EXHIBIT 10.1
POWER PURCHASE AGREEMENT
between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
COGEN TECHNOLOGIES, INC.
(LINDEN, NEW JERSEY)
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS.................................................. 2
ARTICLE 2
TERM
2.1 Base Term................................................ 6
2.2 Renewal of Agreement..................................... 6
2.3 PSC Approval of Agreement................................ 7
ARTICLE 3
DELIVERY AND PURCHASE
3.1 Basic Obligations........................................ 8
3.2 Exceptions from Buyer's Obligation....................... 9
3.3 Interconnection.......................................... 9
ARTICLE 4
RATES FOR ELECTRICITY SOLD TO BUYER
4.1 Definitions.............................................. 10
4.2 Initial Delivery Rates................................... 12
4.3 Rates During Base Term................................... 12
4.4 Renewal Rates............................................ 15
4.5 Rates During Periods of Curtailment...................... 16
4.6 Fuel Component Determination............................. 17
4.7 Alternate Fuel........................................... 18
4.8 Dispute Resolution....................................... 18
ARTICLE 5
SECURITY
5.1 Letter of Credit......................................... 18
5.2 Other Forms of Security.................................. 20
ARTICLE 6
PAYMENT
6.1 General.................................................. 20
6.2 Preparation of Statement................................. 21
6.3 Dispute.................................................. 21
6.4 Interest................................................. 22
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TABLE OF CONTENTS
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ARTICLE 7
METERING
7.1 Measurement.............................................. 23
7.2 Testing of Meters........................................ 23
7.3 Adjustments.............................................. 24
7.4 Additional Meters........................................ 25
7.5 Monitoring Equipment..................................... 25
ARTICLE 8
PROCEDURES FOR INTERCONNECTION AND
INSTALLATION OF INTERCONNECTION FACILITIES
8.1 General.................................................. 26
8.2 Procedures............................................... 26
8.3 Seller's Responsibility.................................. 27
8.4 Buyer's Responsibility................................... 28
8.5 Payment Terms............................................ 28
8.6 Annual Reimbursement..................................... 29
ARTICLE 9
REARRANGEMENT, RELOCATION, RETIREMENT OR
ABANDONMENT OF BUYER'S FACILITIES
9.1 Relocation or Rearrangement.............................. 29
9.2 Retirement or Abandonment................................ 30
ARTICLE 10
SUSPENSION OF BUYER'S OBLIGATION AND
DISCONNECTION OF PLANT FROM BUYER'S SYSTEM
10.1 Temporary Suspension of Buyer's Obligation to
Accept Electricity....................................... 31
10.2 Disconnection............................................. 31
10.3 Restoration of Service and Reimbursement of Costs......... 32
ARTICLE 11
COORDINATION OF PLANT AND SYSTEM MAINTENANCE
11.1 Initial Operation Coordination.......................... 32
11.2 Operation Coordination.................................. 33
11.3 Maintenance Coordination by Seller...................... 35
11.4 Maintenance Coordination by Buyer....................... 36
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ARTICLE 12
QUALIFICATION UNDER FEDERAL LAW
12.1 Initial Certification................................... 36
12.2 Subsequent Notification................................. 36
12.3 Loss of Qualifying Status............................... 37
ARTICLE 13
DEPENDABLE MAXIMUM NET CAPABILITY (DMNC)
13.1 Plant Capability........................................ 39
13.2 Expected Deliveries to Buyer............................ 42
ARTICLE 14
TERMINATION PRIOR TO INITIAL OPERATION
14.1 Events of Termination................................... 42
14.2 Milestone Deposits...................................... 44
ARTICLE 15
BREACH OF CONTRACT, TERMINATION, AND REMEDIES
15.1 Breach.................................................. 45
15.2 Termination............................................. 47
15.3 Cure by Lender.......................................... 48
15.4 Remedies................................................ 48
ARTICLE 16
SPECIFIC PERFORMANCE......................................... 49
ARTICLE 17
RIGHT TO OPERATE............................................. 49
ARTICLE 18
INDEMNIFICATION AND INSURANCE
18.1 Indemnification......................................... 50
18.2 Insurance............................................... 52
18.3 Self-Insurance.......................................... 53
ARTICLE 19
ACCESS AND NONINTERFERENCE
19.1 Access.................................................. 53
19.2 Noninterference......................................... 54
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TABLE OF CONTENTS
Page
ARTICLE 20
FORCE MAJEURE
20.1 Definition............................................. 54
20.2 Effect of Force Majeure................................ 54
ARTICLE 21
ASSIGNMENT OR TRANSFER
21.1 General.............................................. 56
21.2 Permitted Assignments................................ 56
21.3 Other Assignments.................................... 56
21.4 Sale of Plant........................................ 57
21.5 Novation............................................. 57
ARTICLE 22
REPRESENTATIONS AND WARRANTIES
22.1 Seller's Representations............................... 58
22.2 Buyer's Representations................................ 59
ARTICLE 23
AMENDMENTS, APPROVAL OF AMENDMENTS........................... 60
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Binding Effect......................................... 60
24.2 Counterparts........................................... 60
24.3 Notices................................................ 61
24.4 Prior Agreements Superseded............................ 61
24.5 Applicable Law......................................... 61
24.6 Specific Waiver........................................ 61
24.7 Waiver................................................. 62
Appendix A: Plant Description
Appendix B: Avoided Capacity Cost Projections
Appendix C: Security
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POWER PURCHASE AGREEMENT
between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
COGEN TECHNOLOGIES, INC.
WHEREAS, Consolidated Edison Company of New York, Inc. ("Buyer") is a
corporation organized under the Transportation Corporations Law of the State of
New York and is authorized by its Certificate of Incorporation and by the State
of New York to engage in the production, transmission, sale and distribution of
electricity for heat, light and power to the public;
WHEREAS, Cogen Technologies, Inc. ("Seller"), a Texas corporation, proposes
to construct or have constructed, to own, lease or otherwise have a possessory
interest in, and to operate a cogeneration facility in Linden, New Jersey (see
Appendix A) and to deliver Electricity to the electric system of Buyer;
WHEREAS, the Plant will be a "qualifying facility" under the Public Utility
Regulatory Policies Act of 1978 ("PURPA") and as defined in the rules and
regulations issued pursuant to such law;
and
WHEREAS, Seller desires to sell Electricity generated by the Plant to Buyer
pursuant to the rates, terms and conditions set forth in this Agreement, and
Buyer agrees to purchase Electricity generated by the Plant on the terms and
conditions set forth herein;
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NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants hereinafter set forth, the sufficiency of which each Party
acknowledges, Buyer and Seller agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement:
1.1 The term "Agreement" means this contract, including all appendices
attached hereto and amendments to this contract that may be made from time to
time.
1.2 The term "Annual Period" means any one of a succession of consecutive
twelve-month periods, the first of which shall begin on the Date of Initial
Commercial Operation.
1.3 The term "Commercial Operation" means the production of Electricity by
Seller at the Plant, upon the completion of testing of the Plant.
1.4 The term "Date of Initial Commercial Operation" means the day which
begins at 12:01 A.M. on the first day of the month which immediately follows the
date Seller designates in writing as the initial date of Commercial Operation of
the Plant.
1.5 The terms "Deliver", "Delivery" and "Delivered" mean to actually
deliver or to make available Electricity, actual delivery or availability of
Electricity, or actually delivered or available Electricity, as the case may be,
for sale to Buyer at
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the Point of Interconnection, other than Electricity subject to pricing under
Article 4.5.
1.6 The term "DMNC" means the Dependable Maximum Net Capability of the
Plant determined pursuant to Article 13.1.
1.7 The term "Direct Interconnection" means a direct interconnection
between the Plant and Buyer's electric system.
1.8 The term "Electricity" means capacity, expressed in kilowatts MW"), and
energy, expressed in kilowatt hours MWW'), generated or available to be
generated by the Plant for sale to Buyer, as three-phase alternating current
with a nominal frequency of 60 hertz and, in the case of a Direct
Interconnection, a nominal voltage of 345,000 volts and at a minimum power
factor of 0.85.
1.9 The term "Fuel" means Natural Gas or any other fuel, including fuel
oil.
1.10 The term "Indirect Interconnection" means the interconnection of the
Plant to Buyer's electric system through the electric system of the Intervening
Utility.
1.11 The term "Initial Delivery Date" means the day that Seller first
actually delivers Electricity to Buyer, which date shall precede the Date of
Initial Commercial Operation.
1.12 The term "Intervening Utility" means the Public Service Electric and
Gas Company, and any of its successors or assigns.
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1.13 The term "Lender" means any person lending money to Seller for the
construction, operation, maintenance, repair, or alteration of Seller's Plant,
any person providing funds for the refinancing or taking-out of any such loans,
and the nominees or designees of any such persons.
1.14 The term "MW" means megawatt.
1.15 The term "Natural Gas" means natural gas or any other gaseous fuel,
such as butane, propane, or liquified natural gas.
