COMPOSITE COPY OF AMENDED AND RESTATED INTER-COMPANY POWER AGREEMENT DATED AS OF MARCH 13, 2006 AMONG
EXHIBIT
10(a)(2)
COMPOSITE
COPY
OF
AMENDED
AND RESTATED
DATED
AS
OF MARCH 13, 2006
AMONG
OHIO
VALLEY ELECTRIC CORPORATION,
ALLEGHENY
ENERGY SUPPLY COMPANY, L.L.C.
APPALACHIAN
POWER COMPANY,
THE
CINCINNATI GAS & ELECTRIC COMPANY,
COLUMBUS
SOUTHERN POWER COMPANY,
THE
DAYTON POWER AND LIGHT COMPANY,
FIRSTENERGY
GENERATION CORP.,
INDIANA
MICHIGAN POWER COMPANY,
KENTUCKY
UTILITIES COMPANY,
LOUISVILLE
GAS AND ELECTRIC COMPANY,
MONONGAHELA
POWER COMPANY,
OHIO
POWER COMPANY, and
SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY
COMPOSITE
COPY AS MODIFIED BY:
Modification
No. 1, dated as of March 13, 2006.
AMENDED
AND RESTATED
THIS
AGREEMENT, dated as of March 13, 2006, including Modification No. 1 to this
Agreement, dated as of March 13, 2006 (together, the “Agreement”), by and among
Ohio
Valley Electric Corporation
(herein
called OVEC), Allegheny
Energy
Supply
Company,
L.L.C.
(herein called Allegheny), Appalachian
Power Company
(herein
called Appalachian), The
Cincinnati Gas & Electric Company
(herein
called Cincinnati), Columbus
Southern Power Company
(herein
called Columbus), The
Dayton Power and Light Company
(herein
called Dayton), FIRSTENERGY GENERATION CORP. (herein called FirstEnergy),
Indiana
Michigan Power Company
(herein
called Indiana), Kentucky
Utilities Company
(herein
called Kentucky), Louisville
Gas and Electric Company
(herein
called Louisville), Monongahela
Power Company
(herein
called Monongahela), Ohio
Power Company
(herein
called Ohio Power), and Southern
Indiana Gas and Electric Company
(herein
called Southern Indiana, and all of the foregoing, other than OVEC, being herein
sometimes collectively referred to as the Sponsoring Companies and individually
as a Sponsoring Company) hereby amends and restates in its entirety, the
Inter-Company Power Agreement dated as of July 10, 1953 as amended from time
to
time (herein called the Original Agreement), by and among OVEC, Appalachian,
Cincinnati, Columbus, Dayton, Indiana, Kentucky, Louisville, Monongahela Ohio
Edison Company, Ohio Power, Pennsylvania Power Company, The Potomac Edison
Company, Southern Indiana, The Toledo Edison Company and West Penn Power
Company.
Witnesseth
That:
Whereas,
the
Original Agreement was amended by Modification No. 1, dated as of June 3, 1966;
Modification No. 2, dated as of January 7, 1967; Modification No. 3, dated
as of
November 15, 1967; Modification No. 4, dated as of November 5, 1975;
Modification No. 5, dated as of September 1, 1979; Modification No. 6, dated
as
of August 1, 1981; Modification No. 7, dated as of January 15, 1992;
Modification No. 8, dated as of January 19, 1994; Modification No. 9, dated
as
of August 17, 1995; Modification No. 10, dated as of January 1, 1998;
Modification No. 11, dated as of April 1, 1999; Modification No. 12, dated
as of
November 1, 1999; Modification No. 13, dated as of May 24, 2000; Modification
No. 14, dated as of April 1, 2001; and Modification No. 15, dated as of April
30, 2004 (the Modifications); and
Whereas,
OVEC
designed, purchased, and constructed, and continues to operate and maintain
two
steam-electric generating stations, one station (herein called Ohio Station)
consisting of five turbo-generators and all other necessary equipment, at a
location on the Ohio River near Cheshire, Ohio, and the other station (herein
called Indiana Station) consisting of six turbogenerators and all other
necessary equipment, at a location on the Ohio River near Madison, Indiana,
(the
Ohio Station and the Indiana Station being herein called the Project Generating
Stations); and
Whereas,
OVEC
also designed, purchased, and constructed, and continues to operate and maintain
necessary transmission and general plant facilities (herein called the Project
Transmission Facilities) and OVEC established or cause to be established
interconnections between the Project Generating Stations and the systems of
certain of the Sponsoring Companies; and
Whereas,
OVEC
entered into an agreement, attached hereto as Exhibit A, with Indiana-Kentucky
Electric Corporation (herein called IKEC), a corporation organized under the
laws of the State of Indiana as a wholly owned subsidiary corporation of OVEC,
which has been amended and restated as of the date of this Agreement and
embodies the terms and conditions for the ownership and operation by IKEC of
the
Indiana Station and such portion of the Project Transmission Facilities which
are to be owned and operated by it; and
Whereas,
transmission facilities were constructed by certain of the Sponsoring Companies
to interconnect the systems of such Sponsoring Companies, directly or
indirectly, with the Project Generating Stations and/or the Project Transmission
Facilities, and the Sponsoring Companies have agreed to pay for Available Power,
as hereinafter defined, as may be available at the Project Generating Stations;
and
Whereas,
pursuant to East Central Area Reliability Group (“ECAR”) Document No. 2,
entitled DAILY OPERATING RESERVE, as revised August 8, 1996 (“ECAR Document No.
2”), Corporation is required to have available spinning reserve equal to a
percentage of its internal load as well as supplemental reserve equal to a
percentage of its internal load, which supplemental reserve is expected to
be
provided by the Sponsoring Companies in proportion to their respective Power
Participation Ratios as defined in subsection
1.0120;
and
Whereas,
the
parties hereto desire to amend and restate in their entirety, the Original
Agreement and all of the Modifications, to define the terms and conditions
governing the rights of the Sponsoring Companies to receive Available Power
from
the Project Generating Stations and the obligations of the Sponsoring Companies
to pay therefor.
Now,
Therefore,
the
parties hereto agree with each other as follows:
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ARTICLE
1
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Definitions
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1.01
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For
the purposes of this Agreement, the following terms, wherever used
herein,
shall have the following meanings:
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1.011
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“Affiliate”
means, with respect to a specified person, any other person that
directly
or indirectly through one or more intermediaries controls, is controlled
by, or is under common control with, such specified person; provided
that
“control” for these purposes means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities,
by contract or otherwise.
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1.012
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“Arbitration
Board” has the meaning set forth in Section 9.10.
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1.013
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“Available
Energy” of the Project Generating Stations means the energy associated
with Available Power.
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1.014
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“Available
Power” of the Project Generating Stations at any particular time means the
total net kilowatts at the 345-kV busses of the Project Generating
Stations which Corporation in its sole discretion will determine
that the
Project Generating Stations will be capable of safely delivering
under
conditions then prevailing, including all conditions affecting
capability.
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1.015
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“Corporation”
means OVEC, IKEC, and all other subsidiary corporations of
OVEC.
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1.016
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“Decommissioning
and Demolition Obligation” has the meaning set forth in Section 5.03(f)
hereof.
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1.017
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“ECAR
Emergency Energy” means energy sold by Corporation from its Spinning
Reserve during an ECAR Reserve Sharing Period.
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1.018
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“ECAR
Reserve Sharing Period” means any period of time during which any control
area within ECAR (“ECAR Member”) is experiencing a system contingency
which requires implementation of ECAR’s reserve sharing
procedures.
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1.019
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“Effective
Date” means March 13, 2006, or to the extent necessary, such later date
on
which Corporation notifies the Sponsoring Companies that all conditions
to
effectiveness, including all required waiting periods and all required
regulatory acceptances or approvals, of this Agreement (including
Modification No. 1 to this Agreement) have been satisfied in form
and
substance satisfactory to the Corporation.
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1.0110
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“Election
Period” has the meaning set forth in Section 9.183(a) hereof.
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1.0111
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“Minimum
Generating Unit Output” means 80 MW (net) for each of the Corporation’s
generation units; provided that such “Minimum Generating Unit Output”
shall be confirmed from time to time by operating tests on the
Corporation’s generation units and shall be adjusted by the Operating
Committee as appropriate following such tests.
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1.0112
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“Minimum
Loading Event” means a period of time during which one or more of the
Corporation’s generation units are operating at below the Minimum
Generating Output as a result of the Sponsoring Companies’ failure to
schedule and take delivery of sufficient Available Energy.
