COAL TRANSPORTATION AGREEMENT
Exhibit 10.2
THIS AGREEMENT, is entered into as of this 10th day of July, 1981, between THE MONTANA POWER
COMPANY (“Montana”), a Montana corporation of Butte, Montana, and PUGET SOUND POWER & LIGHT COMPANY
(“Puget”), a Washington corporation of Bellevue, Washington, and Puget Colstrip Construction
Company (“PCCC”), a Washington corporation of Bellevue, Washington, and THE WASHINGTON WATER POWER
COMPANY (“Water Power”), a Washington corporation of Spokane, Washington, and PORTLAND GENERAL
ELECTRIC COMPANY (“Portland”), an Oregon corporation of Portland, Oregon, and PACIFIC POWER & LIGHT
COMPANY (“Pacific”), a Maine corporation of Portland, Oregon, and BASIN ELECTRIC POWER COOPERATIVE,
a North Dakota cooperative corporation of Bismarck, North Dakota (“Basin Electric”); and WESTERN
ENERGY COMPANY, a Montana corporation of Butte, Montana (“Western”). Montana, Puget, PCCC, Water
Power, Portland, Pacific, and Basin Electric are sometimes herein referred to collectively as
“Plant Owners” and individually as “Plant Owner.”
RECITALS
A. Plant Owners will construct, own and operate a coal fired steam-electric generating plant
near Colstrip, Montana, consisting of two 700 megawatt nominal rating generating units known as
Colstrip Units #3 and #4 (the “Generating Plant”). The first unit is planned to be in commercial
operation on or about January 1, 1984, and the second on or about January 1, 1985.
B. Pursuant to the Ownership and Operation Agreement of Colstrip Units #3 & #4 (the “Ownership
Agreement”) entered into as of May 6, 1981, by the Plant Owners, each Plant Owner has an initial
share (as the same may be changed pursuant to the Ownership Agreement, “Project Share”) of the
Generating Plant as follows:
Montana |
27.9% | |
Puget/PCCC |
23.25% | |
Portland |
18.6% | |
Water Power |
13.95% | |
Pacific |
9.3% | |
Basin Electric |
7.0% |
C. Plant Owners and Western have entered into a Coal Supply Agreement dated July 2, 1980 (as
amended, the “Coal Contract”) for the sale and delivery of coal for the Generating Plant. Pursuant
to Subsection 4.1 of the Coal Contract, coal sold under the Coal Contract will be delivered to
Plant Owners at the western end of the coal Conveyor system (as the same may be extended from time
to time, the “Point of Delivery”) to be constructed by Western for the transport of coal from
Western’s mining area known as Area C (“Area C”) to the Generating Plant. The Point of Delivery
shall initially be located near the eastern boundary of Area C approximately 4.46 belt miles west
of the Generating Plant as shown on Exhibit 1 to the Coal Contract.
D. The parties desire to establish terms and conditions relating to the transportation of coal
from the Point of Delivery to Generating Plant.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein stated, and the
performance thereof, the parties hereto agree as follows:
1 — TRANSPORTATION OF COAL
1.1 Western shall transport all coal sold under the Coal Contract from the Point of Delivery
to the Generating Plant. As used elsewhere in this Agreement, the word “transport” means transport
from the Point of Delivery to the Generating Plant.
1.2 Without limiting the generality of Subsection 1.1, Western shall design, construct, own,
operate and maintain a coal Conveyor system (as the same may be extended from time to time, the
“Conveyor”) for the transport of coal sold under the Coal Contract (“Contract Coal”). The Conveyor
from the Generating Plant to the initial Point of Delivery shall be constructed along the route
shown on Exhibit 1 to this Agreement and shall be extended only with the prior written consent of
Plant Owners. Western agrees to extend its best effort to complete construction of the Conveyor
from the Generating Plant to the initial Point of Delivery no later than July 1, 1983.
1.3 Western shall not use any means other than the Conveyor to transport Contract Coal, except
to the extent that use of such other means is required:
(a) | as a result of damage, malfunction or inoperability of the Conveyor; | ||
(b) | to perform necessary maintenance or repair of the Conveyor; | ||
(c) | to transport initial quantities of coal if construction of the Conveyor is not completed by July 1, 1983; or | ||
(d) | by written direction given to Western by Plant Owners. |
In the event Western is unable to transport coal by means of the Conveyor for these reasons, and if
alternate means of transportation are reasonably available, Plant Owners agree to include the costs
associated with the alternate means of transportation in the calculation of the cost reimbursement
charge provided for, in Subsection 5.4 herein. Western agrees to extend its best efforts to
transport coal by an alternate means of transportation in the event it is required.
