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EXHIBIT 10.18
WHOLESALE STANDARD OFFER SERVICE AGREEMENT
Wholesale Standard Offer
Service Agreement
between
Blackstone Valley Electric Company
Eastern Edison Company
Newport Electric Corporation
and
NRG Energy Power Marketing Inc.
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TABLE OF CONTENTS
ARTICLE 1. Definitions ................................................... 2
ARTICLE 2. Term .......................................................... 4
ARTICLE 3 Supplier Responsibilities ..................................... 4
ARTICLE 4. Estimation of Hourly Loads and Reporting to the ISO ........... 5
ARTICLE 5. Price ......................................................... 6
ARTICLE 6. Billing and Payments .......................................... 7
ARTICLE 7. Security Provisions ........................................... 8
ARTICLE 8. Events of Default, Liability, Relationship of the Companies ... 10
ARTICLE 9. Termination ................................................... 12
ARTICLE 10. Force Majeure ................................................. 12
ARTICLE 11. Assignment .................................................... 13
ARTICLE 12. Successors and Assigns ........................................ 13
ARTICLE 13. Resolution of Disputes ........................................ 13
ARTICLE 14. Interpretation ................................................ 15
ARTICLE 15. Severability of Provisions .................................... 15
ARTICLE 16. Accounts and Records .......................................... 15
ARTICLE 17. Limitations on Liability and Indemnification .................. 15
ARTICLE 18. Regulation .................................................... 16
ARTICLE 19. Notices ....................................................... 16
ARTICLE 20. Miscellaneous ................................................. 17
APPENDIX A SCHEDULE OF SUPPLIER'S SHARE of STANDARD OFFER SERVICE
AND STANDARD OFFER WHOLESALE PRICE
APPENDIX B SO REBATE
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WHOLESALE STANDARD OFFER SERVICE AGREEMENT
This Wholesale Standard Offer Service Agreement ("Agreement"), is made
and entered into this 13th day of October, 1998, between Eastern Edison Company,
("Eastern") a Massachusetts Corporation, Blackstone Valley Electric Company
("Blackstone"), a Rhode Island Corporation; and Newport Electric Corporation
("Newport"), a Rhode Island Corporation (referred to individually as the
'Company" or collectively as the "Companies"), on the one hand, and NRG Energy
Power Marketing Inc. ("Supplier"), on the other hand.
WHEREAS, the Supplier will purchase certain electric resources from
Montaup Electric Company, under an asset purchase agreement, (the "Asset
Purchase Agreement") dated as of October 13, 1998; and as condition of such
purchase and sale Supplier is required to assume a share of the Companies'
Standard Offer Service under this Agreement; and
WHEREAS, the Companies are required to provide firm all-requirements
service to any retail customer that is eligible for and is taking Standard Offer
Service in accordance with the Settlement Agreements; and
WHEREAS, this Agreement provides for the transfer, from the Companies
to Supplier, of the responsibility for providing firm all-requirements electric
service including capacity, energy, reserves, losses and other related services
necessary to serve a specified share of the Companies' aggregate load of retail
customers taking Standard Offer Service; and
WHEREAS, by entering into this Agreement, Supplier agrees to provide
and the Companies agree to receive and pay for electricity provided in
accordance with the terms and conditions of this Agreement and the applicable
Appendices, subject to any actions by any governmental bodies having regulatory
jurisdiction over services rendered hereunder.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements contained herein. Supplier and Companies agree to the terms and
conditions as set forth below:
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ARTICLE 1. Definitions
Whenever used in this Agreement, the following terms shall have the
following meanings. In addition, except as otherwise expressly provided, where
terms used in this Agreement are defined in the Restated NEPOOL Agreement and
not otherwise defined herein, such terms shall have the meanings given them in
the Restated NEPOOL Agreement.
"Affiliate" shall mean any other entity (other than an individual)
that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such entity. For purposes of
the foregoing the definition of "control" means the direct or indirect ownership
of more than seventy percent of the outstanding capital stock or other equity
interest having ordinary voting power.
"Agreement" shall mean this Agreement, including its Appendices as
amended from time to time.
