Exhibit 10.11.5
THIRD AMENDMENT
TO
POWER PURCHASE AGREEMENT
This Third Amendment, dated as of April 30, 1996 ("Third
Amendment") is made and entered into by and O'Brien (Newark)
Cogeneration, Inc. ("Seller") and Jersey Central Power & Light
Company ("JCP&L") with respect to the Agreement, dated March 10,
1986, between O'Brien Energy Systems, Inc. ("O'Brien") and JCP&L.
WHEREAS, the Power Purchase Agreement as heretofore amended
(the "Agreement") provides for the purchase by JCP&L of the
capacity and energy from the Cogeneration Facility having a
nameplate rating of 52 MW and located at the Newark Boxboard
plant in Newark, New Jersey;
WHEREAS, O'Brien has, with JCP&L's consent, assigned the
Agreement to Seller;
WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its
proposed Plan of Reorganization (the "NRG Plan") of O'Brien
Environmental Energy, Inc. ("OEE") which provides for the
acquisition by NRG of 49% of the outstanding stock of OEE;
WHEREAS, Seller is a wholly owned subsidiary of OEE; and
WHEREAS, JCP&L and Seller now desire further to amend the
Agreement in the manner and subject to the terms and conditions
hereinafter set forth and intend that the Agreement, as amended
by this Third Amendment, become effective and govern the purchase
by JCP&L of the capacity and energy from the Cogeneration
Facility from and after the Effective Date (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and conditions hereinafter set forth and other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Definitions. Capitalized terms used in this Third
Amendment shall have the meaning given to them in the Agreement
unless otherwise defined herein.
2. Exempt Wholesale Generator Status. Promptly following
entry of the Approval Order (as hereinafter defined), Seller will
file with the Federal Energy Regulatory Commission ("FERC") an
appropriate application for determination that Seller is an
"exempt wholesale generator" ("EWG") under Section 32(a)(1) of
the Public Utility Holding Company Act of 1935, as amended, and
the regulations of the FERC thereunder. If requested by Seller,
JCP&L shall, at no cost to JCP&L, use reasonable efforts to
support Seller's filing with the FERC for approval of the rates
provided in the Agreement. In the event the FERC grants Seller's
application, Seller shall have no further obligation under the
Agreement, as further amended by this Third Amendment, to
maintain the Facility as a Qualifying Facility for so long as
Seller maintains EWG
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status. JCP&L agrees that, until either the Effective Date has
occurred or it has been definitively established that the
Effective Date will not occur (e.g., the time period for the
occurrence of the Effective Date under Section 7 shall have
expired), JCP&L will not pursue any rights or remedies that it
may have against Seller, OEE or its or their predecessors in
interest with respect to any past failure or inability of Seller
or the Facility to satisfy applicable FERC requirements for
Qualifying Facilities and further agrees that, if the Effective
Date does occur, on and after the Effective Date, it shall have
no further rights or remedies against Seller, OEE or its or their
predecessors in interest with respect to any past failure or
inability of Seller or the Facility to satisfy applicable F~RC
requirements for Qualifying Facilities, all of which shall be
deemed to be waived by JCP&L. Seller shall, however, maintain
the Facility as a Qualifying Facility in the event the FERC
denies Seller's EWG application or revokes Seller's EWG status.
If the Effective Date does occur as provided herein and the FERC
denies Seller's EWG application or revokes Seller's EWG status,
JCP&L will allow Seller a reasonable period of time, not to
exceed 180 days, to make such modifications to the Facility
and/or to enter into or modify such contracts as may be necessary
to meet the applicable FERC requirements for Qualifying
Facilities, and, if Seller does so, JCP&L shall have no further
rights or remedies against Seller with respect to any past
failure or inability (including any failure or inability during
such cure period) of Seller or the Facility to satisfy such
requirements.
