EXHIBIT 10.38
EXECUTION 5-2-96
This THIRD AMENDMENT TO POWER PURCHASE AGREEMENT, effective the 6th day of
November, 1995, is between MAINE ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP
("Seller") and CENTRAL MAINE POWER COMPANY ("Buyer").
WHEREAS, Seller and Buyer entered into a Power Purchase Agreement dated January
12, 1984, (together with any amendments thereto, the "Agreement") governing the
sale of electricity from Seller's Facility located in Biddeford, Maine; and
WHEREAS, the parties to the Agreement entered into a First Amendment dated April
25, 1986, in order to establish an agreed upon pricing system for Seller's
deliveries of Firm Energy; and
WHEREAS, the parties to the Agreement entered into a Second Amendment dated
February 21, 1991, in order to facilitate the accounting of amounts owed from
Buyer to Seller and from Seller to Buyer by providing Buyer with certain set off
rights; and
WHEREAS, CL Power Sales One, L.L.C. has agreed to make certain payments to
Seller, in return for which payments Seller has agreed to enter into a certain
Capacity Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein and other good valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Buyer and Seller agree as
follows:
1. The Agreement is amended by adding to the Table of Contents the following new
Article title:
XXVI - ARBITRATION
XXVII - PREPAYMENT OF CAPACITY
2. The Agreement is amended by inserting in Article I the following definitions:
"Capacity Purchase Agreement" means the agreement between Seller and
a third-party Capacity Provider regarding the terms under which Seller
will sell the entire capacity of the Facility to such third-party, as
permitted pursuant to Article III.
"Capacity Provider" has the meaning set forth in Article III.
"Capacity Sales Agreement" means the agreement between Buyer and a
third-party Capacity Provider regarding the terms under which Buyer will
purchase the entire capacity of the Facility from such third-party, as
permitted pursuant to Article III.
"Escrow Agent" means Key Trust Company of Ohio, N.A., or any
successor escrow agent, under the terms of the Escrow Agreement.
"Expiration Draw" has the meaning set forth in the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement, dated April
30, 1996, among Buyer, Seller, Capacity Provider, Issuer, and the Escrow
Agent.
"ING" has the meaning set forth in Article XIII.
"Issuer" means the issuer of the letter of credit as set forth in
Article XIII.
"ON-PEAK HOURS" are the hours between 8:00 a.m. and 9:00 p.m.,
Monday through Friday, excluding legal holidays, during the period from
April 1 through October 31, and between 7:00 a.m. and 9:00 p.m., Monday
through Friday, excluding legal holidays, during the remainder of the
year. All hours during Saturday, Sunday, and legal holidays are Off-Peak
Hours.
"OFF-PEAK HOURS" include all hours which are not On-Peak Hours.
"SCHEDULED STEOFF HOURS" are those hours in any Calendar Year which
occur during the following periods: (1) from April 1 through and including
May 31, any period that includes any hour between Friday at 9:00 p.m. and
the following Monday at 8:00 a.m.; and (2) all Holiday Periods for
holidays which fall between the dates of April 1 and September 15. If a
holiday falls on or is observed on Monday, the "Holiday Period" shall mean
the eighty-three (83) hour period that begins at 9:00 p.m. on Friday
before the holiday and ends at 8:00 a.m. on the Tuesday after the holiday.
If a holiday falls on or is observed on Friday, then "Holiday Period"
shall mean the eighty-three (83) hour period that begins at 9:00 p.m. on
the Thursday before the holiday and ends at 8:00 a.m. on the Monday after
the holiday. If a holiday falls on or is observed on a day other than
Monday or Friday, then "Holiday Period" shall mean the thirty-five (35)
hour period that begins at 9:00 p.m. on the day before the holiday and
ends at 8:00 a.m. on the day after the holiday. For purposes of Scheduled
STEOFF Hours, the term "holiday" shall mean any legal holiday in the State
of Maine, as determined pursuant to 4 M.R.S.A. ss. 1051.
"SHORT-TERM ENERGY-ONLY RATE" ("STEO") is the rate per kilowatt-hour
established by the Commission from time to time pursuant to Chapter 36,
Section 3, of its Rules and Regulations, or any successor provision, for
sales from a Qualifying Facility of energy only to a utility on an
intermittent basis and shall be expressed in cents, rounded to the nearest
hundredth. If the Commission has not established a STEO within eighteen
(18) months preceding the date or dates on which a STEO value is required
for purposes of this Agreement, Buyer shall calculate STEO consistent with
the principles for the calculation of such a rate utilized by the
Commission in the most recent proceedings to established STEO immediately
prior to that eighteen-month period using the most recently-available
forecasts of fuel costs, load levels, and other variables then being used
by Buyer which variables are typically used by the Commission in
determining a value for STEO. The Buyer-calculated STEO shall serve as
STEO until the earlier of (i) the Commission establishing STEO or (ii)
eighteen (18) months after Buyer's most recent calculation of STEO. If the
contingency described in (ii) above occurs, Buyer shall recalculate STEO
consistent with the methodology described herein. It is the intent of
Buyer and Seller to have STEO calculated by either the Commission or Buyer
at least every eighteen months. In the event that Buyer determines a value
for STEO as provided
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hereinabove and the Commission subsequently determines a value for STEO
which differs from the Buyer-calculated value, there shall be no
retroactive adjustment with respect to any payments made on the basis of
the Buyer-calculated STEO.
"SHORT-TERM ENERGY-ONLY ON-PEAK RATE" (STEON") is a rate determined
in the manner described in the definition of "STEO" herein, but applicable
to deliveries of energy during On-Peak Hours only. If the Commission has
not established a separate STEON rate, then the STEON rate shall be equal
to STEO x 1.10.
