Exhibit 10.7
OPERATING AGREEMENT
between
Georgia Power Company
and
Southern Power Company
TABLE OF CONTENTS
ARTICLE 1 Definitions.............................................................................................2
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1.1 "Fuel Services".............................................................................2
1.2 "Generation Facility".......................................................................2
1.3 "Governmental Authority"....................................................................3
1.4 "Legal Requirements"........................................................................3
1.5 "New Investment Projects"...................................................................3
1.6 "New Investment Services"...................................................................4
1.7 "Operating Services"........................................................................4
1.8 "Operation and Maintenance Services"........................................................4
1.9 "Prudent Utility Practice"..................................................................4
ARTICLE 2 Operator's Authority and Responsibility with Respect to Operation of the
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Generation Facilities...........................................................................5
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2.1 Responsibility of Operator..................................................................5
2.2 Authorization of Operator...................................................................6
2.2.1. Plant Operation and Maintenance.................................................6
(a) Staff and Personnel.......................................................7
(b) Licenses and Permits for Generation Facilities............................7
(c) Reductions in Capacity and Outages at Each Plant..........................7
(d) Events About Which Owner is to be Notified................................8
(e) No Changes to Transmission or Distribution Facilities.....................8
(f) Operation in Accordance with Operating Plan...............................9
(g) Point of Interconnection..................................................9
2.2.2. New Investment Services.........................................................9
2.2.3. Fuel Services..................................................................10
2.3 Retirement, Removal or Addition of Generating Facilities...................................10
2.4 Authority to Act as Agent for Owner and Right of Third Parties to Rely on
Agency................................................................................11
2.5 Assignment of Contracts; Liability and Allocation of Risks.................................11
2.5.1 Contracts with Third Parties....................................................11
2.5.2 Acceptance of Contract Provisions...............................................12
2.5.3 Enforcement of Rights Under Contracts...........................................12
2.6 Cooperation of Owner.......................................................................13
2.7 Operator Interface Procedure...............................................................14
2.8 Plans and Budgets..........................................................................14
2.8.1 Strategic Plan..................................................................15
(a) Five-year Operating and Planned Outage Schedule..........................15
(b) Availability and Performance Goals.......................................15
(c) Planned Mandatory Projects...............................................15
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(d) Planned Improvement Projects.............................................16
(e) Authorized Level of Staffing.............................................16
2.8.2 Fuel Plan.......................................................................16
2.8.3 Operating Budget................................................................17
2.8.4 Capital Budget..................................................................17
2.8.5 Fuel Budget.....................................................................17
2.8.6 Material Contracts..............................................................17
2.9 Information and Reports....................................................................17
2.9.1 Generation Facility Data........................................................18
2.9.2 Generation Facility Budget Reports..............................................18
2.9.3 Generation Facility Strategic Plan Reports......................................18
2.9.4 Audit Reports...................................................................18
2.9.5 Correspondence to and from Regulatory Agencies..................................18
2.9.6 Responses to Owner Inquiries....................................................18
2.10 Plant Tours...............................................................................19
2.11 Management Audit..........................................................................19
ARTICLE 3 Entitlement to Output..................................................................................20
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3.1 Entitlement to Output......................................................................20
3.2 Determination of Output-Responsibility for Station Service and Losses......................20
ARTICLE 4 Costs, Billing, Accounting and Audit...................................................................20
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4.1 Cost of Operation and Maintenance..........................................................20
4.2 New Investment Costs.......................................................................21
4.3 Fuel Costs.................................................................................21
4.4 Other Costs Required by Legal Requirements.................................................21
4.5 Revision...................................................................................21
4.6 Billing....................................................................................22
4.7 Payment....................................................................................22
4.8 General Accounting Matters.................................................................22
4.9 Right to Inspect Records...................................................................22
4.10 Disputed Invoice..........................................................................23
ARTICLE 5 Advancement of Funds...................................................................................23
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5.1 Advancement of Funds.......................................................................23
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ARTICLE 6 Taxes 24
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6.1 Taxes......................................................................................24
ARTICLE 7 Compliance with Provisions of Permits and Requirements of Governmental
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Agencies.......................................................................................24
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7.1 Compliance with Provisions of Permits and Requirements of Governmental
Agencies..............................................................................24
ARTICLE 8 Confidentiality of Information.........................................................................24
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ARTICLE 9 Damage to Persons or Property; Penalties; Fines........................................................25
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9.1 Applicability of Article...................................................................25
9.2 Absence of Warranty........................................................................25
9.3 Liabilities to Third Parties and Owner.....................................................25
9.4 Willful Misconduct.........................................................................27
9.5 Limitation of Liability....................................................................27
9.6 Severability...............................................................................28
ARTICLE 10 Insurance.............................................................................................28
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10.1 Parties Obligations Generally.............................................................28
10.2 Commercial Liability Insurance............................................................29
10.3 Workmen's Compensation Insurance..........................................................29
10.4 Additional Insurance......................................................................30
10.5 Waiver of Subrogation - Allocation and Payment of Premium.................................30
ARTICLE 11 Term 31
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11.1 Term......................................................................................31
ARTICLE 12 Remedies..............................................................................................31
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12.1 Termination...............................................................................31
ARTICLE 13 Miscellaneous.........................................................................................34
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13.1 No Partnership or Joint Venture...........................................................34
13.2 Owner's Designated Representatives........................................................34
13.3 Operator's Designated Representative......................................................34
13.4 Depreciation..............................................................................34
13.5 Holidays, Business Days...................................................................34
13.6 Owner's Services to be Furnished at Cost..................................................35
13.7 Entire Agreement..........................................................................35
13.8 Amendments................................................................................35
13.9 Notices...................................................................................35
13.10 Captions.................................................................................36
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13.11 Counterparts.............................................................................36
13.12 No Waiver................................................................................36
13.13 Singular and Plural......................................................................36
13.14 Third Party Beneficiaries................................................................36
13.15 Severability.............................................................................36
ARTICLE 14 Successors and Assigns................................................................................37
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14.1 Successors and Assigns....................................................................37
ARTICLE 15 Governing Law.........................................................................................37
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15.1 Governing Law.............................................................................37
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OPERATING AGREEMENT
between
Georgia Power Company
and
Southern Power Company
THIS AGREEMENT is made and entered into this 31st day of July 2001 (the
"Effective Date") by and between Georgia Power Company ("Operator") and Southern
Power Company ("Owner").
W I T N E S S E T H:
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WHEREAS, Operator and Owner are each a wholly-owned subsidiary of The
Southern Company ("Southern"), a registered holding company under the Public
Utility Holding Company Act of 1935 (the "1935 Act"); and
WHEREAS, Owner owns certain generation stations, plants and other
generation-related facilities within the service territory of Operator and may
construct or acquire additional facilities in the future; and
WHEREAS, Owner intends to sell on the wholesale market the electric
power generated by such facilities; and
WHEREAS, Operator owns and operates generation stations, plants and
other related generation facilities and has developed the expertise and
experience to efficiently and economically operate such facilities; and
WHEREAS, Owner believes that in order to more efficiently and
economically provide for the operation, maintenance, repair, and rehabilitation
of its generating stations, plants and other generation-related facilities, such
activities should be conducted and coordinated by Operator; and
WHEREAS, Owner desires that Operator undertake the operation,
maintenance, repair and rehabilitation of its generating stations, plants and
other generation-related facilities identified on Schedule 1, subject to the
receipt of any necessary regulatory approvals, and Operator has agreed to do so
under the terms and conditions set forth below.
