Exhibit 10(H)
TRANSITIONAL POWER PURCHASE AGREEMENT
BY AND BETWEEN
NEVADA POWER COMPANY
AND
XXXX XXXXXXX POWER LLC
DATED: NOVEMBER 16, 2000
ASSET BUNDLE: XXXX XXXXXXX
TABLE OF CONTENTS
Section Page
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1. DEFINITIONS......................................................................... 1
2. TERM................................................................................ 7
3. SECURITY............................................................................ 9
4. SUPPLY SERVICE...................................................................... 10
5. NOTIFICATION........................................................................ 14
6. PRICING OF ENERGY AND ANCILLARY SERVICES............................................ 15
7. INVOICING AND PAYMENTS.............................................................. 16
8. REGULATORY APPROVALS................................................................ 19
9. COMPLIANCE.......................................................................... 20
10. INDEMNIFICATION..................................................................... 20
11. LIMITATION OF LIABILITY............................................................. 22
12. FORCE MAJEURE....................................................................... 22
13. DISPUTES............................................................................ 24
14. NATURE OF OBLIGATIONS............................................................... 26
15. SUCCESSORS AND ASSIGNS.............................................................. 27
16. REPRESENTATIONS..................................................................... 28
17. DEFAULT AND REMEDIES................................................................ 29
18 FACILITY ADDITIONS AND MODIFICATIONS................................................ 30
19. COORDINATION........................................................................ 30
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE....................................... 30
21. OUTAGE SCHEDULING................................................................... 31
22. REPORTS............................................................................. 31
23. COMMUNICATIONS...................................................................... 32
24. NOTICES............................................................................. 33
25. MERGER.............................................................................. 33
26. HEADINGS............................................................................ 33
27. COUNTERPARTS AND INTERPRETATION..................................................... 33
28. SEVERABILITY........................................................................ 34
29. WAIVERS............................................................................. 34
30. AMENDMENTS.......................................................................... 34
31. TIME IS OF THE ESSENCE.............................................................. 35
32. APPROVALS........................................................................... 35
33. PLR SERVICE......................................................................... 36
34. CONFIDENTIALITY..................................................................... 36
35. CHOICE OF LAW....................................................................... 37
Exhibits Page
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EXHIBIT A ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS............................ A-1
EXHIBIT B PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE OF
ANCILLARY SERVICES ....................................................... B-1
EXHIBIT C SUPPLIER'S MONTHLY INVOICE.................................................. C-1
EXHIBIT D BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS................................. D-1
EXHIBIT E YEAR END TRUE-UP INVOICE.................................................... E-1
EXHIBIT F NOTICES, BILLING AND PAYMENT INSTRUCTIONS................................... F-1
EXHIBIT G FORM OF AVAILABILITY NOTICE................................................. G-1
EXHIBIT H FORM OF GUARANTEE........................................................... H-1
EXHIBIT I COMPANY OBSERVED HOLIDAYS................................................... I-1
EXHIBIT J ADJUSTMENTS TO TPPA AMOUNT.................................................. J-1
EXHIBIT K ADJUSTMENTS TO MINIMUM ANNUAL TAKE.......................................... K-1
EXHIBIT L ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE.................................... L-1
EXHIBIT M ASSET BUNDLE CONTRACTUAL AND OPERATIONAL CONSTRAINTS........................ M-1
TRANSITIONAL POWER PURCHASE AGREEMENT
This Agreement is made and entered into as of November 16, 2000 by and between
Nevada Power Company, a Nevada corporation ("Buyer"), and Xxxx Xxxxxxx Power
LLC, a Delaware limited liability company (the "Supplier"). Buyer and Supplier
are referred to individually as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, Buyer is selling its Xxxx Xxxxxxx generating station and other assets
associated therewith to NRG Energy, Inc., a Delaware corporation, and Dynegy
Holdings Inc., a Delaware corporation, both affiliates of Supplier (the "Asset
Sale");
WHEREAS, notwithstanding the Asset Sale, Buyer expects that it has been
designated as the Provider of Last Resort ("PLR") for its Nevada retail electric
customers who are unable to obtain electric service from an alternative seller
or who fail to select an alternative seller. The load required to serve such
customers, plus the customers under those wholesale sales agreements existing at
the Effective Date, is referred to herein as Buyer's Transitional Resource
Requirement; and
WHEREAS, as a result of the Asset Sale, Buyer will no longer have its interest
in the Xxxx Xxxxxxx generating station as a source of supply for its
Transitional Resource Requirement; and
WHEREAS, Supplier has or is willing to secure the necessary resources to provide
a portion of Buyer's Transitional Resource Requirement; and
WHEREAS, Buyer desires to purchase from Supplier and Supplier desires to sell
Energy and Ancillary Services under contract to Buyer; and
NOW, THEREFORE, in consideration of the mutual covenants, representations and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Parties agree as follows:
1. DEFINITIONS
1.1 Format.
1.1.1 References to Articles and Sections herein are
cross-references to Articles and Sections,
respectively, in this Agreement, unless otherwise
stated.
1.1.2 Any parts of this Agreement which are incorporated by
reference shall have the same meaning as if set forth
in full text herein.
2
1.2 Definitions. As used in this Agreement, the following terms
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shall have the meanings set forth below:
1.2.1 "Agreement" means this Agreement together with the
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Exhibits attached hereto, as such may be amended from
time to time.
1.2.2 "Adjusted Replacement Cost of Energy" means the
-----------------------------------
Replacement Cost of Energy that will be due from
Supplier after True-up in accordance with the
provisions of Section 7.5. Example determinations of
the Adjusted Replacement Cost of Energy are shown on
Exhibit E.
1.2.3 "Ancillary Services" means those capacity-related
------------------
services as listed in Exhibit B as well as the Energy
component of such services. These services are
defined in Buyer's OATT.
1.2.4 "Asset Bundle" means the Xxxx Xxxxxxx generating
------------
station(s) and other assets associated therewith
pursuant to the terms of the Asset Sale Agreement.
1.2.5 "Asset Bundle Capacity" means, with respect to each
---------------------
unit listed in Exhibit A, the net generating capacity
(in megawatts ("MW")) of such unit, as modified from
time to time in accordance with Section 5.2, Section
20, and Section 21, and not to exceed at any time the
net capacity for each unit listed in Exhibit A. Asset
Bundle Capacity shall also mean, as the context
requires, the Energy (in megawatt-hours ("MWh")) and
the Ancillary Services which the units would be
capable of producing if they operated at the capacity
level described in the first sentence of this Section
1.2.5. Notwithstanding any provision of this
Agreement, the portion of the Asset Bundle Capacity
attributable to Xxxx Xxxxxxx Unit 4 shall at no time
exceed the net generating capacity in megawatts, the
Energy, or the Ancillary Services to which Supplier
is entitled, as of the Effective Date of this
Agreement, under the Participation Agreement (as
defined in the Asset Sale Agreement).
1.2.6 "Asset Sale" has the meaning set forth in the
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Recitals.
1.2.7 "Asset Sale Agreement" means the Agreement between
--------------------
Buyer and Supplier's affiliates, NRG Energy, Inc., a
Delaware corporation, and Dynegy Holdings Inc., a
Delaware corporation, dated as of November 16, 2000,
to purchase Buyer's Asset Bundle.
1.2.8 "Asset Sale Closing" means the transfer of Buyer's
------------------
ownership of the Asset Bundle through the
consummation of the Asset Sale pursuant to the terms
of the Asset Sale Agreement.
1.2.9 "Average Cost of Delivered Energy" means the total
--------------------------------
cost of Delivered Energy for the Contract Year after
the application of the Annual True-up Mechanism from
Section 7.5 divided by the total Delivered Energy
3
for the Contract Year. Example determinations of
Average Cost of Delivered Energy are shown on Exhibit
E.
1.2.10 "Availability Notice" means a notice delivered from
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time to time by Supplier to Buyer pursuant to Section
5.2 notifying Buyer of changes in the availability of
the Asset Bundle.
1.2.11 "Business Day" means any day other than Saturday,
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Sunday, and any day that is an observed holiday by
Buyer as shown on Exhibit I.
1.2.12 "Buyer's OATT" means Buyer's then-effective Open
------------
Access Transmission Tariff, as it may be amended,
which has been accepted for filing by the FERC.
1.2.13 "CALPX" means the California Power Exchange and any
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successor entity thereto.
1.2.14 "Confidential Information" has the meaning set forth
------------------------
in Section 34.
1.2.15 "Contract Year" means, with respect to the first
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Contract Year, the period beginning on the Effective
Date and, with respect to each subsequent Contract
Year, the period immediately following the end of the
preceding Contract Year, and in each case ending on
the earlier of the date which is twelve (12) months
thereafter or the termination date of this Agreement.
1.2.16 "Control Area Operator" means an entity or
---------------------
organization, and its representatives, which is
responsible for operating and maintaining the
reliability of the electric power system(s) within
the Transmission System. The Control Area Operator is
also referred to as the transmission operator.
1.2.17 "Credit Amount" shall mean an amount equal to the
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TPPA Amount, plus an additional amount equal to
$40/MWh multiplied by 395 megawatts, multiplied by
the number of hours remaining in this Agreement until
March 1, 2003.
1.2.18 "Delivered Amount" means, with respect to any
----------------
Dispatch Hour, the Energy delivered by Supplier to
Buyer at the designated Point(s) of Delivery during
such Dispatch Hour, whether or not such Energy was
generated by the Asset Bundle, plus any additional
amounts pursuant to Section 4.1.2, Section 4.1.3 and
the Ancillary Services provided by Supplier for Buyer
during any Dispatch Hour pursuant to the terms of
this Agreement.
1.2.19 "Derating" means a reduction to the Asset Bundle
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Capacity.
4
1.2.20 "Dispatch Hour" means the prescribed hour(s) when
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Energy is to be delivered by Supplier to Buyer at the
designated Point(s) of Delivery and the prescribed
hour(s) when Ancillary Services are to be provided to
the ISA by Supplier on behalf of Buyer.
1.2.21 "EDU" means electric distribution utility, the
---
organization with the responsibility for the
distribution of energy over Buyer's distribution
system to retail end-users.
1.2.22 "Effective Date" means the date that this Agreement
--------------
becomes effective which shall be the date on which
the Closing Date, as defined in the Asset Sale
Agreement, actually occurs.
1.2.23 "Emergency Condition" shall mean a public declaration
-------------------
by the ISA or Control Area Operator that the
Transmission System is in danger of imminent voltage
collapse or uncontrollable cascading outages.
1.2.24 "Energy" means electricity (measured in MWh) and
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associated power-producing capacity to be provided by
Supplier to Buyer pursuant to this Agreement. Also
known as "firm energy and associated firm capacity".
1.2.25 "Event of Default" has the meaning set forth in
----------------
Section 17 hereof.
1.2.26 "FERC" means the Federal Energy Regulatory Commission
----
and any successor agency thereto.
1.2.27 "Force Majeure" has the meaning set forth in Section
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12 hereof.
1.2.28 "GAAP" means Generally Accepted Accounting Principles
----
for the United States.
1.2.29 "Good Utility Practice" means the applicable
---------------------
practices, methods, and act:
(i) required by applicable Laws, permits and
reliability criteria, whether or not the Party
whose conduct at issue is a member thereof, and
(ii) otherwise engaged in or approved by a
significant portion of the United States
electric utility industry during the relevant
time period, which, in the exercise of
reasonable judgement in light of the facts
known at the time the decision was made, could
have been expected to accomplish the desired
result at a reasonable cost consistent with
good business practices, safety, environmental
protection, economy and expediency. Good
Utility Practice is not intended to be limited
to the optimum practice, method or act to the
exclusion of all others, but rather to
practices, methods or acts generally accepted
in the United States electric utility industry.
5
1.2.30 "Governmental Authority" means any foreign, federal,
----------------------
state, local, tribal or other governmental,
regulatory or administrative agency, court,
commission, department, board, or other governmental
subdivision, legislature, rulemaking board,
tribunal, arbitrating body, or other governmental
authority.
1.2.31 "Gross Replacement Costs of Energy" means Buyer's
---------------------------------
Replacement Cost of Energy prior to adjustment for
the amount that Buyer would have paid for the Energy
if Supplier had delivered the Energy to Buyer.
Example determinations of Gross Replacement Costs of
Energy are shown on Exhibit D.
1.2.32 "Guarantee" has the meaning set forth in Section
---------
3.1.2 hereof.
1.2.33 "Guarantor" has the meaning set forth in Section
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3.1.2 hereo
1.2.34 "Invoiced Replacement Costs" means the Replacement
--------------------------
Costs which have been billed to Supplier or
subtracted from payments to Supplier in accordance
with the provisions of Section 4.2 and Section 7.4.
1.2.35 "ISA" means the Mountain West Independent System
----
Administrator, or the regional transmission
organization authorized with the responsibility for
the scheduling and administration of Energy and
Ancillary Services over, through and within the
Transmission System in coordination with other
interconnected entities to provide transmission
services. The ISA is also referred to herein as
transmission administrator.
1.2.36 "ISA's OATT" means the ISA's then-effective
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Open Access Transmission Tariff, as it may be
amended, which has been accepted for filing by the
FERC.
1.2.37 "Law" means any law, treaty, code, rule, regulation,
---
order, determination, permit, certificate,
authorization, or approval of an arbitrator, court
or other Governmental Authority which is binding on
a Party or any of its property.
1.2.38 "Market Price of Energy" has the meaning set forth
----------------------
in Section 6.2.1.
1.2.39 "Minimum Annual Energy Take" has the meaning set
--------------------------
forth in Section 4.1.2.
1.2.40 "Minimum Hourly Energy Take" has the meaning set
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forth in Section 4.1.3.
1.2.41 "Minimum Investment Grade Rating" of a Person means
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that such Person has a minimum credit rating on its
senior unsecured debt
6
securities of at least two of the following ratings:
(i) BBB as determined by Standard & Poor's
Corporation, (ii) Baa2 as determined by Xxxxx'x
Investors Service, Inc., or (iii) a comparable
rating by another nationally recognized rating
service reasonably acceptable to Buyer.
1.2.42 "Minimum Tangible Net Worth" means the total book
--------------------------
value of shareholder's equity less the balance of
goodwill, as reported on the latest quarterly
balance sheet prepared in accordance with Generally
Accepted Accounting Principles (GAAP).
1.2.43 "NERC" means the North American Electric Reliability
----
Council and any successor entity thereto.
1.2.44 "Nonemergency Condition" shall mean the
----------------------
determination, direction or order by the ISA, or
Control Area Operator to Supplier and/or Buyer to
change the Supply Amount which is not a result of or
due to an Emergency Condition. A Nonemergency
Condition includes an insufficiency of Ancillary
Services to securely operate the Transmission
System.
1.2.45 "Operating Representatives" means the persons
-------------------------
designated to transmit and receive routine operating
and emergency communications required under this
Agreement.
1.2.46 "Party" has the meaning set forth in the preamble of
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this Agreement.
1.2.47 "Permitted Deratings" means those reductions to the
-------------------
Asset Bundle Capacity of which Supplier may notify
Buyer from time to time in an Availability Notice
pursuant to Section 5.2.
1.2.48 "Person" means any natural person, partnership,
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limited liability company, joint venture,
corporation, trust, unincorporated organization, or
governmental entity or any department or agency
thereof.
1.2.49 "Point of Delivery" means the point (s) which has
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(have) been specified as the Interconnection
Point(s) in the Interconnection Agreement between
Buyer and Supplier, dated November 16, 2000, as it
may be amended from time to time, as well as any
alternative locations agreed upon pursuant to
Section 4.1.6.
1.2.50 "Price Ceiling of Energy" means the ceiling price of
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Energy as stated in Exhibit B.
1.2.51 "Price Floor of Energy" means the floor price of
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Energy as stated in Exhibit B.
7
1.2.52 "Provider of Last Resort (PLR)" has the meaning set
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forth in the Recitals.
1.2.53 "PUCN" means the Public Utilities Commission of
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Nevada and any successor entity thereto.
