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Exhibit 10.6
COMPOSITE COPY
of
POWER AGREEMENT
Dated October 15, 1952
between
OHIO VALLEY ELECTRIC CORPORATION
and
UNITED STATES OF AMERICA
Acting By and Through the
UNITED STATES ATOMIC ENERGY COMMISSION
and, subsequent to January 18, 1975, the
ADMINISTRATOR
of
ENERGY RESEARCH AND DEVELOPMENT
and, subsequent to September 30, 1977, the
SECRETARY OF ENERGY
the statutory head of the
DEPARTMENT OF ENERGY
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COMPOSITE COPY AS MODIFIED BY:
Modification No. 1, dated July 23, 1953
Modification No. 2, as of Mar. 15, 1964
Modification No. 3, as of May 12, 1966
Modification No. 4, as of Jan. 7, 1967
Modification No. 5, as of Aug. 15, 1967
Modification No. 6, as of Nov. 15, 1967
Modification No. 7, as of Nov. 5, 1975
Modification No. 8, as of June 23, 1977
Modification No. 9, as of July 1, 1978
Modification No. 10, as of Aug. 1, 1979
Modification No. 11, as of Sept. 1, 1979 (Eff. 3/29/80)
Modification No. 12, as of Aug. 1, 1981 (Eff. 10/1/81)
Modification No. 13, as of Sep. 1, 1989 (Eff. 11/29/89)
Modification No. 14, as of Jan. 15, 1992 (Eff. 10/14/92)
Modification No. 15, as of Feb. 1, 1993 (Eff. 7/1/93)
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TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I
FACILITIES TO BE PROVIDED
1.01 Generating Stations
1.02 Transmission and General Plant Facilities
1.03 Interconnections with Sponsoring Companies
1.04 Installation of Line Terminal Positions at DOE
Substations
1.05 Design, Operation and Maintenance of Line
Terminal Positions and Related Equipment
1.06 Assistance in Securing Priorities
1.07 Ownership of Facilities
1.08 Easements on Project Property
1.09 Rights of Access
ARTICLE II
POWER SUPPLY
2.01 Power Requirements
2.02 Interim Power
2.03 Permanent Power
2.04 Supplemental Power
2.05 Contract Demand and Change in Load
2.06 Characteristics of Supply and Point of Delivery
2.07 Power Factor
2.08 Arranged Power
2.09 Occasional Energy
2.10 Transmission Revenues
2.11 Transmission Payments
ARTICLE III
RATES FOR PERMANENT POWER
3.01 Provisional Rate for Permanent Power during
Full Scale Operation
3.02 Rate for Permanent Power Prior to Full Scale
Operation
3.03 Adjustment of Energy Charge
3.04 Adjustment of Demand Charge
3.05 Capital of Corporation
3.06 Additional Facilities
3.07 Replacements
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3.08 Use of Capacity by Corporation and DOE
3.09 Advance Payments
3.10 Review and Recommendations by DOE
ARTICLE IV
BILLING AND PAYMENT
4.01 Interim Power
4.02 Supplemental Power
4.03 Permanent Power
4.04 Maintenance of Equipment and Cost of Additional
Facilities and Replacements
4.05 Taxes and Insurance Allocated Directly to DOE
4.06 Payment of Charges in Event of Termination or
Reduction
4.07 Payment
4.08 Arranged Power and Occasional Energy
4.09 Transmission Payments
ARTICLE V
MEASURING INSTRUMENTS
5.01 Measuring instruments
5.02 Measurement of Maximum Demand
ARTICLE VI
TERM OF AGREEMENT
6.01 Duration
6.02 Cancellation by DOE during Full Scale Operation
6.03 Reduction of DOE Contract Demand during Full
Scale Operation
6.04 Payments for Employee Benefits
6.05 Termination as Result of Certain Conditions
6.06 Limitation of Liability
6.07 Method of Payment of Cancellation Charges
6.08 Use of DOE Facilities After Cancellation or
Reduction
6.09 Decommissioning, Shutdown, Demolition and
Closing
ARTICLE VII
GENERAL PROVISIONS
7.01 Earnings on Capital Stock
7.02 Purchase of Fuel
7.03 Use of Other Fuels
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7.04 Accounts
7.05 Force Majeure
7.06 Property Insurance
7.07 Convict Labor
7.08 Officials Not to Benefit
7.09 Regulatory Approvals and Future Regulatory
Action
7.10 Notices
7.11 Waiver
7.12 Successors and Assigns
7.13 Equal Opportunity
7.14 Security
7.15 Contract Work Hours and Safety Standards Act
Overtime Compensation
7.16 Patents and Inventions
7.17 Selection of Employees
7.18 Utilization of Small Business Concerns and
Small Business Concerns Owned and Controlled
by Socially and Economically Disadvantaged
Individuals
7.19 Utilization of Labor Surplus Area Concerns
7.20 Wage and Price Standards
7.21 Payment of Interest on Claims
7.22 Affirmative Action for Handicapped Workers
7.23 Clean Air and Water
7.24 Affirmative Action for Disabled Veterans and
Veterans of the Vietnam Era
7.25 Covenant Against Contingent Fees
7.26 Miscellaneous
7.27 Approval Required
7.28 Titles of Articles and Sections
7.29 Alterations
7.30 Definitions
7.31 Gratuities
7.32 Restrictions on Subcontractor Sales to the
Government
7.33 Anti-Kickback Procedures
7.34 Small Business and Small Disadvantaged Business
Subcontracting Plan
7.35 Utilization of Women-Owned Small Businesses
7.36 Drug-Free Workplace
7.37 Electronic Funds Transfer Payment Methods
7.38 Payment of Interest
7.39 Price of Fee Adjustment for Illegal or Improper
Activity
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APPENDIX I
A General
B Project Generation Stations
C Step-Up and Switching Stations at Each
Generating Station
D Other Switching Stations
E Substations Provided by DOE at the Project
APPENDIX II
APPENDIX III
APPENDIX IV
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POWER AGREEMENT
AGREEMENT dated this 15th of October, 1952, by and between OHIO VALLEY
ELECTRIC CORPORATION, a corporation organized under the laws of the State of
Ohio (hereinafter called "Corporation"), and the UNITED STATES OF AMERICA,
acting by and through the SECRETARY OF ENERGY, the statutory head of the
DEPARTMENT OF ENERGY (hereinafter called "DOE" which term as used herein shall
be deemed to include the duly authorized representative or representatives of
the Secretary of Energy)
WITNESSETH THAT:
WHEREAS, DOE proposes to construct a new project (hereinafter referred to
as the "Project") near Portsmouth, Ohio, and will require at the site of the
Project electric power and energy in a large amount which is not now available;
and
WHEREAS, in order to supply all of such electric power and energy, the
companies named below (hereinafter called "Participating Companies") have caused
Corporation to be organized for the purpose of constructing and operating power
generating facilities within reasonable transmission distance of the Project and
certain trans mission facilities, such construction and operation to be effected
either directly by Corporation or indirectly through Indiana-Kentucky Electric
Corporation, a corporation organized under the laws of the State of Indiana as
a wholly owned subsidiary corporation of Corporation, or by other mutually
agreeable subsidiary corporations of Corporation (for all purposes of this
Agreement the term "Corporation" shall include each such subsidiary unless the
context otherwise requires) and the Participating Companies have agreed, subject
to the receipt of certain authorizations or approvals by regulatory agencies, to
make available to Corporation equity capital, in an amount presently estimated
not to exceed $20,000,000 in the aggregate, in the proportions indicated in the
tabulation below:
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Name of Equity Participation
Participating Company Ratio-Per Cent
--------------------- --------------
American Gas and Electric
Company 39.9
The Cincinnati Gas & Electric
Company 9.0
Columbus and Southern Ohio
Electric Company 4.3
The Dayton Power and Light
Company 4.9
Kentucky Utilities Company 2.5
Louisville Gas and Electric
Company 4.9
Ohio Edison Company 16.5
Southern Indiana Gas and
Electric Company 1.5
The Toledo Edison Company 4.0
The West Penn Electric Company 12.5
and
WHEREAS, Corporation proposes to issue from time to time to the
Participating Companies, as required, shares of the capital stock of Corporation
for cash at the par value thereof of $100 per share in amounts presently
estimated not to exceed the aggregate number of shares of such capital stock
indicated in the tabulation below:
Name of Equity Participation
Participating Company Ratio-Per Cent
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American Gas and Electric
Company 79,800
The Cincinnati Gas & Electric
Company 18,000
Columbus and Southern Ohio
Electric Company 8,600
The Dayton Power and Light
Company 9,800
Kentucky Utilities Company 5,000
Louisville Gas and Electric
Company 9,800
Ohio Edison Company 33,000
Southern Indiana Gas and
Electric Company 3,000
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The Toledo Edison Company 8,000
The West Penn Electric Company 25,000
and
WHEREAS, arrangements are being made on behalf of Corporation with several
institutional investors and banks pursuant to which such institutional investors
and banks will lend funds to Corporations, hereinafter referred to as
"indebtedness,"1 for that part of the required initial capital of Corporation
not represented by the equity capital described above, it being anticipated that
such indebtedness will be issued from time to time as required; and
WHEREAS, Corporation will enter into the contracts hereinafter referred to
in Section 1.03 hereof with the companies named below (hereinafter called the
"Sponsoring Companies") under which contracts the respective rights and
obligations of the Sponsoring Companies will, subject to certain conditions to
be expressed therein, be established in the proportions indicated in the
tabulation below:
Name of Power Participation
Sponsoring Company Ratio-Per Cent
------------------ --------------
Appalachian Electric Power
Company (1) 15.2
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1 The term "indebtedness" referred to in the DOE Power Agreement shall
include any indebtedness of Corporation for borrowed money incurred in
connection with the acquisition, financing, construction and completion of
the project generating stations, or the project transmission facilities,
and shall include any indebtedness (including, without limitation any
indebtedness relating to the interest component, the principal or
amortization component and any other component of any purchase price,
amortization, rental or other payment under an installment sale, loan,
lease or similar agreement) relating to the purchase, lease or acquisition
by Corporation of additional facilities under Section 3.06 and
replacements under Section 3.07.
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The Cincinnati Gas & Electric
Company 9.0
Columbus and Southern Ohio
Electric Company 4.3
The Dayton Power and Light
Company 4.9
Indiana & Michigan Electric
Company (1) 7.6
Kentucky Utilities Company 2.5
Louisville Gas and Electric
Company 7.0
Monongahela Power Company (2) 3.5
Ohio Edison Company 14.5
The Ohio Power Company (1) 15.0
Pennsylvania Power Company (3) 2.0
The Potomac Edison Company (2) 2.0
Southern Indiana Gas and
Electric Company 1.5
The Toledo Edison Company 4.0
The West Penn Electric Company 7.0
(1) Subsidiary of American Gas and Electric Company.
(2) Subsidiary of The West Penn Electric Company.
(3) Subsidiary of Ohio Edison Company.
and
WHEREAS, this Agreement is authorized by and executed pursuant to the
Atomic Energy Act of 1946 and the Supplemental Appropriation Act, 1953, in the
interest of the common defense and security;
[Note - Additional whereas clauses were included in the various modifications.]
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
ARTICLE I
FACILITIES TO BE PROVIDED
Section 1.01 GENERATING STATIONS. Corporation shall expeditiously
undertake or cause to be undertaken the design, purchase and construction, and
operation and maintenance, of two steam-electric generating stations; viz.:
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(a) One generating station hereinafter called "Ohio Station" consisting of
five turbo-generators each with an expected capability of 200,000 kw, as
described in Appendix "I" attached hereto and made a part hereof, with all
other necessary equipment, at a location on the Ohio River between Portsmouth
and Marietta, Ohio.
(b) One generating station hereinafter called "Indiana Station" consisting
of six turbo-generators each with an expected capability of 200,000 kw, as
described in Appendix "I", with all other necessary equipment, at a location on
the Ohio River between New Albany and Lawrenceburg, Indiana.
The two above-described generating stations, including lands and land
rights employed in connection there with, are hereinafter called "project
generating stations."
Corporation shall exert its best efforts to have the generating units in
the two project generating stations ready for commercial operation on the
following dates:
Ohio Station Indiana Station
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1st Xxxx 0/0/00 0xx Xxxx 0/0/00
0xx Xxxx 0/0/00 2nd Unit 4/15/55
3rd Unit 9/15/55 3rd Unit 8/1/55
4th Unit 1/1/56 4th Unit 11/1/55
5th Unit 4/1/56 5th Unit 2/15/56
6th Unit 6/1/56
Preliminary operation of each unit expected one month prior to commercial
operating dates.
Section 1.02 TRANSMISSION AND GENERAL PLANT FACILITIES. Corporation shall
expeditiously undertake or cause to be undertaken the design, purchase and
construction, and operation and maintenance, of the necessary transmission and
general plant facilities as described in Appendix "I", to deliver the electric
energy produced at the project generating stations to the point of delivery (as
defined in Section 2.06) for use at the Project and, except as provided in
Section 5.01, the metering facilities required for billing purposes located at
the Project. Such facilities, including lands and land rights used or useful in
connection therewith, are hereinafter
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called "project transmission facilities." Corporation shall use its best efforts
to have the project transmission facilities available for commercial operation
on the following dates:
Ohio Station - Project double circuit line to X-530 Substation....... 8/1/54
Tanners Creek - Switching Station double circuit line................ 10/1/54
Switching Station - Project double circuit line to X-530 Substation.. 10/1/54
Indiana Station - Tanners Creek double circuit line.................. 12/1/54
Indiana Station - Switching Station double circuit line.............. 4/1/55
Ohio Station - Project double circuit line to X-533 Substation....... 6/1/55
Switching Station - Project double circuit line to X-533 Substation.. 8/1/55
Section 1.03 INTERCONNECTIONS WITH SPONSORING COMPANIES. Corporation shall
establish or cause to be established interconnections between the project
generating stations and/or the project transmission facilities and the systems
of certain of the Sponsoring Companies, directly or indirectly, by means of
which there will be afforded additional security of service to the Project from
the systems of Sponsoring Companies, and an outlet for power and energy produced
at the project generating stations and from time to time not needed in the
operation of the Project. Corporation represents that it will enter into
contracts with the Sponsoring Companies (a) to provide power to Corporation over
such interconnections for resale to DOE during the construction period prior to
full scale operation (as defined in Section 2.03) of the project generation
stations, (b) to provide power to Corporation after the beginning of full scale
operation over such interconnections for the purpose of supplying supplemental
power (as defined in Section 2.04) for delivery to DOE whenever required due to
maintenance or emergency outages of Corporation's facilities, and (c) to make
available from the project generating stations to the Sponsoring Companies or
others power that from time to time is not needed by Corporation to furnish the
amount of power to which DOE is entitled hereunder.
Section 1.04 INSTALLATION OF LINE TERMINAL POSITIONS AT DOE SUBSTATIONS.
DOE shall install at its substations at the Project and any additional
substations which DOE may hereafter install and operate at the Project under
such arrangements as shall be mutually agreed upon by Corporation and DOE
(hereinafter called "DOE substations") in addition to the metering facilities
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describe din Section 5.01 of this Agreement, line terminal positions, including
circuit breakers and related equipment for switching and for protection and
operation of the project transmission facilities terminating at the DOE
substations. Such line terminal positions, circuit breakers and related
equipment shall be free of any rental or other charges.
Section 1.05 DESIGN, OPERATION AND MAINTENANCE OF LINE TERMINAL POSITIONS
AND RELATED EQUIPMENT. The Corporation and DOE shall cooperate, to the extent
required, in the coordination of design and operation of the line terminal
positions, circuit breakers, and system relay protection and communication and
telemetering equipment provided by Corporation with similar equipment provided
by DOE at the Project, so as to obtain reliable and satisfactory performance of
such equipment. Corporation, to the extent requested by DOE shall make
necessary tests, adjustments or settings, and repairs to DOE-owned protection
relays, communication and telemetering equipment, and such other related
equipment located at the DOE substations as DOE may install for switching and
for protection and operation of Corporation's or Sponsoring Companies'
transmission lines terminating at the DOE substations. DOE shall reimburse
Corporation for labor, material and other expenses (including applicable over
head costs) incurred by Corporation in providing such services.
Section 1.06 ASSISTANCE IN SECURING PRIORITIES. Upon request by
Corporation, DOE shall use its best efforts to aid Corporation and Sponsoring
Companies to obtain such priorities as may be necessary for the expeditious
construction and operation of the facilities described in Sections 1.01 and 1.02
and of such generating and transmission facilities of the Sponsoring Companies
as DOE deems necessary for the supply of interim power and for additional
security of service to the Project.
Section 1.07 OWNERSHIP OF FACILITIES. All facilities provided by
Corporation in accordance with Sections 1.01, 1.02 and 3.06, including
replacements thereof, shall be the responsibility and remain the property of
Corporation, and all facilities beyond the point of delivery specified in
Section 2.06 shall be the responsibility and remain the property of DOE with
the exception
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of Corporation's meters and Corporation's controls for the 138 kv switching and
transformer station installed at the DOE substations, which shall be the
responsibility and remain the property of Corporation.
The parties hereto may agree in writing that facilities, constructed by
Corporation pursuant to Section 3.06, including replacements thereof, after the
effective date of Modification No. 11 to the Agreement and not located at the
plant sites of the project generating stations or a part of the project
transmission facilities shall be, or become, upon the termination of this
Agreement and on terms and under arrangements specified in such
writing(s), the property of the United States of America.
Section 1.08 EASEMENTS ON PROJECT PROPERTY. DOE shall grant or cause to be
granted to Corporation and to the Sponsoring Companies easements for a term of
fifty years, to enter upon and use such Government-owned land on the Project
property as may be necessary for the construction, operation and maintenance of
Corporation's or any Sponsoring Company's transmission facilities and for
interconnection with other systems. The exact locations, extent of, and other
pertinent details with respect to the easements shall be mutually agreed upon
in writing by DOE and Corporation or such Sponsoring Company. DOE reserves the
right to order removal of any such facilities to another location on the Project
property for the convenience of DOE but in such event DOE shall pay the net cost
of such removal and relocation and shall grant to Corporation or to such
Sponsoring Company similar easements to use such lands as may be necessary in
connection with the relocation. The rights to be granted by DOE to Corporation
and Sponsoring Companies shall be free of any rental or other charges. The
exercise of such rights shall be subject to such security regulations, rules or
instructions as DOE may issue from time to time.
Section 1.09 RIGHTS OF ACCESS. DOE shall grant or cause to be granted to
Corporation and any Sponsoring Company all rights in or on the Project property,
including rights of ingress or egress, necessary for Corporation to fulfill
its responsibilities hereunder for the installation, testing, operation,
maintenance and replacement of facilities or equipment in or on the Project
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property. Upon the termination or cancellation of this Agreement, Corporation or
any Sponsoring Company owning facilities or equipment installed upon or in the
Project property may, at its respective option, and at its expense, remove any
of its facilities from DOE's property.
ARTICLE II
POWER SUPPLY
Section 2.01 POWER REQUIREMENTS. DOE estimates its requirements for
electric power and energy for the Project at the times and amounts set forth in
Columns I and II below. Corporation will be ready and able to supply or cause to
be supplied these requirements in accordance with the provisions of this
Agreement.
Column I Column II
Power Requirements
Date Demand in Megawatts
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10/1/52 0.8
11/1/52 1.0
12/1/52 1.2
1/1/53 1.5
2/1/53 1.8
3/1/53 2.1
4/1/52 2.6
5/1/53 3.3
6/1/53 7.9
7/1/53 16.1
8/1/53 20.5
9/1/53 21.7
10/1/53 22.8
11/1/53 23.9
12/1/53 24.8
1/1/54 25.4
2/1/54 25.8
3/1/54 26.1
4/1/54 26.4
5/1/54 26.6
6/1/54 26.8
7/1/54 27
8/1/54 27
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Column I Column II
Power Requirements
Date Demand in Megawatts
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8/15/54 102
10/1/54 182
11/15/54 262
12/15/54 302
1/1/55 382
2/1/55 457
3/1/55 517
4/1/55 567
4/15/55 597
5/1/55 647
6/1/55 689
7/1/55 723
7/15/55 742
8/1/55 881
8/15/55 895
10/1/55 1025
10/15/55 1036
12/1/55 1174
2/1/56 1310
3/15/56 1444
4/15/56 1554
5/1/56 1556
5/15/56 1666
6/1/56 1667
6/15/56 1760
9/1/56 1781
10/1/56 1790
11/1/56 1800
Section 2.02 INTERIM POWER. Power and energy which will be required by DOE
from Corporation for construction and operation purposes at the Project, from
sources other than the Corporation's project generating stations, during the
period of construction of the project generating stations, is hereinafter
called "interim power." DOE shall pay Corporation for interim power delivered at
the point of delivery at the following rates:
Demand Charge $1.30 per kilowatt per month of measured
maximum kilowatt demand.
Energy Charge 6 xxxxx per kilowatt-hour.
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The maximum amount of interim power that Corporation shall be obligated to
supply to DOE at any time is 465,000 kw.
The maximum demand of interim power supplied prior to commercial operation
of the first generating unit of the project generating stations shall be
measured, in accordance with Section 5.02, directly by meters at the point of
delivery. After such time such maximum demand of interim power shall be computed
as the positive remainder obtained by subtracting from the total net metered
demand at the point of delivery the amount of permanent power (as defined in
Section 2.03) delivered to DOE. The number of kwh supplied as interim power
shall be similarly determined.
Section 2.03 PERMANENT POWER. The term "full scale operation" used herein
shall mean the operation of Corporation's project generating stations after the
date on which all eleven generating units shall have been placed in commercial
operation. Prior to full scale operation Corporation shall make available to DOE
as permanent power for use at the Project the entire net available capacity of
the project generating stations, and the energy associated therewith, less
transmission losses. "During full scale operation Corporation shall make
available to DOE for use at the Project such portion of the net available
capacity of the project generating stations (to the extent that the same as
reduced by transmission losses does not exceed DOE contract demand (as defined
in Section 2.05) at the point of delivery) as shall be required to supply to DOE
the quantities of permanent power and billing kwh of permanent power described
below.
