Exhibit B-3
SERVICES AGREEMENT/1/
THIS SERVICES AGREEMENT, made and entered into as of _________, 1999
by and among The Union Light, Heat and Power Company, a Kentucky
corporation ("Operating Company" or "ULH&P"), and the respective
associate companies listed on the signature pages hereto (each, a
"Nonutility Company").
W I T N E S S E T H:
WHEREAS, Operating Company is an indirect subsidiary of Cinergy
Corp. ("Cinergy"), a registered holding company under the Public Utility
Holding Company Act of 1935, as amended ("PUHCA"), and a "public-utility
company" as therein defined; and
WHEREAS, each of the Nonutility Companies is a direct or indirect
subsidiary of Cinergy and, within the meaning of PUHCA or applicable
rules, regulations or administrative precedent of the Securities and
Exchange Commission ("SEC") thereunder, is a "nonutility company" (but not
an "exempt telecommunications company" ("ETC") or a "foreign utility
company" ("FUCO")), being neither a "public-utility company," "holding
company" nor "subsidiary service company"; and
WHEREAS, in the ordinary course of their businesses, Operating
Company and Nonutility Companies maintain organizations of employees with
technical expertise in matters affecting public utility companies and
related businesses and own or acquire related equipment, facilities,
properties and other resources; and
WHEREAS, ULH&P has previously agreed under certain conditions to
make available to the Kentucky Public Service Commission ("KYPSC") and its
staff all books, records, employees, and officers of ULH&P and any
Nonutility Company necessary to permit the KYPSC to carry out its statutory
and regulatory obligations, the terms and conditions of the May 13, 1994
Order in Case No. 94-104, shall apply to transactions occurring under
this Service Agreement; and
WHEREAS, pursuant to the applicable provisions of PUHCA and the
rules and regulations thereunder, and subject to the terms and conditions
herein set forth, the SEC has authorized the parties hereto to enter into
this Agreement; and
WHEREAS, subject to the terms and conditions herein set forth, and
taking into consideration the parties' utility responsibilities or
primary business operations, as the case may be, the parties hereto are
willing, upon request from time to time, to perform such services, and in
connection therewith to make available such equipment, facilities,
properties and other resources, as they shall request from each other;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
ARTICLE 1. PROVISION OF SERVICES; LOANED EMPLOYEES
Section 1.1 Provision of Services.
(a) Upon receipt by a party hereto (in such capacity, a "Service
Provider") of a written request in substantially the form attached hereto
as Exhibit A (a "Service Request") from another party hereto (in such
capacity, a "Client Company") for the provision to such Client Company of
such services as are specified therein, including if applicable use of
any related equipment, facilities, properties or other resources
(collectively, "Services"), the Service Provider, if in its sole discretion
it has available the personnel or other resources needed to perform the
Service Request without impairment of its utility responsibilities or
business operations, as the case may be, shall furnish such Services to the
Client Company at such times, for such periods and in such manner as the
Client Company shall have so requested and otherwise in accordance with the
provisions hereof.
(b) For purposes of this Agreement, "Services" may include, but
shall not be limited to: (I) in the case of Services that may be provided
by Operating Company hereunder, services in such areas as engineering and
construction; operations and maintenance; and equipment testing;
and (ii) in the case of Services that may be provided by Nonutility
Companies hereunder, services in such areas as information services;
monitoring, surveying, inspecting, constructing, locating and marking of
overhead and underground utility facilities; meter reading; materials
management; vegetation management; and marketing and customer relations.
No such transaction may include the provision of information or other
services by the Operating Company that may result in an undue or
unreasonable competitive advantage under law to any Nonutility Company.
Affiliate transactions involving sales, leases, or other
transfers of assets, goods, energy commodities (including electricity,
gas, coal and other combustible fuels) or thermal energy products are
outside the scope of this Agreement. Likewise, affiliate transactions
involving services to or from ETCs or FUCOs are outside the scope of this
Agreement.
Section 1.2 Loaned Employees.
(a) If specifically requested in connection with the provision of
Services, Service Provider shall loan one or more of its employees to
such Client Company, provided that such loan shall not, in the sole
discretion of Service Provider, interfere with or impair Service Provider's
utility responsibilities or business operations, as the case may be. After
the commencement thereof, any such loaned employees may be withdrawn by
Service Provider from tasks duly assigned by Client Company, prior to
completion thereof as contemplated in the associated Service Request, only
with the consent of Client Company (which shall not be unreasonably
withheld or delayed), except in the event of a demonstrable emergency
requiring the use of any such employees in another capacity for Service
Provider.