NOW THEREFORE, in consideration of these premises, the parties,
intending to be legally bound, do hereby agree as follows:
ARTICLE 1
Definitions
As used herein, the following terms and phrases shall have,
respectively, the following meanings:
1.1 "Fuel Services" shall mean work related to supplying and
managing all necessary fuels for the Generation Facilities, including,
without limitation, planning, procurement, contract administration,
fuel quality assurance, administration of payables and receivables,
and all activities relating to procurement, transportation,
installation, monitoring, repairing, storage, reprocessing and
disposal of fuel for the Generation Facilities, related materials and
waste products.
1.2 "Generation Facility" shall mean, and refer to, respectively,
each of the fossil fuel, hydro-electric and pumped storage generation
stations, plants and other generation-related facilities owned by
Owner, located within the service territory of Operator and identified
on Schedule 1 attached hereto and incorporated herein; provided,
however, that should activities concerning a Generation Facility be
undertaken with respect to one unit of such station, plant or
facility, the phrase "Generation Facility" shall mean and refer to
that unit and related common facilities. Generation stations, plants
and other generation-related facilities may be removed from or added
to the definition of "Generation Facilities" as contemplated in
Section 2.3.
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1.3 "Governmental Authority" shall mean any local, state,
regional or federal legislative, regulatory, administrative, legal,
judicial or executive agency, commission, department or other entity
and any person acting on behalf of any such entity.
1.4 "Legal Requirements" shall mean all laws, codes, ordinances,
orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, written agreements, regulations and requirements of or
issued by every Goernmental Authority having jurisdiction over the
matter in question, whether federal, regional, state or local, which
may be applicable to Operator, or to Owner, or to any Generation
Facility or any of the real or personal property comprising the
Generation Facilities, or to services to be provided to Owner
hereunder, or the use, occupancy, possession, operation, maintenance,
construction, retirement, acquisition, installation, alteration,
replacement, reconstruction or disposal of any one or more of the
Generation Facilities or any part thereof.
1.5 "New Investment Projects" shall mean projects for the
Generation Facilities relating to the planning, design, licensing,
acquisition, construction, completion, renewal, improvement, addition,
repair, replacement or enlargement of any Unit of Property (as
described in the Federal Energy Regulatory Commission's "Units of
Property for Use in Accounting for Additions and Retirements of
Electric Plants"), under circumstances where expenditures on or for
such projects are to be capitalized in accordance with the Electric
Plant Instructions of the Uniform System of Accounts prescribed for
Class A and B utilities by the Federal Energy Regulatory Commission.
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1.6 "New Investment Services" shall mean work on or for any New
Investment Project, including, but not limited to, any planning,
design, engineering, labor, procurement of materials and supplies,
materials management, quality assurance, training, security, and
environmental protection, together with maintaining or obtaining
licenses and regulatory approvals related thereto, governmental
affairs or regulatory relationships, administration of payables and
receivables, and all other activity required for the safe and reliable
operation of the New Investment Project and/or the relevant Generation
Facility or that may be required to comply with Legal Requirements.
1.7 "Operating Services" shall mean Fuel Services, New Investment
Services, and Operation and Maintenance Services.
1.8 "Operation and Maintenance Services" shall mean work for
Owner relating to the possession, management, control, start-up,
operation, availability, production of energy, maintenance,
improvement, renewal, replacement, and shutdown, including, but not
limited to, any planning, design, engineering, labor, procurement of
materials and supplies, materials management, quality assurance,
training, security, and environmental protection, together with
maintaining or obtaining licenses and regulatory approvals related
thereto, governmental affairs or regulatory relationships,
administration of payables and receivables, and all other activity
required for the safe and reliable operation of the Generation
Facilities or that may be required to comply with Legal Requirements.
1.9 "Prudent Utility Practice" shall mean at a particular time
any of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry prior to such
time, or any of the practices, methods and acts which, in the exercise
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of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. "Prudent Utility
Practice" is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard for,
among other things, manufacturers' warranties and the requirements of
governmental agencies of competent jurisdiction.
ARTICLE 2
Operator's Authority and Responsibility with Respect to Operation
of the Generation Facilities
2.1 Responsibility of Operator. Operator, consistent with such written
guidelines as may be jointly developed with Owner, shall provide and be
responsible for (i) the operation and maintenance of the Generation Facilities
in a safe and reliable manner in accordance with all Legal Requirements and with
Prudent Utility Practice, (ii) the generation of power and energy at the
Generation Facilities to the credit of and for the benefit of the Owner as
economically as is reasonably practicable, (iii) the repair and rehabilitation
of the Generation Facilities as may, from time to time, be necessary,
appropriate or reasonably practicable and advisable and (iv) as and to the
extent deemed by Owner to be necessary or appropriate, the construction of new
or additional non-nuclear generation facilities for Owner. Operator also shall
make such further changes and additions to and retirements from the Generation
Facilities in its service territory as shall be consistent with such operation,
maintenance, repair and rehabilitation. Such services and construction may be
provided by Operator through its own personnel or, in part, by others, including
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without limitation affiliate personnel, under contractual or other arrangements,
including the use of Owner's personnel under the direction and supervision of
Operator.
2.2 Authorization of Operator. In furtherance of the foregoing, Owner
authorizes Operator, and Operator agrees to provide, Operation and Maintenance
Services and Fuel Services for the Generation Facilities and, as authorized
herein, New Investment Services. Owner hereby authorizes Operator to take all
actions that, in the discretion and judgment of Operator consistent with Prudent
Utility Practice, are deemed necessary or advisable in providing these Operating
Services. Owner hereby authorizes Operator, as operator, to take any and all
action necessary to comply with all Legal Requirements and to take all action
necessary to fulfill any requirements for the safe and reliable operation of the
Generation Facilities. The authority vested in Operator shall include, but not
be limited to, the authority to incur costs, liabilities, and obligations, to
purchase equipment, materials and supplies, to perform and arrange for
performance of work, to select and retain contractors, engineers, consultants,
architect-engineers, attorneys, accountants and other firms or persons, and to
take all actions in connection with the Generation Facilities that are within
the scope set forth above. Without limiting the foregoing, the authority vested
in Operator shall include the following:
2.2.1. Plant Operation and Maintenance. Operator shall have
the authority to possess, operate and maintain the Generation
Facilities in accordance with policies and decisions established and
made by Owner. Subject to the provisions of this Agreement, Operator
shall in accordance with Prudent Utility Practice endeavor to achieve
reliable performance of each Generation Facility, to maximize the
capacity and availability factors and minimize forced outage rates and
durations at each Generation Facility and to produce busbar costs as
low as reasonably possible.