1.16 The term "Off-Peak Periods" means all other hours of the week
exclusive of On-Peak Periods.
1.17 The term "On-Peak Periods" means the period from 8:00 A.M. to 10:00
P.M. (Eastern Time) Monday through Friday, fifty-two (52) weeks per year.
1.18 The term "Party" or "Parties" means one or both of the Consolidated
Edison Company of New York, Inc., a New York corporation, or Cogen Technologies,
Inc., a Texas corporation, together with any successor or assign of either.
1.19 The term "person" means an individual, corporation or other legal
entity.
1.20 The term "Plant" means the cogeneration facility and all appurtenant
structures and equipment, including Seller's electrical and steam
interconnection facilities, and real property interests owned, leased, or
subleased by Seller in Linden, New Jersey, for the purposes of producing steam
and
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generating electricity. The Plant currently is designed to have a power
production capacity, net of auxiliary Plant loads and expected Plant electric
deliveries to steam customers, of approximately 440 MW. However, Seller may
redesignate such capacity of the Plant as any lower value or any higher value up
to 539 MW, or any higher value up to 594 MW in the event that Seller desires to
include in this Agreement the capacity currently specified in the power purchase
agreement between Buyer and Seller with regard to Seller's proposed plant
located in Bayonne, New Jersey, provided that Seller gives Buyer notice of such
redesignated capacity within six (6) months of the PSC's approval of this
Agreement pursuant to Article 2.3. Any such redesignation shall not require
Seller's Plant to have the capacity so designated but shall determine the
amounts due under Article 14.
1.21 The term "Point of Interconnection" means: (i) in the case of a Direct
Interconnection, the point of physical connection of the Plant to the Buyer's
transmission system; or (ii) in the case of an Indirect Interconnection, the
point of physical connection of the Plant to the Intervening Utility's
transmission system.
1.22 The term "PSC" means the Public Service Commission of the State of New
York or any successor governmental entity exercising jurisdiction over the rates
and operations of Buyer in the State of New York.
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1.23 The term "Qualifying Facility" means a "qualifying cogeneration
facility" as defined in Section 3(18) of the Federal Power Act and the
regulations thereunder.
ARTICLE 2
TERM
2.1 Base Term. This Agreement shall become effective when fully executed
and approved by the PSC and shall remain in full force and effect for a period
of twenty-five (25) Annual Periods from the Date of Initial Commercial Operation
("Base Term") and any additional Annual Periods pursuant to Article 2.2, subject
to termination in accordance with Articles 14 and 15 of this Agreement.
Applicable provisions of this Agreement shall continue in effect after the date
of termination of this Agreement only to the extent necessary to provide for
final xxxxxxxx and adjustments related to the period prior to such date of
termination or as may be otherwise applicable after such date.
2.2 Renewal of Agreement. This Agreement shall be automatically renewed for
two periods of five (5) Annual Periods each, the first of which will commence
with the expiration of the Base Term, unless either Party elects to terminate
this Agreement at the expiration of the Base Term or at the expiration of the
first five-year renewal term. Such termination shall be valid only if the
terminating Party provides notice of its intent to
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terminate to the other Party at least five (5) full years prior to the
expiration of the applicable term.
2.3 PSC Approval of Agreement. Each Party to this Agreement acknowledges
that this Agreement is subject to approval by the PSC. Upon execution of this
Agreement, Buyer shall promptly submit this Agreement to the PSC for approval
and for authorization to recover all payments for the purchase of Electricity
under this Agreement through Buyer's fuel adjustment clause. If the PSC, in
approving this Agreement, orders any material change to this Agreement, or
imposes any condition upon such approval, any Party which, in its sole judgment,
is adversely affected by such change or condition may terminate this Agreement,
without any liability or further obligation to the other Party, by serving
written notice to the other Party within thirty (30) days from the date the PSC
orders such change or condition. Failure to give such notice shall constitute
acceptance of the change or condition imposed by the PSC. In the event that such
notice is served, the Parties agree to negotiate in good faith to agree upon a
mutually satisfactory amendment to this Agreement and to resubmit this
Agreement, as so amended, for any necessary further approval. In the event the
PSC, in its approval of this Agreement under this Article 2.3, does not
expressly authorize full recovery by Buyer, through its fuel adjustment clause,
of any payments made by Buyer to Seller under
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this Agreement, then this Agreement shall become null and void immediately
without either Party becoming liable to the other. In the event the PSC
conditions its authorization of full recovery by Buyer, through its fuel
adjustment clause, of payments made by Buyer to Seller under this Agreement,
this Agreement shall become effective only upon the written agreement of the
Parties to accept such conditions.
ARTICLE 3
DELIVERY AND PURCHASE
3.1 Basic obligations. During the term of this Agreement, Seller shall
deliver and sell to Buyer and Buyer shall accept and purchase from Seller,
subject to the terms and conditions of this Agreement, all the Electricity up to
the power production capacity produced by the Plant net of the electric energy
and capacity used to operate auxiliary equipment in the Plant and net of the
electric energy and capacity (including electric energy and capacity equivalent
used as steam) used by steam customers supplied by the Plant. Seller shall,
within six (6) months of the PSC's approval of this Agreement pursuant to
Article 2.3, designate the maximum amount of electric energy and capacity used
by such steam customers (including electric energy and capacity equivalent used
as steam).
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3.2 Exceptions from Buyer's Obligation.
(A) Buyer's obligation to accept and pay for Electricity from Seller
shall be suspended:
(1) during any period in which Seller fails to satisfy
conditions, imposed on Seller by the PSC in its approval of this Agreement
under Article 2.3, to full recovery by Buyer, through its fuel adjustment
clause, of payments made by Buyer to Seller under this Agreement; and
(2) during any period in which Seller fails to comply with the
requirements specified in Articles 18.2 and 18.3 (relating to insurance).
(B) Buyer's obligation to accept Electricity from Seller shall be
suspended:
(1) during such periods and under such conditions as shall be
established by the PSC in Case 88-E-081; and
(2) pursuant to Article 10 of this Agreement (relating to
suspension).
3.3 Interconnection. Subject to Article 8.1, Seller shall
use a Direct Interconnection.
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ARTICLE 4
RATES FOR ELECTRICITY SOLD TO BUYER
4.1 Definitions. For purposes of this Agreement:
(A) The term "Fixed Component" means an amount equal to 1.8553 cents per
kWh.
(B) The term "Fuel Component" for a month means an amount equal to the sum
of all costs incurred in such month by Seller with respect to Fuel acquired for
use in the Plant (including Fuel commodity, transportation, and storage costs
and any costs related thereto) multiplied by a fraction, the numerator of which
is the kWh actually delivered to Buyer in such month and the denominator of
which is the total kWh actually delivered by the Plant in such month.
(C) The term "Fuel Component Ceiling" for an Annual Period means an amount
equal to 2.634 cents per kWh multiplied by:
(1) a fraction, the numerator of which is equal to Buyer's actual
weighted average Natural Gas costs per MMBtu at the higher heating value
(including Natural Gas commodity, transportation, and storage costs and any
costs related thereto) for such Annual Period, and the denominator of which
is equal to Buyer's actual weighted average Natural Gas costs per
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XXXxx at the higher heating value (including Natural Gas commodity,
transportation, and storage costs and any costs related thereto and
excluding all direct or indirect costs, charges, surcharges, liabilities,
payments, or obligations incurred by, accrued by, reserved by, deferred by,
or billed to Buyer during calendar year 1989 attributable to any take or
pay buy out or buy down costs, however designated, of Buyer or Buyer's
suppliers or transporters) for calendar year 1989; times
(2) the kWh actually delivered by Seller to Buyer during such Annual
Period.
Buyer shall provide Seller with a statement of its actual weighted average
Natural Gas costs (including Natural Gas commodity, transportation, and storage
costs) by the fifth (5th) day of each month or as soon thereafter as available
to Buyer.
(D) The term "0 & M Component" for a month means an amount equal to 0.9
cents per kWh multiplied by the Inflation Factor for such month.
(E) The term "Inflation Factor" for a month means the latest CPI available
at the end of such month divided by the CPI for December, 1988.
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(F) The term "CPI" means the Consumer Price Index for All Urban Consumers
for the New York-Northern New Jersey Area as computed by the United States
Department of Labor, Bureau of Labor Statistics (or if such index shall no
longer be published, such other index as the Parties shall reasonably determine
to be most nearly comparable to such index for the Metropolitan New York Area).
4.2 Initial Delivery Rates. From the Initial Delivery Date until the Date of
Initial Commercial Operation, Buyer shall pay Seller for the Electricity
actually delivered to Buyer at a rate which is the Buyer's avoided energy costs
(i) as may be specified in the applicable tariff in effect at the time of such
deliveries, or (ii) if such tariff is not in effect, as may otherwise be
available. Such rate shall not include any avoided generation or transmission
capacity costs. 4.3 Rates During Base Term.
