conditions. This shall include the ability to
synchronize on connecting to TNP's system to avoid voltage decay or out of
phase connection. a) The controls of the Facility shall be capable of
disconnecting the Facility's input to TNP or otherwise limiting the
Facility's input to avoid overload of any of TNP's system components or
undesirable transient voltage or frequency fluctuations in the event of a
fault on TNP's system or under conditions of large motor start or
capacitor switching operations on TNP's system to which the Facility is
interconnected. This device must be coordinated with TNP's protective
system.
ARTICLE IV. SAFETY STANDARDS
CCC must meet the following safety standards:
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1) The Facility's interconnection must meet the requirements of the
National Electrical Safety Code, National Electric Code and any applicable
local codes.
2) The Facility's interconnection must automatically disconnect from
TNP's system if TNP's service is interrupted during emergency conditions.
Pursuant to the PUC's rules, TNP may discontinue service to or from the
Facility it has been determined that continuation of service would
contribute to such emergency. CCC will coordinate automatic
re-energization in this system with TNP's standard protection practices.
3) There must be a disconnect between the Facility interconnection and
TNP which can be controlled and operated by TNP. This disconnect must
provide a visible air gap which will assure disconnection before a TNP
employee does any work on the circuit or circuits to which the
interconnection is made.
ARTICLE V. FORCE MAJEURE
Neither party shall be held responsible or liable for any loss or damage
resulting from failure to perform its obligations hereunder due to any cause
beyond its control which the party could not reasonably be expected to avoid.
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ARTICLE VI. NOTICES
Any written notice required hereunder shall be deemed properly made, given to,
or served upon the party to whom it is directed when sent by United States Mail,
postage prepaid, addressed to the President, or other representative designated
in writing by the party being notified.
ARTICLE VII. WAIVERS
A waiver by either party of its rights with respect to any matter arising in
connection with this Agreement, shall not be deemed a waiver with respect to any
subsequent matter. Any delay, short of the statutory period of limitations, in
asserting or enforcing any right shall not be deemed a waiver of such right.
ARTICLE VIII. NO DEDICATION OF FACILITIES
An undertaking by one party to another party under any provision of this
Agreement shall not constitute the dedication of the system or any portion
thereof of the party to the public or to the other party, and any such
undertaking shall cease upon the termination of the party's obligation
hereunder.
ARTICLE IX. NO THIRD PARTY RIGHTS
Unless otherwise specifically provided in this Agreement, the parties do not
intend to create rights in or to grant remedies
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to any third party as a beneficiary of this Agreement or of any duty, covenant,
obligation or undertaking established hereunder.
ARTICLE X. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas as if the Agreement were to be performed wholly in the State
of Texas.
ARTICLE XI. COMMISSION APPROVAL
This Agreement, and all obligations hereunder, are expressly conditioned upon
the granting of such approval and authorization by any Commission or other
regulatory body whose approval or authorization may be required by law from time
to time.
ARTICLE XII. ASSIGNMENT
This Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors and assigns. This Agreement may only be assigned with
the consent of the parties hereto.
ARTICLE XIII. LIABILITY
Neither party shall be liable for any injury or death to person or damage to
property (including consequential damage) suffered or claimed by the other party
or by the party's directors, officers, employees, agents or customers as a
result of the other party's
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performance or non-performance of this Agreement, whether due to such other
party's negligence or otherwise, and each of the parties shall indemnify and
hold harmless the other party against any such liability and all costs and
expenses in connection therewith. The foregoing provision shall not however,
relieve any insuror of its obligations under any insurance policy under which a
party hereunder is the insured, but the insuror shall not have any subrogation
rights against the other party hereunder if such other party is the Indemnitee
and the insured is the Indemnitor.
ARTICLE XIV. TERM OF AGREEMENT
This Agreement shall extend for a primary period of Eleven (11) years from the
date hereof, and afterwards for such time as CCC is able to provide power to
TNP.
CAPITOL COGENERATION COMPANY, LTD.
By its General Partners
Attest: CAPITOL POWER, INC.
[SIG] By: [SIG]
---------------------------- -------------------------------------
8/31/83
Attest: BAYPORT COGENERATION, INC.
[SIG] By: [SIG]
---------------------------- -------------------------------------
August 31, 1983
Attest: TEXAS-NEW MEXICO POWER, INC.
[SIG] By: [SIG]
---------------------------- -------------------------------------
August 31, 1983
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EXHIBIT A
AVOIDED COST
Avoided Cost can be expressed with the formula:
Avoided Cost = S(1) - S(2) - (W+B+L)
Where:
S(1) = total cost of a given amount of power from TNP's utility supplier.
This normally included a capacity charge stated in $/KVA or $/KW,
energy charges in $/KWH and a customer charge. The amount of power
would be that actually supplied to TNP by the utility supplier or
other QF's plus that supplied to TNP by CCC.
S(2) = total cost of power actually supplied by TNP's utility supplier.
This would exclude the power taken by TNP from CCC or other QF's.
W = wheeling costs paid by TNP to other utilities to transport power
from CCC to the TNP system.
B = backup charges, if any, paid by TNP to other utilities for power
to supply TNP's retail customers when CCC cannot provide delivered
power.
L = cost to TNP of additional losses, if any, to deliver CCC power to
TNP systems as opposed to losses incurred when purchasing from a
utility supplier of wholesale power.
FOR INFORMATION PURPOSES: portions of S(1) and S(2) above are determined using
capacity payments made by TNP. When C(B) is GREATER THAN C, a ratchet charge is
being paid to a supplier.
C = capacity actually purchased from utility supplier during month
stated as $/KVA or $/KW using monthly metered or scheduled power
times the supplying utility's capacity charge per KVA or KW.
C(B)= capacity being billed by utility supplier during month. Ratchet
applications in suppliers' tariffs determine the billing capacity in
any month as a percentage of the actual capacity taken during some
prior peak period. Charges are stated as $/KVA or $/KW.
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Ratchets are subject to change with suppliers' future filings of rate cases.
Ratchets as of the date of this agreement are:
UTILITY & APPLICATION
------- ----- -----------
HL&P 75 May 15 - Oct 15
TP&L 65 June - October
TESCO 80 June - October
WTU 0 N/A
SWPS 65 Preceding 11 months
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[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
August 14, 1986
Mr. C. Xxxx Xxxxxx Xx. X. X. Xxxxxxx
CAPITOL POWER, INC. BAYPORT COGENERATION CO., INC.
P. O. Xxx 00000 P. O. Xxx 0000
Xxx Xxxxxxx, XX 00000 Xxxx Xxxxx, Xxxxx 00000
Xx. Xxxxxxx Xxxxx Xx. Xxxxxx X. Xxxxxx
CAPITOL POWER, INC. BAYPORT COGENERATION CO., INC.