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(a) Staff and Personnel. Subject to the provisions of
Section 2.8.1 respecting Strategic Plans and approval of Owner
or Owner's designated representative, Operator shall have the
authority to select, hire, compensate, control and discharge
(when deemed appropriate by Operator) those persons, firms or
corporations which are required to satisfy its obligations
under this Agreement. Operator shall keep Owner informed of
any plans to change either the Operator officer responsible
for any of Owner's Generation Facilities or the Operator
manager of such Generation Facility. Any input from Owner on
such plans will be considered by Operator, but Operator's
decisions on personnel matters shall be final. Operator shall
also consider any positive or negative comments from Owner
regarding the performance of any of Operator's officers or
managers, but management decisions on whether to take
personnel or salary administration actions shall be made
solely by Operator.
(b) Licenses and Permits for Generation Facilities.
Operator is authorized to obtain and maintain compliance with
all licenses, approvals and permits for each Generation
Facility from Governmental Authorities required for operation
and maintenance of the Generation Facility. Upon mutual
agreement of Operator and Owner, or as required by Legal
Requirements, Operator will be designated in such licenses,
approvals and permits as having operating responsibility for
the Generation Facilities.
(c) Reductions in Capacity and Outages at Each Plant.
Owner recognizes that, in the course of operating the
Generation Facilities, it may be necessary to decide whether
to operate the Generation Facilities at less than full power
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or to terminate or suspend such operations altogether in light
of technical, legal, regulatory, safety, economic, power
system, testing, or other considerations. Operator recognizes
the need to minimize periods of reduced capacity or outages at
the Generation Facilities that could have an adverse effect on
Owner's power supply system or its cost of providing reliable
electric service. Operator will endeavor to consult with Owner
concerning any operating conditions which are expected to
result in capacity reductions of fifty percent (50%) or more
at a Generation Facility or outages at a unit of any
Generation Facility, and Operator will only take those actions
when they determine they are prudent and necessary from an
operating standpoint.
(d) Events About Which Owner is to be Notified. In
the event of an occurrence at a Generation Facility of any
unplanned outage, any significant extension of a planned
outage, any unplanned reduction in the capacity of a unit for
an extended period, or any event at a Generation Facility or
any regulatory action which is likely to attract substantial
media attention or to affect substantially the operation of
the Generation Facility, Operator shall inform Owner as soon
as practical, or in accordance with guidelines acceptable to
Owner, after the occurrence of such event.
(e) No Changes to Transmission or Distribution
Facilities. In order that the safe operation of the Generation
Facilities is assured, Owner shall not effect any operating or
physical changes to its transmission and distribution
facilities which may adversely affect the safe operation of
the Generation Facilities without prior consultation with and
the concurrence of Operator.
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(f) Operation in Accordance with Operating Plan. Each
Generation Facility shall be operated in accordance with
Prudent Utility Practice and pursuant to an operating plan
developed and updated regularly by Operator and Owner and in
accordance with Owner's obligations, if any, under any
interconnection agreements, power pooling arrangements or
other applicable arrangements, as such obligations may
presently exist or may hereafter be modified from time to
time, including the obligations, if any, of Owner to maintain
the design integrity of each Generation Facility under the
requirements of the Southeast Electric Reliability Council and
the National Electric Reliability Council.
(g) Point of Interconnection. The point of
interconnection between any Generation Facility and
Operator's or a third party's transmission system and the
extent of Operator's operational responsibility therefor
shall be determined from time to time by Owner and Operator.
2.2.2. New Investment Services. Operator shall have
responsibility for all New Investment Services. Operator is authorized
to enter into such arrangements as it deems appropriate for the
Generation Facilities and to make all decisions regarding the
completion of New Investment Projects that were contemplated in the
construction budgets for the Generation Facilities as of this
acquisition by Owner or that have been approved and provided for in an
Operating Budget or Capital Budget under the procedures contemplated
in Section 2.8 and as applicable Section 2.3.3. All equipment,
materials and supplies included in such New Investment Projects for
each Generation Facility shall be acquired in the name of Owner and
shall be the property of Owner.
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2.2.3. Fuel Services. Operator shall have responsibility for Fuel
Services. Operator is authorized to enter into such arrangements as it
deems appropriate and to make all decisions regarding fuel and fuel
services.
2.3 Retirement, Removal or Addition of Generating Facilities. Owner
shall retain the exclusive authority (i) to determine when the economic life of
the Generation Facility has ended and thereupon to retire the Generation
Facility from commercial operation or (ii) to remove a particular generation
station, plant or other generation-related Facility from the provisions of this
Agreement and to arrange for other means for its operation and maintenance.
Owner and Operator may agree to add new generation stations, plants or other
generation-related facilities of Owner within Operator's service territory to
this Agreement.
2.3.1 Retirement. Upon Owner informing Operator of any
retirement or removal of a Generation Facility, Operator shall take
such action as may be necessary to reduce operation of the Generation
Facility or to terminate operation and place the Generation Facility or
unit in a safe shutdown condition. Owner retains the authority to
determine whether any to-be-retired Generation Facility should be
placed in standby status or operated at reduced output for economic
reasons or Owner's need for the capacity or energy of the Generation
Facility. Operator shall also take such steps as may be necessary to
decommission and dispose of and thereafter maintain, to the extent
necessary, any to-be-retired Generation Facility or any unit thereof
designated for retirement.
2.3.2 Removal. Upon Owner informing Operator of any removal of
a Generation Facility from this Agreement, Operator shall take such
action as may be necessary to transfer operational control of such
Generation Facility, and to comply with the provisions of Sections
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12.1.2 and 12.1.3, which shall also apply. Upon the transfer of
operational control of a Generation Facility as contemplated above and
in Sections 12.1.2 and 12.1.3, such generation station, plant or other
generation-related facility shall cease to be a "Generation Facility."
2.3.3 Addition. Upon Owner and Operator agreeing to the
addition of a generation station, plant or other generation-related
facility to this Agreement, such generation station, plant or other
generation-related facility shall be a "Generation Facility" and shall
be subject to all of the provisions of this Agreement.
2.4 Authority to Act as Agent for Owner and Right of Third Parties to
Rely on Agency. In the conduct of the authority vested in Operator in Sections
2.1 and 2.2 above, Owner hereby designates and authorizes Operator to act as its
attorney-in-fact and agent for such purposes, including, without limitation,
authority to enter into and administer contracts on behalf of Owner for
procurement of material, equipment or services and authority to administer
contracts entered into by Owner with respect to the Generation Facilities. As
relates to all third parties, the designation of Operator as agent shall be
binding on Owner. Operator accepts such appointment as agent of Owner. Upon
request from Operator, Owner shall provide written confirmation of this agency
relationship to third parties.
2.5 Assignment of Contracts; Liability and Allocation of Risks.
2.5.1 Contracts with Third Parties. Upon mutual agreement of
Operator and Owner, Owner shall assign and transfer to Operator those
contracts with third parties relating to the operation of each
Generation Facility. Prior to assignment and transfer of such
contracts, Operator may request Owner to appoint Operator as agent for
administration of any such contracts. After receipt of any such
assignment, transfer or authorization to administer, Operator shall
have the exclusive responsibility for the administration and
enforcement thereof in accordance with the terms thereof.