1.4 Western shall not, without the prior written consent of the Plant Owners, use the Conveyor
for any purpose other than to transport Contract Coal.
2 — TERM
2.1 This Agreement shall be effective and binding when executed by Montana, Puget, PCCC, Water
Power, Portland, Pacific and Western and shall be effective and binding as to Basin Electric only
when executed by Basin Electric. This agreement shall continue for so long as the Coal Contract
continues.
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2.2 Transportation of coal under this Agreement is expected to begin on or about July 1, 1983.
2.3 If the Plant Owners require coal transportation service from Area C to the Generating
Plant after expiration of the Coal Contract, this Agreement will be extended on terms mutually
agreeable to Western and the Plant Owners, reflecting then existing conditions.
3 — QUANTITY AND SCHEDULING
3.1 At least ninety (90) days prior to the estimated date of the initial testing of the first
unit of the Generating Plant, Plant Owners shall notify Western, pursuant to Subsection 3.1 of the
Coal Contract, of the amount of coal Plant Owners will require for testing and for the coal storage
pile for the Generating Plant. Western shall transport such amount of coal within sixty (60) days
after the receipt of such notice.
3.2 At least thirty (30) days prior to the estimated date of the commencement of operations of
the first unit of the Generating Pant, Plant Owners shall notify Western, pursuant to Subsection
3.2 of the Coal Contract, of the amount of coal Plant Owners will require from such date of
commencement of operations until the date that transport of coal commences pursuant to Subsection
3.5. Western shall transport said coal as requested by Plant Owners during such period. For the
purposes of this section, “date of commencement of operations” shall be the date determined by
Plant Owners with respect to each unit.
3.3 At least ninety (90) days prior to the estimated date of initial testing of the second
unit of the Generating Plant, Plant Owners shall notify Western, pursuant to Subsection 3.4 of the
Coal Contract, of the amount of additional coal Plant Owners will require for testing and for the
coal storage pile for the Generating Plant. Western shall transport such amount of coal within
sixty (60) days of the receipt of such notice.
3.4 At least thirty (30) days prior to the estimated date of the commencement of operations of
the second unit of the Generating Plant, Plant Owners shall notify Western, pursuant to Subsection
3.5 of the Coal Contract, of the amount of coal Plant Owners will require from such date of
commencement of operations until the date that transportation of coal commences pursuant to
Subsection 3.6. Western shall transport said coal as requested by Plant Owners during such period.
3.5 During the period from the date of commencement of operations of the first unit of the
Generating Plant until the date of commencement of operations of the second unit of the Generating
Plant, Western’s obligation will be to transport the Plant Owners’ coal requirements as specified
in purchase orders under Subsection 3.3 of the Coal Contract.
3.6 Upon the date of commencement of operations of the second unit of the Generating Plant,
Western’s obligation will be to transport the Plant Owners’ requirements as specified in purchase
orders under Subsections 3.4 and 3.6 of the Coal Contract.
3.7 Western and the Plant Owners shall, to the extent reasonably feasible, cooperate in
scheduling daily, weekly and monthly coal transportation in order to accommodate Plant
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Owners’ changing fuel requirements. Said parties shall also cooperate in the same manner in
notifying each other in advance of scheduled outages or downtime in order to avoid unnecessary
inconvenience and delay and to facilitate efficient use of said downtime by each party and to the
extent reasonably possible to assure Plant Owners of an opportunity to increase its stock pile of
coal for use during downtime of the Conveyor. Subject to these reciprocal obligations, Western
shall maintain the capability of making continuous coal deliveries to Plant Owners within the
design limitations of Plant Owners’ coal receiving facilities.
4 — WEIGHING
All coal transported hereunder shall be weighed pursuant to Subsection 4.2 of the Coal Contract and
these weights shall be used for billing purposes under this Agreement.