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1.0113
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“Minimum
Loading Event Costs” means the sum of the following costs caused by one or
more Minimum Loading Events: (i) the actual costs of any of the
Corporation’s generating units burning fuel oil; and (ii) the estimated
actual additional costs to the Corporation resulting from Minimum
Loading
Events, including without limitation the incremental costs of additional
emissions allowances, reflected in the schedule of charges prepared
by the
Operating Committee and in effect as of the commencement of any Minimum
Loading Event, which schedule may be adjusted from time to time as
necessary by the Operating Committee.
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1.0114
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“Month”
means a calendar month.
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1.0115
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“Nominal
Power Available” means an individual Sponsoring Company’s Power
Participation Ratio share of the Corporation’s current estimate of the
maximum amount of Available Power available for delivery at any given
time.
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1.0116
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“Offer
Notice” means the notice required to be given to the other Sponsoring
Companies by a Transferring Sponsor offering to sell all or a portion
of
such Transferring Sponsor’s rights, title and interests in, and
obligations under this Agreement. At a minimum, the Offer Notice
shall be
in writing and shall contain (i) the rights, title and interests
in, and
obligations under this Agreement that the Transferring Sponsor proposes
to
Transfer; and (ii) the cash purchase price and any other material
terms
and conditions of such proposed transfer. An Offer Notice may not
contain
terms or conditions requiring the purchase of any non-OVEC
interests.
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1.0117
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“OVEC
Emergency Energy” means energy purchased by Corporation during an ECAR
Reserve Sharing Period pursuant to the provisions of ECAR Document
No.
2.
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1.0118
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“Permitted
Assignee” means a person that is (a) a Sponsoring Company or its Affiliate
whose long-term unsecured non-credit enhanced indebtedness, as of
the date
of such assignment, has a Standard & Poor’s credit rating of at least
BBB- and a Xxxxx’x Investors Service, Inc. credit rating of at least Baa3
(provided that, if the proposed assignee’s long-term unsecured non-credit
enhanced indebtedness is not currently rated by one of Standard &
Poor’s or Xxxxx, such assignee’s long-term unsecured non-credit enhanced
indebtedness, as of the date of such assignment, must have either
a
Standard & Poor’s credit rating of at least BBB- or a Xxxxx’x
Investors Service, Inc. credit rating of at least Baa3); or (b) a
Sponsoring Company or its Affiliate that does not meet the criteria
in
subsection (a) above, if the Sponsoring Company or its Affiliate
that is
assigning its rights, title and interests in, and obligations under,
this
Agreement agrees in writing (in form and substance satisfactory to
Corporation) to remain obligated to satisfy all of the obligations
related
to the assigned rights, title and interests to the extent such obligations
are not satisfied by the assignee of such rights, title and interests;
provided
that,
in no event shall a person be deemed a “Permitted Assignee” if counsel for
the Corporation reasonably determines that the assignment of the
rights,
title or interests in, or obligations under, this Agreement to such
person
could cause a termination, default, loss or payment obligation under
any
security issued, or agreement entered into, by the Corporation prior
to
such transfer.
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1.0119
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“Postretirement
Benefit Obligation” has the meaning set forth in Section 5.03(e)
hereof.
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1.0120
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“Power
Participation Ratio” as applied to each of the Sponsoring Companies refers
to the percentage set forth opposite its respective name in the tabulation
below:
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Company
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Power
Participation
Ratio—Percent
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Allegheny
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9.00
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Appalachian
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15.69
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Cincinnati
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9.00
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Columbus
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4.44
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Dayton
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4.90
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FirstEnergy.
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20.50
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Indiana
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7.85
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Kentucky
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2.50
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Louisville
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5.63
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Monongahela
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3.50
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Ohio
Power
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15.49
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Southern
Indiana
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1.50
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Total
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100.0
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1.0121
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“Spinning
Reserve” means unloaded generation which is synchronized and ready to
serve additional demand within ten minutes.
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1.0122
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“Supplemental
Reserve” means a combination of spinning reserve, qualified interruptible
load, qualified quick-start generating capacity or pre-scheduled
assistance from another system which can be fully utilized within
ten
minutes.
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1.0123
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“Tariff”
means the open access transmission tariff of the Corporation, as
amended
from time to time, or any successor tariff, as accepted by the Federal
Energy Regulatory Commission or any successor agency.
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1.0124
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“Third
Party” means any person other than a Sponsoring Company or its
Affiliate.
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1.0125
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“Total
Minimum Generating Output” means the product of the Minimum Generating
Unit Output times the number of the Corporation’s generation units
available for service at that time.
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1.0126
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“Transferring
Sponsor” has the meaning set forth in Section 9.183(a)
hereof.
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1.0127
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“Uniform
System of Accounts” means the Uniform System of Accounts prescribed by the
Federal Energy Regulatory Commission as in effect on January 1,
2004.
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ARTICLE
2
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Transmission
Agreement and Facilities
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2.01
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Transmission
Agreement.
The Corporation shall enter into a transmission service agreement
under
the Tariff, and the Corporation shall reserve and schedule transmission
service, ancillary services and other transmission-related services
in
accordance with the Tariff to provide for the delivery of Available
Power
and Available Energy to the applicable delivery points under this
Agreement.
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2.02
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Limited
Burdening of Corporation’s Transmission Facilities.
Transmission facilities owned by the Corporation, including the Project
Transmission Facilities, shall not be burdened by power and energy
flows
of any Sponsoring Company to an extent which would impair or prevent
the
transmission of Available Power, ECAR Emergency Energy or OVEC Emergency
Energy.
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ARTICLE
3
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ECAR
and OVEC Emergency Energy
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3.01
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In
order to enable Corporation to fulfill its obligation under ECAR
Document
No. 2 to maintain Supplemental Reserve equal to a percentage of
Corporation’s internal load, each Sponsoring Company shall stand ready to
supply its Power Participation Ratio of OVEC’s Supplemental Reserve
obligation to other members of ECAR during any ECAR Reserve Sharing
Period. It is understood, however, that the amount which each Sponsoring
Company may charge for its share of such Supplemental Reserve shall
be
such Sponsoring Company’s FERC filed emergency energy charge.
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3.02
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In
order to enable Corporation to fulfill its obligation under ECAR
Document
No. 2 to provide some or all of the energy available from OVEC’s Spinning
Reserve to an ECAR Member which is in need of ECAR Emergency Energy,
the
Sponsoring Companies shall stand ready to purchase from Corporation
the
energy available from its Spinning Reserve, or any portion thereof,
for
their own emergency use or for resale to or for another ECAR Member
which
is experiencing an emergency and shall also stand ready to transmit
such
energy to or for another ECAR Member which is experiencing an
emergency.
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3.03
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In
the event that Corporation is required to purchase, and pay other
entities
for, OVEC Emergency Energy, each Sponsoring Company shall pay its
share,
in accordance with its Power Participation Ratio, of the full amount
paid
by Corporation for OVEC Emergency Energy in accordance with the applicable
FERC filed emergency energy charge; provided, however, that Corporation
shall credit any payments which Corporation owes to any Sponsoring
Company
for ECAR Emergency Energy against the amounts otherwise payable by
such
Sponsoring Company for OVEC Emergency Energy.
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ARTICLE
4
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Available
Power Supply
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4.01
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Operation
of Project Generating Stations.
Corporation shall operate and maintain the Project Generating Stations
in
a manner consistent with safe, prudent, and efficient operating practice
so that the Available Power available from said stations shall be
at the
highest practicable level attainable consistent with OVEC’s obligations
under ECAR Document No. 2 throughout the term of this
Agreement.
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4.02
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Available
Power Entitlement.
The Sponsoring Companies collectively shall be entitled to take from
Corporation and Corporation shall be obligated to supply to the Sponsoring
Companies any and all Available Power and Available Energy pursuant
to the
provisions of this Agreement. Each Sponsoring Company’s Available Power
Entitlement hereunder shall be its Power Participation Ratio, as
defined
in subsection
1.0120, of Available Power.
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4.03
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Available
Energy.
Corporation shall make Available Energy available to each Sponsoring
Company in proportion to said Sponsoring Company’s Power Participation
Ratio. No Sponsoring Company, however, shall be obligated to avail
itself
of any Available Energy. Available Energy shall be scheduled and
taken by
the Sponsoring Companies in accordance with the following
procedures:
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4.031
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Each
Sponsoring Company shall schedule the delivery of all or any portion
(in
whole MW increments) of its entitlement to Available Energy in accordance
with scheduling procedures established by the Operating Committee
from
time to time.
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4.032
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In
the event that any Sponsoring Company does not schedule the delivery
of
all of its Power Participation Ratio share of Available Energy, then
each
such other Sponsoring Company may schedule the delivery of all or
any
portion (in whole MW increments) of any such unscheduled share of
Available Energy (through successive allotments if necessary) in
proportion to their Power Participation Ratios.