(A) From the Date of Initial Commercial Operation of the Plant until
the end of the twenty-fifth (25th) Annual Period, Buyer shall pay Seller for
Electricity Delivered to Buyer in each month the sum of the following amounts:
(1) an amount equal to the Fixed Component multiplied by the kWh
Delivered during such month, but in no event greater than the amount
determined under Article 4.3(B)(1) and (2);
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(2) the Fuel Component for such month; and
(3) an amount equal to the 0 & M Component multiplied by the kWh
Delivered during such month, but in no event greater than the amount
determined under Article 4.3(B)(3) and (4).
(B) (1) With regard to the total amount to be paid under Articles
4.3(A)(1) and 4.5(A) with regard to the Fixed Component, Seller may not receive
in any month more than an amount equal to the Fixed Component multiplied by: (a)
eighty-five percent (85%) of the DMNC applicable to such month; and (b) the
number of total hours in such month.
(2) To the extent that the amount of Seller's Delivered kWh plus
the curtailed kWh subject to Article 4.5 during the twelve-month period
preceding a month (or any shorter period as applicable during the first
Annual Period) is in excess of an amount equal to eighty-five percent (85%)
of the DMNC applicable to such month multiplied by the total hours in the
preceding twelve-month period (or any shorter period as applicable during
the first Annual Period), such excess kWh shall be considered Delivered for
purposes of Article 4.3(A)(1) in such month (except if such month is June,
July, August, or September) so as to result in additional payments to
Seller during such month attributable to the Fixed Component up to the
limitation provided in Article 4.3(B)(1).
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(3) With regard to the total amount to be paid under Articles
4.3(A)(3) and 4.5(B) with regard to the 0 & M Component, Seller may not receive
in any month more than an amount equal to the 0 & M Component multiplied by: (a)
ninety percent (90%) of the DMNC applicable to such month; and (b) the number of
total hours in such month.
(4) To the extent that the amount of Seller's Delivered kWh plus the
curtailed kWh subject to Article 4.5 during the twelve-month period preceding a
month (or any shorter period as applicable during the first Annual Period) is in
excess of an amount equal to ninety percent (90%) of the DMNC applicable to such
month multiplied by the total hours in the preceding twelve-month period (or any
shorter period as applicable during the first Annual Period), such excess kWh
shall be considered Delivered for purposes of Article 4.3(A)(3) in such month
(except if such month is June, July, August, or September) so as to result in
additional payments to Seller during such month attributable to the 0 & M
Component up to the limitation provided in Article 4.3(B)(3).
(C) (1) within thirty (30) days of the end of each Annual Period,
Buyer shall determine:
(a) the revenues that were received by
Seller during such Annual Period solely attributable to the
Fuel Component less all costs that are Buyer's
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responsibility under Article 11.2(D) and all costs incurred and documented
by Seller related to the supply of Fuel during periods of curtailment in
such Annual Period pursuant to Article 4.5 or when Electricity was
available and not actually delivered as a result of Buyer's actions not
authorized under this Agreement; and
(b) an amount equal to the Fuel Component Ceiling for such Annual
Period.
(2) To the extent that Seller's revenues determined under Article
4.3(C)(1)(a):
(a) are less than the amount determined under Article
4.3(C)(1)(b), Buyer shall pay to Seller for fifty percent (50%) of the
difference in twelve (12) equal monthly payments; or
(b) are greater than the amount determined under Article
4.3(C)(1)(b), Seller shall reimburse Buyer for one-hundred percent (100%)
of such difference in twelve (12) equal monthly payments.
4.4 Renewal Rates. From the end of the twenty-fifth (25th) Annual Period
through the end of any renewal term pursuant to Article 2.2, Buyer shall pay
Seller for Electricity Delivered to Buyer at a rate equal to the higher of:
(A) ninety percent (90%) of the avoided capacity cost projections for
On-Peak Periods as shown in Appendix B and
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Buyer's avoided energy costs (i) as may be specified in the applicable
tariff in effect at the time of such Deliveries, or (ii) if such tariff is
not in effect, as may otherwise be available (separated into rates for
On-Peak Periods and Off-Peak Periods); or
(B) one-hundred ten percent (110%) of the amounts determined under
Article 4.3(A)(2) and (3), without regard to Article 4.3(C).
4.5 Rates During Periods of Curtailment. In the case of any event specified
in Articles 3.2(B), 10, 11.2, or 20 in which Buyer's action authorized by, or
non-performance excused by, such Articles causes Seller to operate at a level
less than one hundred percent (100%) of Seller's DMNC, Buyer shall pay Seller
for any curtailed capacity at a rate which is the sum of:
(A) the Fixed Component multiplied by the kWh curtailed, subject to
Article 4.3(B)(1) and (2); and
(B) the 0 & M Component multiplied by the kWh curtailed, subject to
Article 4.3(B)(3) and (4), unless Buyer shows that such curtailed capacity would
not have been available for delivery in the absence of Buyer's curtailment. In
the case of an Indirect Interconnection, Seller's capacity shall be deemed
unavailable for delivery if the transmission services of the Intervening Utility
necessary to deliver Electricity to Buyer are unavailable.
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4.6 Fuel Component Determination.
(A) Seller shall provide Buyer within five (5) days after the end of
the month either a statement of the actual costs with respect to the Fuel
Component for the preceding month or an estimate of such costs (if the actual
costs are not yet available to Seller). To the extent that an estimate is
provided and used for purposes of determination of the Fuel Component in any
month, Seller shall provide Buyer a statement of Seller's actual costs as soon
as available to Seller. Buyer or Seller, as the case may be, shall make the
appropriate adjustment in the next month's xxxx.
(B) To the extent that Seller incurs costs related to the Fuel
Component that requires prepayment of costs or payment of capital costs, Seller
shall include such costs in the Fuel Component amortized on a ratable basis,
including interest on any unrecovered balance at the rate specified in Article
6.4.
(C) To the extent that Seller is incurring costs for Fuel, including
Fuel commodity, transportation, and storage services, for more than the Plant's
use, Seller shall equitably allocate such costs.
(D) Buyer shall have the right, upon reasonable notice and during
normal business hours, to examine the records of Seller related solely to the
determination of the Fuel Component.
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4.7 Alternate Fuel. Seller agrees to use best efforts to change to a
substitute primary fuel which is less expensive than the natural gas it was
otherwise intending to use as the primary fuel at any time during the term of
this Agreement, provided that such less expensive fuel can be burned in the
Plant under applicable environmental and other laws and regulations and such
burning does not otherwise adversely affect the Plant's operations.
4.8 Dispute Resolution. Any dispute between Buyer and Seller under this
Article 4 shall be subject to arbitration by the PSC in accordance with
procedures similar to those set forth in 16 NYCRR Part 12.
ARTICLE 5
SECURITY
5.1 Letter of Credit.
(A) Seller shall provide security in the form of a letter of credit in
the amounts and at the times set forth in Appendix C. The amounts set forth in
Appendix C shall not be subject to escalation or subsequent adjustment, except
if the capacity is redesignated pursuant to Article 1.20, in which case the
amounts in Appendix C will be adjusted on a pro rata basis. Upon termination by
reason of Seller's breach of this Agreement or Seller's termination under
Article 12.3(B), Buyer shall have
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the right to the amounts secured by the letter of credit only to the extent that
the Present Worth of payments for Deliveries and curtailed kWh subject to
pricing under Article 4.5 is greater than the Present Worth of LRAC plus
interest at the rate of eleven percent (11%) from the Date of Initial Commercial
operation to the date of termination on any difference in such amounts.
(B) For purposes of Article 5.1(A):
(1) The term "LRAC" means the long run avoided costs of energy
and capacity calculated using:
(a) avoided capacity cost projections for On-Peak Periods as
shown in Appendix B; and
(b) the actual avoided energy costs for the On-Peak Periods
and Off-Peak Periods of each Annual Period which occurred prior
to the date of such calculation, based upon a tariff in effect
designed to reflect current avoided energy costs or PSC-approved
data reflecting current avoided energy costs if such data is
more current than the tariff or if the tariff is not in effect.
(2) The term "Present Worth" means the cumulative present worth
as calculated to the Date of Initial Commercial Operation using an
eleven percent (11%) discount rate and, with respect to any Deliveries
and
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curtailed kWh subject to pricing under Article 4.5, shall reflect the
difference between rates for On-Peak Periods and Off-Peak Periods.
(3) The term "Present Worth of LRAC" means the cumulative present
worth of LRAC as calculated to the Date of Initial Commercial
Operation using an eleven percent (11%) discount rate based upon
Deliveries and curtailed kWh subject to pricing under Article 4.5 up
to the time of termination of this Agreement.
5.2 Other Forms of Security. Seller may propose other forms of security
with respect to the amounts specified in Appendix C as may be adjusted under
Article 5.1, which other forms may include insurance, performance bonds or
corporate guarantees or any combination thereof. Buyer may, in its sole
discretion, agree to any such proposal in lieu of the security required in
Article 5.1.
