1
EXHIBIT 10.26
TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - EXCESS POWER FROM NYPP SCD)
This Power Purchase Agreement (the "Agreement") is entered into as of
this 11th day of June, 1999 between Niagara Mohawk Power Corporation ("Niagara
Mohawk"), a New York corporation, and Dunkirk Power LLC, a Delaware limited
liability company ("Producer") (each individually a "Party", or collectively the
"Parties").
WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of it's Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;
WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;
WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation
Divestiture Auction ("Auction") to divest itself of its non-nuclear electrical
generating facilities, including its Xxxxxxx and Dunkirk generating facilities;
WHEREAS Producer has entered into an agreement ("Asset Sales Agreement,
or ASA") to acquire certain facilities from Niagara Mohawk, facilities,
including it's Dunkirk generating facility;
WHEREAS Producer, entered into an interconnection agreement with
Niagara Mohawk in April, 1999 for the interconnection of the facility under this
agreement; and
WHEREAS pursuant to the ASA Niagara Mohawk and Producer agreed to enter
into Transition Power Purchase Agreements pursuant to which; for a certain
period of time. Niagara Mohawk is to purchase from Producer certain quantities
of electricity generated by the facility; and
WHEREAS Producer has entered into a Transaction Power Purchase
Agreement (Dunkirk - Call Option - Pre-ISO, Pre Investment Grade) (the "TPPA")
effective upon the Closing Date which provides for among other items, Article
3.3 of the TPPA which gives Niagara Mohawk the right to place specific Units at
the Dunkirk site on economic dispatch to the NYPP or NYISO.
NOW THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:
-1-
2
ARTICLE 1.
DEFINITIONS
The definitions within the TPPA shall be incorporated herein.
Whenever used in this Agreement with initial capitalization, the following terms
shall have the meanings specified or referred to in this Article 1.
"Agreement" shall mean this Transition Power Purchase Agreement
(Dunkirk - Excess Power from NYPP SCD) dated as of the Closing Date, between
Niagara Mohawk Power Corporation and Dunkirk Power LLC and all attached
schedules.
"SCD Excess Power" means the quantity of electricity delivered by
Producer to Niagara Mohawk, for a given hour that is in excess of the initial
schedule notice from Niagara Mohawk (either Schedule D or week-ahead schedule
notices of make-up quantities, each pursuant to the TPPA) for hours when Niagara
Mohawk has exercised the Call Option of the TPPA and placed the Unit(s) on
economic dispatch to the NYPP or NYISO.
ARTICLE 2.
TRANSACTIONS
2.1. Term of Agreement. Term of Agreement will begin upon the Closing Date of
the ASA (the Effective Date) and will terminate upon the earlier of (i) the
fourth anniversary of the Closing Date, or (ii) last day of the month in which
the later of (i) the NYISO goes into operation, or (ii) Niagara Mohawk's senior
notes of the series having the longest maturity then outstanding have been rated
investment grade by (a) S&P and Xxxxx'x or (b) S&P or Xxxxx'x and at least one
other rating agency.
2.2. Compensation. For each month during the term Niagara Mohawk shall pay
Producer the accumulation of the product of the hourly SCD Excess Power
multiplied by the Replacement Price.
2.3. Delivery. Producer will make all of the capacity, energy, and ancillary
services of the Units available to Niagara Mohawk at the Delivery Point.
ARTICLE 3.
NIAGARA MOHAWK'S CALL OPTION
3.1 Scheduling and Commitment. Pursuant to Article 3.3 of the TPPA, During hours
in Schedule D and/or hours in which Niagara Mohawk provides notice to Producer
for make-up quantities, Niagara Mohawk may place such Unit(s) on economic
dispatch to the NYPP or NYISO and producer shall respond to such based point
signals, either electronic or telephone.
-2-
3
Producer shall provide Niagara Mohawk with applicable coefficients by unit to be
used in the NYPP security constrained dispatch ("SCD") program. These
coefficients shall include those historically used in economic dispatch.
Producer will be limited to one update per month for changes to unit efficiency
coefficients (i.e. equation coefficients and dispatch operating factors) and one
update per week for changes to cost coefficients (i.e. maintenance adder,
delivered fuel cost, fuel handling cost, SOx cost and NOx cost). More frequent
changes can be made if agreed to by Niagara Mohawk.
ARTICLE 4.
PAYMENT
4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting forth
the quantity of power which was delivered to Niagara Mohawk, during the
preceding calendar month, the total amount due from Niagara Mohawk, and any
applicable supporting documentation. Niagara Mohawk shall remit the amount due
by wire transfer, or as otherwise agreed, pursuant to Producer's invoice
instructions, on the later of fifteen days from receipt of Producer's invoice or
the twenty-fifth (25th) day of the calendar month in which the invoice is
rendered,
4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest Rate
from, and including, the due date to, but excluding, the date of payment.
4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
Niagara Mohawk shall immediately notify Producer of the Basis for the dispute
and pay the portion of such statement conceded to be correct no later than the
due date. If any amount withheld under dispute by Niagara Mohawk is ultimately
determined (under the terms herein) to be due to Producer, it shall be paid
within one (1) day of such determination along with interest accrued at the
Interest Rate until the date paid. Inadvertent overpayments shall be returned by
Producer upon request or deducted by Producer from subsequent payments, with
interest accrued at the Interest Rate until the date paid or deducted.