1.2.54 "Replacement Costs" means with respect to a period of
-----------------
time, the difference between (a) the actual costs,
including without limitation related penalties and
transmission costs, incurred by Buyer to replace any
shortfall between (1) the Supply Amount and (2) the
Delivered Amounts of Energy, (or in the case of
Ancillary Services the Supplier's schedule of
Ancillary Services) during such period and (b) the
payments the Supplier would have been entitled to in
respect of such shortfall in delivery; provided that
Replacement Costs shall also be subject to the
annual true-up mechanism set forth in Section 7.5.
1.2.55 "Supply Amount" means, with respect to each Dispatch
-------------
Hour, the amount of Energy and Ancillary Services,
not to exceed the Asset Bundle Capacity for such
Dispatch Hour, requested by Buyer to be delivered by
Supplier during any Dispatch Hour. The Supply Amount
for any Dispatch Hour shall be determined pursuant
to Section 5.1.
1.2.56 "Total Amount of Energy Replaced" means the summation
-------------------------------
of Replacement Energy as shown on Exhibit E.
1.2.57 "TPPA Amount" means $106,300,000 as such amount may
-----------
be adjusted pursuant to Section 2.3.
1.2.58 "Transitional Resource Requirement" or "TRR" means
---------------------------------
the Energy and loss compensation necessary for Buyer
to meet its obligations as a Provider of Last Resort
(PLR) for Nevada and under those wholesale sales
agreements existing at the Effective Date.
1.2.59 "Transmission System" means the transmission
-------------------
facilities constituting Buyer's control area, as of
the date this Agreement is executed, plus any
modification, upgrade or expansion of, or additions
to, such facilities.
1.2.60 "WSCC" means the Western Systems Coordinating Council
----
and any successor entity thereto.
2. TERM
2.1 Term. Unless terminated earlier pursuant to the terms of this
----
Agreement, the term of this Agreement shall commence on the
Effective Date and continue until the earlier of the effective
date of an order by a Governmental Authority terminating
Buyer's PLR responsibility, or March 1, 2003. Supplier shall
provide service under this Agreement commencing on the first
hour on the day after the Effective Date.
2.2 Termination.
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8
2.2.1 Except pursuant to Sections 2.2.2 or 17.4, this
Agreement may not be terminated without the explicit
prior written approval of Buyer.
2.2.2 If, prior to the Asset Sale Closing, the FERC or any
other Governmental Authority places conditions on or
requires revisions of this Agreement which have a
material adverse effect on Supplier or Buyer, the
Parties agree to negotiate in good faith those
amendments to the Agreement reasonably needed to
preserve the bargain between the Parties. If the
Parties fail to negotiate mutually acceptable
amendments to this Agreement within sixty (60) days
of such action by the FERC or other Governmental
Authority, either Party may terminate the Agreement
after first notifying the other Party in writing at
least ten (10) Business Days prior to the termination
date; provided that neither Party may exercise a
right of termination pursuant to this Section 2.2.2
after the Asset Sale Closing.
2.2.3 This Agreement may be terminated with the mutual
agreement of the Parties.
2.2.4 Any termination of this Agreement pursuant to this
Section 2 shall not take effect until FERC either
authorizes the termination or accepts a written
notice of termination.
2.3 Effect of Termination.
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2.3.1 Adjustment of TPPA Amount. If the Effective Date of
-------------------------
this Agreement is before June 1, 2001, the TPPA
Amount shall be adjusted to equal (1) the TPPA Amount
multiplied by (2) 100% plus the sum of the monthly
adjustments from Exhibit J for each month or portion
thereof between the Effective Date and June 1, 2001.
An example calculation is shown on Exhibit J.
If the Effective Date of this Agreement is after June
1, 2001, the TPPA Amount shall be adjusted to equal
(1) the TPPA Amount multiplied by (2) 100% minus the
sum of the monthly adjustments from Exhibit J for
each month or portion thereof between June 1, 2001
and the Effective Date. An example calculation is
shown on Exhibit J.
If this Agreement is terminated before March 1, 2003,
Supplier shall pay to Buyer an amount, in accordance
with the provisions of Section 7, equal to the TPPA
Amount which existed before any adjustment in
accordance with the first or second paragraph of this
Section 2.3.1, multiplied by the sum of the monthly
adjustments for each month or portion thereof between
the date on which this Agreement is terminated and
March 1, 2003. An example calculation is shown on
Exhibit J.
2.3.2 Any default or termination of this Agreement shall
not release either
9
Party from any applicable provisions of this
Agreement with respect to:
2.3.2.1 The payment of liquidated damages pursuant
to Sections 4.2, 12, 17, 18, or 21.
2.3.2.2 Indemnity obligations contained in Section
10, to the extent of the statute of
limitations period applicable to any third
party claim.
2.3.2.3 Limitation of liability provisions contained
in Section 11.
2.3.2.4 Payment of any unpaid amounts in respect of
obligations arising prior to or resulting
from termination.
2.3.2.5 For a period of one (1) year after the
termination date, the right to raise a
payment dispute and the resolution thereof
pursuant to Section 13.
2.3.2.6 The resolution of any dispute submitted
pursuant to Section 13 prior to, or
resulting from, termination.
3. SECURITY
3.1 Supplier Certification; Guarantee. As a condition of Buyer's
---------------------------------
execution of, and continuing compliance with, this Agreement,
Supplier shall at Supplier's option comply with the provisions
of either Section 3.1.1 or Section 3.1.2.
3.1.1 Supplier Certification. Supplier shall (a) provide a
----------------------
certificate from a duly authorized corporate officer
of Supplier certifying that, as of the Effective
Date, Supplier has a credit rating equal to or higher
than the Minimum Investment Grade Rating; or (b) post
a letter of credit in a form reasonably acceptable to
Buyer in the amount of the Credit Amount from a
financial institution with each of: (i) a credit
rating of A2 or better from Xxxxx'x Investors
Service, Inc., (ii) a credit rating of A or better
from Standard & Poor's Corporation, and (iii) a
Minimum Tangible Net Worth ("MTNW") of one (1)
billion dollars.
3.1.2 Guarantee. In the alternative to the provisions of
---------
Section 3.1.1, the Supplier may provide a corporate
guarantee, in form and substance as set forth in
Exhibit H, made by an entity (the "Guarantor") that:
3.1.2.1 has a credit rating equal to or higher than
the Minimum Investment Grade Rating,
together with a certificate from a duly
authorized corporate officer of such
Guarantor certifying that, as of the
Effective Date, such Guarantor has a credit
rating equal to or higher than the Minimum
Investment Grade Rating; or
10
3.1.2.2 has a MTNW of no less than one (1) billion
dollars, together with a certificate from a
duly authorized corporate officer of such
Guarantor certifying that, as of the
Effective Date, such Guarantor has a MTNW of
no less than one (1) billion dollars; or
3.1.2.3 posts a letter of credit in a form
reasonably acceptable to Buyer in the amount
of the Credit Amount from a financial
institution with each of: (i) a credit
rating of A2 or better from Xxxxx'x
Investors Service, Inc., (ii) a credit
rating of A or better from Standard & Poor's
Corporation, and (iii) a Minimum Tangible
Net Worth ("MTNW") of one (1) billion
dollars.
3.2 Compliance.
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3.2.1 Reporting. If at any time during the term of this
---------
Agreement, Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc. or another nationally
recognized firm downgrades the credit rating of
Supplier, the Guarantor, or the financial institution
that issued the letter of credit, as applicable, then
Supplier shall provide Buyer with written notice of
such change of circumstance within two (2) Business
Days of any such change. In the event such a
downgrade also constitutes an Event of Default
pursuant to Section 17, the requirements of this
Section 3.2.1 are in addition to, and not in lieu of,
the requirements of Section 17.
4. SUPPLY SERVICE
4.1 Obligations of the Parties.
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4.1.1 Supply Amount. Supplier shall be required to provide
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the Supply Amount in any Dispatch Hour. As provided
in Section 5.1, Buyer shall makereasonable efforts to
ensure that the Supply Amount is no greater than
necessary to satisfy Buyer's TRR.
4.1.1.1 With the Buyer's prior consent, not to be
unreasonably withheld or delayed, Supplier
shall be entitled to generate or otherwise
procure the Supply Amount from sources other
than the Asset Bundle.
4.1.1.2 Supplier shall deliver the Supply Amount to
Buyer during the Dispatch Hour on a
continuous basis at the Point(s) of Delivery
and shall schedule the Supply Amount in
accordance with the Buyer's OATT or the
ISA's OATT, as applicable.
4.1.1.3 The Buyer at its sole discretion shall
designate the allocation of the Supply
Amount between Energy and
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Ancillary Services in accordance with the
notification provisions of Section 5.
4.1.1.3.1 The Parties recognize that
operation of the Asset Bundle is
subject to, and thus the Supply
Amount at times may be limited by,
the operational parameters of the
Asset Bundle. The Parties further
recognize that the consolidation
of two or more generating units
into an Asset Bundle precludes
contractual provisions addressing
such operational parameters in a
matter normally applied to Energy
purchases from specified
generating units. Consequently,
Supplier will have the right to
raise concerns regarding the
effect of such operational
parameters upon Buyer's scheduling
requests, and Buyer will make good
faith efforts to alleviate
Supplier's concerns.
4.1.1.3.2 The Parties further recognize that
the Asset Bundle also is subject
to the contractual and operating
constraints set forth in Exhibit
M.
4.1.2 Minimum Annual Energy Take. The Buyer shall accept a
--------------------------
minimum annual energy take during each Contract Year.
The Minimum Annual Energy Take shall be set forth on
Exhibit A.
4.1.2.1 Buyer's Obligation to Take. If Buyer is
--------------------------
unwilling to accept the Minimum Annual
Energy Take for any Contract Year, as may be
adjusted pursuant to Section 4.1.2.2, the
difference (in MWh) between the Supply
Amount of Energy (including consideration
for Energy that would have been taken but
was unavailable due to Permitted Deratings
or Force Majeure, as well as the Total
Amount of Energy Replaced) and the Minimum
Annual Energy Take shall be billed at the
Price Ceiling of Energy less the Price Floor
of Energy. An example of the monthly
determination of the amount of Energy to be
credited against the Minimum Annual Energy
Take is shown on Exhibit L.
4.1.2.2 Adjustments to Minimum Annual Energy Take.
-----------------------------------------
Buyer shall have the right to reduce the
Minimum Annual Energy Take if the number of
customers taking electric service from Buyer
falls below the number of customers on
December 31, 2000. Adjustments will be
applicable, on a pro rata basis, on the
first (1st) day of the month immediately
following Supplier's receipt of Buyer's
notice of adjustment. Buyer shall provide
supporting data in
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reasonable detail to support its
calculations. An example of the calculation
of a revised Minimum Annual Energy Take is
shown on Exhibit K.
4.1.3 Minimum Hourly Energy Take. The Buyer shall accept a
--------------------------
Minimum Hourly Energy Take for any Dispatch Hour if
the Supply Amount, or a portion thereof, is provided
to Buyer from the Asset Bundle. The Minimum Hourly
Energy Take is stated in Exhibit A.
4.1.3.1 Buyer's Obligation to Take. If Buyer is
--------------------------
unwilling to accept the Minimum Hourly
Energy Take, the difference (in MWh) between
the Supply Amount of Energy (including
consideration for Energy that would have
been taken but was unavailable due to
Permitted Deratings or Force Majeure, as
well as the Total Amount of Energy Replaced)
and Minimum Hourly Energy Take shall be
billed at the Price Ceiling of Energy less
the Price Floor of Energy.
4.1.4 Supplier Rights to Output. Supplier may sell to
-------------------------
others any portion of the Asset Bundle Capacity in
excess of the Supply Amount.
4.1.5 Point(s) of Delivery. Supplier shall deliver, and
--------------------
Buyer shall take delivery of, the Supply Amount of
Energy at the Point(s) of Delivery. Subject to
Section 4.1.6.2, Supplier shall be responsible for
all costs associated with delivery of the Supply
Amount of Energy to the Point(s) of Delivery.
4.1.6 Alternative Points of Delivery. For any Dispatch
------------------------------
Hour, either Party may designate one or more
alternative Points of Delivery, subject to the other
Party's prior approval and consistent with the
Buyer's OATT or the ISA's OATT, as applicable, such
approval not to be unreasonably withheld or delayed.
4.1.6.1 If Supplier has designated an alternative
Point of Delivery, Supplier shall be
responsible for all costs of delivery to
such alternative Point of Delivery.
4.1.6.2 If Buyer has designated an alternative Point
of Delivery, Buyer shall be responsible for
all costs of delivery to such alternative
Point of Delivery.
4.1.7 Fuel. Buyer shall have no responsibility for any fuel
----
procurement or fuel transportation costs or
activities associated with the Asset Bundle during
the term of this Agreement.
4.1.8 Resale. Except as provided in the next sentence, the
------
Supply Amount may be resold by Buyer only as
necessary to satisfy Buyer's TRR. If, after
submitting the request of the Supply Amount pursuant
to Section
13
5.1, the Buyer determines that the scheduled Supply
Amount, together with purchases scheduled under
Buyer's other Transitional Power Purchase Agreements,
exceeds Buyer's most current projected TRR, then the
Buyer also shall resell at wholesale that amount of
Energy in excess of Buyer's actual TRR as necessary
to balance its load and resources.
4.1.9 Right to Review. Buyer and Supplier each shall have
---------------
the right to review during normal business hours the
relevant books and records of the other Party to
confirm the accuracy of such as it pertains to
transactions under this Agreement. The review shall
be consistent with standard business practices and
shall follow reasonable notice to the other Party.
Reasonable notice for a review of the previous
month's records shall be at least a twenty-four (24)
hour period from a Business Day to a subsequent
Business Day. If a review is requested of other than
the previous month's records, then notice of that
request shall be provided with a minimum of seven (7)
calendar days written notice by the requesting Party.
The notice shall specify the period to be covered by
the review. The Party providing records can make
reasonable requests that the receiving Party keep the
records confidential, and the receiving Party shall
take reasonable steps to accommodate such requests.
4.2 Liquidated Damages.
------------------
4.2.1 If the Delivered Amount of Energy is less than the
Supply Amount of Energy in any Dispatch Hour during a
month, and Replacement Costs computed in respect of
such month are greater than zero, then Supplier shall
reimburse Buyer for such Replacement Costs. If
Supplier's schedule of Ancillary Services is less
than the Supply Amount of Ancillary Services in any
Dispatch Hour during a month, Supplier shall
reimburse Buyer for such Replacement Costs for the
difference between Supplier's schedule and the Supply
Amount of Ancillary Services. An example of the
methodology used to calculate Replacement Costs is
provided in Exhibit D.
4.2.2 Supplier also shall be responsible for any costs
incurred by Buyer associated with a violation of
reliability criteria (including but not limited to
imbalance costs or penalties) due to a deviation
between the Supply Amount and Delivered Amount.
4.2.3 The Parties recognize and agree that the payment of
such amounts by Supplier pursuant to this Section 4.2
is an appropriate remedy in the event of such a
failure and that any such payment does not constitute
a forfeiture or penalty of any kind, but rather
constitutes actual costs to Buyer under the terms of
this Agreement.
14
4.3 Supplier Operating Representative. Supplier shall provide and
---------------------------------
maintain a twenty-four (24) hour seven (7) day per week
communication link with Buyer's control center and with
Buyer's schedulers. Supplier's Operating Representatives shall
be available to address and make decisions on all operational
matters under this Agreement on a twenty-four (24) hour seven
(7) day per week basis.
5. NOTIFICATION
5.1 Scheduling Notification. Buyer shall provide Supplier with a
-----------------------
request of the Supply Amount no later than twenty-four (24)
hours before day-ahead bids must be submitted to the CALPX.
Buyer shall make reasonable efforts to ensure that the request
of the Supply Amount is no greater than that amount then
projected to be necessary to satisfy Buyer's TRR. In addition,
for each Supply Amount request, the change in the Supply
Amount from one (1) hour to the next hour shall be no greater
than the ramping capability of the units within the Asset
Bundle as shown in Exhibit A.
5.2 Availability Notification.
-------------------------
5.2.1 No later than 5:00 a.m. (Pacific Time) of each day,
Supplier shall deliver to Buyer an Availability
Notice in the form set forth in Exhibit G.