P. O. Xxx 00000 P. O. Xxx 0000
Xxx Xxxxxxx, XX 00000 Xxxx Xxxxx, Xxxxx 00000
Gentlemen:
This Letter Agreement is for the purpose of setting out binding Agreements
previously made between Capitol Cogeneration Company Limited (CCC) and Texas-New
Mexico Power Company (TNP) (hereinafter, the Parties). The Parties affirm and
agree that all points listed below are, and shall continue to be, binding on the
Parties by CCC and TNP supplement and/or replace the below detailed Agreements
and understandings.
1. TNP will purchase capacity in the maximum amount of 300 MW from CCC.
TNP will contract for standby capacity for use in the event the
capacity provided by CCC or another cogenerator is unavailable. The
amount of standby capacity anticipated by TNP is presently 125 MW,
which amount is adequate to standby the single largest generating
unit now operated by cogenerator's selling power to TNP. The cost of
such standby service will be pro-rated by TNP among the
cogenerator's selling capacity to TNP. The proration is based on the
maximal amount of capacity contracted for with each cogenerator.
CCC's prorated amount of cost will be subtracted from the cost
avoided by TNP from its suppliers due to purchasing capacity from
CCC, and reflected as a reduction in the avoided cost paid to CCC by
TNP.
2. That certain contract signed August 31, 1983 and titled Agreement
for the Purchase of Electrical Power and Energy between CCC and TNP
(Contract) provides for TNP to purchase all of the energy offered to
TNP by CCC. Under Article XI of the Contract, the content is made
subject to regulatory bodies having regulatory control. TNP
currently has approved by a regulatory body (i.e. The Public Utility
Commission of Texas) specific rules and regulations covering TNP's
energy purchases from Cogenerator's. The Parties acknowledge that
the attached rules and regulations apply to purchases by TNP of CCC
energy until such rules and regulations are approved in an altered
form by the Public Utility Commission of Texas.
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Management Committee Members
August 14, 1986
Page #2
3. Article XIV of the Contract provides for a primary term of 11 years
beginning with the date of Contract with extensions of said Contract
for as long as CCC can supply capacity or energy to TNP. The Parties
acknowledge that the capacity and energy supplied to TNP for the
primary Term of Contract or capacity and energy that might be
supplied to TNP after the primary term of Contract is subject to
TNP's actual need for capacity at the time CCC offers such capacity
or energy. The Parties further agree that once a specific amount of
capacity is supplied to TNP by CCC during the primary term such
capacity can only be withdrawn from TNP for force majeure reasons
unless the withdrawal is agreed to by TNP. For capacity which CCC
wishes to sell to TNP after the primary term CCC agrees that the
Parties will enter into a specific agreement concerning the period
of time such capacity is to be made available to TNP beyond the end
of the primary term with such agreement to be reduced to writing and
signed by the Parties no later than three (3) years before the end
of the primary term. Nothing in this paragraph shall prevent TNP
from agreeing to release capacity at TNP's sole option, however it
is understood that once capacity is released for CCC to sell to
others, TNP will have the sole option and responsibility to accept
or reject any re-offered capacity based on system needs and
requirements.
TEXAS NEW-MEXICO POWER COMPANY
/s/ XXXXX X. XXXXXXX
------------------------------------
Xxxxx X. Xxxxxxx
Executive Vice-President
Capitol Cogeneration
/s/ XXXX XXXXXX /s/ XXXXX X. XXXXXXX
------------------------------- ------------------------------------
Xxxx Xxxxxx, President Xxxxx X. Xxxxxxx, President
Capitol Power, Inc. (Partner) Bayport Cogeneration Co., Inc. (Partner)
/s/ XXXXXXX XXXXX /s/ XXXXXX XXXXXX
------------------------------ ------------------------------------
Xxxxxxx Xxxxx, Vice President Xxxxxx Xxxxxx, Manager
Capitol Power, Inc. (Partner) Bayport Cogeneration Co., Inc. (Partner)
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TERMS AND CONDITIONS
LOAD AVAILABLE TO COGENERATORS
The amounts of load at each point of supply to TNP available for supply by
cogenerators is subject to the following:
a. Ratchet provisions in the tariffs of suppliers.
b. Minimum demand provisions for TNP at each delivery point in
accordance with the wholesale contracts of TNP's suppliers.
c. Provisions affecting TNP's purchase of cogenerated power in the
supplier tariffs as approved by the Public Utility Commission of
Texas and/or the Federal Energy Regulatory Commission.
d. Supply not in excess of the actual demands.
ENERGY PURCHASES
The purchase of cogenerated energy by TNP will be subject to the
following:
a. The first priority for delivery of energy will be extended to a
cogenerator who is contracted to supply firm capacity to TNP. The
amount of energy to be supplied by each cogenerator in this category
can be equal to the contracted capacity delivered at 100% load
factor, subject to TNP's load at the time.
b. The next priority for determination of the amounts of energy to be
supplied by a cogenerator will be in accordance with the price at
which the energy is offered and delivered by the cogenerator.
c. If the delivered prices for all energy offered in "b" above are
equal and all energy requirements cannot be satisfied through "a"
above, then the remaining energy requirements of TNP shall be
apportioned to the available cogenerators not offering firm
capacity, prorated on the total amount of energy offered by each
cogenerator.
d. Under no circumstances will TNP accept energy (KWH) into its system
in excess of that required to serve its loads, except for energy
which TNP has contracted to wheel to another utility and which the
other utility will take in a given hour. Arrangements between a
cogenerator and other utility, for said deliveries, are wholly the
responsibility of the cogenerator and the other utility and are in
no way the responsibility of TNP. When arrangements have been
completed for deliveries of energy between a cogenerator and another
utility, TNP shall provide the wheeling service subject to contract.
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STANDBY SERVICE TO TNP
TNP must make arrangements for Standby Service in order to accommodate
purchases of firm power from a cogenerator. If such conditions do not exist
through tariff provisions of wholesale suppliers to insure firm deliveries,
Standby Service will be negotiated if available, by and for TNP. Any cost
associated with functions necessary to maintain a firm supply of power to TNP
will be allocated as a adjustment to payments made to cogenerator requiring the
acquisition of such Standby Service.
The amount of Standby Service necessary shall be determined by TNP based
on unit sizes, diversity, scheduling, and evaluation of quality of service.
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AGREEMENT SUBSTITUTING A PARTY
This Agreement among Capitol Cogeneration Company, Ltd., a Texas limited
partnership ("CCC"), Clear Lake Cogeneration Limited Partnership, a Texas
limited partnership ("Purchaser"), and Texas-New Mexico Power Company, a Texas
corporation ("TNP").