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2.5.2 Acceptance of Contract Provisions. To the extent
permitted pursuant to Section 2.8, Operator in such contracts with
third parties may agree to such matters as limitations on the liability
of contractors for work performed or materials furnished, restrictions
on warranties, agreements to indemnify the contractors from liability,
requirements that Owner be bound by financial protection provisions,
waivers, releases, indemnifications, limitations of liability and
further transfers or assignments under such contracts, and other
similar provisions (each contract with a third party that contains any
of the provisions, terms or other effects described in this sentence,
shall be referred to as a "Material Contract"). Owner waives any claims
against Operator for entering into Material Contracts approved pursuant
to the process provided in Section 2.8. Owner also agrees to be bound
by the requirements for financial protection, waivers, releases,
indemnification, limitation of liability and further transfers or
assignments that bind Operator as they now exist in existing Material
Contracts or as they may exist in the future with respect to Material
Contracts approved or entered into pursuant to such process provided in
Section 2.8.
2.5.3 Enforcement of Rights Under Contracts. Owner covenants
that, Owner will notify Operator in writing in advance if Owner
intends to threaten suit or bring suit against third parties or
otherwise make any claim under any contract or arrangement relating to
any of the Generation Facilities or Operating Services being provided
by Operator. If Owner desires for Operator to threaten or bring suit
or otherwise to make any claim, or desires that such action
contemplated by Operator shall not be taken, Owner shall, by written
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notice to Operator, request it so to act or refrain from acting. Upon
Operator's receipt of a notice under one of the previous two
sentences, Owner and Operator shall arrange for consultation within
ten (10) working days thereafter on the questions raised, or such
lesser period of time as Operator or Owner shall specify in the light
of circumstances requiring a more expeditious determination. Neither
Operator nor Owner shall make its final determination whether it will
or will not bring any such suit or make any such claim until after
such consultation; however, the determination by Operator regarding
the action that it will or will not take, shall be final and binding
(irrespective of what Owner decides to do), and the decision of Owner
regarding the action that it will or will not take will also be final
and binding (irrespective of what Operator decides to do).
2.6 Cooperation of Owner. Subject to the requirements and procedures
of Sections 2.5.2 and 2.8, and in the case of New Investment Services
Section 2.2.2 and as applicable Section 2.3.3, Owner agrees that it will
take all necessary action in a prompt manner to execute any agreements with
respect to the provision of Operation and Maintenance Services and Fuel
Services for the Generation Facilities, and New Investment Services, as and
when requested by Operator to permit Operator to carry out its authority
and responsibilities pursuant to this Article 2. Operator may request Owner
to furnish services or assistance, materials, supplies, licenses, offices
and real property rights including, without limitation, power supply
services, transmission and distribution system repair, replacement,
construction and maintenance, accounting services, maintenance personnel,
security services, and other personnel, services or assistance as Operator
may require with respect to any one or more Generation Facilities. Any such
items which Owner agrees to furnish to Operator shall be provided at cost.
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2.7 Operator Interface Procedure. Operator and Owner will jointly
establish and maintain an Operator Interface Procedure to govern the
working relationships between the two companies. The Operator Interface
Procedure shall contain procedures by which Owner can maintain an overview
of Generation Facility operations, procedures for administering this
Operating Agreement through designated executive points of contact, and
procedures to define interfaces for support services and assistance
provided by Owner pursuant to Section 2.6 hereof.
2.8 Plans and Budgets. Strategic Plans, Fuel Plans, Operating Budgets,
Capital Budgets, Fuel Budgets and Material Contracts shall be submitted to
Owner by Operator as provided in Paragraphs 2.8.1 through 2.8.5 below. The
contents of these plans, budgets and Material Contracts shall conform to
the requirements and guidelines established pursuant to the Operator
Interface Procedure. Owner shall approve or disapprove each such plan,
budget or Material Contract within thirty (30) days after its submittal. In
the event Owner disapproves a plan, budget or Material Contract, Owner
shall inform Operator of the basis for such disapproval. Operator shall
then modify such plan, budget or Material Contracts as required to make it
acceptable to Owner and shall resubmit it for approval; provided, however,
that in no event shall Operator be required to submit plans, budgets or
Material Contracts which would cause Operator to operate a Generation
Facility in violation of any Legal Requirements or in a manner that fails
to provide reasonable assurance of health and safety to employees. Operator
shall attempt to provide Operating Services in accordance with such
approved plans and within the aggregate annual amount of such budgets.
Notwithstanding the foregoing, Operator makes no representation, warranty
or promise of any kind as to accuracy of any such plan or budget, or that
any attempt referred to in the preceding sentence will be successful, and
in no event shall Owner be relieved of its responsibility to pay costs
incurred by Operator as required in Article 4 hereof.
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2.8.1 Strategic Plan. A Strategic Plan for each Generating
Facility shall be submitted to Owner by Operator no later than July 1
of each year. Owner may separately approve or disapprove individual
projects which are classified as planned improvement projects pursuant
to Paragraph (d) below, but shall otherwise approve or disapprove each
Strategic Plan in its entirety. Strategic Plans may cover one or more
Generation Facilities. Each Strategic Plan shall identify key
assumptions to be used in the preparation of budgets and forecasts,
including:
(a) Five-year Operating and Planned Outage Schedule.
This section shall identify the scheduled operating cycles
and planned outages for maintenance and other work during
the succeeding five years. The schedule shall describe in
reasonable detail the time and duration of each planned
outage and the maintenance and other work planned to be
performed during such outage.
(b) Availability and Performance Goals. This section
shall contain overall performance goals which have been
established by Operator for the Generation Facility for the
current year.
(c) Planned Mandatory Projects. A mandatory project is
any project with a total estimated cost in excess of one
million dollars ($1,000,000) or such other amount as Owner
may establish, including but not limited to any upgrade,
replacement, addition or program, which is needed in order
to support normal operations in accordance with Prudent
Utility Practice or in order to comply with regulatory or
safety requirements. The associated schedule and estimated
annual funding requirements shall be included.
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(d) Planned Improvement Projects. An improvement
project is any project with a total estimated cost in excess
of one million dollars ($1,000,000) or such other amount as
Owner may establish, including but not limited to any upgrade,
replacement, addition, or program, which is not mandatory as
defined in (c) above. Examples of such projects include
efforts to improve performance of a Generation Facility or
conditions, such as improved Generation Facility capacity or
efficiency, enhanced working conditions, and appearance. The
associated schedule and estimated annual funding requirements
shall be included.
(e) Authorized Level of Staffing. This section shall
provide the current authorized number of permanent staff
positions which are assigned to the Generation Facility and
its offsite support. Such number of positions shall be broken
down by functional areas (e.g., operations, maintenance,
administrative, technical, corporate support), shall include
positions which are located either on-site or off-site, and
shall include all positions regardless of the actual employer.
This section shall also show any estimates of planned changes
in such authorized number of positions over the succeeding
five years.
2.8.2 Fuel Plan. A five-year Fuel Plan for each Generation
Facility shall be submitted to Owner by September 15 of each year.
Owner shall approve or disapprove each Fuel Plan within thirty days
after submittal. Each Fuel Plan shall describe in reasonable detail
plans for procurement and tilization of fuel for the Generation
Facility and information on disposal of waste products. A Fuel Plan
may cover one or more Generation Facilities.