Whenever the total net metered power and energy delivered to DOE at the
point of delivery for any clock hour, plus the transmission losses applicable to
permanent power and energy generated at the project generating stations from
the 345 kv busses of the project generating stations to the point of delivery,
less the scheduled kwh of arranged power, do not exceed the capability of the
project generating stations multiplied by the DOE capacity ratio (as defined in
paragraph 2 of Section 3.04) then in effect, then the total net metered power
and energy delivered to DOE at the point of delivery for such hour, less the
scheduled kwh of arranged power and occasional
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energy, shall be classified as, and are herein referred to as, permanent power
and billing kwh of permanent power, respectively.
Whenever the total net metered power and energy delivered to DOE at the
point of delivery for any clock hour, plus the transmission losses applicable to
permanent power and energy generated at the project generating stations from
the 345 kv busses of the project generating stations to the point of delivery,
less the scheduled kwh of arranged power, exceed the capability of the project
generating stations multiplied by the DOE capacity ratio then in effect, then
the power and energy associated with the capability of the project generating
stations multiplied by the DOE capacity ratio then in effect, less the
transmission losses applicable to permanent power and energy from the 345 kv
busses to the point of delivery and less the scheduled kwh of occasional energy,
shall be classified as, and are herein referred to as, "permanent power" and
"billing kwh of permanent power", respectively.
"Capability of the project generating stations" shall mean, for any clock
hour, the estimated net capability of the project generating stations for such
hour at their 345kv busses determined by such methods and procedures as may be
mutually agreed upon.
The aggregate of the billing kwh of permanent power for all the hours of a
month shall be the billing kwh of permanent power for such month.
The transmission losses from the project generating stations to the point
of delivery applicable to power and energy generated at the project generating
stations shall be computed by methods and procedures mutually agreed upon.
Corporation shall arrange with the Sponsoring Companies that, in the
event of outage of one or more of the elements of the project transmission
facilities between the project generating stations and the point of delivery,
the Sponsoring Companies shall make available any capacity of their transmission
systems that they determine is not at such time needed by them to supply their
customers under commitments made prior thereto, and Corporation shall use such
transmission capacity, for the
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period during which such is not so needed by the Sponsoring Companies, to the
extent required to transmit permanent power to the point of delivery, in which
event appropriate mutually satisfactory adjustments shall be made for the
resulting changes in the transmission losses occurring in the project
transmission facilities and the systems of the Sponsoring Companies.
DOE shall pay Corporation for all permanent power at rates provided in
Article III.
Section 2.04 SUPPLEMENTAL POWER.
1. Whenever, for any clock hour, the aggregate amount of permanent power
and the energy associated therewith furnished by Corporation to DOE pursuant to
Section 2.03 and the scheduled kwh of occasional energy for which provision has
been made by Corporation pursuant to Section 2.09 is insufficient to supply the
part of the DOE contract demand which is then being demanded by DOE, Corporation
shall, unless Corporation shall be excused as a result of conditions
contemplated by Section 7.05 of this Agreement or DOE shall have otherwise
excused Corporation from meeting such demand, furnish additional generating
capacity and the energy associated therewith to DOE at the point of delivery to
make up for such insufficiency in any amount necessary up to a number of
kilowatts which will equal the Applicable Percentage (which percentage, for
purposes of this Section 2.04, shall not exceed thirty percent) of the sum of
(i) the DOE contract demand and (ii) the transmission losses thereon from the
345 kv busses of the project generating stations. At the request of DOE, during
any clock hour Corporation may, at its option, furnish to DOE supplemental
power which, when added to the permanent power and occasional energy then being
furnished, shall exceed the DOE contract demand; provided that, in such event,
DOE shall, if requested to do so by Corporation, forthwith take action to reduce
its power and energy requirements to an amount not exceeding the aggregate
amount which Corporation would otherwise be obligated to supply. Notwithstanding
the foregoing, the aggregate amount of supplemental power and energy which
Corporation shall be obligated to furnish to DOE pursuant to this paragraph 1
during any calendar year shall not exceed the product of 900,000,000 kwh
multiplied by the average DOE capacity ratio of such calendar year, weighted
with respect to the
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periods of time during which DOE capacity ratios were in effect.
2. The additional generating capacity and the energy associated therewith
furnished to DOE pursuant to paragraph 1. above is called "supplemental power."
Corporation shall make no demand charge to DOE for such additional generating
capacity so furnished. However, DOE shall pay Corporation for the energy
associated therewith in accordance with the plan and rate in paragraph 3 below.
3. Whenever the total net metered kwh delivered to DOE at the point of
delivery for any clock hour is in excess of the aggregate amount of the billing
kwh of permanent power, the scheduled kwh of arranged energy and the scheduled
kwh of occasional energy for such hour, such excess, subject to paragraph 4 of
this Section 2.04, shall be classified as, and is herein referred to as,
"delivered kwh of supplemental energy." The aggregate of the delivery kwh of
supplemental energy for all the hours of a month shall be the delivered kwh of
supplemental energy for such month. To the delivered kwh of supplemental energy
so computed for such month shall be added the number of kwh of transmission
losses applicable thereto from the points of generation thereof to the point of
delivery and the sum so computed is herein called the "billing kwh of
supplemental energy". Such transmission losses shall be computed on an
incremental loss basis by such methods and procedures as may be mutually agreed
upon. For the billing kwh of supplemental energy, DOE shall pay Corporation an
amount equal to the "out-of-pocket costs", as defined in Appendix II.
4. Whenever the permanent power and supplemental power and the energy
associated therewith furnished by Corporation to DOE are not sufficient to
supply the part of the DOE contract demand which is then being demanded by DOE,
Corporation will use its best efforts to furnish additional generating capacity
and associated energy to DOE at such rate or rates as may be quoted at such time
by Corporation.
Section 2.05 CONTRACT DEMAND AND CHANGE IN LOAD.
1. The amount of power which Corporation shall be obligated (unless
excused from performing such obligation
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as a result of delivery by DOE of a notice of termination or reduction pursuant
to Article VI of this Agreement or otherwise) to deliver at the point of
delivery under this Agreement and the amount of power which DOE shall be
obligated to purchase at said point of delivery (unless and to the extent such
requirement shall be waived in writing by Corporation at the request of DOE), is
herein referred to as the "DOE contract demand" and shall, commencing on the
effective date of Modification No. 12 to this Agreement, and for the remainder
of the term of this Agreement, except as otherwise provided in clause (A) and in
clause (B) of this paragraph 1, be that amount (such amount being herein
referred to as the "Full Contract Quantity"), which, when added to the sum of
(i) the kilowatt transmission losses thereon from the 345-kv busses of the
project generating stations to the point of delivery, and (ii) the product of
the Applicable Percentage and the sum of such amount and (i), shall equal the
established capability of the project generating stations as determined from
time to time in accordance with Appendix III hereto; provided, however (A)
that, commencing with the effective date of Modification No. 12 to this
Agreement and during the periods indicated, the DOE contract demand shall be, in
lieu of the Full Contract Quantity, the respective amounts specified, in the
tabulation below:
Period (Inclusive Dates) Megawatts
------------------------ ---------
Effective Date of Modification
No. 12 - September 30, 1982 785
Oct. 1, 1982 - Sept. 30, 1983 1260
Oct. 1, 1983 - Sept. 30, 1984 1260
Oct. 1, 1984 - Sept. 30, 1985 1260
Oct. 1, 1985 - Sept. 30, 1986 1260
Oct. 1, 1986 - Sept. 30, 1987 1340
Oct. 1, 1987 - Sept. 30, 1988 1660
and provided further (B) that (a) notwithstanding anything contained above in
clause (A) of this paragraph 1, Corporation shall be entitled, in its sole
discretion, at any time and from time to time during the term of this Agreement,
upon delivery by Corporation to DOE of a notice in writing at least 60 days
(unless and to the extent DOE shall waive such notice requirement in writing;
provided, however, that if Corporation shall be advised that it will be subject
to a fine or penalty if
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it fails to limit the generation at either or both of the project generating
stations for the purpose of limiting the emission of pollutants or the discharge
of wastes, such notice period may, at the option of Corporation, without the
consent of or any waiver by DOE, be less than 60 days but not less than 10
days), prior to the effective date of the increase specified in such notice
(the effective date so specified in such notice being herein called the
"effective Date") to increase the DOE contract demand from the amount which, had
Corporation not elected to deliver such notice, would otherwise be in effect on
said Effective Date as the DOE contract demand, (1) by such amount, and (2) for
such period commencing on said Effective Date (which may occur within a period
covered by a prior notice) and extending to such date at least 90 days
subsequent to said Effective Date, as shall be specified in such written notice,
and (b) in the event that any of the events specified in clause (i), clause
(ii), clause (iii) or clause (iv) of Section 6.05 of this Agreement shall occur
on the effective date of Modification No. 14 to this Agreement or thereafter
during the term of this Agreement, then, and in such event, if Corporation so
elects pursuant to Section 6.05, for the purpose of computing the demand charges
or modified demand charges payable by DOE as cancellation costs pursuant to
Section 6.02 of this Agreement, and for all other purposes of this Agreement,
the DOE contract demand in effect on the date of the occurrence of such event
and thereafter shall be, and be deemed to be, the Full Contract Quantity; and
provided further (C) that at no time during the term of this Agreement shall the
DOE contract demand be deemed, for any purpose of this Agreement, to exceed the
Full Contract Quantity.
2. DOE shall have the right at any time to sell or provide permanent or
supplemental power and energy to which it is entitled hereunder to its vendors,
contractors and concessionaires for their consumption at or in the vicinity of
the Project. In addition, DOE shall have the right at any time to sell or
provide permanent or supplemental power and energy in an amount up to 2,500 kw
to its tenants for their consumption at or in the vicinity of the Project;
provided, however, that DOE's right to sell to its tenant, the United States
Enrichment Corporation ("USEC"), a corporation established by the Energy Policy
Act of 1992, for consumption at the Project, power and energy purchased from
Corporation shall not be lim-
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ited in amount and provided further that DOE's right to sell to its tenant USEC
for consumption at DOE's uranium enrichment facility near Paducah, Kentucky,
power and energy purchased from Corporation shall not be limited in amount
except as provided in paragraph 3 of this Section 2.05.
3. Except as hereinafter provided, DOE shall have the right, at any time
during the term of this Agreement, to the extent that power and energy shall no
longer be required at the Project, to transfer all or part of the power and
energy to which DOE is entitled hereunder in a block or blocks not less than
20,000 kw in any one case to supply a Governmental requirement at DOE's uranium
enrichment facility near Paducah, Kentucky for consumption in operations at
such installation. In the event that DOE desires to exercise such right, it
shall give notice of its intention to Corporation. If arrangements are mutually
agreed upon for such transfer over transmission facilities provided by
Corporation, such power and energy shall be delivered by Corporation to the
point agreed upon at the rates provided in this Agreement, adjusted to reflect
any increase in cost to Corporation as well as applicable transmission charges.
If, however, within 60 days after receipt of the notice provided for in this
paragraph, Corporation undertakes to release DOE from liability with respect to
charges payable by DOE with respect to such power and energy as of (a) one year
after such notice, or (b) the day on which such power and energy could have been
used at the Paducah facility, whichever is later, or (c) as of such earlier
date, if any, when Corporation can absorb such power and energy in its system or
in the systems of Sponsoring Companies, then Corporation shall, as of the date
when DOE is released from such liability, have the right to dispose of such
power and energy in any manner it may determine.
[Paragraph 4 deleted by Mod. No. 14]
5. If arrangements are mutually agreed upon, DOE shall have the right, at
any time during the term of this Agreement, to transfer all or part of the power
and energy to which DOE is entitled under this Agreement to a separate delivery
point at the Project site for use by DOE in the operation of its facilities at
the Project site and such power and energy shall be delivered by Corporation to
DOE at the delivery point so agreed upon
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at the rates provided in this Agreement, adjusted to reflect any change in the
cost to Corporation resulting from such delivery.
Section 2.06 CHARACTERISTICS OF SUPPLY AND POINT OF DELIVERY. All electric
service delivered hereunder shall be three phase, 60-Hertz, at a nominal voltage
of 345 kv. Corporation and DOE shall cooperate with each other to regulate the
voltage at the DOE 345 kv substation busses at the Project so that the voltage
at such substation busses shall not exceed 354 kv and shall not be less than 313
kv. DOE shall take such action as shall be necessary to limit the demand it
imposes upon Corporation so that the demand imposed on either of DOE's X-530 or
X-533 substations shall not exceed, at any time (i) 1,630,000 kilowatts or (ii)
such lesser amount, which shall at least equal 1,500,000 kilowatts, as
Corporation may from time to time specify. Electric energy shall be delivered at
the substation side of the 345 kv transmission line dead-end insulator
assemblies on the DOE 345 kv bus structures, the substation side of the 34 kv
tie line dead-end insulator assemblies on the series reactor bus structures, and
the X-530 substation side of Corporation's 345 kv disconnecting switch located
in the 345 kv lead from the 345/138 kv auto-transformer adjacent to substation
X-530 and such points taken collectively are herein called the "point of
delivery".
Section 2.07 POWER FACTOR. DOE shall provide power factor corrective
synchronous condenser or other reactive capacity sufficient to correct the net
power factor of the load at the point of delivery to approximately unity for
interim power deliveries and to not less than 94.7 per cent lagging for
permanent power deliveries. DOE and Corporation shall cooperate with each other
and with Sponsoring Companies in the operation of such power factor corrective
equipment of DOE and in the operation of facilities of Corporation and the
Sponsoring Companies to the end that mutually satisfactory power factor
conditions shall be maintained.
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Section 2.08 ARRANGED POWER.
1. In the event that permanent power (together with any occasional energy)
and supplemental power, and the energy associated therewith, to be supplied by
Corporation to DOE will not be sufficient to supply the DOE requirements for
electric power at the Project, at the request of DOE and upon reasonable notice,
and provided that arrangements for the supply to Corporation of other power and
energy from sources other than the project generating stations have been
effected, Corporation will schedule the delivery of such other power and
associated energy to DOE, such other power being herein called "arranged power"
and the energy associated therewith scheduled to be delivered to the point of
delivery being herein called "scheduled kwh of arranged energy".
2. The aggregate of the scheduled kwh of arranged energy for all the hours
of a month shall be the scheduled kwh of arranged energy for such month. To the
scheduled kwh of arranged energy so computed for such month shall be added the
number of kwh of transmission losses applicable thereto computed by such methods
and procedures as may be mutually agreed upon, and the sum so computed is herein
called the "billing kwh of arranged energy".
3. DOE shall pay to Corporation for arranged power and/or for billing kwh
of arranged energy during any month an amount equal to the "out-of-pocket costs
of arranged power," determined as provided in paragraph 5 of this Section 2.08,
plus a charge for difficult to quantify costs of 1 mill per scheduled kwh of
arranged energy. No portion of such 1 mill charge for difficult to quantify
costs shall be included in the computations under Sections 3.03 and 3.04.
4. Corporation proposes to purchase, when and if requested by DOE,
arranged power, and the energy associated therewith, from systems having power
and energy available from sources other than the project generating stations,
including purchases from the systems of one or more of the Sponsoring Companies.
DOE recognizes that one or more of the systems from which Corporation proposes
from time to time to purchase arranged power, and the energy associated
therewith, are required to file, with respect to such service, rate schedules
and/or tariffs,
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with the Federal Energy Regulatory Commission and/or other regulatory bodies
having jurisdiction, and may from time to time file superseding rate schedules
and/or tariffs, which may or may not be made effective by the Federal Energy
Regulatory Commission or such regulatory bodies as so filed, and, therefore,
Corporation cannot assure DOE that arranged power, and the energy associated
therewith, will be supplied by Corporation to DOE under this Section 2.08 in any
specific amount or at any specific rate for any particular period of time.
Corporation will, however, use its best efforts to secure, and to keep DOE
informed as to prevailing, and anticipated changes in, quantities of and
proposed rates for, power and the energy associated therewith, which Corporation
can purchase for delivery to DOE as arranged power and to cooperate with DOE, to
the extent such cooperation is in the judgment of Corporation feasible and in
the interests of Corporation, in the purchase of arranged power when requested
by DOE with the objective that DOE will be supplied, with flexibility as to
source if practical, a reliable and adequate amount of arranged power, and the
energy associated therewith, on just and reasonable terms.
5. "Out-of-pocket costs of arranged power", means all costs which
Corporation shall incur in arranging for such arranged power, and the energy
associated therewith, taking into account transmission losses, if any, that
would not have been incurred if arrangements for such arranged power and energy
had not been made.
Section 2.09 OCCASIONAL ENERGY.
1. From time to time energy may be available to Corporation for delivery
to DOE from systems having energy available from sources other than the project
generating stations, including the systems of one or more of the Sponsoring
Companies, at a cost to DOE which Corporation believes would be lower than the
energy charge for billing kwh of permanent power which would otherwise be
supplied to DOE from the project generating stations. Provided that arrangements
for the supply to Corporation of such energy have been effected, Corporation
may elect, in its sole judgment, to schedule the delivery of such energy to DOE
in lieu of energy associated with permanent power. Such energy is called
"occasional energy" in this Agreement. The occasional energy
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scheduled to be delivered to the point of delivery is herein called "scheduled
kwh of occasional energy".
2. The aggregate of the scheduled kwh of occasional energy for all the
hours of a month shall be the scheduled kwh of occasional energy for such month.
To the scheduled kwh of occasional energy so computed for such month shall be
added the number of kwh of transmission losses applicable thereto, computed by
such methods and procedures as may be mutually agreed upon, and the sum so
computed is herein called the "billing kwh of occasional energy".
3. DOE shall pay Corporation for billing kwh of occasional energy during
any month an amount equal to the "out-of-pocket costs of occasional energy",
determined as provided in paragraph 5 of this Section 2.09.
4. Corporation proposes to use its best efforts to purchase occasional
energy from systems having energy available from sources other than the project
generating stations, including purchases from the systems of one or more of the
Sponsoring Companies. DOE recognizes that one or more of the systems from which
Corporation proposes from time to time to purchase occasional energy are
required to file, with respect to such service, rate schedules and/or tariffs
with the Federal Energy Regulatory Commission and/or other regulatory bodies
having jurisdiction, and may from time to time file superseding rate schedules
and/or tariffs, which may or may not be made effective by the Federal Energy
Regulatory Commission or such regulatory bodies as so filed, and, therefore,
Corporation cannot assure DOE that occasional energy will be supplied by
Corporation to DOE under this Section 2.09 in any specific amount or at any
specific rate for any particular period of time. Corporation will, however, use
its best efforts to secure, and to keep DOE informed as to prevailing, and
anticipated changes in, quantities of and proposed rates for, the energy which
Corporation can purchase for delivery to DOE as occasional energy and to
cooperate with DOE, to the extent such cooperation is in the judgment of
Corporation feasible and in the interests of Corporation, in the purchase of
occasional energy when requested by DOE with the objective that DOE will be
supplied, with flexibility as to source if practical, a reliable and adequate
amount of occasional energy on just and reasonable terms.
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5. "Out-of-pocket costs of occasional energy" means all costs which
Corporation shall incur in providing for such occasional energy, taking into
account transmission losses, if any, that would not have been incurred if such
occasional energy had not been scheduled.
Section 2.10 TRANSMISSION REVENUES. From time to time Corporation may
receive payments from other utilities or entities for the transmission over
transmission facilities of Corporation of electric power and energy not
associated with the Project. In such event, no portion of the payments received
by Corporation for the use of Corporation's transmission facilities shall be
included in the computations under Sections 3.03 and 3.04.
Section 2.11 TRANSMISSION PAYMENTS. In the event that Corporation is
required to make payments to other utilities and/or entities of transmission or
transmission-related charges for or in connection with the delivery of
electric power and energy to DOE under this Agreement, which charges would not,
pursuant to any other provision of this Agreement, be billed by Corporation to,
and paid by, DOE, DOE shall pay to Corporation the full amount paid by
Corporation for such charges; provided, however, that such amount shall be
reduced, to not less than zero, by any amount which Corporation receives from
other utilities and/or entities under Section 2.10 during the calendar year when
the obligation to make payments to other utilities and/or entities arises.
ARTICLE III
Rates For Permanent Power
Section 3.01 PROVISIONAL RATE FOR PERMANENT POWER DURING FULL SCALE
OPERATION. The provisional rate for permanent power, furnished at the point of
delivery, for the DOE contract demand during full scale operation, shall consist
of:
(a) Demand Charge
A provisional semi-monthly demand charge, to be billed to DOE
semi-monthly, for the period ending on the
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fifteenth day or the last day of each calendar month, as the case may be, shall
be separately computed upon the basis of all costs adjusted pursuant to Section
3.04 of this Agreement (other than interest and principal components of
purchase price payments under an installment sale or similar agreement required
to be paid by DOE directly to a trustee as provided in subclauses (i) and (iii)
of clause (a) of paragraph 3 of Section 3.04 of this Agreement) for the most
recent calendar year preceding the calendar month for which such demand charge
is to be billed. The provisional semi-monthly demand charge for each
semi-monthly period shall be determined by dividing the total of the costs for
such preceding calendar year by 24 and multiplying the resulting amount by the
DOE capacity ratio in effect for such semi-monthly period. Such provisional
semi-monthly demand charge shall be subject to adjustment as provided in Section
3.04 of this Agreement. The two provisional semi-monthly demand charges for any
calendar month, as so adjusted, shall constitute the minimum monthly charge for
such month to DOE under this Agreement; and
(b) Energy Charge
A provisional semi-monthly energy charge shall be separately computed for
each semi-monthly period and shall be determined by multiplying (i) the system
heat rate of the project generating stations for the twelfth full calendar month
preceding the beginning of the semi-monthly billing period, expressed in terms
of Btu per kwh of net generation by (ii) the average price of the coal (and
other fuel) in storage at the project generating stations at the beginning of
the calendar month in which the services billed are rendered, expressed in terms
of cost per Btu, and then (iii) multiplying such product by billing kwh of
permanent power (determined as provided in Section 2.03 of this Agreement)
delivered to DOE during the semi-monthly period which is to be billed. The two
provisional semi-monthly energy charges for any calendar month shall be subject
to adjustment as provided in Section 3.03 of this Agreement.
Section 3.02 RATE FOR PERMANENT POWER PRIOR TO FULL SCALE OPERATION.