5.2.2 Availability Notices shall provide, for the
ninety-six (96) hour period starting at 6:00 a.m.
(Pacific Time) that day, Supplier's hourly projection
of the unavailability or derating ("Derating") of the
Asset Bundle compared to the Asset Bundle Capacity
figures stated for each unit in Exhibit A. Each
Availability Notice also shall contain, as
applicable:
(a) the units which are subject to a Derating;
(b) the magnitude of the Derating;
(c) the hours during which the Derating is
expected to apply;
(d) the cause of the Derating;
(e) the extent, if any, to which the Derating is
attributable to a Permitted Derating; and
(f) the projected Asset Bundle Capacity for each
unit during the period covered by the
Availability Notice, pursuant to Section
5.2.4 below.
5.2.3 If and to the extent a Derating is the result of one
or more of the following causes, it shall be a
Permitted Derating:
(a) approved planned outages pursuant to Section
21;
(b) response to an Emergency Condition as
described in Section 20; or
(c) subject to the limitations expressed in
Section 12.5, a Force Majeure event.
15
5.2.4 In respect of any Dispatch Hour, the Asset Bundle
Capacity of each unit shall be the Asset Bundle
Capacity figure stated in Exhibit A minus any
Permitted Derating applicable during such hour.
5.2.5 Neither the Asset Bundle Capacity nor the Supply
Amount shall be reduced by Deratings which are not
Permitted Deratings. Supplier shall be responsible
for all Replacement Costs, pursuant to Section 4.2.1,
caused by Deratings that are not Permitted Deratings.
6. PRICING OF ENERGY AND ANCILLARY SERVICES
6.1 Overview. The price of Energy paid by Buyer to Supplier shall
--------
be based upon a designated hourly market price, subject to
monthly floor, monthly ceiling, and annual true-up provisions.
The Price Floor of Energy will ensure that Supplier will
receive an average price for Energy for each month which is
not less than the price stated in Exhibit B. The Price Ceiling
of Energy provision provides that the average price of Energy
paid to Supplier each month and for each year shall not exceed
the price stated in Exhibit B.
6.2 Price of Energy.
---------------
6.2.1 Market Price of Energy. In respect of any Dispatch
----------------------
Hour, the designated Market Price of Energy shall be
the South of Path 15 ("SP 15") hourly market-clearing
price in the day-ahead market from the CALPX as
published at the following Web Site (or its successor
web site)
xxxx://xxx.xxxxx.xxx/xxxxxx/xxxxx_xxxxxx_xxxxxxxx_
--------------------------------------------------
trading.html. Should this hourly market in the day-
------------
ahead market not exist for the entire term, the
Parties shall agree upon a similar market price
index.
6.2.2 Price Floor of Energy. The Price Floor of Energy is
---------------------
stated in Exhibit B and shall not change during the
term of this Agreement.
6.2.3 Price Ceiling of Energy. The Price Ceiling of Energy
-----------------------
is stated in Exhibit B and shall not change during
the term of this Agreement.
6.3 Pricing of Ancillary Services. The price of the capacity
-----------------------------
component of Ancillary Services is stated in Exhibit B. The
price of Ancillary Services shall not change during the term
of the Agreement. Supplier shall make available to Buyer and
Buyer shall offer to pass through the Energy portion of
Ancillary Services with respect to the Supply Amount to the
ISA, or Control Area Operator, at the Price Ceiling of Energy
(plus expected direct transaction costs). The net proceeds
shall be credited to the Supplier pursuant to Section 7.
6.4 Price Revisions. The Parties waive any and all rights to seek
---------------
to revise the provisions of this Agreement, including the
prices stated, pursuant to Sections 205 and/or 206 of the
Federal Power Act.
16
7. INVOICING AND PAYMENTS
7.1 Invoicing and Payment. On or before the tenth (10th) day of
---------------------
each month, Supplier shall send to Buyer an invoice setting
forth the Supply Amount, Delivered Amount, the Market Price of
Energy pursuant to Section 6.2.1 for each Dispatch Hour in the
previous month, any amount due in accordance with Section 7.13
and the total due from Buyer. The invoice shall be calculated
based upon data available to Supplier and shall be in
accordance with this Section 7 and Exhibit C. Buyer shall
promptly notify Supplier if Buyer in good faith disputes any
portion of the invoice, stating in reasonable detail the
reason for the dispute.
7.2 Monthly Invoice Calculation. On each monthly invoice, Supplier
---------------------------
shall calculate the following amounts:
7.2.1 The Delivered Amount in respect of each Dispatch Hour
multiplied by the corresponding Market Price of
Energy pursuant to Section 6.2.1, summed over the
billing period;
7.2.2 Sum of the Delivered Amounts in respect of all
Dispatch Hours of the billing period multiplied by
the Price Ceiling of Energy;
7.2.3 Sum of the Delivered Amounts in respect of all
Dispatch Hours of the billing period multiplied by
the Price Floor of Energy;
7.2.4 For each Dispatch Hour of the billing period, the
shortfall, if any, between the Supply Amount and the
Delivered Amount (and in the case of Ancillary
Services the shortfall between the Supply Amount of
Ancillary Services and Supplier's schedule of
Ancillary Services);
7.2.5 The Supply Amount of Ancillary Service for each
dispatch hour multiplied by the price of Ancillary
Services as stated in Exhibit B; and
7.2.6 The Delivered Amount of Energy related to Ancillary
Services for each dispatch hour multiplied by the
Price Ceiling of Energy as stated in Exhibit B.
7.2.7 If applicable, any amount to be calculated in
accordance with Section 7.13.
7.3 Supplier's Invoice. Supplier will invoice the lesser of the
------------------
amounts calculated in Sections 7.2.1 and 7.2.2, provided that
if the amount calculated in Section 7.2.1 is less than the
amount calculated in Section 7.2.3, Supplier shall invoice
Buyer the amount calculated in Section 7.2.3. Supplier shall
also include in its invoice the amounts calculated in Sections
7.2.5, 7.2.6 and 7.2.7. If the Delivered Amount exceeds the
Supply Amount, Buyer shall not be obligated to pay for the
excess amount. Buyer shall pay Supplier for the amounts
invoiced pursuant to Section 7.2.6 upon Buyer's receipt of
payment from ISA or Control Area Operator. Examples of this
monthly invoice calculation (and annual true-up process) are
17
contained in Exhibit C.
7.4 Buyer's Invoice. In the event any shortfall occurs pursuant to
---------------
Section 7.2.4 or payment is due to Buyer pursuant to Section
7.13, Buyer shall within ten (10) Business Days of receipt of
Supplier's invoice deliver to Supplier a Buyer's invoice
detailing any Replacement Costs or other payment due. Buyer
shall provide supporting data in reasonable detail to support
its calculations of Replacement Costs. Supplier shall promptly
notify Buyer if Supplier in good faith disputes any portion of
the invoice, stating in reasonable detail the reason for the
dispute. If the Buyer's invoice results in an amount due from
Supplier to Buyer, Buyer may offset such amount from its
payment of Supplier's corresponding invoice.
Buyer shall have the right to adjust the invoices issued in
accordance with this Section 7.4 if Buyer incurs Replacement
Costs that were not known when earlier invoices were issued.
Adjusted invoices shall be issued within thirty (30) days of
the date on which the additional Replacement Costs become
known. Buyer shall provide supporting data in reasonable
detail to support its calculations of Replacement Costs.
Supplier shall promptly notify Buyer if Supplier in good faith
disputes any portion of the invoice, stating in reasonable
detail the reason for the dispute. If the Buyer's adjusted
invoice results in an amount due from Supplier to Buyer, Buyer
may offset such amount from its payment of Supplier's
corresponding invoice.
7.5 Annual True-Up Mechanism for Energy.
-----------------------------------
7.5.1 The annual true-up mechanism will provide adjustments
among the Parties with respect to each Contract Year
in the following scenarios:
(a) If (i) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year is less
than or equal to (ii) the Market Price of
Energy for each hour pursuant to Section
6.2.1 multiplied by the Delivered Amount of
Energy for each hour during the Contract
Year, Supplier shall subtract (x) the amount
invoiced by Supplier for Energy pursuant to
Section 7.3 summed of over the Contract Year
from (y) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year. If the
difference calculated in accordance with the
preceding sentence is greater than or equal
to zero, Buyer shall pay the difference to
Supplier. If the difference is less than
zero, Supplier shall refund the difference
to Buyer.
(b) If (i) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year is
greater than or equal to (ii) the Market
Price of Energy for each hour pursuant to
Section 6.2.1 multiplied by the Delivered
Amount of Energy for each hour during the
Contract Year, Supplier shall
18
subtract (x) the amount invoiced by Supplier
for Energy pursuant to Section 7.3 summed of
over the Contract Year from (y) the Market
Price of Energy multiplied by the hourly
Delivered Amount of Energy summed over the
Contract Year. If the difference calculated
in accordance with the preceding sentence is
greater than or equal to zero, Buyer shall
pay the difference to Supplier. If the
difference is less than zero, Supplier shall
refund the difference to Buyer.
(c) If Buyer incurred Replacement Costs for
energy during the Contract year, Supplier
shall multiply the Total Amount of Energy
Replaced during the Contract Year by the
Average Cost of Delivered Energy after
true-up as determined in accordance with
Section 7.5.1 (a) or 7.5.1 (b). If the
amount so obtained is greater than the sum
of the monthly Gross Replacement Costs of
Energy from Buyer's Invoices for the
Contract Year, the Adjusted Replacement Cost
of Energy for the Contract Year shall be
zero. If the amount so obtained is less than
the sum of the monthly Gross Replacement
Costs of Energy from Buyer's Invoices for
the Contract Year, the Adjusted Replacement
Cost of Energy for the Contract Year shall
be the sum of the monthly Gross Replacement
Costs of Energy less the amount obtained in
accordance with the first sentence of this
Section 7.5.1(c).
If the Adjusted Replacement Cost of Energy
is greater than the sum of the monthly
Invoiced Replacement Costs of Energy from
Buyer's Invoices for the Contract Year,
Supplier shall pay the difference to Buyer.
If the sum of the monthly Invoiced
Replacement costs of Energy is greater than
the Adjusted Replacement Cost of Energy,
Buyer shall pay the difference to Seller.
7.5.2 True-up adjustments will be calculated by Supplier
within twenty (20) days after each Contract Year.
Examples of the true-up calculations and invoice form
are set forth in Exhibit E. Interest shall be
calculated pursuant to 18 CFR Section 35.19a and
shall be included in the true-up invoice. Invoices
for true-up adjustments shall be submitted by
Supplier within thirty (30) days after the end of the
Contract Year. Payments for such invoices shall be
due from Buyer thirty (30) days from receipt of the
true-up invoice.
7.6 Invoice Disagreements. Should there be a good faith dispute
---------------------
over any invoice, the Parties shall promptly seek resolution
pursuant to Section 13. Pending resolution of the invoice
dispute, payment shall be made or offsets or credits taken, as
applicable, based upon the undisputed portion of the invoice.
7.7 Adjustments. Upon resolution of the dispute, the prevailing
-----------
Party shall be entitled
19
to receive the disputed amount, as finally determined to be
payable along with interest (calculated pursuant to 18 C.F.R.
ss. 35.19a through the date of payment. No invoice (or payment
covered thereby) shall be subject to adjustment unless notice
or request for adjustment is given within one (1) year of the
date payment thereunder was due.
7.8 Method of Payment. Subject to Sections 7.3, 7.6 and 7.7, Buyer
-----------------
shall remit all amounts due by wire or electronic fund
transfer, pursuant to Supplier's invoice instructions, no
later than thirty (30) days after receipt of the invoice.
7.9 Overdue Payments. Overdue payments shall bear interest from
----------------
and including, the due date to the date of payment on the
unpaid portion calculated pursuant to 18 C.F.R.ss.35.19a.
7.10 Buyer Right to Offset. Buyer shall have the right to offset
---------------------
any amounts Supplier owes to Buyer, including Replacement
Costs (except for such amounts disputed in good faith by
Supplier), against the amounts owed by Buyer to Supplier.
7.11 Taxes. Each Party shall pay ad valorem and other taxes
-----
attributed to its facilities and services provided. Supplier
shall not include any taxes of any kind in its invoices to
Buyer. The prices of Energy and Ancillary Services shall not
change during the term of this Agreement as a result of any
changes in local, state or federal taxes, fees or levies.
7.12 Late Invoices. If either Party submits an invoice outside of
-------------
the time deadlines set forth herein, that Party shall not
forfeit its rights to collect the amounts due thereunder,
provided that such invoice is no more than six (6) months
late, and provided that changes to invoices remain subject to
the deadline in Section 7.7.
7.13 Termination Prior to March 1, 2003. Notwithstanding any other
----------------------------------
provision herein, in the event that this Agreement is
terminated before March 1, 2003 and as a result of such
termination Buyer is entitled to a payment in accordance with
Section 2.3.1, Supplier shall include an amount calculated in
accordance with Section 2.3.1 and Exhibit J, to be paid by
Supplier to Buyer in the next monthly invoice submitted to
Buyer following such termination.
8. REGULATORY APPROVALS
8.1 This Agreement will be filed with the FERC and any other
appropriate regulatory agencies by the appropriate Party as
may be required.
9. COMPLIANCE
9.1 Each Party shall comply with all relevant Laws and shall, at
its sole expense, maintain in full force and effect all
relevant permits, authorizations, licenses, and other
authorizations material to the maintenance of facilities and
the performance of obligations under this Agreement.
20
9.2 Each Party and its representatives shall comply with all
relevant requirements of any authorized Control Area Operator,
ISA, and/or EDU to ensure the safety of its employees and the
public, and to ensure electric system reliability and
integrity, material to the performance of this Agreement.
9.3 Buyer and Supplier shall perform or cause to be performed,
their obligations under this Agreement in all material
respects in accordance with Good Utility Practices. Supplier
covenants and agrees that as of the Effective Date it or its
permitted assignee shall (a) have the right to control the
operation of the Asset Bundle and (b) be willing and able to
perform its obligations under this Agreement.
10. INDEMNIFICATION
10.1 To the fullest extent permitted by law, a Party to this Agreement
("the Indemnifying Party") shall indemnify, defend and hold
harmless the other Party, its parent, affiliates, and successors
and agents (each an "Indemnified Party") from and against any and
all claims, demands, suits, obligations, payments, liabilities,
costs, judgments, damages, losses or expenses asserted by third
parties against an Indemnified Party and arising out of, relating
to, or resulting from the Indemnifying Party's breach of, or the
negligent performance of its obligations under this Agreement.
10.1.1 Such indemnity shall also extend to actual courts costs,
attorneys' fees, expenses and other liabilities incurred
in the defense of any claim, action or proceeding,
including negotiation, settlement, defense and appeals,
to which this indemnification obligation applies. In
furtherance of the foregoing indemnification and not by
way of limitation thereof, the Indemnifying Party hereby
waives any defense it otherwise might have against the
Indemnified Party under applicable workers' compensation
laws.
10.1.2 In claims against any Indemnified Party by an agent of
the Indemnifying Party, or anyone directly or indirectly
employed by them or anyone for whose acts they may be
liable, the indemnification obligation under this
Section 10 shall not be limited by a limitation on
amount or type of damages, compensation or benefits
payable by or for the Indemnifying Party or a
subcontractor under workers' or workmen's compensation
acts, disability benefit acts or other employee benefit
acts.
10.1.3 Such indemnity shall also extend to all costs and
expenses incurred by the Indemnified Party in any action
or proceeding to enforce the provisions of this
Agreement, but only if and to the extent the Indemnified
Party prevails in such action or proceeding.
10.2 No Negation of Existing Indemnities; Survival. Each Party's
---------------------------------------------
indemnity
21
obligations hereunder shall not be construed to negate, abridge
or reduce other rights or obligations or indemnity which would
otherwise exist at law or equity. The obligations contained
herein shall survive any termination, cancellation, or suspension
of this Agreement to the extent that any third party claim is
commenced during the applicable statute of limitations period.