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3. A new paragraph (g) is hereby added to Section 7.6 of
the Agreement to read in its entirety as follows:
In addition to JCP&L's rights set forth in paragraph
(d) of this Section 7.6, JCP&L shall have the right, in
its sole and absolute discretion, to disconnect,
interrupt, curtail or otherwise refuse to accept or
purchase energy and capacity from the Facility for a
total of 700 hours each calendar year during the term
hereof; provided, however, that such discretionary
disconnections, curtailments, interruptions and
refusals may occur only during Saturdays, Sundays and
Holiday periods and shall, in each case, be of a
duration of not less than six (6) hours each.
Curtailment occurring on Sundays and Holidays may be
extended through 4:00 a.m. the following morning. For
purposes of the foregoing calculation, it is understood
and agreed that the time during which Facility output
moves between full output and net zero output
(including both startup and shutdown periods) shall
not be considered in the calculation. JCP&L shall use
its reasonable best efforts to provide Seller with
prior notice of any such disconnection, interruption,
curtailment or refusal to the extent practicable under
the circumstances.
4. Section A.3 of Appendix A is hereby amended to read in
its entirety as follows:
Adjusted Base Rate. The Adjusted Base Rate for each Rate
Year beginning April 1, 1996, shall be the sum of the Rate
Components for such year, rounded to the nearest one-thousandth
of one cent. The Rate Components, the 1995 Rate Year Values and
Index Factors are as follows:
Rate Component 1995 Rate Index Factor
Year Value
Fixed Component $.03085 None
Retail Rate Component $.01240 Retail Rate Index Factor
Total $.04325
5. Paragraph (B) of Section A.5 of Appendix A is hereby
deleted in its entirety.
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6. Sections A.8 through A.l0 of Appendix A are hereby
added to read in their entirety as follows:
A.8 Fuel Related Charges
The cost for all natural gas fuel consumed by the Facility's
combustion turbine and duct burners will be borne by JCP&L
which shall also be responsible for the supply of, and which
shall supply, such fuel to the Facility subject to the terms
and conditions hereinafter provided.
A.9 Heat Rate Adjustment
The Average Heat Rate, as defined below, will be used to
calculate the Heat Rate Adjustment. This adjustment will be
reflected as either an increase or decrease in the payments
to be made by JCP&L to Seller hereunder for energy and
capacity, depending upon whether the Average Heat Rate is
below or above 9750 BTU/kWh HHV (High Heating Value). Any
such adjustment shall be applied to JCP&L's payments to
Seller beginning the second calendar month following each
anniversary of the Effective Date (as defined below).
At the conclusion of each Contract Year (as defined in
Section B.2.5 of Appendix B hereto), JCP&L will calculate
the Facility's Average Heat Rate ("AHR") for the previous12
months using the following formula:
AHR = Total Fuel Input
AG
where:
Total Fuel Input represents the fuel supplied and paid for by
JCP&L. This includes fuel used during startup and shutdown.
AG, or the Annual Generation, is the annual total of kWhs
produced by the Facility, exported to, registered at the billing
meter and purchased by JCP&L.
The Heat Rate Adjustment ("HRA") will be calculated at the end of
each contract year as follows:
HRA= 9750 BTU/kWh - AHR x AAFC x AG
1,000,000
where:
AAFC, or the Average Annual Fuel Cost, is the average cost for
fuel supplied by JCP&L to the Facility in
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$/MMBTU for the period corresponding to the Average Heat Rate
calculation.
For example, by way of illustration only, if:
AHR = 9550 Btu/kWh
AAFC = $2. 60/MMBtu
AG = 350,000,000 kWh [7000 hours at 50MW]
HRA = (9750-9530) BTU/ kWh x $2.60/MMBtu 1
1000,000
x 350,000,000 kWh = $182,000
JCP&L will provide Seller with an average Heat Rate
Adjustment statement not later than 15 days after each
anniversary of the Effective Date. The Heat Rate
Adjustment payment, if any, will be made by Seller or by
JCP&L (as either an increase in or offset t~ payments
otherwise made by JCP&L to Seller hereunder) in six equal
monthly installments (without interest) commencing the
second calendar month following each anniversary of the
Effective Date; provided, however, that any remaining Heat
Rate Adjustment payment for the last full Contract Year
during the term hereof and for the partial Contract Year
commencing on the last anniversary of the Effective Date
during the term hereof and ending on November 10, 2015 shall
be invoiced by JCP&L on or before December 1, 2015, and the
net amount thereof shall be paid, in cash, by Seller or
JCP&L, as the case may be, within 30 days of submission of
such invoice.