ARTICLE 6
PAYMENT
6.1 General. Buyer shall pay Seller, upon Seller's written notice of the
name and address of its bank, by electronic transfer of funds to Seller's bank
on or before the twentieth (20th) day of each month for the Electricity
Delivered to or curtailed by Buyer during the preceding month, according to
rates applicable under this Agreement.
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6.2 Preparation of Statement.
(A) In the case of a Direct Interconnection, Buyer shall read the
meters at the end of each calendar month in accordance with Article 7. Along
with the payment under Article 6.1, Buyer shall enclose a statement explaining
the basis of the calculation of the payment amount, including the applicable
rate, the total Electricity Delivered and curtailed and any interest charges.
(B) In the case of an Indirect Interconnection, Seller shall prepare
and submit a xxxx to Buyer on or before the fifth (5th) day of each month. If
Seller's xxxx is received after the due date for such xxxx, the due date of the
payment shall be extended by a corresponding number of days. Seller shall
enclose along with each xxxx a statement explaining how the xxxx was calculated.
(C) Neither Party shall be precluded from making claims for
adjustments on account of subsequently discovered errors.
6.3 Dispute.
(A) Upon receipt of any statement, the Party receiving such statement
shall examine the accompanying statement to ensure that it has been calculated
correctly, and shall promptly notify the other Party of any errors therein which
the receiving Party in good faith believes have been made along with the facts
-22-
providing the basis for such belief. The other Party will promptly review the
receiving Party's complaint.
(B) If the Parties are unable to agree upon a settlement of the
contested portion of any statement or xxxx, after the Parties have availed
themselves of their rights to meter testing as provided in Article 7, the
dispute shall be settled in accordance with procedures of the PSC similar to
those set forth in 16 NYCRR Part 12 for the resolution of disputes. The
existence of a dispute with regard to any payment due shall not relieve either
Party of any obligation to pay any uncontested amounts due under this Agreement
or from fulfilling any other obligation under this Agreement.
6.4 Interest. If either Party shall fail to make any payment required by
this Agreement when due, including contested portions of bills, or if Buyer
makes an overpayment requiring a refund by Seller (other than related to the
Fuel Component Ceiling), the amount due shall bear interest, from the due date
of the payment or the date on which the overpayment was made until the date of
payment, at a rate equal to 200 basis points over the prime lending rate in
effect during the period of nonpayment or overpayment, as quoted to substantial
commercial customers by Chase Manhattan Bank, N.A., or its successors.
Remittance agreed to be received by mail will be accepted without interest
charges if such payment was mailed on or before the due
-23-
date. If the due date of any payment falls on a Sunday or legal holiday, the
next business day shall be the last day on which payment can be mailed or paid
without interest charges being assessed.
ARTICLE 7
METERING
7.1 Measurement. In the case of a Direct Interconnection, Electricity will
be measured by electric meters and associated equipment of a type approved by
the PSC, which meters and equipment shall be installed on Buyer's side of the
Point of Interconnection, and owned, installed, operated and maintained by Buyer
at Seller's expense. Such meters shall be of a type to record hourly readings
and shall be capable of being read by both Buyer and Seller. The Seller shall,
at its own expense, furnish and provide for the installation and maintenance of
mounting facilities for such meters and associated equipment.
7.2 Testing of Meters. In the case of a Direct Interconnection, the
metering equipment shall be sealed and the seals shall be broken only upon
occasions when the meters are to be inspected, tested or adjusted, and
representatives of the Seller shall be afforded reasonable opportunity to be
present upon such occasions. Periodic tests of such metering equipment, at
intervals not to exceed those prescribed by the PSC's
-24-
regulations for comparable meters, will be made by Buyer at Seller's expense and
additional tests will be made at any reasonable time upon request by the Seller.
If a test of the metering equipment is made at the request of the Seller with
the result that such metering equipment is found to be registering correctly or
within plus or minus two percent (2%), the Seller shall bear the expense of such
test; provided that if such test shows an error greater than plus or minus two
percent M), then Buyer shall bear the expense of such test unless such error was
caused by Seller. All meters shall be adjusted as close as practical to one
hundred percent (100%) accuracy at the time of installation and testing and any
subsequent adjustment.
7.3 Adjustments. If any of the metering equipment tests provided for in
Article 7.2 disclose that the error for such equipment exceeds plus or minus two
percent (2%), then one-half (1/2) of the readings of such metering equipment
taken during the billing periods since the last test of such equipment was made
will be adjusted, either upward or downward, to correct for such error, unless
there is verifiable information available upon which a more accurate adjustment
can be made, including readings from Seller-installed or, in the case of an
Indirect Interconnection, Buyer-installed, meters. Any correction in billing
resulting from such correction in meter readings shall be made over a reasonable
period of time, to be agreed upon by the
-25-
Parties, but in no event over a period greater than the three (3) succeeding
billing periods after the inaccuracy is verified, and such correction when made
shall, in the absence of bad faith, fraud, or intentional wrongdoing, constitute
a complete and final settlement of any claim arising between the Parties hereto
out of such inaccuracy of the metering equipment.
7.4 Additional Meters. in the case of a Direct Interconnection, Seller
shall have the right to install its own meters and shall maintain them according
to standards prescribed by 16 NYCRR Part 92. In the event Seller's meters are
used under Article 7.3 and Seller's metering point is on the low-voltage side of
the transformer, an adjustment for transmission and transformation losses will
be made to such meter readings.
7.5 Monitoring Equipment. Prior to commencement of Commercial Operation,
Seller shall install, to specifications provided by Buyer and at Seller's
expense, adequate metering and telephone equipment to transmit to Buyer's Energy
Control Center information that will allow Buyer to monitor Seller's generation
of Electricity, including equipment to provide Buyer continuous (every 15
seconds) telemetry of real power, reactive power, voltage, breaker and switch
status, such communication channel(s) as required to transmit such data to
Buyer, and receiving equipment at Buyer's end of the communication channel(s).
Seller shall pay the monthly charges associated with such communication
channel(s).
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ARTICLE 8
PROCEDURES FOR INTERCONNECTION AND
INSTALLATION OF INTERCONNECTION FACILITIES
8.1 General. Seller shall use a Direct Interconnection, unless a Direct
Interconnection is not feasible or the costs to Seller are substantially in
excess of the costs Seller would incur in providing Electricity through an
Indirect Interconnection.
8.2 Procedures.
(A) In the case of a Direct Interconnection, interconnection of the
Seller's Plant with Buyer's electric system shall be governed by the
requirements and conditions contained in Buyer's Specification EO-2115
(interconnections) and Specification EO-4133 (operation and maintenance), as
amended to the date of this Agreement, which is incorporated herein by reference
and with which terms and conditions the Parties hereby agree to be bound. If the
Seller and Buyer are unable to agree on application procedures, information
requirements, schedules and deadlines, or interconnection costs, equipment or
procedures, or compliance with the foregoing, either Party may petition the PSC
to resolve the dispute, subject to judicial review. Buyer shall not, by reason
of review, inspection, or approval of the Plant or any equipment related
thereto, or failure to review, inspect, or approve the same, be responsible for
the strength,
-27-
details of design, adequacy or capacity of the Plant. Buyer hereby disclaims all
warranties, and shall not be liable, with respect to any of the foregoing.
(B) In the case of an Indirect Interconnection, Seller shall deliver
the Electricity to the Intervening Utility and shall schedule the delivery of
Electricity by the Intervening Utility at the Point of Interconnection for the
account of Seller.
8.3 Seller's Responsibility. Seller shall:
(A) at its cost and expense, construct, install, own and maintain the
interconnection facilities as required for Seller to deliver Electricity
from Seller's Plant at the Point of Interconnection;
(B) in the case of an Indirect Interconnection, pay the Intervening
Utility all charges for the scheduling and transmission of Electricity by
the Intervening Utility including transmission losses, if any, to the point
of physical connection between the Intervening Utility's system and Buyer's
electric system; and
(C) reimburse Buyer for the costs and expenses incurred in connection
with the installation of the Dedicated Facilities by Buyer under Article
8.4, provided that reimbursement shall not exceed an amount specified to
Seller within sixty (60) days of the date of execution of this Agreement.
-28-
8.4 Buyer's Responsibility. Buyer shall design, construct, and install
additional facilities on Buyer's side of the Point of Interconnection solely for
the receipt of Electricity by Buyer (herein referred to as "Dedicated
Facilities"). All Dedicated Facilities shall remain the property of Buyer. Buyer
shall submit a schedule for installation of such facilities within thirty (30)
days of PSC approval of this Agreement. Subject to receipt of all prepayments
due from Seller under Article 8.5, Buyer shall complete the installation of any
Dedicated Facilities necessary to permit actual deliveries of Electricity prior
to Seller's scheduled Initial Delivery Date of June 1, 1992 or twenty-four (24)
months after this Agreement is effective under Article 2.1, whichever last
occurs.