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2.8.3 Operating Budget. By September 1 of each year, Operator
shall submit to Owner a written Operating Budget showing the estimated
costs of operating and maintaining Owner's Generation Facilities during
the next calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.4 Capital Budget. By September 1 of each year, Operator
shall submit to Owner a written Capital Budget estimate of capital
expenditures for each of Owner's Generation Facilities for the next
calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.5 Fuel Budget. By September 15 of each year, Operator
shall submit to Owner a written Fuel Budget estimate of fuel
expenditures for each of Owner's Generation Facilities for the next
calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.6 Material Contracts. Reasonably in advance of the time it
plans to enter into a Material Contract with a third party, Operator
shall submit to Owner a draft of such Material Contract. Each draft
Material Contract will be supported with all attachments and sufficient
information for Owner to evaluate the provisions that render such draft
a Material Contract.
2.9 Information and Reports. Operator shall furnish to Owner the
following information and reports:
17
2.9.1 Generation Facility Data. At the time of submittal of each
Strategic Plan, Operator shall also furnish a comparison of the
performance of each Generation Facility with other generating
facilities using performance indicators in common use in the electric
utility industry or as may be specified by Owner.
2.9.2 Generation Facility Budget Reports. Operator shall furnish
monthly data showing actual costs for operation and maintenance,
capital expenditures, and direct fuel expenditures with comparisons to
the respective budgets. This report will normally be provided by the
end of the succeeding month.
2.9.3 Generation Facility Strategic Plan Reports. At least
quarterly, Operator shall furnish data showing actual performance for
each unit at each Generation Facility compared to goals contained in
the Strategic Plan for the Generation Facility.
2.9.4 Audit Reports. Operator shall make available for review
by Owner copies of financial or accounting reports concerning Owner's
Generation Facilities containing the results of audits by or for
Southern Company Services, Inc., or any affiliate or subsidiary of The
Southern Company, or by any regulatory agency.
2.9.5 Correspondence to and from Regulatory Agencies. At the
request of Owner, Operator shall furnish to Owner copies of
correspondence to and from regulatory agencies concerning one or more
of Owner's Generation Facilities.
2.9.6 Responses to Owner Inquiries. In addition to the obligation
of Operator to provide the information as explicitly required herein,
Operator shall respond to reasonable written or verbal requests from
Owner for information not otherwise specifically provided for herein.
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2.10 Plant Tours. Owner shall have the right to have its
representatives and guests visit its Generation Facilities, to tour
the facilities, and observe activities at the Generation Facilities;
provided that such visits or tours will not interfere with the
operation of the Generation Facilities, or the security or safety of
such facilities. Owner shall assure that its representatives and
guests comply with all applicable rules and regulations in effect at a
Generation Facility whether imposed by Governmental Authority or by
Operator.
2.11 Management Audit. Owner shall have the right to conduct a
management audit, at its own cost, of Operator's performance hereunder
either by Owner officers and employees or through their duly
authorized agents or representatives. Operator shall cooperate with
Owner in the conducting of such audit and, subject to applicable Legal
Requirements and the requirements of vendors, give Owner reasonable
access to all contracts, records and other documents relating to the
Generating Facilities. Following any such management audit, Operator
shall respond to the findings of such audit if requested to do so by
Owner. Management audits by Owner shall be scheduled so as to minimize
the number of audits required and so as to not to exceed one
management audit in any consecutive twelve-month period.
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ARTICLE 3
Entitlement to Output
3.1 Entitlement to Output. Owner shall be entitled to all of the output
from its Generation Facilities at the time generation in such units occurs.
Subject to Operator's primary responsibility for safe operation of the
Generation Facilities, Owner shall have the right to schedule and dispatch the
capacity and energy needed from the facilities, and Operator shall use its best
efforts to honor such schedule.
3.2 Determination of Output-Responsibility for Station Service and
Losses. Output of each Generation Facility shall be the gross generation of the
facility, less station service requirements, and less adjustments for losses
experienced. Owner shall be responsible for providing all off-site electric
power required at the Generation Facility whenever the station service and
losses exceed the gross generation of the Generation Facility.
ARTICLE 4
Costs, Billing, Accounting and Audit
4.1 Cost of Operation and Maintenance. Owner shall pay to Operator all
direct costs incurred by Operator relating to Operation and Maintenance Services
for the Generation Facilities (including all costs identified in Section 9.3 and
any costs incurred by Operator as a consequence of termination hereunder). Such
costs shall include all payments made to Operator employees (including payment
of wages, salaries, workmen's compensation and other benefits) relating to work
performed by such employees while on the premises of any of the Generation
Facilities. Operator and Owner acknowledge that all such payments made to
20
Operator employees, relating to work performed by such employees while on
Generation Facility premises, are effectively made by Owner, since Owner is
responsible for such payments and they are made from funds placed on deposit by
Owner for those purposes. Owner shall also pay to Operator the Generation
Facility allocated share of other of Operator's costs. Allocation of costs to
Operation and Maintenance Services shall be performed in accordance with the
methodology agreed-upon from time to time by Owner and Operator.
4.2 New Investment Costs. Owner shall pay to Operator all costs
incurred by Operator relating to New Investment Services for the Generation
Facilities, including obligations incurred to third parties, direct costs of
Operator associated with such New Investment Services and the Generation
Facilities' allocated share of Operator's other costs associated with such
activities. Allocation of costs to New Investment Services shall be performed in
accordance with the methodology agreed-upon from time to time by Owner and
Operator pursuant to Section 4.1 hereof.
4.3 Fuel Costs. Owner shall pay to Operator all direct costs incurred
by Operator relating to Fuel Services for the Generation Facilities and the
Generation Facilities allocated share of other of Operator's costs. Allocation
of costs to Fuel Costs shall be performed in accordance with the methodology
agreed-upon from time to time by Owner and Operator pursuant to Section 4.1
hereof.
4.4 Other Costs Required by Legal Requirements. Owner shall pay to
Operator all direct costs incurred by Operator and the Generation Facilities'
allocated share of other of Operator's costs associated with any other
activities of Operator relative to the Generation Facilities that are required
to meet Legal Requirements.
4.5 Revision. Should Operator undertake to perform services for any
other affiliated company or for any non-affiliated company where the cost to
Operator of providing such services affects the cost of Operator to provide
Operating Services pursuant to this Agreement, Operator shall discuss the matter
21
and reach agreement with Owner respecting the need for or the terms of any
amendment of this Section 4 as may be appropriate to assure the continued
fairness of the determination of the responsibility for costs payable to
Operator hereunder.
4.6 Billing. Operator shall render to Owner a monthly billing
statement, with detailed data in a computer readable form as reasonably
requested by Owner, no later than the fifth (5th) day of each month detailing
costs incurred for Operation and Maintenance Services during the preceding month
pursuant to Section 4.1; costs incurred for New Investment Services during the
preceding month pursuant to Section 4.2; costs incurred for Fuel Services during
the preceding month pursuant to Section 4.3; and the other costs incurred during
the preceding month pursuant to Section 4.4.
4.7 Payment. The obligation to make payments as specified herein shall
continue notwithstanding the capability (or lack of capability) of the
Generation Facilities to produce power for any reason.