A.l0 Fuel Procurement
(a) JCP&L will be responsible for the supply of, and shall
supply, the natural gas required for use by the
Facility (including, without limitation, the auxiliary
boilers and, notwithstanding anything in Section
5.10(g) of the Agreement to the contrary, all fuel used
in connection with capacity tests and demonstrations of
Contract Capacity performed pursuant to Section
5.10(g)) and will bear all the costs thereof other than
the costs to supply such fuel as may be necessary to
generate steam from the Facility's auxiliary boiler.
Seller shall maintain on the Facility site kerosene
inventories for fuel when gas supply to the Facility is
interrupted. JCP&L shall reimburse Seller for the cost
of kerosene used during periods of gas interruptions at
the replacement price thereof (except for kerosene
used to generate steam from the Facility's
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auxiliary boiler) at the then prevailing market rate
therefor in the area in which the Facility is located.
However, if the conditions in the Facility's air permit
or other permits or regulatory requirements would limit
or prohibit the further use of kerosene, and if JCP&L
is unable to obtain appropriate waivers from the
applicable permitting or regulatory authorities to
permit the additional kerosene use, Seller may procure
gas from third parties for use by the Facility for SQ
long as JCP&L is unable to provide the necessary gas
for the Facility. JCP&L shall allow Seller to use
transportation capacity which JCP&L may have available
(taking into account JCP&L's system-wide needs) for
such third party gas and shall reimburse Seller for
such gas (except for gas used to generate steam from
the Facility's auxiliary boiler) and all related
transportation costs (except any transportation made
available without charge by JCP&L) at a rate equal to
the lesser of (i) Seller's actual costs for such gas
and transportation or (ii) the maximum reimbursement to
which Seller would be entitled pursuant to the last
sentence of Section B.2.l of Appendix B hereto.
(b) Fuel procurement and supply shall be on the terms and
conditions set forth in Appendix B hereto.
7. Effective Date; Regulatory Approval. This Third
Amendment shall become effective and binding upon the Parties
hereto ("Effective Date") upon the last to occur of (a) the date
on which the New Jersey Board of Public Utilities ("BPU") issues
a final order (which order shall be acceptable in form and
substance to JCP&L in its sole discretion) approving this Third
Amendment and the full recovery by JCP&L from its customers of
all amounts payable under the Agreement, as so amended, through
JCP&L's levelized energy adjustment clause or similar rate
recovery mechanism, (b) 10 days following the entry of a final
order ("Approval Order") by the United States Bankruptcy Court
for the District of New Jersey approving the NRG Plan, (c) the
existing Gas Service Agreement dated May 13, 1993 between Seller
and Public Service Electric & Gas
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Company ("PSE&G") shall have been terminated or assigned to JCP&L
without any liability to Seller or the Facility, (d) JCP&L shall
have executed a gas supply agreement for the Facility with PSE&G
or, if the existing Gas Supply Agreement described in clause (c)
shall have been assigned to JCP&L, such agreement shall have been
amended or modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall have received
all necessary regulatory approvals and shall otherwise have
become effective in accordance with its terms, and (e) that
certain Amended and Restated Agreement For Purchase and Sale of
Electric Power dated as of December 1995 by and between O'Brien
(Xxxxxx) Cogeneration, Inc. and JCP&L shall have become effective
in accordance with its terms.
If the Effective Date does not occur by the earlier of (a)
75 days after the date of entry of the Approval Order or (b) June
15, 1996, this Third Amendment shall, unless otherwise mutually
agreed by the Parties, automatically terminate and be of no force
or effect and the Parties shall thereupon have no further rights,
liabilities or obligations hereunder.
8. Captions; Miscellaneous. All indexes, titles, subject
headings, section titles and similar items are for convenience of
reference and are not intended to affect the meaning or contents
hereof.