"Commencement Date of Service" shall mean the later of the Closing
Date as defined in the Asset Purchase Agreement or the date on which required
regulatory approvals have been obtained.
"Contract Year" shall mean any calendar year, or in the case of 1998
part of a calendar year, after the Commencement Date of Service in which
Supplier is scheduled to provide electricity to the Companies for Standard Offer
Service.
"Companies' System" shall mean the electrical distribution systems of
Blackstone, Newport, Eastern, and/or the electrical transmission system of
Montaup Electric Company, as applicable.
"Delivered Energy" shall mean the kilowatthours delivered to the meters
of those retail customers taking Standard Offer Service.
"Delivery Point" shall be any location on the NEPOOL PTF system or
Companies' System.
"D.T.E." shall mean the Massachusetts Department of Telecommunications
and Energy or its successor state regulatory agency.
"Good Utility Practice" - Any of the applicable practices, methods and
acts (i) required by NEPOOL, the Northeast Power Coordinating Council, the North
American Electric Reliability Council, the ISO or the successor of any of them;
(ii) required by the policies and standards of the D.T.E. relating to emergency
operations; or (iii) otherwise engaged in or approved by a significant portion
of the electric utility industry during the relevant rime period: which in each
case in the exercise of reasonable judgment in light of the facts known or that
should have been known at the time a decision was made, could have
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been expected to accomplish the desired result in a manner consistent with law,
regulation, safety, environmental protection, economy, and expedition. Good
utility practice is intended to be acceptable practices, methods or acts
generally accepted in the region, and is not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others.
"ISO" shall mean ISO New England, Inc., the independent system
operator established in accordance with the Restated NEPOOL Agreement, or its
successor.
"NEPOOL" shall mean the New England Power Pool or its successor.
"Party" or "Parties" shall mean the Supplier and the Companies and
their respective successors and assigns.
"Price" shall mean the annual amount per kilowatthour to be paid for
Delivered Energy set forth in Article 5 with no variation for time-of-use,
seasonality, or any other factor except as specified in Article 5. The Companies
or their Standard Offer customers shall not be obligated under this Agreement
for any payments for Delivered Energy in addition to the payments made pursuant
to Article 5.
"PTF" shall mean the facilities categorized as Pool Transmission
Facilities as defined in the Restated NEPOOL Agreement.
"P.U.C." shall mean the Rhode Island Public Utilities Commission or its
successor state regulatory agency.
"Restated NEPOOL Agreement" shall mean the New England Power Pool
Agreement dated December 31, 1996, as amended from time to time, as it is in
force at the time the action in question is taken.
"Settlement Agreements" shall mean any agreement or agreements that
have been approved by the D.T.E. in Docket No. 96-24, P.U.C. in Docket No. 2514,
and the Federal Energy Regulatory Commission in Docket Nos. ER97-2800-000 and
ER97-3127-000, together with all conditions, terms and modifications imposed by
those agencies.
"Standard Offer Service" shall mean firm all-requirements electric
service (minute by minute, hour by hour, day by day) including, but not limited
to: energy, installed capability, operable capability, reserves, and associated
losses necessary to fulfill all NEPOOL and ISO obligations as they may change
from time to time associated with providing firm all requirements power to the
Companies' retail customers taking Standard Offer Service in accordance with the
Settlement Agreements.
"Standard Offer Wholesale Price" shall mean the stipulated stream of
prices, in cents per kilowatthour, that will be paid to suppliers of Standard
Offer Service for Delivered
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Energy, as shown in Appendix A.
"Terms and Conditions for Suppliers" shall mean the Blackstone Valley
Electric Company and Newport Electric Corporation Terms and Conditions for
Electric Power Suppliers dated May 29, 1997 as approved by the P.U.C., or the
Eastern Edison Company Terms and Conditions for Competitive Suppliers as
approved by the D.T.E., as applicable. These Terms and Conditions may be
revised, amended, supplemented, or supplanted in whole or in part from time to
time by the P.U.C. or D.T.E. or as otherwise provided by law.
ARTICLE 2. Term
The term of this Agreement shall begin on the Commencement Date of
Service and end at 12:00 midnight on December 31, 2009, unless terminated sooner
in accordance with Article 8 or 9.