During the period between the beginning of commercial operation of the first
unit of Corporation's project generating stations and the beginning of full
scale operation, the rate for permanent
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power furnished at the point of delivery shall consist of:
(a) Monthly Demand Charge
An amount equal to the sum of the following items for the month or portion
thereof included in such period prior to full scale operation (i) the total
fixed charges of Corporation of the nature described in paragraph 3.(a) of
Section 3.04 (including, in lieu of the amount specified in clause (iii) of
said paragraph 3.(a) an amount equal to 2 1/2% on an annual basis of the
aggregate amount in Corporation's Accounts 301 to 393, inclusive, of the Uniform
System of Accounts prescribed by the Federal Power Commission for Public
Utilities and Licensees, as in effect on July 1, 1952 (hereinafter called the
"Uniform System of Accounts")); (ii) the total operating expenses of
Corporation of the nature described in paragraph 3.(b) of Section 3.04; (iii)
the total amount of expenses of Corporation for taxes and insurance of the
nature described in paragraph 3.(c) of Section 3.04, and (iv) an amount computed
as provided in paragraph 3.(d) of Section 3.04 upon that portion of the
aggregate par value of the capital stock of Ohio Valley Electric Corporation
then issued and outstanding which is properly allocable, as determined upon a
basis consistent with generally accepted accounting principles, to the aggregate
amount in Corporation's Accounts 301 to 393, inclusive, of the Uniform System of
Accounts and working capital required for the operation of the facilities then
in commercial operation. Such amount shall be decreased by an amount equal to
the aggregate of the credits required for such month pursuant to the provisions
of paragraph 6. of Section 3.08.
(b) Monthly Energy Charge
An amount equal to a base energy rate of 1.702 xxxxx per kwh multiplied by
the billing kwh of permanent power. Such monthly energy charge shall be subject
to adjustment as set forth in Section 3.03.
Section 3.03 ADJUSTMENT OF ENERGY CHARGE. The provisional semi-monthly
energy charges for any calendar month specified in Section 3.01 shall be
adjusted so that the sum of such charges, as adjusted, for such month shall
equal the product of the total net charges for such
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month at the project generating stations to Account 703 (Fuel) of the Uniform
System of Accounts, and the ratio of (a) the billing kwh of permanent power for
such month plus the transmission losses thereon from the 345 kv busses of the
project generating stations to the point of delivery, to (b) the total net kwh
generated at the project generating stations during such month corrected for
losses to the 345 kv busses thereof. Such losses shall be determined by such
methods and procedures as may be mutually agreed upon.
Section 3.04 ADJUSTMENT OF DEMAND CHARGE. The provisional semi-monthly
demand charges for any calendar month specified in Section 3.01 shall be
adjusted for such month in the following manner:
1. The term "established capability" of the project generating stations
as used herein means the total net capability of the project generating stations
(with all eleven generating units operating) at their 345 kv busses, determined
in accordance with the procedures described in Appendix III.
2. The term "DOE capacity ratio" as used herein means the ratio of (a) the
sum of (i) the DOE contract demand, (ii) the kw transmission losses thereon from
the 345 kv busses of the project generating stations, determined by such
methods and procedures as may be mutually agreed upon, and (iii) the Applicable
Percentage of the sum of items (i) and (ii) as an allowance for reserve
generating capacity, to (b) the established capability of the project generating
stations; provided, however, that the DOE capacity ratio shall not exceed unity.
The term "Applicable Percentage", referred to in paragraph 1 of Section
2.04, in paragraph 1 of Section 2.05, and in paragraph 2 of this Section 3.04,
shall be, on any particular date, fifteen per cent (15%) plus 1.5 percentage
points for each whole percentage point by which the average availability of
Corporation's generating capacity during the calendar year immediately
preceding such particular date, determined as provided in Appendix VI, was
less than 90 percent.
3. As soon as practicable after the close of each calendar month the
following components of costs of Corporation (eliminating any duplication of
costs which
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might otherwise be reflected among the corporate entities comprising
Corporation) applicable to the ownership, operation and maintenance of the
facilities described in Section 1.01, 1.01, 3.06 and 3.07 for such month shall,
except as otherwise provided in Sections 3.06 and 3.07, be determined and
recorded:
(a) Component (A) shall consist of fixed charges made up of (i) the
amounts of interest properly charge able to Accounts 530, 534 and 535, less the
amount thereof credited to Account 536, of the Uniform System of Accounts,
including the interest component of any purchase price, interest, rental or
other payment under an installment sale, loan, lease or similar agreement
relating to the purchase, lease or acquisition by Corporation of additional
facilities under Section 3.06 and replacements under Section 3.07 (which, if
the right to receive such interest component under such installment sale, loan,
lease or similar agreement shall have been assigned by the seller, lender,
lessor or other party to any such similar agreement with the written consent of
Corporation and DOE, to a trustee under an indenture pursuant to which bonds or
other debt securities have been issued and sold, shall be paid by DOE directly
to such assignee rather than to Corporation), (ii) the amounts of amortization
of debt discount or premium and expenses properly chargeable to Accounts 531 and
532, and (iii) an amount equal to the sum of (I) the applicable amount of the
debt amortization component for such month required to retire the total amount
of indebtedness of Corporation issued and outstanding at the beginning of full
scale operation on a twenty-five year semi-annual payment level debt sinking
fund basis (computed with an interest component of 3-3/4% per annum from the
beginning of full scale operation), (II) the amortization requirement for such
month in respect of indebtedness (including the principal or amortization
component of any purchase price, amortization, rental or other payment under an
installment sale, loan, lease or similar agreement relating to the purchase,
lease or acquisition by Corporation of additional facilities under Section 3.06
and replacements under Section 3.07, which, if the right to receive such
principal or amortization component under such installment sale, loan, lease or
similar agreement shall have been assigned by the seller, lender, lessor or
other party to any such similar agreement, with the written consent of
Corporation and DOE, to a trustee under an
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indenture pursuant to which bonds or other debt securities have been issued and
sold, shall be paid by DOE directly to such assignee rather than to Corporation)
of Corporation incurred in respect of facilities referred to in Sections 3.06
and 3.07, the cost of which has been financed by Corporation from sources of
capital funds other than DOE as contemplated by such Sections 3.06 and 3.07, and
(III) to the extent not provided for pursuant to clause (II) of this clause
(iii), an appropriate allowance for depreciation of the facilities referred to
in Sections 3.06 and 3.07, the cost of which has been financed by Corporation
from sources of capital funds other than DOE as contemplated by such Sections
3.06 and 3.07.
(b) Component (B) shall consist of the total operating expenses for
labor, maintenance, materials, supplies, services, insurance, administrative
and general expense, etc., properly chargeable to the Operating Expense Accounts
of the Uniform System of Accounts (exclusive of (i) Accounts 703, 738, 739,
785, 786, 787, 788 and 789 of the Uniform System of Accounts and (ii) any
expenses for which DOE reimburses Corporation under Sections 1.05, 4.02 and
4.08), and additional amounts which, after provision for all estimated Federal
income taxes on such amounts, shall equal any amounts paid or payable by
Corporation as fines or penalties with respect to occasions (before or after the
effective date of Modification No. 11 to this Agreement) where it is asserted
that Corporation failed to comply with a law or regulation relating to the
emission of pollutants or the discharge of wastes; provided, however, that the
cost of any insurance carried solely for the benefit of DOE at its request shall
be paid for solely by DOE unless otherwise agreed upon from time to time by the
parties hereto.
(c) Component (C) shall consist of the total expenses for taxes,
including all taxes on income (other than (i) Federal income taxes, (ii) any
taxes that are now or may hereafter be levied based on revenue, energy generated
or sold or on any other basis capable of direct distribution, the cost of which
taxes shall be allocated directly to DOE and Corporation in amounts reflecting
the proper share of each, and DOE shall pay to Corporation its share thereof,
(iii) taxes arising from payments received by Corporation for difficult to
quantify costs under Section 2.08 and (iv) taxes arising from payments
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received by Corporation for use of Corporation's transmission facilities under
Section 2.10), properly charge able to Account 507 of the Uniform System of
Accounts; provided, however, that any taxes for which DOE reimburses
Corporation under Sections 1.05, 3.06, 3.07, 4.02, and 4.08 shall not be
included in Component (C)."
(d) Component (D) shall consist of an amount equal to the product of
$2.089 multiplied by the total number of shares of capital stock of the par
value of $100 per share of Ohio Valley Electric Corporation which shall have
been issued and which are outstanding on the last day of such month.
4. The two provisional semi-monthly demand charges for such calendar month
shall be adjusted so that the sum of such charges, as adjusted, shall equal the
product of the total of the costs specified in paragraph 3 of this Section 3.04
multiplied by the average DOE capacity ratio in effect for such month, weighted
with respect to the periods of time during which DOE capacity ratios were in
effect; provided, however, that the adjustment of the provisional semi-monthly
demand charges for such month shall be made on the basis that the average DOE
capacity ratio in effect for such month equalled unity as to amounts, if any,
specified in paragraph 3 of this Section 3.04 with respect to the cost of
facilities which are referred to in Sections 3.06 and 3.07, which costs are
incurred after October 14, 1977, whether or not the purchase and installation of
such facilities occurred in whole or in part prior to such date.
5. After the close of each calendar year a further adjustment shall be
made by multiplying the total of the costs specified in paragraph 3 of this
Section 3.04 for the entire year by the average DOE capacity ratio for such
year, weighted with respect to the periods of time during which DOE capacity
ratios were in effect, and crediting or charging DOE, as the case may be, with
the difference between the resulting product and the aggregate of the amounts
of the provisional semi-monthly demand charges for such year, after adjustment
of such amounts pursuant to paragraph 4 of this Section 3.04; provided, however,
that such further adjustment shall be made on the basis that the average DOE
capacity ratio for such year equalled unity as to amounts, if any, specified in
paragraph 3 of this Section 3.04 with respect to the
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cost of facilities which are referred to in Sections 3.06 and 3.07, which costs
are incurred after October 14, 1977 whether or not the purchase and installation
of such facilities occurred in whole or in part prior to such date.
6. Commencing with the month in which Modification No. 12 to the DOE Power
Agreement shall become effective and for each month thereafter during the term
of this Agreement, Corporation shall, to the extent it sells power to one or
more Sponsoring Companies pursuant to paragraph 1 of Section 3.08 of this
Agreement, remit to DOE an amount equal to the Sponsoring Companies' Share of
the Pollution Control Facility Payment applicable to such month or the next
succeeding month pursuant to paragraph 4 of Section 3.04, collected such amount
for such month from one or more Sponsoring Companies pursuant to Section 3.08,
the amount so collected shall (in lieu of being remitted by Corporation to DOE)
be reflected as a credit to, or adjustment of, the demand charges payable by DOE
to Corporation pursuant to Section 3.04, collected such amount for such month
from one or more Sponsoring Companies pursuant to Section 3.08, the amount so
collected shall (in lieu of being remitted by Corporation to DOE) be reflected
as a credit to, or adjustment of, the demand charges payable by DOE to
Corporation pursuant to Section 3.04 of this Agreement; provided, however, that
nothing contained in this paragraph 6 shall relieve, or be deemed to relieve,
DOE from any obligation it may have under paragraph 3(a) of Section 3.04 of this
Agreement to pay any amount referred to in said paragraph 3(a) directly to a
trustee, as assignee, under an indenture pursuant to which bonds or other debt
securities have been issued and sold.
[Paragraph 7 deleted as of August 1, 1981]
8. The amount provided for Component (D) in clause (d) of paragraph 3 of
this Section 3.04 as amended effective as of January 1, 1971 shall be subject to
equitable adjustment (to be made in accordance with the standard that such
Component (D) is designed to provide Corporation with a reasonable return before
Federal income taxes, but taking into account the rate thereof which can
reasonably be estimated to be applicable in the current period and the
deductions which will be available to Corporation for such period, on the
aggregate amounts
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recorded from time to time in Accounts 200, 203, 270 and 271 of the Uniform
System of Accounts) by mutual agreement of Corporation and DOE on January 1,
1971, and on the first day of each calendar quarter thereafter during the term
of this Agreement to reflect prospectively any changes which has occurred in the
circumstances of Corporation. In the event Corporation or DOE shall propose at
adjustment pursuant to this paragraph 8, which shall not be agreed to by the
other party hereto, Corporation or DOE may apply for the determination, after
the expiration of 30 days from the giving of notice thereof or such longer or
shorter period as the parties hereto may agree, by the Review Board hereinafter
described of whether an adjustment shall be made and the amount thereof. Such
determination shall be conducted in accordance with the applicable rules of
procedure for contract disputes of said Review Board, or in the absence of such
rules of procedure, in accordance with such procedure as the Review Board shall
fix. The Review Board shall as promptly as feasible determine such matter by a
written decision, to be made in accordance with the standards specified in this
paragraph 8, which shall include a finding that such decision is consistent
with the provisions hereof. A copy of such decision shall be delivered to each
of the parties hereto. The decision of the Review Board in such determination
shall be final and conclusive unless determined by a court of competent
jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly
erroneous as necessarily to imply bad faith, or not supported by substantial
evidence; provided, that nothing in this contract shall be construed as making
final the decision of any administrative official, representative, or board or
any arbitrator on a question of law. In connection with any proceeding for
determination under this paragraph 8. Corporation and DOE shall each be afforded
an opportunity to be heard and to offer evidence. In the event that an
adjustment proposed by Corporation or DOE to take effect on a future date which
is the first day of a calendar quarter is the subject of mutual agreement or a
determination by the Review Board, such adjustment shall be made effective as of
such first day of a calendar quarter, notwithstanding that such mutual agreement
or determination by the Review Board shall occur before or after such first day
of a calendar quarter.
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Prior to the effectiveness of any assignment of this Agreement by DOE, the
"Review Board," for the purposes of this paragraph 8, shall be the DOE Board of
Contract Appeals. Thereafter the Review Board shall consist of a board of three
arbitrators. Either party hereto applying for determination by arbitration may,
after expiration of the period heretofore described in this paragraph 8, by
written notice to the other appoint an arbitrator to act hereunder with respect
to the determination of such matter. Within fifteen days from receipt of such
notice of appointment of an arbitrator the other party shall appoint an
arbitrator and given written notice of such appointment to the first party. The
arbitrators so appointed shall within a period of forty-five days after the date
of appointment of the second arbitrator agree upon the appointment of a third
arbitrator who shall be a person engaged in engineering work or business
relating to the production or transmission of electric power and energy. Should
the arbitrators appointed by the parties be unable to agree upon the selection
of a third arbitrator, or should there for any other reason be a failure to
appoint three arbitrators as contemplated by this paragraph 8, either party
may apply to any federal court which would have jurisdiction of an action
between the parties arising out of this contract for the appointment of an
arbitrator or arbitrators, pursuant to Section 5 of the Federal Arbitration Act
(Title 9 U.S. Code, Section 5). The compensation and expenses of the arbitrators
in connection with the performance of their duties hereunder shall be paid in
equal proportions by each of the parties hereto unless the arbitrators otherwise
specify in their decision. Promptly after the selection of the third arbitrator,
as above provided, the arbitrators shall proceed to hear and determine, as
promptly as feasible, the matter for the determination of which they have been
appointed. The decision of two or more of the arbitrators shall be final and
binding upon the parties hereto except to the extent provided heretofore in this
paragraph 8 with respect to review by a court of competent jurisdiction.
If under the provisions hereof the matter so determined by a decision of
the Review Board requires a modification or amendment of this Agreement, the
parties agree to incorporate such decision in an appropriate modification or
amendment hereto, in such form and manner as the Review Board shall designate if
the same cannot be
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agreed upon by the parties hereto, and to execute an appropriate instrument
setting forth such modification or amendment. Either party may at any time apply
to an appropriate court for entry of judgment upon a final award of the Review
Board.
Any modification or amendment to this Agreement effected pursuant to this
paragraph 8 shall provide that it shall not become effective until the last day
of the month in which the last of the following events shall occur:
(a) All applicable requirements as to approval by or filings with
regulatory agencies having jurisdiction in respect of the transactions
constituting the subject matter of such modification or amendment
(including expiration of any specified period after the date of any
filing) shall have been complied with and all requisite approvals of such
regulatory agencies shall be in full force and effect and none shall be
the subject of attack on appeal, by direct proceeding or otherwise, and
(except to the extent that Corporation shall waive such condition) any
requisite approvals of regulatory agencies having such jurisdiction shall
have become final and not subject to judicial review in any court; and
(b) All of the parties to the Inter-Company Power Agreement, dated
July 10, 1953, as amended, shall have executed and delivered (i) any
necessary consent to such modification or amendment of this Agreement and
(ii) any modification to the InterCompany Power Agreement which shall be
appropriate in the circumstances, and any such consent and/or modification
shall have become effective; and
(c) Corporation shall be in a position to effect compliance under
the instruments governing the outstanding indebtedness of Corporation with
respect to such modification or amendment to the Agreement and with
respect to any consent and/or modification to the Inter-Company Power
Agreement referred to in clause (b) above, including, to the extent
required, the delivery to the Corporate Trustee under the Mortgage and
Deed of Trust of Ohio Valley Electric Corporation of an opinion or
certificate of an independent engineer to the effect that
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such amendment is desirable in the business of Corporation, is not
prejudicial to the interests of the holders of the then outstanding
indebtedness of Corporation and will not impair any security therefor.
Section 3.05 CAPITAL OF CORPORATION. The total capital of Corporation made
up of outstanding capital stock and indebtedness shall not exceed Corporation's
requirements for (a) the cost of Corporation's facilities described in Sections
1.01 and 1.02, which shall include all components of cost of organization of
Corporation and construction of such facilities, including interest during
construction, as provided in Accounts 301 through 393 and the
Instructions--Electric Plant Accounts of the Uniform System of Accounts, (b) the
cost of any additional project facilities that may be installed pursuant to
Section 3.06 hereof, (c) that part of the cost of replacements as provided for
in Section 3.07 not borne by DOE, (d) costs incident to financing, and (e)
necessary working capital. It is the intent of the parties hereto that working
capital be kept to a minimum consistent with the requirements of Corporation to
enable Corporation to carry on its business of operating the facilities
referred to in this Section 3.05 with reasonable smoothness and dispatch.
The initial amount of capital stock of Corporation to be issued prior to
full scale operation shall not exceed (i) an aggregate par value of $20,000,000
if the initial indebtedness of Corporation issued prior to full scale operation
does not exceed $420,000,000 or (ii) an aggregate par value equal to 5% of the
total initial capital (consisting of indebtedness of Corporation and its capital
stock) issued prior to full scale operation of such initial indebtedness of
Corporation exceeds $420,000,000.
Section 3.06 ADDITIONAL FACILITIES. In connection with the operation of
the Paducah or Portsmouth installations of DOE, as a part of the cost structure
of this Agreement and for the purpose of providing funds in the amount necessary
to cover the entire cost to Corporation of additional facilities and/or spare
parts associated with the provision of electric utility services to DOE,
including, without limitation, such facilities as fuel processing plants, flue
gas or waste product processing
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facilities and additional generating units or stations at the location of the
existing facilities or elsewhere, as shall be purchased and/or installed or
being installed by Corporation pursuant to the provisions of this Section 3.06,
DOE shall pay to Corporation amounts sufficient, after provision for any
estimated income taxes that may be applicable thereto, to enable Corporation to
cover the entire cost of such additional facilities and/or spare parts;
provided, however, that neither any single additional facility and/or spare
part costing more than $100,000 nor any single additional facility or spare part
costing less than $100,000 ("small additional facility or spare part") after the
total cost of all small additional facilities or spare parts in one calendar
year has reached $5 million shall be purchased or installed by Corporation
pursuant to this Section 3.06 without the prior written approval of DOE unless
the purchase or installation of such additional facilities and/or spare parts is
ordered or required by any regulatory body having jurisdiction over the emission
of pollutants or the discharge of wastes by Corporation or is reasonably
required to enable Corporation to limit the emission of pollutants or the
discharge of wastes or is otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the protection of the
environment.
Corporation agrees, upon the request of DOE, to use its best efforts to
arrange, to the extent that, in Corporation's judgment, such financing is
feasible, financing for a period not to extend beyond December 31, 2005, from
sources of capital funds other than DOE of the cost of each additional facility
and/or spare part which has a cost in excess of $5,000,000, or such lesser
amount as may be specified by Corporation, and also agrees where the cost is so
financed in whole or in part (1) to reimburse or credit DOE from any proceeds
of such financing to the extent such proceeds are, under the financing
arrangements, available for such purpose, for any amount which DOE may have
previously paid to Corporation under this Section 3.06 for the cost of such
additional facility and/or spare part and (2) to apply the balance of any such
proceeds in payment of the remaining cost, if any, of such additional facility
and/or spare part; DOE shall be relieved of its obligation under this Section
3.06 to pay Corporation for the cost of any additional facility and/or spare
part to the extent that Corporation pays
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such cost from the balance of any proceeds as contemplated under clause (2) of
this sentence.
DOE agrees that, if DOE requests that Corporation arrange for financing
from sources of capital funds other than DOE the cost of any additional facility
and/or spare part, DOE will provide to Corporation assurance in a form
satisfactory to Corporation that DOE will pay to Corporation (or, if the right
to receive principal payments, interests payments, and any other financing
expenses under an installment sale, loan, lease or similar agreement shall have
been assigned by the seller, lender, lessor or other party to any such similar
agreement with the written consent of the Corporation and DOE to a trustee under
an indenture pursuant to which bonds or other debt securities have been issued
and sold, will pay directly to such assignee rather than to Corporation) the
full amount of principal payments, interest payments and any other expenses of
financing the cost of the additional facility and/or spare part.
If Corporation requests a ruling to the effect that amounts paid by DOE
under this Section 3.06 do not constitute taxable income to Corporation, but is
unable to obtain a ruling satisfactory to Corporation, or in case such ruling
once obtained shall be reversed or rescinded, then DOE shall pay to Corporation
such amounts, in lieu of the amounts to be paid as above provided, which, after
provision for all estimated income taxes that may be applicable thereto, shall
equal the entire costs of the additional facilities and/or spare parts payable
by DOE to Corporation as above provided.
If Corporation charges to expense any item of additional facilities
and/or spare parts which is later determined to be an item which should have
been capitalized for tax purposes, then DOE shall, as part of the cost
structure of this Agreement, pay to Corporation such amount which, after
provision for all estimated income taxes that may be applicable thereto, when
added to any amount previously paid for the item by DOE, shall equal the entire
cost of the additional facilities and/or spare parts payable by DOE to
Corporation as above provided.
