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ENERGY MANAGEMENT AGREEMENT
between
LONG ISLAND LIGHTING COMPANY
and
LONG ISLAND POWER AUTHORITY
Dated as of June 26, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 - DEFINITIONS ................................................... 2
ARTICLE 2 - SCOPE OF ENERGY MANAGEMENT SERVICES ........................... 10
ARTICLE 3 - FUEL MANAGEMENT ............................................... 11
3.1. FUEL MANAGEMENT SERVICES .......................................... 11
3.2. FUEL MANAGEMENT COMPENSATION ...................................... 12
3.2.1. Fuel Management Fee ........................................ 12
3.2.2. Monthly Fuel Payment ....................................... 12
3.3. FUEL PURCHASE PERFORMANCE INCENTIVES/DISINCENTIVE
PAYMENTS .......................................................... 13
3.4. PAYMENT ........................................................... 13
3.5. LATE PAYMENT ...................................................... 13
3.6. FUEL MANAGEMENT ................................................... 13
3.7. GENERAL FUEL SERVICE REQUIREMENTS ................................. 14
3.7.1. Minimization of Costs ...................................... 14
3.7.2. Accounting Controls ........................................ 14
ARTICLE 4 - OFF SYSTEM SALES .............................................. 15
ARTICLE 5 - SYSTEM POWER SUPPLY MANAGEMENT
5.1. LOWEST COST ELECTRICITY ........................................... 16
5.2. SPECIFIC ENERGY MANAGER RESPONSIBILITIES .......................... 16
5.3. SYSTEM POWER SUPPLY MANAGEMENT COMPENSATION ....................... 17
5.3.1 System Power Supply Management Fee ......................... 17
5.3.2 System Power Supply Performance
Incentives/Disincentives ................................... 17
5.4. PAYMENT ........................................................... 17
(i)
5.5. LATE PAYMENT ...................................................... 18
ARTICLE 6 - GENERAL ....................................................... 19
6.1. STAFFING AND LABOR ISSUES ......................................... 19
6.2. ACCOUNT RECORDS; COLLECTION OF MONIES;
AVAILABILITY OF ENERGY MANAGER .................................... 19
6.2.1. Account Records ............................................ 19
6.2.2 Collection of Monies ....................................... 19
6.2.3 Availability of Energy Manager ............................. 20
(A) Office Facilities ...................................... 20
(B) Availability of Representatives ........................ 20
(C) Emergency Telephone Number ............................. 20
6.3. COMPLIANCE WITH APPLICABLE LAW .................................... 20
6.4. INFORMATION ....................................................... 20
6.4.1. Information System ......................................... 20
6.4.2. Ownership of Information and Documentation ................. 20
6.5. BOOKS AND RECORDS ................................................. 21
6.6. FISCAL AFFAIRS, ACCOUNTING AND RECORD KEEPING ..................... 21
6.6.1. General .................................................... 21
6.6.2. Bank Deposits .............................................. 21
6.7. OTHER SERVICES
6.7.1. Xxxx Payments .............................................. 22
6.7.2 Review of System Supply Bills .............................. 22
6.7.3. Attendance at Meetings ..................................... 22
ARTICLE 7 - TERM; EVENTS OF DEFAULT
7.1. TERM .............................................................. 24
7.2. EVENTS OF DEFAULT BY THE ENERGY MANAGER ........................... 24
7.2.1. Events of Energy Manager Default Defined ................... 24
(1) Events of Default Not Requiring Cure
Opportunity for Termination ............................ 24
(a) Change of Control of Energy Manager ............... 24
(b) Voluntary bankruptcy .............................. 24
(c) Involuntary Bankruptcy ............................ 24
(ii)
(2) Events of Default Requiring Cure Opportunity ........... 25
(a) Failure to Pay or Credit .......................... 25
(b) Failure Otherwise to Comply
with Agreement or Guaranty ........................ 25
7.3. EVENTS OF DEFAULT BY THE AUTHORITY ................................ 25
7.3.1. Events of Authority Default Defined ........................ 25
(1) Failure to Pay ........................................ 25
(2) Failure to Comply with Agreement ...................... 26
(3) Change of Control of Long Island Lighting Company ..... 26
7.4. PROCEDURE FOR TERMINATION FOR CAUSE ............................... 26
7.4.1. Thirty Day Notice .......................................... 26
7.4.2. Termination by Authority ................................... 26
(1) Access ................................................ 26
(2) Assumption of Responsibilities ........................ 27
7.5. CERTAIN OBLIGATIONS OF THE ENERGY MANAGER UPON
TERMINATION OR EXPIRATION ......................................... 27
7.5.1. Obligations on Termination or Expiration ................... 27
7.5.2. Authority Payment of Certain Transition Costs .............. 28
7.6. NO WAIVERS ....................................................... 28
7.7. AUTHORITY EMERGENCY ASSUMPTION OF FUEL AND
SYSTEM POWER SUPPLY MANAGEMENT SERVICES ........................... 28
7.8. WAIVER OF CERTAIN DEFENSES ........................................ 29
ARTICLE 8 - DESIGNATION OF REPRESENTATIVES
8.1. AUTHORITY REPRESENTATIVE .......................................... 30
8.2. ENERGY MANAGER REPRESENTATIVE ..................................... 30
ARTICLE 9 - ENERGY MANAGER'S REPORTING REQUIREMENTS
9.1. MONTHLY REPORTS ................................................... 31
9.2. ANNUAL REPORTS .................................................... 31
9.3. FUEL CONSUMPTION REPORTS .......................................... 31
9.4. LITIGATION; PERMIT LAPSES ......................................... 31
(iii)
ARTICLE 10 - INSURANCE .................................................... 32
ARTICLE 11 - INDEMNIFICATION .............................................. 33
11.1. INDEMNIFICATION .................................................. 33
(A) Indemnification by the Energy Manager ........................ 33
(B) Indemnification by the Authority ............................. 34
ARTICLE 12 - NONDISCLOSURE ................................................ 36
12.1. PROPRIETARY INFORMATION .......................................... 36
(A) Energy Manager Request ....................................... 36
(B) Authority Non-Disclosure ..................................... 36
(C) Permitted Disclosures ........................................ 36
ARTICLE 13 - MISCELLANEOUS PROVISIONS
13.1. AGREEMENT ........................................................ 37
13.2. RELATIONSHIP OF THE PARTIES ...................................... 37
13.3. ASSIGNMENT AND TRANSFER .......................................... 37
13.4. APPROVAL OF SUBCONTRACTORS ....................................... 37
13.5. ACTIONS OF THE AUTHORITY IN ITS GOVERNMENTAL
CAPACITY ......................................................... 38
13.6. NO THIRD PARTY BENEFICIARIES ..................................... 38
13.7. STATE LAW REQUIREMENTS ........................................... 38
13.8. DISPUTE RESOLUTION ............................................... 38
13.8.1 Dispute Resolution ........................................ 38
13.8.2 Negotiation and Non-Binding Mediation ..................... 38
13.8.3 Arbitration ............................................... 39
13.8.4 Provisional Relief ........................................ 39
13.8.5 Awards
13.8.6 Information Exchange ...................................... 40
13.8.7 Site of Arbitration ....................................... 40
13.8.8 Precondition to Litigation ................................ 40
13.8.9 Continuity of Service ..................................... 40
(iv)
13.9. AMENDMENTS ......................................................... 40
13.10. NOTICES ............................................................ 40
13.10.1 ............................................................ 40
13.10.2 ............................................................ 41
13.11. REPRESENTATIONS AND WARRANTIES ..................................... 41
13.11.1. Energy Manager Representations and Warranties ............ 41
13.11.2. Authority Representations and Warranties ................. 42
13.12. COUNTERPARTS ....................................................... 43
13.13. GOVERNING LAW ...................................................... 43
13.14. CAPTIONS; APPENDICES ............................................... 43
13.15. ENERGY MANAGER TO REMAIN AFFILIATE OF GUARANTOR;
CREDIT ENHANCEMENT IN CERTAIN CIRCUMSTANCES ........................ 43
(A) Limitations ................................................... 13
(B) Material Decline in the Guarantor's Credit Standing ........... 43
(C) Credit Enhancement ............................................ 43
13.16. SEVERABILITY ....................................................... 44
13.17. RULES OF INTERPRETATION ............................................ 44
13.18. HEDGING POLICIES ................................................... 44
13.19 ENERGY PRICING INFORMATION SYSTEM .................................. 44
APPENDICES
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Appendix A Fuel purchase performance, incentive/disincentive
Appendix B System power supply performance incentive/disincentive
Appendix C Provisions Required by State Law
(v)
ENERGY MANAGEMENT AGREEMENT
This ENERGY MANAGEMENT AGREEMENT ("Agreement") is entered into as of June
26, 1997 ("Contract Date") by and between LONG ISLAND LIGHTING COMPANY, a New
York corporation ("Energy Manager"), and LONG ISLAND POWER AUTHORITY a corporate
municipal instrumentality and political sub-division of the State of New York
(the "Authority"). Each of the foregoing are sometimes referred to herein as a
"Party" and collectively as the "Parties".
WHEREAS, the Energy Manager currently manages the fuel supplies for the
GENCO Generating Facilities (as defined herein), and the Authority desires the
Energy Manager, acting as the Authority's agent, to purchase fuel supplies for
use in the GENCO Generating Facilities.
WHEREAS, the Energy Manager currently manages the System Power Supply (as
defined herein), and the Authority desires the Energy Manager to continue to
manage the System Power Supply on behalf of the Authority.
WHEREAS, the Energy Manager and the Authority have set forth in this
Agreement the terms and conditions for the management by the Energy Manager of
fuel supplies used at the GENCO Generating Facilities to produce electric energy
for delivery to the Authority and for management and administration of the
System Power Supply on behalf of the Authority in a manner consistent with
policies established by the Authority.
WHEREAS, in accordance with the terms hereof, the Authority is to establish
policies and procedures for the System Power Supply and the Manager is
responsible for the implementation of those policies.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the Parties agree as follows:
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ARTICLE 1 - DEFINITIONS
Unless otherwise required by the context in which any defined
term appears, the following capitalized terms have the meanings specified in
this Article 1. All terms used and not otherwise defined herein are defined in
Appendix 1 to the Management Services Agreement, a copy of which is annexed
hereto for reference purposes.
"Ancillary Services" means the ancillary services required by NYPP/ISO from
time to time to enable the NYPP/ISO to operate the transmission system in New
York State in a secure and reliable manner.
"Annual Settlement Statement" means the Annual Settlement Statement
referred to in subsection 9.2 hereof.
"Appendix" means an appendix to this Agreement, as the same may be amended
or modified from time to time in accordance with the terms hereof.
"Applicable Law" means any law, rule, regulation, requirement, guideline,
ruling, ordinance or order of or any Legal Entitlement issued by, any
Governmental Body and applicable from time to time to the performance of the
obligations of the parties hereunder.
"Authority" means the Long Island Power Authority and its subsidiaries, and
its successors or assigns as permitted hereunder.
"Authority Fault" means any breach, failure of compliance, or
nonperformance by the Authority with its obligations hereunder or any negligent
or willful misconduct by the Authority under this Agreement (whether or not
attributable to any officer, trustee, member, agent, employee, representative,
contractor, Subcontractor of any tier, or independent contractor of the
Authority other than the Energy Manager and its Subcontractors) that materially
and adversely affects the Energy Manager's performance or the Energy Manager's
rights or obligations under this Agreement.
"Authority Indemnified Parties" has the meaning specified in subsection
11.1(A) hereof.
"Business Day" means any day other than a Saturday, Sunday or Legal Holiday
(as defined herein).
"Change of Control" means (i) the acquisition of beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "1934
Act")) of 35% or more of the outstanding shares of securities the holders of
which are generally entitled to vote for the election of directors of the Energy
Manager or the Guarantor, as the case may be (including
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securities convertible into, or exchangeable for, such securities or rights to
acquire such securities or securities convertible into, or exchangeable for such
securities, "Voting Stock"), on a fully diluted basis, by any Person or group of
Persons (within the meaning of Section 13 or 14 of the 0000 Xxx); (ii) any sale,
transfer or other disposition of beneficial ownership of 35% or more of the
outstanding shares of the Voting Stock, on a fully diluted basis, of the Energy
Manager or the Guarantor, as the case may be; (iii) any merger, consolidation,
combination or similar transaction of the Energy Manager or the Guarantor, as
the case may be, with or into any other Person, whether or not the Energy
Manager or the Guarantor, as the case may be, is the surviving entity in any
such transaction; (iv) any sale, lease, assignment, transfer or other
disposition of the beneficial ownership in 35% or more of the property, business
or assets of the Energy Manager or the Guarantor, as the case may be; (v) a
Person other than the current shareholders of the Energy Manager or the
Guarantor, as the case may be, obtains, directly or indirectly, the power to
direct or cause the direction of the management or policies of the Energy
Manager or the Guarantor, as the case may be, whether through the ownership of
capital stock, by contract or otherwise; (vi) during any period of 12
consecutive calendar months, when individuals who were directors of the Energy
Manager or the Guarantor, as the case may be, on the first day of such period
cease to constitute a majority of the board of directors of the Energy Manager
or the Guarantor, as the case may be; or (vii) any liquidation, dissolution or
winding up of the Energy Manager or the Guarantor, as the case may be.
"City Gate" means a receipt point of natural gas at any point located at
the New York Facilities at which LILCO may now have rights to receive natural
gas.
"Closing Date" has the meaning ascribed to that term in the Agreement and
Plan of Exchange and Merger by and among BL Holding Corp., Long Island Lighting
Company, the Authority, and LIPA Acquisition Corp., dated as of June 26, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencing of Discharge Date" means the date that the unloading or
delivery of Fuel begins at a Generating Facility.
"Contract Date" means the date of this Agreement, as set forth on page 1
hereof.
"Contract Year", except as the Authority shall otherwise propose subject to
the approval of the Energy Manager which approval shall not be unreasonably
withheld, means the calendar year commencing on January 1 in any year and ending
on December 31 of that year; provided, however, that the first Contract Year
shall commence on the Closing Date and shall end on December 31 of that year,
and the last Contract Year shall commence on January 1 prior to the date this
Agreement expires or is terminated, whichever is appropriate, and shall end on
the last day of the Term of this Agreement or the effective date of any
termination, whichever is appropriate. Any computation made on the basis of a
Contract Year shall be adjusted on a pro rata basis to take into account any
Contract Year of less than 365/366 days.
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"Dispatch" shall mean Authority's adjustment and control (which may be
coordinated by NYPP/ISO) of the net electrical energy output of any component of
the System Power Supply for the purpose of regulating the amount of Electricity
delivered.
"Dth" shall mean dekatherm.
"Electricity" means the electrical energy (real and reactive) and capacity
available from the System Power Supply.
"Electricity Customers" means the retail and wholesale customers of the
Authority located in the Service Area.
"Energy Manager" means the Long Island Lighting Company and its successors
or assigns expressly permitted pursuant to Section 13.3.
"Energy Manager Fault" means any breach, failure of compliance, or
nonperformance by the Energy Manager with its obligations hereunder or any
negligence or willful misconduct by the Energy Manager under this Agreement
(whether or not attributable to any officer, member, agent, employee,
representative, contractor, Subcontractor of any tier, or independent contractor
of the Energy Manager or any Affiliate of the Energy Manager).
"Energy Manager Indemnified Parties" has the meaning specified in
subsection 11.1(B) hereof.
"Existing Power Supply Agreements" means the power supply agreements which
exist between LILCO and other parties for the purchase of capacity and/or energy
which are in effect as of the Contract Date and which were, either in existence
as of March 19, 1997 or which are entered into in accordance with the provisions
of Section 6.1(p) of the Acquisition Agreement on or prior to the Closing Date.
"FERC" shall mean the Federal Energy Regulatory Commission.
"Firm Gas Supply" means a type of natural gas supply delivered or
transported to a City Gate which may not be interrupted except for "force
majeure" events. Such gas may be interrupted on the gas distribution system
serving LILCO's existing gas service area whenever its continued delivery would
adversely affect the reliability of the gas distribution system serving LILCO's
existing gas service area.