8.5 Payment Terms. Seller shall prepay to Buyer the cost of any such
facilities that Buyer must order and shall make payments in advance each month
for all other estimated costs and expenses scheduled to be incurred by Buyer
during the next succeeding month in connection with the installation of the
Dedicated Facilities, less ten percent (10%) retainage by Seller until
completion of the Dedicated Facilities. Upon completion of the Dedicated
Facilities, the actual and estimated costs and expenses incurred in connection
with the Dedicated Facilities shall be compared and the difference between them
shall be promptly paid by or reimbursed to Seller as appropriate.
-29-
8.6 Annual Reimbursement. During the term of this Agreement, on an annual
basis, Seller shall reimburse Buyer for expenses incurred by Buyer for the
operation and maintenance of the Dedicated Facilities at the rate specified in
Buyer's applicable tariff. In no event shall Seller be required in any Annual
Period to reimburse Buyer in amounts greater than nine percent (9%) of the
capital costs incurred by Buyer for the construction of the Dedicated
Facilities. An explanation of such expenses shall accompany each xxxx submitted
by Buyer. Either Party may petition the PSC to resolve disputes relating to such
bills, subject to judicial review.
ARTICLE 9
REARRANGEMENT, RELOCATION, RETIREMENT OR
ABANDONMENT OF BUYER'S FACILITIES
9.1 Relocation or Rearrangement. If, at some future time, Buyer determines
it necessary to relocate or rearrange its system to which the Plant is directly
connected or indirectly connected through the Intervening Utility, Buyer shall
advise Seller one year in advance in writing, explaining the proposed relocation
or rearrangement of Buyer's system. If such relocation or rearrangement is
ordered or required by governmental authority, Buyer shall give prior notice to
Seller equal in time to the notice given Buyer by such governmental authority,
to the extent
-30-
possible. Buyer will indicate the expenditure required for new facilities
proposed to reestablish the connection which the Buyer would not have incurred
but for the Seller's actual delivery of Electricity to the Buyer's electric
system. Seller will have the option of reimbursing Buyer for the cost of these
new facilities (which shall be Dedicated Facilities) or of providing its own
reasonable alternative interconnection to Buyer's system, provided that such
alternative interconnection is approved by Buyer.
9.2 Retirement or Abandonment. If, at some future time, Buyer determines it
necessary to retire or abandon any facilities to which the Plant is directly
connected or indirectly connected through the Intervening Utility, Buyer shall
advise Seller, at least one year in advance, in writing, indicating Buyer's
annual cost of facilities required exclusively to accommodate the output of the
Plant. Seller shall then have the option of paying Buyer for these annual costs
or of providing alternate interconnection of Buyer's system acceptable to Buyer.
Such alternate may be the purchase by Seller of Buyer's existing facilities,
which have been retired in place, at the price set for such purchase in
accordance with the PSC's final determination in Case 29318 or, if not so set,
at a price to be negotiated by the Parties. In the event Seller elects to pay
Buyer the annual charges associated with such facilities, said charges shall be
recomputed as of January 1 of every year.
-31-
ARTICLE 10
SUSPENSION OF BUYER'S OBLIGATION AND
DISCONNECTION OF PLANT FROM BUYER'S SYSTEM
10.1 Temporary Suspension of Buyer's Obligation to Accept Electricity.
Buyer's obligation to accept (but not its obligation pursuant to Article 4 to
pay for) Electricity generated by the Plant shall be suspended for any period of
time during which Buyer's system is physically unable to accept such Electricity
for reasons of repair, relocation or rearrangement of Buyer's system to which
the Plant is directly connected or indirectly connected through the Intervening
Utility, connection of other customers or generators of electricity, system
emergency or safety. Neither Party shall be liable for any indirect loss
incurred as a result of Buyer's inability to accept Electricity generated by the
Plant during such period.
10.2 Disconnection. If necessary, and solely for reasons set forth in
Article 10.1, Buyer may direct that the generating facility of the Plant be
disconnected from Buyer's system. Buyer shall give advance notice, as
circumstances permit, of the need for such disconnection to employees of Seller
designated from time to time by Seller to receive such notice. Upon receipt of
notice directing disconnection, Seller shall carry out the required action
without undue delay. Where circumstances do not permit such advance notice to
Seller or Seller's employees,
-32-
including circumstances in which Seller's Plant is unstaffed, or where Seller
fails to carry out the required action, Buyer may disconnect the generating
facility of the Plant from Buyer's system.
10.3 Restoration of Service and Reimbursement of Costs.
(A) During any period of disconnection, Buyer and Seller shall
endeavor to restore the interconnection as promptly as is reasonably possible.
(B) Seller shall bear any extraordinary cost reasonably incurred by
Buyer as a result of any such suspension, disconnection or reconnection under
this Article 10. An extraordinary cost is a cost that would not be incurred by
Buyer absent the existence of the Plant; provided, however, that such
extraordinary cost shall not include any incremental expenses incurred by Buyer
for the operation and maintenance of Dedicated Facilities which are reimbursed
by Seller pursuant to Article 8 or for the benefit of other Qualifying
Facilities.
ARTICLE 11
COORDINATION OF PLANT AND SYSTEM MAINTE14ANCE
11.1 Initial Operation Coordination. Seller shall notify Buyer in writing,
at least thirty (30) days prior to the anticipated Initial Delivery Date, of the
expected date when Electricity will first be actually delivered to Buyer. After
the
-33-
Initial Delivery Date, Seller shall promptly notify Buyer of its intention to
cease for forty-eight (48) hours or more actual deliveries from the Plant to
Buyer for any reason.
11.2 Operation Coordination.
(A) Not later than the end of any month which begins after the Date of
Initial Commercial Operation, Seller shall furnish to Buyer a schedule showing
Seller's expected actual deliveries to Buyer on an hourly basis for the
following month.
(B) Beginning with the Date of Initial Commercial Operation, Buyer may
request:
(1) by giving Seller at least four (4) hours prior notice, that
Seller curtail actual deliveries down to an output level not less than
eighty-two percent (82%) of the DMNC;
(2) by giving Seller at least twenty-four (24) hours prior
notice, during the first fifteen (15) Annual Periods of the Base Term, that
Seller curtail actual deliveries during any Weekend Period down to an
output level not less than forty-seven percent (47%) of the DMNC, provided
that Buyer may not request such curtailment more than once in any Weekend
Period; and
(3) by giving Seller at least twenty-four (24) hours prior
notice, during the last ten (10) Annual Periods of the Base Term, that
Seller curtail actual deliveries down
-34-
to an output level not less than forty-seven percent (47%) of the DMNC,
provided that Buyer may not exceed in any such Annual Period a ratio of one
(1) curtailment request under this Article 11.2(B)(3) for each fifty (50)
hours of Plant operation not subject to a request under this Article
11.2(B)(3).
(C) For purposes of Article 11.2(B), the term "Weekend Period" means
the period from 10:00 p.m. Friday through 8:00 a.m. Monday (Eastern Time).
(D) If Buyer requests any actual deliveries in excess of that which
Seller was otherwise intending to supply, to the extent Seller is capable of
actually delivering additional Electricity and such delivery is consistent with
other obligations of Seller as determined by Seller, Seller shall accommodate
such request to the maximum extent practicable. Buyer shall bear any additional
costs or expenses incurred by Seller.
(E) Seller agrees to design the Plant to be capable of start-up
without any outside power if there is a Direct Interconnection with Buyer.
(F) Seller shall not voluntarily disconnect from Buyer's electric
system in any emergency situation on Buyer's electric system, so long as such
emergency does not present an imminent threat to Seller's Plant or steam
customers.
-35-
11.3 Maintenance Coordination by Seller.
(A) Seller shall use reasonable efforts to coordinate with Buyer the
scheduling of any planned maintenance of the Plant, in order to ensure the sound
operation of the Plant and Buyer's system. Without prior approval of Buyer,
Seller shall not schedule planned outages of more than three days (including two
weekend days) in duration during the months of June through September except in
emergencies and in situations in which failure to maintain the Plant would, in
Seller's judgement, result in an unplanned outage. In such cases, Seller shall
give Buyer as much notice as possible. Seller shall provide to Buyer in writing
an annual schedule of expected maintenance outage periods (including expected
commencement date and duration) one year in advance of such periods and a notice
within fourteen (14) days of making any changes to such schedule. In addition,
Seller shall notify Buyer of the expected duration of a forced outage within
forty-eight (48) hours of its occurrence and provide to Buyer annually a written
three-year forecast of planned major overhauls.
(B) Beginning with the commencement of the sixteenth (16th) Annual
Period until the termination of this Agreement, Seller shall have and maintain
either: M an operation and maintenance agreement with a third person covering
major maintenance; or (ii) if Seller is performing maintenance of the
-36-
Plant itself, an escrow account sufficient to cover scheduled major Plant
overhauls as recommended by manufacturers of major equipment in the Plant.