DOE shall not pay to Corporation any amount pursuant to paragraph 3(a) and
paragraph 3(d) of Section 3.04 with respect to all or such portion of the cost
of such addi-
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tional facilities and/or spare parts as has been paid by DOE and has not
thereafter been financed from sources other than DOE.
If the purchase, acquisition or installation of any additional facility
and/or spare part is ordered or required by any regulatory agency having
jurisdiction over the emission of pollutants or the discharge of wastes by
Corporation or by a court in any proceeding relating to the control of
pollutants or the discharge of wastes by Corporation, or if in the judgment of
Corporation any additional facility and/or spare part is reason ably required to
enable Corporation to limit the emission of pollutants or the discharge of
wastes or is otherwise reasonably necessary in order to comply with any
governmental requirement as to health, safety or the protection of the
environment, then until such additional facility and/or spare part shall be
purchased, acquired or in stalled and operating effectively (A) Corporation
shall be entitled so to operate the project generating stations as, in the
judgment of Corporation, will (i) limit emissions of pollutants and the
discharge of wastes to permissible amounts, and (ii) otherwise comply with all
governmental requirements as to health, safety and the protection of the
environment, and (B) Corporation shall not be held responsible or liable for any
loss or damage to DOE on account of nondelivery of energy, and DOE shall not be
relieved form its obligation to pay any charges payable under this Agreement.
Section 3.07 REPLACEMENTS. In connection with the operation of the Paducah
or Portsmouth installations of DOE, as a part of the cost structure of this
Agreement and for the purpose of providing funds in the amount necessary to
cover the entire cost to Corporation of replacements chargeable to property and
plant pursuant to the provisions of this Section 3.07 necessary or desirable to
keep the project generating stations and project transmission facilities in a
dependable and efficient operating condition in order to facilitate the
provision of electric utility services to DOE, DOE shall pay to Corporation
amounts sufficient, after provision for any estimated income taxes that may be
applicable thereto, to enable Corporation to cover the entire cost of such
replacements made or being made by Corporation during any month or prior thereto
(and not previously reimbursed), which costs are incurred after October 14,
1977, whether
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or not the purchase and installation of such replacements occurred in whole or
in part prior to such date; provided, however, that neither any single
replacement costing more than $500,000 nor any single replacement costing less
than $500,000 ("small replacement") after the total cost of all small
replacements in one calendar year has reached $1,000,000 shall be effected by
Corporation pursuant to this Section 3.07 without the written approval of DOE
unless such replacements are ordered or required by any regulatory body having
jurisdiction over the emission of pollutants or the discharge of wastes by
Corporation or are reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes or are otherwise reasonably
necessary in order to comply with any governmental requirement as to health,
safety or the protection of the environment.
Corporation agrees, upon the request of DOE, to use its best efforts to
arrange, to the extent that, in Corporation's judgment, such financing is
feasible, financing for a period not to extend beyond December 31, 2005, from
sources of capital funds other than DOE of the cost of each replacement which
has a cost in excess of $5,000,000, or such lesser amount as may be specified by
Corporation, and also agrees where the cost of a replacement is so financed in
whole or in part (1) to reimburse or credit DOE from any proceeds of such
financing to the extent such proceeds are, under the financing arrangements,
available for such purpose, for any amount which DOE may have previously paid to
Corporation under this Section 3.07 for the cost of such replacement and (2) to
apply the balance of any such proceeds in payment of the remaining cost, if any,
of such replacement; DOE shall be relieved of its obligation under this Section
3.07 to pay Corporation for the cost of any replacement to the extent that
Corporation pays such cost form the balance of any proceeds as contemplated
under clause (2) of this sentence.
DOE agrees that, if DOE requests that Corporation arrange financing from
sources of capital funds other than DOE of the cost of any replacement, DOE will
provide to Corporation assurance in a form satisfactory to Corporation that DOE
will pay to Corporation (or, if the right to receive principal payments,
interest payments, and any other financing expenses under an installment sale,
loan, lease or similar agreement shall have been assigned by
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the seller, lender, lessor or other party to any such similar agreement with the
written consent of Corporation and DOE to a trustee under an indenture pursuant
to which bonds or other debt securities have been issued and sold, will pay
directly to such assignee rather than to Corporation) the full amount of
principal payments, interest payments and any other expenses of financing the
cost of the replacement.
If Corporation requests a ruling to the effect that amounts paid by DOE
under this Section 3.07 do not constitute taxable income to Corporation, but is
unable to obtain a ruling satisfactory to Corporation, or in case such ruling
once obtained shall be reversed or rescinded, then DOE shall pay to Corporation
such amounts, in lieu of any amounts paid as above provided, which, after
provision for all estimated income taxes that may be applicable thereto, shall
equal the entire cost of the replacements payable to DOE as above provided.
If Corporation charges to expense any replacement item which is later
determined to be an item which should have been capitalized for tax purposes,
then DOE shall, as part of the cost structure of this Agreement, pay to
Corporation such amount which, after provision for all estimated income taxes
that may be applicable thereto, when added to any amount previously paid for the
item by DOE, shall equal the entire cost of the replacements payable by DOE to
Corporation as above provided.
For the purposes of this Section 3.07 the term "replacement" shall
include, in addition to electric plant constructed or installed in place of
property retired, any facilities or equipment (i) the installation of which
shall require some physical alteration of the project generating facilities
and/or the project transmission facilities and (ii) which are designed to limit
the emission of pollutants or the discharge of wastes or are otherwise
reasonable necessary to comply with any governmental requirement as to health,
safety or the protection of the environment, whether or not the project
generating facilities or the project transmission facilities previously
included facilities or equipment serving the same purpose or function as the
replacement.
No replacement costs paid for out of the proceeds of insurance, or out of
amounts recovered from third par-
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ties, shall be included in the determination of the cost of replacements. The
term "costs of replacements" shall include all components of cost plus removal
expenses, less salvage. DOE shall not pay to Corporation any amounts pursuant to
paragraph 3(a) and paragraph 3(d) of Section 3.04 with respect to all or such
portion of the cost of such replacements as has been paid by DOE and has not
thereafter been financed from sources other than DOE.
If the purchase, acquisition or installation of any replacement is ordered
or required by any regulatory agency having jurisdiction over the emission of
pollutants or the discharge of wastes by Corporation or by a court in any
proceeding relating to the control of pollutants or the discharge of wastes by
Corporation, or if in the judgment of Corporation any replacement is reasonably
required to enable Corporation to limit the emission of pollutants or the
discharge of wastes or is otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the protection of the
environment, then until such replacement shall be installed and operating
effectively (A) Corporation shall be entitled so to operate the project
generating stations as, in the judgment of Corporation, will (i) limit emissions
of pollutants and the discharge of wastes to permissible amounts, and (ii)
otherwise comply with all governmental requirements as to health, safety and the
protection of the environment, and (B) Corporation shall not be held responsible
or liable for any loss or damage to DOE on account of nondelivery of energy, and
DOE shall not be relieved from its obligation to pay any charges payable under
this Agreement.
Section 3.08 USE OF CAPACITY BY CORPORATION AND DOE.
1. Corporation shall have the right at any time after the beginning of
full scale operation to make use of any net available generating capacity in its
project generating stations in excess of the permanent power as defined in
Section 2.03, then being supplied to DOE and to the extent that Corporation
sells such power to others than DOE it shall charge therefor not less than an
aggregate amount per calendar year which, together with all payments made
(after giving effect to all adjustments required hereunder) or to be made to
Corporation by DOE with respect to such year, will be equal to the total of
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the costs specified in paragraph 3, of Section 3.04 and the total net charges
for such year to Account 703 (Fuel) of the Uniform System of Accounts.
2. During the period commencing with the month during which Modification
No. 12 to this Agreement shall become effective and ending with the month of
September 1988, both inclusive, Corporation shall, to the extent it sells power
to one or more of the Sponsoring Companies pursuant to paragraph 1 of this
Section 3.08, charge such Sponsoring Company or Sponsoring Companies for power
sold during a month, as a part of the amount Corporation is obligated to charge
pursuant to paragraph 1 of this Section 3.08, amounts which in the aggregate
equal the Sponsoring Companies' Share of the Pollution Control Facility Payment
applicable to such month. The Sponsoring Companies' Share of the Pollution
Control Facility Payment for a month shall equal the product of (i) an amount
determined by subtracting the DOE capacity ratio in effect during such month
from unity, and (ii) the Pollution Control Facility Payment applicable to such
month. The amount of the Pollution Control Facility Payment for a month shall
mean an amount equal to the sum of (a) the monthly components of interest, and
monthly principal components of purchase price, payable under the agreements of
sale, dated as of March 1, 1977 and March 1, 1979, respectively, between the
City of Madison, Indiana, and Corporation's wholly owned subsidiary,
Indiana-Kentucky Electric Corporation; and the agreements of sale, dated as of
October 1, 1978 and March 1, 1979, respectively, between the Ohio Air Quality
Development Authority, and Corporation, exclusive of amounts of principal
resulting from the acceleration, as a result of default or otherwise, of the
maturity of any purchase price payment under one or more of said agreements of
sale, and (b) the amount of any amortization of debt discount and expense
chargeable for such month to Account 531 of the Uniform System of Accounts with
respect to the financing of the facilities which are subject to the agreements
of sale referred to in clause (a) above.
Section 3.09 ADVANCE PAYMENTS. Corporation and DOE may make advance
payments under this Agreement, to the extent permitted by law and agreed upon by
the parties hereto, and Corporation shall reflect any such advance payments in
the xxxxxxxx rendered to DOE under this Article III.
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Section 3.10 REVIEW AND RECOMMENDATIONS BY DOE. While it is recognized
that the construction and operation of the facilities referred to in Sections
1.01, 1.02, 3.06 and 3.07 are the responsibility of Corporation, the costs
thereof have a direct relation to DOE's cost of power under this Agreement, and
accordingly DOE may from time to time review and discuss with Corporation its
operating and construction plans, practices and procedures and make
recommendations with respect thereto which in DOE's judgment may provide for
economies in construction or operation, and Corporation will adopt such
recommendations of DOE as may be mutually agreed upon.
ARTICLE IV
BILLING AND PAYMENT
Section 4.01 INTERIM POWER. Corporation shall submit to DOE as early as
practicable in each month a xxxx for all interim power supplied to DOE during
the immediately preceding month pursuant to Section 2.02.
Section 4.02 SUPPLEMENTAL POWER. Corporation shall submit to DOE as early
as practicable in each month a xxxx for all supplemental power supplied to DOE
during the immediately preceding month pursuant to Section 2.04.
Section 4.03 PERMANENT POWER. Corporation shall submit to DOE as early as
practicable after the end of each semi-monthly period a xxxx for the provisional
semi-monthly demand charge and the provisional semi-monthly energy charge
specified in Section 3.01 for permanent power delivered by Corporation to DOE
during such semi-monthly period pursuant to Section 2.03.
Corporation shall also submit to DOE as early as practicable in each month
a xxxx or bills or credit memorandum for any amounts due Corporation or DOE, for
the immediately preceding month on account of any of the adjustments provided
for in Sections 3.03 and 3.04; provided, however, that Corporation may render
such bills or credit memoranda for any or all of such adjustments on a quarterly
basis, or such other basis as may be mutually acceptable, and may include there
in the adjustment for any item not included in a previous xxxx or credit
memorandum; and provided further, however, that such bills or
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credit memoranda shall be further adjusted to effect, on such basis as DOE and
Corporation shall mutually agree upon from time to time, the ratable
distribution consistent with Section 46(f)(2) of the Internal Revenue Code of
1954, or any other section of the Internal Revenue Code enacted in substitution
for such section, of federal income tax benefits realized by Corporation after
January 1, 1979 or such other date as may be mutually agreed upon as a result of
investment tax credits claimed by Corporation, such adjustment to commence only
after receipt by Corporation of income tax rulings satisfactory to it. Each such
xxxx or credit memorandum shall include such detail as DOE may request to show
the operation and effect of such adjustments.
Section 4.04 MAINTENANCE OF EQUIPMENT AND COST OF ADDITIONAL FACILITIES
AND REPLACEMENTS. Corporation may xxxx XXX separately each month, or more
frequently if considered desirable by Corporation, for reimbursement for the
expense of maintaining DOE-owned equipment, as provided in Section 1.05, and to
cover the cost of additional facilities and replacements as provided in Article
III, or may include such charges in any xxxx submitted pursuant to Sections 4.02
and 4.03.
Section 4.05 TAXES AND INSURANCE ALLOCATED DIRECTLY TO DOE. Corporation
shall xxxx XXX for (i) its share of the cost of any estimated taxes allocated
directly to DOE pursuant to clause (c) of paragraph 3 of Section 3.04, (ii) the
cost of any estimated taxes or other charges to be paid by DOE pursuant to
Sections 3.06 and 3.07, and (iii) the cost of any insurance to be paid by DOE
pursuant to clause (b) of paragraph 3 of Section 3.04.
Section 4.06 PAYMENT OF CHARGES IN EVENT OF TERMINATION OR REDUCTION.
Corporation shall submit to DOE as early as practicable in each month a xxxx for
all amounts payable by DOE pursuant to Article VI for the preceding month.
Section 4.07 PAYMENT. Bills rendered pursuant to this Article IV shall be
paid by DOE within 15 days after the receipt thereof, but the bills and credit
memoranda submitted shall be subject to such subsequent corrections (including
corrections of computations for any particular year arising by reason of such
matters as subsequent
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redetermination by the Bureau of Internal Revenue of taxes applicable to such
year) as may be appropriate as a result of audits made for the purpose of
verification thereof or otherwise. If during any notice period of the character
described in Section 6.02, or any comparable period involved in a reduction of
DOE contract demand under Section 6.03 or in a termination of this Agreement
under Section 6.04 or Section 6.05, DOE shall fail to pay, within 15 days after
the receipt thereof, any xxxx rendered pursuant to this Article IV in respect of
power and energy supplied to DOE. Corporation, unless DOE shall pay such xxxx
within 7 days after receipt of notification from Corporation of its failure to
pay such xxxx, may elect to treat, upon 48 hours prior notice to DOE, such
failure as a further notice from DOE to the effect that DOE will not require
during the remainder of such period (i) any power in the case of the termination
of this Agreement, or (ii) any power in excess of the reduced DOE contract
demand in the case of a reduction of the DOE contract demand.
Section 4.08 ARRANGED POWER AND OCCASIONAL ENERGY. Corporation shall
submit to DOE as early as practicable in each month a xxxx for the costs
incurred during the immediately preceding month pursuant to Sections 2.08 and
2.09, respectively.
Section 4.09 TRANSMISSION PAYMENTS. Corporation shall submit to DOE as
early as practicable in each month a xxxx for the amount by which costs incurred
during the current calendar year pursuant to Section 2.11 exceed the total of
(i) the amounts paid by DOE during the current calendar year under this Section
4.09, and (ii) the amount of any transmission revenues received by the
Corporation during the current calendar year pursuant to Section 2.10.
ARTICLE V
MEASURING INSTRUMENTS
Section 5.01 MEASURING INSTRUMENTS. Corporation shall own and maintain the
metering equipment at the Project which will be necessary to provide complete
information regarding the use of power and energy for dispatching and billing
purposes, except that DOE shall own and maintain the necessary current and
potential
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transformers with conduit, secondary wiring and devices complete to the terminal
blocks on Corporation's metering panels at the point of delivery hereunder. In
order to expedite the work DOE shall purchase and install Corporation's
metering panels and metering equipment at the Project 345kv substations, the
cost of which shall be reimbursed to DOE by Corporation. DOE may, at its option
and expense, install check meters. Corporation will make such periodic tests and
inspections of its meters as may be necessary to maintain the same at the
highest practical commercial standard of accuracy, and will advise DOE promptly
of the results of any such test which shows any inaccuracy more than 1% slow or
fast. DOE shall be given notice of, and may have representatives present at,
such tests and inspections. Corporation will make additional tests of its meters
at the request of DOE and in the presence of DOE's representatives. If such
periodic or additional tests show that a meter used for billing is accurate
within 1% slow or fast, no correction shall be made in the billing to DOE; but
if any such tests show that such meter is inaccurate by more than 1% slow or
fast, correction shall be made in the billing to DOE for the previous month, or
from the date of the latest test if within the previous month and for the
elapsed period in the month during which the test was made, provided that no
correction shall be made for a longer period than that during which it may be
determined by mutual agreement that the inaccuracy existed.
Section 5.02 MEASUREMENT OF MAXIMUM DEMAND. Whenever it is necessary to
measure or compute the maximum demand of the DOE load, such maximum demand
shall be taken as the highest average simultaneous load in kilowatts at the
point of delivery during any sixty-minute period starting on the hour in the
period under consideration.
ARTICLE VI
TERM OF AGREEMENT
Section 6.01 DURATION. The term of this Agreement, unless otherwise
terminated in accordance with the provisions hereof, shall terminate at 12:00
Midnight, Central Standard Time, on December 31, 2005. The parties recognize
that the project generating stations were constructed to service the United
States of America's load
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requirements at the Project, and therefore recognize the principle that power
and associated energy produced by the project generating stations beyond the
term of this Agreement are to be made available, at least to the extent of DOE's
contract demand as in effect on December 31, 2005, to serve such load, provided
Corporation's equipment is then serviceable and mutually agreeable arrangements
can be evolved by the parties hereto. Accordingly, Corporation and DOE agree to
review the possibility of negotiating power supply arrangements for the delivery
of power and associated energy produced by the project generating stations to
DOE subsequent to December 31, 2005, at least two years in advance of such date.
Section 6.02 CANCELLATION BY DOE DURING FULL SCALE OPERATION. In the event
that power will no longer be required at the Project, DOE shall have the right
to terminate this Agreement by delivering to Corporation, after the beginning of
full scale operation, a notice in writing of its election to terminate prior to
the effective date of such termination (such period being herein called the
"notice period" and the date on which said notice is delivered being herein
called the "notice date"), subject to the following:
(a) During the notice period DOE shall pay, except as otherwise
provided in paragraph (b) of this Section 6.02 (i) the provisional
semi-monthly demand charges provided in Section 3.01 to be paid by DOE,
adjusted in accordance with Section 3.04; (ii) the provisional
semi-monthly energy charges provided in Section 3.01 to be paid by DOE,
adjusted in accordance with Section 3.03; (iii) Corporation's
out-of-pocket costs of supplemental power and (iv) all other charges
payable by DOE under this Agreement.
(b) In the event that DOE shall, during the notice period, deliver
to Corporation a further notice in writing to the effect that DOE will not
require any power during any specified remaining portion of the notice
period and thereafter, DOE shall, during such specified remaining portion,
pay, in lieu of the demand charges referred to in paragraph (a) of this
Section 6.02, the modified demand charges as defined in paragraph (d) of
this Section
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6.02. In the event that such further notice is to the effect that DOE will
not require any specified amount of power during any specified remaining
portion of the notice period and thereafter, appropriate adjustments
shall be made with respect to the demand charges payable for power
required during such specified remaining portion of notice period and the
modified charges for power not so required.
(c) After the effective date of the termination of this Agreement,
DOE shall pay to Corporation, as specified in Section 6.07, a
cancellation charge computed in accordance with the following table:
Column I Column II
-------- ---------
If Notice of Termination Is Equivalent Months of
Delivered within Period of Modified Demand
12 Successive Calendar Months Charges Defined in
Specified Below, the First Paragraph (d) of this
Period Commencing with Calendar Section Payable by DOE
Month in which Full Scale as a Cancellation
Operation Begins Charge
------------------------------- ----------------------
First 28
Second 27
Third 25
Fourth 23
Fifth 21
Sixth 18
Seventh 15
Eighth 12
Ninth 9
Tenth 5
Eleventh or Thereafter 0
If at the notice date the DOE contract demand then in effect is less than
1,800,000 kw, by reason of a reduction under Section 6.03, the equivalent months
in Column II shall be multiplied by the ratio of the DOE contract demand to
1,800,000 kw.
(d) The "modified demand charges" mentioned in paragraphs (b) and
(c) of this Section 6.02 shall be the sum of the monthly demand charges
which would
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have been payable by DOE for permanent power pursuant to Article III
hereof, under conditions prevailing at the notice date, without regard to
any waiver by Corporation of any term or provision of this Agreement, if
DOE had not delivered such notice of termination and the project
generating stations had been operated to furnish the DOE contract demand
in effect at the notice date (without regard to any such waiver), less
one-half of the costs of the nature described in paragraph 3.(b) of
Section 3.04 included in the computation of the monthly demand charges
under this paragraph (d); provided however that the costs of the nature
described in paragraph 3.(b) of Section 3.04 so included in such
computation of the monthly demand charges under this paragraph (d),
after reduction by one-half of such costs, shall not exceed the aggregate
amounts which Corporation properly records on its books during such month
with respect to costs of the nature described in paragraph 3.(b) of
Section 3.04.
(e) In the event that DOE shall not have delivered to Corporation
the further notice described in paragraph (b) of this Section 6.02 and if
DOE finds that it can use power at the Project for a period following the
effective date of termination, it is the intent of the parties hereto, to
the extent that Corporation can coordinate the supply of such power to
DOE with the absorption by Corporation of the capacity not required by
DOE, to attempt to reach mutual agreement of such modification of the
above cancellation arrangements as may be indicated under then existing
circumstances so as to enable DOE to receive power at the Project.