"Fuel" means the natural gas, oil, kerosene or other fossil fuel used for
operating the GENCO Generating Facilities.
"Fuel Management Fee" means the Fuel Management Fee payable under Section
3.2.1.
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"Fuel Purchase Performance Incentive/Disincentive" means the incentive
payment to or disincentive payment from Energy Manager calculated in accordance
with Appendix A hereto.
"Fuel Services" means those services required to be furnished and done for
and relating to the delivery of Fuel to the GENCO Generating Facilities by the
Energy Manager pursuant to this Agreement subsequent to the Closing Date. A
reference to "Fuel Services" shall mean "any part and all of the Fuel Services"
unless the context otherwise requires.
"Gas Balancing" means the service of the type currently provided by LILCO
whenever the aggregate daily gas taken by GENCO for use in the GENCO Generating
Facilities varies from the daily nominated quantity. When this occurs, Energy
Manager will cause certain assets currently owned or contracted for by LILCO to
be used to either provide additional quantities of gas required by GENCO or take
back any excess quantities of gas not required by GENCO.
"GENCO" means Long Island Lighting Company and its successors and assigns
permitted under the Power Supply Agreement.
"GENCO Generating Facilities" means the electric generating facilities
owned by GENCO and under contract at any time with the Authority under the Power
Supply Agreement. A list of the generating units to be owned by GENCO as of the
Closing Date is contained in Appendix C to the Power Supply Agreement.
"Governmental Body" means any federal, State or local legislative,
executive, judicial or other governmental board, agency, authority, commission,
administration, court or other body, or any official thereof having jurisdiction
with respect to any matter which is a subject of this Agreement other than the
Authority.
"Guarantor" means BL Holding Corp. and its successors and assigns permitted
under the Guaranty Agreement.
"Guaranty Agreement" or "Guaranty" means the Guaranty Agreement to be
entered into prior to the Closing Date from the Guarantor to the Authority
substantially in the form provided in Exhibit E to the Acquisition Agreement, as
the same may be amended from time to time in accordance therewith.
"Incremental Fuel Cost" means the additional actual fuel cost incurred to
produce an additional amount of Electricity at the GENCO Generating Facilities,
so as to enable the sale of available excess energy.
"Interruptible Gas Supplies" means gas supplies that will be interrupted
whenever the supplier recalls supplies pursuant to a negotiated supply contract
and/or the interstate pipeline
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interrupts the transportation of such gas supply pursuant to its FERC approved
tariff. Such gas supplies may also be interrupted for force majeure events.
"Legal Holiday" is defined as New Year's Day, Xxxxxx Xxxxxx Xxxx Xx.'s
Birthday, Lincoln's Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day, Day
After Thanksgiving, Christmas Eve, Christmas Day and New Year's Eve, or such
other days as the Parties may mutually agree from time to time.
"LILCO" as of the date hereof, means Long Island Lighting Company and, as
of the Closing Date, shall mean the entity or entities owning and operating the
gas distribution system and related facilities and interests in gas transmission
facilities currently owned and operated by Long Island Lighting Company.
"Local Transportation Charge" is defined as the gas transportation rate set
forth herein that will be charged to the Authority for the use of LILCO's gas
assets to deliver gas to the GENCO Generating Facilities.
"Management Services Agreement" means the Management Services Agreement
dated June 26, 1997, between the Authority and Long Island Lighting Company, as
the same may be amended in accordance with its terms.
"Fuel Management Fee" has the meaning ascribed to that term in Section
3.2.1.
"Monthly Fuel Payment" has the meaning ascribed to that term in Section
3.2.2.
"Monthly System Power Supply Management Fee" has the meaning ascribed to
that term in Section 5.3.1.
"New York Facilities" ("NYF") is defined as the system of gas mains
severally owned and operated by LILCO, The Brooklyn Union Gas Company and
Consolidated Edison Co. of New York pursuant to the NYF Agreement. Among other
things, the NYF Agreement provides for the firm delivery of gas (directly or by
displacement) from the City Gate delivery points of the four interstate
pipelines currently delivering gas to the NYF to the transmission systems of
each of the companies. The rights of the respective parties to firm transport on
the NYF system are specified in the NYF Agreement.
"NYF Agreement" means the New York Facilities Agreement entered into as of
the first day of January, 1994 by and between The Brooklyn Union Gas Company,
Consolidated Edison Company of New York, Inc. and LILCO, as the same may be
amended in accordance with its terms.
"New York Power Pool" or "NYPP" means the member system currently
comprising of Consolidated Edison Company of New York, Inc., Central Xxxxxx Gas
and
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Electric Company, Long Island Lighting Company, Orange and Rockland Utilities,
Rochester Gas and Electric Company, New York State Electric and Gas Corporation,
Niagara Mohawk Power Corporation, and the Power Authority of the State of New
York, as such organization or membership may change from time to time.
"NYPP/ISO" means the Independent System Operator ("ISO") into which the
NYPP is proposed to be restructured to the extent approved by FERC. In the event
this restructuring occurs, the principal reliability, security and dispatch
functions of the NYPP will be performed by the ISO.
"Off-System Sales" means the sale of electric capacity and/or energy to
wholesale or retail customers located outside the Service Area.
"Person" means, unless otherwise specified, any individual person,
corporation, firms, companies, trusts, business trusts, legal entities, general
partnership, limited partnership, joint venture, joint-stock company, limited
liability company, unincorpoprated organization, government or other or
political subdivision hereof or other entity, including a Governmental Body.
"Prime Rate" means the rate announced by Citibank, N.A. from time to time
at its principal office as its prime lending rate for domestic commercial loans,
the Prime Rate to change when and as such prime lending rate changes.
"Power Supply Agreement or PSA" means the agreement dated June 26, 1997,
between Authority and GENCO for the purchase of electric capacity and energy.
"Prudent Utility Practice" at a particular time means any of the practices,
methods, and acts (including but not limited to the practices, methods and acts
engaged in or approved by a significant portion of the electrical utility
industry prior hereto), which, in the exercise of reasonable judgment in light
of the facts and the characteristics of the T&D System, the Service Area, System
Power Supply (and, insofar as the delivery of Fuel Service may require, the gas
distribution and transmission system serving LILCO's existing gas service area
and prevailing regulations or regulatory policies applicable to such gas
distribution and transmission system), known at the time the decision was made,
would have been expected to accomplish the desired result at the lowest
reasonable cost consistent with reliability, safety and expedition and good
customer relations. Prudent Utility Practice is not intended to be limited to
the optimum practice, method or act, to the exclusion of all others, but rather
to be a spectrum of possible practices, methods or acts.
"Service Area" means the counties of Suffolk and Nassau and that portion of
the County of Queens constituting LILCO's electric franchise area as of the
effective date of the Act. "Service Area" does not include the Villages of
Freeport, Rockville Centre and Greenport.
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"Subcontract" means an agreement between the Energy Manager and a
Subcontractor, or between two Subcontractors, as applicable.
"Subcontractor" means every person (other than employees of the Energy
Manager) employed or engaged by the Energy Manager or any person directly or
indirectly in privity with the Energy Manager (including every sub-subcontractor
of whatever tier) for any portion of the services or the materials, supplies, or
equipment to be provided by the Energy Manager hereunder.
"System Emergency" shall mean any abnormal system condition that requires
automatic or immediate, manual action to prevent or limit loss of transmission
facilities or generation resources that could adversely affect the reliability
of an electric system.
"System Interruptible Gas Supply" means a type of gas supply which will be
interrupted whenever its continued delivery would adversely impact the delivery
of gas to the gas customers served by the gas transmission or distribution
system which is currently owned by LILCO; furthermore, if Energy Manager is
using non-LILCO assets to provide natural gas to GENCO, such gas will only be
interrupted on LILCO's gas distribution system whenever its continued delivery
would adversely impact the reliability of such gas distribution system. If GENCO
is using gas provided from LILCO assets, GENCO will be interrupted before
LILCO's interruptible gas customers consistent with current practices. Such gas
supplies may also be interrupted for force majeure events.
"System Policies and Procedures" means the policies and procedures adopted
from time to time by the Authority with respect to the T&D System and the System
Power Supply in accordance with Applicable Law and Prudent Utility Practice.
"System Power Supply" means the electrical capacity and energy from all
power supply sources owned by or under contract to the Authority, including, but
not limited to, the Existing Power Supply Agreements, the Power Supply
Agreement, the Authority's rights and interests with respect to the Nine Mile
Point 2 power plant, the Authority's interest in any future generating
facilities, spot market capacity and energy purchases made by the Energy Manager
on behalf of the Authority, and any load control programs or energy efficiency
measure adopted by the Authority.
"System Power Supply Management Fee" means the System Power Supply
Management Fee payable in accordance under Section 5.3.1.
"System Power Supply Performance Incentive/Disincentive" means the "System
Power Supply Performance Incentive/Disincentive under Section 5.3.2.
"System Power Supply Services" means those services required to be
furnished and done for and relating to the administration and management of
System Power Supply pursuant to this Agreement subsequent to the Closing Date. A
reference to "System Power
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Supply Services" shall mean "any part and all of the System Power Supply
Services" unless the context otherwise requires.
"System Pre-Emergency" shall mean a condition which reasonably could be
expected, if permitted to continue, to contribute to a System Emergency or to a
degraded operating condition and includes the Alert, Warning, Major Emergency,
and Restoration conditions described in NYPP Operating Procedure 1 - "Operating
of the Bulk Power System", as it may be revised or replaced.
"T&D System" means the electric transmission and distribution system
located in the Service Area which provides the means for transmitting and
distributing Electricity.
"Term" has the meaning ascribed to that term in Article 7.
"Termination Date" has the meaning ascribed to that term in Section 7.4.
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ARTICLE 2 - SCOPE OF ENERGY MANAGEMENT SERVICES
As hereinafter described, Energy Manager shall be responsible for (a) fuel
procurement, delivery, storage, and management for GENCO Generating Facilities
to meet the energy generation requirements of the Electricity Customers, (b) the
dispatch of all System Power Supply available to the Authority to meet total
capacity and energy requirements of the Electricity Customers and Off-System
Sales, (c) the purchase, on behalf of the Authority, of all capacity and energy
to meet the needs of the Electricity Customers and (d) the sale, on behalf of
the Authority, of Electricity owned by, or under contract to, the Authority
which is not otherwise required to meet the needs of the Electricity Customers.
All such responsibilities shall be discharged in a manner consistent with
Prudent Utility Practice, the System Policies and Procedures and New York State
Public Service Commission policies and procedures pertaining to retail gas
customer service. In discharging all such functions, Energy Manager shall use
best-efforts to obtain the least-cost fuel and least-cost capacity and energy
for the benefit of the Electricity Customers.
Energy Manager agrees to establish policies and procedures satisfactory to
the Authority designed to assure that Energy Manager's responsibilities are
performed without consideration of the ownership or economic return to the
Energy Manager or its Affiliates, except for the incentive provisions of this
Agreement, and comply with such policies and procedures.
In no event will Energy Manager take title to Electricity being purchased
or sold under this Agreement.
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ARTICLE 3 - FUEL MANAGEMENT
3.1. FUEL MANAGEMENT SERVICES. Energy Manager shall manage all aspects of
the Fuel supply for the GENCO Generating Facilities including determinations
regarding the type of Fuel used for operating the GENCO Generating Facilities
and the source of such Fuel supply taking into account the purchase of alternate
sources of Electricity in lieu of Electricity from the GENCO Generating
Facilities when economic. Authority will compensate Energy Manager for such Fuel
management services, including a Fuel Purchase Performance Incentive/
Disincentive Payment, in accordance with the terms of this Agreement. In this
respect, Energy Manager shall, among other things:
1) Acquire required gas supplies which includes a mix of Interruptible
and Firm Gas Supplies as deemed appropriate;
2) Acquire required fuel oil supplies in accordance with generating unit
specific requirements as determined by GENCO which include a mix of
residual oil, No. 2 oil and kerosene as deemed appropriate;
3) Negotiate, execute and administer Fuel supply contacts with one or
more
4) Obtain and schedule transportation for all Fuel deliveries, including
daily nomination and dispatch;
5) Arrange for the displacement of gas across LILCO's gas distribution
system and the New York Facilities to facilitate deliveries to each
GENCO Generating Facility; and
6) Arrange for the delivery, receipt, fuel analysis, handling, storage,
local and on site transportation and use of Fuel.
Unless otherwise arranged and agreed to between Authority and Energy Manager,
all gas supplies to be used at the GENCO Generating Facilities will be
Interruptible Gas Supplies or short term Firm Gas Supplies with contracts
extending no longer than one month from the date entered into, all of which are
System Interruptible Gas Supplies. Energy Manager will arrange for the most
cost-effective Fuel for use at the existing GENCO Generating Facilities subject
to Energy Manager's existing rate obligations to the gas customers of the
current gas service area of Long Island Lighting Company. Energy Manager will
arrange for Gas Balancing services to be provided associated with use of gas at
the GENCO Generating Facilities. Energy Manager will provide these services from
existing assets of the Energy Manager or its affiliates. The Energy Manager will
not contract for additional firm assets (including storage, pipeline capacity or
swing gas supply) specifically for use in the GENCO Generating Facilities unless
the Authority and Energy Manager agree to the contract Such Interruptible Gas
Supplies will be
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provided only as long as it is available for use, in the GENCO Generating
Facilities. The price of such gas to be paid for by Authority will include a
Local Transportation Charge of 19 cents/Dth for a period of eleven and one half
(11 1/2) years from the Closing Date. Thereafter the Local Transportation Charge
included will be a charge imposed under non-discriminatory tariffs or otherwise
be determined on a non-discriminatory basis.
3.2. FUEL MANAGEMENT COMPENSATION. Except as otherwise provided in this
Agreement, the payments Authority will make to Energy Manager pursuant to this
Agreement will be calculated as set forth below. During the term of this
Agreement, Authority will make monthly payments to Energy Manager consisting of
an amount equal to the sum of: (i) the Monthly Fuel Management Fee, plus (ii)
the Monthly Fuel Payment, plus or minus (iii) the Fuel Purchase Performance
Incentive/Penalty.
3.2.1. Fuel Management Fee.
Energy Manager shall be paid an annual Fuel Management Fee, in
consideration for Energy Manager's performance of the Fuel Services
contemplated herein. The amount of such Fuel Management Fee shall be agreed
upon by the parties not later than the Closing Date and shall reflect a fee
of $750,000 and an allowance for certain costs. These costs included in the
Fuel Management Fee shall be comprised of an appropriate allocation of
compensation paid to employees and expenses of the Energy Manager, an
appropriate allocation of such costs of employees and expenses of the
Energy Manager's parent or affiliates to the extent such employees provide
service pursuant to this Agreement and an appropriate allocation of
depreciation and return on the undepreciated balance of Energy Manager and
its parent or affiliates owned assets. The cost component of the initial
Fuel Management Fee, once established and approved by Authority, will be
indexed in the same manner as the Direct Cost Budget under the Management
Services Agreement until the termination of the Management Services
Agreement and thereafter subject to mutually agreeable adjustments.
Authority shall pay the Fuel Management Fee to Energy Manager in twelve
equal monthly installments, payable in accordance with the provisions of
Section 3.4.
3.2.2. Monthly Fuel Payment.
Authority will, in accordance with the provisions of Section 3.4, pay
the total monthly cost of all Fuel for use in the GENCO Generating
Facilities that are under contract to Authority pursuant to the Power
Supply Agreement, including but not limited to any current or future fuel
related taxes or other fuel related fees or costs reasonably incurred by
Energy Manager. This cost will be based upon (a) the actual variable cost
of gas delivered to the delivery points for such fuel plus (i) any
incremental Firm Gas Supply costs which are incurred based on use of Firm
Gas Supplies in the operation of the GENCO Generating Facilities, (ii) any
costs Energy Manager incurs based on non-use of gas it has otherwise
contracted to purchase for use in the operation of the GENCO Generating
Facilities, and (iii) the Local Transportation Charge and (b) the delivered
cost of oil for use in GENCO's Generating Facilities.