5 — BASE PRICE AND PAYMENT
5.1 The Base Price to be paid by the Plant Owners for the transportation of coal by Western
hereunder shall be the price computed from the sum of (a), (b), and (c), and reduced by (d), in
this Subsection:
(a) Fixed Charge — An annual charge for depreciation, reimbursement of property tax
and overhead costs associated with the Conveyor;
(b) Cost Reimbursement Charge — A per ton charge for the actual costs to operate and
maintain the Conveyor and to transport coal under this Agreement by means other than the Conveyor;
and
(c) Fee — Operating Profit — A per ton charge as an operating profit for the
construction, Ownership, operation and maintenance of the Conveyor; less
(d) Revenue Credit — A monthly credit for any revenues received on account of uses of
the Conveyor for purposes other than to transport Contract Coal.
5.2 The Fee — Operating Profit and the depreciation and property tax components of the Fixed
Charge to be included in the Base Price shall be calculated from Western’s actual initial
investment in the Conveyor. Western’s actual initial investment shall include the following
expenditures reasonably incurred by Western to construct the Conveyor from the Generating Plant to
the initial Point of Delivery:
(a) All expenditures for right-of-way acquisition for the Conveyor, excluding expenditures for
land and/or lease rights made by Western prior to January 1, 1981;
(b) All expenditures for preliminary investigation and development costs, architectural and
engineering fees and expenses, contractors’ fees, labor, materials, equipment and supplies,
operator and other personnel training, testing, permits and license fees and costs, legal costs,
permitting costs, and all other costs properly allocable to construction of the Conveyor;
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(c) All expenditures for insurance and interest during construction associated with the
construction of the Conveyor; and
(d) All expenditures for any modification to Western’s facilities in mining Areas A, B or E of
its Rosebud Mine which are required by any state or federal agencies as a condition or stipulation
of approval of the permits required for the Conveyor.
On January 1, 1984, Western will provide the Plant Owners with an accounting summary of its
investment in the Conveyor. The Plant Owners will have until July 1, 1984 to audit Western’s
financial records and to reach agreement with Western on the actual amount of initial investment.
The amount so agreed upon shall be the “Initial Investment.” For the purpose of this Agreement,
regardless of the method of equipment procurement or financing used by Western (including, but not
limited to, leveraged leasing), the amount of Initial Investment shall be the actual capital
expenditures for the equipment dedicated by Western to the fulfillment of this Agreement.
5.3 The Fixed Charge component of the Base Price shall be determined as follows:
(a) The depreciation component of the Fixed Charge shall be determined from the Initial
Investment by using straight line methods consistent with generally accepted industry accounting
principles as recognized by Western’s independent auditors who shall be of national reputation.
(b) The property tax component of the Fixed Charge shall be the actual ad valorem taxes paid
by Western as determined by applying the then current ad valorem tax levy rate against the taxable
value of Western’s property included in the Initial Investment.
(c) The overhead component of the Fixed Charge shall be a reasonable overhead which on the
date hereof is agreed to be twenty percent (20%) of the annual compensation, including payroll
additives and fringe benefits, paid to Western’s employees engaged exclusively in the operation and
maintenance of the Conveyor.
The Fixed Charge shall be an annual charge to be paid in monthly installments at the rate of
one-twelfth (1/12) of the amount as determined herein.
5.4 The Cost Reimbursement Charge component of the Base Price shall be the actual costs
reasonably incurred by Western to operate and maintain the Conveyor or to transport coal under this
Agreement by means other than the Conveyor, including the cost of all direct labor, payroll
additives and fringe benefits, electric power, tools, equipment, materials and supplies,
replacement spare parts, contract maintenance, bonds and permits, insurance, and other expenses
directly attributable to the operation of the Conveyor and all taxes of whatever kind (except taxes
imposed on or measured by net income) paid by Western as a result of owning or operating the
Conveyor; provided, however, that the Cost Reimbursement Charge shall not include any cost or
expense included in (or taken into account in computing) any other component of the Base Price. For
example, the Cost Reimbursement Charge shall not include any expenditure included in the Initial
Investment, ad valorem taxes, overhead or investment described in Subsection 6.2 or 6.4.
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5.5 The Fee — Operating Profit component of the Base Price shall be determined in the
following manner: The amount of Initial Investment shall be divided by the maximum annual tonnage
to be transported (i.e.: 6,000,000 tons). The quotient thus obtained shall be multiplied by twenty
nine and one-half percent (29.5%) to obtain the Fee — Operating Profit amount of the Base Price.