W I T N E S S E T H :
WHEREAS, CCC and TNP are parties to an agreement for purchase of
electrical power and energy attached hereto, incorporated herein by this
reference and referred to as the "Power Agreement";
WHEREAS, Purchaser has executed an Asset Sale Agreement (the "Asset Sale
Agreement") dated as of April 7, 1988, for the purchase of substantially all the
assets of CCC, including the cogeneration facility located at Celanese Chemical
Company, Inc.'s Clear Lake Chemical Plant in Xxxxxx County, Texas, as more fully
described in the Asset Sale Agreement (the "Facility");
WHEREAS, contemporaneously with the closing of the Asset Sale Agreement,
CCC desires to transfer and assign to Purchaser all of CCC's rights, title and
interest in and to the Power Agreement;
WHEREAS, in connection with financing the acquisition contemplated by the
Asset Sale Agreement, Purchaser intends to assign collaterally all of its
rights, title and interest in and to the Power Agreement to one or more
financial institutions (individually or collectively, the "Lender") as security
for Purchaser's repayment of amounts advanced by such Lender to Purchaser; and
WHEREAS, Purchaser hereafter may wish to transfer and assign all of its
rights, title and interest in and to the Power Agreement to an affiliated
entity.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Subject to all the terms and conditions of this Agreement, Purchaser
is hereby substituted for CCC as a party to the Power Agreement.
2. From and after the date hereof, with respect to the Power Agreement,
Purchaser shall succeed to all of the rights of CCC, Purchaser shall
assume the obligations of CCC and TNP shall look solely to Purchaser
for any
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obligations and liabilities under the Power Agreement arising from
and after the date hereof. TNP shall look solely to CCC and its
general partners for any obligations and liabilities under the Power
Agreement arising prior to the date hereof or accruing during or
related to all periods prior to the date hereof.
3. TNP hereby agrees that it will not require any further consent on
its part to the collateral assignment by Purchaser from time to time
of all of Purchaser's rights, title and interest in and to the Power
Agreement to any lender. Upon foreclosure or sale in lieu of
foreclosure, TNP hereby agrees that TNP will not require any further
consent if the successor or assign by foreclosure or by purchase in
lieu of foreclosure assumes the obligations and liabilities of
purchaser under this Agreement and the Power Agreement, and all
rights under the Power Agreement, subject to the terms and
conditions of the Power Agreement and this Agreement (except the
provisions relating to TNP's consent which is satisfied by this
Agreement), shall inure to the benefit of such Lender or purchaser.
Any such subsequent assignment shall not be a novation.
4. TNP's consent to Purchaser's assignment of the Power Agreement to an
affiliate of Purchaser shall not be withheld if, to TNP's reasonable
satisfaction, (a) the assignee has the operational capability and
financial ability to perform Purchaser's obligations under the Power
Agreement and this Agreement and (b) said assignment will not result
in a change of the legal character or status of the Facility or the
Power Agreement or invalidate or terminate the Power Agreement or
impair TNP's rights under the Power Agreement and this Agreement.
5. TNP hereby confirms that (a) the Power Agreement attached hereto
constitutes the entire agreement of the parties thereto and is a
valid and binding obligation of TNP, enforceable, subject to any
subsequent determination by the Public Utilities Commission of Texas
or any other regulatory authority (all hereinafter referred to as
"Agency"), against TNP by Purchaser in accordance with its terms,
and (b) as of the date of this Agreement, to the best knowledge of
TNP, no party to the Power Agreement is in default thereunder and
there does not exist any event or condition which, with the passage
of time or giving of notice or both, would constitute such a
default.
6. The following statements represent TNP's interpretation of certain
of the contractual obligations under the Power Agreement with
respect to the Facility:
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(a) For an initial term ending August 30, 1994, TNP is obligated
to purchase from Purchaser, and Purchaser is obligated to sell
to TNP, that amount of capacity which TNP requires to avoid
purchasing 300 MW of peak capacity. TNP is obligated to
purchase from Purchaser, and Purchaser is obligated to sell to
TNP, the energy associated with the capacity as described in
this subparagraph (a).
(b) If Purchaser exercises its option in a written notice
delivered to TNP by Purchaser no later than August 30, 1991,
in accordance with the Power Agreement, after August 30, 1994,
TNP will be obligated to purchase and Purchaser will be
obligated to sell up to that amount of such capacity referred
to in subparagraph (a) above and associated energy as
described in subparagraph (a), above for such additional term
as may be specified in said notice.
(c) Because the calculation of avoided cost in the Power Agreement
only references the avoided cost of a supplying utility,
capacity supplied TNP by another cogenerator would not reduce
the avoided cost under the Power Agreement.
7. The parties hereto recognize that, pursuant to the Power Agreement
as consistently construed by the parties thereto, TNP is obligated
to pay 98% of the actual avoided cost as provided i the Power
Agreement but only to the extent such payments constitute reasonable
and necessary operating expenses of TNP which are allowed as a
concurrent recovery through the then existing rates of TNP, as
determined by an Agency.
8. The parties will not initiate any action in any judicial or
regulatory proceeding the direct purpose of which is to invalidate
or terminate the Power Agreement or this Agreement except in
accordance with their terms and the parties will not join a third
party in a proceeding before an Agency to invalidate or terminate
the Power Agreement or this Agreement or to determine the payments
by TNP under the Power Agreement not to constitute reasonable and
necessary operating expenses of TNP which are allowed as a
concurrent recovery through the then existing rates of TNP.
9. This Agreement shall be binding upon and inure to the benefit of the
permitted successors and assigns of the parties hereto.
10. CCC hereby transfers and assigns to Purchaser all of CCC's rights,
title and interest in and to the Power Agreement. CCC hereby
represents and warrants that as
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of the date hereof the Power Agreement is not pledged, mortgaged, or
otherwise collaterally assigned and the Power Agreement has not been
previously transferred or assigned (other than as collateral) to any
person.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the 3rd day of May, 1988.
CAPITOL COGENERATION COMPANY, LTD.
By its General Partners:
CAPITOL POWER, INC.
By: [SIG]
--------------------------------
Its: President
-------------------------------
BAYPORT COGENERATION, INC.
By: [SIG]
--------------------------------
Its: President
-------------------------------
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ XXXXX XXXXXXX
-----------------------------------
Xxxxx Xxxxxxx
Its: President
-----------------------------------
CLEAR LAKE COGENERATION COMPANY, LTD.
By its General Partner:
ENRON COGENERATION THREE COMPANY
By: [SIG]
_______________________________
Its: Senior Vice President
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I. SUPPLIER
Clear Lake Cogeneration Limited Partnership
II. AREA SERVED
Texas Gulf Coast (TNP's Southeast Division)
Texas City Point of Delivery with HL&P West Columbia Point of
Delivery with HL&P
III. TERM
Continuing Term - through August 31, 2004.
IV. CONDITIONS OF SALE
Through August 31, 1994
TNP may purchase capacity up to 325 MW in any month, with
Clear Lake committed to making 325 MW available to TNP at all
times. Clear Lake Cogeneration may offer additional capacity
for purchase as it is available. For calendar years 1992 and
1993, TNP must purchase a minimum of 3380 MW annually. For the
period January 1, 1994 to August 31, 1994, T NP must purchase
a minimum of 2253 MW. There is no minimum energy purchase
commitment.