(f) Under all conditions DOE shall reimburse Corporation for all of
its unamortized costs, and costs of cancellation of commitments, in
respect of facilities constructed or acquired with the approval of DOE to
provide or to make possible long-term arrangements for fuel supply or more
economical arrangements for fuel supply and/or facilities constructed or
installed pursuant to Section 3.06 and/or Section 3.07. Also, to the
extent that the elimination of power requirements of DOE requires
Corporation to make payments on account of cancellation of long-term
arrangements for fuel supply (in-
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cluding arrangements for the handling and shipment of fuel) made in
accordance with Section 7.02 or on account of the suspension and/or
reduction of the deliveries of fuel thereunder, then, in lieu of DOE
reimbursing Corporation for such payments, DOE shall make the required
payments directly to the companies or persons entitled thereto, provided
that (i) Corporation shall certify to DOE the amounts of the payments
thus to be made, (ii) DOE shall not be required to make any such payment
until the amount thus certified is determined to be correct, (iii)
payments to be thus made by DOE shall not include payments made or to be
made by Corporation for fuel or fuel handling or shipment services
actually received or to be actually received by Corporation by virtue of
continuation of the arrangements for fuel supply, (iv) Corporation shall
assign to DOE any rights which Corporation may have, under the terms of
such arrangements for fuel supply, upon the making of any such payment,
to take title to the equipment or materials upon which such payment is
based, and (v) Corporation shall pay to DOE any amount received by or
credited to Corporation under the terms of such arrangements as a refund
or reduction of any part of any payment so made by DOE. Corporation shall
exercise every reasonable effort to reduce such costs and payments to a
minimum by, among other arrangements: (i) continuing such long-term
arrangements to the fullest amount consistent with the fuel requirements
of the project generating stations following such termination, and (ii)
making arrangements with Sponsoring Companies whereby such Sponsoring
Companies will utilize, where possible with no economic or other
disadvantage, fuel supplies made available as a result of such
termination.
(g) In the event DOE delivers to Corporation the further notice
described in paragraph (b) of this Section 6.02, Corporation agrees that,
during any notice period, it shall use its best efforts to dispose of
power which may be available from the project generating stations to the
Sponsoring Companies and, to the extent that the Sponsoring Companies
elect not to receive and pay for such power, to others, so as to reduce
the charges payable by DOE under this Agreement, but Corporation shall
have no
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further obligation to dispose of any or all of such power. The amount of
the reduction of charges payable by DOE under this Agreement during such
notice period by reason of any such disposal of power shall be determined
by mutual agreement of Corporation and DOE in advance, provided that the
amount of such reduction shall in no event exceed the amount of the
payment that would have been payable had no reduction been effected.
Section 6.03 REDUCTION OF DOE CONTRACT DEMAND DURING FULL SONIC OPERATION.
1. The right of termination of this Agreement by DOE provided for in
Section 6.02 shall include the right to make optional reductions (including a
reduction the effect of which would be to reduce the DOE contract demand to
zero) under this Section 6.03 of the DOE contract demand to the extent that
power is no longer required at the Project without payment of any cancellation
charge or cost (other than (i) the reimbursement of Corporation for expenditures
and costs, and the making of the payments with respect to fuel supply, as
specified in paragraph (f) of Section 6.02 and (ii) the demand charges,
including any modified demand charges, and any other payment required under
Article III, payable by DOE during the notice period), by not more than 300 mw
at any one time, upon not less than 60 months' prior written notice to
Corporation; provided, however, that no such reduction shall be made effective
until a period of at least six months has elapsed subsequent to the effective
date of any prior reduction in the DOE contract demand.
2. In the event of any reduction in the DOE contract demand, DOE shall,
to the extent required, reimburse Corporation for expenditures and costs and
make payments with respect to fuel supply as specified in paragraph (f) of
Section 6.02; provided, however, that in the event of a series of reductions,
the notice periods of which overlap, the aggregate liability of DOE in such
respect shall be limited to the aggregate of amounts applicable to each such
reduction.
3. At the effective date of any reduction of the DOE contract demand, the
DOE contract demand shall become the DOE contract demand in effect at the notice
date minus the amount of such reduction.
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Section 6.04 PAYMENTS FOR EMPLOYEE BENEFITS.
1. As part of the cost structure of this Agreement, beginning in 1993, and
in any event not later than the effective date of termination of this Agreement,
DOE shall pay to Corporation amounts, after provision for any estimated taxes
that may be applicable thereto, determined by an actuary or actuaries selected
in accordance with the provisions of paragraph 2 of this Section 6.04 to be
sufficient to pay the premiums due or expected to become due, as well as
administrative fees and costs, on life insurance, medical insurance or other
post-retirement benefits other than pensions attributable to the employment and
employee service of active employees, retirees, or other employees prior to such
effective date, such amounts being sufficient to provide payment with respect to
all periods for which Corporation has committed or is otherwise obligated to
make such payments, including amounts attributable to current employee service
and any unamortized transition obligation attributable to prior service years
("Post-Retirement Benefit Obligation"); further provided, that, not later than
the effective date of termination, DOE will pay to Corporation additional
amounts, after provision for any estimated taxes that may be applicable thereto,
sufficient to purchase insurance policies, or DOE will provide other forms of
assurance, together with provisions for estimated taxes, if any, that may be
applicable thereto, satisfactory to DOE and to Corporation, such insurance
policies or other forms of assurance being adequate to cover any shortfall if
the amount of the Post-Retirement Benefit Obligation is insufficient to permit
Corporation to fulfill its commitments or obligations with respect to
post-retirement benefits other than pensions; further provided that if, after
the decease of the last person entitled to life and/or medical insurance
coverage or other post-retirement benefits other than pensions, the amounts paid
by DOE to Corporation plus earnings thereon are found to have exceeded
Corporation's commitments or obligations, such excess shall be refunded to DOE;
and further provided, that should Corporation be required by law or by
regulation of governmental agencies to provide funds in connection with life
and/or medical insurance premiums for employees whose employment with
Corporation terminates or has terminated before retirement, DOE shall pay
Corporation amounts, after provision for any estimated taxes that may be
applicable thereto, required to
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provide funds sufficient to pay life and/or medical insurance benefits for such
employees, such payments to be made on or before the dates when any accruals in
connection therewith are required by Generally Accepted Accounting Principles to
be recorded or in any event by the effective date of termination of this
Agreement.
2. The actuary selected by Corporation to determine the amounts
sufficient to make payments referenced in paragraph 1 of this Section 6.04 shall
be a person classified under the Employee Retirement Income Security Act as an
"Enrolled Actuary" unless such actuary is selected by Corporation with the
approval of DOE. An actuary retained by DOE shall have the right to review and
approve any actuarial or other assumption or calculation performed with respect
to Section 6.04 by or on behalf of the actuary retained by Corporation and the
actuary retained by Corporation shall have the right to review any actuarial or
other assumption or calculation performed with respect to Section 6.04 by or on
behalf of an actuary retained by DOE. If there is a dispute between
Corporation's actuary and DOE's actuary concerning any actuarial or other
assumption or calculation pursuant to this Section 6.04 and the respective
actuaries are not able to resolve such dispute within 30 days, they shall within
30 days thereafter select and appoint a third actuary to resolve the dispute. If
the actuaries retained by Corporation and DOE are unable to agree within 30
days upon the selection of a third actuary to resolve the dispute, an Enrolled
Actuary who has no professional relationship with either party or to the
actuaries retained by either party shall be chosen by the Executive Director of
the Society of Actuaries or its successor. The fees and expenses of the third
actuary shall be divided equally between Corporation and DOE.
Section 6.05 TERMINATION AS RESULT OF CERTAIN CONDITIONS. In the event of
the occurrence of any of the events specified in clause (i), clause (ii), clause
(iii) or clause (iv) of this Section 6.05, Corporation may in its sole
discretion elect, by notice in writing delivered to DOE within 270 days
following such occurrence, to treat such occurrence as the delivery by DOE to
Corporation on the date of such occurrence of a notice of termination pursuant
to Section 6.02 hereof designating an effective date of termination as the
earlier of (a) the date when this Agreement would otherwise terminate in
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accordance with Section 6.01 hereof, or (b) a date three years subsequent to the
date of such occurrence and, in the event of such election by Corporation, this
Agreement shall terminate upon the earlier of (a) the date when this Agreement
would otherwise terminate in accordance with Section 6.01 hereof, or (b) a date
three years subsequent to the date of such occurrence:
(i) DOE shall have failed to pay any amount required to be paid by DOE
pursuant to the provisions of this Agreement within a period of 30 days after
the receipt of a written notice from Corporation to DOE of DOE's failure to pay
any such amount; or
(ii) DOE shall have made any payment required to be made by DOE pursuant
to the provisions of this Agreement without having full authority to make such
payment; or
(iii) DOE shall have claimed as a reason for failing to pay any amount
billed to DOE by Corporation that DOE was prevented from doing so by Section
165(b) of the Atomic Energy Act, unless Corporation specifically identifies all
or a portion of such billing as requiring a direct payment or direct
reimbursement of Federal income taxes; or
(iv) DOE shall have assigned this Agreement or rights under this Agreement
and the assignee shall not have been at the time of the assignment, or shall
have ceased to be at any time after the assignment, wholly owned by the United
States of America.
Section 6.06 LIMITATION OF LIABILITY. The liability of DOE for
cancellation charges under the provisions of this Article VI shall in no event
exceed an aggregate of $40,000,000 unless and until DOE shall deliver written
notice to Corporation that DOE assumes liability for cancellation charges in an
amount exceeding $40,000,000. It is understood, however, that DOE will use its
best efforts to secure appropriate authorization from the Congress permitting
DOE to obligate DOE for cancellation charges in an amount exceeding $40,000,000
and to the extent required by the provisions of Sections 6.02, 6.03, 6.04 and
6.05 hereof. DOE agrees that, in the event that appropriate authorization shall
be secured prior to August 1, 1953, DOE will deliver to Corporation prior to
August 1, 1953, a written notice to the effect that DOE
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assumes liability for all payments required to be made to Corporation by DOE
pursuant to provisions of this Agreement, including the payments required to be
made pursuant to the provisions of Sections 6.02, 6.03, 6.04 and 6.05 hereof,
and an undertaking obligating DOE to perform all the duties and obligations to
be performed by DOE hereunder during the remainder of the term of this
Agreement.
[The following notice was given in Mod. No. 1]
[Pursuant to Section 6.06 of the DOE Power Agreement DOE hereby
notifies OVEC that DOE assumes liability for all payments required to be
made to Corporation by DOE pursuant to the provisions of the DOE Power
Agreement, including the payments required to be made pursuant to the
provisions of Sections 6.02, 6.03, 6.04 and 6.05 of the DOE Power
Agreement and hereby makes an undertaking obligation DOE to perform all
the duties and obligations to be performed by DOE under the DOE Power
Agreement during the remainder of the term of the DOE Power Agreement
which is hereby confirmed and modified as hereinafter set forth.]
Section 6.07 METHOD OF PAYMENT OF CANCELLATION CHARGES.
1. In the event of the termination of this Agreement after the
beginning of full scale operation in accordance with Section 6.02, the
cancellation charge shall be payable by DOE to Corporation, commencing with the
month following the effective date of termination, in monthly amounts which,
together with all amounts payable to Corporation by others than DOE applicable
to the costs specified in paragraph 3 of Section 3.04, will enable Corporation
to meet all of the costs specified in paragraph 3 of Section 3.04 until such
cancellation charge has been paid in full; provided, however, that,
notwithstanding the foregoing, payment in full shall be made no later than five
years after the effective date of termination.
2. In the event of a reduction in the DOE contract demand after the
beginning of full scale operation in accordance with Section 6.03, the
cancellation charge shall be payable by DOE to Corporation, commencing
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with the month following the effective date of reduction, in monthly amounts
which, together with (i) the demand charges payable by DOE in respect of the DOE
contract demand as so reduced, and (ii) all amounts payable to Corporation by
others than DOE applicable to the costs specified in paragraph 3 of Section
3.04 until such cancellation charge has been paid in full; provided, however,
that, notwithstanding the foregoing, payment in full shall be made no later than
five years after the effective date of reduction.
3. In the event of the termination of this Agreement prior to the
beginning of full scale operation in accordance with Section 6.04 or 6.05
amounts payable of the character specified in paragraph (c) of Section 6.04
shall be paid by DOE to Corporation in a lump sum and amounts payable of the
character specified in paragraph (e) of Section 6.04 shall be paid by DOE to
Corporation in monthly amounts which, together with all amounts payable to
Corporation by others than DOE applicable to costs of the character specified
in subdivision (a) of Section 3.02 or paragraph 3 of Section 3.04 will enable
Corporation to meet all costs of the character specified in subdivision (a) of
Section 3.02 or paragraph 3 of Section 3.04 until such amounts have been paid in
full; provided, however, that, notwithstanding the foregoing, payment in full
of the latter amounts shall be made over a period of no more than five years.
Section 6.08 USE OF DOE FACILITIES AFTER CANCELLATION OR REDUCTION.
1. In the event of the termination of this Agreement under Sections
6.01 or 6.02, or in the event of a reduction of the DOE contract demand under
Section 6.03, DOE shall make available to Corporation, on mutually acceptable
terms, the busses, switching facilities and related equipment located at the DOE
substations necessary for use in transmitting energy from the project
generating stations to others than DOE; provided, however, that in the event
DOE does not desire to retain title to such facilities and equipment DOE shall,
prior to disposition thereof, give Corporation an opportunity, during a
reasonable period, to purchase, subject to any provisions of the Federal
Property and Administrative Services Act then in effect, the same at the then
fair value thereof.
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2. In the event of the termination of this Agreement under Section
6.04 or Section 6.05, DOE shall give Corporation the opportunity to purchase,
subject to any provisions of the Federal Property and Administrative Services
Act then in effect, the facilities and equipment referred to in paragraph 1 of
this Section 6.08, including any incomplete parts thereof, at the then fair
value thereof.
Section 6.09 DECOMMISSIONING, SHUTDOWN, DEMOLITION AND CLOSING. DOE
recognizes that a part of the cost of supplying power to it under this Agreement
is the amount that may be incurred in connection with the decommissioning,
shutdown, demolition and closing of Corporation's Ohio Station and its Indiana
Station when production of electric power and energy is discontinued at each of
these facilities. Such cost (net of salvage credits) shall include, but is not
limited to, the costs of demolishing the plant's building structures, disposal
of nonsalvageable materials, removal and disposal of insulating materials,
removal and disposal of storage tanks and associated piping, disposal or removal
of materials and supplies (including fuel oil and coal), grading, covering and
reclaiming storage and disposal areas, disposing of ash in ash ponds to the
extent required by regulatory authorities, undertaking corrective or remedial
action required by regulatory authorities, and any other costs incurred in
putting the facilities in a condition necessary to protect health or the
environment or which are required by regulatory authorities, or which are
incurred to fund continuing obligations to monitor or to correct environmental
problems which result, or are later discovered to result, from the facilities'
operation, closure or post-closure activities.
DOE agrees to pay as incurred or, if not incurred, not later than the
effective date of termination of the Agreement its pro rata share of any of the
above-referenced costs incurred or, if not incurred, as estimated by the
Independent Engineer in accordance with the methodology described below. The
pro rata share to be paid by DOE and the estimated total amount of the
above-referenced costs are to be determined by a recognized firm of Independent
Engineers to be selected by Corporation with the approval of DOE (hereinafter
called "Independent Engineer"). The Independent Engineer shall determine DOE's
pro rata share on the basis of the following ratio:
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(i) the total number of megawatt-hours produced and estimated to
be produced at the generating station incurring such costs for
sale to DOE subsequent to the effective date of this
Modification No. 14 to this Agreement, as compared to
(ii) The total number of megawatt-hours produced and estimated to
be produced at the generating station incurring such costs
subsequent to the effective date of this Modification No. 14
to this Agreement.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01 EARNINGS ON CAPITAL STOCK. Deleted as
of January 1, 1971.
Section 7.02 PURCHASE OF FUEL. Corporation shall afford DOE the
opportunity to review and discuss with it the price, terms and conditions of any
major long term contract proposed to be made by Corporation with suppliers of
coal or other fuel to be furnished to Corporation for consumption at
Corporation's project generating stations and any major long term contract
proposed for the handling and shipment of such coal or other fuel and to make
recommendations with respect to such contracts, which in DOE's judgment may
provide for economies and dependability in the fuel supply for the project
generating stations; provided, however, that it is the intent of the parties
that the acquirement of an adequate, dependable, and economical coal supply
shall be the responsibility of Corporation. In addition, DOE shall have the
right to approve the cancellation provisions of any contract for a term
exceeding one year proposed to be made by Corporation pertaining to the supply
of fuel to the generating stations, prior to the making of such contract and
shall have the right to furnish fuel, of a type and quality approved by
Corporation, for consumption at the project generating stations.
Section 7.03 USE OF OTHER FUELS. Corporation may make use of fuels other
than coal, if available, to the extent it is economically advantageous to do so.
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Section 7.04 ACCOUNTS.
1. Corporation shall keep books of account in accordance with
the Federal Power Commission (FPC) Uniform System of Accounts of 1937 (Uniform
System of Accounts) and, with the consent of DOE, such other systems of
accounts prescribed by other governmental regulatory authorities having
jurisdiction as may be applicable. In addition, Corporation shall keep such
records and memorandum accounts as may be required for the computation of
amounts payable by DOE hereunder. The Uniform System of Accounts shall be used
for the determination of any question relative to costs and expenses arising
under this Agreement except that where specified methods of computations of
amounts are set forth in this Agreement such methods shall be employed in lieu
of any other method which might be required by the Uniform System of Accounts.
2. DOE shall have the right, at such reasonable times as it
deems appropriate until five years after termination or expiration of this
Agreement, to inspect all books, records and accounts pertaining to
Corporation's operations hereunder and to make such audits thereof as DOE may
deem necessary to protect the interests of DOE. Such books, records, accounts
and all related documents will be retained by Corporation in accordance with
Federal Power Commission Regulations to Govern the Preservation of Records of
Public Utilities and Licensees as in effect at the effective date of
Modification No. 8 to this Agreement.
3. Corporation agrees that the Comptroller General of the
United States or any of his duly authorized representatives shall, until the
expiration of three years after final payment under this Agreement (unless DOE
authorizes their prior disposition), have access to and the right to examine any
directly pertinent books, documents, papers and records of Corporation involving
transactions related to this Agreement; provided that DOE shall reimburse
Corporation for any expense it may reasonable incur in such three year period in
storing and making the same available for such inspection.
4. Corporation further agrees to include in all its
subcontracts hereunder a provision to the effect
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that the subcontractor agrees that the Comptroller General of the United States
or any of his duly authorized representatives shall, until the expiration of
three years after final payment under the subcontractor (unless DOE authorizes
their prior disposition), have access to and the right to examine any directly
pertinent books, documents, papers and records of such subcontractor, involving
transactions related to the subcontract. The term "subcontract" as used in this
clause excludes (i) purchase orders not exceeding $10,000 and (ii) subcontracts
or purchase orders for public utility services at rates established for uniform
applicability to the general public.
5. The periods of access and examination described in
paragraphs 3 and 4 above, for records which relate to (a) disputes under Section
3.04(8) of this Agreement, (b) litigation or the settlement of claims arising
out of the performance of this Agreement, or (c) costs and expenses of this
Agreement as to which exception has been taken by the Comptroller General or
any of his duly authorized representatives, shall continue until such appeals,
litigation, claims, or exceptions have been disposed of.
6. Nothing in this Agreement shall be deemed to preclude an
audit by the General Accounting Office of any transaction under this Agreement.
Section 7.05 FORCE MAJEURE. Corporation shall not be held responsible
or liable for any loss or damage to DOE on account of nondelivery of energy
hereunder at any time caused by Act of God, fire, flood, explosion, strike,
civil or military authority, insurrection or riot, act of the elements, failure
of equipment, or for any other cause beyond its control, or the scheduled
limiting of the operation of the facilities described in Sections 1.01, 1.02,
3.06 and 3.07 (including the complete cessation of all such operations) to
limit the emission of pollutants or the discharge of wastes, which, in the
reasonable judgment of Corporation, if emitted or discharged would result in a
violation of applicable laws and regulations relating to the emission of
pollutants or the discharge of wastes; provided, however, that nondelivery on
account of any such causes shall not relieve DOE from its obligation to pay any
charges payable hereunder; provided, further, that DOE shall be relieved of
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its obligation to pay to Corporation amounts specified in paragraph 3 of Section
3.04 with respect to fines and penalties with respect to occasions where it is
asserted that Corporation failed to comply with a law or regulation relating to
the emission of pollutants or the discharge of wastes, if, and only if, prior
to any such particular occasion, (i) DOE has requested Corporation to limit the
generation at either or both project generating stations so as not to exceed a
stated number of megawatts for a stated period to comply with applicable laws or
regulations relating to the emission of pollutants or the discharge of wastes,
(ii) DOE has advised Corporation that it will, and does, during such period,
limit its demand at the Project so that the number of megawatts to be supplied
by Corporation at the point of delivery as permanent and supplemental power
shall not exceed the amount determined by multiplying the DOE capacity ratio by
the number of megawatts of permanent and supplemental power to which DOE would
be entitled after giving effect to the limitation provided in clause (i) above,
and (iii) Corporation shall willfully fail so to limit generation at either or
both of the project generating stations so as not to exceed the number of
megawatts stated in such requests (however, should Corporation willfully operate
either or both of the project generating stations so that the number of
megawatts generated shall exceed (x) the number of megawatts which could have
been generated had DOE not requested Corporation to limit its generation as
provided in clause (i) above, minus (y) the number of megawatts which could have
been generated had DOE not requested Corporation to limit its generation as
provided in clause (i) above multiplied by the DOE capacity ratio, plus (z) the
number of megawatts determined as provided in clause (ii) above plus
transmission losses thereon, then the amount to be paid by DOE to Corporation on
account of the costs specified in paragraph 3 of Section 3.04 other than (a) any
interest, principal, and/or amortization component of any purchase price,
amortization, rental, or other payment under an installment sale, loan, lease
or similar agreement relating to the purchase, lease, or acquisition by
Corporation of additional facilities under Section 3.06 and replacements under
Section 3.07, (b) the cost of any insurance carried solely for the benefit of
DOE at its request pursuant to paragraph 3(b) of Section 3.04 and (c) any taxes
allocated directly to DOE pursuant to paragraph 3(c) of Section 3.04, shall be
adjusted to the extent mutually agreed
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upon); and provided, further, that DOE agrees that Corporation shall be
entitled so to limit the operator of the facilities described in Sections 1.01,
1.02, 3.06 and 3.07 (including the complete cessation of all such operations)
to limit the emission of pollutants or the discharge of wastes, which, in the
reasonable judgment of Corporation, if emitted or discharged would result in a
violation of any applicable laws or regulations relating to the emission of
pollutants or the discharge of wastes, even though such action by Corporation
shall result in nondelivery of energy to the Project. However, Corporation will
exert every effort to assure the continuity of supply of the DOE contract demand
to DOE and, when that amount of power is not available at any time or from time
to time because of any of the foregoing causes, Corporation will endeavor, upon
request of DOE, to secure the necessary power from others at just and reasonable
rates.
