Fourth Restated Partial Requirements Agreement
EXHIBIT 10.2
Fourth Restated Partial
This FOURTH RESTATED PARTIAL REQUIREMENTS AGREEMENT (this "Agreement"), dated as of November 3, 2009, is entered into among Metropolitan Edison Company, a Pennsylvania corporation ("MetEd"), Pennsylvania Electric Company,
a Pennsylvania corporation ("Penelec"), on behalf of itself and The Waverly Electric Power and Light Company, a New York corporation ("Waverly," and together with MetEd and Penelec, "Buyers"), and FirstEnergy Solutions Corp., an Ohio corporation (“Seller”),
all of which are wholly owned subsidiaries of FirstEnergy Corp., an Ohio corporation. The Buyers and Seller may individually be referred to as a “Party” or collectively as “Parties” in this Agreement.
WHEREAS, Buyers are electric distribution companies with an obligation to serve retail customers under New York and Pennsylvania law (hereinafter “Provider of Last Resort Obligation”);
WHEREAS, Seller is authorized to sell wholesale capacity, energy, and ancillary services to Buyers under First Revised Service Agreements Nos. 1 and 2, effective June 1, 2002 ("Service Agreements"), pursuant to Seller's FERC Electric Tariff, Original Volume No. 1, and is authorized
under the Service Agreements to require a "Confirmation Letter" to document transactions thereunder;
WHEREAS, Buyers currently obtain from Seller some or all of the wholesale capacity ("Capacity Resources") and energy (“Energy Resources”) necessary to satisfy their retail Provider of Last Resort Obligation;
WHEREAS, the Parties previously entered into a Third Restated Partial Requirements Agreement, dated November 1, 2008, among the Parties (as amended, modified or supplemented prior to the date hereof, the "Requirements Agreement");
WHEREAS, in lieu of Seller giving notice of termination of the Requirements Agreement, the Parties agree to amend and restate the Requirements Agreement to provide for: (i) Seller to sell additional Energy Resources to Buyers, and that Buyers will purchase from Seller, beginning January 1, 2010, on the terms set forth herein; (ii) a hedge
against Buyers’ congestion expenses and marginal losses; and (iii) clarification of certain existing terms and conditions in the Requirements Agreement; and
WHEREAS, the Requirements Agreement is a "Confirmation Letter" as such term is used in the Service Agreements, and the Parties desire to amend and restate their obligations under the Requirements Agreement by entering this Agreement, which also constitutes a "Confirmation Letter" as such term is used in the Service Agreements.
NOW THEREFORE, in consideration of the mutual agreements, covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Buyers and Seller hereby agree as follows:
1. Purchase. Buyers agree to purchase Capacity and Energy Resources from Seller (such Resources collectively, "Seller
Resources") to satisfy their Provider of Last Resort Obligation to the extent that Buyers have a need for Capacity and Energy Resources in excess of Buyers’ Capacity and Energy Resources otherwise committed or available to satisfy such obligation (such committed or available resources, "Committed Resources") subject to the limitations below.
a) For the period beginning January 1, 2010, and ending December 31, 2010, the Capacity Resources purchased by Buyers will not exceed 3544 megawatts in any hour (the "Budgeted Capacity Amount").
b) For the period beginning on January 1, 2010, and ending December 31, 2010, Buyers will purchase all Energy Resources in excess of Committed Resources from Seller.
c) For purposes of this Agreement, but except as provided by Section 5, Committed Resources include, but are not limited to, Capacity and Energy Resources produced by or pursuant to non-utility generation under contract to Buyers ("NUG Generation"), Buyer-owned
generating facilities, existing purchased power contracts with persons other than Seller (including capacity, energy and related services obtained by Seller as agent for Buyers), and distributed generation.
d) For the avoidance of doubt, Seller is the residual supplier to Buyers for Energy Resources that exceed the Committed Resources, but is not required to supply Buyers with more Capacity Resources than the Budgeted Capacity Amount.
2. Assignment of Constellation Energy Purchases. Effective January 1, 2010, Buyers hereby assign to Seller all of Buyers’ rights, and to the extent arising
on or after the assignment date, all of their liabilities under their confirmations for the purchase of 1300 MW of round-the-clock energy from Constellation Power Source, Inc. (“Constellation Confirmations”). Seller hereby assumes such rights and liabilities and agrees to be bound by the terms and conditions of the Constellation Confirmations, and Seller assumes all risk of Constellation’s failure to supply under the
Constellation Confirmations.