August 31, 1994 through August 31, 2004
TNP may purchase capacity up to 250 MW in any month. Clear
Lake Cogeneration may offer additional capacity for purchase
as it is available. Beginning August 31, 1994, TNP must
purchase a minimum of 2400 MW annually. There is no minimum
purchase commitment.
TNP and Clear Lake Cogeneration have executed a scheduling
agreement, to become effective January 1, 1993, which allows for
100% of all TNP One generated power scheduled for delivery to the
Texas City and West Columbia points of delivery to be credited to
actual loads before purchases from Clear Lake are determined.
Purchases from this supplier are backed up with standby service
purchased from HL&P.
In the event of the complete failure of this supplier to provide
service, TNP has access to a standby pool of 416 MW, in addition to
contractual
November 9, 1992
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Clear Lake Cogeneration Limited Partnership - continued
arrangements in place with HL&P for up to 300 MW of firm service
which would replace lost deliveries from Clear Lake.
V. PRICE AND PAYMENT
Demand and energy are priced at 98% of Houston Lighting and Power's
wholesale rate schedule TNP.
Payments to Clear Lake for capacity and energy are determined by the
actual avoidance of purchases which would have otherwise been made
from HL&P.
Under the terms and conditions of the purchase agreements between
TNP and Clear Lake, the payments made by TNP to Clear Lake shall not
exceed in any event the amount of amounts constituting reasonable
and necessary operating expenses of TNP that are allowed as a
recovery through the rates of TNP, as determined by the Public
Utility Commission of Texas.
VI. FUEL SUPPLY
Primary - Natural Gas Standby
Standby - Oil
Clear Lake Cogeneration operates three 100 MW gas turbines and two
steam turbines with a combined output of 75 MW, for a total
dependable capacity of approximately 375 MW.
VII. APPROXIMATE PERCENTAGE OF TEXAS ENERGY REQUIREMENTS SUPPLIED FOR 1991 -
35% (source: 1991 TNP Form 10-K)
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[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
May 30, 1990
Xx. Xxxxx X. Xxxxxxxx
Vice President Corporate Development,
Finance and Treasurer
Enron/Dominion Cogen Corp.
00000 Xxxxxxx Xxxx Xxxx, Xx. 000
Xxx Xxxxxxxxx, Xxxxx 00000
Re: No. 89-041946; Clear Lake Cogeneration Limited Partnership v. TNP
Enterprises, Inc., Texas-New Mexico Power Company, Bayport
Cogeneration Inc., Capitol Power, Inc., and Capitol Cogeneration,
Company, Ltd.; In the 000xx Xxxxxxxx Xxxxxxxx Xxxxx xx Xxxxxx
Xxxxxx, Xxxxx
Dear Xxxxx:
This Letter Agreement, entered into on the 30th day of May, 1990, between
Clear Lake Cogeneration Limited Partnership ("Clear Lake") and Texas-New Mexico
Power Company ("TNP") (hereinafter, "the Parties") is for the purpose of
settling the claims and controversies between the Parties regarding the
interpretation of (1) the August 31, 1983 Agreement for the Purchase of
Electrical Power and Energy Between Capitol Cogeneration Company, Ltd. and
Texas-New Mexico Power Company (the "Power Agreement") and the Letter Agreement
dated August 14, 1986, between Capitol Power, Inc., Bayport Cogeneration Co.,
Inc. and Texas-New Mexico Power Company (the "August 14, 1986 Letter
Agreement"); and (2) the Agreement Substituting A Party among Capitol
Cogeneration Company, Ltd., Clear Lake Cogeneration Limited Partnership and
Texas-New Mexico Power Company, dated May 3, 1988 (the "Substitution
Agreement"), and made the basis of the lawsuit. In consideration of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree to
the following:
1. Clarification of Article 1 of the Power Agreement. During the term the
Power Agreement is in force and effect, including any renewal and extension
pursuant to the Power Agreement, the Substitution Agreement, the August 14, 1986
Letter Agreement or any other mutual agreement between the parties, "the cost
which XXX
00
Xx. Xxxxx X. Xxxxxxxx
May 30, 1990
Page 2
actually avoids from a supplying utility or utilities by purchasing power from
CCC [now Clear Lake] as an alternative to taking the same amount of power supply
from the electric utility or utilities which would otherwise supply the
wholesale power to TNP" shall be deemed to be the Houston Lighting & Power
Company ("HL&P") standard wholesale rate, which is designed to recover HL&P's
fully embedded cost of service, provided that such HL&P standard wholesale rate
for capacity and energy, during the accounting month in which power was sold by
Clear Lake to TNP, was available to TNP under an existing HL&P/TNP power
agreement and tariff in effect and approved by the Texas Public Utility
Commission ("TPUC"). In the event that HL&P is not such a supplier to TNP of
wholesale power at a rate designed to recover HL&P's fully embedded cost of
service, then the "supplying utility" for the purposes of determining "the cost
which TNP actually avoids" shall be determined pursuant to the following
criteria:
(i) the supplying utility's wholesale power rate must be designed to
recover its fully embedded cost of wholesale service;
(ii) the wholesale rate during the accounting month in which power was
sold by Clear Lake to TNP was available to TNP under an existing
power agreement between TNP and the supplying utility and a tariff
in effect and approved by TPUC; and
(iii) Clear Lake power must enable TNP to actually avoid the purchase of
that amount of power of the supplying utility for which Clear Lake
is being paid.
TU Electric Company ("TUEC") shall be deemed to be the initial replacement for
HL&P as the supplying utility for as long as it meets the above criteria. At
such time as TUEC fails to meet the above criteria, then the utility that meets
the above criteria shall be the "supplying utility." TNP represents to Clear
Lake that it has entered into a contract with HL&P for the purchase of wholesale
power at rates designed to recover HL&P's fully embedded cost of providing
wholesale service, with a ten year term from July 13, 1991 through July 12,
2001, subject to approval by the TPUC. The rate for Supplemental KVA found by
the TPUC to be applicable to that contract and tariff will not be include in the
standard wholesale rate used to determine "the cost which TNP actually avoids."
2. Clarification of Article 1 of the Power Agreement, Points 1 and 3 of
the August 14, 1986 Letter Agreement and Paragraph 6(a) of the Substitution
Agreement. Clear Lake shall tender and be compensated for by TNP, and shall
supply if requested by TNP, annual capacity to be no less than 2990 MW for
calendar
25
Xx. Xxxxx X. Xxxxxxxx
May 30, 1990
Page 3
years 1990 and 1991. For calendar years 1992 and 1993, Clear Lake shall
tender and be compensated for by TNP, and shall supply if requested by TNP,
annual capacity to be no less than 3380 MW. For the period from January 1, 1994
to August 31, 1994, Clear Lake shall tender and be compensated for by TNP, and
shall supply if requested by TNP, capacity to be no less than 2253 MW. No other
agreement between TNP and other utilities or Qualifying Facilities shall caus
Clear Lake's capacity payments to be reduced under this agreement. In the event
TNP purchases capacity because of Clear Lake's failure to perform and as a
result TNP incurs additional purchased capacity and/or energy expenses, then
Clear Lake shall reimburse TNP for such additional expenses so incurred and
actually paid. TNP has no right to request more than 325 MW, with appropriate
reductions as agreed between the parties for scheduled maintenance. Clear Lake
has the option to supply in excess of 325 MW, if requested by TNP, and if
available from Clear Lake. Clear Lake shall be obligated to use all reasonable
efforts to make 325 MW of capacity available to TNP when such is requested.