Section 7.06 PROPERTY INSURANCE. Corporation will cause its property
which is of a character usually insured by companies similarly situated and
operated like properties to be insured to a reasonable amount against loss or
damage from such hazards and risks as are usually insured by companies similarly
situated and operating like properties, will carry such additional insurance as
Corporation deems desirable in view of the special character of the load, and
will carry such further insurance as DOE may from time to time request in
writing or as may be required by the terms of any mortgage or other instrument
pursuant to which indebtedness of the Corporation shall have been issued or
incurred. The proceeds of any insurance received by Corporation due to the
destruction of or damage to Corporation's facilities shall be applied to the
replacement or restoration or repair of the facilities so destroyed or damages
to the condition required to fulfill Corporation's obligations under this
Agreement. Corporation will, from time to time upon the written request of DOE,
furnish DOE with a statement of such insurance then outstanding and in force,
including the names of any insurance companies which have insured, the amounts
thereof and the property, hazards and risks covered thereby.
Section 7.07 - FAR 52.222-3 CONVICT LABOR (APR 1984). Corporation
agrees not to employ any person undergoing sentence of imprisonment in
performing this
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contract except as provided by 18 U.S.C. 4082(c)(2) and Executive Order 11755,
December 29, 1973.
Section 7.08 - FAR 52.203-1 OFFICIALS NOT TO BENEFIT (APR 1984). No
member of or delegate to Congress, or resident commissioner, shall be admitted
to any share or part of this contract, or to any benefit arising from it.
However, this clause does not apply to this contract to the extent that this
contract is made with a corporation for the corporation's general benefit.
Section 7.09 REGULATORY APPROVALS AND FUTURE REGULATORY ACTION. (a)
The obligations of Corporation hereunder shall be subject to (1) the receipt
and continued effectiveness of all regulatory approvals, in form and substance
satisfactory to Corporation, necessary to permit Corporation to perform all the
duties and obligations to be performed by Corporation hereunder; and (2) the
receipt and continued effectiveness of all regulatory approvals in form and
substance satisfactory to the Sponsoring Companies, necessary to permit the
Sponsoring Companies to carry out all other transactions contemplated herein.
(b) Corporation and DOE recognize that this Agreement, and the
Inter-Company Power Agreement, and any tariff or rate schedule which shall
embody or supersede either are subject to such lawful action as any regulatory
authority having jurisdiction shall hereafter take with respect thereto.
(c) The performance of any obligation of Corporation or the
Sponsoring Companies shall be subject to the receipt and continued
effectiveness, from time to time as required, of such authorizations or
approvals of regulatory authorities having jurisdiction as shall be required by
law.
(d) DOE also expressly agrees that Corporation shall be
entitled, at any time and from time to time, unilaterally to make application
for approval or authorization of, or to take other action to file with or
submit for filing to any regulatory agency having jurisdiction in the premises,
any tariff or rate schedule(s) designed to supersede, in whole or in part, any
provision of this Agreement (or of any prior superseding tariff or rate
schedule(s)), applicable to any electric service fur-
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nished by Corporation to DOE under this Agreement, or the rate or rates payable
by DOE for all or any part of such electric service, and in the event of any
such action by Corporation, notice of which Corporation shall give to DOE, the
terms and conditions under which electric service shall be furnished by
Corporation to DOE shall be the terms and conditions as shall result from any
ensuing action by such regulatory agency. Furthermore, the parties hereto agree
that nothing contained herein shall be construed as affecting in any way the
right of Corporation to unilaterally make application to the Federal Energy
Regulatory Commission to the extent it may have jurisdiction for a change in
rates, charges, classification or service, or any rule, regulation, or contract
relating thereto, under Section 205 of the Federal Power Act and pursuant to the
Commission's Rules and Regulations promulgated thereunder, and the parties
hereto further agree that nothing herein shall be construed as affecting in any
way the right of Corporation to unilaterally make application to any other
regulatory agency having jurisdiction in the premises for a change in rates,
charges, classification or service, or any rule, regulation, or contract
relating thereto, or to take unilateral action before any other regulatory
agency having jurisdiction in the premises to effect a change in rates, charges,
classification or service, or any rule, regulation or contract relating thereto,
under conditions and circumstances similar to those provided in Section 205 of
the Federal Energy Regulatory Commission promulgated thereunder, or the rules
and regulations of any other regulatory agency having jurisdiction.
(e) DOE also expressly agrees that any determination of the
rights of Corporation to make unilateral filings or applications or take other
unilateral action pursuant to this Section 7.09 shall be made solely on the
basis of the provisions contained in this Section 7.09.
Section 7.10 NOTICES. All notices under this Agreement shall be in
writing, and if to Corporation, shall be sufficient in all respects if delivered
in person to its President, Senior Vice President or any Vice President, or sent
by registered or certified mail addressed to it at its office in Piketon, Ohio,
or at any subsequent address of which Corporation may notify DOE in writing; and
if to DOE, shall be sufficient in all respects if delivered in person to the
Manager, Oak Ridge
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Operations, of DOE, or sent by registered or certified mail addressed to DOE at
its offices in Oak Ridge, Tennessee, or any subsequent address of which DOE may
notify Corporation in writing.
Section 7.11 WAIVER. Either party to this Agreement may by a written
instrument waive in any one or more instances performance by the other party of
any responsibility or obligation to be performed by such other party under this
Agreement (other than responsibilities or obligations to pay interest and
principal or amortization components of purchase price, amortization, rental or
other payments under installment sale, loan, lease or similar agreements
directly to any trustee as provided in subclauses (i) and (iii) of clause (a) of
paragraph 3 and paragraphs 4 and 5 of Section 3.04 and Sections 3.06 and 3.07 of
this Agreement) or compliance with any condition contained in this Agreement,
but the failure of either party to insist in any one or more instances upon
strict performance of any of the provisions of this Agreement or to take
advantage of any of its rights hereunder shall not be constructed as a waiver of
any such provisions or the relinquishment of any such right, but the same shall
continue and remain in full force and effect.
Section 7.12 SUCCESSORS AND ASSIGNS.
1. This Agreement shall insure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Neither this Agreement nor any rights under this Agreement may be assigned by
either party without the written consent of the other, provided, however, that
consent shall not be unreasonably withheld and provided further that, in the
case of an assignment by DOE, reasonable grounds for refusal of consent shall
include, without limitation, that such assignment may be prejudicial to
Corporation or the holders of any indebtedness of Corporation, except that (A)
DOE may without Corporation's consent assign this Agreement or any of its rights
under this Agreement, provided that (i) the assignee is a successor to DOE for
purposes of operating the Project, (ii) the assignee is wholly owned by the
United States of America, (iii) the assignee is authorized by law to assume, and
does assume (by written instrument that is in form satisfactory to Corporation),
all of the obligations and responsibilities of DOE and the United States of
America under this Agree-
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ment, and (iv) the assignment does not have the effect of relieving the United
States of America of any of its obligations or responsibilities under this
Agreement, and (B) Corporation may without the consent of DOE assign this
Agreement or any of its rights under this Agreement to a successor to all or
substantially all of its property and assets and may pledge this Agreement to
secure its indebtedness incurred or to be incurred for the purpose of
constructing facilities, and this Agreement or rights under this Agreement may
be assigned or transferred without the consent of DOE to one or more persons who
shall assume the obligations of Corporation hereunder in connection with the
enforcement of any such pledge. Corporation may without the consent of DOE
assign pursuant to the provisions of the Assignment of Claims Act of 1940, as
amended, to any bank, trust company, or other financing institution, including
any Federal lending agency, any moneys due or to become due under this
Agreement, and any such assignment may cover all or any part of the amounts
payable by DOE to Corporation under this Agreement and may be made to more than
one such bank, trust company or financing institution either for the account of
such bank, trust company or financing institution or as agent or trustee for two
or more parties who are holders of indebtedness of Corporation. Payments to be
made to the assignee of any moneys due or to become due under this Agreement
shall not be subject to reduction or set off.
2. Notwithstanding any other provision of this Agreement, any
assignment by DOE shall not become effective if the same would require any
shareholder of the Corporation to dispose of its shares or until the date upon
which all authorizations, consents, approvals, exemptions, franchise,
permissions, permits and licenses of Federal, State or other governmental
authorities, free of conditions deemed burdensome by the Corporation or any of
its shareholders, shall have been issued and there have been made all recordings
and filings with such authorities which are necessary to enable Corporation
legally to furnish to such successor operator of the Project the electric
service required to be furnished to DOE under this Agreement and to enable
Corporation legally to carry out its obligations under this Agreement, and all
such authorizations, consents, approvals, exemptions, franchises, permissions,
permits, licenses, recordings and filings are valid and in full force and
effect, are
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not the subject of attack on appeal, by direct proceedings or otherwise, and
(except to the extent that Corporation shall waive such condition) that either
the time within which any appeal therefrom may be taken or any review thereof
may be had has expired or that no review thereof may be had nor appeal therefrom
taken.
3. In the event that any assignment of this Agreement or
rights under this Agreement shall become effective as herein provided,
Corporation shall thereafter be entitled to take such action, or make such
filings with, any regulatory authority having jurisdiction with respect to any
term or condition of this Agreement as Corporation shall deem appropriate and in
the event of such action by Corporation, the terms and conditions under which
service shall be rendered shall be the terms and conditions as so changed or as
shall result from such action by or before any such regulatory authority.
4. Notwithstanding any other provision of this Agreement, no
assignment contemplated by this Section 7.12 or transfer, by operation of law or
otherwise, of any of the rights, obligations or responsibilities of DOE and the
United States of America under this Agreement shall relieve the United States of
America of its obligations or responsibilities to pay interest and principal or
amortization components of purchase price, amortization, rental or other
payments under installment sale, loan, lease or similar agreements directly to a
trustee as provided in subclauses (i) and (iii) of clause (a) of paragraph 3 of
Section 3.04 or as provided in Sections 3.06 and 3.07 of this Agreement.
Section 7.13 - FAR 52.222-26 EQUAL OPPORTUNITY (APR 1984).
(a) If, during any 12-month period (including the 12 months
preceding the award of this contract), Corporation has been or is awarded
non-exempt Federal contracts and/or subcontracts that have an aggregate value in
excess of $10,000, Corporation shall comply with the subparagraphs (b)(1)
through (11) below. Upon request, Corporation shall provide information
necessary to determine the applicability of this clause.
(b) During performing this contract, Corporation agrees as
follows:
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(1) Corporation shall not discriminate against any
employee or applicant for employment because of race, color,
religion, sex or national origin.
(2) Corporation shall take affirmative action to
ensure that applicants are employed, and that employees are
treated during employment, without regard to their race,
color, religion, sex or national origin. This shall include,
but not be limited to, (i) employment, (ii) upgrading, (iii)
demotion, (iv) transfer, (v) recruitment or recruitment
advertising, (vi) layoff or termination, (vii) rates of pay or
other forms of compensation, and (viii) selection for
training, including apprenticeship.
(3) Corporation shall post in conspicuous places
available to employees and applicants for employment the
notices to be provided by the Contracting Officer that explain
this clause.
(4) Corporation shall, in all solicitations or
advertisement for employees placed by or on behalf of the
Corporation, state that all qualified applicants will receive
consideration for employment without regard to race, color,
religion, sex or national origin.
(5) Corporation shall send to each labor union or
representative of workers with which it has a collective
bargaining agreement or other contract or understanding, the
notice to be provided by the Contracting Officer advising the
labor union or workers' representative of Corporation's
commitments under this clause, and post copies of the notice
in conspicuous places available to employees and applicants
for employment.
(6) Corporation shall comply with Executive Order
11246, as amended, and the rules, regulations and orders of
the Secretary of Labor.
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(7) Corporation shall furnish to the contracting
agency all information required by Executive Order 11246, as
amended, and by the rules, regulations and orders of the
Secretary of Labor. Standard Form 100 (EEO-1), or any
successor form, is the prescribed form to be filed within 30
days following the award, unless filed within 12 months
preceding the date of award.
(8) Corporation shall permit access to its books,
records and accounts by the contracting agency or the Office
of Federal Contract Compliance Programs (OFCCP) for the pur-
poses of investigation to ascertain Corporation's compliance
with the applicable rules, regulations and orders.
(9) In the event of Corporation's noncompliance with
this clause or any rule, regulation or order of the Secretary
of Labor, this contract may be canceled, terminated or
suspended in whole or in part and Corporation may be declared
ineligible for further Government contracts under the
procedures authorized in Executive Order 11246, as amended. In
addition, sanctions may be imposed and remedies invoked
against Corporation as provided in Executive Order 11246, as
amended, the rules, regulations and orders of the Secretary of
Labor, or as otherwise provided by law.
(10) Corporation shall include the terms and
conditions of subparagraph (b)(1) through (11) of this clause
in every subcontract or purchase order that is not exempted by
the rules, regulations or orders of the Secretary of Labor
issued under Executive Order 11246, as amended, so that these
terms and conditions will be binding upon each subcontractor
or vendor.
(11) Corporation shall take such action with respect
to any subcontract or purchase order as the contracting agency
may direct as a means of enforcing these terms and conditions,
including sanctions for noncompliance; provid-
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ed, that if Corporation become involved in, or is threatened
with, litigation with a subcontractor or vendor as a result
of any direction, Corporation may request the United States to
enter into the litigation to protect the interests of the
United States.
(c) If, pursuant to this section, DOE elects, in whole or in
part, to cancel, terminate, annul or suspend this Agreement, to terminate the
right of Corporation to proceed or to suspend contract payments, such action by
DOE may only be taken by delivering to Corporation a notice in writing of DOE's
election to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
Section 7.14 SECURITY.
1. CORPORATION'S DUTY TO SAFEGUARD RESTRICTED DATA, FORMERLY
RESTRICTED DATA, AND OTHER CLASSIFIED INFORMATION. Corporation shall, in
accordance with DOE's security regulations and requirements, be responsible for
safeguarding all classified information and protecting against sabotage,
espionage, loss and theft the classified documents and material in the
Corporation's possession in connection with work under this Agreement. Except
as otherwise expressly provided in this Agreement, Corporation shall, upon
completion or termination of this Agreement, transmit to DOE any classified
matter in the possession of Corporation or any person under Corporation's
control in connection with the performance of the Agreement. If retention by
Corporation of any classified matter is required after the completion or
termination of the Agreement and such retention is approved by the Contracting
Officer, Corporation will complete a certificate of possession to be furnished
to DOE specifying the classified matter to be retained. The certification shall
identify the items and types or categories of matter retained, the conditions
governing the retention of the matter and the period of retention, if known. If
the retention is approved by the Contracting Officer, the security provisions of
the Agreement will continue to be applicable to the matter retained.
2. REGULATIONS. Corporation agrees to conform to all security
regulations and requirements of DOE.
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3. DEFINITION OF CLASSIFIED INFORMATION. The term "Classified
Information" means Restricted Data, Formerly Restricted Data, or National
Security Information.
4. DEFINITION OF RESTRICTED DATA. The term "Restricted Data"
as used in this paragraph, means all data concerning (a) design, manufacture, or
utilization of atomic weapons; (b) the production of special nuclear material;
or (c) the use of special nuclear material in the production of energy, but
shall not include data declassified or removed from the Restricted Data category
pursuant to Section 142 of the Atomic Energy Act of 1954, as amended.
5. DEFINITION OF FORMERLY RESTRICTED DATA. The term "Formerly
Restricted Data," as used in this paragraph, means all data removed from the
Restricted Data category under Section 142 (d) of the Atomic Energy Act of 1954,
as amended.
6. DEFINITION OF NATIONAL SECURITY INFORMATION. The term
"National Security Information" means any information or material, regardless of
its physical form or characteristics, that is owned by, produced for or by, or
is under the control of the United States Government, that has been determined
pursuant to Executive Order 12356 or prior Orders to require protection against
unauthorized disclosure, and which is so designated.
7. SECURITY CLEARANCE OF PERSONNEL. Corporation shall not
permit any individual to have access to any classified information, except in
accordance with the Atomic Energy Act of 1954, as amended, Executive Order
12356, and DOE's regulations or requirements applicable to the particular type
or category of classified information to which access is required.
8. CRIMINAL LIABILITY. It is understood that disclosure of any
classified information relating to the work or services ordered hereunder to any
person not entitled to receive it, or failure to safeguard any classified matter
that may come to Corporation or any person under Corporation's control in
connection with work under this Agreement, may subject Corporation, its agents,
employees, or subcontractors to criminal liability under the laws of the United
States. (See the Atomic
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Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq.; 18 U.S.C. 793 and 794;
and Executive Order 12356.)
9. SUBCONTRACTS AND PURCHASE ORDERS. Except as otherwise
authorized in writing by the Contracting Officer, Corporation shall insert
provisions similar to the foregoing provisions of this Section 7.14 in all
subcontracts and purchase orders under this Agreement.
Section 7.15 CONTRACT WORK HOURS AND SAFETY STANDARDS ACT -- OVERTIME
COMPENSATION. Prior to any assignment or transfer by DOE under Section 7.12,
this Agreement, to the extent that it is of a character specified in the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), is subject to
the following provisions and to all other applicable provisions and exceptions
of such Act and the regulations of the Secretary of Labor thereunder.
1. OVERTIME REQUIREMENTS. No contractor or subcontractor
contracting for any part of the contract work which may require or involve the
employment of laborers or mechanics shall require or permit any laborer or
mechanic, in any workweek in which he is employed on such work, to work in
excess of 40 hours in such workweek or work unless such laborer or mechanic
receives compensation at a rate not less than one and one-half times the basic
rate of pay for all such hours worked in excess of 40 hours in such workweek.
2. VIOLATION; LIABILITY FOR UNPAID WAGES; LIQUIDATED DAMAGES.
In the event of any violation of the provisions of paragraph 1 of this Section
7.15, Corporation and any subcontractor responsible therefor shall be liable to
any affected employee for the unpaid wages. In addition, such Corporation and
subcontractor shall be liable to the United States for liquidated damages. Such
liquidated damages shall be computed with respect to each individual laborer or
mechanic employed in violation of the provisions of paragraph 1 of this Section
7.15 in the sum of $10 for each calendar day on which such employee was required
or permitted to be employed on such work in excess of his standard workweek of
40 hours without payment of the overtime wages required by paragraph 1 of this
Section 7.15.
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3. WITHHOLDING OF UNPAID WAGES AND LIQUIDATED DAMAGES. Except
as otherwise provided in Section 7.12 of this Agreement, the Contracting Officer
may withhold from Corporation, from any moneys payable on account of work
performed by Corporation or subcontractor under any such contract or other
Federal contract with Corporation, or any other Federally Assisted contract
subject to the Contract Work Hours and Safety Standards Act which is held by
Corporation, such sums as may administratively be determined to be necessary to
satisfy any liabilities of Corporation or subcontractor for unpaid wages and
liquidated damages as provided in the provisions of paragraph 2 of this Section
7.15.
4. PAYROLLS AND BASIC RECORDS. Corporation or subcontractor
shall maintain payrolls and basic payroll records during the course of contract
work and shall preserve them for a period of 3 years from the completion of this
Agreement for all laborers and mechanics working on this Agreement. Such records
shall contain the name and address of each such employee, social security
number, correct classifications, hourly rates of wages paid, daily and weekly
number of hours worked, deductions made, and actual wages paid. Nothing in this
paragraph shall require the duplication of records required to be maintained for
construction work by Department of Labor regulations at 29 CFR 5.5(a)(3)
implementing the Xxxxx - Xxxxx Act.
5. SUBCONTRACTS. Corporation shall insert paragraphs 1 through
4 of this Section 7.15 in all subcontracts, and shall require their inclusion
in all subcontracts of any tier.
Section 7.16 PATENTS AND INVENTIONS. Corporation agrees to indemnify
the Government, its officers, agents, and employees against liability of any
kind (including costs and expenses incurred) for the use of any invention or
discovery or for the infringement of any Letters Patent (not including liability
arising pursuant to Title 35, U.S. Code, Section 183, as amended, prior to the
issuance of Letters Patent) occurring by reason of the installation or use by
Corporation (or installation by DOE for the account of Corporation) of items
manufactured, furnished, installed, or supplied under this Agreement. Any
liability or loss of the kind described in this section suffered by Corporation
shall be at the
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sole cost of Corporation and shall not be included directly or indirectly in
the determination of any charges to DOE.
Section 7.17 SELECTION OF EMPLOYEES. Corporation shall make every
reasonable effort in the selection of its employees to secure persons who are
competent, careful, honest and loyal to the United States of America.
Section 7.18 UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL BUSINESS
CONCERNS OWNED AND CONTROLLED BY SOCIALLY AND ECONOMICALLY DISADVANTAGED
INDIVIDUALS.
(a) It is the policy of the United States and DOE that small
business concerns and small business concerns owned and controlled by socially
and economically disadvantaged individuals shall have the maximum practicable
opportunity to participate in the performance of contracts let by DOE.
It is further the policy of the United States that its prime
contractors establish procedures to ensure the timely payment of amounts due
pursuant to the terms of their subcontractors with small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals.
(b) Corporation hereby agrees to carry out this policy in the
awarding of subcontracts to the fullest extent consistent with the efficient
performance of this Agreement. Corporation further agrees to cooperate in any
studies or surveys as may be conducted by the United States Small Business
Administration or DOE as may be necessary to determine the extent of
Corporation's compliance with this article.
(c) As used in this Agreement, the term "small business
concern" shall mean a small business as defined pursuant to section 3 of the
Small Business Act (15 U.S.C. 632) and relevant regulations promulgated pursuant
thereto. The term "small business concern owned and controlled by socially and
economically disadvantaged individuals" shall mean a small business concern:
(1) which is at least 51 per centum owned by one or
more socially and economically disadvantaged individuals; or, in the case of any
publicly-owned busi-
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ness, at least 51 per centum of the stock of which is owned by one or more
socially and economically disadvantaged individuals; and
(2) whose management and daily business operations are
controlled by one or more of such individuals.
This term also means a small business concern that is at least 51
percent unconditionally owned by an economically disadvantaged Indian tribe or
Native Hawaiian organization, or a publicly-owned business having at least 51
percent of its stock unconditionally owned by one of these entities which has
its management and daily business controlled by members of an economically
disadvantaged Indian tribe or Native Hawaiian organization which meets the
requirements of 13 CFR 124.