ARTICLE 3. Supplier Responsibilities
Supplier shall, prior to the Commencement Date of Service, (i) be a
member, in good standing, of NEPOOL or its successor entity and maintain an
own-load dispatch or settlement account established in accordance with the rules
and criteria established by the ISO throughout the term of this agreement, or
(ii) have an agreement in place, for the full term of this Agreement, with a
NEPOOL member whereby the NEPOOL member agrees to include the load to be served
by Supplier under this Agreement in its own-load dispatch or settlement account.
In addition, Supplier must satisfy registration and certification requirements,
as the case may be, as a Non-Regulated Power Producer in Massachusetts and Rhode
Island.
Supplier is responsible for providing firm all-requirements service
necessary to serve its share, as shown in Appendix A attached hereto, of the
Companies aggregate load attributed to those customers taking Standard Offer
Service, including changes in Standard Offer Service customer demand for any
reason, including, but not limited to, seasonal factors, daily load
fluctuations, increased or decreased usage, demand side management activities,
extremes in weather, and other similar events.
As a provider of Standard Offer Service, Supplier is solely responsible
for satisfying all requirements and paying all costs incurred or to be incurred
to provide those generation-related services including, without limitation, all
costs or other requirements to furnish installed capability, operable
capability, energy, operating reserves, line losses, automatic generation
control, and other generation-related ancillary services associated with the
provision of its share of Standard Offer Service. Supplier is also solely
responsible for meeting any other requirements and paying any other cost now
or hereafter imposed by the ISO from time to time which are attributable to the
provision of Standard Offer Service, as they may arise. If the ISO or any
successor entity or NEPOOL allocates any expenses or uplift costs to the
Standard Offer Service provided by the Supplier (on a load or peak load
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basis or otherwise), the expenses or costs so allocated will be borne by the
Supplier alone without recourse to the Companies.
Supplier shall be responsible for all transmission and distribution
losses associated with the delivery of electricity supplied under this Agreement
from the sources of its supply to the meters of those customers taking Standard
Offer Service; provided, however, the Companies shall operate their respective
distribution systems in accordance with Good Utility Practice.
Supplier is responsible for any transmission wheeling costs to the
Delivery Point and any distribution wheeling costs associated with supply
sources not included in Companies' approved distribution rates. If the NEPOOL
control area experiences congestion, Supplier will be responsible for any
congestion costs incurred in delivering power to the Delivery Point(s). In the
event that NEPOOL adopts a transmission congestion management approach
assigning priority rights or other benefits to transmission customers serving
native load in the congested area, then, if so requested by Supplier, the
Companies shall assign to the Supplier at no cost the proportional share of such
priority rights or other benefits associated with Seller's proportional share of
Standard Offer Service under this Agreement at such time. Supplier shall be
responsible for all transmission and distribution costs associated with the use
of transmission systems outside of NEPOOL and any local point-to-point
transmission charges and distribution charges incurred to deliver the power to
the NEPOOL PTF or the Companies' systems.
In the event that either the D.T.E. or the P.U.C. issue orders
requiring the Companies to implement uniform disclosure requirements that
pertain to the reporting of information regarding power plant emissions, fuel
types, or labor information for the sources of electricity used to supply
Standard Offer Service, the Supplier will provide, subject to any
confidentiality obligations to which it is bound, such information in a timely
manner in an appropriate form to enable the Companies to comply with such
requirements.
ARTICLE 4. Estimation of Hourly Loads and Reporting to the ISO
To meet their NEPOOL obligations, the Companies shall report to the ISO
Supplier's share of hourly Standard Offer Service load, including distribution
and non-PTF losses. As required by NEPOOL, the Companies will make all
reasonable efforts to report to the ISO Supplier's hourly share of Standard
Offer Service load by 12:00 noon of the second following business day. In making
such reports, the Companies will estimate Supplier's share of Standard Offer
Service load based on the methods and procedures approved in Terms and
Conditions for Suppliers on file with the P.U.C. and D.T.E., as amended from
time to time.