11.4 Maintenance Coordination by Buyer. Buyer shall use reasonable efforts
to coordinate with Seller the scheduling of any planned maintenance of Buyer' s
facilities necessary to receive Electricity directly or indirectly from the
Plant and to schedule such maintenance during times when Seller has scheduled
maintenance of the Plant.
ARTICLE 12
QUALIFICATION UNDER FEDERAL LAW
12.1 Initial Certification. Seller shall, within thirty (30) days prior to
commencement of the Initial Delivery Date, and at such other times as requested
by Buyer in writing, certify to Buyer, and, if requested by Buyer, deliver to
Buyer evidence satisfactory to Buyer, as to whether the Plant is a Qualifying
Facility.
12.2 Subsequent Notification. Seller shall notify Buyer in writing, within
ten (10) days after Seller receives information or becomes aware, that the Plant
has temporarily or permanently ceased, or will cease, to be a Qualifying
Facility. Buyer may request such additional information, and request, after
reasonable notice, reasonable access to the Plant, to the extent
-37-
necessary to satisfy Buyer that the Plant continues to be a Qualifying Facility.
12.3 Loss of Qualifying Status.
(A) Notwithstanding the provisions of Article 4, in the event that,
during the term of this Agreement, the Plant temporarily or permanently ceases
to be a Qualifying Facility, then the rates to be paid to Seller for Electricity
shall be equal to ninety percent (90%) of the rate that would otherwise be
applicable pursuant to Article 4.
(B) As soon as practical after the Plant ceases to be a Qualifying
Facility, Seller agrees, if required under federal law, to file with the Federal
Energy Regulatory Commission ("FERC") the rate provided for herein; provided,
however, that if FERC approves or authorizes a rate other than the rate provided
for herein, the Parties agree to request FERC to apply such rate prospectively
from the date of its decision and to apply the rate provided for herein prior to
such date. Seller may terminate this Agreement without any further obligation or
liability of one Party to the other Party except as provided in Article 5.1 and
Article 12.3(C) if, as a result of ceasing to be a Qualifying Facility,
continued performance under this Agreement would result in Seller, or any person
having an ownership interest in Seller, becoming subject to regulation under the
Public Utility Holding Company Act of 1935 ("PUHCA"). Seller will use best
efforts to avoid being subject to regulation under PUHCA.
-38-
(C) (1) Prior to making any sales of electric energy and capacity from
the Plant committed to Buyer under this Agreement subsequent to a termination
under Article 12.3(B), Buyer shall have the right of first refusal to purchase
the Electricity under the terms of this Agreement for the remainder of the Base
Term, except if such purchase would result in Seller, or any person having an
ownership interest in Seller, becoming subject to regulation under PUHCA. If
Seller makes sales of electric energy and capacity from the Plant that would
have been otherwise committed to Buyer under this Agreement to any person other
than Buyer subsequent to a termination under Article 12.3(B), Seller shall pay
to Buyer as Buyer's sole measure of damages the difference between the revenues
Seller would have received pursuant to Article 4 (notwithstanding anything in
Article 12.3(A) and (B) to the contrary) and any higher amount of revenues
Seller receives as a result of such sales during the remainder of the Base Term.
(2) Subsequent to a termination under Article 12.3(B), Seller
shall have the right until the end of the Base Term to reinstate this Agreement
and deliver and sell Electricity to Buyer pursuant to the terms and conditions
of this Agreement, if reinstatement of this Agreement does not materially
adversely affect Buyer. It shall not be deemed to materially adversely affect
Buyer if reinstatement of this
-39-
Agreement is requested within twelve (12) months of a termination under Article
12.3(B).
ARTICLE 13
DEPENDABLE MAXIMUM NET CAPABILITY (DMNC)
13.1 Plant Capability. The DMNC of the Plant available for delivery to
Buyer shall be determined in accordance with this Article 13.1:
(A) As soon as practicable after the Plant goes into Commercial
Operation, and every June thereafter, a capability test shall be conducted
to determine the DMNC of the Plant in accordance with the New York Power
Pool Methods and Procedures 2-10. The DMNC shall be the sustained maximum
net output of the Plant averaged over a four-hour period, adjusted to the
average ambient temperature experienced at the Plant at the time of Buyer's
summer peaks during the previous four xxxxxxx, less the electric capacity
committed by Seller to its steam customers. If, during the DMNC test, the
Plant's steam sendout to Seller's thermal customer for any hour is less than
the maximum hourly steam sendout committed by Seller to such customer during
the period June I to September 15, and if such reduction of steam sendout
results in a higher DMNC than would have resulted without such reduction,
then the maximum net
-40-
electric output of the Plant for such hour used to calculate the DMNC shall be
reduced to reflect the reduction of steam sendout during such hour.
(B) Notification that Seller intends to perform the test must be given to
Buyer at least forty-eight (48) hours prior to commencement of the test and
shall specify the hours during which the test will be conducted. Buyer shall
have the right to have one or more of its representatives observe such tests.
Within ten (10) days after conducting the capability tests, Seller shall provide
to Buyer the results of such tests, including kWh meter readings and copies of
actual log sheets verifying the net output of the Plant and a curve of the net
output compared to ambient temperature.
(C) Until the first capability test, capacity payments to Seller shall be
based on a DMNC equal to the capacity designated or redesignated under Article
1.20. If the first capability test results in a DMNC of other than such amount,
the prior capacity payments shall be recalculated by substituting the actual
DMNC for the assumed amount. Adjustments in payments shall be made within thirty
(30) days from the capability test.
-41-
(D) Seller shall use its best efforts to conduct the DMNC test during the
month of June, or as soon thereafter as practicable, but in no event shall the
DMNC test be conducted after September 15. Payments to Seller under Article 4
for each twelve-month period beginning June 1 shall be based on the DMNC of the
Plant determined pursuant to the capability test conducted during June 1 to
September 15 of such twelve-month period. If necessary, such payments shall be
based on the DMNC determined during the prior twelve-month period, with
adjustments in payments to be made within thirty (30) days after the DMNC test
is performed for the current period.
(E) Seller shall also conduct an annual winter capability test of the
Plant, between November I and April 15, to determine the sustained maximum net
output of the Plant available for delivery to Buyer, averaged over a four-hour
period, adjusted to the average ambient temperature experienced at the Plant at
the time of Buyer's winter peaks during the previous four xxxxxxx. Buyer's right
to receive prior notice of such tests, to observe such tests, and to receive the
results of such tests, shall be the same as provided above for the DMNC tests.
However, the results of the annual winter capability tests may be used solely
for informational purposes and shall not be used to
-42-
calculate payments due by Buyer to Seller under this Agreement or for any
purposes for which DMNC is otherwise used under this Agreement.
13.2 Expected Deliveries to Buyer. Not later than May 1 of each Annual
Period, Seller shall provide Buyer with an estimate of the expected average
maximum actual deliveries (expressed in kw) to Buyer during the On-Peak Periods
of the immediately succeeding summer season.
ARTICLE 14
TERMINATION PRIOR TO INITIAL OPERATION
14.1 Events of Termination. Upon the occurrence of any one of the following
events, either Party may terminate this Agreement, upon written notice to the
other Party within sixty (60) days of the occurrence of such event, without any
further obligation or liability of one Party to the other Party, except as
provided in Article 14.2:
(A) Seller's failure, within thirty (30) months after final approval
of this Agreement by the PSC, either to commence material construction of
the Plant or to have executed an enforceable contract for the delivery of
major Plant equipment and/or machinery; provided, however, that Buyer shall
grant Seller up to twelve (12) month-by-month extensions of this deadline
upon W a showing by Seller
-43-
that it is diligently pursuing commencement of construction, and (ii) the
posting by Seller of an additional deposit in the amount of $.10 per kW per
month;
(B) Seller's failure to commence Commercial Operation of the Plant within
sixty (60) months after final approval of this Agreement by the PSC, unless such
failure is due solely to Buyer's failure to complete installation of facilities
necessary to permit actual deliveries of Electricity pursuant to Article 8.4 and
provided, however, that Buyer shall grant Seller up to twelve (12) month-by-
month extensions of this deadline upon M a showing by Seller that it is
diligently pursuing commencement of Commercial Operation and Commercial
Operation can reasonably be expected to commence within seventy-two (72) months
after final approval of this Agreement by the PSC, and (ii) the forfeiture by
Seller of an amount equal to $.10 per kW per month;
(C) Seller's failure to post with Buyer:
(1) an initial deposit of four dollars ($4.00) per kW designated
pursuant to Article 1.20 within six (6) months of the approval of this
Agreement by the PSC;
-44-
(2) an additional deposit of six dollars ($6.00) per kW designated
pursuant to Article 1.20 within one (1) year of the posting of the initial
deposit; and
(3) an additional deposit of five dollars ($5.00) per kW designated
pursuant to Article 1.20 within thirty (30) months after approval of this
Agreement by the PSC.