5.6 The Revenue Credit for any month shall be equal to the amount of any revenues received
during such month on account of uses of the Conveyor for purposes other than to transport Contract
Coal.
5.7 Notwithstanding any other provision of this Agreement to the contrary, the Base Price
under this Agreement shall not include any charge or amount for any cost or expense included in, or
taken into account in the determination of, the Base Price for coal delivered under the Coal
Contract.
5.8 Within fifteen (15) days after the end of each calendar month after the later of July,
1983 or the month during which the construction of the Conveyor is completed, Western shall submit
to each Plant Owner an invoice for such Plant Owner’s share of the Base Price equal to:
where:
FC | = | Fixed Charge | ||||
CRC | = | Cost Reimbursement Charge | ||||
FOP | = | Fee — Operating Profit | ||||
RC | = | Revenue Credit | ||||
PS* | = | such Plant Owner’s Project Share | ||||
POT** | = | the number of tons of Contract Coal transported under this Agreement for such Plant Owner during the applicable month | ||||
TT** | = | the total number of tons of Contract Coal transported for all Plant Owners during the applicable month |
* | The Plant Owners will promptly notify Western of any change in any Plant Owner’s Project Share pursuant to the Ownership Agreement. | |
** | For purposes of determining each Plant Owner’s share of the Cost Reimbursement Charge for any month during which no Contract Coal is transported hereunder, each Plant Owner shall be deemed to have had transported its Project Share of one (1) ton. |
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Each Plant Owner shall pay its share of the Base Price to Western, at its office at 000 Xxxx
Xxxxxxx, Xxxxx, Xxxxxxx 00000, within fifteen (15) days after such Plant Owner’s receipt of
Western’s invoice thereof. Each of Western’s invoices shall be supported by such receipts,
documents and other information as any Plant Owner may reasonably request.
5.9 The Base Price to be computed under the provisions of this section may not be accurately
calculated until July 1, 1984. Transportation of coal is expected to begin approximately one (1)
year earlier. Western and the Plant Owners shall mutually agree on a price to be charged for coal
transported during this interim period and the price will be adjusted to the actual Base Price.
5.10 At the end of each calendar year beginning with 1986, if the tonnage of coal transported
by Western is less than the “Minimum Annual Tonnage,” as that term is defined in Subsection 7.8(a)
of the Coal Contract (as adjusted for force majeure, if any) Plant Owners shall pay Western, in
addition to the Base Price for all coal transported during that calendar year, the Fee — Operating
Profit component of the Base Price for the number of tons not transported below the Minimum Annual
Tonnage.
5.11 This Section 5 “Base Price and Payment” and Section 6 “Price Changes” shall be open on
the 20th, 25th and 30th anniversary dates of this Agreement for a renegotiation of Base Price and
for such revisions to the adjustment provisions of Section 6 as are necessary in order to update
the adjustment provisions to the effective date of the renegotiated Base Price. In the event the
parties are unable to agree upon a revised Base Price or upon such revisions of the provisions for
adjustment within six (6) months after any such anniversary date, the Base Price and necessary
revisions to the adjustment provisions shall be determined by arbitration pursuant to Section 11
hereof. Any price so determined by arbitration shall be made effective as of the applicable
anniversary date.
6 — PRICE CHANGES
6.1 Prior to the beginning of each calendar year beginning with 1986, Western shall notify the
Plant Owners of Western’s best estimate of the Base Price to be charged for the transportation of
coal in the ensuing year.
6.2 The Depreciation component of the Fixed Charge component of the Base Price shall be
adjusted from time to time to reflect changes in Western’s capital investment properly allocable to
transporting coal under this Agreement. These adjustments shall be made using straight line methods
consistent with generally accepted industry accounting principles as recognized by Western’s
independent auditors.
6.3 The Property Tax component of the Fixed Charge component of the Base Price shall be
adjusted from time to time to reflect changes in actual ad valorem taxes paid by Western Energy on
any property properly allocable to transporting coal under this Agreement.