As described in the Terms and Conditions for Suppliers, to determine
Supplier's share of Delivered Energy, at the end of each month, the Companies
shall aggregate Supplier's hourly Standard Offer Service loads as reported to
the ISO for each hour of the month. The
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Supplier's aggregate share of Standard Offer Service. excluding losses, will be
deemed to be the quantity of Delivered Energy that Supplier provided for that
month and is the unadjusted kWh amount to be used for Billing and Payment as
described in Article 6.
The Companies will periodically reconcile the Delivered Energy to
actual meter readings of those customers taking Standard Offer Service, as
described in the Terms and Conditions for Suppliers. The Companies will apply
any resulting billing adjustment (debit or credit) to Supplier's account no
later than the last day of the third month following the billing month.
ARTICLE 5. Price
For each kilowatt-hour of Delivered Energy that Supplier provides in
each month, as determined in accordance with Article 4 and the Terms and
Conditions for Suppliers, the Companies shall pay Supplier the applicable Price
for the month in cents per kilowatt-hour calculated as follows:
Price = Standard Offer Wholesale Price
+ Fuel Adjustment Factor
Where: Standard Offer Wholesale Price in cents per kilowatt hour is
as defined in Article I and shown in Appendix A, and
Fuel Adjustment Factor is a cents per kilowatt-hour adder based on
the incremental revenues collected, if any, attributed to the
operation of the Retail Standard Offer Fuel Index ("Fuel Index")
mechanism in the Companies'Standard Offer Service tariffs. The
revenues attributed to the Fuel Index will be fully allocated to
Suppliers in proportion to the Standard Offer Service energy provided
by each Supplier for the applicable billing month through the Fuel
Adjustment Factor. The Fuel Index, and the resulting Fuel Adjustment
Factor to be paid to Supplier, will be made subject to regulatory
approval and only to the extent that the Companies are allowed to
collect such revenues from their retail customers taking Standard
Offer Service.
With the exception of any sales or gross receipt taxes which are
required by law to be paid by Standard Offer Service customers, the Price for
Delivered Energy as set forth herein includes all local, state, and federal
taxes, fees and levies applicable as of the date hereof. For any new taxes, fees
and levies, assessed with respect to the services provided by Supplier after the
Commencement Date of Service, the Companies will fully support and pursue in
good faith the recovery of any such new tax, fee and levy imposed on Supplier
from the Companies' Standard Offer Service customers. To the extent such new
taxes, fees and levies are allowed to be recoverable by the Companies from their
Standard Offer Service
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customers, the Companies shall reimburse Supplier for such generation related
taxes, fees and levies paid by Supplier.
ARTICLE 6. Billing and Payments
Until reconciled with actual metered data pursuant to the Terms and
Conditions of Suppliers, computations by the Companies of the charges for the
purposes of xxxxxxxx hereunder shall be based on estimates of Supplier's
Delivered Energy in accordance with Article 4 and the Price as determined in
accordance with Article 5. The Companies shall calculate the amount payable to
Supplier for a given month on or before the twentieth (20th) day of the
following month. The calculation shall be provided to Supplier and shall show
the total amount due and payable for the previous month. Each xxxx shall be
subject to adjustment for any errors in arithmetic computation, estimating,
reconciliation pursuant to the Terms and Conditions of Suppliers or otherwise
only to the extent allowed by the terms of this Article 6.
On or before the last day of each month, Companies shall pay Supplier
any amounts due and payable for the Delivered Energy provided by Supplier in the
previous month ("Due Date"). Any amount remaining unpaid after the Due Date
shall bear interest at the Prime Rate then in effect at the main office of
BankBoston, or such other lending institution as agreed to by Companies and
Supplier, from the Due Date to the date of payment by Companies.
If Supplier disputes the amount of any xxxx or payment, Supplier shall
itemize the basis for its dispute in a written notice to Companies within
fifteen days after the Due Date. Billing and payment disputes shall be handled
in accordance with the provisions of Article 13 of this Agreement. Upon final
resolution of the dispute, payment of any amount due to a Party under the terms
of the resolution shall be made within thirty (30) days of the date thereof,
together with interest from and after the original Due Date at the rate
specified in this Article.
The Companies may make retroactive adjustments to any billing for a
period of up to one year from the date of the original billing in order to
reflect differences in charges resulting from receipt of more accurate data.