Such deposits shall be posted either in cash or by an irrevocable letter of
credit, for a term ending not earlier than the milestone date of Commercial
Operation from a financial institution rated at least "AA"; and
(D) in the case of an Indirect Interconnection, Seller's failure to execute
a letter of intent with the Intervening Utility to provide transmission
services within twelve (12) months after Seller notifies Buyer, which
notification shall be within twelve (12) months of final PSC approval of this
Agreement, that a Direct Interconnection will not be used or Seller's failure
to execute a wheeling agreement with the Intervening Utility at least six (6)
months prior to the Date of Initial Commercial Operation.
14.2 Milestone Deposits. Cash deposits specified in Article 14.1 shall be
held by Buyer in escrow and invested in, at Seller's option, either Certificates
of Deposit or U.S. Treasury Bills with terms ending no later than the milestone
date of
-45-
Commercial operation. The deposits, together with interest thereon, will be
refunded by Buyer to Seller upon Commercial Operation. To the extent that
Commercial operation occurs prior to the date a deposit is required as specified
above, Seller shall not be required to make such deposit. Seller will forfeit
deposits posted, but not the interest accrued thereon, in the event this
Agreement is terminated pursuant to the provisions of this Article 14.
ARTICLE 15
BREACH OF CONTRACT, TERMINATION, AND REMEDIES
15.1 Breach. A breach of this Agreement shall be deemed to exist upon the
occurrence of any one or more of the following events:
(A) Failure by either Party to pay any amount due under this Agreement
which continues for a period of thirty (30) days after notice of such non-
payment;
(B) Failure by Seller, during a period of one-hundred twenty (120)
days after the Plant has ceased to operate, to use good faith efforts to
resume actual delivery of Electricity to Buyer pursuant to this Agreement;
(C) Failure by either Party to substantially perform any material
obligation under this Agreement, which failure continues for sixty (60)
days after notice of such
-46-
nonperformance; provided, however, that this Agreement shall not terminate if
such Party diligently commences to cure such failure within such sixty (60) day
period and for so long as such Party diligently continues such efforts;
(D) By order of a court of competent jurisdiction, a receiver or liquidator
or trustee of either Party, or of a substantial part of the assets of either
Party, shall be appointed, and such receiver or liquidator or trustee shall not
have been discharged within a period of sixty (60) days; or by decree of such a
court, a Party shall be adjudicated bankrupt or insolvent or a substantial part
of the assets of such Party shall have been sequestered, and such decree shall
have continued undischarged and unstayed for a period of sixty (60) days after
the entry therof; or a petition to declare bankruptcy or to reorganize a Party
pursuant to any of the provisions of the Federal Bankruptcy Code, as it now
exists or as it may hereafter be amended, or pursuant to any other similar state
statute applicable to such Party, as now or hereafter in effect, shall be filed
against such Party and shall not be dismissed within sixty (60) days after such
filing; or
(E) Either Party shall file a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law or shall consent to the filing
of any
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bankruptcy or reorganization petition against it under any similar law;
or, without limitation of the generality of the foregoing, a Party shall
file a petition or answer or consent seeking relief or assisting in
seeking relief in a proceeding under any of the provisions of the
Federal Bankruptcy Code, as it now exists or as it may hereafter be
amended, or pursuant to any other similar state statute applicable to
such Party, as now or hereafter in effect, or an answer admitting the
material allegations of a petition filed against it in such a
proceeding; or a Party shall make an assignment for the benefit of its
creditors; or a Party shall admit in writing its inability to pay its
debts generally as they become due; or a Party shall consent to the
appointment of a receiver or receivers, or trustee or trustees, or
liquidator or liquidators of it or of all or a substantial part of its
assets.
15.2 Termination. If either Party claims that the other Party has
breached this Agreement, as defined in Article 15.1, it shall provide such other
Party with written notice thereof. If, within fifteen (15) days of the service
of such notice, such other Party disputes in writing that a breach by it has
occurred, either Party may bring such dispute to the PSC for resolution
according to the PSC's Rules of Procedure, and this Agreement shall not be
terminated by the Party claiming the breach prior to
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such resolution by the PSC; provided, however, that the Party claiming the
breach may petition the PSC for summary dismissal of the petition to resolve the
dispute on the ground that the dispute is not bona fide.
15.3 Cure by Lender. Buyer shall have no right to terminate this Agreement
unless Buyer has provided any Lender notice of a breach specified above at the
same time as Buyer has provided notice to Seller pursuant to Article 15.2, to
the extent that Seller gives Buyer actual notice of appropriate contact persons
and addresses. Any such Lender shall have the same right to cure such a breach
as Seller, which right shall remain in effect for an additional thirty (30) days
after the last day Seller could have cured such breach. In the case of a breach
due to an event specified in Articles 15.1(D) or 15.1(E), Buyer shall have no
right to terminate this Agreement if Lender has diligently commenced and is
diligently continuing to exercise its remedies under any financing documents.
15.4 Remedies. In the event the Party alleged to be in breach fails to cure
and the dispute has not been brought to the PSC within the time period described
in Article 15.2, or the PSC determines that a breach has occurred and the
breaching Party does not cure such breach within the time period specified
above, or, to the extent it cannot be cured in such time period, the breaching
Party has not diligently commenced to cure such breach
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within such time period, or has commenced such cure but does not diligently
continue such efforts thereafter, this Agreement may be terminated by the non-
breaching Party. Upon such termination, the non-breaching Party shall be
entitled to such damages as are available at law and equity, except that neither
Party shall be liable for any punitive, special or consequential damages by
reason of a breach of this Agreement.
ARTICLE 16
SPECIFIC PERFORMANCE
Without regard to the requirements or provisions of Article 15 or any other
provision of this Agreement, in addition to any of the rights and/or remedies
referred to in this Agreement, either Party shall have the right to institute an
action against the other Party in any court to obtain specific performance by
such other Party of any of such other Party's obligations under this Agreement.
ARTICLE 17
RIGHT TO OPERATE
If Seller shall permanently cease to operate the Plant prior to the end of
the term of this Agreement, and if operation of the Plant is not assumed by a
Lender, any steam customer of the Plant, or their successors or assigns, Buyer
shall have the right
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to operate the Plant for part or the remainder of the term of this Agreement as
long as Buyer assumes all of Seller's obligations with regard to the Plant,
including any lease or sublease obligations or any obligations to any Lender.
ARTICLE 18
INDEMNIFICATION AND INSURANCE
18.1 Indemnification.
(A) Each Party shall indemnify, save harmless and defend the other,
its trustees, agents, officers, directors and employees, against all claims,
demands, judgments and associated costs and expenses, related to property
damage, bodily injuries or death suffered by third persons resulting from any
act or failure to act by such Party related to this Agreement.
(B) Each Party hereto shall promptly furnish the other Party with
written notification (but in no event later than ten (10) days prior to the time
any response is required by law) after such Party becomes aware of any event or
circumstance which might give rise to such indemnification.
(C) At the indemnified Party's request, the indemnifying Party shall
defend any suit asserting a claim covered by this indemnity and shall pay all
costs and expenses (including reasonable attorney's fees and expenses) that may
be incurred in enforcing this indemnity. The indemnified Party may,
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at its own expense, retain separate counsel and participate in the defense of
any such suit or action. The indemnifying Party shall not compromise or settle a
claim hereunder without the prior written consent of the indemnified Party;
provided, however, that in the event such consent shall be withheld, then the
liability of the indemnifying Party shall be limited to the aggregate of the
amount of the proposed compromise or settlement, the amount of counsel fees and
expenses outstanding at the time such consent shall have been withheld, and the
amount of any outstanding claim against which indemnification applies and which
is not covered by the proposed compromise or settlement (together with all costs
and expenses associated with such outstanding claim). Thereafter, the Party
withholding such consent shall hold harmless and reimburse the indemnifying
Party, upon demand, for the amount of any additional liability, counsel fees and
expenses incurred by the indemnifying Party over and above the amounts described
above after the time such consent shall have been withheld.
(D) To the extent one Party disputes its obligation to indemnify the
other Party, it shall not be considered a breach of this Agreement for such
Party to fail to perform under Article 18.1(C) until such time as such Party is
determined to have the obligation to indemnify under Article 18.1(A).
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18.2 Insurance.
(A) Seller, with respect to the Plant, and Buyer, each at its own cost
and expense, shall maintain and keep in full force and effect:
(1) General comprehensive bodily injury and property damage
insurance of at least five million dollars ($5,000,000) per occurrence for
bodily injury and at least one million dollars ($1,000,000) per occurrence
for property damage for damages resulting from the operations of Buyer or
Seller, as the case may be; and
(2) Statutory workers' compensation insurance and employer's
liability insurance.
(B) Seller shall maintain and keep in full force and effect insurance
against loss or damage to the Plant in amounts not less than the actual full
replacement value of the Plant.
(C) Seller shall cause Buyer to be named as an additional insured on
such insurance policy with regard to comprehensive bodily injury and property
damage insurance for acts and/or omissions that are solely and directly caused
by Seller.