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3.3. FUEL PURCHASE PERFORMANCE INCENTIVES/DISINCENTIVE PAYMENTS. Energy
Manager shall receive a Fuel Purchase Performance Incentive/Disincentive Payment
calculated in accordance with Appendix A hereto. Such Fuel Purchase Performance
Incentive/Disincentive Payment will be calculated at the end of each month, with
the results reflected in the following month's invoice submitted in accordance
with the provisions of Section 3.4. The total Fuel Purchase Performance
Incentive/Disincentive Payment shall not exceed $5.0 million on an annual basis.
3.4. PAYMENT. Energy Manager will submit monthly invoices to Authority for
the Monthly Fuel Management Fee and the Fuel Purchase Performance
Incentive/Disincentive Payment by the tenth (10th) Business Day following the
month of service, consistent with the provisions in this Article 3. Payment of
all invoiced amounts shall be due and payable by Authority within fifteen (15)
Business Days of Authority receiving such invoices. Prior to the Closing Date,
the parties will establish a mutually satisfactory billing arrangement for the
Monthly Fuel Payment designed to minimize and compensate, as appropriate, for
carrying costs and to reflect billing procedures contained in Fuel contracts
entered into by Energy Manager.
All such payments shall be made in the form of immediately available funds
by wire transfer to a bank or financial institution specified by Energy Manager
or in such other form as may be reasonably requested by Energy Manager. The
wired funds will be deemed timely if received by the close of business on or
before the due date of such payment.
3.5. LATE PAYMENT. Any invoiced amount not paid by Authority by the due
date will be subject to interest computed from the date payment was payable
hereunder at the rate equal to the lesser of (i) the maximum rate of interest
per monthly billing period permitted by Applicable Law and (ii) (a) for interest
accruing during the first six months or less after the date on which such
payment was payable hereunder, 6 month LIBOR, and (b) for interest accruing more
than six months after the date on which a payment was payable hereunder, the
Prime Rate plus 1.00% in each case, as 6 month LIBOR or the Prime Rate was
reported in the Wall Street Journal for each day. The parties agree that such
interest rate will apply to payments under this Agreement in lieu of any
different rate that would otherwise apply generally to late payments by the
Authority.
3.6. FUEL MEASUREMENT Installation, maintenance and operation of all Fuel
metering and telemetering equipment shall be undertaken by GENCO in accordance
with the Power Supply Agreement. Energy Manager shall cooperate with Authority
in Authority's verification of the accuracy of all measurements of Fuel made by
GENCO and Authority shall have access to all records of Energy Manager necessary
for such purpose.
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3.7. GENERAL FUEL SERVICE REQUIREMENTS.
3.7.1. Minimization of Cots. In providing the Fuel, Energy Manager
shall use best efforts to minimize Fuel costs for the GENCO Generating
Facilities, such efforts being consistent with (i) all applicable insurance
policies, (ii) all applicable prudent industry practices and standards,
including Prudent Utility Practice, (iii) all applicable operating and
contract constraints for Fuel delivery, (iv) Energy Manager's collective
bargaining agreements and (v) Applicable Law.
3.7.2. Accounting Controls. Energy Manager on a quarterly basis shall
provide, or cause to be provided, all accounting, bookkeeping, and
administrative services in connection with the Fuel costs, such accounting
to be consistent with the FERC Uniform System of Accounts and Generally
Accepted Accounting Principles consistently applied. In areas of conflict,
FERC accounting principles shall control. All records relating to such
services shall be subject to review and audit in accordance with Section
6.2.
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ARTICLE 4 - OFF SYSTEM SALES
Energy Manager shall use best efforts to market to Off-System Sales
customers, on Authority's behalf, Electricity from the System Power Supply that
is not otherwise needed by the Electricity Customers in a manner which will
reduce the net cost of Electricity provided to the Electricity Customers. Energy
Manager shall receive 33 percent of the revenue net of incremental costs from
Off-System Sales of Electricity from the System Power Supply and the Authority
shall receive 67 percent of the revenue net of incremental costs from these
Off-System Sales of Electricity from the System Power Supply. The incremental
costs for such Off-System Sales will be based upon the incremental cost of
energy for such Electricity sales including any other costs or charges
(including applicable taxes) incurred to produce and deliver the Electricity
and/or Ancillary Services for sale by Energy Manager. The incremental costs
associated with capacity sales shall include the cost of replacement capacity
incurred as a result of the sale, if any, and any other costs or charges related
to the sale, including startup, no-load operation, transmission, and applicable
taxes.
Amounts due to Energy Manager under this Article 4 shall be billed by
Energy Manager and shall be paid by the Authority in accordance with the billing
and payment provisions of Section 5.4.
Notwithstanding any of the above, the Energy Manager will only attempt to
sell excess Electricity to the extent that, in GENCO's judgment, such
Electricity sales do not jeopardize any of GENCO's tax-exempt debt and to the
extent that, in the Authority's judgment, such Electricity sales do not
jeopardize the tax-exempt status of any of the Authority's debt. Each party
shall furnish the other an appropriately detailed description of the constraints
imposed on such sales prior to the Closing Date and shall update such
description from time to time to reflect any applicable changes in law or
regulation.
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ARTICLE 5 - SYSTEM POWER SUPPLY MANAGEMENT
5.1. LOWEST COST ELECTRICITY. In connection with the purchase and
management of the System Power Supply, on Authority's behalf, the Energy Manager
shall use best efforts to provide the lowest cost Electricity to the T&D System
and the Electricity Customers, given (i) the transmission and distribution
limitations unique to the T&D System; (ii) the terms of the Existing Power
Supply Agreements; (iii) availability of power through the New York Power Pool
or its successor; (iv) regulatory and reliability council requirements,
including, but not limited to system safety and reliability; and (v) System
Policies and Procedures, including environmental policies contained therein.
5.2. SPECIFIC ENERGY MANAGER RESPONSIBILITIES. In implementing its System
Power Supply responsibilities, the Energy Manager will, subject to the
transmission, contractual and reliability constraints referred to in Section 5.1
above:
(i) schedule deliveries of and Dispatch energy from the System Power
Supply;
(ii) arrange for the Authority's purchase of Electricity to the extent
the System Power Supply is insufficient to meet the requirements of the T&D
System;
(iii) continually monitor the market for the Authority's sale and
purchase of wholesale Electricity and purchase Electricity, on the
Authority's behalf, on the wholesale market to displace System Power Supply
if such purchases, including the cost of transmission services to deliver
such Electricity, will reduce total power supply costs;
(iv) sell Electricity on Authority's behalf from the System Power
Supply that is surplus to the requirements of the T&D System whenever such
sales, including consideration of any incremental cost of Transmission for
delivery of such sales, are advantageous to the Authority;
(v) arrange for such additional transmission services and capacity as
shall be necessary for the purchase or sale of Electricity by the
Authority; and
(vi) with the prior written consent of Authority, subcontract with
power marketers or brokers, or similar entities, to assist in the
acquisition of Electricity and the marketing and sale of excess
Electricity.
All contracts for the purchase or sale of Electricity will be entered into
by the Authority or by the Energy Manager as agent for the Authority. No
contract for the purchase or sale of Electricity for a term in excess of three
months shall be entered into without the prior written consent of the Authority.
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5.3. SYSTEM POWER SUPPLY MANAGEMENT COMPENSATION. Except as otherwise
provided in this Agreement, the payments Authority will make to Energy Manager
pursuant to this Agreement with respect to System Power Supply Services other
than Off-System Sales will be calculated as set forth below. During the term of
this Agreement, Authority will make monthly payments to Energy Manager
consisting of an amount equal to the sum of: (i) the System Power Supply
Management Fee, plus or minus (ii) the System Power Supply Performance
Incentive/Disincentive.
5.3.1 System Power Supply Management Fee.
Energy Manager shall be paid an annual System Power Supply Management
Fee, in consideration for Energy Manager's performance of the System Power
Supply management services contemplated herein. The amount of such System
Power Supply Management Fee shall be agreed upon by the parties not later
than the Closing Date and shall reflect a fee of $750,000 and an allowance
for certain costs. These costs included in the System Power Supply
Management Fee shall be comprised of an appropriate allocation of
compensation paid to employees and expenses of the Energy Manager plus, an
appropriate allocation of such costs of employees and expenses of the
Energy Manager's parent or affiliates to the extent such employees provide
service pursuant to this Agreement and an appropriate allocation of
depreciation and return on the undepreciated balance of Energy Manager and
its parent or affiliates owned assets. The cost component of initial System
Power Supply Management Fee once established and approved by Authority,
will be indexed during the Term of this Agreement in the same manner as the
Direct Cost Budget under the Management Services Agreement. Authority shall
pay the System Power Supply Management Fee to Energy Manager in twelve
equal monthly installments, payable in accordance with the provisions of
Section 5.4.
5.3.2 System Power Supply Performance Incentives/Disincentives. Energy
Manager shall receive a System Power Supply Performance
Incentive/Disincentive calculated in accordance with Appendix B hereto.
Such System Power Supply Incentive/Disincentive will be calculated at the
end of each month, with the results reflected in the following month's
invoice submitted in accordance with the provisions of Section 5.4. The
total System Power Supply Performance Incentive/Disincentive shall not
exceed $2 million on an annual basis.
5.4. PAYMENT. Energy Manager will submit monthly invoices to Authority for
the Monthly System Power Supply Management Fee and the System Power Supply
Performance Incentive/Disincentive Payments and Off-System Sales compensation
(as provided for in Article 4) by the tenth (10th) Business Day following the
month of service, consistent with the provisions in this Article 5 and Article
4. Such invoices shall show separately amounts payable under Articles 4 and 5.
Payment of all invoiced amounts shall be due and payable by Authority within
fifteen (15) Business Days of Authority receiving such invoices.
All such payments shall be made in the form of immediately available funds
by wire transfer to a bank or financial institution specified by Energy Manager.
The wired funds
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will be deemed timely paid if received by the close of business on or before the
due date of such payment.
5.5. LATE PAYMENT. Any invoiced amount not paid by Authority under this
Article by the due date will be subject to interest computed from the date
payment was due at the rate equal to the lesser of (i) the maximum rate of
interest per monthly billing period permitted by Applicable Law and (ii) (a) for
interest accruing during the first six months or less after the date on which
such payment was payable hereunder, 6 month LIBOR, and (b) for interest accruing
more than six months after the date on which a payment was payable hereunder,
the Prime Rate plus 1.00% in each case, as 6 month LIBOR or the Prime Rate was
reported in the Wall Street Journal for each day. The parties agree that such
interest rate will apply to payments under this Agreement in lieu of any
different rate that would otherwise apply generally to late payments by the
Authority.
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ARTICLE 6 - GENERAL
6.1. STAFFING AND LABOR ISSUES. The Energy Manager shall employ and
supervise Energy Manager's employees in sufficient numbers and possessing
sufficient skills to perform the services required of the Energy Manager under
this Agreement consistent with Prudent Utility Practice. The Energy Manager
shall provide proper training for the Energy Manager's employees in the
performance of their work under this Agreement. The Energy Manager shall assure
that the Energy Manager's employees are qualified to perform their work and the
services contemplated by this Agreement in accordance with Prudent Utility
Practice, and the Energy Manager shall give due consideration to any comments of
the Authority with respect to the performance of specific employees. At all
times, the Energy Manager shall comply with Prudent Utility Practice and
Applicable Law with respect to the Energy Manager's employees and with respect
to the Energy Manager's obligations under this Agreement.
6.2. ACCOUNT RECORDS; COLLECTION OF MONIES; AVAILABILITY OF ENERGY MANAGER.
6.2.1. Account Records. The Energy Manager shall maintain such records
as the Authority reasonably requests setting forth in accurate and
reasonable detail the information relating to the purchase and sale of Fuel
and Electricity hereunder requested by the Authority. At a minimum, the
Energy Manager shall maintain the records in a manner such that data by
various supplier and purchaser classifications can readily be reported on a
monthly basis, for the fiscal year to date and for the most recent twelve
month period. The Energy Manager shall retain any records that it is
required to maintain pursuant to this subparagraph for the term of this
Agreement and shall deliver them to the Authority upon the Authority's
request.
6.2.2 Collection of Monies. The Energy Manager shall use best efforts
to collect on a timely basis (1) all amounts due the Authority for
Off-System Sales, and (2) any other monies owed to the Authority in
connection with System Power Supply and other matters within the purview of
the Energy Manager. The Energy Manager shall provide current and historical
billing information concerning Fuel and System Power Supply to the
Authority monthly in such form as reasonably requested by the Authority.
All such monies collected by the Energy Manager or any Subcontractor
thereto shall be the property of the Authority and shall be deposited by
the Energy Manager daily into such accounts and in the manner as the
Authority may from time to time designate. In collecting such monies, the
Energy Manager and any Subcontractor shall act solely as an agent for the
Authority and shall have no right or claim to such moneys and, without
limiting the generality of the foregoing, shall have no right to assert a
claim of set-off, recoupment, abatement, counterclaim or deduction for any
amounts which may be owed to the Energy Manager hereunder or with respect
to any other matter in dispute hereunder or otherwise. The Energy Manager
is unconditionally and absolutely obligated to pay or deposit such moneys
as directed by the Authority.
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6.2.3 Availability of Energy Manager.
(A) Office Facilities. The Energy Manager shall maintain at all times
during the Term hereof an office within Nassau or Suffolk County.
(B) Availability of Representatives. Representatives of the Energy
Manager shall be available at the Energy Manager's office during office
hours for communication with the Authority or with suppliers of Fuel and
System Power Supply.
(C) Emergency Telephone Number. The Energy Manager shall maintain an
emergency telephone number(s) for use during other than normal business
hours and shall, to the extent directed by the Authority make such numbers
available to suppliers of System Power Supply, the New York Power Pool or
successor organization, and the Manager.
6.3. COMPLIANCE WITH APPLICABLE LAW. The Energy Manager shall perform all
of its obligations hereunder in accordance with Applicable Law. In the event
that the Energy Manager fails at any time to comply with Applicable Law, then
the Energy Manager shall immediately remedy such failure at its cost and expense
and bear all Loss-and-Expense, of either party and pay any resulting damages,
fines, assessments or other charges resulting therefrom to the extent provided
in Section 6.8 hereof. Any such damage, fine, assessment or other charge paid by
the Energy Manager due to a violation of Applicable Law for which Authority is
responsible under Section 6.8 shall be reimbursed to the Energy Manager.
6.4. INFORMATION.
6.4.1. Information System. The Energy Manager shall on and after the
Closing Date establish and maintain an information system to provide
storage and real time retrieval for Authority review and copying of
operating data relating to (i) cost and quantities of Fuel Supply and Power
Purchases, (ii) revenues from and quantities of Off-System Sales and (iii)
the performance by the Energy Manager of its obligations hereunder,
including, but not limited to, all information necessary to verify
calculations made pursuant to this Agreement.
6.4.2. Ownership of Information and Documentation. The Authority will
have sole ownership of information related to the purchase of Fuel and the
operation and management of the System Power Supply (the "Fuel and System
Power Supply Operations Data"). The Energy Manager may not use any Fuel and
System Power Supply Operations Data for non-Authority related purposes
without the Authority's prior written permission. Such permission, if
granted, will be granted on a nondiscriminatory basis. To the extent Fuel
and System Power Supply Operations Data is available from other sources,
neither the Energy Manager nor its Affiliates shall be precluded from using
in its business such data obtained from other sources.