Supplier may dispute such adjustment in writing within thirty (30) days of
receipt of the proposed adjustment.
Commencing in 2001, Supplier will pay to each of the Companies a rebate
(the "S0 Rebate") for the prior Contract Year equal to the product of (i) the
Base SO Rebate for such Company set forth in Appendix B to this Agreement,
multiplied by (ii) a fraction, the numerator of which will be equal to such
Company's actual Delivered Energy for the Contact Year for which the SO Rebate
is being calculated, and the denominator of which will be equal to the Base
Delivered Energy for such Company set forth in Appendix B. The SO Rebate payable
to each Company for a Contract Year will be calculated on April 1 of the
following Contract Year and setoff in equal amounts against the amounts payable
by such
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Company for Delivered Energy over the next three billing periods; provided that
if the SO Rebate is not fully recovered by the applicable Company during such
billing periods, any remaining SO Rebate shall be paid by Supplier within 30
days of the applicable Company's written demand therefor.
ARTICLE 7. Security Provisions
As a condition of this Agreement and upon execution hereof, the
Supplier shall deliver to the Companies a financial surety to secure Supplier's
performance under this Agreement under one of the following forms, as Supplier
may from time to time determine:
(1) Except as otherwise provided in this Article, Supplier shall at all
times during the term of this Agreement (i) maintain an investment grade rating
on its senior debt securities, as determined by Standard & Poor's Corporation,
Xxxxx'x Investors Service, Inc. or another nationally recognized rating service
reasonably acceptable to the Companies and (ii) maintain total assets of at
least $500,000.000 times the percentage of the Companies' Standard Offer Service
which is initially satisfied by the Wholesale Standard Offer Service under this
Agreement (the foregoing items (i) and (ii) being herein referred to as the
"Creditworthiness Criteria"). If on the Commencement Date of Service or at any
time during the term of this Agreement the Supplier shall fail to meet the
Creditworthiness Criteria, then the Supplier shall promptly deliver to the
Companies an unconditional and irrevocable guaranty of its obligations under
this Agreement in form and substance acceptable to the Companies and issued by
an entity meeting the Creditworthiness Criteria (a "Guaranty"). The amount of
any such Guaranty shall be the difference between the value of Supplier's total
assets and its requirements pursuant to part (ii) of the Creditworthiness
Criteria; provided, however, that if Supplier meets or exceeds its obligations
pursuant to part (ii) of the Creditworthiness Criteria no Guaranty will be
required of it. Supplier or the issuer of the Guaranty, as applicable, shall
certify to the Companies no less frequently than the end of every calendar
quarter that it meets the Creditworthiness Criteria (which certification shall
include such calculations and evidence as the Companies shall reasonably request
from time to time), and shall deliver financial statements to the Companies
certified by a firm of certified public accountants of national standing at
least annually within sixty (60) days following the end of the Supplier's or the
garantor's fiscal year.
(2) In lieu of meeting the Creditworthiness Criteria or delivering the
Guaranty as required in Article 7(l), Supplier shall have the right to deliver
to the Companies an irrevocable standby letter of credit issued by a commercial
bank reasonably acceptable to the Companies. The amount of such letter of credit
shall be calculated annually based on the following formula:
SD(n) = SF x STDL(n-1) x { (PSTD(n) x TD(n))+(PSTD(n+1) x TD(n+l))+
(PSTD(n/2) x TD(n+2)) +.........+
(PSTD(2009) x TD(2009)) }
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Where:
SD(n) is the Security Deposit in Contract Year (n)
SF is the Security Fee equal to $10.00/MWh
STDL(n-1) is the aggregate load of those customers taking Standard
Offer Service in the previous Contract Year (n-1),
expressed in MWh. In Contract Year 1997, STDL shall be
4,500,000 MWh.
PSTD(n) is the percentage share of Standard Offer Service load that
the Supplier has committed to provide in Contract Year (n)
as shown in Appendix A.
