EXHIBIT B-1
-----------
FORM OF SERVICE AGREEMENT BETWEEN ENERGY EAST MANAGEMENT AND
UTILITY SUBSIDIARY
SERVICE AGREEMENT
This Service Agreement is made and entered into this _____ day of
___________, by and between __________________ ("Client Company") and Energy
East Management Corporation ("Service Company").
WITNESSETH
WHEREAS, the Securities and Exchange Commission ("SEC") has approved
and authorized as meeting the requirements of Section 13(b) of the Public
Utility Holding Company Act of 1935 ("Act") the organization and conduct of the
business of Service Company, in accordance herewith, as a wholly-owned
subsidiary service company of Energy East Corporation ("Energy East"); and
WHEREAS, Client Company is a utility operating company subsidiary of
Energy East and an associate of Service Company; and
WHEREAS, Service Company and Client Company have entered into this
Service Agreement whereby Service Company agrees to provide and Client Company
agrees to accept and pay for various services as provided herein at cost, with
cost determined in accordance with applicable rules and regulations under the
Act, which require Service Company to fairly and equitably allocate costs among
all associate companies to which it renders services (collectively, the "Client
Companies"), including Client Company.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties to this Service Agreement covenant and
agree as follows:
ARTICLE I - SERVICES
Section 1.1 Service Company shall furnish to Client Company, as
requested by Client Company, upon the terms and conditions hereinafter set
forth, such of the services described in Appendix A hereto, at such times, for
such periods and in such manner as Client Company may from time to time request
and that Service Company concludes it is able to perform. Service Company shall
also provide Client Company with such special services, in addition to those
B-1-1
services described in Appendix A hereto, as may be requested by Client Company
and that Service Company concludes it is able to perform. In supplying such
services, Service Company may arrange, where it deems appropriate, for the
services of such experts, consultants, advisers, and other persons with
necessary qualifications as are required for or pertinent to the provision of
such services.
Section 1.2 Client Company shall take from Service Company such of the
services described in Appendix A, and such additional general or special
services, whether or not now contemplated, as are requested from time to time by
Client Company and that Service Company concludes it is able to perform.
Section 1.3 The cost of the services described herein or contemplated
to be performed hereunder shall be directly assigned, distributed or allocated
by activity, project, program, work order or other appropriate basis. Client
Company shall have the right from time to time to amend or alter any activity,
project, program or work order provided that (i) any such amendment or
alteration that results in a material change in the scope of the services to be
performed or equipment to be provided is agreed to by Service Company, (ii) the
cost for the services covered by the activity, project, program or work order
shall include any expense incurred by Service Company as a direct result of such
amendment or alteration of the activity, project, program or work order, and
(iii) no amendment or alteration of an activity, project, program or work order
shall release Client Company from liability for all costs already incurred by or
contracted for by Service Company pursuant to the activity, project, program or
work order, regardless of whether the services associated with such costs have
been completed.
Section 1.4 Service Company shall use its best efforts to maintain a
staff trained and experienced in the services described in Appendix A.
ARTICLE II - COMPENSATION
Section 2.1 As compensation for the services to be rendered hereunder,
Client Company shall pay to Service Company all costs that reasonably can be
identified and related to particular services performed by Service Company for
or on its behalf. The methods for assigning or allocating Service Company costs
to Client Company, as well as to other associate companies, are set forth in
Appendix A.
Section 2.2 It is the intent of this Service Agreement that charges
for services shall be distributed among Client Companies, to the extent
possible, based upon direct assignment. The amounts remaining after direct
assignment shall be allocated among the Client Companies using the methods
identified in Appendix A. The method of assignment or allocation of cost shall
be subject to review by the Service Company annually, or more frequently if
appropriate. Such method of assignment or allocation of costs may be modified or
changed by the Service Company without the necessity of an amendment to this
Service Agreement; provided that, in each instance, all services rendered
hereunder shall be at actual cost thereof, fairly and equitably assigned or
allocated, all in accordance with the requirements of the Act and any orders
promulgated thereunder. The Service Company shall review with the Client Company
B-1-2
any proposed material change in the method of assignment or allocation of costs
hereunder and the parties must agree to any such changes before they are
implemented. In addition, no such agreed upon material change shall be made
unless and until the Service Company shall have first given written notice to
the SEC not less than 60 days prior to the proposed effective date thereof.
Section 2.3 Service Company shall render a monthly report to Client
Company that shall reflect the information necessary to identify the costs
charged for that month. Client Company shall remit to Service Company all
charges billed to it within 30 days of receipt of the monthly report.
Section 2.4 It is the intent of this Service Agreement that the
payment for services rendered by Service Company to Client Company under this
Service Agreement shall cover all the costs of its doing business including, but
not limited to, salaries and wages, office supplies and expenses, outside
services employed, property insurance, injuries and damages, employee pensions
and benefits, miscellaneous general expenses, rents, maintenance of structures
and equipment, depreciation and amortization, and compensation for use of
capital as permitted by Rule 91 of the SEC's regulations under the Act.
ARTICLE III- TERM
This Service Agreement shall become effective as of the date first
written above, subject only to the receipt of any required regulatory approvals
from any State regulatory commission with jurisdiction over Client Company and
the SEC, and shall continue in force until terminated by Service Company or
Client Company, upon not less than 90 days prior written notice to the other
party. This Service Agreement shall also be subject to termination or
modification at any time, without notice, if and to the extent performance under
this Service Agreement may conflict with the Act or with any rule, regulation or
order of the SEC or any State regulatory commission with jurisdiction over
Client Company adopted before or after the date of this Service Agreement.
ARTICLE IV - MISCELLANEOUS
Section 4.1 All accounts and records of Service Company shall be kept
in accordance with the General Rules and Regulations promulgated by the SEC
pursuant to the Act, in particular, the Uniform System of Accounts for Mutual
Service Companies and Subsidiary Service Companies in effect from and after the
date hereof.
Section 4.2 New direct or indirect subsidiaries of Energy East, which
may come into existence after the effective date of this Service Agreement, may
become additional client companies of Service Company and subject to a service
agreement with Service Company. The parties hereto shall make such changes in
the scope and character of the services to be rendered and the method of
assigning, distributing or allocating costs of such services as specified in
Appendix A, subject to the requirements of Section 2.2, as may become necessary
B-1-3
to achieve a fair and equitable assignment, distribution, or allocation of
Service Company costs among all associate companies including the new
subsidiaries.
Section 4.3 Service Company shall permit Client Company access to its
accounts and records including the basis and computation of allocations.
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be executed as of the date and year first above written.
ENERGY EAST MANAGEMENT
CORPORATION
BY:
------------------------------------
Name:
Title:
CLIENT COMPANY
BY:
------------------------------------
Name:
Title:
The undersigned requests all services listed in Appendix A from Energy East
Management Corporation except for __________________________________. Services
will begin _________________________.
CLIENT COMPANY
BY:
------------------------------------
Name:
Title:
B-1-4
Appendix A
DESCRIPTION OF SERVICES TO BE PROVIDED BY SERVICE
COMPANY AND DETERMINATION OF CHARGES FOR SUCH
SERVICES TO THE CLIENT COMPANIES
SEE BODY OF APPLICATION.
FORMS BEING DEVELOPED.
B-1-5