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4.033
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Notwithstanding
any Available Energy schedules made in accordance with this Section
4.03
and the applicable scheduling procedures, (i) the Corporation shall
adjust
all schedules to the extent that the Corporation’s actual generation
output is less than or more than the expected Nominal Power Available
to
all Sponsoring Companies, or to the extent that the Corporation is
unable
to obtain sufficient transmission service under the Tariff for the
delivery of all scheduled Available Energy; and (ii) immediately
following
a Minimum Loading Event, any Sponsoring Company causing (in whole
or part)
such Minimum Loading Event shall have its Available Energy schedules
increased after the schedules of the Sponsoring Companies not causing
such
Minimum Load Event, in accordance with the estimated ramp rates associated
with the shutdown and start-up of the Corporation’s generation units as
reflected in the schedules prepared by the Operating Committee and
in
effect as of the commencement of any Minimum Loading Event, which
schedules may be adjusted from time to time as necessary by the Operating
Committee.
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4.034
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Each
Sponsoring Company availing itself of Available Energy shall be entitled
to an amount of energy (herein called billing kilowatt-hours of Available
Energy) equal to its portion, determined as provided in this Section
4.03,
of the total Available Energy after deducting therefrom such Sponsoring
Company’s proportionate share, as defined in this Section 4.03, of all
losses as determined in accordance with the Tariff incurred in
transmitting the total of such Available Energy from the 345-kV busses
of
the Project Generating Stations to the applicable delivery points,
as
scheduled pursuant to Section 9.01, of all Sponsoring Companies availing
themselves of Available Energy. The proportionate share of all such
losses
that shall be so deducted from such Sponsoring Company’s portion of
Available Energy shall be equal to all such losses multiplied by
the ratio
of such portion of Available Energy to the total of such Available
Energy.
Each Sponsoring Company shall have the right, pursuant to this Section
4.03, to avail itself of Available Energy for the purpose of meeting
the
loads of its own system and/or of supplying energy to other systems
in
accordance with agreements, other than this Agreement, to which such
Sponsoring Company is a party.
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4.035
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To
the extent that, as a result of the failure by one or more Sponsoring
Companies to take its respective Power Participation Ratio share
of the
applicable Total Minimum Generating Output during any hour, a Minimum
Loading Event shall occur, then such one or more Sponsoring Companies
shall be assessed charges for any Minimum Loading Event Costs in
accordance with Section 5.06.
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ARTICLE
5
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Charges
for Available Power, ECAR and OVEC Emergency Energy, and Minimum
Loading
Event Costs
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5.01
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Total
Monthly Charge.
The amount to be paid to Corporation each month by the Sponsoring
Companies for Available Power and Available Energy supplied under
this
Agreement shall consist of the sum of an energy charge, a demand
charge, a
transmission charge and, if applicable, an emergency energy charge,
all
determined as set forth in this Article
5.
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5.02
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Energy
Charge.
The energy charge to be paid each month by the Sponsoring Companies
for
Available Energy shall be determined by Corporation as
follows:
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5.021
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Determine
the aggregate of all expenses for fuel incurred in the operation
of the
Project Generating Stations, in accordance with Account 501 (Fuel),
Account 506.5 (Variable Reagent Costs Associated With Pollution Control
Facilities) and 509 (Allowances) of the Uniform System of
Accounts.
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5.022
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Determine
for such month the difference between the total cost of fuel as described
in subsection 5.021 above and the sum of (i) the total cost of fuel
used
to generate ECAR Emergency Energy, and (ii) the total cost of fuel
included in any Minimum Loading Event Costs payable to the Corporation
for
such month pursuant to Section 8.04. For the purposes hereof the
difference so determined shall be the fuel cost allocable for such
month
to the total kilowatt-hours of energy generated at the Project Generating
Stations for the supply of Available Energy. For Available Energy
availed
of by the Sponsoring Companies, each Sponsoring Company shall pay
Corporation for each such month an amount obtained by multiplying
the
ratio of the billing kilowatt-hours of such Available Energy availed
of by
such Sponsoring Company during such month to the aggregate of the
billing
kilowatt-hours of all Available Energy availed of by all Sponsoring
Companies during such month times the total cost of fuel as described
in
this subsection 5.022 for such month.
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5.03
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Demand
Charge.
During the period commencing with the Effective Date and for the
remainder
of the term of this Agreement, demand charges payable by the Sponsoring
Companies to Corporation shall be determined by the Corporation as
provided below in this Section 5.03. Each Sponsoring Company's share
of
the aggregate demand charges shall be the percentage of such charges
represented by its Power Participation Ratio.
The
aggregate demand charge payable each month by the Sponsoring Companies
to
Corporation shall be equal to the total costs incurred for such month
by
Corporation resulting from its ownership, operation, and maintenance
of
the Project Generating Stations and Project Transmission Facilities
determined as follows:
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As
soon as practicable after the close of each calendar month the following
components of costs of Corporation (eliminating any duplication of
costs
which might otherwise be reflected among the corporate entities comprising
Corporation) applicable for such month to the ownership, operation
and
maintenance of the Project Generating Stations and the Project
Transmission Facilities, including additional facilities and/or spare
parts (such as fuel processing plants, flue gas or waste product
processing facilities, and facilities reasonably required to enable
the
Corporation to limit the emission of pollutants or the discharge
of wastes
in compliance with governmental requirements) and replacements necessary
or desirable to keep the Project Generating Stations and the Project
Transmission Facilities in a dependable and efficient operating condition,
and any provision for any taxes that may be applicable to such charges,
to
be determined and recorded in the following manner:
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(a)
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Component
(A) shall consist of fixed charges made up of (i) the amounts of
interest properly chargeable to Accounts 427, 430 and 431, less the
amount
thereof credited to Account 432, of the Uniform System of Accounts,
including the interest component of any purchase price, interest,
rental
or other payment under an installment sale, loan, lease or similar
agreement relating to the purchase, lease or acquisition by Corporation
of
additional facilities and replacements (whether or not such interest
or
other amounts have come due or are actually payable during such Month),
(ii) the amounts of amortization of debt discount or premium and
expenses properly chargeable to Accounts 428 and 429, and (iii) an
amount equal to the sum of (I) the applicable amount of the debt
amortization component for such month required to retire the total
amount
of indebtedness of Corporation issued and outstanding, (II) the
amortization requirement for such month in respect of indebtedness
of
Corporation incurred in respect of additional facilities and replacements,
and (III) to the extent not provided for pursuant to clause (II)
of this clause (iii), an appropriate allowance for depreciation of
additional facilities and replacements.
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(b)
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Component
(B) shall consist of the total operating expenses for labor, maintenance,
materials, supplies, services, insurance, administrative and general
expense, etc., properly chargeable to the Operation and Maintenance
Expense Accounts of the Uniform System of Accounts (exclusive of
Accounts
501, 509, 555, 911, 912, 913, 916, and 917 of the Uniform System
of
Accounts), minus the total of all non-fuel costs included in any
Minimum
Loading Event Costs payable to the Corporation for such month pursuant
to
Section 8.04, minus the total of all transmission charges payable
to the
Corporation for such month pursuant to Section 5.04, and plus any
additional amounts which, after provision for all income taxes on
such
amounts (which shall be included in Component (C) below), shall equal
any
amounts paid or payable by Corporation as fines or penalties with
respect
to occasions where it is asserted that Corporation failed to comply
with a
law or regulation relating to the emission of pollutants or the discharge
of wastes.
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(c)
|
Component
(C) shall consist of the total expenses for taxes, including all
taxes on
income but excluding any federal income taxes arising from payments
to
Corporation under Component (D) below, and all operating or other
costs or
expenses, net of income, not included or specifically excluded in
Components (A) or (B) above, including tax adjustments, regulatory
adjustments, net losses for the disposition of property and other
net
costs or expenses associated with the operation of a utility.
|
||||||
|
(d)
|
Component
(D) shall consist of an amount equal to the product of $2.089 multiplied
by the total number of shares of capital stock of the par value of
$100
per share of Ohio Valley Electric Corporation which shall have been
issued
and which are outstanding on the last day of such month.
|
||||||
|
(e)
|
Component
(E) shall consist of an amount to be sufficient to pay the costs
and other
expenses relating to the establishment, maintenance and administration
of
life insurance, medical insurance and other postretirement benefits
other
than pensions attributable to the employment and employee service
of
active employees, retirees, or other employees, including without
limitation any premiums due or expected to become due, as well as
administrative fees and costs, such amounts being sufficient to provide
payment with respect to all periods for which Corporation has committed
or
is otherwise obligated to make such payments, including amounts
attributable to current employee service and any unamortized prior
service
cost, gain or loss attributable to prior service years (“Postretirement
Benefit Obligation”); provided
that,
the amount payable for Postretirement Benefit Obligations during
any month
shall be determined by the Corporation based on, among other factors,
the
Statement of Financial Accounting Standards No. 106 (Employers’ Accounting
For Postretirement Benefits Other Than Pensions) and any applicable
accounting standards, policies or practices as adopted from time
to time
relating to accruals with respect to all or any portion of such
Postretirement Benefit Obligation.