-20-
6.5. BOOKS AND RECORDS. The Energy Manager shall prepare and maintain
proper, accurate and complete books, records and accounts regarding Fuel and
System Power Supply to the extent necessary (1) to enable the Authority to
prepare the Authority's financial statements in accordance with generally
accepted accounting principles, (2) to verify data with respect to any
operations or transactions in which the Authority has a financial or other
material interest hereunder, (3) to prepare periodic performance reports and
statements relating to purchase of Fuel and System Power Supply, which shall be
submitted by the Energy Manager to the Authority and (4) to enable the Authority
to administer any fuel adjustment clause or similar provision applicable to
Electricity sales. The Energy Manager shall, upon notice and demand from the
Authority, produce for examination and copying at the Energy Manager's office,
by representatives of the Authority, all books of account, bills, vouchers,
invoices, personnel rate sheets, cost estimates and bid computations and
analyses, Subcontracts, purchase orders, time books, daily job diaries and
reports, correspondence, and any other documents showing all acts and
transactions in connection with or relating to or arising by reason of this
Agreement, any Subcontract or any transactions in which the Authority has or may
have a financial or other material interest hereunder, and shall produce such
operation books and records for examination and copying in connection with the
costs for which the Authority may be responsible hereunder. The Energy Manager
shall keep the relevant portions of the books, records and accounts maintained
with respect to each Contract Year until at least the seventh anniversary of the
last day of each such Contract Year (the third anniversary for tape recordings
of transactions) and provide copies thereof to the Authority at its reasonable
request to the extent necessary to allow the Authority to determine to its
reasonable satisfaction the propriety of any request for payment or charge
hereunder. The Energy Manager shall have the right to destroy such books and
records if it provides copies thereof at its expense upon Authority request
following 60 days' written notice to the Authority of the Energy Manager's
intention to destroy such books and records. The provisions of this subsection
6.5 shall survive the termination of this Agreement.
6.6. FISCAL AFFAIRS, ACCOUNTING AND RECORD KEEPING.
6.6.1. General. The Energy Manager shall maintain possession of
equipment, materials and supplies, maps, plans and specifications, and Fuel
and System Power Supply billing records during the term of this Agreement
and shall duly account to the Authority therefor.
6.6.2. Bank Deposits. All cash held by the Energy Manager for the
account of the Authority and all cash collected by the Energy Manager for
the account of the Authority after the Closing Date shall be deposited on
each Business Day in bank accounts in such bank or banks as the .Authority
may direct and upon such terms and conditions as may be specified by the
Authority.
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6.7. OTHER SERVICES
6.7.1. Xxxx Payments. The Energy Manager shall timely pay all bills
related to Fuel which are proper and appropriate and which it has authority
to pay and shall assume that, to the extent within the Energy Manager's
control, no liens are filed against a portion of the assets or revenues of
the Authority. In the event that the Energy Manager fails to pay any such
xxxx on a timely basis, the Authority shall have the right, but not the
obligation, to pay such xxxx and deduct the amount of such payment, plus
all costs and expenses incurred by the Authority in connection therewith
and an administration fee of $50, from the next payment due from the
Authority to the Energy Manager hereunder.
6.7.2. Review of System Power Supply Bills. The Energy Manager shall
review all purchased power bills in a timely manner and forward those which
are proper and appropriate to the Authority for payment.
6.7.3. Attendance at Meetings. The Energy Manager Representative shall
attend meetings of the Authority, with suppliers of the Authority and
others as reasonably requested by the Authority.
SECTION 6.8. ALLOCATION OF RISK OF CERTAIN COSTS AND LIABILITIES. Except to
the extent due to Authority Fault (as determined by either a final non-
appealable order or judgment of a court of competent jurisdiction (including
administrative tribunals) or a final non-appealable binding arbitration
decision), the Energy Manager shall be responsible and liable to the Authority
for, and shall not be entitled to reimbursement from the Authority for any
Loss-and-Expense incurred by the Energy Manager or the Authority,
(a) due to any gross negligence or willful misconduct by the Energy
Manager during the period commencing six months prior to the Closing
Date to the extent LILCO knew or should have known of such gross
negligence or willful misconduct and during the Term in carrying out
its obligations hereunder,
(b) due to any violation of or failure of compliance with Applicable Law
the Energy Manager (except as provided below) during the period
commencing six months prior to the Closing Date to the extent LILCO
knew or should have known of such violation or failure of compliance
during the Term which materially and adversely affects
(i) the condition or operations of the T&D System or the System Power
Supply,
(ii) the financial condition of the Authority,
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(iii) the performance or ability of the Energy Manager to perform its
obligations under this Agreement, or
(iv) the cost of providing electric service to the customers of the
T&D System, provided, however, that Energy Manager shall not be
responsible and liable to the Authority under this clause (b)
with respect to any violation of, failure of compliance with, or
liability under, Environmental Laws (as defined in the
Acquisition Agreement) for which the Authority or the Energy
Manager may be strictly liable provided that Energy Manager (or
for actions prior to the closing date, LILCO) acted in a manner
consistent with Prudent Utility Practice. Notwithstanding the
foregoing, Energy Manager shall in all events be liable for any
fine or penalty arising by reason of any violation of or failure
of compliance with Applicable Law for acts or omissions of the
Energy Manager not consistent with Prudent Utility Practice.
(c) due to any criminal violation of Applicable Law by the Energy Manager
(or for actions prior to the Closing Date, LILCO), or
(d) due to an event which would otherwise permit recovery of cost incurred
hereunder which would otherwise be recoverable hereunder, that is
incurred by reason of actions or omissions of the Manager not
consistent with Prudent Utility Practice.
Any action or omission identified in (a), (b), (c) or (d) shall be
determined by either a final non-appealable order or judgment of a court of
competent jurisdiction (including administrative tribunals) or a final
non-appealable binding arbitration decision and shall be attributable to the
Manager for purposes of the preceding sentence whether it is attributable to the
Manager or to any officer, member, agent, employee or representative of the
Manager or any Affiliate and any contractor, Subcontractor of any tier.
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ARTICLE 7 - TERM; EVENTS OF DEFAULT
7.1. TERM. The Term of this Agreement shall commence on the Closing Date
and, except as otherwise provided herein, shall remain in full force and effect
for an initial term of (i) fifteen (15) years from such Closing Date with
respect to the Fuel Services and (ii) eight (8) years from such Closing Date
with respect to System Power Supply Services.
7.2. EVENTS OF DEFAULT BY THE ENERGY MANAGER.
7.2.1. Events of Energy Manager Default Defined. (1) Events of Default
Not Requiring Cure Opportunity for Termination. The following constitute
Events of Default on the part of the Energy Manager for which the Authority
may terminate this Agreement without any requirement of cure opportunity:
(a) Change of Control of Energy Manager. Change of Control of the
Energy Manager, the Parent or the Guarantor has occurred; provided,
however, that the combination effectuated under the BU/LILCO Agreement or
Acquisition Agreement shall not constitute a Change of Control of the
Energy Manager for purposes of this provision.
(b) Voluntary Bankruptcy. The written admission by the Energy Manager
or the Guarantor that it is bankrupt, or the filing by the Energy Manager
or the Guarantor of a voluntary petition under the Federal Bankruptcy Code,
or the consent by the Energy Manager, the Parent or the Guarantor to the
appointment by a court of a receiver or trustee for all or a substantial
portion of its property or business, or the making by the Energy Manager,
the Parent or the Guarantor of any arrangement with or for the benefit of
its creditors involving an assignment to a trustee, receiver or similar
fiduciary, regardless of how designated, of all or a substantial portion of
the Energy Manager's or the Guarantor's property or business.
(c) Involuntary Bankruptcy: The final adjudication of the Energy
Manager, the Parent or the Guarantor as a bankrupt after the filing of an
involuntary petition under the Federal Bankruptcy Code, but no such
adjudication shall be regarded as final unless and until the same is no
longer being contested by the Energy Manager, the Parent or the Guarantor
nor until the order of the adjudication shall be regarded as final unless
and until the same is no longer being contested by the Energy Manager or
the Guarantor nor until the order of the adjudication is no longer
appealable.
(d) Credit Enhancement. Failure of the Energy Manager to supply,
maintain, renew, extend or replace the credit enhancement required under
subsection 13.15(C) hereof within the time specified therein in the event
there is a Material Decline in the Guarantor's Credit Standing, as defined
in Section 13.15 hereof.
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(e) Letter of Credit Draw. Failure of the Energy Manager to
supplement, replace or cause to be reinstated the letter of credit as
described in Section 13.15 hereof within 30 days following draws equal to,
in the aggregate, 50% of the face value thereof.
(2) Events of Default Requiring Cure Opportunity for Termination. Each of
the following shall constitute an Event of Default on the part of the Energy
Manager for which the Authority may terminate this Agreement upon compliance
with the notice and cure provisions set forth below:
(a) Failure to Pay or Credit. The failure of the Energy Manager to pay
or credit undisputed amounts it owes to the Authority under this Agreement
within 90 days following the due date for such payment or credit; and
(b) Failure Otherwise to Comply with Agreement or Guaranty. The
failure or refusal by the Energy Manager to perform any material obligation
under this Agreement (other than those obligations contained in subsection
7.2.14(2)(a) above), or the failure of the Guarantor to comply with any of
its obligations under the Guaranty unless such failure or refusal is
excused by an Uncontrollable Circumstance or Authority Fault except that no
such failure or refusal specified in clause (b) of this Section 7.2.1(2)
shall constitute an Event of Default giving the Authority the right to
terminate this Agreement for cause under this subsection unless:
(i) The Authority has given prior written notice to the Energy
Manager or the Guarantor, as applicable, stating that a specified
failure or refusal to perform exists which will, unless corrected,
constitute a material breach of this Agreement on the part of the
Energy Manager or the Guaranty on the part of the Guarantor and which
will, in its opinion, give the Authority a right to terminate this
Agreement for cause under this Section unless such default is
corrected within a reasonable period of time, and
(ii) The Energy Manager or the Guarantor, as applicable, has
neither challenged in an appropriate forum the Authority's conclusion
that such failure or refusal to perform has occurred or constitutes a
material breach of this Agreement nor corrected or diligently taken
steps to correct such default within a reasonable period of time, but
not more than 60 days, from receipt of the notice given pursuant to
clause (i) of this subsection (but if the Energy Manager or the
Guarantor shall have diligently taken steps to correct such default
within a reasonable period of time, the same shall not constitute an
Event of Default for as long as the Energy Manager or the Guarantor is
continuing to take such steps to correct such default).
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7.3. EVENTS OF DEFAULT BY THE AUTHORITY.
7.3.1. Events of Authority Default Defined. Each of the following
shall constitute an Event of Default on the part of the Authority for which
the Energy Manager may terminate this Agreement upon compliance with the
notice and cure provisions set forth below:
(1) Failure to Pay. The failure of the Authority to pay undisputed
amounts owed to the Energy Manager under this Agreement within 90 days
following the due date for such payment.
(2) Failure to Comply with Agreement. The failure or refusal by the
Authority to perform any material obligation under this Agreement unless
such failure or refusal is excused by an Uncontrollable Circumstance or
Energy Manager Fault; except that no such failure or refusal to pay or
perform shall constitute an Event of Default giving the Energy Manager the
right to terminate this Agreement for cause under this Section unless:
(a) The Energy Manager has given prior written notice to the
Authority stating that a specified failure or refusal to perform
exists which will, unless corrected, constitute a material breach of
this Agreement on the part of the Authority and which will, in its
opinion, give the Energy Manager a right to terminate this Agreement
for cause under this Section unless such default is corrected within a
reasonable period of time, and
(b) The Authority has either challenged in an appropriate forum
the Energy Manager's conclusion that such failure or refusal to
perform has occurred or constitutes a material breach of this
Agreement nor corrected or diligently taken steps to correct such
default within a reasonable period of time but not more than 60 days
from the date of the notice given pursuant to clause (a) of this
subsection (but if the Authority shall have diligently taken steps to
correct such default within a reasonable period of time, the same
shall not constitute an Event of Default for as long as the Authority
is continuing to take such steps to correct such default).
(3) Change of Control of Long Island Lighting Company. A Change of
Control of Long Island Lighting Company (after acquisition by the
Authority) which results in ownership control of LILCO by other than a
state public benefit corporation, authority, political subdivision or other
instrumentality of the State or any political subdivision thereof.
7.4. PROCEDURE FOR TERMINATION FOR CAUSE.
7.4.1. Thirty Day Notice. If any party shall have a right of
termination for cause in accordance with Section 7.3, the same may be
exercised by notice of termination
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given to the party in default at least thirty days prior to (or, in the
case of a bankruptcy or insolvency default or a Change of Control,
simultaneously with) the date of termination specified in such notice (the
"Termination Date").
7.4.2. Termination by Authority. (1) Access. In the event an Event of
Default of the Energy Manager occurs and the Authority issues a termination
notice described in 7.4.1 hereof or the Energy Manager is terminated in
accordance with Section 7.2 hereof, from the date of such issuance until
the Termination Date, the Authority shall have unrestricted access to all
information, data and records concerning the Fuel and Energy Supply
Services in order to monitor the performance of the Energy Manager and to
ensure that the Energy Manager complies with the provisions of this
Agreement during such time period (the "Termination Notice Period").
(2) Assumption of Responsibilities. At the Authority's sole option,
the Authority may elect at any time during the Termination Notice Period to
direct the Energy Manager and its employees in the day-to-day performance
of the Energy Manager's obligations under this Agreement. If the Authority
so elects, the Authority shall reimburse the Energy Manager for its
resulting Cost Substantiated incremental costs incurred in the performances
of services hereunder, and the Energy Manager shall no longer be eligible
to receive any performance incentives nor be responsible for the payment of
performance disincentives under this Agreement; provided that the Energy
Manager shall be entitled to receive any such performance incentives and
shall be responsible for any such performance disincentives for the period
preceding such assumption of day-to-day operations.
7.5. CERTAIN OBLIGATIONS OF THE ENERGY MANAGER UPON TERMINATION OR
EXPIRATION.
7.5.1. Obligations on Termination or Expiration. Upon a termination of
the Energy Manager's right to perform this Agreement or the expiration of
this Agreement in accordance with the terms hereof, the Energy Manager
shall cooperate in the smooth transition to the new manager and, without
limiting the generality of the foregoing, shall:
(1) transfer all records, supplier lists and account information,
operations and training manuals for all Fuel and System Power Supply
Services and, to the extent permitted by law, personnel information to the
new fuel and energy supply manager;
(2) stop the Fuel and System Power Supply Services on the date or
dates and to the extent specified by the Authority, provided that in so
doing the Energy Manager shall cooperate and coordinate with the Authority
and any successor fuel and energy supply manager so as to permit Authority
to maintain an uninterrupted Fuel supply and System Power Supply;
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(3) promptly deliver to the Consulting Engineer or the successor fuel
and energy supply manager, as the Authority shall direct, copies of all
Fuel and Electricity supply contracts, together with a statement of:
(a) the fuel and/or energy purchased and not yet delivered
pursuant to each agreement;
(b) the expected delivery date of all such items;
(c) the total cost of each agreement and the terms of payment;
and
(d) the estimated cost of cancelling and/or assigning each
agreement,
(4) advise the Authority promptly of any special circumstances which
might limit or prohibit cancellation of any contract or subcontract;
(5) as the Authority directs, terminate or assign to the new energy
manager or the Authority all contracts or subcontracts entered into or
utilized by the Energy Manager in performance of this Energy Management
Agreement (including, but not limited to, any contracts for gas pipeline
capacity (or portions thereof in the case of contracts entered into for
multiple purposes) entered into to serve the GENCO Generating Facilities)
and make no additional contracts or subcontracts hereunder without the
prior written approval of the Authority;
(6) furnish to the Authority all information in the possession of
Manager and any subcontractor on how Energy Manager or subcontractor
obtained Fuel and System Power Supply during the term of this Agreement
that would be helpful to Authority (or any successor manager) in performing
these services in the future;
(7) notify the Authority promptly in writing of any Legal Proceedings
against the Energy Manager by any contractor or subcontractor relating to
the termination of the Fuel and Energy Supply Services (or any
Subcontracts);
(8) take such other actions, and execute such other documents, as may
be necessary to effectuate and confirm the foregoing matters, or as may be
otherwise necessary or desirable to minimize the Authority's costs, and
take no action which will increase any amount payable to the Authority
under this Agreement.
7.5.2. Authority Payment of Certain Transition Costs. The Authority
shall reimburse the Energy Manager within 60 days of the date of the Energy
Manager's invoice for all mutually agreeable costs incurred by the Energy
Manager in satisfying the requirements of Section 7.5.1, subject to Cost
Substantiation.