TD(n) is the Transition Discount in Contract Year (n), calculated as
follows:
TD(n) = 1.00
TD(n+1) = (7-1)/7 = 0.857
TD(n+2) = (7-2)/7 = 0.714
TD(n+3) = (7-3)/7 = 0.571
TD(n+4) = (7-4)/7 = 0.429
TD(n+5) = (7-5)/7 = 0.286
TD(n+6) = (7-6)/7 = 0.143
TD(n+7) = 0
TD(n+8) = 0
TD(n+9) = 0
TD(n+10) = 0
TD(n+11) = 0
The letter of credit shall be available to be drawn upon by the
Companies in the event that an event of default occurs with respect to the
Supplier hereunder and shall otherwise be in form and substance reasonably
acceptable to the Companies (the "Initial Letter of Credit"). The draw down on
the Initial Letter of Credit shall be limited to the amount the Companies are
entitled to pursuant to Article 8(3) hereof. The bank issuing such Initial
Letter of Credit on behalf of a Supplier must maintain a long term debt rating
of "A" or better from Standard and Poor's Rating Service or Xxxxx'x Investment
Service.
The Initial Letter of Credit, if not issued for the full term of the
Supplier's Standard Offer Service obligation, shall be renewed on an annual
basis or replaced and superseded by a like kind of surety at least thirty (30)
days prior to the expiration of such prior surety on a continuing basis to the
termination of this Agreement or until Supplier's share of Standard Offer
Service load is zero. The amount of such financial surety may be amended on an
annual basis to reflect the security amount calculated pursuant to this Article
7 for the remaining term of this Agreement, provided that, if such Initial
Letter of Credit is drawn down upon by the Companies, Supplier shall have no
duty to renew or replace it with a letter of credit having a face amount greater
than that remaining on the drawn down Initial Letter
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of Credit.
ARTICLE 8. Events of Default, Liability, Relationship of the Companies
(1) Unless excused by a Force Majeure as described in Article 10, each
of the following events shall be deemed to be an Event of Default hereunder:
(a) Failure of the Company to pay when due any undisputed payment due
to Supplier and such failure shall continue for five (5) days
following the receipt of written notice from the Supplier
specifying the overdue amount.
(b) Failure of Supplier, in a material respect, to comply with,
observe, or perform any covenant, warranty or obligation under this
Agreement, and such failure is not cured or rectified within
forty-five (45) days after receipt of written notice thereof from
the Companies.
(c) Failure of the Companies, in a material respect, to comply with,
observe, or perform any covenant, warranty or obligation under this
Agreement, other than as described in (a) above, and such failure
is not cured or rectified within forty-five (45) days after receipt
of written notice thereof from the Supplier.
(d) Failure of Supplier to maintain any of the security requirements
outlined in Article 7, and such failure is not cured or rectified
within ten (10) days after notice thereof from the Companies.
(e) And with respect to the Supplier, any Company and/or the Companies,
a custodian, receiver, liquidator or trustee for such Party is
appointed or takes possession and such appointment or possession
remains uncontested or in effect for more than sixty days: or the
Party makes an assignment for the benefit of creditors or admits in
writing its inability to pay its debts as they mature; or the Party
is adjudicated as bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code against the Party; or any
material property of the Party is sequestered by court order and
the order remains in effect for more than sixty days; or a petition
is filed against the Party under any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law of any jurisdictions, whether now or subsequently
in effect, and is not stayed or dismissed within sixty days after
filing; or the Party files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in
effect; or the Party consents to the filing of any petition against
it under any such law; or the Party consents to the appointment or
taking possession by a custodian, receiver, trustee or liquidator
of the Party or any material portion of its
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property.
(2) Upon the occurrence of an Event of Default by the Companies, the
Companies shall be liable to the Supplier for any direct damages resulting from
the Event of Default, including, but not limited to, reasonable additional
administrative and legal expenses incurred as a result of Companies failure to
perform. Supplier shall take all commercially reasonable measures to mitigate
such direct damages. In addition, the Supplier may unconditionally terminate
this Agreement by giving written notice to the Companies, such termination to be
effective as of the date specified in such notice. Notwithstanding any other
provision of this Agreement to the contrary, the rights and obligations of the
Companies, herein are several and not joint. Each of the Company's share of such
rights and obligations shall be determined by the portion of its monthly
Standard Offer Service requirements represented as a percentage of the
Companies' total Standard Offer Service requirements during the period of time
in which the right, obligation or liability in questions arose, accrued and/or
matured, and in the event of difficulty or a dispute in determining the
appropriate period of time, during the entire duration of the Agreement.
