Date: March 1, 2003 Idaho Power Company Attn: Jason Keil, Manager - Credit Risk 1221 W. Idaho Street Boise, Idaho 83702 Fax No. (208) 388-2879 LETTER AGREEMENT
Exhibit 10(k)
Date: March 1, 2003
Idaho
Power Company
Attn: Xxxxx Xxxx, Manager - Credit Risk
0000 X. Xxxxx Xxxxxx
Xxxxx, Xxxxx 00000
Fax
No. (000) 000-0000
LETTER AGREEMENT
This
Letter Agreement provides for modifications to the Western Systems Power Pool
Agreement ("WSPP Agreement") as amended periodically with FERC
approval, to which PPL Montana, LLC ("PPLM"), acting by and
through its authorized agent, PPL EnergyPlus, LLC, and Idaho Power
Company ("IPC") are parties. Terms used but not defined herein
shall have the meanings ascribed to them in the WSPP Agreement. In the event of
any conflict between the terms of this Letter Agreement and the WSPP Agreement,
the terms of this Letter Agreement shall control.
NOW
THEREFORE, in consideration of the promises and agreements that are set forth
herein, PPLM and IPC agree as follows:
Special Modifications
The
Parties hereby agree that the WSPP Agreement (as is in effect on the date of
this Letter Agreement, and as amended and in effect at any time thereafter
during the term of this Letter Agreement) is hereby amended and modified as
follows in respect of any Transactions between the Parties under and pursuant
to the WSPP Agreement:
1. The following definitions are added to
Section 4 of the WSPP Agreement:
"Credit
Rating" means, with respect to any entity, the rating assigned to such
entity's unsecured, senior long-term debt obligations (not supported by third
party credit enhancements) or if such entity does not have a rating for its
senior unsecured long-term debt, then the rating then assigned to such entity
as an issues rating by S&P or Moody's.
"Letter
of Credit" means one or more irrevocable, transferable standby letters
of credit from a major U.S. commercial bank or a foreign bank with a U.S. branch
office, with such bank having a credit rating of at least "A-" from
S&P or "A3" from Moody's, in a form acceptable to the party in
whose favor the letter of credit is issued. Costs of a Letter of Credit shall
be borne by the applicant for such Letter of Credit.
"Material
Adverse Change" means (i) with respect to PPLM, (a) at any time of
determination, that all amounts which would be included under members equity on
an audited consolidated balance sheet at any time in accordance with GAAP,
shall not be less than $250,000,000.00.or (ii) with respect to IPC, its
long-term, senior, unsecured debt obligations (not supported by third party
credit enhancement) are (a) rated by S&P below "BBB-", (b) rated
by Moody's below "Baa3", or (c) not rated by either Moody's or
S&P.
"Moody's"
means Xxxxx'x Investor Services, Inc. or its successor.
"Performance
Assurance" means collateral in the form of cash, Letters of Credit, or
other security acceptable in form and in substance to the Party requesting the
Performance Assurance.
"S&P"
means the Standard & Poor s Rating Group (a division of XxXxxx-Xxxx, Inc.)
or its successor.
2. Subsection
21.3(a)(3) of the WSPP Agreement is deleted in its entirety and replaced with
the following:
"Notwithstanding
any provision in the Agreement to the contrary, the Non-Performing Party shall
pay any amount due from it under this Section 21.3 within five (5) Business
Days of the date the Non-Performing Party receives an invoice for such
amounts."