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7.6. NO WAIVERS. No action of the Authority or Energy Manager pursuant to
this Agreement (including, but not limited to, any investigation or payment),
and no failure to act, shall constitute a waiver by either party of the other
party's compliance with any term or provision of this Agreement. No course of
dealing or delay by the Authority or Energy Manager in exercising any right,
power or remedy under this Agreement shall operate as a waiver thereof or
otherwise prejudice such party's rights, powers and remedies. No single or
partial exercise of (or failure to exercise) any right, power or remedy of the
Authority or Energy Manager under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
7.7. AUTHORITY EMERGENCY ASSUMPTION OF FUEL AND SYSTEM POWER SUPPLY
MANAGEMENT SERVICES. Should the Energy Manager, due to Uncontrollable
Circumstances or any other reason whatsoever, fail, refuse or be unable to
provide any or all Fuel and System Power Supply Services contemplated hereby and
the Authority or any Governmental Body finds that such failure endangers or
menaces the public health, safety or welfare, then, in any of those events and
to the extent of such failure, the Authority shall have the right, upon notice
to the Energy Manager, during the period of such emergency, to perform the
services which the Energy Manager would otherwise be obligated to perform
hereunder. The Energy Manager agrees that in such event it will fully cooperate
with the Authority to effect such a temporary assumption. The Energy Manager
agrees that, in such event, the Authority may take and use any or all of the
operating assets of the Energy Manager necessary for the above-mentioned
purposes without paying the Energy Manager or any other person any additional
charges or compensation whatsoever for such possession and use; provided,
however, that if such emergency is due to Uncontrollable Circumstances, the
Authority shall reimburse the Energy Manager for its Cost-Substantiated costs
incurred due to such a transfer of the operating assets. The parties acknowledge
that if the Authority assumes the Fuel and System Power Supply services in
accordance with this Section 7.7, any applicable cure period provided for in
this Agreement for the Energy Manager's benefit shall be tolled until such time
as the Energy Manager resumes performance of its obligations hereunder. The
Authority may use the Energy Manager's employees and the Energy Manager shall
make its employees available for such purposes. It is further agreed that the
Authority may at any time, at its discretion, relinquish its performance of the
Fuel Services and System Power Supply Services thereupon demand that the Energy
Manager resume such services as provided in the Agreement. It is specifically
understood and agreed that the Authority's exercise of its rights under this
Section: (1) does not constitute a taking of private property for which payment
must be made other than as specifically provided for in this Section; (2) shall
not create any liability on the part of the Authority to the Energy Manager; and
(3) that the indemnity provisions of Article 11 hereof covering the Authority
and the Energy Manager are meant to include circumstances arising under this
Section. The Authority's right to perform the services anticipated to be
performed by the Energy Manager hereunder shall terminate at the time when such
services can, in the judgment of the Authority, be resumed by the Energy
Manager.
7.8. WAIVER OF CERTAIN DEFENSES The Energy Manager acknowledges that it is
solely responsible for the day-to-day management of Fuel Services and
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System Power Supply Services and agrees that, unless otherwise permitted
pursuant to the provisions of this Agreement with respect to the occurrence of
Uncontrollable Circumstances, and without limiting such provisions, it shall not
assert (i) impossibility or impracticability of performance, (ii) the existence,
non-existence, occurrence or non-occurrence of any foreseen or unforeseen fact,
event or contingency that may be a basic assumption of the Energy Manager, (ii)
commercial frustration of purposes or (iii) contract of adhesion, as a defense
against any claim by the Authority against the Energy Manager.
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ARTICLE 8 - DESIGNATION OF REPRESENTATIVES
8.1. AUTHORITY REPRESENTATIVE. Not later than 30 days after the execution
and delivery of this Agreement, Authority shall select a Representative (the
"Authority Representative"). The Authority Representative, subject to any
necessary approvals, is authorized to act for and on behalf of Authority
concerning this Agreement. In all such matters, Authority shall be bound, to the
extent authorized, by the written communications, directions, requests and
decisions made by the Authority Representative. Authority shall promptly notify
Energy Manager in writing of Authority's Representative selection and any
subsequent replacement(s).
8.2. ENERGY MANAGER REPRESENTATIVE. Not later than 30 days after the
execution and delivery of this Agreement, Energy Manager will select a
Representative (the "Energy Manager Representative") who shall be authorized to
act for and on behalf of Energy Manager in all matters concerning this
Agreement. In all such matters, Energy Manager shall be bound by the written
communications, directions, requests and decisions made by the Energy Manager
Representative. Energy Manager shall promptly notify Authority in writing of
Energy Manager's Representative selection and any subsequent replacanent(s). The
Energy Manager Representative shall have appropriate experience with respect to
the supervision and management of services of the type contemplated by this
Agreement and who shall be responsible for the day to day supervision of the
Energy Manager's performance of this Agreement. The Energy Manager shall inform
the Authority of the identity of the person serving from time to time as Energy
Manager Representative, and of the telephone and beeper numbers or other means
by which such person and his or her designee may be contacted at all times.
Recognizing the need for an amicable working relationship between the Authority
and the Energy Manager, the Authority shall have the right to approve the
appointment of the Energy Manager Representative and any successors thereto,
such approval not to be unreasonably withheld. The Energy Manager Representative
or a pre-approved designee shall attend monthly meetings, following Authority
receipt and review of the monthly reports delivered pursuant to Section 9.1
hereof, with the Authority to discuss such matters as the Authority deems
appropriate.
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ARTICLE 9 - ENERGY MANAGER'S REPORTING REQUIREMENTS
9.1. MONTHLY REPORTS. The Energy Manager shall provide the Authority and
the Consulting Engineer with monthly reports no later than 20 days after the [ ]
of each month, including such data relating to the Fuel Services and System
Power Supply Services as may reasonably be requested to be furnished by the
Authority.
9.2. ANNUAL REPORTS. The Energy Manager shall furnish the Authority and,
the Consulting Engineer, within 60 days after the end of each Contract Year an
Annual Settlement Statement together with annual summary of the statistical data
provided in monthly reports, certified by the Energy Manager, as well as such
other data relating to the services provided hereunder as may be reasonably
requested to be furnished by the Authority. The Annual Settlement Statement
shall also include an accounting of any incentives or penalties accrued during
the applicable Contract Year along with appropriate supporting documentation.
The Authority or its designees shall have an opportunity to review such
accounting prior to payment and shall have access to the Energy Manager's books
and records in order to confirm such accounting prior to payment. Such review
will be performed within 90 days of receipt the Animal Settlement Statement.
93. FUEL CONSUMPTION REPORTS. Fifteen (15) Business Days following the end
of each month, Energy Manager shall submit to Authority a [ ] summarizing the
Fuel burned during that month and such other information as the parties may
mutually agree.
9.4. LITIGATION; PERMIT LAPSES. Promptly upon obtaining knowledge thereof,
each Party shall submit to the other Party written notice of (and, upon request,
copies of any relevant non-privileged documents in the Party's possession
relating to): (i) any [ ] litigation, claims, disputes or actions actually
filed, or any material litigation, claims, disputes or actions which are
threatened, concerning in each case, the Fuel Services or Power Supply Services
or the Authority's obligations relating thereto; (ii) any actual refusal to
grant, [ ] or extend, or any action pending or any action filed with respect to,
the granting, renewal extension of any permit or any material threatened action
regarding the same; (iii) any dispute with any Governmental Body relating to the
Fuel Services or Power Supply Services or [ ] Authority's obligations relating
thereto of Energy Manager or Authority; and (iv) without regard to their
materiality, all penalties or notices of violation issued by any Governmental
[ ] relating to Fuel Services or Power Supply Services or the Authority's
obligations relating thereto.
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ARTICLE 10 - INSURANCE
Energy Manager shall maintain with financially responsible insurance
companies insurance in such amounts and against such risks and losses as are
customary for companies engaged in the business of providing services or
undertaking activities similar to the Fuel Services and System Power Supply
Services to be provided hereunder.
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ARTICLE 11 - INDEMNIFICATION
11.1. INDEMNIFICATION. (A) Indemnification by the Energy Manager. The
Energy Manager agrees that, to the extent permitted by law, it will protect,
indemnify and hold harmless the Authority and its respective representatives,
trustees, officers, employees and subcontractors (as applicable in the
circumstances), (the "Authority Indemnified Parties") from and against (and pay
the full amount of) any Loss-and-Expense, and will defend the Authority
Indemnified Parties in any suit, including appeals, for personal injury to, or
death of, any person, or loss or damage to property arising out of any matter
for which Energy Manager is responsible under Section 6.8. The Energy Manager
shall not, however, be required to reimburse or indemnify any Authority
Indemnified Party for any Loss-and-Expense to the extent any such
Loss-and-Expense is due to (a) any matter for which the Authority has
responsibilities under Section 6.8 hereof, (b) the negligence or other wrongful
conduct of any Authority Indemnified Party, (c) any Uncontrollable Circumstance,
(d) any act or omission of any Authority Indemnified Party judicially determined
to be responsible for or contributing to the Loss-and-Expense, or (e) any matter
for which the risk has been specifically allocated to the Authority hereunder.
An Authority Indemnified Party shall promptly notify the Energy Manager of the
assertion of any claim against it for which it is entitled to be indemnified
hereunder, shall give the Energy Manager the opportunity to defend such claim,
and shall not settle the claim without the approval of the Energy Manager. The
Energy Manager shall be entitled to control the handling of any such claim and
to defend or settle any such claim, in its sole discretion, with counsel of its
own choosing that is reasonably acceptable to the Authority Indemnified Parties;
provided, however, that, in the case of any such settlement, the Energy Manager
shall obtain written release of all liability of the Authority Indemnified
Parties, in form and substance reasonably acceptable to the Authority
Indemnified Parties. Notwithstanding the foregoing, each Authority Indemnified
Party shall have the right to employ its own separate counsel in connection
with, and to participate in (but, except as provided below, not control) the
defense of, such claim, but the fees and expenses of such counsel incurred after
notice to the Energy Manager of its assumption of the defense thereof shall be
at the expense of such Authority Indemnified Party unless:
(i) the employment of counsel by such Authority Indemnified Party has been
authorized by the Energy Manager;
(ii) counsel to such Authority Indemnified Party shall have reasonably
concluded that there may be a conflict on any significant issue
between the Energy Manager and such Authority Indemnified Parry in the
conduct of the defense of such claim; or
(iii) the Energy Manager shall not in fact have employed counsel reasonably
acceptable to the Authority Indemnified Party to assume the defense
such claim within twenty (20) days following the receipt by the
Energy
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Manager of the notice from the Authority Indemnified Party regarding
the assertion of the applicable claim,
in each of which cases the fees and expenses of counsel for such Authority
Indemnified Party shall be at the expense of the Energy Manager; provided,
however, that, with respect to clauses (ii) and (iii) of this sentence, the
Energy Manager shall not be obligated to pay the fees and expenses of more than
one law firm, plus local counsel if necessary in each relevant jurisdiction,
for all such Authority Indemnified Parties with respect to any claims arising
out of the same events or facts or the same series of events or facts. The
Energy Manager shall not be entitled, without the consent of such Authority
Indemnified Party, to assume or control the defense of any a claim as to which
counsel to such Authority Indemnified Party shall have reasonably made the
conclusion that there may be a conflict on any significant issue between the
Energy Manager and such Authority Indemnified Party in the conduct of the
defense of such claim as set forth in clause (ii) above, provided that the
foregoing limitation shall apply only with respect to those issues for which
there may be such a conflict. These indemnification provisions are for the
protection of the Authority Indemnified Parties only and shall not establish, of
themselves, any liability to third parties. The provisions of this subsection
11.1(A) shall survive termination of this Agreement.
(B) Indemnification by the Authority. The Authority agrees that to the
extent permitted by law, it will protect, indemnify and hold harmless the Energy
Manager and its Affiliates and their respective officers, directors,
Subcontractors (as applicable in the circumstances) and employees (the "Energy
Manager Indemnified Parties") from and against (and pay the full amount of) all
Loss-and-Expense, and will defend the Energy Manager Indemnified Parties in any
suit, including appeals, for personal injury to, or death of, any person, or
loss or damage to property arising out of any matter for which the Authority is
responsible under Section 6.8 hereof. The Authority shall not, however, be
required to reimburse or indemnify any Energy Manager Indemnified Party for any
Loss-and-Expense to the extent any such Loss-and-Expense is due to (a) any
matter for which the Energy Manager is responsible under Section 6.8 hereof, (b)
the negligence or other wrongful conduct of any Energy Manager Indemnified
Party, (c) any Uncontrollable Circumstance, (d) any act or omission of any
Energy Manager Indemnified Party judicially determined to be responsible for or
contributing to the Loss-and-Expense, (e) any matter for which the risk has been
specifically allocated to the Energy Manager hereunder. A Energy Manager
Indemnified Party shall promptly notify the Authority of the assertion of any
claim against it for which it is entitled to be indemnified hereunder, shall
give the Authority the opportunity to defend such claim, and shall not settle
the claim without the approval of the Authority. The Authority shall be entitled
to control the handling of any such claim and to defend or settle any such
claim, in its sole discretion, with counsel of its own choosing that is
reasonably acceptable to the Energy Manager Indemnified Parry; provided,
however, that, in the case of any such settlement, the Authority shall obtain
written release of all liability of the Energy Manager Indemnified Party, in
form and substance reasonably acceptable to the Energy Manager Indemnified
Party. Notwithstanding the foregoing, each Manager Indemnified Party shall have
the right to employ its own separate counsel in connection with, and to
participate in (but, except as provided below, not control) the
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defense of, such claim, but the fees and expenses of such counsel incurred
after notice to the Authority of its assumption of the defense thereof shall be
at the expense of such Energy Manager Indemnified Party unless:
(i) the employment of counsel by such Energy Manager Indemnified Party has
been authorized by the Authority;
(ii) counsel to such Energy Manager Indemnified Party shall have reasonably
concluded that there may be a conflict on any significant issue
between the Authority and such Energy Manager Indemnified Party in the
conduct of the defense of such claim; or
(iii) the Authority shall not in fact have employed counsel reasonably
acceptable to the Authority Indemnified Party to assume the defense of
such claim within twenty (20) days following the receipt by the
Authority of the notice from the Energy Manager Indemnified Party
regarding the assertion of the applicable claim,
in each of which cases the fees and expenses of counsel for such Energy Manager
Indemnified Party shall be at the expense of the Authority; provided, however,
that, with respect to clauses (ii) and (iii) of this sentence, the Authority
shall not be obligated to pay the fees and expenses of more than one law firm,
plus local counsel if necessary in each relevant jurisdiction, for all
such Energy Manager Indemnified Parties with respect to any claims arising out
of the same events or facts or the same series of events or facts. The Authority
shall not be entitled, without the consent of such Energy Manager Indemnified
Party, to assume or control the defense of any claim as to which counsel to such
Energy Manager Indemnified Party shall have reasonably made the conclusion that
there may be a conflict on any significant issue between the Authority and such
Manager Indemnified Party in the conduct of the defense of such claim as set
forth in clause (ii) above, provided that the foregoing limitation shall apply
only with respect to those issues for which there may be such a conflict. These
indemnification provisions are for the protection of the Energy Manager
Indemnified Parties only and shall not establish, of themselves, any liability
to third parties. The provisions of this Section 11.1$) shall survive
termination of this Agreement.
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ARTICLE 12 - NONDISCLOSURE
12.1. PROPRIETARY INFORMATION. (A) Energy Manager Request. The parties
hereto hereby acknowledge that the Energy Manager has a proprietary interest in
certain information that may be furnished pursuant to the provisions of this
Agreement. The Energy Manager acknowledges that the Authority may be required to
disclose information upon request under Applicable Law. The Energy Manager shall
have the right to request the Authority in writing not to publicly disclose any
information which the Energy Manager believes to be proprietary and not subject
to public disclosure under Applicable Law, any such request to be accompanied by
an explanation of its reasons for such belief. Any information which is the
subject of such a request shall be clearly marked on all pages, shall be bound,
and shall be physically separate from all non-proprietary information. At the
Energy Manager's request, the Authority and its agents, consultants and
employees (including the Consulting Engineer) given access to such information
shall execute and comply with the terms of a confidentiality agreement in a
mutually acceptable form, subject to Applicable Law.