"SHORT-TERM ENERGY-ONLY OFF-PEAK RATE" ("STEOFF") is a rate
determined in the manner described in the definition of "STEO" herein, but
applicable to deliveries of energy during Off-Peak Hours only. If the
Commission has not established a separate STEOFF rate, then the STEOFF
rate shall be equal to STEO x 0.90.
3. The Agreement is amended by deleting ARTICLE II: TERM and a substituting
thereof the following:
ARTICLE II: TERM
The term of this Agreement commenced on January 12, 1984 and will
terminate on December 31, 2012.
Seller shall purchase Seller's Electrical Usage under one or more of
the applicable retail tariffs filed with and approved by the Maine Public
Utilities Commission. Any reactive demand charges for such purchases shall
be based only on the kvar reading associated with the net inflows of
reactive power, if any, at the Point of Delivery.
4. The Agreement is amended by deleting ARTICLE III: SALE OF POWER and
substituting therefor the following:
ARTICLE III: SALE OF POWER
Subject to the provisions of the second paragraph of Article IX,
Seller agrees to sell and Buyer agrees to purchase the entire output of
Firm Energy, less energy used for generator auxiliaries, from Seller's
Facility. Subject to the provisions of the second paragraph of Article IX,
Seller shall at all times during the term of this Agreement use its best
effort to generate and sell Firm Energy up to 150,000,000 kWh per year at
its Facility consistent with satisfying proper maintenance of the
Facility, and Prudent Electrical Practice. Both parties agree that they
will make all determinations called for herein and carry out all
obligations herein, in good faith and in a reasonable manner.
Buyer shall pay for deliveries of Firm Energy for the Calendar Year
of generation at the Total Rate set forth in Attachment II, except as
otherwise provided in this Agreement. However, the number of
kilowatt-hours subject to Attachment II rates shall not exceed 150,000,000
in any Calendar Year. Once Seller has delivered in any Calendar Year
150,000,000 kWh which Buyer is obligated to purchase at the Attachment II
rates, deliveries to Buyer during any On-Peak Hour shall be purchased at
STEON and
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deliveries to Buyer during any Off-Peak Hour shall be purchased at STEOFF.
Any deliveries of Firm Energy during Scheduled STEOFF Hours shall be
purchased by Buyer at the STEOFF rate. The 150,000,000 kWh per Calendar
Year figure shall be prorated on a daily basis during any partial years.
If under Article XI hereof Buyer elects a Special Work Period or an
Allowable Work Time that occurs outside of scheduled maintenance hours
(collectively a "Work Period Curtailment"), Seller will be deemed to have
delivered 410,000 kWh of Firm Energy per day for the duration of the Work
Period Curtailment, except for those days during the Work Period
Curtailment on which Seller actually delivers more than 410,000 kWh of
Firm Energy, in which case Seller will be credited for that day with its
actual deliveries for purposes of meeting its minimum delivery
requirements under this Article XIII. Any Firm Energy deemed to be
delivered under this paragraph will not be paid for by Buyer, or be
included in the number of kilowatt hours subject to Attachment II rates,
but will qualify toward meeting Seller's minimum delivery requirement
under Article XIII.
If Buyer is obligated, pursuant to the terms of Article XI, to pay
Seller for Firm Energy not actually delivered as a result of a
curtailment, interruption or reduction period exceeding the Allowable Work
Time or, if applicable, the Special Work Period, the Firm Energy paid for
pursuant to the terms of Article XI but not actually delivered shall be
deemed delivered both for the purpose of determining (i) compliance with
the 100,000,000 kWh, 41,369,863 kWh, and 15,000,000 kWh minimum delivery
obligations set forth in Article XIII and (ii) in the number of kilowatt
hours subject to Attachment II rates.
If written consent is given by Buyer, Seller may sell to a
third-party ("Capacity Provider") the entire capacity of the Facility
until May 31, 2007 ("Capacity Sale"). If such Capacity Sale takes place,
the Agreement shall remain in effect between Buyer and Seller without
amendment or modification, except as provided herein. Buyer shall pay
Seller for deliveries of energy from the effective date of the Capacity
Sale until May 31, 2007 at the Energy Rate set forth in Attachment II,
except for deliveries during Scheduled STEOFF Hours and deliveries in
excess of 150,000,000 kWh per Calendar Year, which will be paid for at the
rates set forth in the second paragraph of this Article. In the event of a
Capacity Sale, Buyer and Capacity Provider shall determine the terms under
which capacity payments will be paid to Capacity Provider and Buyer shall
have no obligation, so long as this Agreement is in effect, to pay Seller
for capacity until June 1, 2007. Seller shall not receive the Capacity
Rate for the scheduled term of any such Capacity Sale, regardless of the
performance or non-performance of Capacity Provider under its Capacity
Purchase Agreement. It is expressly understood that Firm Energy during the
term of such Capacity Sale shall be provided as follows: both energy and
capacity will be delivered to Buyer (energy pursuant to this Agreement and
capacity pursuant to a Capacity Sales Agreement), but Seller shall sell
only energy to Buyer and the Capacity Provider will sell capacity to
Buyer. During any Capacity Sale, Seller shall have no obligation to Buyer
to provide the capacity portion of Firm Energy. Buyer will during any
Capacity Sale look solely to the Capacity Provider to provide capacity,
and Seller shall have only the obligations regarding capacity as set forth
in the Capacity
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Purchase Agreement. It is agreed that Buyer is expressly not an intended
third-party beneficiary having any right of action under any Capacity
Purchase Agreement.