3. Clarification of Point 1 of the August 14, 1986 Letter Agreement.
Clear Lake shall reimburse TNP's direct cost for 125 MW of standby capacity,
which amount is adequate to standby clear Lake's single largest generating unit.
Clear Lake shall bear the risk of reduction in payments from TNP to clear Lake
as a result of ratchet charges incurred by TNP for power purchased from a
utility or utilities in the event the 125 MW of standby capacity should not be
sufficient to cover any shortage of power deliveries from Clear Lake to TNP. TNP
agrees to obtain, and clear Lake will pay for, additional capacity through ERCOT
if such is requested by Clear Lake, and if such additional capacity can be
obtained.
4. Clarification of Article 14 of the Power Agreement, Point 3 of the
August 14, 1986 Letter Agreement, and Paragraph 6(b) of the Substitution
Agreement. The Power Agreement and the Substitution Agreement shall be extended
beyond the primary period at the sole option of Clear Lake, for such time as
Clear Lake is able to provide power to TNP. Provided clear Lake gives the
requisite notice to TNP required in Paragraph 6(b) of the Substitution
Agreement, the parties agree that from and after August 31, 1994, Clear Lake
shall tender and be compensated for by TNP, and shall supply if requested by
TNP, annual capacity to be not less than 2400 MW per year on a load profile
similar to that followed in previous years and at the rate determined in
accordance with Paragraph 1 of this Letter Agreement. However, this guaranteed
minimum purchase of 3400 MW per year will not extend beyond August 31, 1997.
5. It is understood and agreed that TNP, to meet its demand, will
schedule Clear Lake capacity subordinate only to TNP One. TNP also agrees to
allow the existing contractual arrangement between TNP and the Texas Municipal
Power Authority ("TMPA") to expire and
26
Xx. Xxxxx X. Xxxxxxxx
May 30, 1990
Page 4
that TNP will allow Clear Lake the opportunity to service such energy and
capacity previously served by TMPA. TNP will not execute any new supply
agreements for supply to TNP's Southeast Division before January 1, 1992 for
supply after August 31, 1994 without first providing Clear Lake the opportunity
to enter into a contract on equivalent terms for said supply.
6. The provisions of the Power Agreement and Substitution Agreement, as
hereby clarified, are ratified and confirmed and shall remain in full force and
effect, including, but not limited to the provision that, notwithstanding the
provisions of this Letter Agreement, the payments made by TNP to Clear Lake
shall not exceed in any event the amount or amounts constituting reasonable and
necessary operating expenses of TNP that are allowed as a recovery through the
rates of TNP, as determined by the Texas Public Utility Commission.
No party to this Letter Agreement shall release any information to a third
party without the agreement of the other party concerning this settlement, its
terms and conditions, or the fact that it has occurred, except (1) as expressly
required by law including, but not limited to, applicable security laws and
regulations or regulatory authorities or as a party may deem in good faith to be
required for governmental reporting purposes; (2) as ordered by a regulatory
agency or a court of competent jurisdiction; (3) to prospective lenders and
financial consultants; and (4) as expressly agreed to in advance in writing by
the other party to this Letter Agreement.
This Letter Agreement shall be effective from the date of execution
forward, and shall be binding upon and inure to the benefit of the successors
and assignees of the Parties.
Texas-New Mexico Power Company
By: /s/ X. X. Xxxxxxxx
------------------------------------
X. X. Xxxxxxxx
Sector Vice President
Revenue Production
AGREED:
Enron/Dominion Cogen Corp. on its own
behalf and on behalf of its affiliates
and subsidiaries.
By: /s/ XXXXX X. XXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxx
Vice President Corporate Development,
Finance and Treasurer
27
August 28, 1991
Xx. X. X. Xxxxxxxx
Sector Vice President,
Revenue Production
Texas-New Mexico Power Company
0000 Xxxxxxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Re: August 31, 1983 Agreement for the Purchase of Electrical Power and
Energy Between Clear Lake Cogeneration, Limited Partnership and
Texas-New Mexico Power Company (the "Power Agreement"), as Clarified
by Letter Agreements Dated August 14, 1986, May 3, 1988 and May 30,
1990
Dear Xxxx:
This Letter Agreement, entered into and effective as of the 28th day of August,
1991, between Clear Lake Cogeneration, Limited Partnership ("Clear Lake") and
Texas-New Mexico Power Company ("TNP") is to memorialize an agreement that Clear
Lake and TNP have reached regarding Clear Lake's option to extend the Power
Agreement beyond its primary term.
Article 14 of the Power Agreement states that the agreement shall extend for a
primary term of eleven years from the date thereof (the "Primary Term"). By
letter agreement dated August 14, 1986, Capitol Cogeneration Company Limited
("CCC") (Clear Lake's predecessor in interest), by and through its partners,
Capitol Power, Inc. and Bayport Cogeneration Co., Inc. and TNP clarified certain
terms of the Power Agreement. Among other things, Point 3 of the Letter
Agreement states that for capacity that the seller (now Clear Lake) wishes to
sell to TNP after the expiration of the Primary Term of the Power Agreement, the
parties will enter into a written agreement regarding the sale of such capacity
"no later than (3) three years before the end of the [P]rimary [T]erm" (the
"Option Date").
28
Xx. X. X. Xxxxxxxx
August 28, 1991
Page 2
Paragraph 6(b) of the May 3, 1988 Agreement Substituting a Party between CCC,
Clear Lake and TNP (the "Substitution Agreement") states that if Clear Lake
desires to exercise its option to extend the Power Agreement, it must deliver
TNP written notice of its intent no later than August 30, 1991.
In a letter agreement dated May 30, 1990 between Clear Lake and TNP, which was
executed for the purpose of settling claims and controversies between Clear Lake
and TNP regarding the interpretation of the Power Agreement and the
aforementioned letter agreements, Clear Lake and TNP further defined TNP's
purchase obligations beyond the Primary Term of the agreement in the event Clear
Lake, at its sole option, gives TNP the notice described in Paragraph 6(b) of
the Substitution Agreement.
Recently, Clear Lake and TNP agreed that it would be to the mutual benefit of
both parties to change the Option Date to two years before the end of the
Primary Term. To clarify Article 14 of the Power Agreement, Point 3 of the
August 14, 1986 Letter Agreement, Paragraph 6(b) of the May 3, 1988 Substitution
Agreement and Paragraph 4 of the May 30, 1990 Letter Agreement, and in
consideration of the mutual benefits that will result to the parties by
extending Clear Lake's Option Date, Clear Lake and TNP agree to the following:
the Power Agreement and the Substitution Agreement shall be extended beyond the
Primary Term at the sole option of Clear Lake, and under the terms and
conditions set forth in Paragraph 4 of the May 30, 1990 Letter Agreement,
provided that Clear Lake gives TNP written notice no later than August 30, 1992.
