AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT is made and is effective as of the 3rd day of
March, 2001 between the AGC Division of ALCOA POWER GENERATING INC., a Tennessee
Corporation (hereinafter called "APG") and SOUTHERN INDIANA GAS AND ELECTRIC
COMPANY, an Indiana corporation (hereinafter called "Southern Indiana").
WITNESSETH
WHEREAS, Alcoa Generating Corporation, now a division of APG, and
Southern Indiana are parties to an Operating Agreement executed April 14, 1958
(hereinafter called the "Operating Agreement") under which Southern Indiana
operates Units 1 through 3 of the APG's Xxxxxxx Power Plant located in Xxxxxxx
County, Indiana (hereinafter call the "Power Plant"), and an Agreement For Unit
Four at Alcoa Generating Corporation's Xxxxxxx Power Plant dated January 30,
1968, (hereinafter called the "Unit Four Agreement"), under which Southern
Indiana operates Unit Four of the Power Plant; and
WHEREAS, effective March 3, 2001, APG will become responsible for
operating Units 1 through 4 of the Power Plant.
NOW THEREFORE, in consideration of the foregoing and of the agreements
of the parties as stated herein, APG and Southern Indiana hereby agree as
follows:
ARTICLE ONE
OPERATING AGREEMENT
Section 1. The Operating Agreement shall terminate as of the date of
this Amendment Agreement.
ARTICLE TWO
UNIT FOUR AGREEMENT
Section 1. Except as expressly amended by this Amendment Agreement, the
terms and conditions of the Unit Four Agreement shall remain in effect, and
words defined therein shall have the same meanings herein.
Section 2. Section 5 of the ARTICLE ONE is amended to provide:
"Operating Term" means the period commencing at the date of commercial
operation of Unit Four and continuing for forty (40) years thereafter or until
Unit Four shall no longer be used or useful and shall have been retired by both
owners in their books of account, whichever shall be the earlier. This Agreement
shall continue in effect thereafter if Unit Four remains used or useful and has
not been so retired on the books of account of the owners until terminated by
either party by written notice given to the other party. Notice to terminate the
Operating Term at the end of forty years or any time thereafter shall be given
at least thirty months in advance of the intended date of termination.
Notwithstanding the foregoing, the Operating Term may be terminated by either
party, by notice to the other, if the other party shall fail to perform its
obligations hereunder, and such failure shall continue for a period of sixty
days after notice thereof from the party not in default.
Section 3. Section 13 of ARTICLE FIVE is hereby replaced with the following:
In the event that Southern Indiana terminates the Operating Term
pursuant to Section 5 of ARTICLE ONE for APG's failure to perform its
obligations, then APG shall be obligated at Southern Indiana's request
to purchase Southern Indiana's interests in the Unit Four Real Estate,
Unit Four and all structures, facilities and equipment constructed or
installed in or on such real estate or interests and owned by APG and
Southern Indiana as tenants in common at the price paid by Southern
Indiana for its interest in the Unit Four Real Estate and at the fair
market value of its interests in Unit Four, and all structures,
facilities and equipment constructed or installed in or on such real
estate or interests and owned by APG and Southern Indiana as tenants in
common. Such purchase and sale shall not be consummated or become
effective until Southern Indiana has obtained suitable substitute
generation facilities to supply it with power or energy equivalent to
its share of power or energy from Unit Four but in no event shall the
consummation of such sale be delayed more than five (5) years after the
date of the termination by Southern Indiana of the Operating Agreement
pursuant to Section 5 of ARTICLE ONE for APG's failure to perform its
obligations. Upon the consummation of such sale the parties recognize
that Southern Indiana will have no further obligation to pay the Common
Facilities service charge set forth in ARTICLE FOUR hereof.
Section 4. ARTICLE SIX of the Unit Four Agreement is hereby amended to provide
as follows.
ARTICLE SIX
DUTIES OF APG
Section 1. Functions of APG. APG will operate Unit Four on behalf of
both parties beginning March 3, 2001 and for the remainder of the Operating
Term. APG's functions in regard to operating Unit Four shall include, but not be
limited to:
(a) Selection, employment and training of proper and competent
staff and working force, all such employees to be employees
of APG;
(b) purchasing;
(c) engineering;
(d) maintenance and repairs, including any minor additions to or
retirements or replacements of property;
(e) accounting;
(f) plant security.
APG will perform its functions in the most efficient and economical
manner practicable. All functions performed by APG in the operation of Unit Four
shall be subject to the direction and control of the Operating Committee and to
the approval of both parties.
Section 2. Capital Additions to Unit Four. APG shall have the right,
upon the prior written approval of both parties, to make capital improvements,
additions, retirements or replacements in Unit Four for the account of and at
the expense of Southern Indiana and APG.