3. Subsection
22.1(d) of the WSPP Agreement is deleted and replaced by the following:
"(d)
the occurrence of a Material Adverse Change at any time with respect to the
Defaulting Party; provided that such Material Adverse Change shall not be
considered an Event of Default if within three (3) Business Days after the
occurrence of such Material Adverse Change, the Defaulting Party establishes
and maintains for so long as the Material Adverse Change is continuing,
Performance Assurance to the Non-Defaulting Party, in an amount equal to the sum
of (in each case rounding upwards for any fractional amount to the next
$250 000): (a) the Non-Defaulting Party's Termination Payment plus (b)
if the Non-Defaulting Party is the Seller under any outstanding transactions,
the aggregate of the amounts Seller is entitled to receive under such
transactions; or
(e) the
Defaulting Party fails to establish, maintain, extend or increase Performance
Assurance when required pursuant to this Agreement; or
(f)
with respect to IPC or IPC's Guarantor, the occurrence and continuation of a
default or other similar condition or event under one or more agreements or
instruments, individually or collectively, relating to indebtedness for
borrowed money which in aggregate is in excess of $50,000,000.00, which
results in such indebtedness becoming immediately due and payable; or
(g)
with respect to PPLM, the occurrence and continuation of a default or other
similar condition or event under one or more agreements or instruments,
individually or collectively, relating to indebtedness for borrowed money which
in aggregate is in excess of $20,000,000.00, which results in such
indebtedness becoming immediately due and payable."
5. Section
22.2 of the WSPP Agreement is amended by deleting the first two sentences and
replacing them with the following sentence:
"If
an Event of Default occurs and is continuing, the Non-Defaulting Party shall
possess the right, upon written notice (by facsimile or other reasonable means)
to the Defaulting Party, such notice of termination to be effective immediately
upon receipt, to terminate and liquidate all transactions between the Parties
under this Agreement, withhold payments due to the Defaulting Party under this
Agreement, and suspend performance."
6. Section
22.3(d) of the WSPP Agreement is amended by replacing the reference to
"Section 33.2(c)" in the second to last paragraph to "Section
22.3(c)".
7. Section 24
of the WSPP Agreement is deleted and replaced with the following:
"This
Agreement and any Confirmation Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles."
8. Section 27
of the WSPP Agreement is deleted and replaced with the following:
"27.1.
Financial Statements. If requested by IPC, PPLM shall deliver (i) within
120 days following the end of each fiscal year, a copy of PPLM' s annual report
containing audited consolidated financial statements for such fiscal year and
(ii) within 60 days after the end of each of its first three fiscal quarters of
each fiscal year, a copy of its quarterly report containing unaudited
consolidated financial statements for such fiscal quarter. In all cases the
statements shall be for the most recent accounting period and prepared in
accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as PPLM diligently pursues the preparation, certification and
delivery of the statements.
27.2. Financial
Statements. If requested by PPLM, IPC shall deliver (i) within 120 days
following the end of each fiscal year, a copy of IPC's or IPC's Guarantor
annual report containing audited consolidated financial statements for such
fiscal year and (ii) within 60 days after the end of each of its first three
fiscal quarters of each fiscal year, a copy of IPC's or IPC's Guarantor
quarterly report containing unaudited consolidated financial statements for
such fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as IPC diligently pursues the
preparation, certification and delivery of the statements.
27.3. Collateral.
If at any time and from time to time during the term of this Agreement (and
notwithstanding whether an Event of Default has occurred):
(a)
with respect to PPLM, if
the Termination Payment that would be owed to IPC in respect of all
transactions then outstanding exceeds $5,000,000.00 (the "PPL Collateral
Threshold");
(b)
with respect to IPC, if
the Termination Payment that would be owed to PPLM in respect of all
transactions then outstanding exceeds $10,000,000.00 (the "IPC Collateral
Threshold");
then,
IPC or PPLM, as the case may be (the "Beneficiary Party") as the
Beneficiary Party on any Business Day, may request the other Party (the
"Posting Party") to provide Performance Assurance (in such form as
selected by the Posting Party), in an amount equal to the amount by which the
Termination Payment exceeds the relevant Collateral Threshold (rounding upwards
for any fractional amount to the next $250,000), or such other
collateral as may be reasonably acceptable to the Beneficiary Party. The
Performance Assurance shall be delivered within two (2) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash) the Posting
Party, at its sole cost, may request that such Performance Assurances be
reduced correspondingly to the amount of such excess Termination Payment. For
purposes of this Section 27.3, the calculation of "Termination
Payment" shall include all amounts owed but not yet paid by one Party to
the other Party whether or not such amounts are then due, for performance
already provided pursuant to any and all Transactions.