ARTICLE 5.
FORCE MAJEURE
5.1 Performance Excused. If either Party is rendered unable by an event of Force
Majeure to carry out, in whole or part, its obligations under the Agreement,
then, for only the pendency of such Force Majeure, the Party affected by the
event (other than the obligation to make payments then due or becoming due with
respect to performance which occurred prior to the event) shall be temporarily
relieved of its obligations insofar as they are affected by Force Majeure but
for no longer period. The Party affected by an event of Force Majeure shall
provide the
-3-
4
other Party with written notice setting forth the full details thereof within
two (2) business days after the occurrence of such event and shall take all
reasonable measures to mitigate or minimize the effects of such event of Force
Majeure; provided, however, that this provision shall not require Producer to
deliver, or Niagara Mohawk to receive, Power at points other then the Delivery
Point.
ARTICLE 6.
TITLE TRANSFER; LIABILITY
6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.
6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 7.1, in the indemnifying Party. "Claims" means all claims
or actions, threatened or filed and, whether groundless, false or fraudulent,
that directly or indirectly relate to the subject matter of an indemnity, and
the resulting losses, damages, expenses, attorneys' fees and court costs,
whether incurred by settlement or otherwise, and whether such claims or actions
are threatened or filed prior to or after the termination of this Agreement.
6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or non-
performance of this Agreement.
ARTICLE 7.
LAW
7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Except as provided in Article 9.2, any law suits
arising under this AGREEMENT shall be instituted in the Federal or State courts
of New York located in the City of Syracuse and each party hereby irrevocably
submits to the in personam jurisdiction of such courts. Each Party herein waives
its respective right to a jury trial with respect to any litigation arising
under or in connection with this Agreement or any Transaction.
-4-
5
ARTICLE 8.
MISCELLANEOUS
8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer. sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree to in writing be bound by the terms and
conditions hereof and creditworthiness is not materially different than that of
such Party.
8.2 Notices. All Notices and other communications hereunder shall be in writing
and shall be deemed given (as of the time of delivery or, in the case of a
telecopied communication. as of confirmation), if delivered personally, if sent
by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.
TO NIAGARA MOHAWK:
NOTICES & CORRESPONDENCE: SCHEDULING:
Niagara Mohawk Power Corporation (000) 000-0000
Supply Services - HCB#3 (315) 460-2425
000 Xxxx Xxxxxxxxx Xxxx Fax - (000) 000-0000
Xxxxxxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000 DISPATCHERS:
Phone: (000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 (000) 000-0000
Fax - (000) 000-0000
INVOICES: CHECK PAYMENTS:
Niagara Mohawk Power Corporation Niagara Mohawk Power Corp
Power Scheduling and Billing - HCB#3 Misc. Accounts Receivable C-3
000 Xxxx Xxxxxxxxx Xxxx 000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000 Xxxxxxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000 PAYMENTS BY WIRE:
Citibank New York
Account #: 00000000
-5-
6
ABA#: 000000000
Credit To: NIAGARA MOHAWK POWER
CORPORATION
TO PRODUCER:
NOTICES & CORRESPONDENCE: PAYMENTS:
Dunkirk Power LLC LaSalle Xxxxxxxx Xxxx, Xxxxxxx
0000 Xxxxxxxx Xxxx XXX #: 071 000 505
Xxxxxxxxxxx, XX 00000 Account #: 58 000 768 52
Attn: President Beneficiary: NRG Energy, Inc.
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
INVOICES: SCHEDULING:
Attn: Xxx Xxxxxx Attn: Xxx Xxxxxx
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
Phone No.: (000) 000-0000 Phone No.: (000) 000-0000
8.3. General. This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter contemplated by this Agreement. The
Agreement shall be considered for all purposes as prepared through the joint
efforts of the parties and shall not be construed against one party or the other
as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. No amendment or modification to this
Transition Power Agreement shall be enforceable unless reduced to writing and
executed by both Parties. This Master Power Agreement shall not impact any
rights enforceable by any third party (other than a permitted successor or
assignee bound to this Agreement). No waiver by a Party of any default by the
other Party shall be construed as a waiver of any other default. Any provision
declared or rendered unlawful by any applicable court of law or regulatory
agency or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement, The
term "including" when used in this Agreement shall be by way of example only and
shall not be considered in any way to be in limitation. The headings used herein
are for convenience and reference purposes only. All indemnity and audit rights
shall survive the termination of this Agreement for six years.
8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or
-6-
7
underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.
-7-
8
TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - EXCESS POWER FROM NYPP SCD)
The Parties have executed this Master Power Agreement in multiple
counterparts to be construed as one effective as of the Effective Date.
XXXXXXX POWER LLC NIAGARA MOHAWK POWER CORPORATION
By: /s/ Xxxxxxx X'Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------- -----------------------
Name: Xxxxxxx X'Xxxxxxxx Name: Xxxxxxx X. Xxxxxx
---------------------
Title: Vice President Title: Vice President Electric Delivery
Date: 6/11/99 Date: 6/8/99
--------------------- ---------------------
-8-