|
||||||
|
(f)
|
Component
(F) shall consist of an amount that may be incurred in connection
with the
decommissioning, shutdown, demolition and closing of the Project
Generating Stations when production of electric power and energy
is
discontinued at such Project Generating Stations, which amount shall
include, without limitation the following costs (net of any salvage
credits): the costs of demolishing the plants’ building structures,
disposal of non-salvageable materials, removal and disposal of insulating
materials, removal and disposal of storage tanks and associated piping,
disposal or removal of materials and supplies (including fuel oil
and
coal), grading, covering and reclaiming storage and disposal areas,
disposing of ash in ash ponds to the extent required by regulatory
authorities, undertaking corrective or remedial action required by
regulatory authorities, and any other costs incurred in putting the
facilities in a condition necessary to protect health or the environment
or which are required by regulatory authorities, or which are incurred
to
fund continuing obligations to monitor or to correct environmental
problems which result, or are later discovered to result, from the
facilities’ operation, closure or post-closure activities
(“Decommissioning and Demolition Obligation”)
provided that,
the amount payable for Decommissioning and Demolition Obligations
during
any month shall be calculated by Corporation based on, among other
factors, the then-estimated useful life of the Project Generating
Stations
and any applicable accounting standards, policies or practices as
adopted
from time to time relating to accruals with respect to all or any
portion
of such Decommissioning and Demolition Obligation, and provided
further that,
the Corporation shall recalculate the amount payable under this Component
(F) for future months from time to time, but in no event later than
five
(5) years after the most recent calculation.
|
||||||
|
5.04
|
Transmission
Charge.
The transmission charges to be paid each month by the Sponsoring
Companies
shall be equal to the total costs incurred for such month by Corporation
for the purchase of transmission service, ancillary services and
other
transmission-related services under the Tariff as reserved and scheduled
by the Corporation to provide for the delivery of Available Power
and
Available Energy to the applicable delivery points under this Agreement.
Each Sponsoring Company's share of the aggregate transmission charges
shall be the percentage of such charges represented by its Power
Participation Ratio.
|
||||||
|
5.05
|
ECAR
and OVEC Emergency Energy.
The amount to be paid to Corporation for ECAR Emergency Energy supply
under this Agreement shall be 98.74 xxxxx per kilowatt hour (plus
transmission charges calculated in accordance with applicable law).
The
amount to be paid to Corporation for OVEC Emergency Energy purchased
by
Corporation under this Agreement shall be the applicable FERC filed
emergency energy charge per kilowatt hour (plus any applicable
transmission charges calculated in accordance with applicable
law).
|
||||||
|
5.06
|
Minimum
Loading Event Costs.
To
the extent that, as a result of the failure by one or more Sponsoring
Companies to take its respective Power Participation Ratio share
of the
applicable Total Minimum Generating Output during any hour, a Minimum
Loading Event shall occur, then the sum of all Minimum Loading Event
Costs
relating to such Minimum Loading Event shall be charged to such Sponsoring
Company or group of Sponsoring Companies that failed take its respective
Power Participation Ratio share of the applicable Total Minimum Generating
Output during such period, with such Minimum Loading Event Costs
allocated
among such Sponsoring Companies on a pro-rata basis in accordance
with
such Sponsoring Company’s MWh share of the MWh reduction in the delivery
of Available Energy causing any Minimum Loading Event. The applicable
charges for Minimum Loading Event Costs as determined by the corporation
in accordance with Section 5.06 shall be paid each month by the applicable
Sponsoring Companies.
|
||||||
|
ARTICLE
6
|
|||||||
|
Metering
of Energy Supplied
|
|||||||
|
6.01
|
Measuring
Instruments.
The parties hereto shall own and maintain such metering equipment
as may
be necessary to provide complete information regarding the delivery
of
power and energy to or for the account of any of the parties hereto;
and
the ownership and expense of such metering shall be in accordance
with
agreements among them. Each party will at its own expense make such
periodic tests and inspections of its meters as may be necessary
to
maintain them at the highest practical commercial standard of accuracy
and
will advise all other interested parties hereto promptly of the results
of
any such test showing an inaccuracy of more than 1%. Each party will
make
additional tests of its meters at the request of any other interested
party. Other interested parties shall be given notice of, and may
have
representatives present at, any test and inspection made by another
party.
|
||||||
|
ARTICLE
7
|
|||||||
|
Costs
of Replacements and Additional Facilities;
Payments
for Employee Benefits;
Decommissioning,
Shutdown, Demolition and Closing Charges
|
|||||||
|
7.01
|
Replacement
Costs.
The Sponsoring Companies shall reimburse Corporation for the difference
between (a) the total cost of replacements chargeable to property and
plant made by Corporation during any month prior thereto (and not
previously reimbursed) and (b) the amounts received by Corporation as
proceeds of fire or other applicable insurance protection, or amounts
recovered from third parties responsible for damages requiring
replacement, plus provision for all taxes on income on such difference;
provided that, to the extent that the Corporation arranges for the
financing of any replacements, the payments due under this Section
7.01
shall equal the amount of all principal, interest, taxes and other
costs
and expenses related to such financing during any month. Each Sponsoring
Company’s share of such payment shall be the percentage of such costs
represented by its Power Participation Ratio. The term cost of
replacements, as used herein, shall include all components of cost,
plus
removal expense, less salvage.
|
||||||
|
7.02
|
Additional
Facility Costs.
The Sponsoring Companies shall reimburse Corporation for the total
cost of additional facilities and/or spare parts purchased and/or
installed by Corporation during any month prior thereto (and not
previously reimbursed), plus provision for all taxes on income on
such
costs; provided that, to the extent that the Corporation arranges
for the
financing of any additional facilities and/or spare parts, the payments
due under this Section 7.02 shall equal the amount of all principal,
interest, taxes and other costs and expenses related to such financing
during any month. Each Sponsoring Company’s share of such payment shall be
the percentage of such costs represented by its Power Participation
Ratio.
|
||||||
|
7.03
|
Payments
for Employee Benefits.
Not later than the effective date of termination of this Agreement,
each
Sponsoring Company will pay to Corporation its Power Participation
Ratio
share of additional amounts, after provision for any taxes that may
be
applicable thereto, sufficient to cover any shortfall if the amount
of the
Postretirement Benefit Obligation collected by the Corporation prior
to
the effective date of termination of the Agreement is insufficient
to
permit Corporation to fulfill its commitments or obligations with
respect
to both postemployment benefit obligations under the Statement of
Financial Accounting Standards No. 112 and postretirement benefits
other
than pensions, as determined by Corporation with the aid of an actuary
or
actuaries selected by the Corporation based on the terms of the
Corporation’s then-applicable plans.
|
||||||
|
7.04
|
Decommissioning,
Shutdown, Demolition and Closing.
The Sponsoring Companies recognize that a part of the cost of supplying
power to it under this Agreement is the amount that may be incurred
in
connection with the decommissioning, shutdown, demolition and closing
of
the Project Generating Stations when production of electric power
and
energy is discontinued at such Project Generating Stations. Not later
than
the effective date of termination of this Agreement, each Sponsoring
Company will pay to Corporation its Power Participation Ratio share
of
additional amounts, after provision for any taxes that may be applicable
thereto, sufficient to cover any shortfall if the amount of the
Decommissioning and Demolition Obligation collected by the Corporation
prior to the effective date of termination of the Agreement is
insufficient to permit Corporation to complete the decommissioning,
shutdown, demolition and closing of the Project Generating Stations,
based
on the Corporation’s recalculation of the Decommissioning and Demolition
Obligation in accordance with Section 5.03(f) of this Agreement no
earlier
than twelve (12) months before the effective date of termination
of this
Agreement.
|
||||||
|
ARTICLE
8
|
|||||||
|
Billing
and Payment
|
|||||||
|
8.01
|
Available
Power, and Replacement and Additional Facility Costs.
As
soon as practicable after the end of each month Corporation shall
render
to each Sponsoring Company a statement of all Available Power and
Available Energy supplied to or for the account of such Sponsoring
Company
during such month, specifying the amount due to the Corporation therefor,
including any amounts for reimbursement for the cost of replacements
and
additional facilities and/or spare parts incurred during such month,
pursuant to Articles 5
and 7 above. Such Sponsoring Company shall make payment therefor
promptly
upon the receipt of such statement, but in no event later than fifteen
(15) days after the date of receipt of such statement. In case any
factor
entering into the computation of the amount due for Available Power
and
Available Energy cannot be determined at the time, it shall be estimated
subject to adjustment when the actual determination can be
made.
|
||||||
|
8.02
|
Provisional
Payments for Available Power.