Section 3. Contractual Commitments for Operation and Maintenance of
Unit Four. APG may enter contractual commitments under this ARTICLE SIX relating
to the operation and maintenance of Unit Four without Southern Indiana's prior
written consent, but after the approval of the Operating Committee, if such
commitments are incidental to the ordinary operation of Unit Four and Southern
Indiana's share of such commitments determined pursuant to ARTICLE FIVE is less
than $10,000. Nothing contained in this Section 3 or in Section 4 below shall
require APG to secure Southern Indiana's approval, either written or oral, of
APG's employee contracts.
Section 4. Operation and Maintenance of Common Facilities. In operating
Unit Four APG will also operate and maintain the Common Facilities. The parties
recognize that APG has the sole right to make all decisions regarding the Common
Facilities, as provided in Section 2 of ARTICLE FOUR, above.
Section 5. Payment and Reimbursement of Operating and Maintenance
Expenses.
(a) Each party shall pay directly to the proper authorities all ad
valorem property taxes duly assessed against its ownership interest in Unit Four
and the Unit Four Real Estate.
(b) APG shall pay all other costs, excluding Southern Indiana's coal
costs, of operating and maintaining Unit Four and the Common Facilities.
Southern Indiana shall reimburse APG for Southern Indiana's portion of the
operating and/or maintenance costs of Unit Four and of the Common Facilities
determined as set forth above in ARTICLE FIVE. APG shall xxxx Southern Indiana
monthly for the amounts reimbursable and Southern Indiana shall pay each monthly
xxxx within fifteen (15) days after receipt.
(c) Southern Indiana shall advance to APG from time to time funds to
cover Southern Indiana's share of anticipated expenses of operating and
maintaining Unit Four which will be incurred by APG.
Section 6. Operating Fee. Each month, Southern Indiana shall pay to APG
an operating fee equal to five percent of Southern Indiana's share of the
operating and maintenance expenses, excluding Southern Indiana's coal costs, of
Unit Four and the Common Facilities attributable to Southern Indiana's half of
Unit Four incurred in the prior month during which APG operated Unit Four. For
purposes of this Section 6, Southern Indiana's share of the foregoing operating
and
maintenance expenses shall include the expenses of potable water, electric power
and energy, and similar items furnished to Unit four and the Common Facilities
by APG.
It is the intention of the parties generally that to the extent
possible APG will bear its portion of the expenses of operating and maintaining
Unit Four and the Common Facilities by not receiving reimbursement for its share
of all such expenses which it pays.
Section 7. Indemnity. APG shall indemnify Southern Indiana against and
hold it harmless from all liability and claims & for damages to property or
injury to persons arising out of the ownership and operation of Unit Four and of
the Common Facilities which result from the negligence of APG, and APG shall at
its own expense defend any action based thereon, provided, however, that where
in the final disposition of any such action it is held that APG is not
negligent, then Southern Indiana shall reimburse APG for its share of the
expenses in defending such action.
Southern Indiana shall indemnify APG against and hold it harmless from
all liability and claims for damages to property or injury to persons arising
out of the ownership by Southern Indiana its interest in Unit Four which result
from the negligence of Southern Indiana, and Southern Indiana shall at its own
expense defend any action based thereon, provided, however, that where in the
final disposition of any such action it is held that Southern Indiana is not
negligent, then APG shall reimburse Southern Indiana for its share of the
expenses in defending such action.
Section 8. Access to Unit Four and Common Facilities. Authorized
representatives of APG and Southern Indiana shall have access to Unit Four and
the Common Facilities at any time.
Section 9. Books and Records and Reports. APG shall keep accurate and
satisfactory books and records of accounts showing all expenses and payments and
all other pertinent data regarding the operation of Unit Four, such books and
records to be kept in accordance with sound and accepted accounting principles.
Accounting records kept in connection with the generation of electric power and
energy shall be kept in accordance with Uniform System of Accounts for Public
Utilities as issued and amended by the Federal Energy Regulatory Commission. All
books and records kept pursuant to this Section shall be available for
inspection by authorized representatives of Southern Indiana at all times. APG
shall submit to Southern Indiana such reports of the operation and maintenance
of Unit Four as Southern Indiana may reasonable request.
The parties have executed this Agreement in duplicate as of the day and
year above first written.
ATTEST: ALCOA POWER GENERATING INC.,
By: /s/ X. X. Xxxx
-------------------------- -------------------------------
Secretary X. X. Xxxx
Vice President
[CORP.
SEAL]
ATTEST: SOUTHERN INDIANA GAS
AND ELECTRIC COMPANY
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ J. Xxxxxx Xxxxx
--------------------------------- ------------------------------
Xxxxxx X. Xxxxxxxxx J. Xxxxxx Xxxxx
Secretary President
[CORP.
SEAL]