This Letter Agreement shall be binding upon and inure to the benefit of the
successors and assignees of the parties.
Enron/Dominion Cogen Corp., on
its own behalf and on behalf of
its affiliates and subsidiaries
By: /s/ XXXXX X. XXXXXXX
------------------------------------
Xxxxx X. Xxxxxxx
Vice President and
Chief Financial Officer
29
Xx. X. X. Xxxxxxxx
August 28, 1991
Page 3
AGREED:
Texas-New Mexico Power Company
By: /s/ X. X. XXXXXXXX
-----------------------------
X. X. Xxxxxxxx
Sector Vice President
Revenue Production
30
[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
August 31, 1992
Xx. XxXxxxx Xxxxxxx
Vice President, Operations
Enron Power Corp.
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Dear De Xxxxx:
Pursuant to our conversation today, TNP and Clear Lake (the "Parties")
agree and recognize that TNP is in receipt of a binding extension of the Power
Agreement pursuant to paragraph 6(b) of the Substitution Agreement dated May 3,
1988, as amended by the Letter Agreement dated August 28, 1991. It is hereby
agreed by both parties that it is the intent that TNP One - Units 1 and 2 will
be baseload units (Unit 1 = 146 MW x 8760 hrs. x 87.5% CF and Xxxx 0 = 151.6 MW
x 8760 hrs. x 87.5% CF) in TNP's daily and annual resource schedules. In order
to accomplish said baseload operation and to increase the efficiency of the TNP
One and Clear Lake Cogen generation facilities, it is hereby agreed that the
parties will enter into detailed negotiations to be completed by September 15,
1992. The purpose of the negotiations will be the development of written
procedures to define daily and annual scheduling methodologies and practices to
accomplish the intent of the Parties. Such methodology and practices to be
reduced to a letter agreement between the Parties. However, the terms and
conditions of the intended letter agreement, nor any language contained herein,
shall affect the August 31, 1992 extension of the Power Agreement.
It is recognized that Clear Lake desires to have annually defined and
guaranteed purchase minimums in the amount of 2400 MW/yr. In order for TNP to
accommodate Clear Lake's desire to sell such annual capacity, the
afore-referenced scheduling practices and procedures are necessary. The
afore-referenced practices and procedures will require a written agreement
similar to the attached sample which attempts to describe the intent of the
Parties. The attached is not binding on either of the Parties but used for
illustrative purposes only.
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ X. X. XXXXXXXX
-----------------------------
X. X. Xxxxxxxx
Sector Vice President
Revenue Production
AGREED AND ACCEPTED
By: /s/ XXXXXXX X. XXXXXXX
--------------------------
XxXxxxx X. Xxxxxxx
ENRON DOMINION COGEN CORP.
On Its Behalf and the Behalf of Its
Affiliates and Subsidiaries
31
[CLEAR LAKE LETTERHEAD]
August 31, 1992
Xx. X. X. Xxxxxxxx
Sector Vice President,
Revenue Production
Texas-New Mexico Power Company
0000 Xxxxxxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Re: August 31, 1983 Agreement for the Purchase of Electrical Power and
Energy Between Clear Lake Cogeneration, Limited Partnership and
Texas-New Mexico Power Company (the "Power Agreement"), as Clarified
by Letter Agreements dated August 14, 1986, May 3, 1988, May 30,
1990 and August 28, 1991
Dear Xxxx:
This Letter Agreement, entered into as of the 31st day of August, 1992,
between Clear Lake Cogeneration, Limited Partnership ("Clear Lake") and
Texas-New Mexico Power Company ("TNP") and effective as of August 31, 1994, is
to affirm the August 31, 1983 Agreement for the Purchase of Electrical Power and
Energy between Capitol Cogeneration Company, Ltd. and Texas-New Mexico Power
Company, as clarified by Letter Agreement dated August 14, 1986, Agreement
Substituting a Party dated May 3, 1988, Letter Agreement dated May 30, 1990 and
Letter Agreement dated August 28, 1991, altogether known and considered as the
"Power Agreement" and to extend the terms thereof through August 30, 2004.
Pursuant to Paragraph 6(b) of the May 3, 1988 Agreement Substituting a
Party, as amended by the Letter Agreement dated August 28, 1991, Clear Lake
hereby gives TNP notice of the extension of the Power Agreement through August
30, 2004, upon the terms and conditions set forth therein as clarified from time
to time.
32
Xx. X. X. Xxxxxxxx
August 31, 1992
Page 2
In consideration of the mutual covenants set forth within the Power
Agreement, and other good and valuable consideration to be received thereunder,
the parties hereto agree to the following:
1. The extension of the Power Agreement by Clear Lake is appropriate
under the terms of such Power Agreement and the term of the
extension shall be from August 31, 1994, through August 30, 2004.
2. The terms and conditions of the Power Agreement shall remain in full
force and effect for the term of the extension except for such
conditions that by their own language expire. The parties hereto
agree that the term "Qualifying Facilities" as used in the Power
Agreement shall be deemed to include other suppliers of wholesale
electric capacity and associated energy (e.g., independent power
producers, exempt wholesale generators, etc.).
3. Pursuant to Exhibit A of the Power Agreement and by Point 1 of the
May 30, 1990 Letter Agreement clarifying the Power Agreement, Clear
Lake shall tender and be compensated for by TNP, and shall supply if
requested by TNP, annual capacity on a load profile similar to that
followed in previous years. This annual capacity and energy
scheduling of TNP's resources for the term of this extension will be
addressed in a separate agreement to be completed by September 15,
1992.
4. TNP hereby releases the right to request in excess of 250 MW of
instantaneous capacity. Clear Lake shall use all reasonable efforts
to make 250 MW of capacity available to TNP if such is requested.
Clear Lake has the option, but not the obligation, to supply in
excess of 250 MW, if requested by TNP and if available from Clear
Lake. Compensation for all capacity and energy supplied by Clear
Lake in excess of the 250 MW limit shall be paid to clear Lake by
TNP pursuant to Exhibit A of the Power Agreement and by Point 1 of
the May 30, 1990 Letter Agreement clarifying the Power Agreement.
33
Xx. X. X. Xxxxxxxx
August 31, 1992
Page 3
5. The parties agree to cooperate in reasonable efforts to reduce the
cost of standby capacity provided for Clear Lake.
6. TNP will not enter into any new agreements for supply to TNP's
Southeast Division before August 31, 2002, for delivery after August
31, 2004, without first providing Clear Lake the opportunity to
enter into a contract on equivalent terms for said supply.