IPC Collateral Threshold shall be: $10,000,000.00;
provided, however, that IPC's Collateral Threshold shall be zero if an Event of
Default or Potential Event of Default with respect to IPC has occurred and is
continuing.
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PPLM
Collateral Threshold shall be: $5,000 000.00; provided, however, that PPLM' s
Collateral Threshold shall be zero if an Event of Default or Potential Event of
Default with respect to PPLM has occurred and is continuing.
27.4 Grant
of Security Interest/Remedies. To secure its obligations under this
Agreement and to the extent either or both Parties deliver Performance
Assurance hereunder, each Party (a "Pledgor") hereby grants to the
other Party (the "Secured Party") a present and continuing security
interest in, and lien on (and right of setoff against), and assignment of, all
cash collateral and cash equivalent collateral and any and all proceeds
resulting therefrom or the liquidation thereof, whether now or hereafter held
by, on behalf of, or for the benefit of, such Secured Party, and each PPLM
agrees to take such action as the other Party reasonably requires in order to
perfect the Secured Party's first-priority security interest in, and lien on
(and right of setoff against), such collateral and any and all proceeds
resulting therefrom or from the liquidation thereof. Upon or any time after the
occurrence or deemed occurrence and during the continuation of an Event of
Default, the Non-Defaulting Party may do anyone or more of the following: (i)
exercise any of the rights and remedies of a Secured Party with respect to all
Performance Assurance, including any such rights and remedies under law then in
effect; (ii) exercise its rights of setoff against any and all property of the
Defaulting Party in the possession of the Non-Defaulting Party or its agent;
(iii) draw on any outstanding Letter of Credit issued for its benefit; and (iv)
liquidate all Performance Assurance then held by or for the benefit of the Secured
Party free from any claim or right of any nature whatsoever of the Defaulting
Party, including any equity or right of purchase or redemption by the
Defaulting Party. The Secured Party shall apply the proceeds of the collateral
realized upon the exercise of any such rights or remedies to reduce the
Pledgor's obligations under this Agreement (the Pledgor remaining liable for
any amounts owing to the Secured PPLM after such application), subject to the
Secured Party's obligation to return any surplus proceeds remaining after such
obligations are satisfied in full".
WHEREAS,
the Parties have executed this Letter Agreement, as an amendment to the Western
Systems Power Pool Agreement, effective as of the date first set forth above.
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Idaho Power Company |
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PPL Montana, LLC, by and through its authorized |
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Agent, PPL EnergyPlus, LLC |
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By: |
/s/Xxxxxx Xxxxxxxx |
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By: |
/s/Xxxxx X. Xxxx |
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Name: |
Xxxxxx Xxxxxxxx |
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Name: |
Xxxxx X. Xxxx |
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Title: |
Vice President, CFO and Treasurer |
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Title: |
Treasurer |
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00 Xxxxx Xxxxx Xxxx
Butte, Montana 59701
(000) 000-0000
(000) 000-0000
REVISED CONFIRMATION AGREEMENT
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Date: |
May 9, 2003 |
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Seller: |
PPL Montana, LLC, by its authorized agent PPL EnergyPlus, LLC |
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Buyer: |
Idaho Power Company |
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This
Confirmation Agreement is provided to confirm the oral agreement entered into
between the Buyer and Seller on May 7, 2003; whereby Seller agreed to sell and
deliver to Buyer and Buyer agreed to purchase and receive from Seller firm
energy pursuant to the WSPP Agreement and Service Schedule C, including the
attached WSPP Credit Annex dated 03/25/2003 and the following terms and
conditions:
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Delivery Terms: |
Hour Ending (HE) 0700 through HE 2200 Pacific Prevailing Time (PPT), Monday |
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through Saturday excluding Sundays and NERC Holidays. |
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Contract Term |
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And Quantity: |
June 1, 2004 through July 31, 2004 |
83 MWh/hour |
70384 MWhs Total |
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August 1, 2004 through August 31, 2004 |
26 MWh/hour |
10816 MWhs Total |
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June 1, 2005 through August 31, 2005 |
83 MWh/hour |
103584 MWhs Total |
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June 1, 2006 through August 31, 2006 |
83 MWh/hour |
103584 MWhs Total |
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June 1, 2007 through August 31, 2007 |
83 MWh/hour |
103584 MWhs Total |
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June 1, 2008 through August 31, 2008 |
83 MWh/hour |
102256 MWhs Total |
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June 1, 2009 through August 31, 2009 |
83 MWh/hour |
103584 MWhs Total |
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Price: |
$44.50 per MWh |
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Total Price: |
$26,601,744.00 |
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Total Quantity: |
597,792 MWhs |
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Delivery Point: |
Seller's choice into NorthWestern Energy's transmission system (NWMT). |
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Special
Provisions:
The
Seller and Xxxxx agreed to the above transaction pursuant to and in accordance
with the terms and conditions of the WSPP Agreement and Service Schedule C, as
amended and effective as of February 1, 2003, including the attached WSPP
Credit Annex dated 03/25/2003 and those additional terms and conditions
provided below:
1. Buyer will
acquire and pay for NWMT to Jefferson transmission service including losses on
NorthWestern Energy's transmission system.