In the event of a Capacity Sale pursuant to the previous paragraph,
if Buyer subsequently materially breaches, including by rejection in
bankruptcy, its Capacity Sales Agreement with Capacity Provider and such
Capacity Sales Agreement is terminated as a result of such breach, Buyer
shall be deemed to have materially breached this Agreement and Seller
shall have the right, for a period of 395 days following such termination
of the Capacity Sales Agreement, to terminate this Agreement. In the event
that Seller materially breaches, including by rejection in bankruptcy, its
Capacity Purchase Agreement with Capacity Provider, Seller shall be deemed
to have materially breached this Agreement and Buyer shall have the right,
so long as such breach is not cured, to terminate this Agreement. For
purposes of this paragraph, "reject" shall mean: (a) that the applicable
agreement is rejected by or on behalf of either Buyer or Seller (whether
by a trustee, the debtor in possession, or otherwise) and such rejection
is approved, as applicable, pursuant to Section 365 of the Bankruptcy
Code, 11 U.S.C. ss. 101, et seq., or any other provision of the Bankruptcy
Code or of any other bankruptcy or insolvency law, now or hereafter in
effect, which similarly provides for the rejection of executory contracts,
and any right of reconsideration, review and appeal has been exhausted or
is otherwise waived or barred or (b) if, as of the time distribution of
the assets of the estate of Buyer and Seller, as applicable, whether in a
liquidation pursuant to a confirmed Chapter 11 plan or otherwise, such
agreement has not been assigned to and assumed by a party capable of
performing thereunder.
Buyer hereby consents to Seller's sale to CL Power Sales One,
L.L.C., pursuant to the Capacity Purchase Agreement dated as November 6,
1995 (the "Capacity Purchase Agreement"), of the entire capacity of the
Facility until May 31, 2007, and Buyer, without waiving any other rights
now available or hereafter arising with respect to Seller, agrees that it
shall not seek to amend, modify or terminate any of its obligations
hereunder by virtue of a claim or assertion arising under Article XX(A) or
otherwise that the sale of capacity by Seller to Capacity Provider is
inconsistent with the status of the Facility as a Qualifying Facility as
defined in 16 U.S.C. Section 796(17)(c) and 35-A MRSA Section 3303(7).
5. The Agreement is amended by deleting ARTICLE IX: DELIVERIES and substituting
therefor the following:
ARTICLE IX: DELIVERIES
Seller shall deliver all Firm Energy in excess of the Seller's
Electrical Usage of the Facility at the Point of Delivery in the form of 3
phase 34,500 volts 60 Hertz electricity up to a maximum capacity of 25,000
kVA, which Firm Energy shall be delivered to Buyer at the Point of
Delivery as described in Attachment I hereof. It is expressly understood
and agreed that Seller shall sell to Buyer and Buyer shall purchase the
Gross Generation of Firm Energy from the Facility although Seller is only
obligated to deliver the Net Generation of the Facility. Seller shall
enter into a separate contract to
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purchase Seller's Electrical Usage. Notwithstanding any of the foregoing,
Buyer shall have no obligation to pay for deliveries in excess of 25,000
kWh per hour.
Subject to its obligation to deliver Firm Energy, Seller shall,
during the following time periods, have the right to deliver and sell
energy from the Facility to another purchaser: (1) during Scheduled STEOFF
Hours; and (2) at any time during a Calendar Year once Seller has
delivered to Buyer 150,000,000 kWh which Buyer is obligated to purchase at
the Attachment II rates. If Seller desires to transact wholesale sales of
energy from the Facility in the aforementioned situations, then Buyer
shall accommodate such sales by providing transmission services over
Buyer's transmission facilities. The rates, terms, and conditions
pertaining to Buyer's provision of such transmission services to Seller
shall be consistent with the final rulings promulgated by the Federal
Energy Regulatory Commission ("FERC") in FERC Docket No. RM95-8-000,
Promoting Wholesale Competition Through Open Access Non-Discriminatory
Transmission by Public Utilities, and FERC Docket No. RM94-7-001, Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities, or at
Seller's option, Buyer's most favorable then currently available and
applicable transmission tariff. In consideration of Buyer's agreement to
permit sales of excess energy during the periods set forth above, and in
consideration of Buyer's agreement to provide transmission services to
accommodate such sales, Seller agrees that Buyer shall have the right of
first refusal to purchase any energy proposed to be sold to a third party
under this paragraph for use in Buyer's service territory. Seller shall
offer the exercise of this right to Buyer by delivery to Buyer of a copy
of a firm offer to buy energy for use in Buyer's service territory, prior
to entry into any agreement for sale of energy for use in Buyer's service
territory. Buyer shall have ten business days after receipt of the copy of
the firm offer to substitute itself for the proposed purchaser under such
firm offer. If Buyer elects to purchase energy, it may do so under the
terms and conditions of the firm offer, except that the price shall be the
time-differentiated STEO rate in effect at the time the energy is
delivered, so that deliveries during any On-Peak Hour shall be purchased
at STEON and deliveries during any Off-Peak Hour shall be purchased at
STEOFF.