3. Agency. Buyers may authorize Seller to act as agent for Buyers in obtaining capacity, energy and related services on Buyers' behalf when the Parties agree that
such capacity, energy and related services are reasonable and economic. Buyers shall authorize Seller to act as agent by giving Notice to Seller of such authorization, including its scope and duration.
4. Sale. Seller agrees to supply and sell the Budgeted Capacity Amount and all Energy Resources required to meet the Buyers’ Provider of Last Resort Obligation,
less any Committed Resources used to satisfy such Provider of Last Resort Obligation, under the terms and conditions set forth in this Agreement, and will comply with all requirements of the Federal Energy Regulatory Commission ("FERC"), the New York Public Service Commission and the Pennsylvania Public Utility Commission and with the applicable requirements of PJM Interconnection, LLC ("PJM")
in supplying Buyers with the Seller Resources.
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5. NUG Sales. Each Buyer will give Notice to Seller that the Buyer intends to sell NUG Generation to third parties other than pursuant to the
Buyer's Provider of Last Resort Obligation (such sales, "NUG Sales") at least 10 business days prior to the first such NUG Sale and if Seller does not object in writing to such NUG Sales within 5 business days of receiving the Buyer's Notice, (i) the Buyer may engage in the NUG Sales described in the Buyer's Notice; and (ii) such NUG Sales shall be excluded from the calculation of Committed Resources used to satisfy the Buyer's Provider of Last
Resort Obligation, and Seller shall provide replacement Energy Resources required by the Buyer; provided, that Seller shall not be responsible for supplying Capacity Resources or capacity credits to replace any Capacity Resources or capacity credits sold by the Buyer as part of its NUG Sales. To the extent that Buyers notified Seller of NUG sales pursuant to the terms of the Requirements Agreement, no additional notice is required
under this Section 5.
6. Forecast of Provider of Last Resort Obligation and Committed Resources. No later than sixty days prior to the beginning of 2010, Buyers shall provide Seller
a forecast (“Annual Forecast”) of the Capacity and Energy Resources necessary to satisfy their Provider of Last Resort Obligation, the Seller Resources to be purchased (which, for the avoidance of doubt, shall not exceed the Budgeted Capacity Amount), and their Committed Resources for 2010. The Annual Forecast will be provided in the format and detail agreed upon by the Parties. Buyers will update the Annual Forecast
no less frequently than monthly for known changes, including but not limited to the changes described in Section 5.
7. (a) Delivery Points. Seller shall inform Buyers telephonically by 8:00 A.M. East Coast time each day on which Seller Resources are scheduled to be
sold to Buyers within the following twenty-four (24) hour period of the points at which Seller shall deliver Seller Resources to Buyers (such points, the "Delivery Points").
(b) Transfer of Title; Transmission and Scheduling. Title and risk of loss for Seller Resources shall pass to Buyers at the Delivery Points. Seller
shall sell and deliver, or cause to be delivered, and Buyers shall purchase and receive, or cause to be received, Seller Resources at the Delivery Points. Seller shall be responsible for any costs or charges imposed on or associated with Seller Resources or their delivery up to the Delivery Points, including any costs or charges associated with transmission service or scheduling services. Buyers shall be responsible for any costs or charges imposed on or associated with Seller Resources
or their receipt at and from the Delivery Points, including any costs or charges associated with transmission service or scheduling services.
8. Price for Provider of Last Resort Service.
(a) Direct Sales. MetEd and Penelec shall pay Seller $42.77 and $44.42 per megawatt-hour, respectively, for all Seller Resources delivered to Buyers during calendar year 2010. The Parties will agree upon
a transfer date for the funds remitted to Seller that will be no less frequently than monthly.
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(b) Procurement as Agent. Buyers shall reimburse Seller for all costs, charges and fees Seller incurs in procuring Committed Resources on Buyers' behalf under
Section 3 of this Agreement. For the avoidance of doubt, Seller shall not charge Buyers any xxxx-up, profit fee, or commission for Seller's services in procuring Committed Resources pursuant to Section 3 of this Agreement.