(3) Upon the occurrence of an Event of Default by the Supplier, the
Supplier shall be liable to the Companies for all costs reasonably incurred by
the Companies resulting from Supplier's failure to deliver its share of the
Standard Offer Service. Such amount shall include the positive difference, if
any, obtained by subtracting the per unit Price established in Article 5, from
the per unit Replacement Price. The positive difference shall be applied to
each kilowatthour that Supplier falls to deliver.
"Replacement Price" shall mean the price at which the Companies acting in a
commercially reasonable manner purchase substitute Standard Offer Service
nor delivered by Supplier, plus any additional transmission and NEPOOL
charges, incurred by the Companies. The Parties hereby stipulate that
purchases at the applicable NEPOOL spot market prices will be deemed
commercially reasonable.
The Parties expressly agree that the amounts Set forth in this Article 8(3)
do not constitute liquidated damages. In addition to the amounts established in
this Article 8(3) above, the Supplier shall be liable to the Companies for any
additional direct damages resulting from an Event of Default associated with
reasonable additional administrative and legal expenses incurred as a result of
Supplier's failure to perform, and the Companies may unconditionally terminate
this Agreement by giving at least sixty (60) days advance written notice to the
Supplier, such termination to be effective as of the date specified in such
notice. The Parties expressly agree that the Companies may exercise their rights
under the financial surety provided under Article 7 to collect any and all
amounts owed and due from the Supplier resulting under this Article 8.
Nothing in this Article 8 shall be construed to limit the right of any
party to seek any remedies for a breach specified in this Agreement by the
other Party or Parties of its or their obligations hereunder, whether or not
such breach results in a termination of this Agreement
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under this Article 8 and whether or not such breach is cured per Articles
8(l)(a) or 8(l)(b), or during any period during which the non-breaching, Party
elects not to exercise its right to terminate this Agreement. In particular,
each Party shall have the right to seek a specific performance of any of the
obligations of any other Party hereunder.
ARTICLE 9. Termination
In addition to the termination rights for an Event of Default provided
in Article 8, the Companies may terminate this Agreement if Supplier's share of
Standard Offer Service load is less than one (1) megawatt for two consecutive
months.
ARTICLE 10. Force Majeure
As used in this Agreement, "Force Majeure" means any cause beyond the
reasonable control of, and without the fault or negligence of, the Party
claiming Force Majeure. A Force Majeure shall include, without limitation,
sabotage, strikes, riots or civil disturbance, acts of God, acts of a public
enemy, drought, earthquake, flood, explosion, fire, lightning, landslide, or any
similar cataclysmic occurrence, or appropriation or diversion of electricity by
sale or order of any governmental authority having jurisdiction thereof, but
only if and to the extent that the event adversely affects the availability of
the transmission or distribution facilities of NEPOOL and/or its participants,
the Companies or an affiliate of the Companies, and such affected facilities
are necessary to deliver Standard Offer Service electricity to the Standard
Offer Service customers.
An event chat affects the availability or cost of operating any
transmission or distribution facilities outside the NEPOOL control area, affects
the availability or cost of operating a generating facility, or any event that
merely causes an economic hardship to either Party shall not be deemed a Force
Majeure.
If either Party is rendered wholly or partly unable to perform its
obligations under this Agreement because of Force Majeure as defined above,
that Party shall be excused from whatever performance is affected by the Force
Majeure, to the extent so affected, provided that:
(a) The nonperforming Party promptly, but in no case longer than five
(5) working days after the occurrence of the Force Majeure, gives the
other Party written notice describing the particulars of the
occurrence;
(b) The suspension of performance shall be of no greater scope and of
no longer duration than is reasonably required by the Force Majeure;
(c) The nonperforming Party uses reasonable efforts to remedy its
inability to perform and expeditiously takes reasonable action to
correct or cure the event or condition; and
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(d) The nonperforming Party exercises all reasonable efforts to
mitigate or limit damages to the other Party. With respect to the
Supplier, this shall mean that Supplier must purchase, at its own
expense, electricity from the NEPOOL market to meet its obligations
under this Agreement, to the extent such electricity is available and
deliverable.