9. Governing Law. This Third Amendment shall be governed
by and construed in accordance with the laws of the State of New
Jersey applicable to contracts made and to be performed in that
State.
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10. Entire Agreement. The Agreement, as further amended by
this Third Amendment, supersedes any and all prior understanding
and agreements made between the Parties regarding the subject
matter hereof, and constitutes the entire agreement and
understanding of the Parties relating thereto.
11. Counterparts. This Third Amendment may be executed in
any number of counterparts, each of which shall be an original
but all of which, when taken together, shall constitute one and
the same agreement.
IN WITNESS WHEREOF, the Parties have caused this Third
Amendment to be signed by their respective officers thereunto
duly authorized as of the date and year first above written.
Attest: O'BRIEN (NEWARK) COGENERATION,
INC.
By: /s/ Xxxxxxx Xxxxx
Title: Title:
Attest: JERSEY CENTRAL POWER & LIGHT
COMPANY
By: /s/ X.X. Xxxxxxx
Assistant Secretary Title: Vice President
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Xxxxxx Xxxxxxxx
Xxxxxxxx X
Facility Fuel Management Services
B. 1 GPU Natural Gas Private Pooling Point ("PPP")
B.1.1 GPU Service Corporation ("GPUSC") is authorized to
act on behalf of and as agent for JCP&L in all matters pertaining
to the procurement and delivery of natural gas for consumption by
those participating gas-fired generating facilities owned by
JCP&L or certain facilities owned by an Independent Power
Producer with a Power Purchase Agreement with JCP&L, including
the Facility. JCP&L and GPUSC shall hereafter collectively be
referred to as the "Company".
B.1.2 GPUSC has established a Natural Gas Private Pooling
Point ("PPP"), which is a portfolio of natural gas supply and
transportation
assets, that is managed collectively by New Jersey Natural Energy
Corporation
("NJNE") and GPUSC pursuant to a Master Fuel Management Agreement. NJNE is
a
wholly owned subsidiary of New Jersey Resources Corporation.
B.1.3 Facilities served by the PPP, including the Facility,
will be provided a comprehensive natural gas management service
such that neither the Facility's owners nor operator shall be
responsible nor held liable for procuring, transporting,
scheduling, nominating or delivering natural gas to the
Facility's burner tip. In the case of the Facility, this shall
include serving the full requirements of the Facility (including
the Facility's auxiliary boilers) provided that Seller both
complies with the explicit notification requirements set forth
herein and elects to accept delivery of such natural gas at the
price specified in Section B.2.4 below.
B.1.4 GPUSC has designated a full time employee assigned to
the PPP, and officed at GPUSC's dispatch center, to coordinate
all natural gas procurement and scheduling for PPP facilities
including the Facility. Such employee shall hereafter be referred
to as the "Fuel Manager". The Fuel Manager or his designee shall
be available twenty-four hours per day, seven days per week.
B.2 Operations
B.2.1 The PPP shall provide natural gas to the Facility's
Burner Tip to operate the Facility unless the Seller notifies the
GPUSC dispatcher that the Facility is not available as a
consequence of a planned or forced outage. In the event of a
forced outage, the Seller shall immediately notify the Company
dispatcher of the outage condition and its anticipated duration.
The Seller shall notify JCP&L of a major Planned Outage, i.e.,
scheduled outages expected to last longer than seven (7)
consecutive days, at least two (2) months prior to the planned
start of said outage. Further, the Seller shall notify JCP&L of
its intent to resume
operation of the Facility at least one (1) week prior to the
completion of a major Planned Outage. Seller shall use reasonable
best efforts to notify the Company of Maintenance Outages and
short duration Planned Outages, i.e., unscheduled Planned Outages
or Planned Outages expected to take less than seven (7) days,
within one day of the decision to conduct such an outage. If the
PPP fails to properly procure and cause to be delivered an
adequate supply of natural gas to operate the Facility during
periods when PSE&G has not interrupted Or recalled the interstate
or intrastate transportation that it supplies to the PPP pursuant
to its agreement with the Company to support, among other things,
the operation of the Facility, then the Seller shall,
nonetheless, ensure that an adequate supply of kerosene is
available at all times and agree to operate the Facility on
kerosene provided that the Company shall pay for said kerosene
pursuant to Section A. 10 of Appendix A to the Agreement and that
operation of the Facility on kerosene does not cause the Facility
to violate its air permits. Alternatively, the Seller may
procure and cause to be delivered a supply of natural gas to the
facility from third party supplier to operate the Facility during
such periods. The Company shall reimburse the Seller for the all-
in cost of such natural gas up to the sum of the mid-point of the
range of the most recent price to Mid-Atlantic Citygates,
Transco, Zone 6, or Texas Eastern, Xxxx X-0, whichever is
greater, as published in the following day's Gas Daily, Eastern
Edition, and PSE&G's reasonable charge to transport said natural
gas to the Facility.