10.3 Indemnification Procedures.
--------------------------
10.3.1 Any Party seeking indemnification under this Agreement
shall give the other Party notice of such claim promptly
but in any event on or before thirty (30) days after the
Party's actual knowledge of such claim or action. Such
notice shall describe the claim in reasonable detail,
and shall indicate the amount (estimated if necessary)
of the claim that has been, or may be sustained by, said
Party. To the extent that the other Party will have been
actually and materially prejudiced as a result of the
failure to provide such notice, such notice will be a
condition precedent to any liability of the other Party
under the provisions for indemnification contained in
this Agreement.
10.3.2 In any action or proceeding brought against an
Indemnified Party by reason of any claim indemnifiable
hereunder, the Indemnifying Party may, at its sole
option, elect to assume the defense at the Indemnifying
Party's expense, and shall have the right to control the
defense thereof and to determine the settlement or
compromise of any such action or proceeding.
Notwithstanding the foregoing, an Indemnified Party
shall in all cases be entitled to control its defense in
any action if it:
(i) may result in injunctions or other equitable
remedies in respect of the Indemnified Party which
would affect its business or operations in any
materially adverse manner;
(ii) may result in material liabilities which may not
be fully indemnified hereunder; or
(iii) may have a significant adverse impact on the
business or the financial condition of the
Indemnified Party (including a material adverse
effect on the tax liabilities, earnings or ongoing
business relationships of the Indemnified Party)
even if the Indemnifying Party pays all
indemnification amounts in full.
10.3.3 Subject to Section 10.3.2, neither Party may settle or
compromise any claim for which indemnification is sought
under this Agreement without the prior consent of the
other Party; provided, however, said consent shall not
be unreasonably withheld or delayed.
11. LIMITATION OF LIABILITY
22
11.1 Responsibility for Damages: Except as otherwise provided
--------------------------
herein or to the extent of the other Party's negligence or
willful misconduct, each Party shall be responsible for all
physical damage to or destruction of the property, equipment
and/or facilities owned by it and its affiliates and any
physical injury or death to natural Persons resulting
therefrom, regardless of who brings the claim and regardless
of who caused the damage, and shall not seek recovery or
reimbursement from the other Party for such damage; provided,
that in any such case the Parties will exercise Due Diligence
to remove the cause of any disability at the earliest
practicable time.
11.2 No Consequential Damages: To the fullest extent permitted by
------------------------
law and notwithstanding other provisions of this Agreement, in
no event shall a Party, or any of its Agents, be liable to the
other Party, whether in contract, warranty, tort, negligence,
strict liability, or otherwise, for special, indirect,
incidental, multiple, consequential (including but not limited
to lost profits or revenues and lost business opportunities),
or punitive damages related to or resulting from performance
or nonperformance of this Agreement or any activity associated
with or arising out of this Agreement. For purposes of
clarification, Replacement Costs shall not be considered
consequential or incidental damages under this Section 11.2.
In addition, this limitation on liability shall not apply with
respect to claims pursuant to Section 10 hereof.
11.3 Survival: The provisions of this Section 11 shall survive any
--------
termination, cancellation, or suspension of this Agreement.
12. FORCE MAJEURE
12.1 An event of "Force Majeure" shall be defined as any
interruption or failure of service or deficiency in the
quality or quantity of service or any other failure to perform
any of its obligations hereunder to the extent such failure
occurs without fault or negligence on the part of that Party
and is caused by factors beyond that Party's reasonable
control, which by the exercise of reasonable diligence that
Party is unable to prevent, avoid, mitigate or overcome,
including:
(i) acts of God or the public enemy, such as storms,
flood, lightning, and earthquakes,
(ii) failure, threat of failure, or unscheduled withdrawal
of facilities from operation for maintenance or
repair, and including unscheduled transmission and
distribution outages,
(iii) sabotage of facilities and equipment,
(iv) civil disturbance,
(v) strike or labor dispute,
(vi) action or inaction of a court or public authority, or
23
(vii) any other cause of similar nature beyond the
reasonable control of that Party.
12.2 Economic hardship of either Party shall not constitute Force
Majeure under this Agreement. Notwithstanding this, if Buyer
suffers an event of Force Majeure it shall be relieved of its
obligation to take delivery of, or otherwise pay for, Energy
and Ancillary Services under this Agreement for the duration
of the event of Force Majeure. In addition, if Buyer is unable
to have Energy and Ancillary Services delivered from the
Point(s) of Delivery to its service territory due to an outage
on the Transmission System, that shall be considered a Force
Majeure event and shall relieve Buyer of performance for the
extent of the event.
12.3 In the event of a Force Majeure, neither Party shall be
considered in default under this Agreement or responsible to
the other Party in tort, strict liability, contract or other
legal theory for damages of any description, and affected
performance obligations shall be extended by a period equal to
the term of the resultant delay, but in no event shall exceed
the term of the Agreement, provided that the Party relying on
a claim of Force Majeure:
(i) provides prompt written notice of such Force Majeure
event to the other Party, giving an estimate of its
expected duration and the probable impact on the
performance of its obligations hereunder;
(ii) exercises all reasonable efforts to continue to
perform its obligations under this Agreement;
(iii) expeditiously takes action to correct or cure the
event or condition excusing performance so that the
suspension of performance is no greater in scope and
no longer in duration than is dictated by the
problem; provided, however, that settlement of
strikes or other labor disputes will be completely
within the sole discretion of the Party affected by
such strike or labor dispute;
(iv) exercises all reasonable efforts to mitigate or limit
damages to the other Party; and
(v) provides prompt notice to the other Party of the
cessation of the event or condition giving rise to
its excuse from performance.
12.4 Notwithstanding the above provisions, a Force Majeure event
shall excuse Supplier from its obligation to deliver the
Supply Amount pursuant to Section 4 of this Agreement only for
the first forty-eight (48) hours of the Force Majeure event.
After such forty-eight (48) hour period, Supplier must either
deliver the Supply Amount at the Point(s) of Delivery or pay
liquidated damages pursuant to Section 4.2 of this Agreement.
Provided that, to the extent a Force Majeure event is caused
by an outage on the Transmission System, Supplier shall be
excused
24
from its obligations to deliver the Supply Amount for the
duration of the outage.
12.5 If Supplier has notified Buyer of an event of Force Majeure,
and if Supplier so requests, Buyer will attempt to replace the
Supply Amount that is not excused in accordance with Section
12.4 with Energy or Ancillary Services from another Asset
Bundle. However, Buyer's inability to acquire such replacement
Energy or Ancillary Services shall not excuse Supplier from
Supplier's obligation to deliver the Supply Amount not
otherwise excused in accordance with Section 12.4
13. DISPUTES
13.1 Any action, claim or dispute which either Party may have
against the other arising out of or relating to this Agreement
or the transactions contemplated hereunder, or the breach,
termination or validity thereof (any such claim or dispute, a
"Dispute") shall be submitted in writing to the other Party.
The written submission of any Dispute shall include a concise
statement of the question or issue in dispute together with a
statement listing the relevant facts and documentation that
support the claim.
13.2 The Parties agree to cooperate in good faith to expedite the
resolution of any Dispute. Pending resolution of a Dispute,
the Parties shall proceed diligently with the performance of
their obligations under this Agreement.
13.3 The Parties shall first attempt in good faith to resolve any
Dispute through informal negotiations by the Contract
Representatives. In the event that the Contract
Representatives are unable to satisfactorily resolve the
Dispute within thirty (30) days from the receipt of notice of
the Dispute, either Party may by written notice to the other
Party refer the Dispute to its respective senior management
for resolution as promptly as practicable. If the Parties'
senior management are unable to resolve the Dispute within
forty-five (45) days from the date of such referral,
thereafter the Parties may agree in writing to extend the time
period of such senior management negotiations. In the event
the Parties' senior management do not resolve the dispute
within the prescribed or extended time period, either Party
may initiate arbitration through the serving and filing of a
demand for arbitration and the Parties expressly agree that
arbitration in accordance with this Section 13 shall be the
exclusive means to further resolve any Dispute and hereby
irrevocably waive their right to a jury trial with respect to
any Dispute, provided that at any time:
13.3.1 A request made by a Party for provisional remedies
requesting preservation of the Parties' respective
rights and obligations under the Agreement may be
resolved by a court of law located in the County of
the principal place of business of Buyer.
13.3.2 Nothing in this Agreement shall preclude, or be
construed to preclude, any Party from filing a
petition or complaint with the FERC or PUCN with
respect to any arbitrable Dispute over which said
agency has jurisdiction. In such case, the other
Party may request the FERC or
25
PUCN, as applicable, to reject or to waive
jurisdiction. If jurisdiction is rejected or waived
with respect to all or a portion of the Dispute, the
portion of the Dispute not so accepted by the FERC or
PUCN, as applicable, shall be resolved through
arbitration in accordance with this Agreement. To the
extent that the FERC or PUCN, as applicable, asserts
or accepts jurisdiction over the Dispute, the
decision, finding of fact or order of FERC shall be
final and binding, subject to judicial review under
the Federal Power Act or Nevada Revised Statutes and
subject to the provisions of Section 2.2.2. Any
arbitration proceedings that may have commenced with
respect to the Dispute prior to the assertion or
acceptance of jurisdiction by the FERC or PUCN, as
applicable, shall be terminated to the extent the
FERC or PUCN accepts or asserts jurisdiction over
such Dispute.
13.4 Unless otherwise agreed by the Parties, any arbitration
initiated under this Agreement shall be conducted in
accordance with the following:
13.4.1 Arbitrations shall be held within the County of the
principal place of business of Buyer.
13.4.2 Except as otherwise modified herein, the arbitration
shall be conducted in accordance with the "Commercial
Arbitration Rules" of the American Arbitration
Association ("AAA") then in effect.
13.4.3 Arbitration shall be conducted by one neutral
arbitrator who shall be selected pursuant to the AAA
rules and the following:
13.4.3.1 The Parties agree that the list of potential
arbitrators provided by the AAA shall, if
available, contain twenty (20) candidates,
and at least fifty percent (50%) of the
candidates shall be members of the AAA
National Energy Panel.
13.4.3.2 The Parties also agree that each shall be
allowed to strike the names of five
candidates before ranking the remaining
candidates and returning the list to the AAA
in accordance with the Commercial
Arbitration Rules. If the Parties are unable
to agree on an arbitrator, such arbitrator
shall be appointed by the AAA.
13.4.3.3 The arbitrator shall not have any current or
past substantial business, financial, or
personal relationships with either Party (or
their Affiliates) and shall not be a vendor,
supplier, customer, employee, consultant, or
competitor to either of the Parties or their
Affiliates.
13.4.3.4 The arbitrator shall be authorized only to
interpret and apply the provisions of this
Agreement or any related agreements entered
into under this Agreement and shall
26
have no power to modify or change any
provision of this Agreement. The arbitrator
shall have no authority to award punitive or
multiple damages or any damages inconsistent
with this Agreement. The arbitrator shall
within thirty (30) days of the conclusion of
the hearing, unless such time is extended by
agreement of the Parties, notify the Parties
in writing of his or her decision, stating
his or her reasons for such decision and
separately listing his or her findings of
fact and conclusions of law. Judgment on the
award may be entered in any court having
jurisdiction.
13.5 The Parties shall proceed with the arbitration expeditiously,
and the arbitration shall be concluded within five (5) months
of the filing of the demand for arbitration pursuant to this
Section 13 in order that the decision may be rendered within
six (6) months of such filing, unless the arbitrator extends
such time at the request of a Party upon a showing of good
cause or upon agreement of the Parties.
13.6 Any arbitration proceedings, decision or award rendered
hereunder and the validity, effect and interpretation of any
arbitration agreement shall be governed by the Federal
Arbitration Act of the United States, 9 U.S.C. xx.xx. 1 et
seq.
13.7 The decision of the arbitrator shall be final and binding on
both Parties and may be enforced in any court having
jurisdiction over the Party against which enforcement is
sought.
13.8 The fees and expenses of the arbitrator shall be shared by the
Parties equally, unless the decision of the arbitrator shall
specify some other apportionment of such fees and expenses.
All other expenses and costs of the arbitration shall be borne
by the Party incurring the same.
14. NATURE OF OBLIGATIONS
14.1 Except where specifically stated in this Agreement to be
otherwise, the duties, obligations, and liabilities of the
Parties shall be several; not joint or collective. The
provisions of this Agreement shall not be construed to create
an association, trust, partnership, or joint venture; to
impose a trust or partnership duty, obligation, or liability
or agency relationship on or with regard to either Party.
14.2 Nothing in this Agreement nor any action taken hereunder shall
be construed to create any duty, liability, or standard of
care to any person not a Party to this Agreement. Each Party
shall be individually and severally liable for its own
obligations under this Agreement.
14.3 By this Agreement, neither Party dedicates any part of its
facilities or the service provided under this Agreement to the
public.
15. SUCCESSORS AND ASSIGNS
27
15.1 This Agreement may be assigned, without express written
consent of the other Party, as follows:
15.1.1 Buyer may assign this Agreement or assign or delegate
its rights and obligations under this Agreement, in
whole or in part, if such assignment is made to an
affiliate, parent, subsidiary, successor or any
party, provided that such assignee operates all or a
portion of the PLR or if such assignment is required
by Law or applicable regulations.
15.1.2 Supplier also may assign this Agreement as provided
in Section 11.5 of the Asset Sale Agreement; provided
that such assignment is to an entity that (a) has the
right to control the operation of the Asset Bundle
and (b) is willing and able to perform its
obligations under this Agreement.
15.2 Supplier may, without the consent of Buyer, assign, transfer,
pledge or otherwise dispose of its rights and interests
hereunder to a trustee, lending institution, or any Person for
the purposes of financing or refinancing the Asset Bundle,
including upon or pursuant to the exercise of remedies under
such financing or refinancing, or by way of assignments,
transfers, conveyances of dispositions in lieu thereof;
provided, however, that no such assignment or disposition
shall relieve or in any way discharge Supplier or such
permitted assignee from the performance of its duties and
obligations under this Agreement. Buyer agrees to execute and
deliver such documents as may be reasonably necessary to
accomplish any such assignment, transfer, conveyance, pledge
or disposition of rights hereunder for purposes of the
financing or refinancing of the Asset Bundle, so long as
Buyer's rights under this Agreement are not thereby materially
altered, amended, diminished or otherwise impaired.
15.3 Either Party may, without the consent of the other Party,
assign this Agreement to a successor to all or substantially
all of the assets of such Party by way of merger,
consolidation, sale or otherwise, provided such successor
assumes and becomes liable for all of such Party's duties and
obligations hereunder including Section 3 hereof.
15.4 Except as stated above, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned
by either Party, including by operation of law, without the
prior written consent of the other Party, said consent not to
be unreasonably withheld. Any assignment of this Agreement in
violation of the foregoing shall be, at the option of the
non-assigning Party, void.
15.5 Except as set forth above, no assignment or transfer of rights
or obligations under this Agreement by a Party shall relieve
said Party from full liability and financial responsibility
for the performance thereof after any such transfer or
assignment unless and until the transferee or assignee shall
agree in writing to assume the obligations and duties of said
Party under this Agreement and the other Party has consented
in writing to such assumption; said consent not to be
unreasonably withheld.
28
15.6 This Agreement and all of the provisions hereof are binding
upon, and inure to the benefit of, the Parties and their
respective successors and permitted assigns.
16. REPRESENTATIONS
16.1 Representations of the Parties. The Parties represent and
------------------------------
warrant each to the other as follows:
16.1.1 Incorporation. Buyer is a corporation duly
-------------
incorporated, validly existing and in good standing
under the laws of the State of Nevada. Supplier is a
limited liability company duly organized, validly
existing and in good standing under the laws of the
State of Delaware. Both Buyer and Supplier have all
requisite corporate power and authority to own, lease
and operate their material assets and properties and
to carry on their business as now being conducted.
16.1.2 Authority. The Party has full corporate power and
---------
authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory
approvals, to carry out the actions required of it by
this Agreement. The execution and delivery of this
Agreement and the transactions contemplated hereby
have been duly and validly authorized by all
necessary corporate action required on the part of
the Party. The Agreement has been duly and validly
executed and delivered by the Party and, assuming
that it is duly and validly executed and delivered by
the other Party, constitutes a legal, valid and
binding agreement of the Party.