The Sponsoring Companies shall, from time to time, at the request
of the
Corporation, make provisional semi-monthly payments for Available
Power in
amounts approximately equal to the estimated amounts payable for
Available
Power delivered by Corporation to the Sponsoring Companies during
each
semi-monthly period. As soon as practicable after the end of each
semi-monthly period with respect to which Corporation has requested
the
Sponsoring Companies to make provisional semi-monthly payments for
Available Power, Corporation shall render to each Sponsoring Company
a
separate statement indicating the amount payable by such Sponsoring
Company for such semi-monthly period. Such Sponsoring Company shall
make
payment therefor promptly upon receipt of such statement, but in
no event
later than fifteen (15) days after the date of receipt of such statement
and the amounts so paid by such Sponsoring Company shall be credited
to
the account of such Sponsoring Company with respect to future payments
to
be made pursuant to Articles
5
and 7 above by such Sponsoring Company to Corporation for Available
Power.
|
||||||
|
8.03
|
ECAR
and OVEC Emergency Energy.
As
soon as practicable after the end of each month, Corporation shall
render
to each Sponsoring Company a statement indicating all ECAR Emergency
Energy supplied to or for the account of such Sponsoring Company
during
such month and all OVEC Emergency Energy supplied to Corporation
during
such month, specifying the amount due to the Corporation therefor
pursuant
to Article 5
above; provided, however, that Corporation shall credit any payments
which
Corporation owes to any Sponsoring Company for ECAR Emergency Energy
against the amounts otherwise payable by such Sponsoring Company
for OVEC
Emergency Energy. Such Sponsoring Company shall make payment therefor
promptly upon the receipt of such statement, but in no event later
than
fifteen (15) days after the date of receipt of such statement. In
case the
computation of the amount due for ECAR Emergency Energy or OVEC Emergency
Energy cannot be determined at the time, it shall be estimated subject
to
adjustment when the actual determination can be made, and all payments
shall be subject to subsequent adjustment.
|
||||||
|
8.04
|
Minimum
Loading Event Costs.
As
soon as practicable after the end of each month, Corporation shall
render
to each Sponsoring Company a statement indicating any applicable
charges
for Minimum Loading Event Costs pursuant to Section 5.06 during such
month, specifying the amount due to the Corporation therefor pursuant
to
Article 5
above. Such Sponsoring Company shall make payment therefor promptly
upon
the receipt of such statement, but in no event later than fifteen
(15)
days after the date of receipt of such statement. In case the computation
of the amount due for Minimum Loading Event Costs cannot be determined
at
the time, it shall be estimated subject to adjustment when the actual
determination can be made, and all payments shall be subject to subsequent
adjustment.
|
||||||
|
8.05
|
Unconditional
Obligation to Pay Demand and Other Charges. The
obligation of each Sponsoring Company to pay its specified portion
of the
Demand Charge under Section 5.03, the Transmission Charge under Section
5.04, and all charges under Article
7
for any Month shall not be reduced irrespective of:
|
||||||
|
(a)
|
whether
or not any Available Power or Available Energy are supplied by the
Corporation during such calendar month and whether or not any Available
Power or Available Energy are accepted by any Sponsoring Company
during
such calendar month;
|
||||||
|
(b)
|
the
existence of any claim, set-off, defense, reduction, abatement or
other
right (other than irrevocable payment, performance, satisfaction
or
discharge in full) that such Sponsoring Company may have, or which
may at
any time be available to or be asserted by such Sponsoring Company,
against the Corporation , any other Sponsoring Company, any creditor
of
the Corporation or any other Person (including, without limitation,
arising as a result of any breach or alleged breach by either the
Corporation, any other Sponsoring Company, any creditor of the Corporation
or any other Person under this Agreement or any other agreement (whether
or not related to the transactions contemplated by this Agreement
or any
other agreement) to which such party is a party); o
|
||||||
|
(c)
|
the
validity or enforceability against any other Sponsoring Company of
this
Agreement or any right or obligation hereunder (or any release or
discharge thereof) at any time.
|
||||||
|
ARTICLE
9
|
|||||||
|
General
Provisions
|
|||||||
|
9.01
|
Characteristics
of Supply and Points of Delivery.
All power and energy delivered hereunder shall be 3-phase, 60-cycle,
alternating current, at a nominal unregulated voltage designated
for the
point of delivery as described in this Article
9.
Available Power and Available Energy to be delivered between Corporation
and the Sponsoring Companies pursuant to this Agreement shall be
delivered
under the terms and conditions of the Tariff at the points, as scheduled
by the Sponsoring Company in accordance with procedures established
by the
Operating Committee and in accordance with Section 9.02, where the
transmission facilities of Corporation interconnect with the transmission
facilities of any Sponsoring Company (or its successor or predecessor);
provided that, to the extent that a joint and common market is established
for the sale of power and energy by Sponsoring Companies within one
or
more of the regional transmission organizations or independent system
operators approved by the Federal Energy Regulatory Commission in
which
the Sponsoring Companies are members or otherwise participate, then
Corporation and the Sponsoring Companies shall take such action as
reasonably necessary to permit the Sponsoring Companies to bid their
entitlement to power and energy from Corporation into such market(s)
in
accordance with the procedures established for such
market(s).
|
||||||
|
9.02
|
Modification
of Delivery Schedules Based on Available Transmission
Capability.
To
the extent that transmission capability available for the delivery
of
Available Power and Available Energy at any delivery point is less
than
the total amount of Available Power and Available Energy scheduled
for
delivery by the Sponsoring Companies at such delivery point in accordance
with Section 9.01, then the following procedures shall apply and
the
Corporation and the applicable Sponsoring Companies shall modify
their
delivery schedules accordingly until the total amount of Available
Power
and Available Energy scheduled for delivery at such delivery point
is
equal to or less than the transmission capability available for the
delivery of Available Power and Available Energy: (a) the transmission
capability available for the delivery of Available Power and Available
Energy at the following delivery points shall be allocated first
on a pro
rata basis (in whole MW increments) to the following Sponsoring Companies
up to their Power Participation Ratio share of the total amount of
Available Energy available to all Sponsoring Companies (and as applicable,
further allocated among Sponsoring Companies entitled to allocation
under
this Section 9.02(a) in accordance with their Power Participation
Ratios):
(i) to Allegheny, Appalachian, Columbus, FirstEnergy, Indiana, Monongahela
and Ohio Power (or their successors) for deliveries at the points
of
interconnection between the Corporation and Appalachian, Columbus,
Indiana
or Ohio Power, or their successors; (ii) to Cincinnati (or its successor)
for deliveries at the points of interconnection between the Corporation
and Cincinnati or its successor; (iii) to Dayton (or its successor)
for
deliveries at the points of interconnection between the Corporation
and
Dayton or its successor; and (iv) to Kentucky, Louisville and Southern
Indiana (or their successors) for deliveries at the points of
interconnection between the Corporation and Louisville or Kentucky,
or
their successors; and (b) any remaining transmission capability available
for the delivery of Available Power and Available Energy shall be
allocated on a pro rata basis (in whole MW increments) to the Sponsoring
Companies in accordance with their Power Participation
Ratios.
|
||||||
|
9.03
|
Operation
and Maintenance of Systems Involved.
Corporation and the Sponsoring Companies shall operate their systems
in
parallel, directly or indirectly, except during emergencies that
temporarily preclude parallel operation. The parties hereto agree
to
coordinate their operations to assure maximum continuity of service
from
the Project Generating Stations, and with relation thereto shall
cooperate
with one another in the establishment of schedules for maintenance
and
operation of equipment and shall cooperate in the coordination of
relay
protection, frequency control, and communication and telemetering
systems.
The parties shall build, maintain and operate their respective systems
in
such a manner as to minimize so far as practicable rapid fluctuations
in
energy flow among the systems. The parties shall cooperate with one
another in the operation of reactive capacity so as to assure mutually
satisfactory power factor conditions among themselves.
The
parties hereto shall exercise due diligence and foresight in carrying
out
all matters related to the providing and operating of their respective
power resources so as to minimize to the extent practicable deviations
between actual and scheduled deliveries of power and energy among
their
systems. The parties hereto shall provide and/or install on their
respective systems such communication, telemetering, frequency and/or
tie-line control facilities essential to so minimizing such deviations;
and shall fully cooperate with one another and with third parties
(such
third parties whose systems are either directly or indirectly
interconnected with the systems of the Sponsoring Companies and who
of
necessity together with the parties hereto must unify their efforts
cooperatively to achieve effective and efficient interconnected systems
operation) in developing and executing operating procedures that
will
enable the parties hereto to avoid to the extent practicable deviations
from scheduled deliveries.