B.2.2 In accordance with Section A. 10 of Appendix A to the
Agreement, the PPP shall be responsible for tendering natural gas
to the Facility's auxiliary boilers to produce steam for Newark
Boxboard during periods when the Facility is not operating,
either because 3CP&L has elected to exercise its rights to
curtail. operation or because of a full or partial outage. The
Seller shall notify the Fuel Manager of its intention to operate
the auxiliary boilers and the amount of natural gas required
prior to 0900 hours of the preceding day or, If notice by such
time is not feasible (e.g., because notice of curtailment was not
given by JCP&L by that time or because of the sudden occurrence
of a full or partial forced outage), as much notice as is
feasible under the circumstances. The Fuel Manager shall fax
confirmation of the Seller's request by 1200 hours on that day
(or, if response by that time is not feasible because shorter
notice was given by Seller as permitted under the previous
sentence, as soon as is feasible). Seller shall pay for such
additional gas at the rate provided in Section B.2.4 below.
B.2.3 Once nominated, the Seller is obligated to consume
within plus or minus five percent (5%) of any additional gas
requested pursuant to Section B.2.2 hereof in the aggregate
during each calendar month, unless other arrangements can be made
at the time between the Seller and the Fuel Manager. In the event
the Facility, for whatever reason, is unable or fails to consume
the additional gas that it had previously requested, the Company
shall use reasonable efforts to redirect, place into storage, or
remarket such excess gas so as to mitigate the cost of disposing
of said excess gas. Should the Facility consume an amount of
natural gas greater than one hundred and five percent (105%) of
the aggregate amount requested during any calendar month, then
the Company shall use reasonable efforts to remedy any resulting
imbalances including, when practicable, withdrawal of natural gas
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reserves from storage, if an adequate supply of such natural gas
exists and can be accessed. However, the incremental cost of such
gas along with any and all penalties or claims that may
nonetheless be applied by a third party, including but not
limited to an interstate pipeline company or PSE&G, as a result
of an imbalance, shall be paid by the Seller.
B.2.4 The Fuel Manager shall provide the Company and the
Seller with a monthly weighted average cost of gas ("WACOG") to
the PSE&G city gate that shall be combined with the cost of
variable intrastate transportation charged to the PPP by PSE&G to
deliver gas to the Facility's burner tip. The combined WACOG and
intrastate transportation charges will be used in the calculation
of Seller3s reimbursement to JCP&L for steam sales to Newark
Boxboard when the auxiliary boiler is used. The WACOG shall be
the PPP's overall WACOG at PSE&G's city gate and shall be
reported to the Company and the Seller no later than three (3)
business days after the end of the month. Upon receipt of the
Seller's written request, the Fuel Manager shall provide
documentation supporting the calculation of the WACOG and shall
provide access, as required, to relevant supporting detail
including invoices and LDC metering summaries.
B.2.5 Unless otherwise advised by the Seller, the Fuel
Manager shall utilize the Average Heat Rate of the preceding
"Contract Year' (which shall mean each twelve month period during
the term of the Agreement commencing on the Effective Date and
each anniversary of the Effective Date), or 9750 BTU/kWh (HHV),
to determining the natural gas requirements of the Facility.
