Exhibit 10.9
Execution Copy
1996 AMENDATORY AGREEMENT
This Agreement, dated as of the 4th day of December, 1996, is entered into
by and between Connecticut Yankee Atomic Power Company ("Connecticut Yankee" or
"Seller") and The Connecticut Light and Power Company ("Purchaser").
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as follows:
1. Basic Understandings
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Connecticut Yankee was organized in 1962 to provide for the supply of
power to its sponsoring utility companies, including the Purchaser
(collectively the "Purchasers"). It constructed a nuclear electric generating
unit, having a net capability of approximately 582 megawatts electric (the
"Unit") at a site in Haddam Neck, Connecticut. Connecticut Yankee was issued
a full-term, Facility Operating License for the Unit by the Nuclear Regulatory
Commission (which, together with any successor agencies, is hereafter called
the "NRC"), which license is now stated to expire on June 29, 2007. The Unit
has been in commercial operation since January 1, 1968.
The Unit was conceived to supply economic power on a cost of service
formula basis to the Purchasers. Connecticut Yankee and the Purchaser are
arties to a Power Contract dated as of July 1, 1964 ("Initial Power Contract").
Pursuant to the Initial Power Contract and other similar contracts
(collectively, the "Initial Power Contracts") between Connecticut Yankee and
the other Purchasers, Connecticut Yankee contracted to supply to the Purchasers
all of the capacity and electric energy available from the Unit for a term of
thirty (30) years following January 1, 1968.
Connecticut Yankee an the Purchaser are also parties to an
Additional Power Contract, dated as of April 30, 1984 ("Additional Power
Contract"). The Additional Power Contract and other similar contracts
(collectively, the "Additional Power Contracts") between Connecticut Yankee
and the other Purchasers, Connecticut Yankee contracted to supply to the
Purchasers all of the capacity and electric energy available from the Unit
for a term of thirty (30) years following January 1, 1968.
Connecticut Yankee and the Purchaser are also parties to an
Additional Power Contract, dated as of April 30, 1984 ("Additional Power
Contract"). The Additional Power Contract and other similar contracts
(collectively, the "Additional Power Contracts") between Connecticut Yankee
and the other Purchasers provide for an operative term stated to commence
on January 1, 1998 (when the Initial Power Contracts terminate) and extending
until a date (the "End of Term Date") which is 30 days after the later of the
date on which the last of the financial obligations of Connecticut Yankee has
been extinguished or the date on which Connecticut Yankee is finally relieved
of any obligations under the last of the licenses (operating or possessory)
which it holds, or hereafter receives, from the NRC with respect to the Unit.
The Additional Power Contracts also provide, in the event of their earlier
cancellation, for the survival of the decommissioning cost obligation and for
the applicable provisions thereof to remain in effect to permit final xxxxxxxx
of costs incurred prior to such cancellation.
Pursuant to the Power Contract and the Additional Power Contract, the
Purchaser is entitled and obligated to take its entitlement percentage of the
capacity and net electrical output of the Unit during the service life of the
Unit and is obligated to pay therefore monthly its entitlement percentage of
Connecticut Yankee's cost of service, including decommissioning costs, whether
or not the Unit is operated.
Connecticut Yankee and the Purchaser are also parties to a 1987
Supplementary Power Contract, dated as of April 1, 1987 ("1987 Supplementary
Power Contract"). The 1987 Supplementary Power Contract and other similar
contracts (collectively, the "1987 Supplementary Power Contracts") between
Connecticut Yankee and the other Purchasers restate and supersede earlier
Supplementary Power Contracts and Agreements Amending Supplementary Power
Contracts between Connecticut Yankee and the Purchasers. Pursuant to the
1987 Supplementary Power Contracts, the Purchasers make monthly certain
supplementary payments to Connecticut Yankee during the terms of the Initial
Power Contracts and Additional Power Contracts.