4.8 General Accounting Matters. Determinations by Operator on all
accounting matters related to the transactions contemplated by this Agreement
will be in accordance with Generally Accepted Accounting Principles and the
Securities and Exchange Commission's Uniform System of Accounts for Mutual and
Subsidiary Service Companies, utilizing the accrual method of accounting, unless
otherwise specifically provided in this Agreement or mutually agreed by Operator
and Owner or as prescribed by other regulatory agencies having jurisdiction, as
in effect from time to time.
4.9 Right to Inspect Records. During normal business hours and subject
to conditions consistent with the conduct by Operator of its regular business
affairs and responsibilities, Operator will provide Owner or any auditor
utilized by Owner and reasonably acceptable to Operator, or any nationally
22
recognized accounting firm retained by Owner, access to Operator's books,
records, and other documents directly related to the performance of Operator's
obligations under this Agreement and, upon request, copies thereof, which
pertain to (a) costs applicable to Operation and Maintenance Services, New
Investment Services, Fuel Services, and Other Costs for Owner's Generation
Facilities to the extent necessary to enable Owner to verify the costs which
have been billed to Owner pursuant to the provisions of this Agreement; (b)
compliance with all environmental Legal Requirements; and (c) matters relating
to the design, construction and operation and retirement of Owner's Generation
Facilities in proceedings before any Governmental Authority.
4.10 Disputed Invoice. In the event Owner shall question any statement
rendered by Operator in accordance with the provisions of Section 4.1 hereof,
Owner shall nevertheless promptly pay amounts called for by Operator under
Section 4.1 hereof but such payment shall not be deemed to prevent Owner from
claiming an adjustment of any statement rendered.
ARTICLE 5
Advancement of Funds
5.1 Operator shall prepare forecasts, in such frequency, form and
detail as Owner shall direct, of the funds required to pay Operator's
anticipated costs of the services to be provided to Owner and the dates on which
payment of such costs shall become due. Owner shall advance funds to Operator in
such amounts and at such times determined on the basis of such forecasts, to
enable Operator to pay its costs of services on or before payment of such costs
shall be due. Such advances shall be made by deposits or bank transfers to
accounts of Operator with such financial institutions as Operator shall
designate. Any excess funds in such accounts shall be invested by Operator in
accordance with prudent cash management practices and all investment income and
appreciation received on such funds shall be credited against the cost of
service provided to Owner.
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ARTICLE 6
Taxes
6.1 Owner shall report, file returns with respect to, be responsible
for and pay all real property, franchise, business or other taxes, except
payroll and sales or use taxes, arising out of or relating to its ownership of
the Generation Facilities.
ARTICLE 7
Compliance with Provisions of Permits
and Requirements of Governmental Agencies
7.1 Owner and Operator shall cooperate in taking whatever action may be
necessary to comply with the terms and provisions of all permits and licenses
for the Generation Facilities and with all applicable lawful requirements of any
federal, state or local agency or regulatory body having jurisdiction in or over
the Generation Facilities.
ARTICLE 8
Confidentiality of Information
8.1 Each party to this Agreement may, from time to time, come into
possession of information of the other parties that is either confidential or
proprietary. Any party having any such information which is known to be
considered by any other party as either confidential or proprietary will not
reproduce, copy, use or disclose (except when required by a Governmental
Authority) any such information in whole or in part for any purpose without the
written consent of the other party. In disclosing confidential or proprietary
information to a Governmental Authority, the disclosing party shall cooperate
with the other party in minimizing the amount of such information furnished. At
24
the specific request of the other party, the disclosing party will endeavor to
secure the agreement of such Governmental Authority to maintain specified
portions of such information in confidence. Public dissemination of information
by the furnishing party before or after it is furnished shall constitute a
termination of the confidentiality requirement as to that specific information.
ARTICLE 9
Damage to Persons or Property; Penalties; Fines
9.1 Applicability of Article. Since Operator is undertaking its
responsibilities hereunder (i) at cost and (ii) in order to assist Owner in
meeting its responsibilities with respect to its Generation Facilities, the
following provisions shall be applicable to loss or damage to the property of
any or all of the parties hereto (including Generation Facilities property) or
of third parties, or injuries to or loss of life by any person, including
employees of the parties hereto, and to penalties or fines assessed with respect
to the Generation Facilities:
9.2 Absence of Warranty. Operator does not warrant that its performance
of Operating Services will meet the standards set forth in Sections 2.1 and 2.2
hereof, and its sole obligation if it fails to meet such standards is to
reperform at the request of Owner the deficient work at cost payable by Owner in
a manner that complies with such standards. Owner acknowledges that such
services are not subject to any warranty of any nature, express or implied,
including, without limitation, any warranty of merchantability or fitness for a
particular purpose.
9.3 Liabilities to Third Parties and Owner. (a) To the fullest extent
provided by law, all liability to third parties other than liability for
Operator's Willful Misconduct (as defined in 9.4 below), fraud or gross
negligence whether arising in contract (including breach of warranty), tort
(including negligence, product liability, breach of fiduciary duty or any other
theory of tort liability), under the laws of real property or otherwise, or as a
25
result of fines or other penalties imposed by any Governmental Authority, that
results from or is in any way connected with the provision of Operation and
Maintenance Services, New Investment Services, or Fuel Services for the
Generation Facilities shall be borne by Owner in their entirety. Owner shall
indemnify and hold harmless Operator, its agents servants, directors, employees
and affiliates (the "Indemnified Parties") from and against any and all claims,
losses, damages, expenses and costs of any kind, including without limitation
attorneys fees, costs of investigation and court costs, other than those
attributable to Willful Misconduct, fraud or gross negligence of Operator,
whether direct or indirect, on account of or by reason of bodily injuries
(including death) to any person or persons or property damage arising out of or
occurring in connection with the provision of Operation and Maintenance
Services, New Investment Services, or Fuel Services for the Generation
Facilities, whether or not such claims, losses, damages, expenses or costs were
caused by or alleged to have been caused by or contributed to by the active,
passive, affirmative, sole or concurrent negligence or by breach of any
statutory or other duty (whether non-delegable or otherwise) of any of the
Indemnified Parties.
Except for consequences of Operator's Willful Misconduct or fraud,
Owner and its affiliates, servants, employees, agents and insurers hereby
release, acquit and forever discharge the Indemnified Parties, to the fullest
extent permitted by applicable law, from any and all damages, claims, causes of
action, damage to property of Owner or expenses of whatever kind or nature, that
are in any manner connected with the provision of any Operating Services or the
performance and prosecution of any project or work by any of the Indemnified
Parties for or on behalf of Owner for its Generation Facilities, whether arising
in tort (including negligence, strict liability, breach of fiduciary duty or any
other theory of tort liability), contract (including breach of warranty), under
26
the laws of real property or otherwise, or as a result of any fine or other
penalty imposed by any Governmental Authority. This release shall be effective
whether or not such claims, causes of action, damages, or expenses were caused
or alleged to have been caused by or contributed to by the active, passive,
affirmative, sole or concurrent negligence or by breach of any statutory or
other duty (whether non-delegable or otherwise) of any of the Indemnified
Parties.