16.1.3 Compliance With Law. The Party represents and
-------------------
warrants that it is not in violation of any
applicable Law, or applicable regulation, which
violation could reasonably be expected to materially
adversely affect the other Party's performance of its
obligations under this Agreement. The Party
represents and warrants that it will comply with all
Laws, and regulations applicable to its compliance
with this Agreement, non-compliance with which would
reasonably be expected to materially adversely affect
either Party's performance of its obligations under
this Agreement.
16.1.4 Representations of Both Parties. The representations
-------------------------------
in this Section 16 shall continue in full force and
effect for the term of this Agreement.
17. DEFAULT AND REMEDIES
17.1 An Event of Default hereunder shall be deemed to have occurred
upon a Party's (Defaulting Party) failure to comply with any
material obligation imposed upon it by this Agreement.
Examples of an Event of Default include, but are not limited
to the following:
(i) Failure to make any payments due under this
Agreement;
29
(ii) Failure to deliver the Supply Amount for a period of
five (5) consecutive days;
(iii) Failure to follow the directions of a Control Area
Operator, ISA, EDU, WSCC, NERC, PUCN, FERC, or any
successor thereto where following such directions is
required hereunder;
(iv) Supplier not being in compliance with Section 3; and
(v) Failure of the Guarantor to be in compliance with the
terms of the Guarantee delivered under Section 3.1.2.
17.2 An Event of Default shall be excused:
17.2.1 In the event such Event of Default was caused by
Force Majeure provided that the Party claiming a
Force Majeure complies with the requirements of
Section 12; and
17.2.2 In the event such Event of Default was caused by
transmission and distribution outages or disruptions.
17.3 Unless excused, in an Event of Default the Non-Defaulting
Party shall be entitled to provide written notice (or verbal
notice in case of emergency followed by written notice) of the
Event of Default to the Defaulting Party and to specify a cure
period, which cure period shall be a minimum of thirty (30)
days.
17.4 If an Event of Default is not cured by the Defaulting Party
during the cure period specified by the Non-Defaulting Party,
the Non-Defaulting Party shall be entitled to those remedies
which are not inconsistent with the terms of this Agreement,
including termination and the payment of liquidated damages. A
Defaulting Party shall not be liable to the Non-Defaulting
Party for any punitive, consequential or incidental damages.
For purposes of clarification, Replacement Costs shall not be
considered consequential or incidental damages under this
Section 17.4.
17.5 Notwithstanding this Section 17, liquidated damages shall be
paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.
18. FACILITY ADDITIONS AND MODIFICATIONS
18.1 Supplier shall be entitled to make additions and modifications
to the Asset Bundle subject to the following:
18.1.1 To the extent additions and modifications interfere
with the operation of the Asset Bundle in providing
the Supply Amount to Buyer beyond the limits for
planned outages set forth in Section 21, liquidated
damages shall be paid to Buyer pursuant to Section
4.2.
18.1.2 Supplier shall use reasonable efforts to minimize any
adverse impact on
30
Buyer during the course of making such additions and
modifications.
18.1.3 Such additions and modifications shall be conducted
in accordance with Good Utility Practice, and all
applicable Laws, regulations, reliability criteria
and the Interconnection Agreement between Buyer and
Supplier, dated November 16, 2000, as it may be
amended from time to time.
18.2 Supplier shall seek Buyer's prior written approval for all
Supplier's additions or modifications to the Asset Bundle
which might reasonably be expected to have an adverse effect
upon Buyer with respect to operations or performance under
this Agreement.
19. COORDINATION
19.1 Upon knowledge thereof, each Party shall promptly give notice
to the other Party of any labor dispute which is delaying or
threatens to delay the timely performance of this Agreement,
which shall include a description of the general nature of the
dispute.
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE
20.1 Buyer and Supplier shall comply with any applicable
requirement of any Governmental Authority, NERC, WSCC, ISA,
Control Area Operator, transmission operator, EDU or any
successor of any of them, regarding the reduced or increased
generation of the Asset Bundle in the event of an Emergency
Condition or Nonemergency Condition.
20.2 Supplier shall not be obligated to deliver the Supply Amount
and no liquidated damages shall become due, if the Supply
Amount is reduced in the event of an Emergency Condition or a
Nonemergency Condition.
20.3 Each Party shall provide prompt verbal notice to the other
Party of any Emergency Condition or Nonemergency Condition.
20.4 Either Party may take reasonable and necessary action to
prevent, avoid or mitigate injury, danger, damage or loss to
its own equipment and facilities, or to expedite restoration
of service; provided, however, that the Party taking such
action shall give the other Party prior notice if at all
possible before taking any action. However, this Section 20.4
shall not be construed to supersede Sections 20.2 and 20.3.
21. OUTAGE SCHEDULING
21.1 Supplier shall request Buyer's approval prior to any
inspections, proposed planned outages or other non-forced
outages (all hereinafter referred to as "planned outages") of
the Asset Bundle so as to minimize the impact on the
availability of the Asset Bundle. Under no circumstances shall
Supplier conduct a
31
planned outage without the express prior consent of Buyer
pursuant to this Section 21.
21.2 Planned Outages.
---------------
21.2.1 Within sixty (60) days following the Effective Date
of this Agreement and on or before October 1 of each
Contract Year, Supplier shall provide Buyer with a
schedule of proposed planned outages for the period
beginning on the date of such proposed schedule for
the following twelve (12) months. The proposed
planned outage schedule will designate days for each
unit in which the Asset Bundle Capacity will be
reduced in part or total for each such unit. Each
proposed schedule shall include all applicable
information, including but not limited to the
following: Month, day and time of requested outage;
facilities impacted (such as Unit and description);
duration of outage; purpose of outage; amount of
capacity (in MWs) which is derated; other conditions
and remarks; and name of contact and phone number.
21.2.2 Buyer shall promptly review Supplier's proposed
schedule and shall either require modifications or
approve the proposed schedule. Supplier shall use its
best efforts to accomplish all planned outages in
accordance with the approved schedule. Supplier shall
be responsible to Buyer for Replacement Costs (i) if
any outage period exceeds its approved schedule,
provided that changes to the approved schedule may be
requested by either Party and each Party shall make
reasonable efforts to accommodate such changes,
provided further the Buyer shall have no obligation
to agree to Supplier's revisions to the approved
planned outage schedule; and (ii) if Supplier
conducts a planned outage without the consent of
Buyer as provided herein.
22. REPORTS
22.1 Supplier shall promptly provide Buyer with copies of any
orders, decrees, letters or other written communications to or
from any Governmental Authority asserting or indicating that
Supplier and/or its Asset Bundle is in violation of Laws which
relate to Supplier, or operations or maintenance of the Asset
Bundle and which may have an adverse effect on Buyer. Supplier
shall use reasonable efforts to keep Buyer appraised of the
status of any such matters.
23. COMMUNICATIONS
23.1 Supplier's Operating Representatives shall be available
twenty-four (24) hours per day for communications with the
Control Area Operator and/or the ISA and Buyer to facilitate
the operations contained in this Agreement.
23.2 Supplier shall, at its expense, maintain and install real-time
communications equipment at the Asset Bundle to maintain
communications between personnel on site at the Asset Bundle,
Buyer and the Control Area Operator at all times. Supplier
shall provide at its expense:
32
(i) Ringdown voice telephone lines, and
(ii) Equipment to transmit to and receive telecopies from
Buyer and the Control Area Operator.
23.3 Supplier shall immediately report to Buyer any "Abnormal
Condition" that has or may occur, and provide all pertinent
information, including but not limited to the following:
(i) A description of the "Abnormal Condition" and the
actions to be taken to alleviate the "Abnormal
Condition";
(ii) The expected duration including the beginning and
ending time of the "Abnormal Condition"; and
(iii) The amount of any adjustment to the current (real
time) level of Energy and Ancillary Services.
23.4 Cause of the Condition.
----------------------
23.4.1 An "Abnormal Condition" shall include without
limitation any conditions that, to Supplier's
knowledge, have or are reasonably likely to:
(i) Adversely affect Supplier's ability to
provide Energy and Ancillary Services to
Buyer;
(ii) Cause an unplanned reduction in the amount of
delivery of Energy and Ancillary Services to
Buyer; or
(iii) Cause an unplanned isolation of the Asset
Bundle from the transmission system.
23.5 Supplier shall immediately notify Buyer after such "Abnormal
Condition" has been alleviated.
24. NOTICES
24.1 All notices hereunder shall, unless specified otherwise, be in
writing and shall be addressed, except as otherwise stated
herein, to the Parties as set forth in Exhibit F.
24.2 All written notices or submittals required by this Agreement
shall be sent either by hand-delivery, regular first class
U.S. mail, registered or certified U.S. mail postage paid
return receipt requested, overnight courier delivery,
electronic mail
33
or facsimile transmission and will be effective and deemed to
have been received on the date of receipt personally, on the
date and time as documented by method of delivery if during
normal business hours or on the next succeeding Business Day,
or on the third (3rd) Business Day following deposit with the
U.S. mail if sent regular first class U.S. mail.
24.3 Notices of an Event of Default pursuant to Section 17 and or
Force Majeure pursuant to Section 12 may not be sent by
regular first class U.S. mail.
24.4 Any payments required to be made under this Agreement shall be
made to the Party as set forth in Exhibit F.
24.5 Each Party shall have the right to change, at any time upon
written notice to the other Party, the name, address and
telephone numbers of its representatives under this Agreement
for purposes of notices and payments.
25. MERGER
25.1 The Agreement contains the entire agreement and understanding
between the Parties with respect to all of the subject matter
contained herein, thereby merging and superseding all prior
agreements and representations by the Parties with respect to
such subject matter.
25.2 In the event of any conflict between this Agreement and the
Asset Sale Agreement, the terms of the Asset Sale Agreement
shall govern.
26. HEADINGS
26.1 The headings or section titles contained in this Agreement are
inserted solely for convenience and do not constitute a part
of this Agreement between the Parties, nor should they be used
to aid in any manner in the construction of this Agreement.
27. COUNTERPARTS AND INTERPRETATION
27.1 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
27.2 In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue
of authorship of any of the provisions of this Agreement.
27.3 Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context
requires otherwise.
34
27.4 The word "including" in this Agreement shall mean "including
without limitation".
28. SEVERABILITY
28.1 If any term, provision or condition of this Agreement is held
to be invalid, void or unenforceable by a court or
Governmental Authority of competent jurisdiction and such
holding is subject to no further appeal or judicial review,
then such invalid, void, or unenforceable term, provision or
condition shall be deemed severed from this Agreement and all
remaining terms, provisions and conditions of this Agreement
shall continue in full force and effect, unless, however, the
effect of the severance would vitiate the intent of the
Parties hereto, as determined by either Party in its
reasonable discretion.
28.2 The Parties shall endeavor in good faith to replace such
invalid, void, or unenforceable provisions with a valid and
enforceable provision which achieves the purposes intended by
the Parties to the greatest extent permitted by law.
29. WAIVERS
29.1 No failure or delay on the part of a Party in exercising any
of its rights under this Agreement or in insisting upon strict
performance of provisions of this Agreement, no partial
exercise by either Party of any of its rights under this
Agreement, and no course of dealing between the Parties shall
constitute a waiver of the rights of either Party under this
Agreement. Any waiver shall be effective only by a written
instrument signed by the Party granting such waiver, and such
shall not operate as a waiver of, or estoppel with respect to,
any subsequent failure to comply therewith.
30. AMENDMENTS
30.1 The Parties shall negotiate in good faith to determine
necessary amendments, if any, to this Agreement, provided that
in negotiating such amendments the Parties shall attempt, in
good faith, to reasonably preserve the bargain initially
struck in this Agreement if any Governmental Authority, FERC,
any state or the PUCN, implements a change in any Law or
applicable regulation that materially affects or is reasonably
expected to materially affect Buyer's PLR service under this
Agreement.
30.2 The Parties shall meet to discuss the impact of any changes in
Buyer's OATT or the ISA's OATT, as applicable, or any rule or
practice of NERC, WSCC, or any other Governmental Authority on
the terms of this Agreement upon request by either Party
during the term of this Agreement.
30.3 In the event that it is deemed necessary to amend this
Agreement, the Parties will attempt to agree upon such
amendment and will submit such mutually agreed upon
amendment(s) to the FERC for filing and acceptance.
35
30.4 Amendments to this Agreement shall be in writing and shall be
executed by an authorized representative of each Party.
31. TIME IS OF THE ESSENCE
31.1 Time is of the essence of this Agreement and in the
performance of all of the covenants and conditions hereof.
32. APPROVALS
32.1 Each Party's performance under this Agreement is subject to
the condition that all requisite governmental and regulatory
approvals for such performance are obtained in form and
substance satisfactory to the other Party in its reasonable
discretion. Each Party shall use best efforts to obtain all
required approvals and shall exercise due diligence and shall
act in good faith to cooperate and assist each other in
acquiring any regulatory approval necessary to effectuate this
Agreement. Further, the Parties agree to reasonably support
the other Party in any associated regulatory proceedings,
including by being a witness on behalf of the other Party.
32.2 Notwithstanding the provisions of Section 2.2.2 of this
Agreement, if any Governmental Authority in its review of the
Agreement places conditions on or requires revisions of the
Agreement that have no more than a de minimus effect on
Supplier or Buyer, the Parties agree to execute an amendment
to this Agreement reasonably acceptable to each Party
incorporating such conditions or revisions.
32.3 This Agreement is made subject to present or future state or
federal laws, regulations, or orders properly issued by state
or federal bodies having jurisdiction.
32.4 The Parties hereto agree to execute and deliver promptly, at
the expense of the Party requesting such action, any and all
other and further instruments, documents and information which
may reasonably be necessary or appropriate to give full force
and effect to the terms and intent of this Agreement.
33. PLR SERVICE
33.1 The Agreement is premised on Buyer providing PLR service.
Notwithstanding anything to the contrary contained herein, if
Nevada retail electricity restructuring (including
implementation of retail customer choice of electricity
suppliers) is delayed beyond the Effective Date of this
Agreement, the Parties shall continue to perform this
Agreement in all respects pursuant to the terms and conditions
hereof as if Buyer was the PLR and Buyer's retail and
wholesale customers shall be considered as the TRR.
36
34. CONFIDENTIALITY
34.1 Confidential Information. Certain information provided by a
------------------------
Party (the "Disclosing Party") to the other Party (the
"Receiving Party") in connection with the negotiation or
performance of this Agreement may be considered confidential
and/or proprietary (hereinafter referred to as "Confidential
Information") by the Disclosing Party. To be considered
Confidential Information hereunder, such information must be
clearly labeled or designated by the Disclosing Party as
"confidential" or "proprietary" or with words of like meaning.
If disclosed orally, such information shall be clearly
identified as confidential and such status shall be confirmed
promptly thereafter in writing.
34.2 Treatment of Confidential Information. The Receiving Party
-------------------------------------
shall treat any Confidential Information with at least the
same degree of care regarding its secrecy and confidentiality
as the Receiving Party's similar information is treated within
the Receiving Party's organization. The Receiving Party shall
not disclose the Confidential Information of the Disclosing
Party to third parties (except as stated hereinafter) nor use
it for any purpose other than the negotiation or performance
of this Agreement, without the express prior written consent
of the Disclosing Party. The Receiving Party further agrees
that it shall restrict disclosure of Confidential Information
as follows:
34.2.1 Disclosure shall be restricted solely to its agents
as may be necessary to enforce the terms of this
Agreement after advising those agents of their
obligations under this Section 34.2.