2. The Parties
acknowledge that during the Contract Term of this Confirmation Agreement, a
third party could "bump" Buyer off of NorthWestern Energy's
transmission system by requesting firm service of a longer duration. If such an
event happens and as a consequence there is not sufficient transmission
capacity for Buyer to accept delivery of energy into NWMT under this
Confirmation Agreement, then upon written notice of that fact to Seller, Seller
shall at its sole discretion and on an annual election basis, either:
A. Attempt to beat such third party offer, and,
in the event Seller is successful in obtaining such transmission rights on
NorthWestern Energy's transmission system from NWMT to Jefferson, Seller will
deliver energy to Buyer at the Jefferson under this Confirmation Agreement, and
Buyer shall be responsible for paying to Seller the actual transmission costs
incurred by seller related to such transmission service during the delivery
months; OR
B. Deliver energy to Buyer at the Mid-C
delivery point (the "Mid-C"), In which case Xxxxx agrees to accept
delivery of energy at the Mid-C and to pay to seller an additional $6.00/MWh
for energy delivered to the Mid-C.
3. Upon execution
of this Confirmation Agreement, Buyer shall pay a deposit to Seller in the
amount of $250,000.00. Buyer shall then have 60 days to seek Idaho Public
Utility Commission ("IPUC") acceptance of this Confirmation
Agreement. If the IPUC issues a final order approving this Confirmation
Agreement as submitted (or with mutually acceptable changes) within the 60-day
period, Seller shall, upon receipt of a copy of such final order, refund the
$250,000 to Buyer and this Confirmation Agreement shall become effective. If
IPUC does not accept this Confirmation Agreement as submitted (or with mutually
acceptable changes) within the 60-day period then either Party may immediately
terminate this Confirmation Agreement by providing written notice to the other
party, in which case Buyer will forfeit the $250,000 deposit; provided,
however, such termination shall occur, if at all, within 5 business days after
the end of such 60-day period.
Upon
receipt of this Confirmation Agreement, Buyer shall notify Seller of its
approval by executing and returning the Confirmation Agreement by fax to (000)
000-0000 within five (5) business days following receipt. This Confirmation Agreement shall be final
and binding, whether or not signed or confirmed by Xxxxx, unless Xxxxx advises
Seller in writing of any inaccuracy within five (5) business days following the
receipt of this Confirmation Agreement.
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Buyer |
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Seller |
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Idaho Power Company |
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PPL Montana, LLC |
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By PPL EnergyPlus, LLC, Its Authorized Agent |
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Signed: |
/s/X Xxxxxx Xxxx |
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Signed: |
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/s/Xxxx X. Xxxxxxx |
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Name: |
X Xxxxxx Xxxx |
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Name: |
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Xxxx X. Xxxxxxx |
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Title: |
President and CEO |
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Title: |
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Senior Trading Controls Analyst |
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Date: |
5/12/03 |
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Date: |
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5/9/03 |
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