Seller shall use reasonable efforts to maintain an accurate
estimate of the Facility's Heat Rate and shall report any
significant variations (i.e., +/- 5%) from the Average Heat Rate
then in effect, either due to the materiel condition of the
Facility or temperature conditions. Seller shall not be
responsible for any cost or charges, including storage or
remarketing costs or imbalance charges, resulting from any
difference between such estimates and the Facility's actual usage
provided that (i) Seller operates the Facility as contemplated
and (ii) Seller has properly notified the Fuel Manager of any
significant variations in the Heat Rate used by the Fuel Manager
in calculating the natural gas requirements of the Facility.
B.2.6 From time to time, the Company may direct the Seller
to operate the Facility on kerosene instead of natural gas during
periods when natural gas is either unavailable or prohibitively
expensive. The Company shall reimburse Seller for the cost of
kerosene as provided in Section A. 10 of Appendix A to the
Agreement. The Company shall provide at least a comparable level
of natural gas service to the Facility for the purpose of
operating the Facility to that provided by PSE&G to its QF
customers under its prevailing CIG Tariff.
B.3 Metering of Natural Gas Flows to the Facility
B.3.1 Both Seller and JCP&L shall maintain meters for
measuring the quantity of fuel used by the Facility. The meters
shall be capable of recording total MCFs and associated
calculated BTUs delivered to the Facility on a continuous, real
time basis and shall be calibrated at regular intervals based on
manufacturer's recommendations. The parties will
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use these meter readings to cheek the readings obtained by PSE&G.
In the event of a discrepancy between meters, the readings
obtained by PSE&G shall prevail until such time as all of the
meters can be recalibrated. If such recalibration demonstrates
that the PSE&G meter data was in error, an appropriate adjustment
shall be made for the period in question. It is contemplated by
the Parties at the time of this Agreement that ~CP&L shall be
afforded ~ to PSE&G's billing meter and shall further be
permitted to connect its remote telemetering unit ("RTU") to such
billing meter for the purpose of electronically transmitting real
time fuel consumption data to the GPUSC's dispatch center. In the
event that, for whatever reason, access to PSE&G's billing meter
is denied or deemed to be impracticable, then the 3CP&L shall
have the right to cause to be installed at its own expense a
meter capable of recording and electronically transmitting
required real time fuel consumption data at the Facility.
B.3.2 The Fuel Manager will monitor the consumption of
natural gas at the Facility to ensure that an adequate supply of
natural gas is available to operate Facility. In the event that
the Fuel Manager determines that, during periods when PSE&G has
not interrupted or recalled the interstate or intrastate
transportation that it supplies to the PPP pursuant to its
agreement with the Company to support, among other things, the
operation of the Facility, an insufficient quantity of natural
gas remains to continue to operate the Facility at its current
level of output, provided that the insufficiency is not the
result of a material change in the Facility's performance or
output, the PPP may request the Company to exercise, and the
Company may exercise, the Company's right to curtail Facility
output under the Agreement in order to conserve the remaining
supply of natural gas until additional quantities of natural gas
can arranged. If the shortfall is substantial i.e., greater than
5% variation from anticipated consumption at the point in time
that the comparison is made and cannot be readily explained), the
Company and/or the Seller may request that any or all gas
measuring meters be recalibrated. If it is determined that the
additional fuel consumption is the result of a material change in
the Facility's performance or output, the Fuel Manager shall
notify the Seller in writing immediately, who shall, in turn,
confirm receipt of such notification and explain the cause or
causes of the change in performance and what steps will be taken
to remedy the situation. The extent of the change in performance
may necessitate that the Facility be declared to be in a full or
partial forced outage until the condition is remedied. In such
circumstances where the additional fuel consumption is the result
of a material change in the Facility's performance or output, the
Seller shall be responsible for paying the reasonable incremental
cost of either operating the Facility on kerosene, or on a
supplemental supply of "no notice" natural gas that the Fuel
Manager may arrange until such time as the Fuel Manager, using
reasonable efforts, is able to nominate additional quantities of
natural gas. In any event, the provisions set forth in Section
A.9 of Appendix A to the Agreement shall apply.