(B) Authority Non-Disclosure. In the event the Authority receives a request
from the public for the disclosure of any information designated as proprietary
by the Energy Manager pursuant to subsection (A) of this Section, the Authority
(1) shall use reasonable efforts, consistent with Applicable Law, to provide
notice to the Energy Manager of the request prior to any disclosure, and (2)
shall use reasonable efforts, consistent with Applicable Law, to keep in
confidence and not disclose such information unless it is entitled to do so
pursuant to the provisions of subsection (c) of this Section. The Energy Manager
shall indemnify, hold harmless and defend the Authority against all
Loss-and-Expense incurred from the withholding from public disclosure of
information designated as proprietary by the Energy Manager or otherwise
requested by the Energy Manager to be withheld.
(C) Permitted Disclosures. Notwithstanding any confidential or proprietary
designation thereof by the Energy Manager, the Authority may disclose any
information, (1) which is known to the Authority without any restriction as to
disclosure or use at the time it is furnished, (2) which is or becomes generally
available to the public without breach of any agreement, (3) which is received
from a third party without limitation or restriction on such third party or the
Authority at the time of disclosure, (4) information with respect to (a)
Electricity purchases by LIPA by time of day, month and year, to the extent
available; and (b) prices paid by LIPA for capacity, energy and any Ancillary
Services contracted for under this Agreement; or (5) following notice to the
Energy Manager pursuant to subsection (B) of this Section, information which, in
the opinion of counsel for the Authority, is required to be or may be disclosed
under any Applicable Law, an order of a court of competent jurisdiction, or a
lawful subpoena.
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ARTICLE 13 - MISCELLANEOUS PROVISIONS
13.1. AGREEMENT. This Agreement consists of the terms and conditions set
forth in the body hereof and the Appendices and other attachments hereto. This
Agreement contains the entire agreement between the Parties with respect to the
subject matter hereof. In the event of a conflict, variation or inconsistency
between or among the Appendices, other attachments and the terms and conditions
set forth in the body hereof, the terms and conditions contained in the body
hereof shall govern.
13.2. RELATIONSHIP OF THE PARTIES. Except as otherwise expressly provided
herein, neither party to this Agreement shall have any responsibility whatsoever
with respect to services provided or contractual obligations assumed by the
other party hereto, and nothing in this Agreement shall be deemed to constitute
either party a partner, agent or legal representative of the other party or to
create any fiduciary relationship between the parties.
13.3. ASSIGNMENT AND TRANSFER. This Agreement may be assigned by either
party hereto only with the prior written consent of the other party, except that
without the consent of the other party (1) the Authority may make such
assignments, create such security interests in its rights hereunder and pledge
such monies receivable hereunder as may be required in connection with issuance
of Revenue Bonds; (2) the Authority may assign its rights, obligations and
interests hereunder, or transfer such rights and obligations by operation of
law, to any other governmental entity or to a subsidiary of the Authority
provided that the successor entity gives reasonable assurances to the Energy
Manager that it will fulfill the Authority's obligations hereunder; and (3) the
Energy Manager may assign its rights, obligations and interests hereunder to the
Parent or any Affiliate thereof, provided, however, that with respect to clause
(3) immediately above, the Energy Manager may not, without the consent of the
Authority, make any assignment or other transfer to any person of its rights and
obligations under this Agreement unless the Guaranty is and remains in full
force and effect and unless the Guarantor or a majority-owned direct or indirect
subsidiary of the Guarantor shall have control of and responsibility for the
obligations of the Energy Manager hereunder. Effective upon the Closing Date,
the Authority may assign its rights, obligations and interests hereunder to Long
Island Lighting Company (then a wholly-owned subsidiary of the Authority) and
the Energy Manager shall assign all of its rights, obligations and interests
hereunder to the Parent or any Affiliate thereof pursuant to clause 3 above.
13.4. APPROVAL OF SUBCONTRACTORS. The Authority shall have the right to
approve all Subcontractors engaged to perform any services to be provided
hereunder. Prior to the beginning of each Contract Year, Energy Manager shall
propose a list of preapproved Subcontractors for the Authority's review and
approval, which shall specify the proposed categories of potential work under
contracts for each such proposed Sub-contractor. The Energy Manager also shall
furnish the Authority written notice of its intention to engage such
Subcontractors, together with all information requested to the extent reasonably
available to the Energy Manager pertaining to the proposed Subcontractor and
subcontract pertaining to
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the demonstrated responsibility of the proposed Subcontractor in the following
areas: (1) any conflicts of interest, (2) any record of felony criminal
convictions or pending felony criminal investigations, (3) any final judicial or
administrative finding or adjudication of illegal employment discrimination, and
(4) any final judicial or administrative finding or adjudication of
non-performance in contracts with the Authority or the State. In its sole
discretion, Authority may approve any proposed Subcontractor for such Contract
Year or for a designated shorter period or for a specific subcontract. If a
Subcontractor is approved for a Contract Year or shorter period, such
Subcontractor shall be deemed to be approved for the specified categories of
potential work for the duration of such Contract Year or shorter period unless
the Authority otherwise notifies the Manager. The approval or withholding
thereof by the Authority of any proposed Subcontractor shall not create any
liability of the Authority to the Energy Manager, such Subcoractor, third
parties or otherwise.
13.5. ACTIONS OF THE AUTHORITY IN ITS GOVERNMENTAL CAPACITY. Nothing in
this Agreement shall be interpreted as limiting the rights and obligations of
the Authority in its governmental or regulatory capacity, or as limiting the
right of the Energy Manager to bring any legal action against the Authority, not
based on this Agreement, arising out of any act or omission of the Authority in
its governmental or regulatory capacity.
13.6. NO THIRD PARTY BENEFICIARIES. Unless specifically set forth herein,
neither party to this Agreement shall have any obligation to any third party
other than Indemnified Parties as a result of the agreements contained herein.
13.7. STATE LAW REQUIREMENTS. All contracts entered into by the Authority
are required under State law to contain certain terms and conditions, as set
forth in Appendix C hereto and the provisions of such Appendix C are hereby
deemed incorporated in this Agreement at this place. To the extent of any
conflict between any other provision of this Agreement and Appendix C, Appendix
C shall control. The Energy Manager shall comply with such terms and conditions
during the Term of this Agreement.
13.8. DISPUTE RESOLUTION.
13.8.1 Dispute Resolution. Any dispute arising out of or relating to
this Agreement shall be resolved in accordance with the procedures
specified in this Section, which shall constitute the sole and exclusive
procedures for the resolution of such disputes.
13.8.2 Negotiation and Non-Binding Mediation. The Parties agree to use
their best efforts to settle promptly any disputes or claims arising out of
or relating to this Agreement through negotiation conducted in good faith
between executives having authority to reach such a settlement. Either
party hereto may, by written notice to the other party, refer any such
dispute or claim for advice or resolution by mediation by an Independent
Engineer, financial advisor or other suitable mediator. The parties shall
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mutually agree on the selection of such mediator. If the parties are unable
to agree, the parties shall each designate a qualified mediator who,
together, shall choose the mediator for the particular disputes or claim.
If the mediator is unable, within 30 days of such referral, to reach a
determination as to the dispute that is acceptable to the parties hereto,
the matter shall be referred to applicable Legal Proceedings.
All negotiations and mediation discussions pursuant to this paragraph
shall be confidential subject to Applicable Law and shall be treated as
compromise and settlement negotiations for purposes of Federal Rule of
Evidence 408 and applicable state rules of evidence.
13.8.3 Arbitration. Any dispute arising out of or relating to this
Agreement or the breach, termination, or validity thereof, for a
termination to except Change of Control or due to a bankruptcy or
insolvency or failure to provide, renew, reinstate or replace the credit
enhancement required pursuant to Section 13.15 which dispute has not been
resolved by a negotiation or mediation as provided in subsection 13.8.2
hereof within 30 days from the date that either negotiations or mediation
shall have been first requested, shall be settled by arbitration before
three independent and impartial arbitrators (the "Arbitrators") in
accordance with the then current rules of the American Arbitration
Association, except to the extent such rules are inconsistent with any
provision of this Agreement, in which case the provisions of this Agreement
shall be followed, and except that the arbitrations under this Agreement
shall in be administered by the American Arbitration Association. The
Arbitrators shall be (a) independent of the parties and disinterested in
the outcome of the dispute, provided that residents of Long Island shall
not be deemed to be interested merely by virtue of their residence on Long
Island, (b) attorneys, accountants investment bankers, commercial bankers
or engineers familiar with contracts governing the operation of electric
utility assets, and (c) qualified in the subject area of the issue in
dispute. The Arbitrators shall be chosen by the parties, with each party
choosing one arbitrator and those Arbitrators choosing the third
Arbitrator. Judgment on the award rendered by the Arbitrators may be
entered in any court in the State of New York having jurisdiction thereof.
If either party refused to participate in good faith in the negotiations or
mediation proceedings described in subsection 13.8.2 hereof, the other may
initiate arbitration at any time after such refusal without waiting for the
expiration of the applicable time period. Except as provided in subsection
13.8.4 hereof relating to provisional remedies, the Arbitrators shall
decide all aspects of any dispute brought to them including attorney
disqualification and the timeliness of the making of any claim.
13.8.4 Provisional Relief. Either parry may, without prejudice to any
negotiation, mediation, or arbitration procedures, proceed in any court to
obtain provisional judicial relief if, in such party's sole discretion,
such action is necessary to avoid imminent irreparable harm, to provide
uninterrupted electrical and other services, or to preserve the status quo
pending the conclusion of the dispute procedures specified in this Section.
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13.8.5 Awards. The Arbitrators shall have no authority to award
punitive damages or any other damages aside from the prevailing party's
actual and consequential damages plus interest at the Base Interest Rate
from the date such damages were incurred. The Arbitrators shall not have
the authority to make any ruling, finding, or award that does not conform
to the terms and conditions of this Agreement. The Arbitrators may award
reasonable attorneys' fees and costs of the arbitration. The Arbitrators'
award shall be in writing and shall set forth the factual and legal bases
for the award.
13.8.6 Information Exchange. The Arbitrators shall have the discretion
to order a pre-hearing exchange of information by the parties, including,
without limitation, the production of requested documents, the exchange of
summaries of testimony of proposed witnesses, and the examination by
disposition of parties. The parties hereby agree to produce all such
information as ordered by the Arbitrators and shall certify that they have
provided all applicable information and that such information was true,
accurate and complete.
13.8.7 Site of Arbitration. The site of any Arbitration brought
pursuant to this Agreement shall be either Mineola, New York or Hauppauge,
New York.
13.8.8 Precondition to Litigation. Except for claims for temporary
injunctive relief from a court of competent jurisdiction as described
above, neither party shall bring any action at law or in equity to enforce,
interpret, or remedy any breach of his Agreement without first complying
with the provisions of this Article 13.
13.8.9 Continuity of Service. Unless otherwise agreed to in writing or
prohibited by Applicable Law, the Parties shall continue to provide
service, honor commitments under this Agreement, and continue to make
payments in accordance with this Agreement during the course of dispute
resolution pursuant to Section 13.8 of this Agreement and during the
pendency of any action at law or in equity or any arbitration proceeding
relating hereto.
13.9. AMENDMENTS. No amendments or modifications of this Agreement shall be
valid unless evidenced in writing and signed by duly authorized representatives
of both Parties.
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13.10. NOTICES.
13.10.1 Notice Addresses. Any written notice under this Agreement
shall be deemed properly given if sent by registered or certified mail
return receipt requested, postage prepaid, or by nationally recognized
overnight delivery service or signature required upon signed receipt to the
address specified below, unless otherwise provided for in this Agreement:
To the Authority: LONG ISLAND POWER AUTHORITY
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Executive Director
With a copy to CHAIRMAN, LONG ISLAND POWER AUTHORITY
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
To Energy Manager: LONG ISLAND LIGHTING COMPANY
000 Xxxx Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
13.10.2. Either Party may, by written notice to the other Party,
change the name or address of the person to receive notices pursuant to
this Agreement.
13.11. REPRESENTATIONS AND WARRANTIES.
13.11.1. Energy Manager Representations and Warranties. Energy
Manager, as of the date of this Agreement, makes the following
representations and warranties as the basis for its undertakings contained
herein:
(a) Energy Manager is duly organized, validly existing and in
good standing under the laws of the State of New York, is qualified to
do business under the laws of the State of New York, has the power and
authority to own its properties, to carry on its business as it now is
being conducted and to enter into this Agreement and carry out the
transactions contemplated hereby, and to perform and carry out all
covenants and obligations on its part to be performed under and
pursuant to this Agreement, and is duly authorized to execute and
deliver this Agreement and consummate the transactions herein
contemplated.
(b) The execution and delivery of this Agreement, the
consummation of the transactions contemplated herein and the
fulfillment of and compliance with the provisions of this Agreement do
not materially conflict with or constitute a
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material breach of or a material default under any of the terms,
conditions or provisions of any law, any order of any court or other
agency of government, the certificate of incorporation of Energy
Manager or any contractual limitation, partnership restriction or
outstanding trust indenture, deed of trust, mortgage, loan agreement,
other evidence of indebtedness or any other agreement or instrument to
which Energy Manager is a Party or by which it or any of its property
is bound or result in a material breach of or a material default under
any of the foregoing and this Agreement is the legal, valid and
binding obligation of Energy Manager enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) As of the Closing Date and throughout the Term of this
Agreement, Energy Manager will be in material compliance with, or will
have acted in good faith and used all reasonable efforts to be in
material compliance with, all laws, judicial and administrative
orders, rules and regulations with respect to the ownership and
operation of its facilities and the performance of its obligations
hereunder including but not limited to the following: all requirements
to obtain and comply with the conditions of Applicable Law.
13.11.2. Authority Representations and Warranties. Authority, as of
the date of this Agreement, makes the following representations and
warranties as the basis for its undertakings contained herein:
(a) Authority is a corporate municipal instrumentality and
political subdivision of the State of New York, has the corporate
power and authority to own its properties, to carry on its business as
now being conducted, and to enter into this Agreement and the
transactions contemplated herein and perform and carry out all
covenants and obligations on its part to be performed under and
pursuant to this Agreement, and is duly authorized to execute and
deliver this Agreement and consummate the transactions herein
contemplated.
(b) The execution and delivery of this Agreement, the
consummation of the transactions contemplated herein and the
fulfillment of and compliance with the provisions of this Agreement do
not materially conflict with or constitute a material breach of or a
material default under, any of the terms, conditions or provisions of
any law, any order of any court or other agency of government, or any
contractual limitation, corporate or partnership restriction or
outstanding trust indenture, deed of trust, mortgage, loan agreement,
other evidence of indebtedness or any other agreement or instrument to
which Authority is a party or by which it or any of its property is
bound or result in a material breach of or a material default under
any of the foregoing and this Agreement is the legal, valid and
binding obligation of Authority enforceable in accordance with its
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terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) All corporate or other organization consents, authorizations,
and approvals, and all other actions required for Authority to
execute, deliver and perform its obligations hereunder have been
obtained or completed.
13.12. COUNTERPARTS. The Parties may execute this Agreement in
counterparts, which shall, in the aggregate, when signed by both Parties
constitute one and the same instrument; and, thereafter, each counterpart shall
be deemed an original instrument.
13.13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable principles of conflict of law. Any action arising out of or relating
to this Agreement shall be brought in New York State Court.
13.14. CAPTIONS; APPENDICES. Tides or captions of the articles contained in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend, describe or otherwise affect the scope or
meaning of this Agreement or the intent of any provision hereof.
13.15. ENERGY MANAGER TO REMAIN AFFILIATE OF GUARANTOR; CREDIT ENHANCEMENT
IN CERTAIN CIRCUMSTANCES. (A) Limitations. The Energy Manager agrees that at the
Closing that it will become and thereafter it will remain an Affiliate of the
Guarantor.