In
order to xxxxxx coordination of the operation and maintenance of
Corporation’s transmission facilities with those facilities of Sponsoring
Companies that are owned or functionally controlled by a regional
transmission organization or independent system operator, Corporation
shall use commercially reasonable efforts to enter into a coordination
agreement with any regional transmission organization or independent
system operator approved by the Federal Energy Regulatory Commission
that
operates transmission facilities that interconnect with Corporation’s
transmission facilities, and to enter into a mutually agreeable services
agreement with a regional transmission organization or independent
system
operator to provide the Corporation with reliability and security
coordination services and other related services.
|
||||||
|
9.04
|
Power
Deliveries as Affected by Physical Characteristics of
Systems.
It
is recognized that the physical and electrical characteristics of
the
transmission facilities of the interconnected network of which the
transmission systems of the Sponsoring Companies, Corporation, and
other
systems of third parties not parties hereto are a part, may at times
preclude the direct delivery at the points of interconnection between
the
transmission systems of one or more of the Sponsoring Companies and
Corporation, of some portion of the energy supplied under this Agreement,
and that in each such case, because of said characteristics, some
of the
energy will be delivered at points which interconnect the system
of one or
more of the Sponsoring Companies with systems of companies not parties
to
this Agreement. The parties hereto shall cooperate in the development
of
mutually satisfactory arrangements among themselves and with such
companies not parties hereto whereby the supply of power and energy
contemplated hereunder can be fulfilled.
|
||||||
|
9.05
|
Operating
Committee.
There shall be an “Operating Committee” consisting of one member appointed
by the Corporation and one member appointed by each of the Sponsoring
Companies electing so to do; provided that, if any two or more Sponsoring
Companies are Affiliates, then such Affiliates shall together be
entitled
to appoint only one member to the Operating Committee. The “Operating
Committee” shall establish (and modify as necessary) scheduling,
operating, testing and maintenance procedures of the Corporation
in
support of this Agreement, including establishing: (i) procedures
for
scheduling delivery of Available Energy under Section 4.03, (ii)
procedures for power and energy accounting, (iii) procedures for
the
reservation and scheduling of firm and non-firm transmission service
under
the Tariff for the delivery of Available Power and Available Energy,
(iv)
the Minimum Generating Unit Output, and (v) the form of notifications
relating to power and energy and the price thereof. In addition,
the
Operating Committee shall consider and make recommendations to
Corporation’s Board of Directors with respect to such other problems as
may arise affecting the transactions under this Agreement. The decisions
of the Operating Committee, including the adoption or modification
of any
procedure by the Operating Committee pursuant to this Section 9.04,
must
receive the affirmative vote of at least two-thirds of the members
of the
Operating Committee, regardless of the number of members of the Operating
Committee present at any meeting.
|
||||||
|
9.06
|
Acknowledgment
of Certain Rights. For
the avoidance of doubt, all of the parties to this Agreement acknowledge
and agree that (i) as of the Effective Date of this Agreement, certain
rights and obligations of the Sponsoring Companies under the Original
Agreement will be changed, modified or otherwise removed, (ii) to
the
extent that the rights of any Sponsoring Company will be changed,
modified
or otherwise removed as of the Effective Date of this Agreement,
such
Sponsoring Company may be entitled to rights under applicable law,
regulation, rules or orders under the Federal Power Act or otherwise
adopted by the Federal Energy Regulatory Commission (“FERC”), (iii) as a
result of the elimination as of the Effective Date of this Agreement
of
the firm transmission service previously provided during the term
of the
Original Agreement to Sponsoring Companies whose transmission systems
were
only indirectly connected to the Corporation’s facilities through
intervening transmission systems by certain Sponsoring Companies
whose
transmission systems were directly connected to the Corporation’s
facilities, such Sponsoring Companies whose transmission systems
were only
indirectly connected to the Corporation’s facilities through intervening
transmission systems shall be entitled to such “roll over” firm
transmission service for delivery of their entitlement to their Power
Participation Ratio share of Surplus Power and Surplus Energy under
this
Agreement, to the border of such Sponsoring Company system and intervening
Sponsoring Company system, as would be accorded a long-term firm
point-to-point transmission service reservation under the then otherwise
applicable FERC Open Access Transmission Tariff (“OATT”), (iv) the
obligation of any Sponsoring Company to maintain or expand transmission
capacity to accommodate another Sponsoring Company’s “roll over” rights to
transmission service for delivery of their entitlement to their Power
Participation Ratio share of Surplus Power and Surplus Energy under
this
Agreement shall be consistent with the obligations it would have
for
long-term firm point-to-point transmission service provided pursuant
to
the then otherwise applicable OATT, and (v) the parties shall cooperate
with any Sponsoring Company that seeks to obtain and/or exercise
any such
rights available under applicable law, regulation, rules or orders
under
the Federal Power Act or otherwise adopted by the FERC
|
||||||
|
9.07
|
Term
of Agreement.
This Agreement shall become effective upon the Effective Date and
shall
terminate upon the earlier of: (1) March 13, 2026 or (2) the sale
or other
disposition of all of the facilities of the Project Generating Stations
or
the permanent cessation of operation of such facilities; provided
that,
the provisions of Articles
5,
7 and 8, this Section 9.07 and Sections 9.08, 9.09, 9.10, 9.11, 9.12,
9.14, 9.15, 9.16, 9.17 and 9.18 shall survive the termination of
this
Agreement, and no termination of this Agreement, for whatever reason,
shall release any Sponsoring Company of any obligations or liabilities
incurred prior to such termination.
|
||||||
|
9.08
|
Access
to Records.
Corporation shall, at all reasonable times, upon the request of any
Sponsoring Company, grant to its representatives reasonable access
to the
books, records and accounts of the Corporation, and furnish such
Sponsoring Company such information as it may reasonably request,
to
enable it to determine the accuracy and reasonableness of payments
made
for energy supplied under this Agreement.
|
||||||
|
9.09
|
Modification
of Agreement.
Absent the agreement of all parties to this Agreement, the standard
for
changes to provisions of this Agreement related to rates proposed
by a
party, a non-party or the Federal Energy Regulatory Commission (or
a
successor agency) acting sua sponte shall be the “public interest”
standard of review set forth in United
Gas Pipeline Co. v. Mobile Gas Serv. Corp.,
000 X.X. 000 (1956) and Federal
Power Comm’n v. Sierra Pacific Power Co., 350
U.S. 348 (1956).
|
||||||
|
9.10
|
Arbitration.
Any controversy, dispute or claim arising out of this Agreement or
the
refusal by any party hereto to perform the whole or any part thereof,
shall be determined by arbitration, in the City of Columbus, Franklin
County, Ohio, in accordance with the Commercial Arbitration Rules
of the
American Arbitration Association or any successor organization, except
as
otherwise set forth in this Section 9.10.
The
party demanding arbitration shall serve notice in writing upon all
other
parties hereto, setting forth in detail the controversy, dispute
or claim
with respect to which arbitration is demanded, and the parties shall
thereupon endeavor to agree upon an arbitration board, which shall
consist
of three members (“Arbitration Board”). If all the parties hereto fail so
to agree within a period of thirty (30) days from the original notice,
the
party demanding arbitration may, by written notice to all other parties
hereto, direct that any members of the Arbitration Board that have
not
been agreed to by the parties shall be selected by the American
Arbitration Association, or any successor organization. No person
shall be
eligible for appointment to the Arbitration Board who is an officer,
employee, shareholder of or otherwise interested in any of the parties
hereto or in the matter sought to be arbitrated.
The
Arbitration Board shall afford adequate opportunity to all parties
hereto
to present information with respect to the controversy, dispute or
claim
submitted to arbitration and may request further information from
any
party hereto; provided, however, that the parties hereto may, by
mutual
agreement, specify the rules which are to govern any proceeding before
the
Arbitration Board and limit the matters to be considered by the
Arbitration Board, in which event the Arbitration Board shall be
governed
by the terms and conditions of such agreement.
The
determination or award of the Arbitration Board shall be made upon
a
determination of a majority of the members thereof. The findings
and award
of the Arbitration Board shall be final and conclusive with respect
to the
controversy, dispute or claim submitted for arbitration and shall
be
binding upon the parties hereto, except as otherwise provided by
law. The
award of the Arbitration Board shall specify the manner and extent
of the
division of the costs of the arbitration proceeding among the parties
hereto
|
||||||
|
9.11
|
Liability.
The rights and obligations of all the parties hereto shall be several
and
not joint or joint and several.
|
||||||
|
9.12
|
Force
Majeure.