6.4 The Fee — Operating Profit component shall be adjusted in the event Western is required to
make a substantial investment to extend the Conveyor or modify the Conveyor to correct design
deficiencies. For the purpose of this section, a substantial investment shall be
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defined as an investment of at least five percent (5%) of the Initial Investment cost of the
Conveyor, except that in the event additional right-of-way acquisition costs are encountered after
the construction of the Conveyor, any such cost so encountered shall be defined as substantial and
will require an adjustment of the Fee -Operating Profit component of the Base Price. In the event
Western is required to make a substantial additional investment, the amount of such investment, as
certified by the Plant Owners’ audit, shall be divided by the maximum annual tonnage to be
transported (i.e.: 6,000,000 tons). The quotient thus obtained shall be multiplied by
twenty-nine and one-half percent (29.5%) to obtain the additional Fee – Operating Profit that shall
be added to the Base Price, effective on the date the substantial additional investment is made.
6.5 Nothing contained in this Section 6 shall be construed as authorizing, or providing for
revisions of the Base Price based on changes in federal, state or local taxes imposed on or
measured by net income.
6.6 The Base Price shall also be revised to compensate for the effects of inflation and/or
deflation on Western’s profit per ton under this Agreement as follows:
(a) For the purpose of computing such revision, the parties will use the Consumers Price Index
(as issued by the United States Department of Labor, Bureau of Labor Statistics) on the adjusted
base that the average cost of all items therein for the year 1967 = 100, and, if said base is
revised or a new base adopted for said Index, then the revised or new Index must be adjusted to
said base of 1967 = 100. The index number for all items in said Index for June, 1983, or the month
in which the construction of the Conveyor is complete, whichever is later, is not yet available
from the Federal Government, but this index number, when available, shall be used as the basis for
computing the amount of any such revisions; and
(b) Whenever a change occurs from said index number, the Fee -Operating Profit (5.1(c)) shall
be increased or decreased by an inflation/deflation adjustment factor which will increase or
decrease the Base Price per ton for each one point change above or below said index number. Such
adjustment shall be made as of March 1 and September 1 of each year or whenever the Consumers Price
Index changes by one (1) full point, whichever occurs first.
(c) The inflation/deflation adjustment factor shall be determined by dividing the Fee -
Operating Profit component of the Base Price, as determined in accordance with Subsection 5.5
herein, by the Consumers Price Index value for the month specified in Subsection 6.6(a). The
quotient obtained thereby, expressed as a four (4) decimal dollar value, shall be the adjustment
factor to be used in Subsection 6.6(b).
(d) In the event that the Fee — Operating Profit is increased in accordance with the
provisions of Subsection 6.4 herein, an additional inflation/deflation adjustment factor to be
applied to such increase will be computed in a manner similar to that provided for in Subsection
6.6(c) above, except that the additional inflation/deflation adjustment factor shall be based on
the Consumers Price Index published for the month in which the required substantial investment is
made.
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It is further agreed that if and when said Consumers Price Index has increased by one hundred
percent (100%) or more from the index number for the month specified in Subsection 6.5(a) or has
decreased by fifty percent (50%) or more from said index number for such month then for the
purposes of this Agreement, either party may notify the other that it believes an unusual condition
may have occurred and a gross inequity may have resulted. If a gross inequity has occurred as the
result of such unusual condition, the parties agree to negotiate a new Base Price and provisions
for adjustments for cost changes in order to remedy such gross inequity. Each party hereto shall,
in the case of gross inequity, furnish the other with whatever documentary evidence may be
requested in effecting a fair settlement of such gross inequity.
7 — FACILITY DESIGN
Western shall develop a design and budget for the Conveyor, including a route lay-out,
equipment selection, structure design and location, and identify any necessary ancillary structures
and equipment, consistent with good engineering practices as observed in the industry. Western and
the Plant Owners shall cooperate in establishing the location and design of the interface
facilities at the terminus of the Conveyor. Within sixty (60) days after the date of this
Agreement. Western shall submit the proposed design and budget to the Operator of the Generating
Plant described in Section 15 of this Agreement. The Operator shall coordinate the review and
approval of the Conveyor design and budget by the Plant Owners. The Plant Owners, through the
Operator of the Generating Plant, shall perform and conduct their review in an expedient manner in
order to avoid delays to either the permitting or construction of the Conveyor. The final design
and budget for the Conveyor shall be subject to the approval of Western and the Plant Owners.