Enron/Dominion Cogen Corp., on its
own behalf and on behalf of its
affiliates and subsidiaries
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------
XxXxxxx X. Xxxxxxx
Vice President, Operations
AGREED:
Texas-New Mexico Power Company,
on its own behalf and on behalf of
its affiliates and subsidiaries
By: /s/ X. X. XXXXXXXX
-----------------------------
X. X. Xxxxxxxx
Sector Vice President
Revenue Production
34
[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
September 15, 1992
Xx. XxXxxxx Xxxxxxx
Vice President, Operations
Enron Power Corp.
000 Xxxx Xx.
3 Xxxxx Center - Room 400
Xxxxxxx, Xxxxx 00000
Dear Xx. Xxxxxxx:
Enclosed please find one executed original of the Scheduling Agreement.
Sincerely yours,
/s/ XXXXX XXXX
Xxxxx Xxxx
Supervisor - Contracts
EH:lm
Enclosure
35
[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
September 15, 1992
Xx. XxXxxxx X. Xxxxxxx
Vice President, Operations
ENRON POWER CORP.
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Re: Notice of Extension, Dated August 31, 1992, to Extend the Terms of the
August 31, 1983 Agreement for the Purchase of electrical Power and Energy
Between Clear Lake Cogeneration, Limited Partnership and Texas-New Mexico
Power Company as Clarified by Letter Agreements Dated August 14, 1986, May
3, 1988, May 30, 1990, and August 28, 1991 (altogether, the "Power
Agreement")
Dear XxXxxxx:
Pursuant to Paragraph 3 of the Notice of Extension dated August 31, 1992,
and in recognition of the Letter of Intent dated August 31, 1992 (Attachment A),
this Scheduling Agreement, entered into as of the 15th day of September, 1992,
between Clear Lake Cogeneration, Limited Partnership ("Clear Lake"), and
Texas-New Mexico Power Company ("TNP") (hereinafter, "the Parties") is to
clarify the following: 1) the annual capacity which Clear Lake shall tender and
be compensated for by TNP, and shall supply if requested by TNP; and 2) the
methodologies employed by the Parties to schedule the generation of the TNP One
and Clear Lake facilities, and to enhance the efficient use of the generation
facilities of both Clear Lake and TNP. In recognition of the foregoing, the
Parties agree to the following:
1. TNP shall schedule power from Clear Lake as needed to meet forecasted
hourly loads at TNP's West Columbia and Bacliff points of delivery ("PODs") with
Houston Lighting & Power ("HL&P") not met by power scheduled from TNP One. In
determining the amount of power to be scheduled hourly from Clear Lake, TNP may
include an amount of Clear Lake power to assist in meeting unanticipated load
increases at the two PODs. This amount of Clear Lake power may crate some
quantity of TNP One power which is not credited to actual load.
2. The Parties recognize that the resource scheduling methodology described
above in Paragraph 1 may increase the amount of TNP One energy which will not be
credited to
36
September 14, 1992
Xx. XxXxxxx Xxxxxxx
Enron Power Corp.
Page 2
actual loads when calculated strictly in accordance with Schedule 3
of the Agreement for Utility Services between TNP and HL&P. In consideration for
scheduling of resources as described above in Paragraph 1, the calculation of
the amount of energy purchased by TNP from Clear Lake shall incorporate the
amount of any energy generated at TNP One and scheduled for delivery at TNP's
West Columbia and Bacliff PODs with HL&P, which will include any TNP One energy
not credited to actual loads by HL&P at the West Columbia and Bacliff PODs due
to the sum of all scheduled resources exceeding actual loads at the PODs. The
amount of TNP One energy not credited by HL&P but incorporated in the
calculation of purchases of energy from Clear Lake shall be limited in
accordance with Paragraph 3 below.
3. Annual Allowable Energy Exceptions for TNP One, for use in calculating
energy purchases by TNP from Clear Lake shall be determined as described below:
a) For the purposes of this Scheduling Agreement, the term "Annual
Allowable Energy Exceptions" shall be defined as the maximum
quantity of TNP One energy, projected on an annual basis as
described below in points 3b and 3c, which may be used in addition
to the amount of energy generated at TNP One, scheduled and actually
delivered at TNP's West Columbia and Bacliff PODs with HL&P.
b) From the effective date of this Scheduling Agreement to January 1,
1995, Annual Allowable Energy Exceptions for TNP One shall be
156,103,200 KWH per year, which is the difference between annual
baseload operation at TNP One and the defined minimum annual energy
production at TNP One, as calculated and shown in Attachment B.
c) From and after January 1, 1995, Annual Allowable Energy Exceptions
for TNP One shall be 195,523,200 KWH, which is the difference
between annual baseload operation at TNP One and the defined minimum
annual energy production at TNP One, as calculated and shown in
Attachment B.
4. The quantities of TNP One energy used in calculating monthly energy
purchases from Clear Lake shall be determined by TNP from monthly billing data
received from HL&P. The Parties understand and agree that the monthly billing
data prepared by HL&P and provided to TNP contains an interval by interval
calculation of TNP One "exceptions" for both the West Columbia and Bacliff PODS.
The Parties further understand and agree that the "exceptions" represent the
quantity of TNP One power which was generated, scheduled for delivery, and
delivered to the respective POD, but not actually credited to load at the POD
due to the sum of all scheduled resources exceeding actual load at the POD.
37
September 14, 1992
Xx. XxXxxxx Xxxxxxx
Enron Power Corp.
Page 3
TNP shall, on a monthly basis, include as TNP One energy actual power
generated at TNP One which is scheduled for delivery at TNP's West Columbia and
Bacliff PODs with HL&P, which will include any TNP One energy which is
identified in the billing data received from HL&P, as TNP One "exceptions" as
defined within this Paragraph 4. TNP One "exceptions" which occur during "Period
1 hours" shall not be included in the calculation of total TNP One energy to be
credited to total TNP load at TNP's West Columbia and Bacliff PODs as described
in this Paragraph 4. "Period 1 hours" shall be defined as follows: 1) for the
months of June to September, hour-ending 0100 to hour ending 0700; and 2) for
all remaining months, hour-ending 2400 to hour-ending 0500. If, at any time
during a given calendar year, the cumulative total of actual monthly TNP One
"exceptions" used in the determination of total TNP One energy to be credited to
TNP's PODs exceeds the annual allowable Energy Exceptions as defined above in
Paragraph 3, for the balance of that calendar year any further TNP One
"exceptions" identified in billing data received from HL&P shall not be used in
the determination of total TNP One energy to be credited to TNP's PODs.
Total TNP One energy, as described in the preceding paragraph, including
any applicable TNP One "exceptions" as defined previously shall be credited
against total metered load at TNP's West Columbia and Bacliff PODs as provided
in the monthly HL&P billing data for each POD. The residual load remaining after
the crediting of TNP One power as described above shall be used in the
determination of the "S(1)" component of the "S(1) - S(2)" billing formula. TNP
shall provide Clear Lake with sufficient documentation to verify the calculation
of TNP One energy quantities as described in this Scheduling Agreement. Further,
TNP shall provide Clear Lake with copies of monthly capacity factor information
as reported to the Public Utility Commission of Texas.