No
party hereto shall be held responsible or liable for any loss or
damage on
account of non-delivery of energy hereunder at any time caused by
an event
of Force Majeure. “Force Majeure” shall mean the occurrence or
non-occurrence of any act or event that could not reasonably have
been
expected and avoided by exercise of due diligence and foresight and
such
act or event is beyond the reasonable control of such party, including
to
the extent caused by act of God, fire, flood, explosion, strike,
civil or
military authority, insurrection or riot, act of the elements, or
failure
of equipment. For the avoidance of doubt, “Force Majeure” shall in no
event be based on any Sponsoring Company’s financial or economic
conditions, including without limitation (i) the loss of the Sponsoring
Company’s markets; or (ii) the Sponsoring Company’s inability economically
to use or resell the Available Power or Available Energy purchased
hereunder.
|
||||||
|
9.13
|
Governing
Law.
This Agreement shall be governed by, and construed in accordance
with, the
laws of the State of Ohio.
|
||||||
|
9.14
|
Regulatory
Approvals.
This Agreement is made subject to the jurisdiction of any governmental
authority or authorities having jurisdiction in the premises and
the
performance thereof shall be subject to the following:
|
||||||
|
(a)
|
The
receipt of all regulatory approvals, in form and substance satisfactory
to
Corporation, necessary to permit Corporation to perform all the duties
and
obligations to be performed by Corporation hereunder.
|
||||||
|
(b)
|
The
receipt of all regulatory approvals, in form and substance satisfactory
to
the Sponsoring Companies, necessary to permit the Sponsoring Companies
to
carry out all transactions contemplated herein.
|
||||||
|
9.15
|
Notices.
All notices, requests or other communications under this Agreement
shall
be in writing and shall be sufficient in all respects: (i) if delivered
in
person or by courier, upon
receipt by the intended recipient or an employee that routinely accepts
packages or letters from couriers or other persons for delivery to
personnel at the address identified above (as confirmed by, if delivered
by courier, the records of such courier), (ii) if sent by facsimile
transmission, when the sender receives confirmation from the sending
facsimile machine that such facsimile transmission was transmitted
to the
facsimile number of the addressee, or (iii) if mailed, upon the date
of
delivery as shown by the return receipt therefor.
|
||||||
|
9.16
|
Waiver.
Performance by any party to this Agreement of any responsibility
or
obligation to be performed by such party or compliance by such party
with
any condition contained in this Agreement may by a written instrument
signed by all other parties to this Agreement be waived in any one
or more
instances, but the failure of any party to insist in any one or more
instances upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be
construed as a waiver of any such provisions or the relinquishment
of any
such rights, but the same shall continue and remain in full force
and
effect.
|
||||||
|
9.17
|
Titles
of Articles and Sections.
The titles of the Articles and Sections in this Agreement have been
inserted as a matter of convenience of reference and are not a part
of
this Agreement.
|
||||||
|
9.18
|
Successors
and Assigns.
This Agreement may be executed in any number of counterparts, all
of which
shall constitute but one and the same document.
|
||||||
|
9.181
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns, but a party to
this
Agreement may not assign this Agreement or any of its rights, title
or
interests in or obligations (including without limitation the assumption
of debt obligations) under this Agreement, except to a successor
to all or
substantially all the properties and assets of such party or as provided
in Section 9.182 or 9.183, without the written consent of all the
other
parties hereto.
|
||||||
|
9.182
|
Notwithstanding
the provisions of Section 9.181, any Sponsoring Company shall be
permitted
to, upon thirty (30) days notice to the Corporation and each other
Sponsoring Company, without any further action by the Corporation
or the
other Sponsoring Companies, assign all or part of its rights, title
and
interests in, and obligations under this Agreement to a Permitted
Assignee, provided
that,
the assignee and assignor of the rights, title and interests in,
and
obligations under, this Agreement have executed an assignment agreement
in
form and substance acceptable to the Corporation in its reasonable
discretion (including, without limitation, the agreement by the Sponsoring
Company assigning such rights, title and interests in, and obligations
under, this Agreement to reimburse the Corporation and the other
Sponsoring Companies for any fees or expenses required under any
security
issued, or agreement entered into, by the Corporation as a result
of such
assignment, including without limitation any consent fee or additional
financing costs to the Corporation under the Corporation’s then-existing
securities or agreements resulting from such assignment).
|
||||||
|
9.183
|
Notwithstanding
the provisions of Section 9.181, any Sponsoring Company shall be
permitted
to, subject to compliance with all of the requirements of this Section
9.183, assign all or part of its rights, title and interests in,
and
obligations under this Agreement to a Third Party without any further
action by the Corporation or the other Sponsoring Companies.
|
||||||
|
(a)
|
A
Sponsoring Company (the “Transferring Sponsor”) that desires to assign all
or part of its rights, title and interests in, and obligations under
this
Agreement to a Third Party shall deliver an Offer Notice to the
Corporation and each other Sponsoring Company. The Offer Notice shall
be
deemed to be an irrevocable offer of the subject rights, title and
interests in, and obligations under this Agreement to each of the
other
Sponsoring Companies that is not an Affiliate of the Transferring
Sponsor,
which offer must be held open for no less than thirty (30) days from
the
date of the Offer Notice (the “Election
Period”).
|
||||||
|
(b)
|
The
Sponsoring Companies (other than the Transferring Sponsor and its
Affiliates) shall first have the right, but not the obligation, to
purchase all of the rights, title and interests in, and obligations
under
this Agreement described in the Offer Notice at the price and on
the terms
specified therein by delivering written notice of such election to
the
Transferring Sponsor and the Corporation within the Election
Period; provided that, irrespective of the terms and conditions of
the
Offer Notice, a Sponsoring Company may condition its election to
purchase
the interest described in the Offer Notice on the receipt of approval
or
consent from such Sponsoring Company’s Board of Directors; provided
further that, written notice of such conditional election must be
delivered to the Transferring Sponsor and the Corporation within
the
Election Period and such conditional election shall be deemed withdrawn
(as if it had never been provided) unless the Sponsoring Company
that
delivered such conditional election subsequently delivers written
notice
to the Transferring Sponsor and the Corporation on or before the
tenth
(10th)
day after the expiration of the Election Period that all necessary
approval or consent of such Sponsoring Company’s Board of Directors have
been obtained.
To the extent that more than one Sponsoring Company exercises its
right to
purchase all of the rights, title and interests in, and obligations
under
this Agreement described in the Offer Notice in accordance with the
previous sentence, such rights, title and interests in, and obligations
under this Agreement shall be allotted (successively if necessary)
among
the Sponsoring Companies exercising such right in proportion to their
respective Power Participation Ratios
|
||||||
|
(c)
|
Each
Sponsoring Company exercising its right to purchase any rights, title
and
interests in, and obligations under this Agreement pursuant to this
Section 9.183 may choose to have an Affiliate purchase such rights,
title
and interests in, and obligations under this Agreement; provided
that,
notwithstanding anything in this Section 9.183 to the contrary, any
assignment to a Sponsoring Company or its Affiliate hereunder must
comply
with the requirements of Section 9.182.
|
||||||
|
(d)
|
If
one or more Sponsoring Companies have elected to purchase all of
the
rights, title and interests in, and obligations under this Agreement
of
the Transferring Sponsor pursuant to the Offer Notice, the assignment
of
such rights, title and interests in, and obligations under this Agreement
shall be consummated as soon as practical after the delivery of the
election notices, but in any event no later than fifteen (15) days
after
the filing and receipt, as applicable, of all necessary governmental
filings, consents or other approvals and the expiration of all applicable
waiting periods. At the closing of the purchase of such rights, title
and
interests in, and obligations under this Agreement from the Transferring
Sponsor, the Transferring Sponsor shall provide representations and
warranties customary for transactions of this type, including those
as to
its title to such securities and that there are no liens or other
encumbrances on such securities (other than pursuant to this Agreement)
and shall sign
such
documents as may reasonably be requested by the Corporation and the
other
Sponsoring Companies. The Sponsoring Companies or their Affiliates
shall
only be required to pay cash for the rights, title and interests
in, and
obligations under this Agreement being assigned by the Transferring
Sponsor.