On December 4, 1996, the board of directors of Connecticut Yankee,
after conducting a thorough review of the economics of continued
operation of the Unit for the remainder of the economics of continued
operation of the Unit for the remainder of the term of the Facility
Operating License for the Unit in light of other alternatives available
to Connecticut Yankee and the Purchasers, determined that the Unit
should be permanently shut down effective December 4, 1996. The
Purchaser concurs in that decision.
As a consequence of the shutdown decision, Connecticut Yankee and
the Purchaser propose at this time to amend the 1987 Supplementary Power
Contract and Additional Power Contract in various respects in order to
clarify and confirm provisions for the recovery under said contracts of
the full costs previously incurred by Connecticut Yankee in providing
power from the Unit during its useful life and of all costs of
decommissioning the Unit, including the costs of maintaining the Unit
in a safe condition following the shutdown and prior to its
decontamination and dismantlement.
Connecticut Yankee and each of the other Purchasers are entering
into agreements which are identical to this Agreement except for
necessary changes in the names of the parties.
2. Parties' Contractual Commitments
--------------------------------
Connecticut Yankee reconfirms its existing contractual obligations to
protect the Unit, to maintain in effect certain insurance and to prepare for
and implement the decommissioning of the Unit in accordance with applicable
aws and regulations. Consistent with public safety, Connecticut Yankee shall
use its best efforts to accomplish the shutdown of the Unit, the protection
and any necessary maintenance of the Unit after shutdown and the
decommissioning of the Unit in a cost-effective manner and shall use its best
efforts to ensure that any required storage and disposal of the nuclear fuel
remaining in the reactor at shutdown and all spent nuclear fuel or other
radioactive materials resulting from operating of the Unit are accomplished
consistent with public health and safety considerations and at the lowest
practicable cost. The Purchaser reconfirms its obligations under its Initial
Power Contract, Additional Power Contract and 1987 Supplementary Power Contract
to pay its entitlement percentage of Connecticut Yankee's costs as deferred
payment in connection with the capacity and net electrical output of the Unit
previously delivered by Connecticut Yankee and agrees that the decision to
shut down the Unit described in Section 1 hereof does not give rise to any
cancellation right under Section 9 of the Initial Power Contract or Section 10
of the Additional Power Contract.
Except as expressly modified by this Agreement, the provisions of the
Additional Power Contract and the 1987 Supplementary Power Contract remain in
full force and effect, recognizing that the mutually accepted decision to shut
down the Unit renders moot those provisions which by their terms relate solely
to continuing operation of the Unit.
3. Amendment of Payment Provisions of Additional Power Contract
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and 1987 Supplementary Power Contract
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A. Section 2 of the Additional Power Contract is hereby amended by
deleting the first two paragraphs thereof and by inserting in lieu thereof
the following.
This contract shall become effective upon receipt by the
Purchaser of notice that Connecticut Yankee has entered into
Additional Power Contracts, as contemplated by Section 1 above, with
each of the other Purchasers. The operative term of this contract
shall commence on such date as may be authorized by the FERC as may
be authorized by the FERC and shall terminate on the date (the "End
of Term Date") which is the later to occur of (i) 30 days after the
date on which the last of the financial obligations of Connecticut
Yankee which constitute elements of the payment calculated pursuant
to Section 7 of this contract has been extinguished by Connecticut
Yankee, or (ii) 30 days after the date on which Connecticut Yankee is
finally relieved of all obligations under the last of any licenses
(operating and/or possessory) which it now holds from, or which may
hereafter be issued to it by, the NRC with respect to the Unit under
applicable provisions of the Atomic Energy Act of 1954, as amended
from time to time (the "Act").
B. The second paragraph of Section 4 of the Additional Power Contract is
amended by deleting the phrase "Second Supplementary Power Contracts" wherever
it appears and inserting in lieu thereof the phrase "1987 Supplementary Power
Contracts".