B.3.3 The Company shall seek to cause PSE&G to deliver
natural gas of interstate pipeline quality to the Facility at its
system operating pressure.
B.4 Title
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B.4.l Title to the natural gas supply used to fuel the
Facility shall remain with
GPUSC.
B.4.2 Title to the natural gas requested by the Seller to
fuel the auxiliary boiler shall transfer to the Seller at the
PSE&G billing meter. Such tide transfer shall create an
obligation on the part of the Seller to reimburse the Company the
full cost of the natural gas as provided herein.
B.4.3 At all times, tide to any interstate transportation
which may be used from time to time to transport natural gas to
the PSE&G city gate for the purpose of operating the Facility
including the auxiliary boiler shall remain with GPUSC.
B.4.4 The Company warrants that it will have good and
marketable tide to all natural gas supplied to Seller and full
authority to deliver such natural gas to Seller free and clear of
any liens, claims or encumbrances of any third party.
B.5 Liability
B.5.1 The Seller shall have no responsibility to procure
natural gas for the Facility, nor shall it be liable for any
claims or penalties resulting from the supply and or
transportation of natural gas to the Facility when operation of
the Facility is within the prescribed terms of the Agreement.
Such operation shall include operating the Facility and operating
the auxiliary boiler either during periods when the Facility is
in an outage condition or, during periods when the Company elects
to exercise its rights pursuant to Section 7.6(g) of the
Agreement.
B.5.2 The Seller shall be liable for the unmitigated cost
of disposing of additional gas supplies previously requested by
the Seller referenced in Section B.2.3 of this Appendix but not
consumed at the Facility pursuant to the terms and limitations
set forth in that Section.
B.5.3 The Seller shall be liable for the entire cost of any
natural gas consumed by the auxiliary boiler. Further, in
addition to the full cost of the natural gas consumed, the Seller
shall be entirely liable for any penalties or claims that might
result as a consequence of its failure to properly notify the
Fuel Manager of its intention to operate the auxiliary boiler.
B.5.4 The Company shall not be held liable for any fines
imposed by the New Jersey Department of Environmental Protection
on the Seller resulting from the Facility exceeding the
authorized level of operations on kerosene. It is the Seller's
responsibility to ensure compliance with all of its permits.
However, Seller shall not be obligated to operate the Facility if
the PPP has not provided adequate natural gas for such production
during periods when PSB&G has not interrupted or recalled the
interstate or intrastate transportation that it supplies to the
PPP, pursuant to its agreement with the Company, to support,
among other things, the operation of the Facility, if such
production would cause the Facility to exceed
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authorized levels of operation on kerosene. Such failure to
operate the Facility shall not be considered a forced outage
under the Agreement.
B.5.5 Pursuant to Section B.2.6 of this Appendix, the PPP
shall provide a level of service comparable to PSE&G's CIG Tariff
which contemplates some number of days of interruption during
periods when the ambient air temperature falls below some
predetermined contract level. During such periods of natural gas
interruption, the Seller may operate the Facility on kerosene,
provided that such operation does not exceed the authorized
levels of operation on kerosene under the Facility's permit. The
Company shall reimburse the Seller the cost of said kerosene
pursuant to Section A.10 of Appendix A to the Agreement.
However, if the Seller is unable to operate the Facility due to
the unavailability of kerosene or, because the Facility has
exceeded the authorized number of hours of operation under the
air permit, the Company shall not be liable to the Seller for any
lost revenue that would otherwise be paid pursuant to Article 8
and Appendix A to the Agreement and the Facility shall be
considered to be in a forced outage and all provisions related
thereto shall apply.
B.6 Conflicts
B.6.1 Nothing contained in this Appendix shall supersede or
nullify any portion or provision of the Agreement. In the event
of conflict between this Appendix and the Agreement, the terms
and conditions set forth in the Agreement shall always prevail.
B.7 Billing and Payments
B.7.1 The Parties shall establish and maintain guidelines
which shall govern the billing and subsequent payment for natural
gas volumes supplied by the Company and delivered to the Seller
at the PSE&G billing meter. Such guidelines shall be established
and amended, as required, through letter agreement.
6