|
||||||
|
(e)
|
To
the extent that the Sponsoring Companies have not elected to purchase
all
of the rights, title and interests in, and obligations under this
Agreement described in the Offer Notice, the Transferring Sponsor
may,
within one-hundred and eighty (180) days after the later of the expiration
of the Election Period or the deemed withdrawal of a conditional
election
by a Sponsoring Company under Section 9.183(b) hereof (if applicable),
enter into a definitive agreement to, assign such rights, title and
interests in, and obligations under this Agreement to a Third Party
at a
price no less than 92.5% of the purchase price specified in the Offer
Notice and on other material terms and conditions no more favorable
to the
such Third Party than those specified in the Offer Notice; provided
that such
purchases shall be conditioned upon: (i) such Third Party having
long-term
unsecured non-credit enhanced indebtedness, as of the date of such
assignment, with a Standard & Poor’s credit rating of at least BBB-
and a Xxxxx’x Investors Service, Inc. credit rating of at least Baa3
(provided that, if such Third Party’s long-term unsecured non-credit
enhanced indebtedness is not currently rated by one of Standard &
Poor’s or Xxxxx, such Third Party’s long-term unsecured non-credit
enhanced indebtedness, as of the date of such assignment, must have
either
a Standard & Poor’s credit rating of at least BBB- or a Xxxxx’x
Investors Service, Inc. credit rating of at least Baa3); (ii) the
filing
or receipt, as applicable, of any necessary governmental filings,
consents
or other approvals; (iii) the determination by counsel for the Corporation
that the assignment of the rights, title or interests in, or obligations
under, this Agreement to such Third Party would not cause a termination,
default, loss or payment obligation under any security issued, or
agreement entered into, by the Corporation prior to such transfer;
and
(iv) such Third Party executing a counterpart of this Agreement,
and both
such Third Party and the Sponsoring Company which is assigning its
rights,
title and interests in, and obligations under, this Agreement executing
such other documents as may be reasonably requested by the Corporation
(including, without limitation, an assignment agreement in form and
substance acceptable to the Corporation in its reasonable discretion
and
containing the agreement by such Sponsoring Company to reimburse
the
Corporation and the other Sponsoring Companies for any fees or expenses
required under any security issued, or agreement entered into, by
the
Corporation as a result of such assignment, including without limitation
any consent fee or additional financing costs to the Corporation
under the
Corporation’s then-existing securities or agreements resulting from such
assignment). In the event that the Sponsoring Company and a Third
Party
have not entered into a definitive agreement to assign the interests
specified in the Offer Notice to such Third Party within the later
of
one-hundred and eighty (180) days after the expiration of the Election
Period or the deemed withdrawal of a conditional election by a Sponsoring
Company under Section 9.183(b) hereof (if applicable) for any reason
or if
either the price to be paid by such Third Party would be less than
92.5%
of the purchase price specified in the Offer Notice or the other
material
terms of such assignment would be more favorable to such Third Party
than
the terms specified in the Offer Notice, then the restrictions provided
for herein shall again be effective, and no assignment of any rights,
title and interests in, and obligations under this Agreement may
be made
thereafter without again offering the same to Sponsoring Companies
in
accordance with this Section 9.183.
|
||||||
|
ARTICLE
10
|
|||||||
|
Representations
and Warranties
|
|||||||
|
10.01
|
Representations
and Warranties.
Each Sponsoring Company hereby represents and warrants for itself,
on and
as of the date of this Agreement and on and as of the date of Modification
No. 1 to this Agreement, as follows:
|
||||||
|
(a)
|
it
is duly organized, validly existing and in good standing under the
laws of
its state of organization, with full corporate power, authority and
legal
right to execute and deliver this Agreement and to perform its obligations
hereunder;
|
||||||
|
(b)
|
it
has duly authorized, executed and delivered this Agreement, and upon
the
execution and delivery by all of the parties hereto, this Agreement
will
be in full force and effect, and will constitute a legal, valid and
binding obligation of such Sponsoring Company, enforceable in accordance
with the terms hereof, except as enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’
rights generally;
|
||||||
|
(c)
|
except
as set forth in Schedule
10.01(c)
hereto, no consents or approvals of, or filings or registrations
with, any
governmental authority or public regulatory authority or agency,
federal
state or local, or any other entity or person are required in connection
with the execution, delivery and performance by it of this Agreement,
except for those which have been duly obtained or made and are in
full
force and effect, have not been revoked, and are not the subject
of a
pending appeal; and
|
||||||
|
(d)
|
the
execution, delivery and performance by it of this Agreement will
not
conflict with or result in any breach of any of the terms, conditions
or
provisions of, or constitute a default under its charter or by-laws
or any
indenture or other material agreement or instrument to which it is
a party
or by which it may be bound or result in the imposition of any liens,
claims or encumbrances on any of its property.
|
||||||
|
ARTICLE
11
|
|||||||
|
Events
of Default and Remedies
|
|||||||
|
11.01
|
Payment
Default.
If any Sponsoring Company fails to make full payment to Corporation
under
this Agreement when due and such failure is not remedied within ten
(10)
days after receipt of notice of such failure from the Corporation,
then
such failure shall constitute a “Payment Default” on the part of such
Sponsoring Company. Upon a Payment Default, the Corporation may suspend
service to the Sponsoring Company that has caused such Payment Default
for
all or part of the period of continuing default (and such Sponsoring
Company shall be deemed to have notified the Corporation and the
other
Sponsoring Companies that any Available Energy shall be available
for
scheduling by such other Sponsoring Companies in accordance with
Section
4.032). The
Corporation’s right to suspend service shall not be exclusive, but shall
be in addition to all remedies available to the Corporation at law
or in
equity. No suspension of service or termination of this Agreement
shall
relieve any Sponsoring Company of its obligations under this Agreement,
which are absolute and unconditional.
|
||||||
|
11.02
|
Performance
Default.
If
the Corporation or any Sponsoring Company fails to comply in any
material
respect with any of the material terms, conditions and covenants
of this
Agreement (and such failure does not constitute a Payment Default
under
Section 11.01), the Corporation (in the case of a default by any
Sponsoring Company) and any Sponsoring Company (in the case of a
default
by the Corporation) shall give the defaulting party written notice
of the
default (“Performance Default”). To the extent that a Performance Default
is not cured within thirty (30) days after receipt of notice thereof
(or
within such longer period of time, not to exceed sixty (60) additional
days, as necessary for the defaulting party with the exercise of
reasonable diligence to cure such default), then the Corporation
(in the
case of a default by any Sponsoring Company) and any Sponsoring Company
(in the case of a default by the Corporation) shall have all of the
rights
and remedies provided at law and in equity, other than termination
of this
Agreement or any release of the obligation of the Sponsoring Companies
to
make payments pursuant to this Agreement, which obligation shall
remain
absolute and unconditional.
|
||||||
|
11.03
|
Waiver.
No
waiver by the Corporation or any Sponsoring Company of any one or
more
defaults in the performance of any provision of this Agreement shall
be
construed as a waiver of any other default or defaults, whether of
a like
kind or different nature.
|
||||||
|
11.04
|
Limitation
of Liability and Damages. TO
THE FULLEST EXTENT PERMITTED BY LAW, NEITHER THE CORPORATION, NOR
ANY
SPONSORING COMPANY SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES,
LOST
REVENUES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
STATUTE,
IN TORT OR CONTRACT, OR OTHERWISE.
|
||||||
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Inter-Company Power Agreement to be duly executed and delivered by their proper
and duly authorized officers to be effective as of March 13, 2006.
|
OHIO
VALLEY ELECTRIC CORPORATION
By
/s/
Xxxxxxx Xxxxxx
Its
President
|
ALLEGHENY
ENERGY SUPPLY COMPANY, L.L.C.
By
/s/
Xxxxx X Xxxxxx
Its
President
|
|
APPALACHIAN
POWER COMPANY
By
/s/
Xxxxx Xxxxx
Its
President
|
THE
CINCINNATI GAS & ELECTRIC COMPANY
By
/s/
Xxxxxxx J Cyrus
Its
Executive
Vice President
|
|
COLUMBUS
SOUTHERN POWER COMPANY
By
/s/
Xxxxx Xxxxx
Its
President
|
THE
DAYTON POWER AND LIGHT COMPANY
By
/s/
W. Xxxxxx Xxxxx
Its
President,
Power Production
|
|
FIRSTENERGY
GENERATION CORP.
By
/s/
Xxxxxx X Xxxxxxxxx
Its
President
|
INDIANA
MICHIGAN POWER COMPANY
By
/s/
Xxxxx Xxxxx
Its
President
|
|
KENTUCKY
UTILITIES COMPANY
By
/s/
Xxxx X. Xxxxxxxx
Its
Sr.
Vice President, Energy Svcs.
|
LOUISVILLE
GAS AND ELECTRIC COMPANY
By
/s/
Xxxx X Xxxxxxxx
Its
Sr.
Vice President, Energy Svcs.
|
|
MONONGAHELA
POWER COMPANY
By
/s/
Xxxxx X Xxxxxx
Its
Vice
President
|
OHIO
POWER COMPANY
By
/s/
Xxxxx Xxxxx
Its
President
|
|
SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY
By
/s/
Xxxxxxx X Xxxx
Its
President
|