(b) While performing work on behalf of Client Company, any such
loaned employees shall be under its supervision and control, and Client
Company shall be responsible for their actions to the same extent as
though such persons were its employees (it being understood that such
persons shall nevertheless remain employees of Service Provider and nothing
herein shall be construed as creating an employer-employee relationship
between any Client Company and any loaned employees). Accordingly, for the
duration of any such loan, Service Provider shall continue to provide its
loaned employees with the same payroll, pension, savings, tax
withholding, unemployment, bookkeeping and other personnel support services
then being provided by Service Provider to its other employees.
ARTICLE 2. SERVICE REQUESTS
Section 2.1 Procedure.
All Services (including any loans of employees) (I) shall be
performed in accordance with Service Requests issued by or on behalf of
Client Company and accepted by Service Provider and (ii) shall be assigned
to applicable activities, projects, programs or on other appropriate bases
to enable specific work to be properly assigned. Service Requests shall
be as specific as practicable in defining the Services requested. Client
Company shall have the right from time to time to amend or rescind any
Service Request, provided that (a) Service Provider consents to any
amendment that results in a material change in the scope of Services to
be provided, (b) the costs associated with an amended or rescinded Service
Request shall include the costs incurred by Service Provider as a result
of such amendment or rescission, and no amendment or rescission of a
Service Request shall release Client Company from any liability for costs
already incurred or contracted for by Service Provider pursuant to the
original Service Request, regardless of whether any labor or the
furnishing of any property or other resources has been commenced or
completed.
ARTICLE 3. COMPENSATION FOR SERVICES
Section 3.1 Cost of Services.
Except as may be required pursuant to Section 5.6 (with respect to
regulatory requirements), as compensation for any Services rendered to it
pursuant to this Agreement, Client Company shall pay to Service Provider
the full cost thereof as computed in accordance with applicable rules,
regulations and accounting standards, including Rules 90 and 91 under
PUHCA. As soon as practicable after the close of each month, Service
Provider shall render to each Client Company a statement reflecting the
billing information necessary to identify the costs charged for that
month. All amounts so billed shall be paid by Client Company within 30
days after receipt thereof.
ARTICLE 4. LIMITATION OF LIABILITY; INDEMNIFICATION
Section 4.1 Limitation of Liability/Services.
In performing Services pursuant to Section 1.1 hereof, Service
Provider will exercise due care to assure that the Services are performed
in a workmanlike manner in accordance with the specifications set forth
in the applicable Service Request and consistent with any applicable legal
standards. The sole and exclusive responsibility of Service Provider for
any deficiency therein shall be promptly to correct or repair such
deficiency or to re-perform such Services, in either case at no
additional cost to Client Company, so that the Services fully conform to
the standards described in the first sentence of this Section 4.1. No
Service Provider makes any other warranty with respect to the provision of
Services, and each Client Company agrees to accept any Services without
further warranty of any nature.
Section 4.2 Limitation of Liability/Loaned Employees.
In furnishing Services under Section 1.2 hereof (i.e., involving
loaned employees), neither the Service Provider, nor any officer,
director, employee or agent thereof, shall have any responsibility whatever
to any Client Company receiving such Services, and Client Company
specifically releases Service Provider and such persons, on account of any
claims, liabilities, injuries, damages or other consequences arising in
connection with the provision of such Services under any theory of
liability, whether in contract, tort (including negligence or strict
liability) or otherwise, it being understood and agreed that any such
loaned employees are made available without warranty as to their
suitability or expertise.
Section 4.3 Disclaimer.
WITH RESPECT TO ANY SERVICES PROVIDED UNDER THIS AGREEMENT,
THE SERVICE PROVIDER THEREOF MAKES NO WARRANTY OR REPRESENTATION
OTHER THAN AS SET FORTH IN SECTION 4.1, AND THE PARTIES HERETO HEREBY
AGREE THAT NO OTHER WARRANTY, WHETHER STATUTORY, EXPRESS OR IMPLIED
(INCLUDING BUT NOT LIMITED TO ALL WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES ARISING FROM COURSE OF
DEALING OR USAGE OF TRADE), SHALL BE APPLICABLE TO THE PROVISION OF ANY
SUCH SERVICES. THE PARTIES FURTHER AGREE THAT THE REMEDIES STATED HEREIN
ARE EXCLUSIVE AND SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF ANY
PARTY HERETO FOR A FAILURE BY ANY OTHER PARTY HERETO TO COMPLY WITH ITS
WARRANTY OBLIGATIONS.
Section 4.4 Indemnification.
In respect of any Services provided under this Agreement, any Client
Company that issued the Service Request requesting such Services shall
defend, indemnify and hold harmless the Service Provider thereof, and
each of its officers, directors, employees and agents, from and against,
and shall pay the full amount of, any loss, liability, claim, damage,
expense (including costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with the provision of such Services. Such indemnity shall apply
regardless of whether the Claims result from any asserted or actual
negligence or willful misconduct of, or breach of warranty by, the Service
Provider or any of its officers, directors, employees or agents. Such
indemnity shall not apply, however, to the extent that Service Provider
receives insurance proceeds in respect of any such Claim.