Corporation shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic Americans, Native Americans,
Asian-Pacific Americans, Asian-Indian Americans, and other specified minorities,
or any other individual found to be disadvantaged by the Small Business
Administration pursuant to section 8(a) of the Small Business Act. Corporation
shall presume that socially and economically disadvantaged entities also
include Indian Tribes and Native Hawaiian Organizations.
(d) Corporation acting in good faith may rely on written
representations by Corporation's subcontractors regarding their status as
either a small business concern or a small business concern owned and controlled
by socially and economically disadvantaged individuals.
Section 7.19 UTILIZATION OF LABOR SURPLUS AREA CONCERNS.
(a) It is the policy of the Government to award contracts to
labor surplus area concerns that agree to perform substantially in labor surplus
areas, where this can be done consistent with the efficient performance of the
contract and at prices no higher than are obtainable elsewhere. Corporation
agrees to use its best efforts to place its subcontracts in accordance with this
policy.
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(b) In complying with the foregoing provisions of this Section
7.19 and with Section 7.18 of this Agreement, Corporation in placing its
subcontracts shall observe the following order of preference: (1) small business
concerns that are labor surplus area concerns, (2) other small business
concerns, and (3) other labor surplus area concerns.
(c)(1) The term "labor surplus area" means a geographical area
identified by the Department of labor, in accordance with 20 CFR 654,
Subpart A, as an area of concentrated unemployment and underemployment
or an area of labor surplus.
(2) The term "labor surplus area concern" means a concern that
together with its first-tier subcontractor will perform substantially
in labor surplus areas.
(3) The term "perform substantially in a labor surplus area"
means that the costs incurred on account of manufacturing, production,
or appropriate services in labor surplus areas exceed 50 percent of the
contract price.
Section 7.20 WAGE AND PRICE STANDARDS.
(a) Corporation hereby certifies that it believes that, on the
date of the execution and delivery by Corporation of Modification No. 10 to this
Agreement, Corporation is in compliance with the Wage and Price Standards issued
by the Council of Wage and Price Stability (6 CFR 705, Appendix, and Part 706).
(b) If a duly authorized agency of the United States of
American later determines, after notice and opportunity for hearing and such
determination shall become final and not subject to appeal by Corporation, that
Corporation was wilfully not in compliance with such standards on the day of the
execution and delivery by Corporation of Modification No. 10 to this Agreement,
this Agreement shall, at the election of DOE evidenced by notice delivered to
Corporation by DOE within 270 days subsequent to the date when such
determination shall become final, terminate with the same effect and under the
same conditions as if, at the time such determination shall become final, DOE
had delivered to Corporation a
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notice of termination pursuant to Section 6.02 of this Agreement.
(c) Corporation shall require as a condition of award of any
first-tier subcontract which exceeds $5,000,000 a certification that such
subcontractor believes that, on the date of such award, it is in compliance
with the Wage and Price Standards issued by the Council on Wage and Price
Stability (6 CFR 705, Appendix, and Part 706). Corporation further agrees that
should any price adjustment in subcontract prices result from the operation of
this provision as to subcontracts, it will advise DOE and an equitable
adjustment of the contract price will be made. The operation of this provision
in any subcontract shall not excuse Corporation from performance of this
Agreement in accordance with its terms and conditions. Any waiver or relaxation
of the certification requirements with respect to such first- tier
subcontractors can only be made by the Secretary of Energy.
Section 7.21 PAYMENT OF INTEREST ON CLAIMS. If an appeal is filed by
Corporation from a final decision of the Contracting Officer under this
Agreement, denying a claim arising under this Agreement, simple interest on the
amount of the claim finally determined to be owed by the Government shall be
payable to Corporation. Such interest shall be at the rate determined by the
Secretary of the Treasury pursuant to Public Law 92-41, 85 Stat 97, from the
date Corporation furnishes to the Contracting Officer its written appeal under
Section 3.04 of this Agreement to the date of (i) a final judgment by a court of
competent jurisdiction, or (ii) mailing to Corporation of a supplemental
agreement for execution either confirming completed negotiations between the
parties or carrying out a decision of a Review Board. Notwithstanding the
foregoing provisions of this Section 7.21, (i) interest shall be applied only
from the date payment was due, if such date is later than the filing of appeal,
and (ii) interest shall not be paid for any period of time that the Contracting
Officer determines Corporation has unduly delayed in pursuing its remedies
before a board of contract appeals or a court of competent jurisdiction.
Section 7.22 AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS.
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(a) Corporation will not discriminate against any employee or
applicant for employment because of physical or mental handicap in regard to any
position for which the employee or applicant for employment is qualified.
Corporation agrees to take affirmative action to employ, advance in employment
and otherwise treat qualified handicapped individuals without discrimination
based upon their physical or mental handicap in all employment practices such as
the following: employment, upgrading, demotion or transfer, recruitment,
advertising, layoff or termination, rates of pay or other forms of compensation,
and selection for training, including apprenticeship.
(b) Corporation agrees to comply with the rules, regulations,
and relevant orders of the Secretary of Labor issued pursuant to the
Rehabilitation Act of 1973, as amended (the "Rehabilitation Act").
(c) In the event of Corporation's noncompliance with the
requirements of this clause, actions for noncompliance may be taken in
accordance with the rules, regulations and relevant orders of the Secretary of
Labor issued pursuant to the Rehabilitation Act.
(d) Corporation agrees to post in conspicuous places,
available to employees and applicants for employment, notices in a form to be
prescribed by the Director of the Office of Federal Contract Compliance Programs
of the United States Department of Labor, provided by or through the contracting
officer. Such notices shall state Corporation's obligation under the law to take
affirmative action to employ and advance in employment qualified handicapped
employees and applicants for employment, and the rights of applicants and
employees.
(e) Corporation will notify each labor union or representative
of workers with which it has a collective bargaining agreement or other
contract understanding, that Corporation is bound by the terms of Section 503
of the Rehabilitation Act, and is committed to take affirmative action to employ
and advance in employment physically and mentally handicapped individuals.
(f) Corporation will include the provisions of this clause in
every subcontract or purchase order of $2,500 or more unless exempted by rules,
regulations, or orders of the Secretary of Labor issued pursuant to
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Section 503 of the Rehabilitation Act, so that such provisions will be binding
upon each subcontractor or vendor. Corporation will take such action with
respect to any subcontract or purchase order as the Director of the Office of
Federal Contract Compliance Programs may direct to enforce such provisions,
including action for noncompliance.
(g) If, pursuant to this section, DOE elects, in whole or in
part, to cancel, terminate, annul or suspend this Agreement, to terminate the
right of Corporation to proceed or to suspend contract payments, such action by
DOE may only be taken by delivering to Corporation a notice in writing of DOE's
election to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
Section 7.23 CLEAN AIR AND WATER.
(a) Corporation agrees as follows:
(i) to comply with all applicable requirements of Section 114 of the
Clean Air Act (42 U.S.C. 7414) and Section 308 of the Clean Water Act (33 U.S.C.
1518), respectively, relating to inspection, monitoring, entry, reports and
information, as well as other applicable requirements specified in Section 114
and Section 308 of the Air Act and the Water Act, respectively, and all
applicable regulations and guidelines issued thereunder before the execution of
Modification No. 14 to this Agreement;
(ii) that no portion of the work required by this Agreement will be
performed in a facility listed on the Environmental Protection Agency list of
violating facilities on the date when Modification No. 14 to this Agreement
was executed unless and until the Environmental Protection Agency eliminates the
name of such facility or facilities from such listing;
(iii) to use its best efforts to comply with clean air standards and
clean water standards at the facilities in which the Agreement is being
performed;
(iv) to insert the substance of the provisions of this Section 7.23 in
any nonexempt subcontract, including this paragraph (iv).
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(b) The terms used in this Section 7.23 have the following meanings:
(i) the term "Air Act" means the Clean Air Act, as amended (42 U.S.C.
7401 et seq.);
(ii) the term "Water Act" means Clean Water Act, as amended (33 U.S.C.
1251 et seq.);
(iii) the term "Clean Air Standards" means any applicable and
enforceable rules, regulations, guidelines standards, limitations, orders,
controls, prohibitions, or other requirements which are contained in, issued
under, or otherwise adopted pursuant to the Air Act or Executive Order 11,738,
an applicable implementation plan as described in Section 110(d) of the Air Act
(42 U.S.C. 7410(d)), an approved implementation procedure or plan under Section
111(c) or Section 111(d), respectively, of the Air Act (42 U.S.C. 7411(c) or
(d)), or an approved implementation procedure under Section 112(d) of the Air
Act (42 U.S.C. 7412(d));
(iv) the term "Clean Water Standards" means any applicable and
enforceable limitation, control, condition, prohibition, standard, or other
requirement which is promulgated pursuant to the Water Act or contained in a
permit issued to a discharger by the Environmental Protection Agency or by a
state under an approved program, as authorized by Section 402 of the Water Act
(33 U.S.C. 1342), or by a local government to ensure compliance with
pretreatment regulations as required by Section 307 of the Water Act (33 U.S.C.
1317);
(v) the term "compliance" means compliance with applicable clean air or
water standards. Compliance shall also mean compliance with a schedule or plan
ordered or approved by a court of competent jurisdiction, the Environmental
Protection Agency or an air or water pollution control agency in accordance with
the requirements of the Air Act or Water Act and regulations issued pursuant
thereto;
(vi) the term "facility" means any building, plant installation,
structure, mine, vessel, or other floating craft, location, or site of
operations owned, leased or supervised by a contractor or subcontractor, to be
utilized in the performance of a contract or subcontract.
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Where a location or site of operations contains or includes more than one
building, plant, installation, or structure, the entire location shall be deemed
to be a facility except where the Director, Office of Federal Activities,
Environmental Protection Agency, determines that independent facilities are
located in one geographical area.
Section 7.24 AFFIRMATIVE ACTION FOR DISABLED VETERANS AND VETERANS OF
THE VIETNAM ERA.
(a) Corporation will not discriminate against any employee or applicant
for employment because he or she is a disabled veteran or veteran of the Vietnam
era in regard to any position for which the employee or applicant for
employment is qualified. Corporation agrees to take affirmative action to
employ, advance in employment and otherwise treat qualified disabled veterans
and veterans of the Vietnam era without discrimination based upon their
disability or veterans status in all employment practices such as the
following: employment upgrading, demotion or transfer, recruitment,
advertising, layoff or termination, rates of pay or other forms of compensation,
and selection for training, including apprenticeship.
(b) Corporation agrees that all suitable employment openings of
Corporation which exist at the time of the execution of Modification No. 14 to
this Agreement and those which occur during the performance of this Agreement,
including those not generated by this Agreement and including those occurring at
an establishment of Corporation other than the one wherein this Agreement is
being performed but excluding those of independently operated corporate
affiliates, shall be listed at an appropriate local office of the State
employment service system wherein the opening occurs. Corporation further agrees
to provide such reports to such local office regarding employment openings and
hires as may be required.
(c) Listing of employment openings with the employment service system
pursuant to this clause shall be made at least concurrently with the use of any
other recruitment source or effort and shall involve the normal obligations
which attach to the placing of a bona fide job order, including the acceptance
of referrals of veterans and nonveterans. The listing of employment openings
does
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not require the hiring of any particular job applicant or from any particular
group of job applicants, and nothing herein is intended to relieve Corporation
from any requirements in Executive Orders or regulations regarding
nondiscrimination in employment.
(d)(1) Corporation shall report at least annually, as required by the
Secretary of Labor, on:
(i) The number of special disabled veterans and the number of veterans
of the Vietnam era in the workforce of Corporation by job category and hiring
location; and
(ii) The total number of new employees hired during the period covered
by the report, and of that total, the number of special disabled veterans, and
the number of veterans of the Vietnam era.
(2) The above items shall be reported by completing the form entitled
"Federal Contractor Veterans' Employment Report VETS-100."
(3) Reports shall be submitted no later than March 31 of each year.
(4) The employment activity report required by paragraph (d)(1)(ii) of
this clause shall reflect total hires during the most recent 12-month period as
of the ending date selected for the employment profile report required by
paragraph (d)(1)(i) of this clause. Contractors may select an ending date: (i)
As of the end of any pay period during the period January through March 1st of
the year the report is due, or (ii) as of December 31, if the contractor has
previous written approval from the Equal Opportunity Commission to do so for
purposes of submitting the Employer Information Report EEQ-1 (Standard Form
100).
(5) The count of veterans reported according to paragraph (d)(1) of
this clause shall be based on voluntary disclosure. Each contractor subject to
the reporting requirements at 38 U.S.C. 2012(d) shall invite all special
disabled veterans and veterans of the Vietnam era who wish to benefit under the
affirmative action program at 38 U.S.C. 2012 to identify themselves to the
contractor. The invitation shall state that the information is voluntarily
provided, that the information will be kept
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confidential, that disclosure or refusal to provide the information will not
subject the applicant or employee to any adverse treatment and that the
information will be used only in accordance with the regulations promulgated
under 38 U.S.C. 2012.
(e) Whenever Corporation becomes contractually bound to the listing
provisions of this clause, it shall advise the employment service system in each
State where it has establishments of the name and location of each hiring
location in the State. As long as Corporation is contractually bound to these
provisions and has so advised the State system, there is no need to advise the
State system of subsequent contracts. Corporation may advise the State system of
subsequent contracts. Corporation may advise the State system when it is no
longer bound by this contract clause.
(f) This clause does not apply to the listing of employment openings
which occur and are filled outside of the 50 states, the District of Columbia,
Puerto Rico, Guam, Virgin Islands, American Samoa, and the Trust Territory of
the Pacific Islands.
(g) The provisions of paragraphs (b), (c), (d) and (e) of this clause
do not apply to openings which Corporation proposes to fill from within its own
organization or to fill pursuant to a customary and traditional employer-union
hiring arrangement. This exclusion does not apply to a particular opening once
an employer decides to consider applicants outside of its own organization or
employer-union arrangement for that opening.
(h) As used in this clause: (1) "all suitable employment openings"
includes, but is not limited to, openings which occur in the following job
categories: production and nonproduction; plant and office; laborers and
mechanics; supervisory and nonsupervisory; technical; and executive,
administrative, and professional openings as are compensated on a salary basis
of less than $25,000 per year. This term includes full-time employment,
temporary employment of more than 3 days' duration, and part-time employment. It
does not include openings which Corporation proposes to fill from within its own
organization or to fill pursuant to a customary and traditional employer-union
hiring arrangement nor openings in an educational institution which are
restricted to students
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of that institution. Under the most compelling circumstances an employment
opening may not be suitable for listing, including such situations where the
needs of the Government cannot reasonably be otherwise supplied, where listing
would be contrary to national security, or where the requirement of listing
would otherwise not be for the best interest of the Government.
(2) "Appropriate office of the State employment service system" means
the local office of the Federal-State national system of public employment
offices with assigned responsibility for serving the areas where the employment
opening is to be filled, including the District of Columbia, Guam, Puerto Rico,
the Virgin Islands, American Samoa, and the Trust Territory of the Pacific
Islands.
(3) "Openings which Corporation proposes to fill from within its own
organization" means employment openings for which no consideration will be
given to persons outside Corporation's organization (including any affiliates,
subsidiaries, and the parent companies) and includes any openings which
Corporation proposes to fill from regularly established "recall" lists.
(4) "Openings which Corporation proposes to fill pursuant to a
customary and traditional employer-union hiring arrangement" means employment
openings which Corporation proposes to fill from union halls, which is part of
the customary and traditional hiring relationship which exists between
Corporation and representatives of its employees.
(i) Corporation agrees to comply with the rules, regulations, and
relevant orders of the Secretary of Labor issued pursuant to the Vietnam Era
Veterans Readjustment Assistance Act of 1972 (the "Act"), as amended.
(j) In the event of Corporation's noncompliance with the requirements
of this clause, actions for noncompliance may be taken in accordance with the
rules, regulations and relevant orders of the Secretary of Labor issued
pursuant to the Act.
(k) Corporation agrees to post in conspicuous places, available to
employees and applicants for employment, notices in a form to be prescribed by
the Director
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of the Office of Federal Contract Compliance Programs of the United States
Department of Labor, provided by or through the contracting officer. Such notice
shall state Corporation's obligation under the law to take affirmative action
to employ and advance in employment qualified disabled veterans and veterans of
the Vietnam era for employment, and the rights of applicants and employees.
(l) Corporation will notify each labor union or representative of
workers with which it has a collective bargaining agreement or other contract
understanding, that Corporation is bound by the terms of the Vietnam Era
Veterans Readjustment Assistance Act, and is committed to take affirmative
action to employ and advance in employment qualified disabled veterans and
veterans of the Vietnam era.
(m) Corporation will include the provisions of this clause in every
subcontract or purchase order of $10,000 or more unless exempted by rules,
regulations, or orders of the Secretary of Labor issued pursuant to the Act, so
that such provisions will be binding upon each subcontractor or vendor.
Corporation will take such action with respect to any subcontract or purchase
order as the Director of the Office of Federal Contract Compliance Programs may
direct to enforce such provisions, including action for noncompliance.
(n) If, pursuant to this section, DOE elects, in whole or in part, to
cancel, terminate, annul or suspend this Agreement, to terminate the right of
Corporation to proceed or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in writing of DOE's election
to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
Section 7.25 COVENANT AGAINST CONTINGENT FEES.
(a) The Corporation warrants that no person or selling agency has been
employed or retained to solicit or secure this contract upon an agreement or
understanding for a commission, percentage, brokerage, or contingent fee,
excepting bona fide employees or bona fide established commercial or selling
agencies maintained by the Corporation for the purpose of securing business. For
breach or violation of this warranty the Government
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shall have the right to annul this contract without liability or in its
discretion to deduct from the contract price or consideration, or otherwise
recover, the full amount of such commission, percentage, brokerage, or
contingent fee; provided, however, that if, pursuant to this section, DOE
elects, in whole or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed or to suspend con-
tract payments, such action by DOE may only be taken by delivering to
Corporation a notice in writing of DOE's election to terminate not less than
three years prior to the effective date of termination pursuant to Section 6.02
of this Agreement.
(b) "Bona fide agency," as used in this clause, mans an established
commercial or selling agency, maintained by a contractor for the purpose of
securing business, that neither exerts nor proposes to exert improper influence
to solicit or obtain Government contracts nor holds itself out as being able to
obtain any Government contract or contracts through improper influence.
"Bona fide employee," as used in this clause, means a person, employed
by a contractor and subject to the contractor's supervision and control as to
time, place, and manner of performance, who neither exerts nor proposes to
exert improper influence to solicit or obtain Government contracts nor holds out
as being able to obtain any Government contract or contracts through improper
influence.
"Contingent fee," as used in this clause, means any commission,
percentage, brokerage, or other fee that is contingent upon the success that a
person or concern has in securing a Government contract.
"Improper influence," as used in this clause, means any influence that
induces or tends to induce a Government employee or officer to give
consideration or to act regarding a Government contract on any basis other than
the merits of the matter.
Section 7.26 MISCELLANEOUS.
As used in this Agreement, the terms "bonds" and "debt securities
issued by Corporation" shall be deemed to refer to bonds and debt securities
issued by Corpora-
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tion and bonds and debt securities issued by persons, including municipalities
and governmental bodies, other than Corporation but in respect of which
Corporation is obligated to make payments under installment sale or other
agreements relating to the purchase, lease and/or installation of facilities
and/or equipment by, or for the benefit of, Corporation executed in connection
with the issuance of such bonds or debt securities. The foregoing definition is
intended for purposes of this Agreement and for purposes of this Agreement only
and shall not be deemed to affect in any way the construction or
characterization of such installment sale or other agreements for any other
purpose whatsoever.
[Third and fourth sentences of Section 7.26 deleted by Mod. No. 14.]
Section 7.27 APPROVAL REQUIRED.
Note - Refer to original agreement and various modifications for
approval required and conditions to effectiveness.
Section 7.28 TITLES OF ARTICLES AND SECTIONS. The titles of the Articles and
Sections in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.
Section 7.29 ALTERATIONS. The following changes were made in this Agreement
before it was signed by the parties hereto:
None.
Section 7.30 -DEAR 952.202-1 DEFINITIONS (APR 1984).
(a) "Contracting Officer" means a person with the authority to enter
into, administer, and/or terminate contracts and make related determinations and
findings. The term includes certain authorized representatives of the
Contracting Officer acting within the limits of their authority as delegated by
the Contracting Office.
(b) Except as otherwise provided in this Agreement, the term
"subcontracts" includes, but is not limited to,
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purchase orders and changes and modifications to purchase orders under this
Agreement.
Section 7.31 - FAR 52.203-3 GRATUITIES (APR 1984).
(a) The right of Corporation to proceed may be terminated by written
notice if, after notice and hearing, the agency head or a designee determines
that Corporation, its agent, or another representative --
(1) Offered or gave a gratuity (e.g., an entertainment or
gift) to an officer, official, or employee of the Government; and
(2) Intended, by the gratuity, to obtain a contract or
favorable treatment under a contract.
(b) The facts supporting this determination may be reviewed by any
court having lawful jurisdiction.
(c) If this Agreement is terminated under paragraph (a) above, the
Government is entitled --
(1) To pursue the same remedies as in a breach of this
Agreement; and
(2) In addition to any other damages provided by law, to
exemplary damages of not less than 3 nor more than 10 times the cost
incurred by Corporation in giving gratuities to the person concerned,
as determined by the agency head or a designee. (This subparagraph
(c)(2) is applicable only if this contract uses money appropriated to
the Department of Defense).
(d) If, pursuant to this section, DOE elects, in whole or in part, to
cancel, terminate, annul or suspend this Agreement, to terminate the right of
Corporation to proceed or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in writing of DOE's election
to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
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Section 7.32 - FAR 52.203-6 RESTRICTIONS ON SUBCONTRACTOR SALES TO THE
GOVERNMENT (JUL 1985).
(a) Except as provided in (b) below, Corporation shall not enter into
any agreement with an actual or prospective subcontractor, nor otherwise act in
any manner, which has or may have the effect of unreasonably restricting sales
by such subcontractors directly to the Government of any item or process
(including computer software) made or furnished by the subcontractor under this
Agreement or under any follow-on production contract.