9.4 Willful Misconduct. As used in this Agreement, the term "Willful
Misconduct" shall mean any act or omission by any of the Indemnified Parties
that is performed or omitted consciously with actual knowledge that such conduct
is likely to result in damage or injury to persons or property; provided,
however, that any such act or omission, if performed or omitted by an
Indemnified Party, shall not be deemed Willful Misconduct unless an officer or
employee of Operator at or above the officer level of Vice President or the
employee level of plant manager shall have expressly authorized such act or
omission. Operator shall exercise reasonable and customary supervision or
control over the activities of its agents, servants and employees, and its
affiliates, so as to minimize the potential for adverse willful actions by such
agents, servants or employees or affiliates; provided, however, that failure of
Operator to prevent such adverse willful actions shall not itself be considered
Willful Misconduct. Liability attributable to Operator's Willful Misconduct,
fraud or gross negligence shall be borne by Operator, subject to the limitations
of liability in Section 9.5 below and the last paragraph of Section 9.3 above in
the case of liability to Owner.
9.5 Limitation of Liability. Notwithstanding Sections 9.3 and 9.4
hereof, Owner agrees that in no event shall any of the Indemnified Parties be
liable to Owner for any indirect, special, punitive, incidental or consequential
damages including, without limitation, (1) loss of profits or revenues, (2)
damages suffered as a result of the loss of the use of Owner's power system,
27
Generation Facilities or equipment, (3) cost of purchase of replacement power
(including any differential in fuel or power costs), or (4) cost of capital with
respect to any claim based on or in any way connected with this Agreement
whether arising in contract (including breach of warranty), tort (including
negligence, strict liability, breach of fiduciary duty or any other theory of
tort liability), under the laws of real property or any other legal or equitable
theory of law, or as a result of any fine or other penalty imposed by any
Governmental Authority. Owner shall release, acquit, forever discharge,
indemnify, and hold harmless the Indemnified Parties from and against any claim
by any customer of Owner, or any other third party, for any direct, indirect,
special, punitive, incidental or consequential damages arising out of any
performance or failure to perform under this Agreement. The provisions of this
Section 9.5 shall apply to the fullest extent permitted by law.
9.6 Severability. In the event that any particular application of any
of the limitations of liability contained in this Article 9 should be finally
adjudicated to be void as a violation of the public policy of the State of
Georgia then such limitation of liability shall not apply with respect to such
application to the extent (but only to the extent) required in order for such
limitation of liability not to be void as a violation of such public policy, and
such limitations of liability shall remain in full force and effect with respect
to all other applications to the fullest extent permitted by law.
ARTICLE 10
Insurance
10.1 Parties' Obligations Generally. During the term of this Agreement,
Owner and Operator shall make reasonable efforts to procure and maintain in
force such physical damage and loss, public liability, worker's compensation,
28
officers' liability and other insurance as Owner may deem appropriate with
respect to all losses, damages, liability and claims arising out of Owner's
ownership of its Generation Facilities and Operator's operation thereof and the
provision of Operating Services hereunder. All such insurance policies shall
identify Operator and Owner as additional insureds thereunder as their interests
may appear, and shall contain a waiver of subrogation clause in favor of
Operator and Owner to the extent of the applicable limits of such policies. The
aggregate cost of all insurance, applicable to each Generation Facility and
procured by Operator pursuant to this Agreement, and any payment by Operator of
any deductible, self-insured retention, or co-payment in connection with any
policy claim arising out of Operator's performance of this Agreement shall be
included in the costs of Operating Services. Operator will take steps to meet
the requirements of such insurance policies and cooperate with Owner to furnish
information, establish procedures, erect or change physical facilities and
otherwise meet the requirements of the insurers to maintain coverage in effect
and to collect claims that may be made under such insurance. In the event that
any of the insurance described in this Article 10 is canceled by a party, that
party shall give written notice of such cancellation to the other party at least
sixty (60) days prior to the effective date of such cancellation.
10.2 Commercial Liability Insurance. Operator will carry insurance to cover
the legal obligations to pay damages because of bodily injury or property
damage. The limits and deductibles of such coverage shall be as mutually agreed
by Operator and Owner.
10.3 Workmen's Compensation Insurance. Operator shall qualify as a
self-insurer in Georgia and with the U.S. Department of Labor for purposes of
the U.S. Longshoreman's and Harbor Worker's Act, but will provide an umbrella
policy to cover benefits in excess of its assumed liability for workmen's
compensation, the Longshoreman's and Harbor Worker's Act, and employers
29
liability. Owner and Operator acknowledge that, pursuant to the terms of this
Agreement, all premiums for Operator's workmen's compensation insurance and all
payments to Operator employees, including workmen's compensation benefits,
relating to work performed by such employees while on the premises of a
Generation Facility, are effectively made by the Owner, since such premiums and
payments constitute direct charges incurred by Operator in relation to the
performance of Operating Services for such Generation Facility. It is the intent
of Owner and Operator that for purposes of workmen's compensation Owner not be
exposed to greater liability by virtue of this Agreement than Owner would have
if Owner had utilized Owner employees to perform Operating Services. If Operator
and Owner agree, as an alternative, the parties can purchase any such insurance.
10.4 Additional Insurance. In the event Owner at any time or from time
to time shall have elected to participate in supplemental insurance programs to
cover other risks arising from the ownership and operation of a Generation
Facility, including the extra costs of replacement power, the costs of such
protection shall be borne by Owner.
10.5 Waiver of Subrogation - Allocation and Payment of Premium. Each
insurance policy obtained by a party hereto shall contain waivers of subrogation
against the other party, if obtainable from the insurer. The aggregate cost of
all insurance, applicable to the Generation Facilities and procured by Operator
pursuant to this Agreement, shall be considered an operating cost subject to
reimbursement under Section 4.1. In the event that any of the foregoing
insurance policies is canceled by a party, that party shall give written notice
of such cancellation to the other party sixty (60) days prior to the effective
date of such cancellation.
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ARTICLE 11
Term
11.1 Term. The term of this Agreement shall commence on the Effective
Date, subject nevertheless to any applicable rules, regulations or approvals of
any regulatory authority whose approval is required. This Agreement shall expire
(i) when all Generation Facilities have been retired and each site has been
returned to a condition acceptable to Owner, all in compliance with Legal
Requirements; (ii) upon termination pursuant to Section 12.1; or (c) upon mutual
agreement of the parties. Owner's obligation to make payments to Operator under
this Agreement that have not been satisfied prior to the expiration of the term
of this Agreement shall survive such expiration of the term.
11.1.1 It is recognized in the case of expiration under
Sections 11.1(i) or 11.1(iii), however, that this Agreement shall not
expire, unless all necessary regulatory approvals, if any, have been
obtained to transfer the operating responsibility for all Generation
Facilities to Owner or Owner's designee. Until the date on which such
transfer of operating responsibility is accomplished, or as Owner may
otherwise notify Operator in writing, Operator agrees to continue to
provide Operating Services for the Generation Facilities.
ARTICLE 12
Remedies
12.1 Termination. In the event Owner determines that it is in its
interest to do so, or Operator determines that it is in Operator's interest to
do so, either Operator or Owner may at will terminate this Agreement as provided
below. Except as may be otherwise provided in Section 11.1, this Section 12.1
and Article 9 hereof, this right of termination shall be Owner's sole and
31
exclusive remedy, legal or equitable, for any failure by Operator at any time to
perform its duties, responsibilities, obligations, or functions under this
Agreement, or for any other breach by Operator of this Agreement. The procedure
for exercise of this right of termination shall be as follows:
12.1.1 Owner shall give written notice to Operator of Owner's
determination to terminate this Agreement or Operator shall give
written notice to Owner of its determination to terminate this
Agreement.