Section 4.5 Procedure for Indemnification.
Within 10 days after receipt by Service Provider of notice of any
claim or the commencement of any action, suit, litigation or other
proceeding against it (a "Proceeding") with respect to which it is
eligible for indemnification hereunder, Service Provider shall notify the
applicable Client Company thereof (it being understood that failure so to
notify Client Company shall not relieve the latter of its indemnification
obligation, unless Client Company establishes that defense thereof has
been prejudiced by such failure). Thereafter, Client Company shall be
entitled to participate in such Proceeding and, at its election upon
notice to Service Provider, to assume the defense of such Proceeding. If
Service Provider has given timely notice to Client Company of the
commencement of such Proceeding, but Client Company has not, within 10 days
after receipt of such notice, given notice to Service Provider of its
election to assume the defense thereof, Client Company shall be bound by
any determination made in such Proceeding or any compromise or settlement
made by Service Provider. A claim for indemnification for any matter not
involving a third-party claim may be asserted by notice from Service
Provider to the applicable Client Company.
ARTICLE 5. MISCELLANEOUS
Section 5.1 Ratemaking.
Operating Company shall not seek to overturn, reverse, set aside,
change or enjoin, whether through appeal or the initiation or maintenance
of any action in any forum, a decision or order of the KYPSC which
pertains to recovery, disallowance, deferral or ratemaking treatment of any
expense, charge, cost or allocation incurred or accrued by Operating
Company in or as a result of this Agreement (or any amendment hereto) on
the basis that this Agreement and any such expense, charge, cost or
allocation was filed with or approved by the SEC.
Section 5.2 Amendments in Writing.
(a) Any amendments to this Agreement shall be in writing executed
by each of the parties hereto.
(b) A copy of any amendment hereto shall be provided to the KYPSC
at the time it is filed with the SEC.
Nothing in this Section 5.2 is intended to detract from the
authority of the SEC under PUHCA.
Section 5.3 Effective Date; Term.
This Agreement shall become effective as of the day and year first
above written and shall continue in full force and effect as to each
party until terminated by any party, as to itself only, upon not less than
30 days prior written notice to the other parties hereto. Any such
termination of parties shall not be deemed an amendment and shall not
require adherence to the procedures set forth in Section 5.2(b).
Section 5.4 Additional Parties.
After the effective date of this Agreement, additional Nonutility
Companies may become parties to this Agreement by executing appropriate
signature pages, whereupon any such additional signatory shall be deemed
a "party" hereto all purposes hereof and shall thereupon become bound by
the terms and conditions of this Agreement as if an original party hereto.
The addition of any such further signatories, in the absence of any changes
to the terms of this Agreement, shall not be deemed an amendment hereto and
shall not be subject to the procedures described in Section 5.2(b).
Section 5.5 Entire Agreement.
This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes any prior
or concurrent understandings with respect thereto. Any oral or written
statements, representations, promises, negotiations or agreements,
whether prior hereto or concurrently herewith, are superseded by and
merged into this Agreement.
Section 5.6 Severability; Regulatory Requirements.
If any provision of this Agreement or any application thereof shall
be determined to be invalid or unenforceable, the remainder of this
Agreement and any other application thereof shall not be affected thereby.
Without limiting the generality of the foregoing, the provision of Services
pursuant to this Agreement shall in all cases, and notwithstanding
anything herein to the contrary, be subject to any limitations or
restrictions contained in any applicable orders or authorizations,
statutory provisions, rules or regulations, tariffs, or agreements,
whether now in existence or hereinafter promulgated, of those regulatory or
governmental agencies, including without limitation the KYPSC, SEC and
Federal Energy Regulatory Commission, having jurisdiction over any of the
parties hereto. To the extent, if any, that at any time any provision of
this Agreement conflicts with any such limitation or restriction of any
such other regulatory agencies, such limitation shall control.
ULH&P has waived SEC preemption so that SEC approval of this
Services Agreement (including any amendments thereto) would not preempt,
preclude, delay or otherwise affect KYPSC review of this Agreement and
transactions under this Agreement. Further, with the waiver of SEC
preemption, the KYPSC may, by order, entry or directive, require accounting
treatment(s), codes of conduct, guidelines, performance criteria, and rules
and regulations relating to this Agreement and/or transactions under this
Agreement.
Section 5.7 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto, provided that a Service
Provider shall not be entitled to assign or subcontract to any third
party any of Service Provider's obligations under this Agreement or under
any Service Request issued hereunder without the prior approval of each
affected Client Company.