C. The first paragraph of Section 7 of the Additional Power Contract is
amended to read as follows:
With respect to each month commencing on or after the commencement of
the operative term of this contract, whether or not this contract
continues fully or partially in effect, the Purchaser will pay
Connecticut Yankee as deferred payment for the capacity and output
of the Unit provided to the Purchaser by Connecticut Yankee prior to
the permanent shutdown of the Unit on December 4, 1996, to the extent
not otherwise paid in accordance with the Power Contract, but without
duplication:
D. The eighth paragraph of Section 7 of the Additional Power Contract is
amended by changing the period at the end to a comma and inserting:
, but including for purposes of this contract:
(i) with respect to each month until the commencement of
decommissioning of the Unit, the Purchaser's entitlement
percentage of all expenses related to the storage or disposal
of nuclear fuel or other radioactive materials, and all expenses
related to protection and maintenance of the Unit during such
period, including to the extent applicable all of the various
sorts of expenses included in the definition of "Decommissioning
Expenses", to the extent incurred during the period prior to the
commencement of decommissioning;
(ii) with respect to each month until expenses associated with
disposal of pre-April 7, 1983 spent nuclear fuel have been fully
covered by amounts which have been collected from Purchasers
and paid to a segregated fund as contemplated by Section 8 of
the 1987 Supplementary Power Contract, dated as of April 1,
1987, between Connecticut Yankee and the Purchaser, as amended
(the "1987 Contract"), the Purchaser's entitlement percentage
of previously uncollected expenses associated with disposal of
such prior spent nuclear fuel, as determined in accordance with
Section 10 of the 1987 Contract; and
(iii) with respect to each month until End of License Term, the
Purchaser's entitlement percentage of monthly amortization of
(a) the amount of any unamortized deferred expenses, as
permitted from time to time by the Federal Energy Regulatory
Commission or its successor agency, plus (b) the remaining
unamortized amount of Connecticut Yankee's investment in plant,
nuclear fuel and materials and supplies and other assets.
Such amortization shall be accrued at a rate sufficient to
amortize fully such unamortized deferred expenses and
Connecticut Yankee's investments in plant, nuclear fuel and
materials and supplies or other assets over a period
extending to June 29, 2007, provided, that if during any
calendar month ending on or before December 31, 2000 either of
the following events shall occur: (a) Connecticut Yankee
shall become insolvent or (b) Connecticut Yankee shall be
unable, from available cash or other sources, to meet when
due during such month its obligations to pay principal,
interest, premium (if any) or other less with respect to any
of its indebtedness of money borrowed, then Connecticut Yankee
may adjust upward the accrual for amortization of the
unrecovered investment for such month to an amount
not exceeding the applicable maximum level specified in
Appendix A hereto, provided that concurrently therewith the net
Unit investment shall be reduced by an amount equal to the
amount of such adjustment.
As used herein, "End of License Term" means June 29, 2007 or such
later date as may be fixed, by amendment to the NRC Facility Operating License
for the Unit, as the end of the term of the Facility Operating License.
E. The definitions in Section 7 of the Additional Power Contract
and in Section 3 of the 1987 Supplementary Power Contract of "Total
Decommissioning Costs" and "Decommissioning Expenses" are hereby amended
to read as follows:
"Total Decommissioning Costs" for any month shall mean the sum of (x)
an amount equal to all accruals in such month to any reserve, as from
time to time established by Connecticut Yankee and approved by its
board of directors, to provide for the ultimate payment of the
Decommissioning Expenses of the Unit, plus (y), during the
Decommissioning Period, the Decommissioning Expenses for the month,
to the extent such Decommissioning Expenses are not paid with funds
from such reserve, plus (z) Decommissioning Tax Liability for such
month. It is understood (i) that funds received pursuant to clause
(x) may be held by Connecticut Yankee or by an independent trust or
other separate fund, as determined by said board of directors, (ii)
that, upon compliance with applicable regulatory requirements, the
amount, custody and/or timing of such accruals may from time to time
during the term hereof be modified by said board of directors
in its discretion or to comply with applicable statutory or
regulatory requirements or to reflect changes in the amount, custody
or timing of anticipated Decommissioning Expenses, and (iii) that the
use of the term "to decommission" herein encompasses compliance
with all requirements of the NRC for permanent cessation of operation
of a nuclear facility and any other activities reasonably related
thereto, including provision for the interim storage of spent nuclear
fuel.
