EXHIBIT X-0
XXXX XXXXXX XXXX XX. 0 CONSTRUCTION AND OPERATING
AGREEMENT, dated December 30, 1965, among MONONGAHELA POWER
COMPANY, a West Virginia corporation ("Monongahela"), THE
POTOMAC EDISON COMPANY, a Maryland corporation ("Potomac"),
and WEST PENN POWER COMPANY, a Pennsylvania corporation
("West Penn"),
WITNESSETH:
1. Station.
Monongahela, Potomac, and West Penn (the
"Companies") hereby provide for the construction and
operation of the second unit of approximately 500,000 kw
name plate capacity of a steam electric generating station
in Monongalia County, West Virginia, to be owned by the
Companies as tenants in common with undivided ownership
interests of Xxxxxxxxxxx 00 %, Potomac 30%, and West Penn
50% (their respective "Ownership Shares"), all as
contemplated in the deed dated December 30, 1965 (the
"Deed") from Monongahela to Potomac and West Penn. Said
second unit, the interests of the Companies in all renewals,
replacements, and additions in respect of said second unit,
50% of all undivided ownership interests in the Common
Facilities referred to in the Deed, and 50% of all undivided
ownership interests in all renewals, replacements, and
additions in respect of said Common Facilities are together
hereinafter called the "Second Unit". The provisions of
this Agreement are intended, as contemplated in the Deed, to
establish among the Companies more detailed provisions and
procedures for carrying out provisions of the Deed.
2. Construction.
Construction of the Second Unit shall be carried
out by the Companies under the general supervision and
direction of a Construction Committee, which shall be the
Allegheny Power System Fort Xxxxxx Construction Committee.
The Companies intend to use their best efforts
toward the end that the construction of the Second Unit will
be completed, and full-scale operation commenced, on or
before May 1, 1969.
The Companies shall, with reasonable expedition,
enter into contracts (which may be purchase order contracts)
providing for (a) the purchase of materials, equipment and
services for, and construction of, the Second Unit and (b)
insurance to insure all work under construction against
risks usually insured against for such work. Each such
contract shall provide, among other things, that the
performance of the contract shall be for the account of, and
the charges therefor shall be billed to, and paid by the
Companies in proportion to their respective Ownership Shares
and that the invoices for such billing (contractor's invoice
or invoices) shall be submitted in the names of the
Companies.
Books of account and records containing details of
the items of cost applicable to the construction of the
Second Unit shall be kept under the supervision of the
Construction Committee and shall be open to examination at
any time by any Company or its representatives.
The Construction Committee shall cause the
Companies to be furnished with counterparts of such books of
account and records as they may request. The basic books of
account and records shall be turned over to and maintained
by the Operating Company referred to in Section 3.
3. Operation and Maintenance.
The Second Unit shall be operated and maintained
in accordance with good utility operating practice.
The Companies shall establish an Operating
Committee, consisting of one member appointed by each
Company, for the purpose of establishing policies for the
operation and maintenance of the Second Unit. The Operating
Committee shall meet at the call of any member.
The Second Unit will be operated and maintained by
one of the Companies (the "Operating Company") in accordance
with policies to be established by the Operating Committee.
Until otherwise agreed by all the Companies, Monongahela
shall be the Operating Company. The Operating Company shall
not be liable in respect of operation or maintenance except
for its gross negligence or willful misconduct. The
Operating Company shall keep books of account and records
containing details of the items of cost applicable to the
operation and maintenance of the Second Unit. Such books of
account and records shall be open to examination at any time
by any Company or its representatives. The Operating
Company shall furnish the Companies with counterparts of
such books of account and records as they may request.
4. Renewals, Replacements, Additions and Retirements.
Renewals and replacements necessary for the
operation of the Second Unit shall be made as required by
good utility operating practice. Other renewals and
replacements and any additions to the Second Unit may be
made only by agreement of all the Companies. Retirements,
sales and other dispositions of Second Unit property shall
be effected only in a
manner consistent with the Companies' respective mortgage
indentures, if any. Renewals, replacements, additions, and
retirements (and related dispositions and sales) shall be
effected by the Operating Company subject to the policies
established by the Operating Committee.
5. Title to Property.
Title to all property acquired or constructed in
connection with the Second Unit (including without
limitation property acquired for use or consumption in
connection with its construction, operation or maintenance)
shall be in the Companies as tenants in common in proportion
to their Ownership Shares. Construction, acquisitions and
purchases shall be made in such manner that title shall vest
in accordance with the foregoing.
