EXHIBIT B-3
XXXXXXXX'X FERRY POWER STATION CONSTRUCTION AND
OPERATING AGREEMENT, dated April 20, 1968, among MONONGAHELA
POWER COMPANY, an Ohio corporation ("Monongahela"), THE
POTOMAC EDISON COMPANY, a Maryland corporation ("Potomac"),
and WEST PENN POWER COMPANY, a Pennsylvania corporation
("West Penn"),
WITNESSETH:
1. Station.
Monongahela, Potomac, and West Penn (the
"Companies") hereby provide for the construction and
operation of a steam electric generating station (the
"Station") in Xxxxxx County, Pennsylvania, with 3 generating
units with a nameplate capacity of approximately 500,000 kw
each to be owned by the Companies as tenants in common with
undivided ownership interests of Monongahela 27.5%, Potomac
20%, and West Penn 52.5% (their respective "Ownership
Shares"), all as contemplated in the deed dated April 20,
1968 (the "Deed") from West Penn to Monongahela and Potomac.
The provisions of this Agreement are intended, as
contemplated in the Deed, to establish among the Companies
more detailed provisions and procedures for carrying out the
provisions of the Deed.
2. Construction.
Construction of the Station shall be carried out
by the Companies under the general supervision and direction
of a Construction Committee, which shall be the Allegheny
Power System Xxxxxxxx'x Ferry Construction Committee.
The Companies intend to use their best efforts
toward the end that the construction of the first generating
unit at the Station will be completed, and full-scale
commercial operation commenced, on or before October 1,
1969, that the construction of the second generating unit at
the Station will be completed, and full-scale commercial
operation commenced, on or before October 1, 1970, and that
the construction of the third generating unit at the Station
will be completed, and full-scale commercial operation
commenced, on or before May 1, 1972.
The Companies shall, with reasonable expedition,
enter into contracts (which may be purchase order contracts)
providing for (a) the purchase of materials, equipment and
services for, and construction of, the Station and (b)
insurance to insure all work under construction against
risks usually insured against for such work. Each such
contract shall provide, among other things, that the
performance of the contract shall be for the account of, and
the charges therefor shall be billed to, and paid by the
Companies in proportion to their respective Ownership Shares
and that the invoices for such billing (contractor's invoice
or invoices) shall be submitted in the names of the
Companies.
Books of account and records containing details of
the items of cost applicable to the construction of each
unit at the Station shall be kept under the supervision of
the Construction Committee and shall be open to examination
at any time by any Company or its representatives.
The Construction Committee shall cause the
Companies to be furnished with counterparts of such books of
account and records as they may request.
The basic books of account and records shall be turned over
to and maintained by the Operating Company referred to in
Section 3.
3. Operation and Maintenance.
The Station shall be operated and maintained in
accordance with good utility operating practice.
The Companies shall establish an Operating
Committee, consisting of one member appointed by each
Company, for the purpose of establishing policies for the
operation and maintenance of the Station. The Operating
Committee shall meet at the call of any member.
The Station will be operated and maintained by one
of the Companies (the "Operating Company") in accordance
with policies to be established by the Operating Committee.
Until otherwise agreed by all the Companies, West Penn shall
be the Operating Company. The Operating Company shall not
be liable for loss, damage, or injury in respect of
operation or maintenance except for its gross negligence or
willful misconduct. The Operating Company shall keep books
of account and records containing details of the items of
cost applicable to the operation and maintenance of the
Station. Such books of account and records shall be open to
examination at any time by any Company or its
representatives. The Operating Company shall furnish the
Companies with counterparts of such books of account and
records as they may request.
4. Renewals, Replacements, Additions, and Retirements.
Renewals and replacements necessary for the
operation of the Station shall be made as required by good
utility operating practice. Other renewals
and replacements and any additions to the Station may be
made only by agreement of all the Companies. Retirements,
sales, and other dispositions of property shall be effected
only in a manner consistent with the Companies' respective
mortgage indentures, if any. Renewals, replacements,
additions, and retirements (and related dispositions and
sales) shall be effected by the Operating Company subject to
the policies established by the Operating Committee.
5. Title to Property.
Title to all property acquired or constructed in
connection with the Station (including without limitation
property acquired for use or consumption in connection with
its construction, operation, or maintenance) shall be in the
Companies as tenants in common in proportion to their
Ownership Shares. Construction, acquisitions, and purchases
shall be made in such manner that title shall vest in
accordance with the foregoing.