"Decommissioning Expenses" shall include all expenses of
decommissioning the Unit, and all expenses relating to ownership and
protection of the Unit during the Decommissioning Period, and shall
also include the following:
(1) All costs and expenses of any NRC-approved method of removing
the Unit from service, including without limitation:
dismantling, mothballing and entombment of the Unit; removing
nuclear fuel and other radioactive material to temporary and/or
permanent storage sites; construction, operation, maintenance
and dismantling of a spent fuel storage facility;
decontaminating, restoring and supervising the site; and any
costs and expenses incurred in connection with proceedings
before governmental authorities relating to any authorization
to decommission the Unit or remove the Unit from service;
(2) All costs of labor and services, whether directly or indirectly
incurred, including without limitation, services of foremen,
inspectors, supervisors, surveyors, engineers, security
personnel, counsel and accountants, performed or rendered in
connection with the decommissioning of the Unit and the removal
of the Unit from service, and all costs of materials, supplies,
machinery, construction equipment and apparatus acquired or
used (including rental charges for machinery, equipment or
apparatus hired) for or in connection with the decommissioning
of the Unit and the removal of the Unit from service, and all
administrative costs, including services of counsel and
financial advisers of any applicable independent trust or other
separate fund; it being understood that any amount, exclusive
of proceeds of insurance, realized by Connecticut Yankee as
salvage on any machinery, construction equipment and apparatus,
the cost of which was charged to Decommissioning Expense, shall
be treated as a reduction of the amounts otherwise chargeable on
account of the costs of decommissioning of the Unit; and
(3) All overhead costs applicable to the Unit during the
Decommissioning Period, or accrued during such period, including
without limiting the generality of the foregoing, taxes (other
than taxes on or in respect of income), charges, license fees,
excise and assessments, casualties, health care costs, pension
benefits and other employee benefits, surety bond premiums and
insurance premiums.
F. Section 7 of the Additional Power Contract and Section 3 of the 1987
Supplementary Power Contract are each hereby amended by adding the following
new paragraph after the definition of "Decommissioning Tax Liability":
"Decommissioning Period" shall mean the period commencing with the
notification by Connecticut Yankee to the NRC of a decision of the
board of directors of Connecticut Yankee to cease permanently the
operation of the Unit for the purpose of producing electric energy
and ending with the date when Connecticut Yankee has completed the
decommissioning of the Unit and the restoration of the site and has
been relieved of all its obligations under the last of any licenses
issued to it by the NRC.
G. The first sentence of Section 8 of the Additional Power
Contract is hereby amended to read as follows:
Connecticut Yankee will xxxx the Purchaser, no later than ten (10)
days after the end of any month, for all amounts payable by the Purchaser
with respect to such particular month pursuant to Section 7 hereof.
H. Section 8 of the Additional Power Contract and Section
4 of the 1987 Supplementary Power Contract are each amended to
delete the name "The Connecticut Bank and Trust Company, National
Association" and substitute "Fleet National Bank".
I. Section 5 of the 1987 Supplementary Power Contract is
amended to read as follows:
5. Decommissioning Fund
--------------------
Connecticut Yankee agrees to pay to, or cause to be paid
to, the Connecticut Yankee Trust or any successor trust approved
by the board of directors of Connecticut Yankee all funds
collected pursuant to Section 3 under clause (x) of the
definition of "Total Decommissioning Costs".