6. The Agreement is amended by deleting the first paragraph of ARTICLE X and
substituting therefor the following:
Seller shall during the term of this Agreement maintain the
Facility, including Seller's Interconnection Equipment and protective
relay equipment, in accordance with Prudent Electrical Practice. With
respect to scheduling maintenance of the Facility and Seller's
Interconnection Equipment, Seller shall provide to Buyer on the first
business day of September of each year a list of dates, in order of
priority, in which Seller would like to schedule maintenance. For purposes
of this Agreement, "business day" shall mean any day from Monday through
Friday, except for any legal holiday in the State of Maine, as determined
pursuant to 4 M.R.S.A. ss. 1051. Within one month Seller and Buyer will
agree on dates for maintenance of the Facility and Seller's
Interconnection Equipment. Seller shall schedule all major maintenance
projects (projects reasonably expected to have a duration of longer than
three (3) days) between the dates of April 1 and June 15, and between the
dates of September 15 and November 30. If Seller and Buyer are unable to
agree upon a date, or if the parties agree upon a date and Seller
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subsequently fails to perform on the agreed upon date, without Buyer's
agreement, Seller shall lose the one percent adjustment for scheduled
maintenance for the Calendar Year in which such maintenance was scheduled
to occur. Buyer shall establish reasonable scheduled maintenance
guidelines that set forth procedures for matters such as the timely
communication of modification by Seller of previously agreed upon
scheduled maintenance dates and operating parameters (e.g., ramp-up and
ramp-down periods) to be applied in determining whether Seller performed
on the agreed upon date. Seller agrees to accept Buyer's existing
scheduled maintenance guidelines for small power producers as reasonable.
7. The Agreement is amended by adding the following paragraphs to the end of
ARTICLE XIII:
Beginning in Calendar Year 1996, notwithstanding any of the
foregoing, if Seller fails to deliver to the Point of Delivery (or to be
deemed to have delivered under the terms hereof) at least 15,000,000 kWh
during any Calendar Year, Seller will be deemed to have materially
breached this Agreement and Buyer may terminate this Agreement and shall
not have any further liabilities or obligations to Seller under this
Agreement. The 15,000,000 kWh per Calendar Year figure shall be prorated
on a daily basis during any partial years. In the event of a Force
Majeure, the 15,000,000 kWh per Calendar Year shall be prorated on an
hourly basis to account for the period of time that the Facility is not
available.
If Seller breaches this Agreement by failure to deliver (or to be
deemed to have delivered under the terms hereof) the minimum 15,000,000
kWh per year and Buyer terminates this Agreement on account of such
failure, Buyer will be injured both by loss of an expected reliable source
of energy and on account of the loss of value of a portion of the payments
made in connection with the Capacity Sales Agreement and the Capacity
Purchase Agreement. The amount of such injury will be difficult to
calculate with certainty at the time of the breach and difficult to
predict at the time of formation of this Third Amendment, given the length
of the Term. Accordingly, the parties have agreed to liquidate the loss to
Buyer arising out of such breach and termination, as follows: upon such
termination, Seller shall pay to Buyer the difference between: (a)
Forty-Five Million Dollars ($45,000,000), and (b) the product of (i)
$3,750,000 and (ii) the number of completed Calendar Years from and
including 1996 to the date of termination of this Agreement.
Notwithstanding any provision of this Agreement, no termination of
this Agreement by Seller shall constitute a waiver or otherwise affect any
statutory right (as existing at the time of termination) of Seller to sell
or any statutory obligation (as existing at the time of termination) of
Buyer to negotiate a new agreement to purchase capacity and energy from
the Facility after such termination.
Buyer anticipates that Seller will deliver to Buyer at least
150,000,000 kWh of energy per Calendar year from the Facility under this
Agreement. If energy delivered falls substantially below that amount,
Buyer will be injured in an amount that is difficult to calculate with
certainty at the time of breach and difficult to predict, given the length
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of the Term. Accordingly, the parties have agreed to liquidate the loss to
Buyer arising out of substantial under-deliveries of energy in any
Calendar Year prior to January 1, 2007, or during the partial year from
January 1, 2007, through May 31, 2007, as follows: If the amount of energy
delivered or deemed to be delivered by Seller to Buyer under this
Agreement falls below 100,000,000 kWh in any Calendar Year after 1995 and
before January 1, 2007, or if energy delivered or deemed delivered falls
below 41,369,863 kWh between January 1 and May 31, 2007, then Seller shall
pay Buyer the sum of $3,750,000.00 with respect to each year or final
partial year when such shortfall occurs.
Any reference in this Agreement to Seller's performance or
nonperformance of delivery obligations established hereby at 100,000,000
kWh and 15,000,000 kWh per Calendar Year, and 41,369,863 kWh between
January 1 and May 31, 2007, shall be deemed to include and refer to
adjustments of such performance levels by: (a) including in the
computation of total deliveries the "deemed" deliveries for any Work
Period Curtailment under Article III, and (b) reducing the required level
of performance pro rata for each hour of Force Majeure excuse validly
claimed under Article XIX. Such adjustments shall apply whether or not the
provision in question specifically refers to prorations or deemed
deliveries.
In order to secure Seller's obligations under this Article to pay
liquidated damages to Buyer, Seller shall assure that a Qualified Letter
of Credit is issued and outstanding, in an amount equal to the damages
then applicable on failure to deliver 15,000,000 kWh at all times until
May 31, 2007 other than following an Expiration Draw, and at all times
after May 31, 2007 that a dispute exists between Buyer and Seller
regarding an attempt by Buyer to draw under an existing letter of credit
which attempt to draw occurred prior to May 31, 2007. For purposes of this
paragraph, a "Qualified Letter of Credit" shall mean a letter of credit
issued by a financial institution meeting the following criteria:
(i) if Internationale Nederlanden (U.S.) Capital Corporation ("ING")
is the issuer, and if the Guaranty dated as of April 30, 1996 issued
by ING Capital Holdings to the Escrow Agent with respect to the
Issuer's obligations remains in effect, then a letter of credit
shall be a Qualified Letter of Credit so long as an ING Credit
Event, as hereinafter defined, has not occurred; and
(ii) If any other financial institution having an office in the
United States where the letter of credit is payable is the issuer,
then a letter of credit shall be a Qualified Letter of Credit if the
long-term debt of the issuer (or of a bank holding company parent of
the issuer) is rated not less than A by both Xxxxx'x and Standard &
Poor's.