(B) Material Decline in the Guarantor's Credit Standing. For purposes of
this Section, a "Material Decline in the Guarantor's Credit Standing" shall be
deemed to have occurred if (1) in the event that the Guarantor has long-term
senior debt outstanding which has a credit rating by a Rating Service, such
rating by a Rating Service is established or is reduced below investment grade
level or (2) in the event the Guarantor does not have long-term senior debt
outstanding which has a credit rating by a Rating Service and the Guarantor has
a credit rating by a Rating Service, such credit rating is established or
reduced below investment grade level, or (3) in the event the Guarantor does not
have long-term senior debt outstanding which has a credit rating by a Rating
Service and the Guarantor does not have a credit rating by a Rating Service, in
which event the Guarantor shall seek a credit rating for the Guaranty from a
Rating Service, such rating is established or is reduced below investment grade
level or if no rating is established.
(C) Credit Enhancement. If, at any time during the Term hereof, a Material
Decline in the Guarantor's Credit Standing occurs, the Energy Manager shall
immediately notify the Authority thereof and, within 30 days after such
occurrence, shall provide credit enhancement of its obligations hereunder,
GENCO's obligations under the Power Supply
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Agreement and the Manager's obligations under the Management Services Agreement
at its sole cost and expense in the form either of (1) any unconditional
guarantee of all of the Energy Manager's obligations hereunder, GENCO's
obligations under the Power Supply Agreement and the Manager's obligations under
the Management Services Agreement provided by a corporation or financial
institution whose long-term senior debt is or would be rated investment grade by
a Rating Service or (2) an irrevocable letter of credit in form and substance
satisfactory to the Authority securing the Energy Manager's obligations
hereunder, GENCO's obligations under the Power Supply Agreement and the
Manager's obligations under the Management Services Agreement in a face amount
of $60,000,000 provided by a financial institution whose long-term senior debt
is rated investment grade by a Rating Service provided that if any such letter
of credit is drawn upon in the aggregate in an amount equal to 50% of the face
value of such letter of credit, the Manager shall, within 30 days thereafter,
supplement or replace such letter of credit with an additional letter of credit
such that the total amount of such letter of credit then available equal $60
million. The amount of such letter of credit shall be reduced by $26 million if
the Management Services Agreement has theretofore been or is thereafter
terminated and by $4 million if the Power Supply Agreement has theretofore been
or is thereafter terminated, such obligation to continue until the expiration or
termination of this Energy Management Agreement, the Power Supply Agreement and
the Management Services Agreement. The Energy Manager immediately shall notify
the Authority of any Material Decline in the Guarantor's Credit Standing.
13.16. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall be determined only by a court of competent jurisdiction,
and the Parties hereby agree to negotiate an equitable adjustment to the invalid
or unenforceable provision with a view toward effecting the purposes of this
Agreement; the validity or enforceability of the remaining provisions or
portions or applications thereof, shall not be affected thereby.
13.17. RULES OF INTERPRETATION. The terms and provisions of this Agreement
shall be interpreted and construed as follows: (a) words of the masculine gender
shall include corresponding words of the feminine or neuter genders and vice
versa; (b) the plural shall include the singular and vice versa; (c) unless the
context indicates otherwise, all references herein to Articles, Sections,
paragraphs, exhibits, schedules, and Appendices shall refer, respectively, to
the Articles, Sections, paragraphs, exhibits, schedules and Appendices of this
Agreement; (d) the words "includes" or "including" mean "including, but not
limited to" and are not limiting; (e) any reference to an agreement, a contract
or any other document means the same as it may be amended, modified,
supplemented or replaced from time to time, unless otherwise noted; (f) any
reference to a Person includes such Person's successors and assigns; and (g)
"ensure" shall not be construed as a guarantee, but shall imply only a duty to
use reasonable effort and care, consistent with Prudent Utility Practice.
13.18. HEDGING POLICIES. The Energy Manager will not engage in any hedging
activities relating to the Fuel Services or System Power Supply Services without
express approval from the Boards of Directors of Energy Manager and its Parent
and without notifying
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and consulting with the Authority at least 60 days prior to implementing such
activities. In the event that approval for the use of hedging activities is
implemented, the incentive/disincentive program will be reexamined by the
parties to determine the appropriateness of the inclusion or exclusion of the
related costs, gain or losses and appropriate mutually agreeable revisions
thereto will be made.
13.19 ENERGY PRICING INFORMATION SYSTEM. Within 9 months after Contract
Date, Energy Manager shall recommend to Authority a plan, including function,
equipment, information to be supplied, procedures, and cost, for a methodology
and system to provide real-time and suitable historic information on capacity
and energy pricing and amounts purchased. Such methodology and system shall be
developed in a manner which provides data necessary for prospective suppliers
of capacity and energy to determine the market for sale of capacity and energy
to the Authority and shall be subject to approval by the Authority. To the
extent approved by the Authority, such system shall be installed and operated at
the expense of the Authority, subject to Cost Substantiation.
13.20 BINDING EFFECT. This Agreement shall become binding and effective on
the Closing Date and shall thereafter bind and inure to the benefit of the
parties hereto and any successor or assignee acquiring an interest hereunder in
compliance with the provisions of Section 13.3 hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement through their
duly authorized officers as of the date set forth in the preamble to this
Agreement.
LONG ISLAND POWER AUTHORITY
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
By: /s/ XXXXXXX XXXX
---------------------------------
Name: Xxxxxxx Xxxx
Title: Deputy Chairman
LONG ISLAND LIGHTING COMPANY
By: /s/ XX. XXXXXXX X. XXXXXXXXXXX
---------------------------------
Name: Xx. Xxxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
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APPENDIX A
FUEL PURCHASE PERFORMANCE, INCENTIVE/DISINCENTIVE
The Authority and the Energy Manager shall share in savings realized or
additional costs incurred when comparing the actual costs of monthly natural gas
and oil purchases for generation with the respective natural gas and oil target
indices described herein. The amount of incentive or disincentive will be
determined monthly on a transaction by transaction basis. The maximum net annual
incentive or disincentive shall be limited to the provisions of Section 3.3 of
the Energy Management Agreement. All units of fuel shall be converted to
millions of British thermal units - dry ("MMBtu") for purposes of these
calculations.
1. NATURAL GAS PURCHASES
1.1 Benchmark Gas Index Price
An index shall be computed and expressed in dollars per MMBtu (the "Index
Price") for each monthly purchase arrangement for the three categories as
described below. The three categories are intended to incorporate all gas
purchases for generation without exception. There shall be no allowance for
losses and unaccounted-for gas between the City Gate and the billing meters at
each generating station. For this purpose, the term "Bid Week" is defined to
mean for the week in the prior month during which gas prices are established for
the current month.
a. The Index Price for gas purchases made after Bid Week for a duration of
less than one month ("Swing Gas Purchases") shall be based on the delivery
area and pipeline specific Daily Midpoint index published by Gas Daily for
the first business day of gas flow under the transaction (e.g., "Others -
Transco, Zone 6" index).
b. The Index Price for gas purchases made prior to or during Bid-Week with a
duration of one month or less ("Monthly Gas Purchases") shall be derived
separately for each pipeline source as the equally weighted average of (i)
the Gas Daily Price Guide Monthly Contract Index or City Gate Prices
Average of the high and low Bid Week posting for a specific pipeline and
region, as appropriate; and (ii) the price for a specific pipeline and
region, as appropriate, published in Inside FERC Gas Market Report as of
the first day of the month.
c. The Index Price for gas purchases with a term greater than one month
("Long-Term Gas Purchases") shall be determined for each such contract for
Long-Term Gas Purchases as the index for Swing Gas Purchase or Monthly Gas
Purchases, as described above plus an adjustment to reflect the premium
paid for long-term supply (the "Long-Term
Adjustment"). The Long-Term Adjustment shall be computed annually as the
difference between the weighted average cost per MMBtu of Long-Term
Purchases and the weighted average cost of all other supplies. If the
historical data for Long-Term Gas Purchases for electric generation is
inadequate, average costs for all other long-term purchase contracts by the
Energy Manager may be substituted. Appropriate transportation costs will be
added to each index so determined.
1.2 Calculation of Incentive/Disincentive for Gas Purchases
A benchmark price shall be computed for each purchase (the "Gas Index
Benchmark") equal to 102% of the Index Price determined in Section 1.1 of this
Appendix. The "Actual Gas Cost" shall be computed for each purchase transaction
as the average cost per MMBtu of all costs associated with such transactions,
including commodity and demand charges, and excluding any a penalties and fines
incurred by Energy Manager. Should the Actual Gas Cost be less than the Gas
Index Benchmark the Authority and the Energy Manager shall share the savings
equally. Should the Actual Gas Cost exceed the Gas Index Benchmark the Authority
and the Energy Manager shall share such excess cost equally. For each month the
amount of incentive or disincentive associated with each purchase transaction
shall be computed as the product of the resulting incentive or disincentive cost
per unit and the actual volume of gas purchased.
2. OIL PURCHASES
The target price for oil purchases expressed as dollars per MMBtu (the `Oil
Index Benchmark") shall be computed each month for each type of oil purchase for
each purchase transaction.
2.1 Residual Oil Purchases
The Oil Index Benchmark for residual oil purchases shall be computed as the
weighted avenge of applicable residual oil spot postings as described below, and
shall be determined separately for (nominal) 1.0% sulfur, 0.7% sulfur and 0.3%
sulfur No. 6 residual fuel oil ("Residual Oil Purchase") depending on which type
of oil is delivered for each delivery based on the date on which each delivery
commences (the "Commencement of Discharge Date). All index prices for each
delivery shall be computed as the average of the spot postings for the
Commencement of Discharge Date, the two days prior to such date, and the two
days following such date (the "Residual Oil Index Period").
2
a. Forty percent of the International Heavy Fuel Oil Prices, Delivered New
York Spot, Cargoes 1.0% sulphur LP, or 0.7% sulphur LP, or 0.3% HP, price
as posted in Bloomberg Petroflash at 5:00 PM Eastern Time for each day of
the Residual Oil Index Period.
b. Forty percent of the average of Cargoes, DEL NYH 1.0% sulphur LP, or 0.7%
sulphur LP, or 0.3% sulphur HP low/high prices as posted in Argus US
Products in Houston, at 5:00 PM Central Time, for each of day of the
Residual Oil Index Period.
c. Twenty percent of the average New York Cargo, No. 6 1% sulphur LP, or 0.7%
sulphur LP, or 0.3% sulphur HP low/high prices as posted in Xxxxx'x Oilgram
U.S. Marketscan price report at 5:00 PM Eastern Time for each day of the
Residual Oil Index Period.
In computing the Oil Index Benchmark the above indices will be increased to
include the actual transportation charge to each GENCO Generating Facility as
appropriate.
2.2 No. 2 Oil - Barge Delivery
For No. 2 oil purchases, the Oil Index Benchmark shall be equal to the average
of the three spot postings, as defined below, for each of the following days
(the "Daily Averages"): the Commencement of Discharge Date; the day before such
date, and the day after such date (the "No. 2 Oil Barge Index Period"). The
following postings for spot barge No. 2 oil ("Spot Postings") will be used to
determine the daily average for each of the referenced days:
a. The low "New York Barge No. 2" price as published in Xxxxx'x Oilgram U.S.
Marketscan price report at 5:00 PM Eastern Time for each day of the No. 2
Oil Index Period.
b. The "New York Heating/Gas Oil: 0.2% Sulphur" price as published in
Bloomberg Petroflash. At 5:00 PM Eastern Time for each day of the No. 2 Oil
Index Period.
C. The low "DEL NYH No. 2" price as posted in Argus US Products in Houston, at
5:00 PM Central Time, for each of day of the No. 2 Oil Index Period.
In computing the Oil Index Benchmark the above indices will be increased to
include appropriate handling, terminalling, storage, and transportation charges
to each GENCO Generating Facility.
3
2.3 No. 2 Oil - Truck Delivery
For No. 2 oil purchases the target index shall be equal to the average of "low"
or "average" price, as appropriate, for each supplier of fuel oil, for Newark,
NJ **OPIS/Tape Gross Distillate Prices* Hi Sul No. 2" as published in Oil Price
Information Service at the close of business Eastern Time on the Commencement of
Discharge Date, the day before such date and the date after such date (the "No.
2 Oil Truck Index Period").
The above target index will be modified to include appropriate handling,
terminalling, storage, and transportation charges to each GENCO Generating
Facility.
2.4 Kerosene - Barge Delivery
For kerosene purchases, the target index shall be equal to the average of the
New York Barge LS Jet Low Price as published in Xxxxx'x Oilgram U.S. Marketscan
price report at 5:00 PM Eastern Time effective for the Commencement of Discharge
Date, the day before such date, and the day after such date (the "Kerosene Index
Period").
In computing the Oil Index Benchmark the above indices will be modified to
include appropriate handling, terminalling, storage, and transportation charges
to each GENCO Generating Facility.
2.5 Calculation of Incentive/Disincentive for Oil Purchases
The "Actual Oil Cost" shall be computed for each purchase transaction as the
average cost per MMBtu of all costs associated with such transaction. Should the
Actual Oil Cost be less than the corresponding Oil Index Benchmark, LIPA and the
Energy Manager shall share the savings equally. Should the Actual Oil Cost
exceed the Oil Index Benchmark, the Authority and the Energy Manager shall share
such excess cost equally. For each month the amount of incentive or disincentive
associated with each purchase transaction shall be computed as the product of
the resulting incentive or disincentive cost per unit and the actual volume of
oil purchased.
The net amount of incentive or disincentive payment will not exceed $5 million
on an annual basis.
4
3. SUBSTITUTION OF INDICES
In the event that any of the posted indices referenced herein cease to be
published, their basis of determination materially changes or new, more
appropriate indices are published, the parties may agree to substitute a
mutually agreeable index.
0
XXXXXXXX X
SYSTEM POWER SUPPLY PERFORMANCE INCENTIVE/DISINCENTIVE
Recognizing that incentives for favorable fuel prices, and GENCO generating unit
efficiencies are provided as part of this or other agreements, the power supply
cost incentive/disincentive shall be based on the actual cost of off-system
power purchases, excluding purchases under long-term contracts in effect on the
Closing Date, in comparison to an indexed cost as described herein.
Each month, an indexed cost of purchased power shall be computed for on-peak and
off-peak purchases for each week during the month in the amount equal to the sum
of (i) the product of the quantities for each week in the month of on-peak
purchases and the corresponding Prices of Spot Electricity - East New York,
Weekly Index (on-peak) published weekly in Power Markets Week; (ii) the product
of the quantities for each week in the month of off-peak purchases and the
corresponding Prices of Spot Electricity - East New York, midpoint of the Weekly
Range (off-peak), published weekly in Power Markets Week and (iii) the product
of total on-peak and off-peak purchases and a Basis Differential computed for a
12-month period prior to the Commencement Date (the "Target Purchase Cost"). The
Basis Differential shall be computed (pound) as the difference between the
weighted average per cost MWh of purchase indexed as described above, excluding
the Basis Differential component, and the actual cost of purchases per MWh. The
parties agree that in the event that any index ceases to be published, or there
is a substantial change in the manner in which the index is established, another
mutually agreeable index shall be substituted, and/or the Basis/Differential
shall be recomputed, as appropriate.
For each month, if the Actual Purchase Cost is less than the Target Purchase
Cost, the Authority shall pay Energy Manager 33% of the savings. Should the
Actual Purchase Cost exceed 101 % of the Target Purchase Cost, Energy Manager
shall incur a penalty equal to 33% of such excess cost. In any other event, the
Authority shall reimburse Energy Manager for the Actual Purchase Cost with no
adjustment for incentive or penalty amounts. The net amount of incentive or
penalty will not exceed $2 million on an annual basis.
1
APPENDIX C
PROVISIONS REQUIRED BY STATE LAW
1.1 ENERGY MANAGER TO COMPLY WITH LEGAL REQUIREMENTS. The Manager in performing
its obligations under this Agreement, shall comply with all applicable laws and
regulations. All provisions required by such laws and regulations to be included
in this Agreement shall be deemed to be included in this Agreement with the same
effect as if set forth in full.
1.2 ENERGY MANAGER TO OBTAIN PERMITS. ETC. Except as otherwise instructed in
writing by the Authority, the Energy Manager shall obtain and comply with all
legally required licenses, consents, approvals, orders, authorizations, permits,
restrictions, declarations, and filings required to be obtained by the Authority
or the Energy Manager in connection with this Agreement.