34.2.2 In the event that the Receiving Party is requested,
pursuant to or as required by applicable Law or by
legal process, to disclose any Confidential
Information, the Receiving Party shall provide the
Disclosing Party with prompt notice of such request
or requirement in order to enable Disclosing Party to
seek an appropriate protective order or other remedy
and to consult with Disclosing Party with respect to
Disclosing Party taking steps to resist or narrow the
scope of such request or legal process. The Receiving
Party agrees not to oppose any action by the
Disclosing Party to obtain a protective order or
other appropriate remedy. In the absence of such
protective order, and provided that the Receiving
Party is advised by its counsel that it is compelled
to disclose the Confidential Information, the
Receiving Party shall:
(i) furnish only that portion of the
Confidential Information which the Receiving
Party is advised by counsel is legally
required; and
(ii) use its commercially reasonable best
efforts, at the expense of the Disclosing
Party, to ensure that all Confidential
Information so disclosed will be accorded
confidential treatment.
34.3 Excluded Information. Confidential Information shall not be
--------------------
deemed to include
37
the following:
34.3.1 information which is or becomes generally available
to the public other than as a result of a disclosure
by the Receiving Party;
34.3.2 information which was available to the Receiving
Party on a non-confidential basis prior to its
disclosures by the Disclosing Party; and
34.3.3 information which becomes available to the Receiving
Party on a non-confidential basis from a person other
than the Disclosing Party or its representative who
is not otherwise bound by a confidentiality agreement
with Disclosing Party or its agent or is otherwise
not under any obligation to Disclosing party or its
agent not to disclose the information to the
Receiving Party.
34.4 Injunctive Relief Due to Breach. The Parties agree that
-------------------------------
remedies at law may be inadequate to protect each other in the
event of a breach of this Section 34, and the Receiving Party
hereby in advance agrees that the Disclosing Party shall be
entitled to seek and obtain, without proof of actual damages,
temporary, preliminary and permanent injunctive relief from
any court or Governmental Authority of competent jurisdiction
restraining the Receiving Party from committing or continuing
any breach of this Section 34.
35. CHOICE OF LAW
35.1 This Agreement and the rights and obligations of the Parties
shall be construed and governed by the Laws of: (i) the State
of Nevada as if executed and performed wholly within that
state; and (ii) the Federal Power Act, to the extent the
rights and obligations of the Parties are covered by such act.
38
IN WITNESS WHEREOF, the Parties hereto have caused this Transitional Power
Purchase Agreement for the Xxxx Xxxxxxx Bundle to be executed by their duly
authorized representative on the date set forth below.
NEVADA POWER COMPANY XXXX XXXXXXX POWER LLC
---------------------- ----------------------------
By: Xxxxxxx X. Xxxxxxxx By: Xxxxxx X. Xxxxxxx
Title: Senior Vice President, General Title: Vice President
Counsel, and Corporate Secretary
Date: November 16, 2000 Date: November 16, 2000
39
EXHIBIT A
XXXX XXXXXXX BUNDLE
ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS
===============================================================================
UNIT NET SUMMER NET RAMP RATE MINIMUM HOURLY
CAPABILITY (MW) WINTERCAPABILITY(MW) (MW)/HOUR ENERGY TAKE (MW)
-------------------------------------------------------------------------------
Unit 1 110 110 60 50
Unit 2 110 110 60 50
Unit 3 110 110 60 50
Unit 4* 260 260 100 24
-------------------------------------------------------------------------------
Total 590 590 280 174
===============================================================================
Minimum Annual Energy Take: 2,550,000 MWh
* The portion of the Asset Bundle Capacity attributable to Xxxx Xxxxxxx Unit 4
shall at no time exceed the net generating capacity in megawatts, the Energy, or
the Ancillary Services to which Supplier is entitled, as of the Effective Date,
under the Participation Agreement (as defined in the Asset Sale Agreement).
For purposes of this Exhibit A, the summer months shall consist of June through
September, and the winter months shall consist of the months of January through
May and the months of October through December.
A-1
EXHIBIT B
XXXX XXXXXXX BUNDLE
ENERGY AND ANCILLARY SERVICES PRICES
Energy Prices*
-------------
Price Floor of Energy: $ 23.83 per MWh
Price Ceiling of Energy: $ 41.44 per MWh
Ancillary Service Prices*
------------------------
Regulation and Frequency Response:
Summer On-Peak: $28.61 per MW-reserved per hour
Summer Off-Peak: $16.35 per MW-reserved per hour
Winter On-Peak: $16.33 per MW-reserved per hour
Winter Off-Peak: $9.33 per MW-reserved per hour
Operating Reserve - Spinning Reserve:
Summer On-Peak: $23.35 per MW-reserved per hour
Summer Off-Peak: $13.34 per MW-reserved per hour
Winter On-Peak: $13.32 per MW-reserved per hour
Winter Off-Peak: $7.61 per MW-reserved per hour
Operating Reserve - Supplemental Reserve:
Summer On-Peak: $23.35 per MW-reserved per hour
Summer Off-Peak: $13.34 per MW-reserved per hour
Winter On-Peak: $13.32 per MW-reserved per hour
Winter Off-Peak: $7.61 per MW-reserved per hour
The summer months shall consist of the months of June through September. The
winter months shall consist of the months of January through May and the months
of October through December.
The On-Peak periods shall consist of Hour Ending (HE) 0700 through HE 2200 PPT,
Monday through Saturday. The Off-Peak periods shall consist of HE 0100 through
HE 0600, HE 2300 and HE 2400 PPT, Monday through Saturday; HE 0100 through HE
2400 PPT Sunday and additional Off-Peak days (holidays) as designated annually
by WSCC.
*SUBJECT TO FERC APPROVAL
-------------------------
B-1
EXHIBIT C
XXXX XXXXXXX BUNDLE
SUPPLIER'S MONTHLY INVOICE
A Price Ceiling of Energy $41.44 /MWh
B Price Floor of Energy $23.83 /MWh
MONTH 1 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Capacity
---- ------------ ----------- -------------- ----------------- ---------------- ---------------------
(C - D) (D x F) (C x F)
1 590 590 - 40.00 $23,600.00 $23,600.00
2 590 590 - 40.00 23,600.00 23,600.00
3 590 530 60 40.00 21,200.00 23,600.00
4 590 530 60 40.00 21,200.00 23,600.00
5 460 450 10 30.00 13,500.00 13,800.00
6 490 490 - 30.00 14,700.00 14,700.00
7 580 560 20 20.00 11,200.00 11,600.00
8 590 590 - 20.00 11,800.00 11,800.00
9 590 590 - 20.00 11,800.00 11,800.00
10 590 590 - 25.00 14,750.00 14,750.00
--------------------------------------------------------------------------------------------------------------------------------
5,660 5,510 150 $167,350.00 $ 172,850.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $167,350.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $ 172,850.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling of Energy Sec 7.2.2 $228,334.40
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $ 234,550.40
K. Sum of hourly Delivered Energy multiplied by the Price Floor of Energy Sec 7.2.3 $131,303.30
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $ 134,877.80
L. Invoiced Amount - Energy Sec 7.3 (K ** I ** J) $167,350.00
M. Theoretical Amount for Expected Performance (KT ** IT ** JT) $ 172,850.00
** less than
*** Greater than
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------
N O P Q R S
Schedule of Ancillary
Dispatch Ancillary Capacity Supplier Capacity Price of Price x Ancillary Price x Schedule
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- -------------- ----------------- ----------------------
(N - O) (O x Q) (N x Q)
1 - - - 16.35 $ - $ -
2 - - - 16.35 - -
3 - - - 28.61 - -
4 - - - 28.61 - -
C-1
EXHIBIT C
XXXX XXXXXXX BUNDLE
SUPPLIER'S MONTHLY INVOICE
5 30 30 - 28.61 858.30 858.30
6 - - - 28.61 - -
7 - - - 28.61 - -
8 - - - 28.61 - -
9 - - - 28.61 - -
10 - - - 28.61 - -
-------------------------------------------------------------------------------------------------------------------------------
30 30 - $ 858.30 $ 858.30
T. Invoiced Amount - Ancillary Service Capacity - Regulation
and Frequency Response Sec 7.2.5 $ 858.30
U. Theoretical Amount for Expected Performance $ 858.30
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------
V W X Y Z AA
Dispatch Schedule of Ancillary Supplier Capacity Price of Price x Ancillary Price x Schedule
Ancillary Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(V - W) (W x Y) (V x Y)
1 - - - 13.34 $ - $ -
2 - - - 13.34 - -
3 - - - 23.35 - -
4 - - - 23.35 - -
5 80 80 - 23.35 1,868.00 1,868.00
6 80 60 20 23.35 1,401.00 1,868.00
7 - - - 23.35 - -
8 - - - 23.35 - -
9 - - - 23.35 - -
10 - - - 23.35 - -
------------------------------------------------------------------------------------------------------------------------------
160 140 20 $3,269.00 $ 3,736.00
AB. Invoiced Amount - Ancillary Service Capacity - Spinning Reserve Sec 7.2.5 $3,269.00
AC. Theoretical Amount for Expected Performance $ 3,736.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
-----------------------------------------------------------
AD AE AF AG AH AI
Dispatch Schedule of Ancillary Supplier Capacity Price of Price x Ancillary Price x Schedule
Ancillary Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
--- ------------- ------------ -------------- --------------- ----------------- ----------------------
(AE x AG) (AD x AG)
1 - - - 13.34 $ - $ -
2 - - - 13.34 - -
3 - - - 23.35 - -
4 - - - 23.35 - -
5 10 10 - 23.35 233.50 233.50
6 10 10 - 23.35 233.50 233.50
7 10 10 - 23.35 233.50 233.50
C-2
EXHIBIT C
XXXX XXXXXXX BUNDLE
SUPPLIER'S MONTHLY INVOICE
8 - - - 23.35 - -
9 - - - 23.35 - -
10 - - - 23.35 - -
---------------------------------------------------------------------------------------------------------------------------------
30 30 - $700.50 $ 700.50
AJ. Invoiced Amount - Ancillary Service Capacity - Supplemental Reserve Sec 7.2.5 $700.50
AK. Theoretical Amount for Expected Performance $ 700.50
MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------
AL AM AN AO AP AQ
Dispatch Schedule of Ancillary Energy Supplier Price Ceiling of Price x Ancillary Price x Schedule
Ancillary
Hour Energy (MWh Supplied (MWh) Shortfall (MWh) Energy ($/MWh) Energy Supplied of Ancillary Energy
---- ----------- -------------- --------------- -------------- --------------- -------------------
(AL - AM) (AM x AO) (AL x AO)
1 - - - 41.44 $ - $ -
2 - - - 41.44 - -
3 - - - 41.44 - -
4 - - - 41.44 - -
5 40 40 - 41.44 1,657.60 1,657.60
6 30 10 20 41.44 414.40 1,243.20
7 10 10 - 41.44 414.40 414.40
8 - - - 41.44 - -
9 - - - 41.44 - -
10 - - - 41.44 - -
---------------------------------------------------------------------------------------------------------------------------------
80 60 20 $414.40 $2,486.40 $3,315.20
AR. Invoiced Amount - Ancillary Services Energy Sec 7.2.6 $2,486.40
AS. Theoretical Amount for Expected Performance $3,315.20
MONTH 1 - TOTAL INVOICE AMOUNT Sec 7.3 (L + T + AB + AJ + AR) $174,664.20
==========================================================================================================================
MONTH 2 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy $/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ---------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 590 590 - 45.00 $26,550.00 $26,550.00
2 590 590 - 45.00 26,550.00 26,550.00
3 590 530 60 45.00 23,850.00 26,550.00
4 590 530 60 55.00 29,150.00 32,450.00
C-3
EXHIBIT C
XXXX XXXXXXX BUNDLE
SUPPLIER'S MONTHLY INVOICE
5 460 450 10 55.00 24,750.00 25,300.00
6 490 490 - 55.00 26,950.00 26,950.00
7 580 560 20 35.00 19,600.00 20,300.00
8 590 590 - 35.00 20,650.00 20,650.00
9 590 590 - 35.00 20,650.00 20,650.00
10 590 590 - 40.00 23,600.00 23,600.00
----------------------------------------------------------------------------------------------------------------------
5,660 5,510 150 $242,300.00 $249,550.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $242,300.00
IT. Sum of (Asset Bundle Capacity times corresponding $249,550.00
J. Sum of hourly Delivered Energy multiplied by the Sec 7.2.2 $228,334.40
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $234,550.40
K. Sum of hourly Delivered Energy multiplied by the Price Floor of Energy Sec 7.2.3 $131,303.30
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $134,877.80
L. Invoiced Amount - Energy Sec 7.3 (I > J) $228,334.40
M. Theoretical Amount for Expected Performance (IT > JT) $234,550.40
MONTH 3 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ----------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 590 590 - 30.00 $ 17,700.00 $ 17,700.00
2 590 590 - 20.00 11,800.00 11,800.00
3 590 530 60 20.00 10,600.00 11,800.00
4 590 530 60 20.00 10,600.00 11,800.00
5 460 450 10 15.00 6,750.00 6,900.00
6 490 490 - 15.00 7,350.00 7,350.00
7 580 560 20 15.00 8,400.00 8,700.00
8 590 590 - 15.00 8,850.00 8,850.00
9 590 590 - 15.00 8,850.00 8,850.00
10 590 590 - 15.00 8,850.00 8,850.00
-------------------------------------------------------------------------------------------------------------------------
5,660 5,510 150 $ 99,750.00 $102,600.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $ 99,750.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $102,600.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling of Sec 7.2.2 $228,334.40
Energy
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $234,550.40
C-4
EXHIBIT C
XXXX XXXXXXX BUNDLE
SUPPLIER'S MONTHLY INVOICE
K. Sum of hourly Delivered Energy multiplied by the PriceFloor of Sec 7.2.3 $ 131,303.30
Energy
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $134,877.80
L. Invoiced Amount - Sec 7.3 (I ** K) $ 131,303.30
Energy
M. Theoretical Amount for Expected Performance (IT ** KT) $134,877.80
** less than
*** Greater than
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
C-5
EXHIBIT D
XXXX XXXXXXX BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ENERGY
----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 60 35.00 100.00 2,200.00
4 60 30.00 50.00 1,850.00
5 10 30.00 50.00 350.00
6 0 na 0.00 0.00
7 20 25.00 0.00 500.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
------------------------------------------------------------------------------------------------
150 $ 4,900.00
X. Xxxxx Replacement Cost of Energy $ 4,900.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 172,850.00
G. Actual Supplier's Invoice Amount 167,350.00
--------------------
H. Avoided Payment to Supplier (F - G) $ 5,500.00
I. Invoiced Replacement Cost - Energy (E ** H) $ 0.00
** less than
*** Greater than
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------
J K * L * M
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------ ------------------ ------------- ----------------
(J x K) + L
1 0 na $0.00 $0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-------------------------------------------------------------------------------------------
0 $ 0.00
X. Xxxxx Replacement Cost of Ancillary Capacity - $ 0.00
Regulation & Frequency Response
O. Theoretical Supplier's Invoice Amount for Expected Performance $ 858.30
P. Actual Supplier's Invoice Amount 858.30
--------------
Q. Avoided Payment to Supplier (O - P) $ 0.00
R. Invoiced Replacement Cost - Ancillary Capacity (N = Q) $ 0.00
D-1
EXHIBIT D
XXXX XXXXXXX BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------
S T * U * V
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(S x T) + U
1 0 na $0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 40.00 100.00 900.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-----------------------------------------------------------------------------------------------
20 $ 900.00
X. Xxxxx Replacement Cost of Ancillary Capacity - Spinning Reserve $ 900.00
X. Theoretical Supplier's Invoice Amount for Expected Performance $ 3,736.00
Y. Actual Supplier's Invoice Amount 3,269.00
-------------------
Z. Avoided Payment to Supplier (X - Y) $ 467.00
AA. Invoiced Replacement Cost - Ancillary Capacity (W > Z) $ 433.00
MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
---------------------------------------------------
AB AC * AD * AE
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ---------------- ----------------
(AB x AC) + AD
1 0 na $0.00 $0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-----------------------------------------------------------------------------------------------
0 $ 0.00
AF. Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve $ 0.00