If an issued and outstanding letter of credit ceased to be a Qualified Letter of
Credit on account of an adverse change in the financial condition of the issuer,
then Seller shall provide alternative credit support within 270 days after
demand by Buyer or such shorter time as provided in the definition of "ING
Credit Event" set forth below. If Seller shall fail to so provide alternative
support, then Buyer shall make all payments otherwise due under this Agreement
to the Escrow Agent to be held under the same terms as applicable to cash held
following an Expiration Draw. If Seller subsequently provides alternative credit
support as provided herein, Buyer shall cease
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making payments into escrow and any amounts held in escrow shall be dealt with
pursuant to the Escrow Agreements. Seller may provide alternative credit support
by using any of the following mechanisms:
(i) provide a replacement Qualified Letter of Credit;
(ii) provide a confirming letter of credit from a financial
institution from which a letter of credit would constitute a
Qualified Letter of Credit; or
(iii) deposit cash with the Escrow Agent in an amount equal to the
outstanding letter of credit under the terms set forth in the Escrow
Agreement, but without reference to the Issuer.
In the event a replacement Qualified Letter of Credit or other alternate credit
support is issued by an entity other than ING, then such replacement or
alternate entity must also enter into agreements with the Escrow Agent, Buyer,
Seller, Capacity Provider, and the Note Purchasers in substantially the same
form and content as the agreements with such parties entered into by ING in
connection with the Capacity Sale to CL Power Sales One contemplated hereunder.
The Escrow Agent shall surrender the outstanding letter of credit upon tender of
a replacement Qualified Letter of Credit or other alternative credit support
that satisfies the requirements set forth above.
For purpose of this Article, an "ING Credit Event" shall be deemed to have
occurred if any of the following occurs and is continuing:
(i) failure by ING or Internationale Nederlanden (U.S.) Capital
Holdings Corporation ("ING Capital Holdings") to pay a letter of
credit draft or guarantee demand in an amount greater than
$10,000,000, unless such draft or demand is the subject of a bona
fide dispute (in such event, Seller shall provide alternative credit
support within 120 days after demand by Buyer);
(ii) the rating assigned to the unsecured senior debt securities of
the direct or indirect banking institution parent of ING having
publicly rated debt, exclusive of ratings assigned to debt issues
that are based primarily on collateral adequacy and not on issuer
creditworthiness (i.e., non-recourse asset-backed securities
ratings) (the "ING Bank Debt Rating") is downgraded to A2/P2 AND has
a long-term rating less than A assigned by both Xxxxx'x and Standard
& Poor's (in such event, Seller shall provide alternative credit
support within 180 days after demand by Buyer);
(iii) the ING Bank Debt Rating is downgraded to either A2/P2 (i.e.,
both short term ratings are reduced) OR has a long-term rating less
than A from either Xxxxx'x or Standard & Poor's (i.e., either of the
long-term ratings is less than A) (in such event, Seller shall
provide alternative credit support within 270 days after demand by
Buyer); or
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(iv) ING notifies Buyer that the Revolving Credit Facility Agreement
dated July 13, 1993 provided ING Bank N.V. to the direct or indirect
U.S. parent ING either has a remaining term of less than two years
or the aggregate commitment thereunder is reduced below $4 billion
(in such event, Seller shall provide alternative credit support
within 270 days after demand by Buyer).
If more than one ING Credit Event has occurred, the shortest applicable time
frame for providing alternative credit support shall govern. If an ING Credit
Event is triggered by an ING Bank Debt Rating reduction that is later restored
before the time for credit support replacement has expired, then the ING Credit
Event shall be deemed "cured". If ING or ING Capital Holdings shall receive a
long-term debt rating of not less than A from both Xxxxx'x and Standard &
Poor's, then the ING Credit Events set forth above shall no longer apply and
Seller shall be required to provide alternative credit support within 270 days
after either of such ratings is reduced below A. If the dual "A" rating is
received by ING, then the Guaranty by ING Capital Holdings may be canceled and
the Letter of Credit issued by ING will be deemed Qualified without such
Guaranty.
If the terms of a Qualified Letter of Credit require Buyer's
certification of annual levels of electricity production from Seller (or
certification that the 100,000,000 kWh requirement has been met), then Buyer
agrees to review promptly a draft certificate prepared by Seller. In the event
that Seller executes and delivers such a certificate but Buyer refuses to do so
for more than 30 days, the dispute will be resolved by arbitration hereunder. If
Seller prevails in such arbitration Buyer will be liable to Seller for the
incremental cost of the Letter of Credit caused by Buyer's wrongful refusal to
certify production.
In order to further secure the payment of liquidated damages from
Seller to Buyer, Seller shall grant to Buyer a junior mortgage on the Facility.
Such junior mortgage shall be expressly subordinate to the liens of ING or of
any other lender which is the supplier of a Qualified Letter of Credit and liens
securing the working capital line or any other financing obtained by Seller from
time to time, up to the total outstanding of the stated amount of the Letter of
Credit at such time, plus $15 million. Such mortgage shall include a requirement
to name Buyer as a mortgagee under any property or casualty policy insuring the
Facility and shall also include an express assignment of any rights to
reimbursement for any damage or destruction to the Facility, whether by way of
compensation for governmental taking, a recovery in tort, or any other form of
such compensation; provided that such assignment shall be subordinated to the
same extent as the mortgage.