6. Power and Energy.
Subject to Section 9, each Company shall at all
times have full ownership of and available to it at the
Station the portion of the generating capability of the
Station, and the energy associated therewith, corresponding
to its Ownership Share.
Each Company shall keep the Operating Company
informed as to the amount of power it requires to be
generated for it.
Subject to its capability and to necessary or
unavoidable outages, the Station shall be operated so as to
produce an output equal to the sum of the power requirements
of the Companies therefrom.
7. Expenditures.
All expenditures in respect of the Station shall
be accounted for in accordance with the Uniform System of
Accounts prescribed by the Federal Power Commission for
Public Utilities and Licensees (Class A and B Electric
Utilities) as in effect on the date of this Agreement.
All expenditures (including without limitation all
expenditures for administration, labor, payroll taxes,
employee benefits, maintenance, materials, research and
development, supplies and services) for the construction,
operation, and maintenance (excluding fuel) of the Station
and for renewals, replacements, additions, and retirements
in respect thereof shall be shared by the Companies in
proportion to their Ownership Shares. All expenditures in
respect of the Station properly chargeable to Account 501
(Fuel) of such Uniform System of Accounts for any period
shall be shared by the Companies pro rata according to the
total kilowatthours of energy respectively taken by them
from the Station during such period.
Interest charges on borrowed funds, income taxes,
and property, business and occupation and like taxes, of
each Company shall be borne entirely by such Company; and
such items, as well as depreciation, amortization, and
interest charged to construction, shall not be deemed
expenditures for purposes of this Section.
8. Joint Account.
The Companies shall maintain one or more joint
accounts (collectively, the "Joint Account") in a bank or
banks agreed upon by them. All expenditures referred to in
the second paragraph of Section 7 shall be paid out of the
Joint Account.
From time to time the Construction Committee or
the Operating Company may request the Companies to advance
to the Joint Account such amount as is then needed for cash
working capital. Within ten days thereafter the Companies,
pro rata according to their respective Ownership Shares,
shall deposit in such Joint Account the amount specified in
such request.
As promptly as practicable after the end of each
month, the Construction Committee or the Operating Company
shall send to each of the Companies a statement in
reasonable detail of all expenditures for such month and the
amount of each Company's share thereof. Within ten days
after its receipt of such statement, each Company shall
deposit its share in the Joint Account.
The Construction Committee or Operating Company
shall cause to be drawn against the Joint Account, and to be
delivered, checks or drafts in the names of the Companies in
payment of expenditures. Funds shall be disbursed from the
Joint Account in accordance with sound accounting and
disbursement procedures. All persons authorized to handle
or disburse funds from the Joint Account shall be bonded in
favor of Monongahela, Potomac, and West Penn, as their
respective interests may appear, for not less than $500,000.
9. Default.
During any period that a Company is in default in
whole or in part in making the most recent deposit in the
Joint Account then required under this Agreement, (a) such
Company shall be entitled to no energy from the Station (but
shall be obligated to pay any damages to the non-defaulting
Companies resulting from the default) and (b) the non-
defaulting Companies shall be entitled to all of the energy
from the Station in proportion to their Ownership Shares.
No such default shall affect any Company's ownership
interest, or any Company's obligations under Sections 7 and
8.
10. Arbitration.
The Companies hereby declare their intention and
agree that any controversy arising out of or relating to
this Agreement or the Deed, or the breach of either thereof,
shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association and that judgment
upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
11. Term of Agreement.
This Agreement shall continue in full force and
effect for a period of forty-five years from the date hereof
and for such longer period as the Companies shall by mutual
agreement continue to operate any of the units at the
Station. Termination of this Agreement shall not terminate
the provisions of Section 10.
12. Amendment.
This Agreement may be amended from time to time or
canceled at any time by an instrument or instruments in
writing signed by all of the Companies (or their successors
or assigns).
13. Successors and Assigns.
This Agreement shall inure to the benefit of and
bind the successors and assigns of the parties hereto, but
it may be assigned in whole or in part
Only in connection with transfer to the assign of a
corresponding ownership interest in the Station.
IN WITNESS WHEREOF each of the parties has caused this
Agreement to be duly executed.
MONONGAHELA POWER COMPANY
By_______/S/____________
Vice President
THE POTOMAC EDISON COMPANY
By________/S/___________
President
WEST PENN POWER COMPANY
By_________/S/__________
President