9. Congestion Hedge. Seller will manage the Seller Resources, including, but not limited to the Constellation Confirmations, under this Agreement consistent with
good utility practice, with the objective that the Buyers’ congestion expenses and net marginal losses billed by PJM (“Congestion Expense”) do not exceed $208 million for MetEd and $79 million for Penelec for Seller Resources delivered during 2010 (“Congestion Cap”). If Buyers’ Congestion Expense as billed by PJM during 2010 exceeds $208
million for MetEd, or $79 million for Penelec, Seller will reimburse MetEd or Penelec, as applicable, for the Congestion Expense in excess of the Congestion Cap. Reimbursement will take the form of either payment by Seller to Buyers or a net billing transaction under this Agreement as agreed to by the Parties.
10. Other Services Provided by Seller. Subject to receiving any necessary approvals or waivers from FERC, (a) Seller may provide Buyers technical advice and assistance
and other services as may be reasonably necessary to assist Seller in minimizing its costs of providing Seller Resources, such services including but not limited to price forecasting, risk management advice, management of congestion expenses and related services, and (b) Buyers shall provide Seller with data necessary to perform such services. No fee or charges in addition to those imposed by other terms of this Agreement shall be imposed for services provided by Seller pursuant to this Section 10.
11. Effective Date and Term. This Agreement amends and restates the Requirements Agreement in its entirety; provided however, that except with respect to the obligations
under Section 6 of this Agreement which will take effect immediately, this Agreement shall be effective January 1, 2010 and will remain in effect until midnight on December 31, 2010 (“Expiration Date”) and the Requirements Agreement will remain in effect until midnight on December 31, 2009. Expiration of this Agreement does not relieve the Parties of any unfulfilled obligations or undischarged liabilities
incurred under this Agreement. These obligations and liabilities and the applicable provisions of this Agreement creating or relating to such obligations and liabilities shall survive the Expiration Date.
12. Regulatory Out Termination. In the event that a Party’s obligations under this Agreement are materially and adversely affected by a change in law, rule,
regulation, or other action by a governmental authority or regulatory agency, the adversely affected Party may terminate this Agreement upon sixty days' written notice to the other Party.
13. Force Majeure. Neither Party’s performance under this Agreement is excused by force majeure.
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14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to the choice of law rules thereof.
15. Execution in Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall
be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when all counterparts have been signed by each of the Parties and delivered to each Party hereto. Delivery of an executed signature page counterpart by telecopies or e-mail shall be as effective as delivery of a manually executed counterpart.
16. Representation and Warranties. Each Party represents and warrants that it has full authority and right to enter into this Agreement.
17. Effect of Agreement. Subject to Section 11, this Agreement supersedes and replaces all prior agreements among the Parties with respect to the subject matter hereof, including the
Requirements Agreement and the Call Options for off-peak power executed pursuant to the Requirements Agreement.
18. Notice. All notices and other communications under this Agreement ("Notices") shall be in writing and shall be
deemed duly given (a) when delivered personally or by prepaid overnight courier, with a record of receipt, (b) the fourth day after mailing if mailed by certified mail, return receipt requested, or (c) the day of transmission, if sent by facsimile, telecopy or e-mail (with a copy promptly sent by prepaid overnight courier with record of receipt or by certified mail, return receipt requested), to the Parties at the following addresses or telecopy numbers (or to such other address or telecopy number as a Party
may have specified by notice given to the other Parties pursuant to this provision):
If to Buyers:
Xxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Email: xxxxxxxx@xxxxxxxxxxxxxxx.xxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy (which shall not constitute Notice) to:
Xxxxx X. Xxxxx, Esq.
0000 Xxxxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Email: xxxxxx@xxxxxxxxxxxxxxx.xxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
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If to Seller:
000 Xxxxx Xxxx Xx.
Xxxxx, XX 00000
Attention: Xxxx Xxxxx
Email: xxxxxxx@xxx.xxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy (which shall not constitute Notice) to:
Xxxxxxx Xxxxxxx, Esq.
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, XX 00000
Email: xxxxxxxx@xxxxxxxxxxxxxxx.xxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
[Signature pages follow]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the duly authorized officers of the Parties as of the date first above written.
FirstEnergy Solutions Corp.
By: /s/ Xxx Xxxxxxxx
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Name: Xxx Xxxxxxxx
Title: Vice President |
[Signature Page to Fourth Restated
Partial Requirements Agreement]
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the duly authorized officers of the Parties as of the date first above written.
Metropolitan Edison Company
Pennsylvania Electric Company
The Waverly Electric Power and Light Company
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx |
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Title: President |
[Signature Page to Fourth Restated
Partial Requirements Agreement]