8. The Agreement is amended by adding the following paragraph to then end of
Article XVIII:
Notwithstanding any of the foregoing, Seller shall obtain and
maintain with respect to the Facility insurance against perils presently
covered under existing policies with existing coverage and deduction
amounts (including, without limitation, machinery breakdown, flood,
explosion, fire, lightning, riot, civil commotion, smoke, vandalism,
malicious acts, wind or hail) in amounts necessary to repair any insured
damage to the Facility (including complete reconstruction), together with
such other insurance as may reasonably be necessary in view of the nature
and business of the Facility, in each case, to
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the extent available at commercially reasonable rates. Insurance required
or acceptable to the lender under the reimbursement agreement related to
any Qualified Letter of Credit shall conclusively be deemed to satisfy the
foregoing requirement. Seller shall provide Buyer with certificates of
insurance certifying the issuance of such insurance, which certificates
shall provide for not less than ten (10) days' notice of cancellation to
the certificate holder. If Seller shall fail to maintain insurance
required under this paragraph for more than ninety (90) days after notice
from Buyer demanding the replacement of expired or canceled coverage, then
Buyer may (bur shall not have the obligation to) acquire such insurance on
its own, and deduct the amount paid therefor from the amount otherwise
payable to Seller under this Agreement.
9. The Agreement is amended by deleting Article XIX in its entirety and
replacing it with the following new Article XIX:
ARTICLE XIX: FORCE MAJEURE
As used in this Agreement, "Force Majeure" means causes that are not
preventable by reasonable diligence and beyond the reasonable control of
the party claiming Force Majeure. It shall include, without limitation:
(a) failure or interruption of services due to causes beyond a
party's control;
(b) sabotage, acts of public enemy, insurrections, wars (whether
declared or otherwise), riots, vandalism;
(c) strikes, lockouts, boycotts, sit-ins, slowdowns, or other
labor disturbances, disputes or unrest (it being agreed that
labor disturbances, disputes or unrest resulting from an
employer's exercise of rights under or in connection with
labor agreement or state or federal labor law shall not be
deemed to be within the reasonable control of the employer);
(d) acts of God, droughts, floods, hurricanes, tornadoes,
cyclones, or other storms, earthquakes, epidemics;
(e) accidents not preventable by reasonable diligence, fires,
explosions, lightning strikes, breakdowns of or damage to the
plant, equipment or Facility (other than breakdowns or damage
caused by failure to conduct maintenance procedures required
under this Agreement);
(f) damage to roadways, interruptions to transportation, embargoes
or blockades;
(g) orders or acts of civil or military authority, including, but
not limited to law, regulation, rule or order of any
governmental authority, or other causes of similar nature,
which wholly or partially prevent the delivering, processing
or burning of garbage, the generating or selling of
electricity or capacity to any person by the Facility or the
disposal of ash, residue or
-11-
other by-products from the Facility (provided, however, that
such orders or acts shall not constitute a Force Majeure to
the extent that they merely increase the cost of performance
or require a change in the method of performance (E.G., a
change of fuel mix), but do not delay or prevent performance
hereunder);
(h) appropriation or diversion of electricity by rule or order of
any governmental authority having jurisdiction thereof, and
failure to deliver or accept delivery of electricity during
such time as a party may be obliged to temporarily discontinue
delivering or accepting delivery of the electricity hereby
contracted for on account of System Emergencies or System
Pre-Emergencies.
If either party is rendered wholly or partly unable to perform its
obligations under this Agreement because of Force Majeure as defined
above, that party shall be excused from whatever performance is affected
by the Force Majeure to the extent so affected provided that:
(A) the non-performing party shall promptly give the other party
written notice describing the particulars of the occurrence.
If such notice is given more than ten (10) working days after
the occurrence of Force Majeure, then the excuse provided by
such Force Majeure shall not apply to the period between the
eleventh working day following the occurrence and the date the
notice is given;
(B) the suspension of performance be of no greater scope and of no
longer duration than is reasonably required by the Force
Majeure;
(C) no obligations of either party which arose before the
occurrence causing the suspension of performance be excused as
a result of the occurrence;
(D) the non-performing party uses reasonable efforts to remedy its
inability to perform. If Seller fails to pursue such
reasonable efforts within thirty (30) days after demand by
Buyer, then the Force Majeure shall be deemed to have ceased
until such time as reasonable efforts begin.
Notwithstanding anything contained in this section, no excuse
arising out of a Force Majeure event or series of related Force
Majeure events shall continue for a period of greater than 18
months, unless: (i) prior to the end of such 18-month period the
party claiming Force Majeure shall inform the other party whether or
not such Force Majeure is permanent (in which case the next
paragraph shall apply), and (ii) if the Force Majeure is declared
not permanent, the party claiming Force Majeure shall provide to the
other party, concurrent with the foregoing notice, detailed plans
and schedules to cure the Force Majeure event, including, without
limitation: (a) any regulatory or permitting requirements, (b)
detailed plans and schedules for any necessary construction or
procurements and (c) cost, expense and financial data sufficient to
reasonably demonstrate that the cure of
-12-
the Force Majeure will occur as proposed. If the party claiming
Force Majeure fails substantially to conform to such plans and
schedules, the other party may declare the Force Majeure excuse to
be ended and the other party shall be obligated to perform all
obligations under this Agreement.
