EXHIBIT B-2
SERVICE COMPANY
FORM OF UTILITY SERVICE AGREEMENT
SERVICE AGREEMENT
This Service Agreement is made and entered into this day of
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, by and between ("Client Company") and CP&L
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Services ("Service Company").
WITNESSETH
WHEREAS, the Securities and Exchange Commission ("SEC") has approved and
authorized as meeting the requirements of Section 13(b) of the Public Utility
Holding Company Act of 1935 ("Act") the organization and conduct of the business
of Service Company, in accordance herewith, as a wholly-owned subsidiary service
company of CP&L Energy, Inc. ("CP&L Energy"); and
WHEREAS, Client Company is a utility operating company subsidiary of CP&L
Energy and an associate of Service Company; and
WHEREAS, Service Company and Client Company have entered into this Service
Agreement whereby Service Company agrees to provide and Client Company agrees to
accept and pay for various services as provided herein at cost, with cost
determined in accordance with applicable rules and regulations under the Act,
which require Service Company to fairly and equitably allocate costs among all
associate companies to which it renders services (collectively, the "Client
Companies"), including Client Company.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties to this Service Agreement covenant and agree as
follows:
ARTICLE I - SERVICES
Section 1.1 Service Company shall furnish to Client Company, as requested
by Client Company, upon the terms and conditions hereinafter set forth, such of
the services described in Appendix A hereto, at such times, for such periods and
in such manner as Client Company may from time to time request and that Service
Company concludes it is able to perform. Service Company shall also provide
Client Company with such special services, in addition to those services
described in Appendix A hereto, as may be requested by Client Company and that
Service Company concludes it is able to perform. In supplying such services,
Service Company may arrange, where it deems appropriate, for the services of
such experts, consultants, advisers, and other persons with necessary
qualifications as are required for or pertinent to the provision of such
services.
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Section 1.2 Client Company shall take from Service Company such of the
services described in Section 1.1, and such additional general or special
services, whether or not now contemplated, as are requested from time to time by
Client Company and that Service Company concludes it is able to perform.
Section 1.3 The cost of the services described herein or contemplated to be
performed hereunder shall be directly assigned, distributed or allocated by
activity, project, program, work order or other appropriate basis. Client
Company shall have the right from time to time to amend or alter any activity,
project, program or work order provided that (i) any such amendment or
alteration that results in a material change in the scope of the services to be
performed or equipment to be provided is agreed to by Service Company, (ii) the
cost for the services covered by the activity, project, program or work order
shall include any expense incurred by Service Company as a direct result of such
amendment or alteration of the activity, project, program or work order, and
(iii) no amendment or alteration of an activity, project, program or work order
shall release Client Company from liability for all costs already incurred by or
contracted for by Service Company pursuant to the activity, project, program or
work order, regardless of whether the services associated with such costs have
been completed.
Section 1.4 Service Company shall use its best efforts to maintain a staff
trained and experienced in the services described in Appendix A.
ARTICLE II - COMPENSATION
Section 2.1 As compensation for the services to be rendered hereunder,
Client Company shall pay to Service Company all costs, which reasonably can be
identified and related to particular services performed by Service Company for
or on its behalf. The methods for assigning or allocating Service Company costs
to Client Company, as well as to other associate companies, are set forth in
Appendix A.
Section 2.2 It is the intent of this Service Agreement that charges for
services shall be distributed among Client Companies, to the extent possible,
based upon direct assignment. The amounts remaining after direct assignment
shall be allocated among the Client Companies using the methods identified in
Appendix A. The method of assignment or allocation of cost shall be subject to
review annually, or more frequently if appropriate. Such method of assignment or
allocation of costs may be modified or changed by the Service Company without
the necessity of an amendment to this Service Agreement; provided that, in each
instance, all services rendered hereunder shall be at actual cost thereof,
fairly and equitably assigned or allocated, all in accordance with the
requirements of the Act and any orders promulgated thereunder. The Service
Company shall review with the Client Company any proposed material change in the
method of assignment or allocation of costs hereunder and the parties must agree
to any such changes before they are implemented. In addition, no such agreed
upon material change shall be made unless and until the Service Company shall
have first given written notice to the North Carolina Utilities Commission, the
Public Service Commission of South Carolina, and the Florida Public Service
Commission (collectively, the "State Commissions") and the SEC not less than 60
days prior to the proposed effective date thereof.
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Section 2.3 Service Company shall render a monthly report to Client
Company that shall reflect the information necessary to identify the costs
charged for that month. Client Company shall remit to Service Company all
charges billed to it within 30 days of receipt of the monthly report.
Section 2.4 It is the intent of this Service Agreement that the payment
for services rendered by Service Company to Client Company under this Service
Agreement shall cover all the costs of its doing business including, but not
limited to, salaries and wages, office supplies and expenses, outside services
employed, property insurance, injuries and damages, employee pensions and
benefits, miscellaneous general expenses, rents, maintenance of structures and
equipment, depreciation and amortization, and compensation for use of capital as
permitted by Rule 91 of the SEC's regulations under the Act.
Section 2.5 North and South Carolina Client Companies may not incur a
charge under this Service Agreement except in accordance with North and South
Carolina law and the rules, regulations and orders of the North Carolina
Utilities Commission ("NCUC") and South Carolina Public Service Commission
("SCPSC") promulgated thereunder, and may not seek to reflect in rates any cost
incurred under this agreement exceeding the amount allowed by the NCUC or SCPSC.
ARTICLE III - TERM
Section 3.1 This Service Agreement shall become effective as of the date
first written above, subject only to the receipt of any required regulatory
approvals from the State Commissions and the SEC, and shall continue in force
until terminated by Service Company or Client Company, upon not less than one
year's prior written notice to the other party. This Service Agreement shall
also be subject to termination or modification at any time, without notice, if
and to the extent performance under this Service Agreement may conflict with the
Act or with any rule, regulation or order of the SEC adopted before or after the
date of this Service Agreement.
ARTICLE IV - MISCELLANEOUS
Section 4.1 All accounts and records of Service Company shall be kept in
accordance with the General Rules and Regulations promulgated by the SEC
pursuant to the Act, in particular, the Uniform System of Accounts for Mutual
Service Companies and Subsidiary Service Companies in effect from and after the
date hereof.
Section 4.2 New direct or indirect subsidiaries of CP&L Energy, which may
come into existence after the effective date of this Service Agreement, may
become additional client companies of Service Company and subject to a service
agreement with Service Company. The parties hereto shall make such changes in
the scope and character of the services to be rendered and the method of
assigning, distributing or allocating costs of such services as specified in
Appendix A, subject to the requirements of Section 2.2, as may become necessary
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to achieve a fair and equitable assignment, distribution, or allocation of
Service Company costs among all associate companies including the new
subsidiaries.
Section 4.3 Service Company shall permit Client Company access to its
accounts and records including the basis and computation of allocations.
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be executed as of the date and year first above written.
CP&L SERVICES
BY:
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Name:
Title:
CLIENT COMPANY
BY:
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Name:
Title:
The undersigned requests all services listed in Appendix A from CP&L Services,
except for . Services will begin .
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CLIENT COMPANY
BY:
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Name:
Title:
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APPENDIX A
DESCRIPTION OF SERVICES TO BE PROVIDED BY SERVICE COMPANY AND
DETERMINATION OF CHARGES FOR SUCH SERVICES TO THE
CLIENT COMPANIES
TO BE FILED BY AMENDMENT
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