8 — FORCE MAJEURE
8.1 If, because of force majeure, any party shall be unable to carry out any of its
obligations under this Agreement, then the obligations of such party shall be suspended to the
extent made necessary by such force majeure. The party affected by force majeure shall give notice
to the other parties as promptly as practicable of the nature and probable duration of such force
majeure. The term “force majeure” shall mean acts of God, legislation or lawful regulations of any
governmental body, court orders, acts of the public enemy, riots, strikes, labor disputes, labor or
material shortages, fires, explosions, floods, breakdowns of or damage to plants, mines,
transmission lines, equipment or facilities, interruptions in transportation, embargoes, or other
causes of similar nature which wholly or partially prevent the transportation of Contract Coal by
Western, the receiving or consuming of Contract Coal by Plant Owners, or the operation of the
Generating Plant. Plant Owners and Western shall use all reasonable means of preventing the
occurrence of any of the foregoing. Nothing contained herein shall be construed so as to require a
party to settle any strike or labor dispute in which it may be involved. Any party rendered unable
to fulfill any obligation by reason of force majeure shall exercise due diligence to remove such
inability with all reasonable dispatch.
8.2 If the Generating Plant is rendered inoperable as the result of physical damage,
legislation or lawful regulation of governmental body, court order or other causes of a similar
nature that prevent further operation of the Generating Plant, and if the Plant Owners have
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notified Western in writing that the Generating Plant will not be restored, rebuilt or
otherwise made operable, then Western’s obligation to transport coal under this Agreement and Plant
Owners’ obligation to use and pay for the Conveyor (including, but not limited to, payment of the
Fixed Charges described in Section 5) shall terminate as of the date provided in the notice;
provided, however, that the Plant Owners shall be liable to Western for any loss (other than loss
of profits) sustained by Western as a result of such termination, and Western shall use all
reasonable efforts to minimize any such loss.
9 — WAIVERS AND REMEDIES
9.1 The failure of any party to insist in any one or more instances upon strict performance of
any of the provisions of this Agreement or take advantage of its right hereunder shall not be
construed as a waiver of any such provisions or their relinquishment of any such right, but the
same shall continue and remain in full force and effect.
9.2 No default of any party to this Agreement in the performance of any of its covenants or
obligations hereunder which, except for this provision, would be the legal basis for rescission or
termination of this Agreement by any other party hereto, shall give or result in such a right
unless and until the party committing such default shall fail to correct the default within sixty
(60) days or within a reasonable time if not correctable within sixty (60) days after written
notice of claim of such default and a statement setting forth the nature thereof are given to such
defaulting party by the party claiming such default.
9.3 (a) In the event of the occurrence of one or more of the following events which materially
and adversely affect or will affect the ability of Western to perform hereunder as agreed, Plant
Owners shall have the rights set forth in Subsection 9.3 (b) which rights shall be in addition to
all other rights or remedies provided Plant Owners at law or in equity in the event of a default by
Western:
(1) Western defaults in the performance of any of its obligations hereunder, which
default adversely affects, or will adversely affect, the transportation by Western of coal
to Plant Owners in the required quantity;
(2) Western becomes insolvent, or becomes the subject of a petition in bankruptcy,
either voluntarily or involuntarily, or any other proceeding in the Federal Bankruptcy Laws;
or is named in, or Western’s coal mine, buildings, equipment of other facilities are
subjected to, a suit for an appointment of receiver;
(3) Western becomes delinquent in the performance of any financial obligation; or
(4) Western commits an anticipatory breach of any of its obligations hereunder.
Western agrees to promptly notify Plant Owners of any default, financial delinquency or
claimed delinquency, insolvency, or anticipated breach as described above.
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(b) In the event of any occurrence of any of the items set forth in (a) above, Plant Owners
jointly and severally shall have all of the following rights, in addition to those provided at law
or in equity:
(1) To pay any financial obligations of Western and to recover the amounts of such
payments from Western or offset them against any amounts due from any Plant Owner to
Western;
(2) To require that Western furnish evidence, in a form satisfactory to Plant Owners,
of financial capability to perform its obligations under this contract;
(3) To take over the operation of the Conveyor; to take immediate possession of all of
Western’s buildings, facilities and equipment used for the transportation of coal hereunder;
to acquire all of Western’s interest in said buildings, facilities and equipment at their
depreciated book cost, but not exceeding the fair value of such buildings, facilities and
equipment in place, which acquisition shall be subject to any liens or encumbrances of
record; and
(4) To require Western to invite bids from qualified operators to operate the Conveyor
and perform the obligations of Western under this Agreement for the remainder of its term.