J. Section 10 of the Additional Power Contract is amended
to read as follows:
10. Cancellation of Contract
------------------------
If either
(i) the Unit is damaged to the extent of being completely
or substantially completely destroyed, or
(ii) the Unit is taken by exercise of the right of eminent
domain or a similar right or power,
then and in any such case, the Purchaser may cancel the provisions of
this contract, except that in all cases other than those described in
clause (ii) above, the Purchaser shall be obligated to continue to
make the payments of Total Decommissioning Costs and the other
payments required by Section 7 and the provisions of that Section and
the related provisions of this contract shall remain in full force
and effect until the End of Term Date, it being recognized that the
costs which Purchaser is required to pay pursuant to Section 7
represent deferred payments in connection with power heretofore
delivered by Connecticut Yankee hereunder. Such cancellation shall
be effected by written notice given by the Purchaser to Connecticut
Yankee. In the event of such cancellation, all continuing
obligations of the parties hereunder as to subsequently incurred
costs of Connecticut Yankee other than the obligations of the
Purchaser to continue to make the payments required by Section 7
shall cease forthwith. Notwithstanding the foregoing, the
applicable provisions of this contract shall continue in effect after
the cancellation hereof to the extent necessary to permit final
xxxxxxxx and adjustments hereunder with respect to obligations
incurred through the date of cancellation and the collection thereof.
Any dispute as to the Purchaser's right to cancel this contract
pursuant to the foregoing provisions shall be referred to arbitration
in accordance with the provisions of Section 13.
Notwithstanding anything in this contract elsewhere contained,
the Purchaser may cancel this contract or be relieved of its
obligations to make payments hereunder only as provided in the next
preceding paragraph of this Section 10. Further, if for reasons
beyond Connecticut Yankee's reasonable control, deliveries are not
made as contemplated by this contract, Connecticut Yankee shall have
no liability to the Purchaser on account of such non-delivery.
K. Section 2 of the 1987 Supplementary Power Agreement is amended to
change the date in the definitions of "operating expenses" and "M"
from May 26, 2004" to "June 29, 2007".
5. Effective Date
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This Agreement shall become effective upon receipt by the Purchaser of
notice that Connecticut Yankee has entered into 1996 Amendatory Agreements,
as contemplated by Section 1 hereof, with each of the other Purchasers.
6. Interpretation
--------------
The interpretation and performance of this Agreement shall be in
accordance with and controlled by the laws of the State of Connecticut.
7. Addresses
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Except as the parties may otherwise agree, any notice, request, xxxx or
other communication from one party to the other relating to this Agreement,
or the rights, obligations or performance of the parties hereunder, shall be
in writing and shall be effective upon delivery to the other party. Any such
communication shall be considered as duly delivered when mailed to the
respective post office address of the other party shown following the
signatures of such other party hereto, or such other post office address as
may be designated by written notice given in the manner as provided in this
Section.
8. Corporate Obligations
---------------------
This Agreement is the corporate act and obligation of the parties hereto.
9. Counterparts
------------
This Agreement may be executed in any number of counterparts and each
executed counterpart shall have the same force and effect as an original
instrument and as if all the parties to all of the counterparts had signed the
same instrument. Any signature page of this Agreement may be detached from any
counterpart without impairing the legal effect of any signatures thereon, and
may be attached to another counterpart of this Agreement identical in form
hereto but having attached to it one or more signature pages.
IN WITNESS WHEREOF, the parties have executed this Amendatory Agreement
by their respective duly authorized officers as of the day and year first
named above.
CONNECTICUT YANKEE ATOMIC POWER
COMPANY
By _______________________________________
Its
Address:
THE CONNECTICUT LIGHT AND POWER
COMPANY
By ______________________________________
Its
Address:
Appendix A to
1996 Amendatory Agreement
Maximum Amortization Schedule
-----------------------------
If the event occurs during the twelve
months ending: Maximum Amortization Accrual:
December 31, 1997 $100,000,000.00
December 31, 1998 $ 80,000,000.00
December 31, 1999 $ 40,000,000.00
December 31, 2000 $ 20,000,000.00