In the event Seller declares that it has been rendered permanently
incapable of performing its obligations under this Agreement as a
result of a Force Majeure pursuant to the foregoing paragraph, then
Buyer shall have the right immediately to terminate this Agreement,
neither party shall have any further liabilities or obligations to
the other, including any liability for liquidated damages pursuant
to Article XIII and Buyer shall instruct the Escrow Agent to return
any Qualified Letter of Credit or any proceeds of any Expiration
Draw to the Issuer; PROVIDED, HOWEVER, that if the Force Majeure
event in question was or should have been insured by Seller under
the terms of this Agreement or if the event in question entitles
Seller to receive compensation, then Seller shall have liability to
Buyer for liquidated damages upon termination pursuant to the
provisions of Article XIII hereof to the extent of the lesser of the
amount of such liquidated damages and the proceeds of such required
insurance or compensation remaining after discharge of the senior
obligations described in the last paragraph of Article XIII.
10. The Agreement is amended by adding after ARTICLE XXV the following new
ARTICLE XXVI:
ARTICLE XXVI: ARBITRATION
(a) Any controversy or claim between or among the parties arising out of
or relating to this Agreement or any agreement or instruments relating
hereto or delivered in connection herewith, and including but not limited
to a claim that a proposed draw under the letter of credit referred to in
Article XIII is improper and/or a claim based on or arising from an
alleged tort, shall at the written request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Portland, Maine. The arbitrators shall have the
qualifications set forth in subparagraph (b) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action
brought by a party shall apply to any arbitration proceeding hereunder.
(b) The arbitrators shall be selected in accordance with the rules of the
American Arbitration Association from panels maintained by the
Association. The panel shall consist of three arbitrators, one selected by
each party and the third selected by the two party appointees. At least
one of the arbitrators must have at least 15 years experience in the power
generation industry, including experience in power supply management. Each
party shall bear its own costs arising from the arbitration, which costs
shall include attorneys' fees, administrative fees, arbitrators' fees, and
court costs. The arbitrators also may grant provisional or ancillary
remedies such as, for example, injunctive relief, attachment, or the
appointment of a receiver, either during the pendency of the arbitration
or as part of the arbitration.
-13-
(c) Notwithstanding the applicability of other law to any other provision
of this Agreement, the Federal Arbitration Act, 9 U.S.C. ss. 1 ET Seq.,
shall apply to the construction and interpretation of this arbitration
paragraph.
(d) In any demand or claim for arbitration relating to a matter in which
an award in excess of $100,000 is or may be sought, the party seeking
arbitration shall set forth in detail the basis of its claim in a written
demand for arbitration. The arbitrator shall establish a period prior to
the arbitration date when each party shall have the right to obtain
discovery from the other party that would ordinarily be available under
the civil rules applicable in the Maine Superior Court. Similarly, any
party proposing to present expert testimony in the arbitration shall,
within the reasonable time period established by the arbitrators, provide
the other party with a detailed written summary of the proposed testimony
of such expert.
(e) Buyer and Seller each recognize the benefits of quick dispute
resolution. It is the intent of the parties that each arbitration
proceeding be concluded within three (3) months of the written request for
arbitration.
(f) Any award, order or judgment pursuant to such arbitration shall be
deemed final and may be entered and enforced in any state or federal court
of competent jurisdiction. Each party agrees to submit to the jurisdiction
of any such court for purposes of the enforcement of any such award, order
or judgment.
11. The Agreement is amended by adding a new Article XXVII, as follows:
ARTICLE XXVII: PREPAYMENT OF CAPACITY
In the event that Buyer exercises its rights under section 3.2(h) of
that certain Capacity Sales Agreement between buyer and CL Power Sales
One, L.L.C. ("CL One") dated as of November 6, 1995 (the "Capacity Sales
Agreement") to prepay in full its obligations to make monthly capacity
payments, THEN:
(a) Buyer shall undertake to make payments to Maine Energy equal to
the Quarterly Payments and LC Fee Reimbursement Payments at the time
and in the manner required at the time of such undertaking pursuant
to the Capacity Purchase Agreement;
(b) Seller shall deliver Capacity for the Facility to Buyer through
May 31, 2007, under this Agreement, without further charge (other
than payment of the aforesaid Quarterly Payments and LC Fee
Reimbursement Payments);
(c) Seller shall negotiate in good faith with Buyer regarding
replacement of the Letter of Credit with a mortgage and termination
of the LC Fee Reimbursement Payments;
(d) Seller shall consent to the termination of the Capacity Purchase
Agreement by CL One;
-14-
(e) Seller shall cooperate with buyer in making any changes to the
Escrow Agreement necessary to reflect the termination of CL One's
interest.
12. The Agreement is further amended by replacing Attachment II: Rate Schedule
with the Attachment II that is affixed to this Amendment.
13. The rate per kWh payable to Seller is, on the date hereof, subject to a
scheduled maintenance rate adjustment under Article X of the Agreement on
account of alleged failure to perform schedule maintenance on the agreed upon
date. Seller dispute the validity of this adjustment. By execution of this Third
Amendment, the parties agree that the one percent (1%) adjustment relating to
scheduled maintenance occurring or scheduled to occur prior to the date of
execution hereof shall apply to deliveries occurring from January 1, 1995
through November 5, 1995. Seller waives any dispute as to the correctness of
such adjustment and Buyer waives any claim for any additional adjustment on
account of scheduled maintenance occurring or scheduled to occur prior to the
date of execution hereof.
14. In all other respects the Agreement shall remain in full force and effect.
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IN WITNESS HEREOF, the parties hereto have executed this instrument.
WITNESS: CENTRAL MAINE POWER COMPANY
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------------
Xxxxxxxxx Xxxxxxxx
Its: Managing Director, Power
Supply
Dated:____________________________
MAINE ENERGY RECOVERY COMPANY
LIMITED PARTNERSHIP
A Maine Limited Partnership
By: Xxxx Technologies, Inc.