12.1.2 Following the giving of such notice, the parties agree
to cooperate, in good faith, to accomplish the transfer of operating
responsibility in a prompt manner, including without limitation
assigning contracts, transferring employees, and modifying licenses,
approvals and permits as necessary to reflect such change (including,
if required to effectuate transfer to Owner for regulatory purposes of
the operating responsibility for the Generation Facilities).
12.1.3 It is recognized that no termination shall be
accomplished until all necessary regulatory approvals, if any, have
been obtained to transfer the operating responsibility for all
Generation Facilities to Owner or Owner's designee. During the period
between the giving of the notice of determination to terminate, and the
date on which such transfer of operating responsibility is
accomplished, Operator agrees to continue the provision of Operating
Services for the Generation Facilities.
12.1.4 Upon receipt of all necessary governmental
authorization for transfer of operating responsibility for each
Generation Facility from Operator to Owner or Owner's designee, this
Agreement shall terminate. Except as may otherwise be provided in
Section 11.1 and this Section 12.1 and except for the consequences of
Operator's Willful Misconduct, fraud or gross negligence and the other
32
limitations provided in Article 9 hereof, Owner hereby agrees that from
and after such termination Owner shall indemnify and forever hold
Operator, its servants, directors, employees, affiliates and its agents
harmless from and against any and all liability, costs, expenses
(including reasonable attorneys' fees) and judgments, which may
thereafter be experienced by Operator, which are in any way related to,
arise out of or are in connection with the activities of Operator, its
agents, servants, directors, employees and affiliates under this
Agreement (whether the cause occurred before or after termination).
Except as may otherwise be provided in Section 11.1 and this Section
12.1 and except for the consequences of Operator's Willful Misconduct
or fraud and the other limitations provided in Article 9 hereof, Owner
further waives any claim Owner may have against Operator, its officers,
directors, employees, affiliates and agents for damage to property of
Owner, that arose out of or in connection with the activities of
Operator, its officers, directors, employees, affiliates and agents
under this Agreement. The indemnification and waiver contained herein
shall survive termination and shall be specifically enforceable by
Operator against Owner.
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ARTICLE 13
Miscellaneous
13.1 No Partnership or Joint Venture. Nothing in this Agreement shall
be deemed to create or constitute a partnership, joint venture or association
among the parties hereto or any of them, the sole purpose of this Agreement
being limited to providing for the orderly and efficient operation, maintenance,
repair, upgrade, rehabilitation, renewal, replacement, additions and
construction of the Generation Facilities.
13.2 Owner's Designated Representatives. Owner hereby designates its
President as Owner's Representative, who shall receive notices and
communications from Operator under the provisions of this Agreement and who
shall send to the designated Representative of Operator all notices and
communications under the provisions of this Agreement.
13.3 Operator's Designated Representative, Operator hereby designates
its President as the Operator Representative, who shall receive notices and
communications from Owner's Representative under the provisions of this
Agreement and who shall send to Owner's Representative all notices and
communications concerning the provisions of this Agreement.
13.4 Depreciation. Owner shall determine the basis and method it will
use for purposes of depreciation and other matters where investment in
Generation Facilities property is relevant.
13.5 Holidays, Business Days. Any obligations to perform under this
Agreement, including payment obligations, which shall become due on a
non-business day shall become due upon the next business day. The term "business
day" shall mean any day other than a day on which banking institutions in the
City of Atlanta, Georgia are authorized by law to close.
34
13.6 Owner's Services to be Furnished at Cost. To the extent that Owner
may, from time to time, provide goods or services to Operator, Operator shall
pay for such goods and services at Owner's cost determined as herein provided,
which payments shall thereupon be treated as Generation Facilities costs under
Article 4.
13.7 Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto, superseding any and all previous
understandings, oral or written, pertaining to the subject matter contained
herein. No party hereto has relied or will rely upon any verbal or written
representation or verbal or written information made or given to such party by
any representative of the other party or anyone on its behalf.
13.8 Amendments. This Agreement may not be amended, modified, or
terminated, nor may any obligation hereunder be waived verbally, and no such
amendment, modification, termination or waiver shall be effective for any
purpose unless it is in writing, and signed by both parties hereto, and all
necessary regulatory approvals have been obtained.
13.9 Notices. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given when deposited in the United States Mail, first class postage prepaid, and
addressed as follows:
If to Operator: Georgia Power Company
000 Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
Attention: President
If to Owner: Southern Power Company
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attention: President
35
Unless a different officer or address shall have been designated by the
respective party by notice in writing.
13.10 Captions. The descriptive captions of the various Articles,
Sections and Paragraphs of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms and
provisions hereof.
13.11 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.12 No Waiver. Failure of any party to enforce any rights or to
require performance of any other party of any of the provisions of this
Agreement shall not release any party of any of its obligations under this
Agreement and shall not be deemed a waiver of any rights of the parties to
insist on performance thereof, or of any of the parties' rights or remedies
hereunder, and in no way shall affect the validity of these terms and conditions
or any part thereof, or the right of any party thereafter to enforce every
provision hereof.
13.13 Singular and Plural. Throughout this Agreement, whenever any word
in the singular number is used, it shall include the plural unless the context
otherwise requires; and whenever the plural number is used, it shall include the
singular unless the context otherwise requires.
13.14 Third Party Beneficiaries. This Agreement is for the benefit of
Owner and Operator, and no person or entity other than Owner and Operator is or
shall be entitled to bring any action to enforce any provision of this Agreement
against anyone.
13.15 Severability. Should any provision of this Agreement be held to
be invalid or unenforceable by a court of competent jurisdiction, the remaining
provisions shall remain in full force and effect, provided that deletion of the
invalid or unenforceable provision does not materially affect the agreement of
the parties contained herein.
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ARTICLE 14
Successors and Assigns
14.1 This Agreement and all of the terms and conditions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
of Operator's obligations hereunder shall be assignable by Operator, in whole or
in part, without the express written consent of Owner. Any mortgage indenture
trustee which shall foreclose on substantially all of the electric generation
properties of Owner may, at such trustee's own election, be deemed to be a
successor and assign of Owner under this Agreement.
ARTICLE 15
Governing Law
15.1 This Agreement shall be construed in accordance with, and to
be governed by, the laws of the State of Georgia.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and by their duly authorized representatives as of the day and year
first above written.
"Operator"
GEORGIA POWER COMPANY
By:
--------------------------
Name:
------------------------
Title:
-----------------------
"Owner"
SOUTHERN POWER COMPANY
By:
--------------------------------
X.X. Xxxxxxx
Vice President, Comptroller and Chief Financial Officer
38
SCHEDULE 1
SOUTHERN POWER COMPANY GENERATION FACILITIES
GENERATING XXXXXXX XXXXXXXX
Xxxxx Xxxxxxxx Xxxxxxx Xxxxxx, Xxxxxxx
00