(D) Should either Party not be able to acquire coverage in a manner or
amounts specified at reasonable rates, such Party shall obtain such amount of
coverage as is commercially available.
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(E) Seller shall arrange to have its insurance carriers send Buyer a
copy of all notices affecting Seller's insurance coverages required under this
Article 18.
18.3 Self-Insurance.
(A) Buyer reserves the right to self-insure either all or any portion
of the foregoing coverages.
(B) Upon a showing satisfactory to Buyer that Seller has sufficient
net worth or other assets in place to self-insure for purposes of Article 18.2,
Seller shall have the right to self-insure either all or any portion of the
foregoing coverages so long as there is no material decrease in such net worth
or assets which renders the same insufficient for purposes of self-insurance.
ARTICLE 19
ACCESS AND NONINTERFERENCE
19.1 Access. To the extent Seller owns any facility in which Buyer has
placed its equipment, Seller grants to Buyer (including Buyer's duly authorized
agents and representatives) for the term of this Agreement a right to access
consistent with the terms of any ground lease obligations of Seller, at all
reasonable hours, and, in an emergency immediately upon request, to such
facility to construct, install, operate, maintain, repair, replace, inspect and
remove Buyer's equipment and
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facilities consistent with Buyer's obligations and rights under this Agreement
and Seller shall execute such documents as may be reasonably required to enable
Buyer to record such right of access.
19.2 Noninterference. Each Party agrees that it will not construct any
facilities or structures or engage in any activities that will materially
interfere with the rights granted to the other Party under this Agreement,
subject to the provisions of Article 9 (rearrangement).
ARTICLE 20
FORCE MAJEURE
20.1 Definition. The term "force majeure" as used herein, shall include but
not be limited to acts of God, fires, floods, storms, strikes, labor disputes,
riots, insurrections, acts of war (whether declared or otherwise), acts of
governmental, regulatory, or judicial bodies, or any other causes beyond the
reasonable control of and without the fault or negligence of the Party claiming
force majeure.
20.2 Effect of Force Majeure. If either Party because of force majeure is
rendered wholly or partly unable to perform any of its obligations under this
Agreement, except for the obligation to make payments of money, that Party shall
be excused from whatever performance is affected by the force majeure to the
extent so affected, provided that:
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(A) the non-performing Party, within fourteen (14) days after it becomes
aware or should have become aware that it would be unable to perform, gives the
other Party written notice describing the particulars of the occurrence;
(B) the suspension of performance is of no greater scope and of no longer
duration than is required by the force majeure;
(C) no obligations of either Party which arose before the occurrence
causing the suspension of performance are excused as a result of the occurrence;
and
(D) the non-performing Party endeavors to remedy its inability to perform.
This paragraph (D) shall not require the settlement of any strike, walkout,
lockout or other labor dispute on terms which, in the sole judgment of the Party
involved in the dispute, are contrary to its interest. It is understood and
agreed that the settlement of strikes, walkouts, lockouts or other labor
disputes shall be entirely within the discretion of the Party having the
difficulty.
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ARTICLE 21
ASSIGNMENT OR TRANSFER
21.1 General. Except as otherwise provided in this Article 21, neither this
Agreement nor any rights hereunder may be assigned or transferred, by operation
of law or otherwise, by either Party without the prior written consent of the
other Party.
21.2 Permitted Assignments. Upon thirty (30) days prior written notice to
Buyer, Seller may, without the consent of Buyer, assign this Agreement to a
Lender, to an entity controlling, controlled by, or under common control with
Seller ("Affiliate"), or to a partnership in which Seller or an Affiliate is a
partner, provided that such assignment shall not relieve Seller of its
obligations under this Agreement. Such prior notice to Buyer shall specify the
entity to whom payments under Article 6 are to be made subsequent to the
effective date of the assignment.
21.3 Other Assignments. If Seller has not been notified in writing by Buyer
that Seller is in breach of this Agreement under Article 15, Seller may also
assign this Agreement without the consent of Buyer, subject to the following
conditions. Seller shall provide at least thirty (30) days prior to the
effective date of the proposed assignment an assignment and assumption
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agreement duly executed by the Seller and the assignee providing that the
assignee unconditionally assumes, and agrees to be bound by, all of the terms
and conditions of this Agreement, and whereby the assignee makes certain
additional representations and warranties as appropriate for assignee as
contained in Article 22.1.
21.4 Sale of Plant. If the Plant is sold to any person, this Agreement
shall be assigned to the purchaser in accordance with this Article 21 and the
purchaser shall unconditionally assume Seller's obligations hereunder as a
condition to the effectiveness of the sale. Seller agrees to execute such
documents as may be reasonably required to enable Buyer to record notice that
this Agreement must be assigned to, and assumed by, any purchaser of the Plant
as a condition of transfer of legal title to the Plant.
21.5 Novation. No assignment by Seller, including an assignment permitted
to be made without consent of Buyer, shall result in a novation of this
Agreement unless Buyer consents in writing to such novation.
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ARTICLE 22
REPRESENTATIONS AND WARRANTIES
22.1 Seller's Representations. Seller makes the following representations
and warranties as the basis for the benefits and obligations contained in this
Agreement:
(A) Seller represents that it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and will
be qualified to do business under the laws of the States of New York and
New Jersey not later than the Initial Delivery Date and has the corporate
power and corporate authority to own its properties, to carry on its
business as now being conducted, to enter into this Agreement and carry out
all obligations on its part to be performed under and pursuant to this
Agreement.
(B) Seller represents and warrants that, to the best of Seller's
knowledge, information and belief available on the Date of Initial
Commercial Operation, Seller will be in compliance with all laws, judicial
and administrative orders, rules and regulations, with respect to the
ownership, lease or possession and operation of the Plant, including the
following: all requirements to obtain and comply with the conditions of any
applicable certificates,
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licenses, permits and governmental approvals, including all applicable
environmental requirements. Seller will use best efforts to maintain the
Plant's Qualifying Facility status throughout the term of this Agreement.
(C) Seller represents and warrants that all corporate, partnership or
other organizational consents and authorizations required for Seller to
execute and deliver this Agreement have been obtained.
22.2 Buyer's Representations. Buyer makes the following representations and
warranties as the basis for the benefits and obligations contained in this
Agreement:
(A) Buyer represents and warrants that it is a corporation duly
organized, validly existing and qualified to do business under the laws of
the State of New York, is in good standing under its certificate of
incorporation and the laws of the State of New York, and has the corporate
power and authority to own its properties, to carry on its electric utility
business as now being conducted, to enter into this Agreement and the
transactions contemplated hereby, and to perform and carry out all
obligations on its part to be performed under and pursuant to this
Agreement. Buyer further warrants that this Agreement shall be binding for
the term hereof on the Buyer and its successors and assigns.
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(B) Buyer represents and warrants that action required on its part to
execute and deliver this Agreement has been completed.
(C) Buyer represents and warrants that all corporate, partnership or other
organizational consents and authorizations required for Buyer to execute and
deliver this Agreement have been obtained.
ARTICLE 23
AMENDMENTS, APPROVAL OF AMENDMENTS
This Agreement shall not be amended unless such amendment is in writing and
signed by the Parties. Any such amendment shall not become effective as to the
Parties or their successors until such amendment is accepted or approved by the
PSC.
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Binding Effect. This Agreement shall inure to the benefit of and shall
be binding upon the Parties and their respective successors and assigns.
24.2 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument.
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24.3 Notices. Where notice is required by this Agreement, all notices,
certificates or other communications hereunder shall be in writing and shall be
deemed given when mailed by United States registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
(A) To Seller:
at 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxx
(B) To Buyer:
at 0 Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Vice President-Planning
and Inter-Utility Affairs
or to such other and different person or address as may be designated by the
Parties.
24.4 Prior Agreements Superseded. This Agreement shall completely and fully
supersede all other prior understandings or agreements, both written and oral,
between the Parties relating to the subject matter hereof.
24.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
24.6 Specific Waiver. Seller hereby waives any right it may have under law
to any minimum payment for Electricity under this Agreement and Buyer hereby
waives any right it may have to
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refuse, by reason of any maximum price requirement under law, to make payments
for Electricity under this Agreement at the rates specified herein.
24.7 Waiver. No delay or omission in the exercise of any right under this
Agreement shall impair any such right or shall be taken, construed or considered
as a waiver or relinquishment thereof, but any such right may be exercised from
time to time and as often as may be deemed expedient. In the event that any
agreement or covenant herein shall be breached and thereafter waived, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their proper officers thereunto duly authorized as of the date
written below.
CONSOLIDATED EDISON COMPANY OF
NEW YORK, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------
Title: Vice President
---------------------------
Dated: 4/14/89
---------------------------
COGEN TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. XxXxxx
------------------------------
Name: Xxxxxx X. XxXxxx
----------------------------
Title: President
---------------------------
Dated: 4/14/89
---------------------------