10 — SUCCESSORS AND ASSIGNS
10.1 This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns. This Agreement may be assigned and transferred by the
Plant Owners only as set forth in Subsection 10.2 herein and may be assigned and transferred by
Western only as set forth in Subsection 10.3 herein, and not otherwise.
10.2 The undivided interest of Plant Owners, or any of them, in this Agreement or any part
thereof may be transferred or assigned to a third party only in conjunction with an assignment or
transfer to said third party by Plant Owners, or any of them, of a portion or all of its interest
in the Coal Contract.
10.3 Western’s interest in this Agreement may be transferred or assigned to a third party only
in conjunction with the assignment or transfer to said third party of (a) Western’s entire
Ownership and operating interests in the Conveyor, and (b) Western’s entire interest in the Coal
Contract. Such an assignment or transfer may be made by Western only after Western has first
offered to transfer its interest in this Agreement to the Plant Owners for the amount of and on
terms not less advantageous than those of a bona fide offer from a buyer able and willing to
purchase Western’s interest. Western shall advise Plant Owners, in writing, of the name of the
proposed buyer, the proposed purchase price, the terms of sale and of such other information as may
be necessary in order for Plant Owners to properly evaluate the offer. Plant Owners shall have
three (3) months after the written notice from Western to elect to exercise the right to purchase.
If Plant Owners elect not to purchase Western’s Ownership interests in the coal Conveyor system,
then Western may assign or transfer its interest in this Agreement to the
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person named in the notice to Plant Owners (“third party transferee”), which assignment or
transfer shall be made subject to the following conditions:
(a) The assignment or transfer to the third party transferee must be completed within one (1)
year from the date of the notice to Plant Owners.
(b) As a condition of the assignment or transfer, the third party, transferee must agree to be
bound by each and every term and condition of this Agreement, including the restriction on
transfers and assignments.
(c) The transfer or assignment to the third party transferee shall not directly or indirectly
result in an increase in any of the costs included in, or taken into account in the determination
of, the Base Price. Without limiting the generality of the foregoing, the following shall apply:
If the third party transferee’s costs are higher than Western’s costs for the same items, then the
third party transferee shall absorb the difference in costs and any adjustment thereafter in the
Base Price shall be based upon any subsequent changes in third party transferee’s costs; the third
party transferee shall maintain the same depreciation basis and rates with respect to any
transferred property as that maintained by Western; and any increase in ad valorem or other taxes
resulting or based upon the transfer shall be absorbed by the third party transferee and thereafter
any adjustments in the Base Price with respect to ad valorem taxes on transferred property shall be
based upon subsequent changes in third party transferee’s costs.
(d) Prior to the transfer, the third party transferee shall furnish evidence satisfactory to
Plant Owners of its financial capability to perform under this contract and shall furnish, if
requested by Plant Owners, a bond in form satisfactory to Plant Owners guaranteeing to Plant Owners
that the third party transferee will perform each of the terms and conditions of this Agreement and
will meet all of its financial obligations as required.
11 — ARBITRATION
Any controversies between the parties hereto arising out of or relating to this Agreement or
the breach thereof which cannot be resolved by negotiations within thirty (30) days after notice by
either party to the other shall be submitted to an Arbitrator, competent and experienced in coal
industry accounting and operations. If the parties cannot mutually agree upon such Arbitrator, then
upon petition of either party, such Arbitrator shall be appointed by the senior United States Judge
for the District of Montana. The arbitration shall be conducted under the rules of the American
Arbitration Association. The Arbitrator shall render his decision in writing not later than thirty
(30) days after the matter has been submitted ‘to him, and such decision shall be conclusive and
binding upon the Plant Owners and Western. Western and Plant Owners shall each bear one-half the
cost of the Arbitrator.
12 — LAW GOVERNING CONSTRUCTION OF CONTRACT
This contract shall be subject to and governed by the law of the State of Montana,
irrespective of the fact that one or more of the parties is now or may become a resident of a
different state.