(b) The prohibition in (a) above does not preclude Corporation from
asserting rights that are otherwise authorized by law or regulation.
Section 7.33 - FAR 52.203-7 ANTI-KICKBACK PROCEDURES (OCT 1988).
(a) DEFINITIONS.
"Kickback," as used in this clause, means any money, fee,
commission, credit, gift, gratuity, thing of value, or compensation of
any kind which is provided, directly or indirectly, to any prime Con-
tractor, prime Contractor employee, sub-contractor, or subcontractor
employee for the purpose of improperly obtaining or rewarding
favorable treatment in connection with a prime contract or in
connection with a subcontract relating to a prime contract.
"Person," as used in this clause, means a corporation,
partnership, business association of any kind, trust, joint-stock
company, or individual.
"Prime contract," as used in this clause, means a contract or
contractual action entered into by the United States for the purpose of
obtaining supplies, materials, equipment, or services of any kind.
"Prime Contractor," as used in this clause, means a person who
has entered into a prime contract with the United States.
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"Prime Contractor employee," as used in this clause, means any
officer, partner, employee, or agent of a prime Contractor.
"Subcontract," as used in this clause, means a contract or
contractual action entered into by a prime Contractor or subcontractor
for the purpose of obtaining supplies, materials, equipment or services
of any kind under a prime contract.
"Subcontractor," as used in this clause, (1) means any person,
other than the prime Contractor, who offers to furnish or furnishes any
supplies, materials, equipment, or services of any kind under a prime
contract or a subcontract entered into in connection with such prime
contract, and (2) includes any person who offers to furnish or
furnishes general supplies to the prime Contractor or a higher tier
subcontractor.
"Subcontractor employee," as used in this clause, means any
officer, partner, employee, or agent of a subcontractor.
(b) The Anti-Kickback Act of 1986 (41 U.S.C. 51-58) (the Act),
prohibits any person from --
(1) Providing or attempting to provide or offering to provide any
kickback;
(2) Soliciting, accepting, or attempting to accept any kickback; or
(3) Including, directly or indirectly, the amount of any kickback in
the contract price charged by a prime Contractor to the United States or in the
contract price charged by a subcontractor to a prime contractor or higher tier
subcontractor.
(c)(1) Corporation shall have in place and follow reasonable procedures
designed to prevent and detect possible violations described in paragraph (b) of
this clause in its own operations and direct business relationships.
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(2) When Corporation has reasonable grounds to believe that a violation
described in paragraph (b) of this clause may have occurred, Corporation shall
promptly report in writing the possible violation. Such reports shall be made to
the inspector general of the contracting agency, the head of the contracting
agency if the agency does not have an inspector general, or the Department of
Justice.
(3) Corporation shall cooperate fully with any Federal Agency
investigating a possible violation described in paragraph (b) of this clause.
(4) The Contracting Officer may (i) offset the amount of the kickback
against any monies owed by the United States under the prime contract and/or
(ii) direct that the Prime Contractor withhold, from sums owed a subcontractor
under the prime contract, the amount of any kickback. The Contracting Officer
may order that monies withheld under subdivision (c)(4)(ii) of this clause be
paid over to the Government unless the Government has already offset those
monies under subdivision (c)(4)(i) of this clause. In either case, the Prime
Contractor shall notify the Contracting Officer when the monies are withheld.
(5) Corporation agrees to incorporate the substance of this clause,
including this subparagraph (c)(5) but excepting subparagraph (c)(1), in all
subcontracts under this Agreement.
Section 7.34 - FAR 52.219-9 SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN (FEB 1990).
(a) This clause does not apply to small business concerns.
(b) "Commercial product," as used in this clause, means a product in
regular production that is sold in substantial quantities to the general public
and/or industry at established catalog or market prices. It also means a product
which, in the opinion of the Contracting Officer, differs only insignificantly
from Corporation's commercial product.
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"Subcontract," as used in this clause, means any agreement (other than
one involving an employer-employee relationship) entered into by a Federal
Government prime Contractor or subcontractor calling for supplies or services
rendered for performance of the contract or subcontract.
(c) The offeror, upon request by the Contracting Officer, shall submit
and negotiate a subcontracting plan, where applicable, which separately
addresses sub contracting with small business concerns and small disadvantaged
business concerns. If the offeror is submitting an individual contract plan, the
plan must separately address subcontracting with small business concerns and
with small disadvantaged business concerns with a separate part for each option
(if any). The plan shall be included in and made a part of the resultant
contract. The subcontracting plan shall be negotiated within the time specified
by the Contracting Officer. Failure to submit and negotiate the subcontracting
plan shall make the offeror ineligible for award of a contract.
(d) The Offeror's subcontracting plan shall include the following:
(1) Goals, expressed in terms of percentages of total planned
subcontracting dollars, for use of small business concerns and small
disadvantaged business concerns as subcontractors. The offeror shall
include all subcontracts that contribute to contract performance, and
may include a proportionate share of products and services that are
normally allocated as indirect costs.
(2) A statement of --
(i) Total dollars planned to be subcontracted;
(ii) Total dollars planned to be subcontracted to
small business concerns; and
(iii) Total dollars planned to be subcontracted to
small disadvantaged business concerns.
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(3) A description of the principal types of supplies and
services to be subcontracted, and an identification of the types planned for
subcontracting to (i) small business concerns and (ii) small disadvantaged
business concerns.
(4) A description of the method used to develop the
subcontracting goals in (1) above.
(5) A description of the method used to identify potential
sources for solicitation purposes (e.g., exiting company source lists, the
Procurement Automated Source System (PASS) of the Small Business Administration,
the National Minority Purchasing Council Vendor Information Service, the
Research and Information Division of the Minority Business Development Agency
in the Department of Commerce, or small and small disadvantaged concerns trade
associations).
(6) A statement as to whether or not the offeror included
indirect costs in establishing subcontracting goals, and a description of the
method used to determine the proportionate share of indirect costs to be
incurred with (i) small business concerns and (ii) small disadvantaged business
concerns.
(7) The name of the individual employed by the offeror who
will administer the offeror's subcontracting program, and a description of the
duties of the individual.
(8) A description of the efforts the offeror will make to
assure that small business concerns and small disadvantaged business concerns
have an equitable opportunity to compete for subcontracts.
(9) Assurances that the offeror will include the clause in
this Agreement entitled "Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns" in all subcontracts that offer further
subcontracting opportunities, and that the offeror will require all
subcontractors (except small business concerns) who receive subcontracts in
excess of $500,000 ($1,000,000 for construction of any public facility) to adopt
a plan similar to the plan agreed to by the offeror.
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(10) Assurances that the offeror will (i) cooperate in any
studies or surveys as may be required, (ii) submit periodic reports in order to
allow the Government to determine the extent of compliance by the offeror with
the subcontracting plan, (iii) submit, not later than the 25th day of the
succeeding month, Standard Form (SF) 294 only, (DOE contractors need not submit
SF 295) on a quarterly basis current as the last day of March, June, September,
and December, and upon contract completion, in accordance with the instructions
on the form except the report shall be submitted quarterly rather than
semiannually and additionally shall indicate at the remarks block the number and
dollar amount of award made to labor surplus area concerns to the extent such
reporting is required by the terms of their contract, and (iv) ensure that its
subcontractors agree to submit Standard Form 294 in accordance with the
instructions of (iii) above.
(11) A recitation of the types of records the offeror will
maintain to demonstrate procedures that have been adopted to comply with the
requirements and goals in the plan, including establishing source lists; and in
a description of its efforts to locate small and small disadvantaged business
concerns and award subcontracts to them. The records shall include at least the
following (on a plant-wide or company-wide basis, unless otherwise indicated):
(i) Source lists, guides, and other data that identify small
and small disadvantaged business concerns.
(ii) Organizations contacted in an attempt to locate sources
that are small or small disadvantaged business concerns.
(iii) Records on each subcontract solicitation resulting in an
award of more than $100,000, indicating (A) whether small business
concerns were solicited and if not, why not, (B) whether small
disadvantaged business concerns were solicited and if not, why not, and
(C) if applicable, the reason award was not made to a small business
concern.
(iv) Records of any outreach efforts to contact (A) trade
associations, (B) business develop-
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ment organizations, and (C) conferences and trade fairs to locate small
and small disadvantaged business sources.
(v) Records of internal guidance and encouragement provided
to buyers through (A) workshops, seminars, training etc., and (B)
monitoring performance to evaluate compliance with the program's
requirements.
(vi) On a contract-by-contract basis, records to support award
data submitted by the offeror to the Government, including the name,
address, and business size of each subcontractor. Contractors having
company or division-wide annual plans need not comply with this
requirements.
(e) In order to effectively implement this plan to the extent
consistent with efficient contract performance, Corporation shall perform the
following functions:
(1) Assist small business and small disadvantaged business
concerns by arranging solicitations, time for the preparation of bids,
quantities, specifications, and delivery schedules so as to facilitate
the participation by such concerns.
Where Corporation's lists of potential small business and small
disadvantaged subcontractors are excessively long, reasonable effort
shall be made to give all small business concerns an opportunity to
compete over a period of time.
(2) Provide adequate and timely consideration of the
potentialities of small business and small disadvantaged business
concerns in all "make-or-buy" decisions.
(3) Counsel and discuss subcontracting opportunities with
representatives of small and small disadvantaged business firms.
(4) Provide notice to subcontractors, similar to that in the
solicitation provision at 52.219-1, concerning penalties from its
representations of business status as small business or small disadvan-
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taged business for the purpose of obtaining a subcontract that is to
be included as part or all of a goal contained in Corporation's
subcontracting plan.
(f) A master subcontracting plan on a plant or division-wide basis
which contains all the elements required by (d) above, except goals, may be
incorporated by reference as a part of the subcontracting plan required of the
offeror by this clause; provided, (1) the master plan has been approved, (2) the
offeror provides copies of the approved master plan and evidence of its approval
to the Contracting Officer, and (3) goals and any deviations from the master
plan deemed necessary by the Contracting Officer to satisfy the requirements of
this contract are set forth in the individual subcontracting plan.
(g)(1) If a commercial product is offered, the subcontracting plan
required by this clause may relate to the offeror's production generally, for
both commercial and noncommercial products, rather than solely to the Government
contract. In these cases, the offeror shall, with the concurrence of the
Contracting Officer, submit one company-wide or division-wide annual plan.
(2) The annual plan shall be received for approval by the agency
awarding the offeror its first prime contract requiring a subcontracting plan
during the fiscal year, or by an agency satisfactory to the Contracting Officer.
(3) The approved plan shall remain in effect during the offeror's
fiscal year for all of the Offeror's commercial products.
(h) Prior compliance of the offeror with other such subcontracting
plans under previous contracts will be considered by the Contracting Officer in
determining the responsibility of the Offeror for award of the contract.
(i) The failure of the Corporation to comply in good faith with (1) the
clause of this Agreement entitled "Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns," or (2) an approved plan required by
this clause, shall be a material breach of this Agreement.
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(j) If, pursuant to this section, DOE elects, in whole or in part, to
cancel, terminate, annul or suspend this Agreement, to terminate the right of
Corporation to proceed or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in writing of DOE's election
to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
Section 7.35 - FAR 52.291-13 UTILIZATION OF WOMEN-OWNED SMALL
BUSINESSES (AUG 1986).
(a) "Women-owned small businesses," as used in this clause, means small
business concerns that are at least 51 percent owned by women who are United
States citizens and who also control and operate the business.
"Control, as used in this clause, means exercising the power to make
policy decisions.
"Operate," as used in this clause, means being actively involved in
the day-to-day management of the business.
"Small business concern," as used in this clause, means a concern
including its affiliates, that is independently owned and operated, not
dominant in the field of operation in which it is bidding on Government
contracts, and qualified as a small business under the criteria and size
standards in 13 CFR 121.
(b) It is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to participate in
performing contracts awarded by any Federal agency.
(c) Corporation agrees to use its best efforts to give women-owned
small businesses the maximum practicable opportunity to participate in the
subcontracts it awards to the fullest extent consistent with the efficient
performance of this Agreement.
(d) Corporation may rely on written representations by its
subcontractors regarding their status as women-owned small businesses.
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Section 7.36 - FAR 52.223-6 DRUG-FREE WORKPLACE (JUL 1990).
(a) DEFINITIONS. As used in this clause,
"Controlled substance" means a controlled substance in schedules I
through V of section 202 of the Controlled Substances Act (21 U.S.C. 812) and as
further defined in regulation at 21 CFR 1308.11 - 1308.15.
"Conviction" means a finding of guilt (including a plea of nolo
contendere) or imposition of sentence, or both, by any judicial body charged
with the responsibility to determine violations of the Federal or State criminal
drug statutes.
"Criminal drug statute" means a Federal or non-Federal criminal
statute involving the manufacture, distribution, dispensing, possession or use
of any controlled substance.
"Drug-free workplace" means the site(s) for the performance of work
done by the Contractor in connection with a specific contract at which employees
of the Contractor are prohibited from engaging in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance.
"Employee" means an employee of a Contractor directly engaged in the
performance of work under a Government contract.
"Directly engaged" is defined to include all direct cost employees and
any other Contractor employee who has other than a minimal impact or involvement
in contract performance.
(b) Corporation, if other than an individual, shall -- within 30
calendar days after award (unless a longer period is agreed to in writing for
contracts of 30 calendar days or more performance duration); or as soon as
possible for contracts of less than 30 days performance duration -
(1) Publish a statement notifying its employees that the
unlawful manufacture, distribution, dispensing, possession, or use of a
controlled substance is
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prohibited in Corporation's workplace and specifying the actions that will be
taken against employees for violations of such prohibition;
(2) Establish an ongoing drug-free awareness program to inform
such employees about --
(i) The dangers of drug abuse in the workplace;
(ii) Corporation's policy of maintaining a drug-free
workplace;
(iii) Any available drug counseling, rehabilitation,
and employee assistance program; and
(iv) The penalties that may be imposed upon
employees for drug abuse violations occurring in the workplace.
(3) Provide all employees engaged in performance of the
Agreement with a copy of the statement required by subparagraph (b)(1) of this
clause;
(4) Notify such employees in writing in the statement required
by subparagraph (b)(1) of this clause that, as a condition of continued
employment of this Agreement, the employee will --
(i) Abide by the terms of the statement; and
(ii) Notify the employer in writing of the employee's
conviction under a criminal drug statute for a violation occurring in
the workplace no later than five (5) calendar days after such
conviction.
(5) Notify the Contracting Officer within 10 calendar days
after receiving notice under subdivision (b)(4)(ii) of this clause, from an
employee or otherwise receiving actual notice of such conviction. The notice
shall include the position title of the employee;
(6) Within 30 calendar days after receiving notice under
subdivision (b)(4)(ii) of this clause of a
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conviction, take one of the following actions with respect to any employee who
is convicted of a drug abuse violation occurring in the workplace:
(i) taking appropriate personnel action against such
employee, up to and including termination; or
(ii) Require such employee to satisfactorily
participate in a drug abuse assistance or rehabilitation program
approved for such purposes by a Federal, State, or local health, law
enforcement, or other appropriate agency.
(7) Make a good faith effort to maintain a drug-free workplace
through implementation of subparagraphs (b)(1) through (b)(6) of this clause.
(c) Corporation, if an individual, agrees by award of this Agreement or
acceptance of a purchase order, not to engage in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance in the
performance of this Agreement.
(d) In addition to other remedies available to the Government,
Corporation's failure to comply with the requirements of paragraphs (b) and (c)
of this clause may, pursuant to FAR 23.506, render Corporation subject to
suspension of contract payments, termination of the Agreement for default, and
suspension or debarment.
(e) If, pursuant to this section, DOE elects, in whole or in part, to
cancel, terminate, annul or suspend this Agreement, to terminate the right of
Corporation to proceed or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in writing of DOE's election
to terminate not less than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement.
Section 7.37 - FAR 52.232-28 ELECTRONIC FUNDS TRANSFER PAYMENT METHODS
(APR 1989). Payments under this Agreement will be made by the Government either
by check or electronic funds transfer (through the Treasury Fedline Payment
System (FEDLINE) or the Automated Clearing House (ACH)), at the option of the
Government. After
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award, but no later than 14 days before an invoice or contract financing request
is submitted, Corporation shall designate a financial institution for receipt of
electronic funds transfer payments, and shall submit this designation to the
Contracting Officer or other Government official, as directed.
(a) For payments through FEDLINE, Corporation shall provide the
following information:
(1) Name, address, and telegraphic abbreviation of the
financial institution receiving payment.
(2) The American Bankers Association 9-digit identifying
number for wire transfers of the financing institution receiving
payment if the institution has access to the Federal Reserve
Communications System.
(3) Payee's account number at the financial institution where
funds are to be transferred.
(4) If the financial institution does not have access to the
Federal Reserve Communications System, name, address, and telegraphic
abbreviation of the correspondent financial institution through which
the financial institution receiving payment obtains wire transfer
activity. Provide the telegraphic abbreviation and American Bankers
Association identifying number for the correspondent institution.
(b) For payment through ACH, Corporation shall provide the following
information:
(1) Routing transit number of the financial institution
receiving payment (same as American Bankers Association identifying
number used for FEDLINE).
(2) Number of account to which funds are to be deposited.
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(3) Type of depositor account ("C" for checking, "S" for
savings).
(4) If Corporation is a new enrollee to the ACH system, a
"Payment Information Form," SF 3881, must be completed before payment
can be processed.
(c) In the event Corporation, during the performance of this
Agreement, elects to designate a different financial institution for the receipt
of any payment made using electronic funds transfer procedures, notification of
such change and the required information specified above must be received by the
appropriate Government official 30 days prior to the date of such change is to
become effective.
(d) The documents furnishing the information required in this clause
must be dated and contain the signature, title, and telephone number of the
Corporation official authorized to provide it, as well as Corporation's name
and contract number.
(e) Corporation's failure to properly designate a financial institution
or to provide appropriate payee bank account information may delay payments of
amounts otherwise properly due.
Section 7.38 - PAYMENT OF INTEREST.
(a) Notwithstanding any other clause of this Agreement, all amounts
that become payable by Corporation to the Government under this Agreement (net
of any applicable tax credit under the Internal Revenue Code (26 U.S.C. 1481))
shall bear simple interest from the date due until paid unless paid within 30
days of becoming due. The interest rate shall be the interest rate established
by the Secretary of the Treasury as provided in Section 12 of the Contract
disputes Act of 1978 (Public Law 95-563), which is applicable to the period in
which the amount becomes due, as provided in paragraph (b) of this clause, and
then at the rate applicable for each six-month period as fixed by the Secretary
until the amount is paid.
(b) Amounts shall be due at the earliest of the following dates:
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(1) The date fixed under this Agreement.
(2) The date of the first written demand for payment
consistent with this Agreement.
(c) The interest charge made under this clause may be reduced under the
procedures prescribed in 32.614-2 of the Federal Acquisition Regulation in
effect on the date of this Agreement.
Section 7.39 - FAR 52.203-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR
IMPROPER ACTIVITY (SEP 1990).
(a) The Government, at its election, may reduce the price of a
fixed-price type contract or contract modification and the total cost and fee
under a cost-type contract or contract modification by the amount of profit or
fee determined as set forth in paragraph (b) of this clause if the head of the
contracting activity or his or her designee determines that there was a
violation of subsection 27(a) of the Office of Federal Procurement Policy Act,
as amended (41 U.S.C. 423), as implemented in the FAR. In the case of a contract
modification, the fee subject to reduction is the fee specified in the
particular contract modification at the time of execution, except as provided in
subparagraph (b)(5) of this clause.
(b) The price or fee reduction referred to in paragraph (a) of this
clause shall be --
(1) For cost-plus-fixed-fee contracts, the amount of the fee
specified in the contract at the time of award;
(2) For cost-plus-incentive-fee contracts, the target fee
specified in the contract at the time of award, notwithstanding any
minimum fee or "fee floor" specified in the contract;
(3) For cost-plus-award-fee contracts --
(i) The base fee established in the contract at the
time of contract award;
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(ii) If no base fee is specified in the contract, 30
percent of the amount of each award fee otherwise payable to
the Contractor for each award fee evaluation period or at each
award fee determination point.
(4) For fixed price incentive contracts, the Government may --
(i) Reduce the contract target price and contract
target profit both by an amount equal to the initial target
profit specified in the contract at the time of contract
award; or
(ii) If an immediate adjustment to the contract
target price and contract target profit would have a
significant adverse impact on the incentive price revision
relationship under the contract, or adversely affect the
contract financing provisions, the Contracting Officer may
defer such adjustment until establishment of the total final
price of the contract. The total final price established in
accordance with the incentive price revision provisions of the
contract shall be reduced by an amount equal to the initial
target profit specified in the contract at the time of
contract award and such reduced price shall be the total final
contract price.
(5) For firm-fixed-price contracts or contract modifications,
by 10 percent of the initial contract modification price; or a profit amount
determined by the Contracting Officer from records or documents in existence
prior to the date of the contract award or modification.
(c) The Government may, at its election, reduce a prime contractor's
price or fee in accordance with the
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procedures of paragraph (b) of this clause for violations of the Act by its
subcontractors by an amount not to exceed the amount of profit or fee reflected
in the subcontract at the time the subcontract was first definitively priced.
(d) In addition to the remedies in paragraphs (a) and (c) of this
clause, the Government may terminate this contract for default. The rights and
remedies of the Government specified herein are not exclusive and are in
addition to any other rights and remedies provided by law or under this
contract.
(e) Notwithstanding the provisions of paragraphs (a), (b), (c), and (d)
of this Section 7.39:
(1) The cumulative total of all reductions, made pursuant to
this Section 7.39, in price, profit, fee or other compensation shall
not exceed $140,000; and
(2) If, pursuant to this section, DOE elects, in whole or in
part, to cancel, terminate, annul or suspend this Agreement, to
terminate the right of Corporation to proceed or to suspend contract
payments, such action by DOE may only be taken by delivering to
Corporation a notice in writing of DOE's election to terminate not less
than three years prior to the effective date of termination pursuant to
Section 6.02 of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Modification
No. 14 as of the date and year first above written.
OHIO VALLEY ELECTRIC CORPORATION
By /s/
--------------------------------
UNITED STATES OF AMERICA
By: SECRETARY OF ENERGY
By /s/
--------------------------------
Authorized Contracting Officer
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