AG. Theoretical Supplier's Invoice Amount for Expected Performance $ 700.50
AH. Actual Supplier's Invoice Amount 700.50
-------------------
AI. Avoided Payment to Supplier (AG - AH) $ 0.00
D-2
EXHIBIT D
XXXX XXXXXXX BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
AJ. Invoiced Replacement Cost - Ancillary Capacity (AF = AI) $ 0.00
MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------
AK AL * AM * AN
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy ** Cost of Energy
---- ------------ ----------------- -------------- --------------
(AK x AL) + AM
1 0 na $0.00 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 50.00 20.00 1,020.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-----------------------------------------------------------------------------------------------------
20 $ 1,020.00
AO. Gross Replacement Cost of Ancillary Energy $ 1,020.00
AP. Theoretical Supplier's Invoice Amount for Expected Performance $ 3,315.20
AQ. Actual Supplier's Invoice Amount 2,486.40
AR. Avoided Payment to Supplier (AP - AQ) $ 828.80
AS. Invoiced Replacement Cost - Ancillary Energy (AO > AR) $ 191.20
MONTH 1 - TOTAL INVOICE AMOUNT (I + R + AA + AJ + AS) $ 624.20
==================================================================================================
MONTH 2 - ENERGY
----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $0.00 0.00
2 0 na 0.00 0.00
3 60 40.00 200.00 2,600.00
4 60 55.00 100.00 3,400.00
5 10 48.00 200.00 680.00
6 0 na 0.00 0.00
7 20 35.00 300.00 1,000.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-----------------------------------------------------------------------------------------------
150 $7,680.00
D-3
EXHIBIT D
XXXX XXXXXXX BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
X. Xxxxx Replacement Cost of Energy $ 7,680.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 234,550.40
G. Actual Supplier's Invoice Amount 228,334.40
-----------------
H. Avoided Payment to Supplier (F - G) $ 6,216.00
I. Invoiced Replacement Cost - Energy (E *** H) $ 1,464.00
** less than
*** Greater than
MONTH 3 - ENERGY
----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $0.00 0.00
2 0 na 0.00 0.00
3 60 27.00 100.00 1,720.00
4 60 22.00 50.00 1,370.00
5 10 22.00 0.00 220.00
6 0 na 0.00 0.00
7 20 22.00 50.00 490.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-----------------------------------------------------------------------------------------------------
150 $ 3,800.00
X. Xxxxx Replacement Cost of Energy $ 3,800.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 134,877.80
G. Actual Supplier's Invoice Amount 131,303.30
-----------------
H. Avoided Payment to Supplier (F - G) $ 3,574.50
I. Invoiced Replacement Cost - Energy (E ** H) $ 225.50
** less than
*** Greater than
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
EXHIBIT E
XXXX XXXXXXX BUNDLE
YEAR END TRUE-UP INVOICE
A Price Ceiling of Energy $ 41.44 /MWh
B Price Floor of Energy $ 23.83 /MWh
EXAMPLE 1
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Super's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ----------------
(A X C) (B x C)
1 5,510 $ 167,350,00 $ 228,303,30 $ 131,303,30 167,350,00
2 5,510 242,300,00 228,334,40 131,303,30 228,334,40
D-4
EXHIBIT E
XXXX XXXXXXX BUNDLE
YEAR END TRUE-UP INVOICE
3 5,510 99,750.00 228,334.40 131,303.30 131,303.30
4 5,900 283,200.00 244,496.00 140,597.00 244,496.00
5 5,900 259,600.00 244,496.00 140,597.00 244,496.00
6 5,700 250,800.00 236,208.00 135,831.00 236,208.00
7 5,900 271,400.00 244,496.00 140,597.00 244,496.00
8 5,900 259,600.00 244,496.00 140,597.00 244,496.00
9 5,360 241,200.00 222,118.40 127,728.80 222,118.40
10 5,900 247,800.00 244,496.00 140,597.00 244,496.00
11 5,900 300,900.00 244,496.00 140,597.00 244,496.00
12 5,600 257,600.00 232,064.00 133,448.00 232,064.00
------------------------------------------------------------------------------------------------------
Total 68,590 $2,881,500.00 $2,842,369.60 $1,634,499.70 $2,684,354.10
(Total of Column D) > (Total of Column E) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(a)
----------------------
H. Annual True-up - Delivered Energy (Total E - Total G) $158,015.50
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total E / Total C) $ 41.44
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,464.00
3 150 3,800.00 225.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
--------------------------------------------------------------------------------------------------------
Total 450 $18,648.00 $16,380.00 $0.00 $ 1,689.50
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,689.50
Total Annual True-up * (H + O) $159,705.00
=======================================================================================================
EXAMPLE 2
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
------ ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 5,510 $ 167,350.00 $ 228,334.40 $ 131,303.30 $ 167,350.00
2 5,510 242,300.00 228,334.40 131,303.30 228,334.40
3 5,510 99,750.00 228,334.40 131,303.30 131,303.30
E-2
EXHIBIT E
XXXX XXXXXXX BUNDLE
YEAR END TRUE-UP INVOICE
4 5,900 224,200.00 244,496.00 140,597.00 224,200.00
5 5,900 218,300.00 244,496.00 140,597.00 218,300.00
6 5,700 193,800.00 236,208.00 135,831.00 193,800.00
7 5,900 283,200.00 244,496.00 140,597.00 244,496.00
8 5,900 200,600.00 244,496.00 140,597.00 200,600.00
9 5,360 203,680.00 222,118.40 127,728.80 203,680.00
10 5,900 206,500.00 244,496.00 140,597.00 206,500.00
11 5,900 259,600.00 244,496.00 140,597.00 244,496.00
12 5,600 218,400.00 232,064.00 133,448.00 218,400.00
-------------------------------------------------------------------------------------------------
Total 68,590 $2,517,680.00 $2,842,369.60 $1,634,499.70 $2,481,459.70
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------
H. Annual True-up - Delivered Energy (Total D - Total G) $36,220.30
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $ 36.71
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,464.00
3 150 3,800.00 225.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
--------------------------------------------------------------------------------------------------------------
Total 450 $16,517.80 $16,380.00 $0.00 $ 1,689.50
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,689.50
Total Annual True-up * (H + O) $37,909.80
==============================================================================================================
EXAMPLE 3
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 5,510 $167,350.00 $228,334.40 $131,303.30 $167,350.00
2 5,510 242,300.00 228,334.40 131,303.30 228,334.40
3 5,510 99,750.00 228,334.40 131,303.30 131,303.30
4 5,900 188,800.00 244,496.00 140,597.00 188,800.00
E-3
EXHIBIT E
XXXX XXXXXXX BUNDLE
YEAR END TRUE-UP INVOICE
5 5,900 177,000.00 244,496.00 140,597.00 177,000.00
6 5,700 159,600.00 236,208.00 135,831.00 159,600.00
7 5,900 153,400.00 244,496.00 140,597.00 153,400.00
8 5,900 159,300.00 244,496.00 140,597.00 159,300.00
9 5,360 134,000.00 222,118.40 127,728.80 134,000.00
10 5,900 147,500.00 244,496.00 140,597.00 147,500.00
11 5,900 123,900.00 244,496.00 140,597.00 140,597.00
12 5,600 123,200.00 232,064.00 133,448.00 133,448.00
-------------------------------------------------------------------------------------------------
Total 68,590 $1,876,100.00 $2,842,369.60 $1,634,499.70 $1,920,632.70
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------
H. Annual True-up - Delivered Energy (Total D - Total G) $(44,532.70)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $ 27.35
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ ----------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,464.00
3 150 3,800.00 225.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
----------------------------------------------------------------------------------------------------------
Total 450 $12,308.57 $16,380.00 $4,071.43 $ 1,689.50
O. Annual True-up - Replacement Costs (Total N - Total M) $ (2,381.93)
Total Annual True-up * (H + O) $ (46,914.63)
==========================================================================================================
EXAMPLE 4
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 5,510 $167,350.00 $228,334.40 $131,303.30 $167,350.00
2 5,510 242,300.00 228,334.40 131,303.30 228,334.40
3 5,510 99,750.00 228,334.40 131,303.30 131,303.30
4 5,900 129,800.00 244,496.00 140,597.00 140,597.00
E-4
EXHIBIT E
XXXX XXXXXXX BUNDLE
YEAR END TRUE-UP INVOICE
5 5,900 100,300.00 244,496.00 140,597.00 140,597.00
6 5,700 131,100.00 236,208.00 135,831.00 135,831.00
7 5,900 135,700.00 244,496.00 140,597.00 140,597.00
8 5,900 82,600.00 244,496.00 140,597.00 140,597.00
9 5,360 96,480.00 222,118.40 127,728.80 127,728.80
10 5,900 112,100.00 244,496.00 140,597.00 140,597.00
11 5,900 70,800.00 244,496.00 140,597.00 140,597.00
12 5,600 106,400.00 232,064.00 133,448.00 133,448.00
-------------------------------------------------------------------------------------------------
Total 68,590 $1,474,680.00 $2,842,369.60 $1,634,499.70 $1,767,577.50
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------
H. Annual True-up - Delivered Energy (Total F - Total G) $(133,077.80)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total F / Total C) $ 23.83
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ----------- -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,464.00
3 150 3,800.00 225.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
---------------------------------------------------------------------------------------------------------
Total 450 $ 10,723.50 $ 16,380.00 $ 5,656.50 $ 1,689.50
O. Annual True-up - Replacement Costs (Total N - Total M) $ (3,967.00)
Total Annual True-up * (H + O) $ (137,044.80)
=========================================================================================================
* Positive Total Annual True-up is indicative of a payment form Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment form Supplier
to Buyer.
E-5
EXHIBIT F
NOTICES, BILLING AND PAYMENT INSTRUCTIONS
Supplier:
--------
a) Agreement Notices: Name and Address: __________________________
------------------
Phone: _____________________________________
Fax: _____________________________________
b) Payment Check: Name and Address: __________________________
--------------
c) Payment Wire Transfer: Bank: ______________________________________
----------------------
ABA #: _____________________________________
For: Supplier's Name _____________________
Account No: ________________________________
For: _______________________________________
d) Invoices: Name and Address: __________________________
--------
Phone: _____________________________________
Fax: _______________________________________
e) Operating Notifications:
-----------------------
i) (Management, if required)
ii) Pre-Schedule: Phone: _____________________________________
Fax: _______________________________________
iii) Real Time: Phone: _____________________________________
Fax: _______________________________________
iv) Monthly Checkout Phone: _____________________________________
Person: Fax: _______________________________________
F-6
Buyer:
-----
a) Agreement Notices:
-----------------
Address: Xxxx Xxxxxxxxx
Manager, Resource Contracts
Nevada Power Company
0000 Xxxx Xxxxxx Xxxxxx, X/X 00X
Xxx Xxxxx, Xxxxxx 00000
Phone: 702/000-0000
Fax: 702/227-2455
E-mail: xxxxxxxxxx@xxxx.xxx
b) Invoices:
--------
US Post Office: (Via Certified Mail) Overnight Delivery
-------------- ------------------
Address: Nevada Power Company Address: Nevada Power Company
Attn: Xxxxx Xxxxx Attn: Xxxxx Xxxxx
X.X. Xxx 000, M/S 20 0000 Xxxx Xxxxxx Xxx., X/X 00
Xxx Xxxxx, Xxxxxx 00000 Xxx Xxxxx, Xxxxxx 00000
Telephone: 702/000-0000
Fax: 702/000-0000
E-mail: xxxxxx@xxxx.xxx
c) Schedules:
---------
i) Pre-Schedule: Primary Name: Xxxx Xxxxxxxxxxx Phone: 702/000-0000
E-mail: xxxxxxxxxxxx@xxxx.xxx
Alternate Name: Xxx Xxxxxxxx Phone: 702/000-0000
E-mail: xxxxxxxxx@xxxx.xxx
Fax: 702/000-0000
ii) Real Time: Phone: 702/000-0000
Fax: 702/000-0000
iii) Monthly Checkout: Xxxxx Xxxxx Phone: 702/000-0000
Fax: 702/000-0000
E-mail: xxxxxx@xxxx.xxx
d) Control Area/Transmission:
-------------------------
i) Reliability Dispatch: Phone:(000) 000-0000
Fax:(000) 000-0000
ii) Transmission Dispatch: Phone:(000) 000-0000
Fax:(000) 000-0000
F-7
EXHIBIT G
FORM OF AVAILABILITY NOTICE*
Date of Notice:
Time of Notice:
Supplier:
Name of Supplier's Representative:
Buyer:
Asset Bundle:
Availability Dates (96 hours total):
A B C D E F G
Availability Hour Available from Total Derating of Permitted Asset Bundle Available Total Derating Permitted
Date Ending Valmy Unit Valmy Unit (MW) Derating Capacity of from Valmy Of Valmy Derating of
---- ------ ---- -------------- Xxxx 0 (XX) Xxxx 0 (XX) Xxxx 0 (XX) Xxxx 0 (XX) Xxxx 0 (XX)
0 (XX) ----------- ----------- ---------- ----------- -----------
-----
(A *** or = ____) (___ - A) (C) *** or = B) (A - C) (E *** or = ___) (___ - E) (B *** or = F)
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
0100
0200
0300
0400
0500
0600
0700
:
(96 hours total)
:
300
400
500
H I** J
Asset bundle Alternative Cause and Expected Duration of
Availability Hour Capacity of Point(s) of Deratings and Identification
Date Ending Unit 2 (MW) Delivery Permitted Deratings
---- ------ ---------- ------- -------------------
(G - E)
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
0100
0200
0300
0400
0500
0600
0700
:
(96 hours total)
:
300
400
500
* The Parties' operational personnel shall develop a similar form for the
other generating units in the bundle.
** The Parties' operational personnel shall develop the necessary procedure
to document requests and responses to utilize Alternative Point(s) of
Delivery.
*** less than
**** Greater than
G-1
EXHIBIT H
FORM OF GUARANTEE
This Guarantee is entered into as of November 16, 2000 by NRG Energy,
Inc., a Delaware corporation, and Dynegy Holdings Inc., a Delaware corporation
(each, a "Guarantor"), on behalf of Xxxx Xxxxxxx Power LLC, a Delaware limited
liability company ("Supplier"), in favor of and for the benefit of Nevada Power
Company, a Nevada corporation ("NPC"). NPC is sometimes referred to herein as
"Beneficiary".
WHEREAS, Supplier and NPC are entering into a Transitional Power
Purchase Agreement dated as of November 16, 2000 (the "TPPA") by which Supplier
has agreed to sell and NPC has agreed to buy Energy and Ancillary Services (as
defined in the TPPA) produced by the Xxxx Xxxxxxx generating station being sold
by NPC; and
WHEREAS, it is a condition to the obligation of NPC to enter into the
TPPA for Guarantor to guarantee the Supplier's obligations under the TPPA in an
amount not to exceed the Credit Amount (as defined in the TPPA) (the "Guarantied
Obligations").
1. Guarantee. Each Guarantor jointly and severally, and irrevocably and
unconditionally, guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Guarantied Obligations (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C.(S)362(a)).
In the event that all or any portion of the Guarantied Obligations is
paid by Supplier, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from the Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations (to the extent such payments, in the
aggregate, do not exceed the Credit Amount).
Subject to the other provisions of this Section 1, upon failure of
Supplier to pay any of the Guarantied Obligations when and as the same shall
become due, the Guarantors will upon demand pay, or cause to be paid, in cash,
to NPC, an amount equal to the aggregate of the unpaid Guarantied Obligations to
the extent due. In the event the Guarantors fail to pay the Guarantied
Obligations, each and every default in the payment shall give rise to a separate
cause of action and separate causes of action may be brought hereunder as each
such cause of action arises. In no event shall the amount recoverable hereunder
by Beneficiary from the Guarantors, singly or jointly, ever exceed the Credit
Amount (as defined in the TPPA).
2. Expenses. Each Guarantor agrees to reimburse NPC for all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any default by such Guarantor
hereunder and any enforcement or collection proceeding resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with bankruptcy, insolvency, receivership, foreclosure, winding up
or liquidation proceedings of or involving the Guarantor, judicial or regulatory
proceedings of or
H-3
involving the Guarantor and workout, restructuring or other negotiations or
proceedings of or involving the Guarantor (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 2.