1.3 WORKERS' COMPENSATION INSURANCE. The Energy Manager agrees that:
(a) It will secure Workers' Compensation and Disability Insurance and keep
insured during the life of this Agreement such employees as are required to be
insured by the provisions of Chapter 41 of the Laws of 1914, as amended, known
as the Worker's Compensation Law; and
(b) This Agreement shall be voidable at the election of the Authority and
of no effect unless the Energy Manager complies with the requirement in
paragraph (a) of this Section.
1.4 NO ASSIGNMENT WITHOUT CONSENT. The Energy Manager agrees that: (a) It is
prohibited from assigning, transferring, or otherwise disposing of this
Agreement, or of its rights or interests therein, or its power to execute such
Agreement to any person, company, partnership, or corporation, without the
previous written consent of the Authority. Assignments of this Agreement
expressly referred to in clause (3) of the first sentence of Section 13.3 of
this Agreement have been so consented to.
(b) If the prohibition contained in paragraph (a) above is violated, the
Authority may revoke and annul this Agreement and the Authority shall be
relieved from any and all liability and obligations hereunder to the Energy
Manager and to the person, company, partnership, or corporation to whom such
assignment, transfer, or other disposal shall have been made, and the Energy
Manager and such assignee or transferee shall forfeit and lose all the money
theretofore earned under this Agreement.
1.5 NON-DISCRIMINATION. (a) The Energy Manager shall not discriminate against
employees or applicants for employment because of race, creed, color, national
origin, sex, age, disability, or marital status, and will undertake or continue
existing programs of affirmative
1
action to ensure that minority group persons and women are afforded equal
opportunity without discrimination. Such programs shall include, but not be
limited to, recruitment, employment, job assignment, promotion, upgrading,
demotion, transfer, layoff, termination, rates of pay or other forms of
compensation, and selection for training and retraining, including
apprenticeship and on-the-job training.
(b) At the request of the Authority, the Energy Manager shall request each
employment agency, labor union, or authorized representative of workers with
which it has a collective bargaining or other agreement or understanding and
which is involved in the performance of this Agreement to furnish a written
statement that such employment agency, labor union, or representative shall not
discriminate because of race, creed, color, national origin, sex, age,
disability, or marital status and that such union or representative will
cooperate in the implementation of the Energy Manager's obligations hereunder.
(c) The Energy Manager shall state, in all solicitations or advertisements
for employees placed by or on behalf of the Energy Manager in the performance
of this Agreement, that all qualified applicants will be afforded equal
employment opportunity without discrimination because of race, creed, color,
national origin, sex, age, disability, or marital status.
The Energy Manager shall submit an equal employment opportunity policy
statement to the Authority which shall contain, but not be limited to, the
provisions (a) through (c) of this (As required by NYCRR ss.142. 1(d)(2) and
(3)).
(d) The Energy Manager will include provisions (a) through (c) of this
section in every subcontract or purchase order in such a manner that such
provisions will be binding upon each subcontractor or vendor as to its work in
connection with this Agreement.
(e) The Energy Manager shall furnish to the Authority such information and
reports regarding its compliance with the above requirements as the Authority
may from time to time request.
(f) The provisions of this section shall not be binding upon the Energy
Manager or any subcontractor in the performance of work or the provision of
services or any other activity that is unrelated, separate or distinct from this
Agreement, as expressed by its terms.
(g) The requirements of this section do not apply to any employment outside
the State of New York or application for employment outside the State of New
York or solicitations or advertisements therefor, or to any existing programs of
affirmative action regarding employment outside the State of New York.
(h) Any disputes regarding this section shall be resolved as provided in
Section 316 of the New York State Executive Law.
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1.6 INTERNATIONAL BOYCOTT PROHIBITION. The Energy Manager expressly agrees
and certifies that neither the Energy Manager nor any person, firm, partnership,
or corporation which is substantially owned by or affiliated with the Energy
Manager has participated, is participating, or will participate in an
international boycott in violation of the provisions of the United States Export
Administration Act of 1969, as amended, or the Export Administration Act of
1979, as amended, or the regulations of the United States Department of Commerce
promulgated thereunder. The Energy Manager understands that such agreement and
certification constitutes a material term of this Agreement.
1.7 FAILURE OR REFUSAL TO TESTIFY. Upon the refusal of any person, including any
member, officer, or director of the Energy Manager, when called before a grand
jury, head of state department, temporary state commission or other state
agency, the organized crime task force in the department of law, head of a city
department, or other city agency, which is empowered to compel the attendance of
witnesses and examine them under oath, to testify in an investigation
concerning any transaction or contract had with the state, any political
subdivision thereof or of a public authority, to sign a waiver of immunity
against subsequent criminal prosecution or to answer any relevant question
concerning such transaction or contract:
(a) such person, and any firm, partnership, or corporation of which he or
she is a member, partner, director, or officer (including, if applicable, the
Energy Manager), shall be disqualified from thereafter selling to or submitting
bids to or receiving awards from or entering into any contract with any public
authority or official thereof, for goods, work, or services, for a period of
five years after such refusal, or until a disqualification shall be removed
pursuant to law; and
(b) any and all contracts made with any public authority or official
thereof, since July 1, 1959 (including if applicable, this Agreement), by such
person and by any firm, partnership or corporation of which he is a member,
partner, director, or officer (including, if applicable, the Energy Manager),
may be canceled or terminated by the public authority without incurring any
penalty or damages on account of such cancellation or termination, but any
monies owing by the public authority for goods delivered or work done prior to
the cancellation or termination shall be paid.
1.8 MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE PROCEDURES
(a) DECLARATION OF POLICY AND STATEMENT OF GOALS. It is the policy of the
Authority to provide Minority and Women-Owned Business Enterprises ("M/WBEs")
the greatest practicable opportunity to participate in the Authority's
contracting activity for the procurement of goods and services. To effectuate
this policy, the Energy Manager shall comply with the provisions of this section
and the provisions of Article 15-A of the New York State Executive Law. The
Energy Manager will use its best efforts to achieve the below-stated MAYBE Goals
set for the Agreement, and will cooperate in any efforts of the Authority, or
any
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government agency which may have jurisdiction, to monitor and assist the Energy
Manager's compliance with the Authority's M/WBE policy.
Minority-Owned Business Enterprise (MBE) Subcontracting Goal *%
Women-Owned Business Enterprise (WBE) Subcontracting Goal *%
(b) DEFINITIONS.
(1) "CERTIFICATION" The process conducted by the Director of the Division
of Minority and Women's Business Development in the Department of
Economic Development to verify that a business enterprise qualifies
for New York State Minority or Women-Owned Business Enterprise status.
To initiate the certification process, contact one of the offices
listed below.
ALBANY OFFICE: (000) 000-0000
Xxxxx Xxxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxx 12224
NEW YORK CITY XXXXXX
0 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(2) CERTIFIED BUSINESS. A business enterprise which has been approved by
the Director for status as a MBE or WBE subsequent to verification
that the business enterprise is owned, operated, and controlled by
Minority Group Members, or women.
(3) "CONTRACT SCOPE OF WORK". For purposes of this section, this means:
(i) Specific tasks required by the Agreement;
(ii) Services or products which must be provided to perform specific
tasks required by this Agreement; and
(iii) Components of any overhead costs billed to the Authority
pursuant to this Agreement.
(4) "DAY". A calendar state business day unless otherwise specified.
----------
* To be specified at time of adoption of initial Annual T&D Budget.
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(5) "DIRECTOR". The Director of the Division of Minority and Women's
Business Development in the Department of Economic Development.
(6) "DIRECTORY". The Directory of Certified Businesses, prepared by the
Director.
(7) "GOAL". A percentage of participation, which is not a set aside or
quota, that represents a target toward which the Energy Manager must
aim in expending good faith efforts to subcontract with or otherwise
ensure the commercial involvement of minority and women-owned
businesses on this Agreement.
(8) "OFFICE" or "OFFICE OF MINORITY AND WOMEN'S BUSINESS DEVELOPMENT".
Office in the New York State Department of Economic Development
created by Article 15-A of the Executive Law.
(9) MINORITY GROUP MEMBER. A United States citizen or permanent resident
alien who is and can demonstrate membership in one of the following
groups:
(i) Black persons having origins in any of the Black African racial
groups;
(ii) Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban,
Central or South American descent of either Indian or Hispanic
Origin, regardless of race;
(iii) Native American or Alaskan native persons having origins in any
of the original peoples of North America,
(iv) Asian and Pacific Islander persons having origins in any of the
Far East countries, South East Asia, the Indian subcontinent or
the Pacific Islands;
(v) Other groups which the Office may determine to be eligible for
M/WBE status.
(10) MINORITY-OWNED BUSINESS ENTERPRISE. A business enterprise, including a
sole proprietorship, partnership or corporation that is:
(i) At least fifty-one percent owned by one or more Minority Group
Members;
(ii) An enterprise in which such minority ownership is real,
substantial and continuing;
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(iii) An enterprise in which such minority ownership has, and
exercises the authority to control independently, the day-to-day
business decisions of the enterprise for at least one year; and
(iv) An enterprise authorized to do business in New York State and is
independently owned and operated.
(11) "SUBCONTRACT". An agreement in which a portion of the Energy Manager's
obligation under this Agreement is undertaken or assumed.
(12) "WOMEN-OWNED BUSINESS ENTERPRISE". A business enterprise, including a
sole proprietorship, partnership or corporation that is:
(i) At least fifty-one percent owned by one or more United States
citizens or permanent resident aliens who are women;
(ii) An enterprise in which the ownership interest of such women is
real, substantial and continuing;
(iii) An enterprise in which such women ownership has, and exercises
the authority to control independently, the day-to-day business
decisions of the enterprise for at least one year; and
(iv) An enterprise authorized to do business in New York State and is
independently owned and operated.
(c) REQUIREMENTS.
(1) The Energy Manager shall search for, assess the capabilities of and
generally deal with potential M\WBE subcontractors in a fair and responsive
manner, allowing them the 4 opportunity to participate in the Contract
Scope of Work.
(2) The Energy Manager will designate, and make known to the Authority an
MAYBE Officer who will have the responsibility for and authority to
effectively administer the MAYBE Program.
(3) The Energy Manager shall submit its Preliminary Subcontracting Plan on
a preliminary subcontracting plan form, which shall identify the Certified
Businesses it will utilize to meet its M/WBE Contract Goals. Approval of
any such firm is solely within the discretion of the Authority. The Energy
Manager will also designate an M/WBE Officer who will have the
responsibility for, and authority to, effectively administer these
procedures. If the Energy Manager believes it may be unable to meet the
Goals, the reasons shall be submitted in writing with the form.
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(4) The Energy Manager may inspect the current New York State Certification
Directory of Minority and Women Owned Businesses, prepared for use by state
agencies and contractors in complying with Executive Law Article 15-A, (the
Directory) at the Authority's office. In addition, printed or electronic
copies of the Directory may be purchased from the Office of Minority and
Women's Business Development.
(5) Firms certified as both MBE and WBE may count toward either the MBE or
WBE Goal on a single contract, but not both, regardless of whether either
Goal is thus exceeded. The Energy Manager must choose the Goal to which the
participation value is to be applied in the preliminary Subcontracting
Plan.
(6) Within 10 days following the adoption of the initial Annual T&D Budget
and in any event no later than 60 days prior to the anticipated Closing
Date, the Energy Manager shall submit a complete Utilization Plan, which
shall include identification of the M/WBEs which the Energy Manager intends
to use; the dollar amount of business with each such M/WBE; the Contract
Scope of Work which the Energy Manager intends to have performed by such
M/WBEs; and the commencement and end dares of such performance. The
Authority will review the plan and, within 20 days of its receipt, issue a
written acceptance of the plan or comments on deficiencies in the plan.
(7) The Authority shall consider a partial or total waiver of Goal
requirements only upon the submission of a written request for a waiver
following the Energy Manager's unsuccessful good faith efforts at
compliance. Such waiver request may be made simultaneously with the
submission of the Utilization Plan.
(8) The Energy Manager shall include in each Subcontract, in such a manner
that the provisions will be binding upon each subcontractor, all of the
provisions herein including those requiring subcontractors to make a good
faith effort to solicit participation by M/WBEs.
(9) The Energy Manager shall keep records, canceled checks and documents
for at least one (1) year following completion of this Agreement. These
records, and canceled checks, documents or copies thereof will be made
available at reasonable times upon written request by the Authority or any
other authorized governmental entity.
(10) The Energy Manager shall submit monthly compliance reports regarding
its M/WBE utilization activity on a Compliance Report Form acceptable to
the Authority. Reports are due on the first business day of each month,
beginning 30 days after the Closing Date.
(11) The Authority will conduct compliance reviews for determination of the
Energy Manager's performance relative to meaning the specified MAYBE Goal
which may include review and inspection of documents pertaining to the
Energy Manager's efforts towards meeting the Goals and on-site interviews
with personnel of Energy Manager and
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its subcontractors. The Energy Manager will fully cooperate to assist the
Authority in this endeavor.
(12) The Energy Manager shall not use the requirements of this section to
discriminate against any qualified company or group of companies.
(d) CONDITIONS FOR SATISFYING MAYBE GOALS. MAYBE participation will be
counted toward the total Contract M/WBE Goals subject to the following
conditions:
(1) If the Energy Manager is unable to meet the Goals with Certified
Businesses by making all of the good faith efforts defined herein, the
Energy Manager shall actively solicit uncertified M/WBEs to satisfy the
Goals. Uncertified firms will be required to submit an application for
certification (to the Office of Minority and Women's Business Development)
and will be counted as contributing towards the contract Goals only after
they have been certified.
(2) The Energy Manager must keep records of efforts to utilize certified
M/WBE's including
(i) The firm's name, address and telephone number.
(ii) A description of the information provided to the M/WBE.
(iii) A written explanation of why an agreement with the M/WBE was not
obtained.
(3) Price alone will not be an acceptable basis for rejecting M/WBE bids if
any of the bids are reasonable.
(4) Geographical limitation in the MAYBE search is not an acceptable reason
for not meeting the M/WBE goal when traditionally non-local firms have been
generally utilized.
(5) the Authority reserves the right to reject any firm as counting toward
meeting the Energy Manager's MAYBE goal if, in the opinion of the
Authority, the facts as to that firm's business and technical organization
and practices justify the rejection.
(e) ENERGY MANAGER'S GOOD-FAITH EFFORTS. To satisfy the MAYBE participation
requirements, the Energy Manager agrees to make the following good-faith
efforts in a timely manner:
(1) Submission of a completed, acceptable Utilization Plan as described
herein.
(2) Advertising in appropriate general circulation, trade and minority and
women-oriented publications.
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(3) Written solicitations made in a timely manner of certified minority and
women-owned business enterprises listed in the Directory.
(4) Attendance at meetings, if any, scheduled by the Authority with
certified M/WBEs capable of performing the Contract Scope of Work.
(5) Written notification to M/WBE trade associations located within the
region where the Contract Scope of Work will be performed.
(6) Structuring the Contract Scope of Work for purposes of subcontracting
with certified M/WBEs.
(7) Where certified M/WBEs have expressed an interest to the Energy Manager
in performing work that the Energy Manager normally performs with its own
sources and the Contract Scope of Work has not been fully performed, the
Energy Manager shall consider subcontracting such work or portions of it to
meet the MAYBE Goals.
1.9. COMMENCEMENT OF ACTIONS ON STATE PUBLIC WORKS CONTRACTS. The time
within which an action on this Agreement against the Energy Manager must be
commenced shall be computed from the date of completion of the physical work.
The Energy Manager may notify the Authority in writing, that such physical work
has been completed by specifying a completion date, which date shall be no more
than thirty days previous to the date of such notice, in which case the
completion date set forth in such notice shall be deemed to be the date of
completion of the physical work unless the Authority, within thirty days of
receipt of such notice, notifies the Energy Manager in writing of its
disagreement. In the event that the Energy Manager fails to send the notice
provided for herein or the Authority disagrees in the manner provided herein,
the date of completion of the physical work shall be determined in any other
manner provided by law.
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