6. Power and Energy.
Subject to Section 9, each Company shall at all
times have full ownership of and available to it at the
Second Unit the portion of the generating capability of the
Second Unit and the energy associated therewith,
corresponding to its Ownership Share.
Each Company shall keep the Operating Company
informed as to the amount of power it requires to be
generated for it.
Subject to its capability and to necessary or
unavoidable outages, the Second Unit shall be operated so as
to produce an output equal to the sum of the power
requirements of the Companies therefrom.
7. Expenditures.
All expenditures in respect of the Second Unit
shall be accounted for in accordance with the Uniform System
of Accounts
prescribed by the Federal Power Commission for Public
Utilities and Licensees (Class A and B Electric Utilities)
as in effect on the date of this Agreement.
All expenditures (including without limitation all
expenditures for administration, labor, payroll taxes,
employee benefits, maintenance, materials, research and
development, supplies and services), except those in respect
of the aforesaid Common Facilities, for the construction,
operation and maintenance (excluding fuel) of the Second
Unit and for renewals, replacements, additions and
retirements in respect thereof shall be shared by the
Companies in proportion to their Ownership Shares. One-half
of all such expenditures in respect of the aforesaid Common
Facilities shall be shared by the Companies (in their
capacities as Second Unit owners) in proportion to their
Common Facilities Ownership Shares as defined in
subparagraph 1 of the Deed. All expenditures in respect of
the Second Unit properly chargeable to account 501 (Fuel) of
such Uniform System of Accounts for any period shall be
shared by the Companies pro rata according to the total
kilowatthours of energy respectively taken by them from the
Second Unit during such period.
Interest charges on borrowed funds, income taxes,
and property, business and occupation and like taxes, of
each Company shall be borne entirely by such Company; and
such items, as well as depreciation, amortization, and
interest charged to construction, shall not be deemed
expenditures for purposes of this Section.
8. Joint Account.
The Companies shall maintain one or more joint
accounts (collectively, the "Joint Account") in a bank or
banks agreed upon by them. All expenditures referred to in
the second paragraph of Section 7 shall be paid out of the
Joint Account.
From time to time the Construction Committee or
the Operating Company may request the Companies to advance
to the Joint Account such amount as is then needed for cash
working capital. Within ten days thereafter the Companies,
pro rata according to their respective Ownership Shares,
shall deposit in the Joint Account the amount specified in
such request.
As promptly as practicable after the end of each
month, the Construction Committee or the Operating Company
shall send to each of the Companies a statement in
reasonable detail of all expenditures for such month and the
amount of each Company's share thereof. Within ten days
after its receipt of such statement, each Company shall
deposit its share in the Joint Account
The Construction Committee or Operating Company
shall cause to be drawn against the Joint Account, and to be
delivered, checks or drafts in the names of the companies in
payment of expenditures. Funds shall be disbursed from the
Joint Account in accordance with sound accounting and
disbursement procedures. All persons authorized to handle
or disburse funds from the Joint Account shall be bonded in
favor of Monongahela, Potomac, and West Penn, as their
respective interests may appear, for not less than $500,000.
9. Default.
During any period that a Company is in default in
whole or in part in making the most recent deposit in the
Joint Account then required under this Agreement, (a) such
Company shall be entitled to no energy from the Second Unit
(but shall be obligated to pay any damages to the non-
defaulting Companies resulting from the default) and (b) the
non-defaulting Companies shall be entitled to all of the
energy from the Second Unit in proportion to their Ownership
Shares. No such default shall affect any Company's
ownership interest, or any Company's obligations under
Sections 7 and 8.
10. Arbitration.
The Companies hereby declare their intention and
agree that any controversy arising out of or relating to
this Agreement or the Deed, or the breach of either thereof,
shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association and that judgment
upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
11. Term of Agreement.
This Agreement shall continue in full force and
effect for a period of forty-four years from the date hereof
and for such longer period as the Companies shall by mutual
agreement continue to operate the Second Unit. Termination
of this Agreement shall not terminate the provisions of
Section 10.
12. Amendment.
This Agreement may be amended from time to time or
canceled at any time by an instrument or instruments in
writing signed by all of the Companies (or their successors
or assigns).
13. Successors and Assigns.
This Agreement shall inure to the benefit of and
bind the successors and assigns of the parties hereto, but
it may be assigned in whole or in part only in connection
with transfer to the assign of a corresponding ownership
interest in the Second Unit.
IN WITNESS WHEREOF each of the parties has caused
this Agreement to be duly executed.
MONONGAHEAL POWER COMPANY
By_________/S/_____________
President
THE POTOMAC EDISON COMPANY
By__________/S/_______________
President
WEST PENN POWER COMPANY
By___________/S/_______________
President