3. Guarantee Absolute; Continuing Guarantee. The obligations of each
Guarantor hereunder are joint and several, irrevocable, absolute, independent
and unconditional, and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantors agree that: (a) this
Guarantee is a guarantee of payment when due and not of collectibility; (b) the
obligations of each Guarantor hereunder are independent of the obligations of
Supplier under the TPPA and a separate action or actions may be brought and
prosecuted against either Guarantor whether or not any action is brought against
the Supplier and whether or not the Supplier is joined in any such action or
actions; and (c) either Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantors' liability for any portion of the Guarantied Obligations that has not
been paid. This Guarantee is a continuing guarantee and shall be binding upon
the Guarantors and its successors and assigns.
4. Actions by Beneficiary. The Beneficiary may from time to time,
without notice or demand and without affecting the validity or enforceability of
this Guarantee or giving rise to any limitation, impairment or discharge of the
Guarantors' liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guarantee or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security hereafter held by
or for the benefit of the Beneficiary in respect of this Guarantee or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Beneficiary may have against any
such security, and (f) exercise any other rights available to NPC under the
TPPA.
5. No Discharge. This Guarantee and the obligations of each Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guarantee of or
security for the payment of the Guarantied Obligations, (b) any waiver or
H-4
modification of, or any consent to departure from, any of the terms or
provisions of any other guarantee or security for the Guarantied Obligations,
(c) the Guarantied Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even if the Beneficiary might have
elected to apply such payment to any part or all of the Guarantied Obligations,
(e) any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (f) any defenses,
set-offs or counterclaims which the Supplier may assert against the Beneficiary
in respect of the Guarantied Obligations, including but not limited to failure
of consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction (other than the right to set off or recoup
overdue undisputed payments due from Beneficiary under the TPPA), and (g) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of either Guarantor as an
obligor in respect of the Guarantied Obligations.
6. Waivers for the Benefit of Beneficiary. Each Guarantor waives, for
the benefit of Beneficiary, until the Guarantied Obligations are paid in full:
(a) any right to require the Beneficiary, as a condition of payment or
performance by the Guarantors, to (i) proceed against the Supplier, any other
guarantor of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any security held from the Supplier, any other guarantor of
the Guarantied Obligations or any other Person, or (iii) pursue any other remedy
in the power of the Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the Supplier
including, without limitation, any defense based on or arising out of the lack
of validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Supplier from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (d) (i) any
principles or provisions of law, statutory or otherwise, that are or might be in
conflict with the terms of this Guarantee and any legal or equitable discharge
of Guarantors' obligations hereunder, (ii) the benefit of any statute of
limitations affecting Guarantors' liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that the Beneficiary protect, secure,
perfect or insure any lien on any property subject thereto; (e) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guarantee; and
(f) to the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guarantee.
7. Waiver of Rights Against Supplier. Until the Guarantied Obligations
are paid in full, each Guarantor waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against the Supplier
or any of its assets in connection with this Guarantee or the performance by
such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (a) any right of subrogation,
reimbursement or
H-5
indemnification that such Guarantor now has or may hereafter have against the
Supplier, (b) any right to enforce, or to participate in, any claim, right or
remedy that the Beneficiary now has or may hereafter have against the Supplier,
and (c) any benefit of, and any right to participate in, any collateral or
security hereafter held by the Beneficiary. Each Guarantor further agrees that,
to the extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement and indemnification as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against the Supplier or against any collateral or security shall be junior and
subordinate to any rights the Beneficiary may have against Supplier, to all
right, title and interest the Beneficiary may have in any such collateral or
security, and to any right the Beneficiary may have against such other
guarantor.
8. Representations and Warranties of Guarantor. Each Guarantor
represents and warrants to NPC as follows:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Such Guarantor has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
(b) it has the corporate power and authority to execute and deliver
this Guarantee and to consummate the transactions contemplated hereby. The
execution and delivery of this Guarantee and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of such Guarantor, and no other corporate proceedings on the
part of such Guarantor, including the approval of its shareholders, are
necessary to authorize this Guarantee or to consummate the transactions so
contemplated. This Guarantee has been duly and validly executed and delivered by
such Guarantor and constitutes a valid and binding agreement of such Guarantor,
enforceable against such Guarantor in accordance with its terms.
(c) There are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or (to such
Guarantor's knowledge) threatened against such Guarantor or its subsidiaries
that could reasonably be expected to have a material adverse effect on the
consolidated financial condition, operations or business taken as a whole of it
and its subsidiaries, except as set forth in periodic filings by such Guarantor
with the Securities and Exchange Commission.
(d) The representations and warranties made herein will remain true
until such Guarantor has fulfilled its obligations to pay in full the Guaranteed
Obligations.
9. Set Off. In addition to any other rights the Beneficiary may have
under law or in equity, if any amount shall at any time be due and owing by
either Guarantor to the Beneficiary under this Guarantee, the Beneficiary is
authorized at any time or from time to time, without notice (any such notice
being expressly waived), to set off and to appropriate and to apply any
indebtedness of the Beneficiary owing to such Guarantor and any other property
of such
H-6
Guarantor held by the Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to the Beneficiary under this Guarantee.
10. Disputes. Any action, claim or dispute arising out of or relating
to this Guarantee (any such action, claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. In the event the Guarantors and NPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either the Guarantors or NPC may initiate
arbitration through the serving and filing of a demand for arbitration. The
Guarantors and NPC expressly agree that such arbitration shall be the exclusive
means to further resolve any Dispute and hereby irrevocably waive their right to
a jury trial with respect to any Dispute, provided that at any time a request
made for provisional remedies requesting preservation of respective rights and
obligations under the Guarantee may be resolved by a court of law located in the
County of the principal place of business of NPC. Arbitration shall be conducted
in accordance with Sections 13.4, 13.5, 13.6, 13.7, and 13.8 of the TPPA.
11. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guarantee, and no consent to any departure by
either Guarantor therefrom, shall in any event be effective without the written
concurrence of NPC and, in the case of any such amendment or modification,
either Guarantor. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
12. Miscellaneous. It is not necessary for Beneficiary to inquire into
the capacity or powers of either Guarantor or Supplier or the officers,
directors or any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiary by this Guarantee are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiary by virtue of any statute or rule of law or in the
TPPA. Any forbearance or failure to exercise, and any delay by Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guarantee shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This Guarantee shall inure to the benefit of Beneficiary and its
respective successors and assigns.
13. Notices. All notices, requests, demands, waivers, consents and
other communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by overnight air
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means, (b) one (1) business day after having been
H-7
delivered to an air courier for overnight delivery or (c) three (3) business
days after having been deposited in the U.S. mails as certified or registered
mail, return receipt requested, all fees prepaid, directed to the parties at the
following addresses:
If to Guarantors, addressed to: Xxxxx Xxxxx, Esq.
NRG Energy, Inc.
Symphony Towers
Suite 2740
000 "X" Xxxxxx
Xxx Xxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxxx, Esq.
Dynegy Holdings Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
with copies to: Xxxxxxx X. Xxxxxx, Esq.
Stoel Rives LLP
000 XX Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
If to NPC, addressed to: Xxxxxxx X. Xxxxxxxx
Nevada Power Company
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first written above.
NRG ENERGY, INC. DYNEGY HOLDINGS INC.
-------------------------------- --------------------------------
By: Xxxxx X. Xxxxxxxxxxx By: _______________________
Title: President Title: _______________________
Address: 000 Xxxxxxxxx Xxx., Xxxxx 0000 Address: 0000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
H-8
EXHIBIT I
COMPANY OBSERVED HOLIDAYS
New Year's Day January 1/st/
Xxxxxx Xxxxxx Xxxx'x Day Third Monday in January
President's Day Third Monday in February
Memorial Day (observed) Last Monday in May
Independence Day July 4/th/
Labor Day First Monday in September
Veteran's Day November 11/th/
Thanksgiving Day Fourth Thursday in November
Thanksgiving Friday Friday after Thanksgiving
Christmas Eve December 24/th/
Christmas Day December 25/th/
Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.
I-1
EXHIBIT J
XXXX XXXXXXX BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
Monthly Monthly
Month Adjustment Month Adjustment
---------------------------- ---------------------------
Mar-01 3.7% Mar-02 2.9%
Apr-01 3.2% Apr-02 2.7%
May-01 4.8% May-02 4.0%
Jun-01 5.6% Jun-02 4.5%
Jul-01 8.8% Jul-02 9.2%
Aug-01 8.3% Aug-02 7.3%
Sep-01 8.8% Sep-02 7.1%
Oct-01 4.4% Oct-02 3.4%
Nov-01 3.8% Nov-02 2.5%
Dec-01 3.9% Dec-02 2.5%
Jan-02 3.1% Jan-03 2.6%
Feb-02 2.5% Feb-03 2.1%
Example 1 - Effective Date of Agreement is April 15, 2001
---------------------------------------------------------
A. TPPA Amount: $15,000,000
B C D
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
--------------------------------------------------------------------------
(B x C)
Apr-01 3.2% 50.0% 1.6%
May-01 4.8% 100.0% 4.8%
--------------------------------------------------------------------------
Total 6.4%
E. Total of Monthly Applicable Adjustments 6.4%
F Adjusted TPPA Amount (A x (1+D)) $15,960,000
============================================================================================
Example 2 - Effective Date of Agreement is September 15, 2001
-------------------------------------------------------------
G. TPPA Amount: $15,000,000
H I J
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
----------------------------------------------------------------------------------------
(H x I)
Jun-01 5.6% 100.0% 5.6%
Jul-01 8.8% 100.0% 8.8%
Aug-01 8.3% 100.0% 8.3%
----------------------------------------------------------------------------------------
J-1
EXHIBIT J
XXXX XXXXXXX BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
Sep-01 8.8% 50.0% 4.4%
--------------------------------------------------------------------------
Total 27.1%
K. Total of Monthly Applicable Adjustments 27.1%
L Adjusted TPPA Amount (G x (1-K)) $10,935,000
========================================================================================
Example 3 - Termination Date of December 31, 2002
-------------------------------------------------
M. TPPA Amount: $15,000,000
N O P
Monthly Applicable Applicable
Month Adjustment Portion ** Adjustment
----------------------------------------------------------------------------------
(N x O)
Jan-03 2.6% 100.0% 2.6%
Feb-03 2.1% 100.0% 2.1%
----------------------------------------------------------------------------------
Total 4.7%
Q. Total of Monthly Applicable Adjustments 4.7%
R Payment Amount (M x Q) $705,000
===============================================================================================
* The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer were made divided by the
number of days in the month.
** The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer would have been made divided
by the number of days in the month.
J-2
EXHIBIT K
XXXX XXXXXXX BUNDLE
ADJUSTMENTS TO MINIMUM ANNUAL TAKE
A B C D E F
Base Number Base Energy Sales per Current Adjusted
Number Energy
Class * of Customers Sales Customer
(MWh) (MWh) of Customers Sales (MWh)
-------------------------------------------------------------------------------------------
(C / B) (D x E) **
Residential 475,000 5,800,000 12 470,000 5,738,947
Commercial 65,000 2,800,000 43 60,000 2,584,615
Industrial 1,000 4,900,000 800 3,600,000
Street Lighting 5 130,000 5 130,000
Other Retail 50 600,000 50 600,000
Wholesale 5 850,000 5 850,000
-------------------------------------------------------------------------------------------
541,060 15,080,000 530,860 13,503,563
G. Adjustment to Minimum Annual Take (F / C) 89.55%
H. Minimum Annual Take from Exhibit A (MWh) 2,550,000
I. Revised Minimum Annual Take (MWh) (G x H) 2,283,525
J K
Month During Applicable Min.
Contract Year Annual Take(MWh)
---------------------------------
1 2,550,000
2 2,550,000
3 2,550,000
4 2,550,000
5 2,283,525
6 2,283,525
7 2,283,525
8 2,167,500
9 2,167,500
10 2,040,000
11 2,040,000
12 2,040,000
---------------------------------
Total 27,505,575
L. Minimum Take for Contract Year (MWh) (Total of K / 12) 2,292,131
* As reported on Buyer's FERC Form 1
** Adjusted Energy Sales for the remaining Industrial, Street Lighting, Other
Retail, and Wholesale customers will be based upon actual sales during the
base period.
K-1
EXHIBIT L
XXXX XXXXXXX BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
A B C D E * F G **
Dispatch Supply Delivered Permitted Force Replacement Applicable
Hour Amount (MWh) Energy (MWh) Derating(MWh) Majeure(MWh) Energy(MWh) Energy(MWh)
--------------------------------------------------------------------------------------------
(C+D+E+F)
1 590 590 590
2 590 590 590
3 590 590 590
4 590 590 590
5 590 590 590
6 590 570 20 590
7 590 570 20 590
8 590 570 20 590
9 590 590 590
10 590 590 590
11 590 590 590
12 590 590 590
13 590 0 590 590
14 590 0 590 590
15 590 0 590 590
16 590 0 590 590
17 590 540 30 570
18 590 590 590
19 590 590 590
20 590 590 590
21 590 590 590
22 590 590 590
23 590 590 590
24 560 560 560
25 540 540 540
26 510 510 510
27 540 510 30 540
28 560 560 560
29 590 590 590
30 590 590 590
31 590 590 590
32 590 590 590
K-2
EXHIBIT L
XXXX XXXXXXX BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
33 590 590 590
34 590 590 590
35 590 590 590
36 590 590 590
-------------------------------------------------------------------------------
total 21,000 18,500 70 2,360 50 20,980
* Includes energy excused because of Supplier's and Buyer's events of Force
Majeure
** G cannot be greater than B
EXHIBIT M
XXXX XXXXXXX BUNDLE
CONTRACTUAL AND OPERATIONAL CONSTRAINTS
1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean that
portion of the Asset Bundle Capacity that has been designated as being
subject to contractual and operational constraints in accordance with the
provisions of this Exhibit M.
2. Section 4.1.4 of the Agreement, which addresses Supplier's right to Asset
Bundle Capacity in excess of the Supply Amount, shall not be applicable to
Constrained Capacity.
3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
Agreement, which addresses Buyer's notifications to Supplier, shall not be
deemed to include Constrained Capacity unless Buyer's schedules specifically
designate Constrained Capacity as being applicable to the schedules.
4. The Asset Bundle Capacity described in the following table shall be deemed
Constrained Capacity.
---------------------------------------------------------------------------------------
Asset Bundle Source of Capacity Annual Limit Monthly Limit Daily Limit
---------------------------------------------------------------------------------------
Xxxx Xxxxxxx Unit 4 Peaking 1,500 hours at 300 hours at 12 hours at
(235 MW summer)/1/ max. capacity max. capacity max. capacity
---------------------------------------------------------------------------------------
____________________
/1/ As defined in Section 12.2 of the Participation Agreement (as defined in
the Asset Sale Agreement).
L-2
EXHIBIT L
XXXX XXXXXXX BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
33 590 590 590
34 590 590 590
35 590 590 590
36 590 590 590
70 2,360 50 20,980
total 21,000 18,500
* Includes energy excused because of Supplier's and Buyer's events of Force
Majeure
** G cannot be greater than B
EXHIBIT M
XXXX XXXXXXX BUNDLE
CONTRACTUAL AND OPERATIONAL CONSTRAINTS
1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean that
portion of the Asset Bundle Capacity that has been designated as being
subject to contractual and operational constraints in accordance with the
provisions of this Exhibit M.
2. Section 4.1.4 of the Agreement, which addresses Supplier's right to Asset
Bundle Capacity in excess of the Supply Amount, shall not be applicable to
Constrained Capacity.
3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
Agreement, which addresses Buyer's notifications to Supplier, shall not be
deemed to include Constrained Capacity unless Buyer's schedules specifically
designate Constrained Capacity as being applicable to the schedules.
4. The Asset Bundle Capacity described in the following table shall be deemed
Constrained Capacity.
---------------------------------------------------------------------------------------
Asset Bundle Source of Capacity Annual Limit Monthly Limit Daily Limit
---------------------------------------------------------------------------------------
Xxxx Xxxxxxx Unit 4 Peaking 1,500 hours at 300 hours at 12 hours at
(235 MW summer)1 max. capacity max. capacity max. capacity
---------------------------------------------------------------------------------------
____________________
1 As defined in Section 12.2 of the Participation Agreement (as defined in the
Asset Sale Agreement).
L-2
70