Section 5.8 Governing Law.
This Agreement shall be construed and enforced under and in
accordance with the laws of the Commonwealth of Kentucky, without regard to
conflicts of laws principles.
Section 5.9 Captions, etc.
The captions and headings used in this Agreement are for convenience
of reference only and shall not affect the construction to be accorded
any of the provisions hereof. As used in this Agreement, "hereof,"
"hereunder," "herein," "hereto," and words of like import refer to this
Agreement as a whole and not to any particular section or other paragraph
or subparagraph thereof.
Section 5.10 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed a duplicate original hereof, but all of which shall
be deemed one and the same Agreement.
Section 5.11 Customer Information Disclosure.
ULH&P and the Nonutility Companies agree to certain prohibitions
related to the access, sharing, and release of customer information and
customer information databases. For purposes of carrying out this
Services Agreement and all Service Requests pursuant hereto:
(a) No employee of a Nonutility Company may access ULH&P's customer
database or release ULH&P customer information without the written
consent of the customer specifying the type of information to be released.
(b) No employee of ULH&P may release ULH&P customer information to
a Nonutility Company without the written consent of the customer specifying
the type of information to be released.
ULH&P shall keep a log when the ULH&P customer database is
accessed by or ULH&P customer information is released to a Nonutility
Company. Such log shall include customer name, date(s) when ULH&P's
customer database was accessed or ULH&P customer information was
released, the type(s) of information accessed or released, and the employee
and entity requesting access to the database or release of information.
(d) Notwithstanding Paragraphs (a), (b), and above, when a
Nonutility Company provides or assists in providing utility service (like
billing) regulated by the KYPSC as an agent of or on behalf of ULH&P:
(I) ULH&P may release information for such utility services to
such Nonutility Company without the customer's consent;
(ii) ULH&P may access the customer database or so release ULH&P
customer information without keeping a log of each access or release of
information.
(e) ULH&P customer information released to a Nonutility Company may
not be shared or supplied by that Nonutility Company with or to another
ULH&P affiliate or Cinergy subsidiary.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by an appropriate officer
thereunto duly authorized, as of the respective dates set forth below.
The Union Light, Heat and Power Company
Date:____________ By:______________________
Name:
Title:
Cinergy Investments, Inc.
Date:___________ By:____________________
Name:
Title:
KO Transmission Company
Date:___________ By:____________________
Name:
Title:
Tri-State Improvement Company
Date:___________ By:____________________
Name:
Title:
South Construction Company, Inc.
Date:___________ By:____________________
Name:
Title:
Cinergy-Cadence, Inc.
Date:___________ By:____________________
Name:
Title:
Cadence Network LLC
Date:___________ By:____________________
Name:
Title:
Cinergy Capital & Trading, Inc.
Date:___________ By:____________________
Name:
Title:
CinCap IV, LLC
Date:___________ By:____________________
Name:
Title:
CinCap V, LLC
Date:___________ By:____________________
Name:
Title:
CinPower I, LLC
Date:___________ By:____________________
Name:
Title:
Producers Energy Marketing, LLC
Date:___________ By:____________________
Name:
Title:
Cinergy Engineering, Inc.
Date:___________ By:____________________
Name:
Title:
Cinergy Resources, Inc.
Date:___________ By:____________________
Name:
Title:
Cinergy Solutions, Inc.
Date:___________ By:____________________
Name:
Title:
Cinergy Business Solutions, Inc.
Date:___________ By:____________________
Name:
Title:
Trigen-Cinergy Solutions LLC
Date:___________ By:____________________
Name:
Title:
Trigen-Cinergy Solutions of Illinois L.L.C.
Date:___________ By:____________________
Name:
Title:
Trigen-Cinergy Solutions of Orlando LLC
Date:___________ By:____________________
Name:
Title:
Cinergy Supply Network, Inc.
Date:___________ By:____________________
Name:
Title:
Reliant Services, LLC
Date:___________ By:____________________
Name:
Title:
Cinergy Technology, Inc.
Date:___________ By:____________________
Name:
Title:
Enertech Associates, Inc.
Date:___________ By:____________________
Name:
Title:
Exhibit A
FORM OF SERVICE REQUEST
Client Company: Approved By:
Name:
Title:
Proposed Service Provider/ Description of Proposed Services:
Estimated Costs (provide basis):
Scheduled Start Date: Scheduled Completion
Date:
Service Provider: Approved By:
Name:
Title:
ENDNOTES
/1/ Note: For illustrative purposes this exhibit has been prepared for
execution by ULH&P; substantially identical, separate Service Agreements
would be executed by each of the other CG&E utility subsidiaries
(Lawrenceburg Gas Company, The West Xxxxxxxx Gas and Electric Company and
Miami Power Corporation).