Its General Partner
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------- ------------------------------
Witness Its chief Operating Officer
Dated:____________________________
-16-
ATTACHMENT II
RATE SCHEDULE
Total Energy Capacity
Rate Rate Rate
(cent)kWh (cent)kWh (cent)kWh
1995** 15.71 7.18 8.53
1996 16.59 7.18 9.41
1997 17.76 7.36 10.40
1998 16.63 7.54 9.09
1999 16.63 7.73 8.90
2000 16.63 7.92 8.71
2001 16.63 8.12 8.51
2002 16.63 8.32 8.31
2003 16.88 8.53 8.35
2004 17.13 8.74 8.39
2005 17.39 8.96 8.43
2006 17.65 9.18 8.47
2007* 17.92 9.41 8.51
* Rates shown for the year 2007 are for the period January 1, 2007 through May
31, 2007. Rates for the remainder of 2007 will be calculated as set forth below.
For the period June 1, 2007 through December 31, 2007 during each Calendar
Year from 2008 through 2012, the rate paid for deliveries shall be Market Rate,
as defined in Appendix A hereto.
All rates either listed above or calculated using methodologies listed
above are deemed to include upward adjustments for maintenance scheduling (1%)
and savings resulting from variations in line losses (2.89258%), as described in
ss. 4(C)(7)(d) and (e) of the Maine Public Utilities Commission's Chapter 360
Rules.
**Rates shown for 1995 apply from November 7, 1995, to December 31, 1995.
-17-
APPENDIX "A"
"MARKET RATE" is the average monthly market price for capacity and energy ($/kw
or (cent)/kWh) delivered in wholesale transactions in New England for a block of
energy and capacity similar in size and nature to a 20,000 KW resource or
purchase capable of producing 150,000,000 kWh annually (i.e., a base load
resource). The average monthly market price will be determined in (cent)/kWh,
using a methodology that incorporates reference(s) to generally accepted,
publicly available indicators of the components of market price. These
components shall include at a minimum both fixed and variable operation and
maintenance costs (including all ash disposal or spent fuel disposal costs,
environmental compliance costs, start up and regulatory compliance costs), fuel
costs, capital costs, and general and administrative costs. As necessary, the
methodology will convert the components to (cent)/kWh. Further, the methodology
and reference(s) utilized in the monthly determination will be agreed on by and
be reasonably acceptable to Buyer and Seller. The Market Rate for a month shall
to the extent possible be the average monthly market price for the particular
month in which the deliveries to be paid for occur, but if data for that month
is not available in time for the monthly billing statement preparation under
Article IV but is expected to be available later, payment will be made using the
Market Rate for the previous month, until the Market Rate for the month in
question is calculated. A "true up" to adjust for any differences in the interim
Market Rate paid and the Market Rate finally calculated will be made in the next
monthly billing period after the Market Rate for the month in question is
finally calculated. It is the intent of the parties that Seller will be timely
paid each month even though some component of the Market Rate has not been
determined.
If generally accepted, publicly available indicators of components of market
price become unavailable for more than three consecutive months and are expected
to continue to be unavailable for the foreseeable future, or if the parties
cannot agree on market price information sources, then the attached Proxy Unit
Calculation Methodology will be utilized until such time as agreeable market
reference(s) for future months become available.
Should any part of the Market Rate not be agreed to by Buyer and Seller or if
the Buyer and Seller cannot agree on the Proxy Unit Calculation, then such
disagreement shall be submitted to arbitration under the provisions hereof, for
resolution in accordance with the standards for determining Market Rate set
forth herein. It is the express intent of the parties that should they be unable
to agree on all or any part of the Market Rate, they intend that Seller
nevertheless be paid a reasonable price for its energy and capacity in
accordance with the concepts set forth in Maine Uniform Commercial Code
ss.2-305(1). The parties intend to be bound by the terms hereof even if they are
unable to reach agreement on any applicable Market Rate for any month during the
term hereof, and desire that the Market Rate be set in the absence of agreement
by arbitration in accordance with the arbitration provisions hereof.
-18-
PROXY UNIT COST CALCULATION METHODOLOGY
Total Proxy Unit costs will be the sum of the following 3 costs:
(1) Capital Costs
(2) Operation & Maintenance ("O&M") Costs
(3) Energy Costs
(1) Capital Costs will be calculated in $/mwh by multiplying the total
installed costs of a Gas Fired Combined Cycle unit times the
Economic Carrying Charge Rate of a facility with a 20 year Book &
Tax life and a cost of capital equal to the U.S. Prime Rate plus 3
percentage points, as follows:
CAPITAL COSTS Total Unit Economic
in = Installed Cost * Carrying Charge
$/kWyr in $/kW Rate
(Redetermined Annually for
each year when the
computation is made)
(2)(a) Fixed O&M in $/kWyr will be added to the above capital costs in
$/kWyr
For total fixed costs Capital Costs in $/kWyr
+Fixed O&M cost in $/kWyr
----------------------------
Total fixed costs in $/kWyr
(2)(b) Variable O&M costs in $/Mwyr will be added to fuel costs in $/Mwyr
accordingly.
(3) Energy Price will be computed by using the delivered price of
Natural Gas to Maine in $/mCF divided by the Heating Content of
NaturalGas in mBTU/MCF, as follows:
Energy Price = ($/MCF) = $/mBTU
----------------------
mBTU
----
MCF
The Energy Costs will be calculated by multiplying the Energy Price in
$/mBTU by an efficiency factor of heat rate associated with the combined
cycle technology appropriate at that time. As way of example, a heat rate
of 8,500 BUT/kWh is used for purpose of the example below.
6
Energy Costs = ($/mBTU)(8500 BTU/kWh)(1000 kWh/mwh)(1mBTU/10 BTU)=$/mwh
-19-