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13 — NOTICES AND REPORTS
All notices or reports provided for under this Agreement shall be in writing and shall be sent
by United States mail, postage prepaid, and properly addressed:
(a) | If to Plant Owners, | ||
Puget Sound Power & Light Company/PCCC Puget Power Building Bellevue, Washington 98009 |
|||
The Washington Water Power Company 0000 Xxxx Xxxxxxx X. X. Xxx 0000 Xxxxxxx, Xxxxxxxxxx 00000 |
|||
Portland General Electric Company 000 X. X. Xxxxxx Xxxxxxxx, Xxxxxx 00000 |
|||
Pacific Power & Light Company Public Service Building 000 X. X. Xxxxx Xxxxxx Xxxxxxxx, Xxxxxx 00000 |
|||
The Montana Power Company 00 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx 00000 |
|||
Basin Electric Power Cooperative 0000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx 00000 |
|||
(b) | If to Western, | ||
Western Energy Company 000 Xxxx Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx 00000 |
14 — RECORDS TO BE KEPT
14.1 Western will keep accurate and satisfactory records and books of account showing all
costs, payments, price revisions, adjustments, credits, debits and all other data required for the
purposes of this Agreement. Whenever the Base Price is revised in accordance with the provisions
of Section 6, and at any other time upon fifteen (15) days notice from Plant Owners, or any of
them, Western shall furnish or cause to be furnished to such Plant Owners a detailed statement
showing Western’s Base Price as revised and the basis for the revisions to be
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made. If any such statement discloses that any error has occurred and that, as a result
thereof, an overpayment or an underpayment has been made, the amount thereof plus interest, at the
rate of 1 1/2% per month or the highest lawful rate, whichever is lower, shall promptly be paid to
the party to whom it is owed by the other party.
14.2 Western and Plant Owners shall have the right at all reasonable times to examine the
records kept by the other concerning this Agreement, including weights of the coal transported
hereunder.
15 — AGENT OF PLANT OWNERS
The parties hereto acknowledge that Plant Owners are a party to an agreement entitled
Ownership and Operation Agreement Colstrip Units #3 and #4, dated May 6, 1981 which agreement names
The Montana Power Company as the operator of the Generating Plant. Western herein, therefore,
agrees to recognize Montana as the operator of the Generating Plant and as the agent of Plant
Owners thereunder for purposes of scheduling, transportation and deliveries of coal and the giving
of notices herein mentioned respecting all coal transported under this Agreement until such time as
Plant Owners, in writing, designate a new or different agent. Nothing herein shall prevent any
Plant Owner from acting on its own behalf respecting coal transportation hereunder providing it
first notifies, in writing, the other parties of its intention to do so.
16 — PERPETUITIES
If the duration of any term or condition of this Agreement shall be subject to the rule
against perpetuities or a similar or related rule, then the effectiveness of such term or condition
shall not extend beyond (a) the maximum period of time permitted under such rule, or (b) the
specific applicable period of time expressed in the Agreement, whichever is shorter. For purposes
of applying the rule against perpetuities or a similar or related rule the measuring lives in being
shall be those of the officers of Plant Owners, respectively, listed by name on the Schedule of
Officers of the annual reports of the respective Plant Owners, FERC Form 1, filed with the Federal
Energy Regulatory Commission for the year ended on December 31, 1980, together with all those
officers’ children that are living on the date of execution of this Agreement. As used in this
paragraph the word “children” shall have its primary and generally accepted meaning of descendants
of the first degree.
17 — COMPLIANCE
Western shall comply with all applicable laws and regulations in its performance of this
contract.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in
several counterparts, by their respective corporate officers thereunto duly authorized, as of the
day and year first above written.
“PLANT OWNERS” | “WESTERN” | |||||
PUGET SOUND POWER & LIGHT COMPANY | WESTERN ENERGY COMPANY | |||||
By:
|
/s/ X. X. Xxxxxx | By: | /s/ Xxxxxx X. Xxxxx | |||
ATTEST: | ATTEST: | |||||
By:
|
/s/ W. E. Xxxxxx | By: | /s/ T. O. XxXxxxxx | |||
(SEAL) | (SEAL) | |||||
PUGET COLSTRIP CONSTRUCTION COMPANY | ||||||
By:
|
/s/ X. X. Xxxxxx | |||||
ATTEST: | ||||||
By:
|
/s/ W. E. Xxxxxx | |||||
(SEAL) | ||||||
WASHINGTON WATER POWER COMPANY | ||||||
By:
|
/s/ X. X. Xxxxxxx | |||||
ATTEST: | ||||||
By:
|
/s/ X. X. Xxxxxxx | |||||
(SEAL) |
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[Map Graphic Intentionally Omitted]
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