5. In recognition of the terms and conditions of this Scheduling Agreement,
and pursuant to Exhibit A to the Power Agreement, and Paragraph 3 of the Notice
of Extension, from August 31, 1994, Clear Lake shall tender and be compensated
for by TNP, and shall supply if requested by TNP, annual capacity of no less tan
2400 MVA, on a load profile similar to that followed in previous years.
6. The term of this Scheduling Agreement shall be from January 1, 1993 to
August 31, 2004.
7. The Parties acknowledge that forecasting daily and monthly loads entails
the prediction of local weather patterns, load patterns, etc., and therefore the
results of scheduling resources in the manner described above in Paragraph 1
cannot be quantified and guaranteed by either Party. Further, the Parties
recognize that nothing contained in this Scheduling Agreement shall prevent or
limit TNP's ability to schedule its available resources
38
September 14, 1992
Xx. XxXxxxx Xxxxxxx
Enron Power Corp.
Page 4
to provide least cost electric service to its retail customers.
8. The Parties recognize that the determination of Annual Allowable Energy
Exceptions as presented in Attachment B reflect the contracted wheeling
quantities for TNP One generation at the time of execution of this Scheduling
Agreement. Following the execution of this Scheduling Agreement, Attachment B
shall be amended as necessary to reflect the then-current quantities of TNP One
generation available for schedule and delivery to TNP's West Columbia and
Bacliff PODs with HL&P.
9. The Parties agree that this Scheduling Agreement shall be amended as
necessary to reflect any amendments, or revisions which may be made to Schedule
3 of the Agreement for Utility Services between TNP and HL&P to affect the order
in which scheduled resources are applied by HL&P to actual load. Such amendments
to this Scheduling Agreement shall be completed within thirty (30) days of the
effective date of the amendment or revision to Schedule 3.
Texas-New Mexico Power Company,
on its own behalf and on behalf of
its affiliates and subsidiaries
By: /s/ X. X. XXXXXXXX
------------------------------
X. X. Xxxxxxxx
Sector Vice President -
Revenue Production
Agreed and Accepted:
Enron/Dominion Cogen Corp.
on its own behalf and on behalf of
its affiliates and subsidiaries
By: /s/ XXXXXXX X. XXXXXXX
----------------------------
XxXxxxx X. Xxxxxxx
Vice President, Operations
39
ATTACHMENT A
40
[TEXAS-NEW MEXICO POWER COMPANY LETTERHEAD]
August 31, 1992
Xx. XxXxxxx Xxxxxxx
Vice President, Operations
Enron Power Corp.
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Dear XxXxxxx:
Pursuant to our conversation today, TNP and Clear Lake (the "Parties")
agree and recognize that TNP is in receipt of a binding extension of the Power
Agreement pursuant to paragraph 6(b) of the Substitution Agreement dated May 3,
1988, as amended by the Letter Agreement dated August 28, 1991. It is hereby
agreed by both parties that it is the intent that TNP One - Units 1 and 2 will
be baseload units (Unit 1 = 146 MW x 8760 hrs. x 87.5% CF and Xxxx 0 = 151.6 MW
x 8760 hrs. x 87.5% CF) in TNP's daily and annual resource schedules. In order
to accomplish said baseload operation and to increase the efficiency of the TNP
One and Clear Lake Cogen generation facilities, it is hereby agreed that the
parties will enter into detailed negotiations to be completed by September 15,
1992. The purpose of the negotiations will be the development of written
procedures to define daily and annual scheduling methodologies and practices to
accomplish the intent of the Parties. Such methodology and practices to be
reduced to a letter agreement between the Parties. However, the terms and
conditions of the intended letter agreement, nor any language contained herein,
shall affect the August 31, 1992 extension of the Power Agreement.
It is recognized that Clear Lake desires to have annually defined and
guaranteed purchase minimums in the amount of 2400 MW/yr. In order for TNP to
accommodate Clear Lake's desire to sell such annual capacity, the
afore-referenced scheduling practices and procedures are necessary. The
afore-referenced practices and procedures will require a written agreement
similar to the attached sample which attempts to describe the intent of the
Parties. The attached is not binding on either of the Parties but used for
illustrative purposes only.
TEXAS-NEW MEXICO POWER COMPANY
By: /s/ X. X. XXXXXXXX
------------------------------------
X. X. Xxxxxxxx
Sector Vice President
Revenue Production
AGREED AND ACCEPTED
By: /s/ XXXXXXX X. XXXXXXX
----------------------------
XxXxxxx X. Xxxxxxx
ENRON DOMINION COGEN CORP.
On Its Behalf and the Behalf of Its
Affiliates and Subsidiaries
41
ATTACHMENT B
42
DETERMINATION OF ANNUAL ALLOWABLE ENERGY EXCEPTIONS
a) From the effective date of this Scheduling Agreement to January 1, 1995,
annual baseload operation of TNP One, Units 1 and 2, for purposes of this
Scheduling Agreement, shall be defined as follows:
Xxxx 0 Net Output = 146,000 KW
Unit 2 Net Output = 151,600 KW
Schedule to TUEC = 60,000 KW
Annual Target Capacity Factor = 87.5 %
1. Target Annual Baseload KWH:
((146,000 KW + 151,600 KW) - 60,000 KW) x 8760 Hrs. x 87.5 % CF = 1,821,204,000 KWH
2. Defined Minimum Annual Energy Production (based on 80 % target CF):
((146,000 KW + 151,600 KW) - 60,000 KW) x 8760 Hrs. x 80.0 % CF = 1,665,100,800 KWH
3. Annual Allowable Energy Exceptions:
Target annual baseload operation (line 1) = 1,821,204,000 KWH
Minimum Annual Energy Production (line 2) = 1,665,100,800 KWH
Annual Allowable Energy Exceptions = 156,103,200 KWH
b) From and after January 1, 1995, annual baseload operation of TNP One,
Units 1 and 2, for purposes of this Scheduling Agreement, shall be defined
as follows:
Xxxx 0 Net Output = 146,000 KW
Unit 2 Net Output = 151,600 KW
Schedule to TUEC = 0 KW
Annual Target Capacity Factor = 87.5 %
4. Target Annual Baseload KWH:
(146,000 KW + 151,600 KW) x 8760 Hrs. x 87.5 % CF = 2,281,104,000 KWH
5. Defined Minimum Annual Energy Production (based on 80 % target CF):
(146,000 KW + 151,600 KW) x 8760 Hrs. x 80.0 % CF = 2,085,580,800 KWH
6. Annual Allowable Energy Exceptions:
Target annual baseload operation (line 4) = 2,281,104,000 KWH
Minimum Annual Energy Production (line 5) = 2,085,580,800 KWH
Annual Allowable Energy Exceptions = 195,523,200 KWH