ARTICLE 11. Assignment
Unless mutually agreed to by the Parties, no assignment, pledge, or
transfer of this Agreement shall be made by either Party without the prior
written consent of the other Party, which shall nor be unreasonably withheld,
except no prior written consent shall be required for (i) the assignment, pledge
or other transfer to another company or Affiliate in the same holding company
system as the assignor, pledgor or transferor, provided, the assignee, pledgee
or transferee expressly assumes and demonstrates, to the reasonable satisfaction
of the non-assigning Party, that it can meet the obligations of the assignor,
pledgor or transferor under this Agreement, or (ii) the transfer, incident to a
merger or consolidation with, or transfer of all (or substantially all) of the
assets of the transferor, to another person or business entity, provided, such
transferee expressly assumes, and demonstrates to the reasonable satisfaction of
the non-assigning party that it can meet, all the obligations of the assignor,
pledgor or transferor under this Agreement.
ARTICLE 12. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of
the Parties and their successors and assignees.
ARTICLE 13. Resolution of Disputes
Subject to Article 8(3), all disputes between the Companies and
Supplier resulting from or arising out of performance under this Agreement shall
be referred to a senior representative of the Companies with authority to
settle, designated by the Companies, and a senior representative of Supplier
with authority to settle, designated by Supplier, for resolution on an informal,
face-to-face basis as promptly as practicable. The Parties agree that such
informal discussion shall be conducted in good faith. The discussions between
such representatives shall be considered "settlement talks" under Rule 403 of
the Federal Rules of Evidence or analogous Massachusetts rules or practices and
such discussions shall have no evidentiary value provided, however, that either
Party may introduce evidence of matters discussed in such settlement talks, if
the facts and documents reflecting such matters are discovered or otherwise come
into a Party's possession independent of such settlement talks. In the event the
designated senior representatives are unable to resolve the dispute within
thirty (30) days, or such other period as the Companies and the Supplier may
jointly agree upon, such dispute may be submitted to arbitration and resolved in
accordance with the arbitration procedure set forth herein if the Companies and
Supplier jointly agree to submit it to arbitration. For any dispute or claim
arising out of or relating to any charges incurred
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under this Agreement having a value less than or equivalent to $100,000, such
arbitration shall be mandatory. Nothing in this Article 13 shall prevent the
Companies from issuing, pursuant to Sections 1(a) and (3) of Article 8, notice
of failure to comply with, observe or perform this Agreement.
The arbitration shall be conducted before a single neutral arbitrator
or arbitrator panel appointed by the Parties. If the Parties agree upon a single
arbitrator within ten (10) days of the referral of the dispute to arbitration,
that arbitrator shall serve, otherwise the Companies and Supplier shall each
choose one arbitrator, who shall serve on a three-member arbitration panel. The
two arbitrators so chosen shall within twenty (20) days select a third
arbitrator to act as chairman of the arbitration panel. If the two arbitrators
are unable to select a third arbitrator, each arbitrator shall select three
candidates. A list of the six candidates, along with their resumes, shall be
provided in alphabetical order, with no indication of the arbitrator who
selected such candidate or the Party who selected the arbitrator who selected
such candidate, to the American Arbitration Association ("AAA"), who will select
one candidate. If that candidate is unable or unwilling to serve, AAA shall
select another candidate. This process will be repeated until a third arbitrator
is selected or the list of candidates is exhausted. If the list of candidates is
exhausted, the arbitrators shall submit a new list of candidates and the process
set forth above shall be repeated a second time. In all cases, the arbitrator(s)
shall be knowledgeable in electric utility matters, including electricity
transmission and bulk power issues, and shall not have any current or past
substantial business or financial relationships with any Party to the
arbitration or any affiliate of such Party.
Except as otherwise provided herein, the arbitrator(s), shall generally
conduct the arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. There shall be no formal discovery
conducted in connection with the arbitration, except as specifically authorized
by a vote of the panel. The Parties shall exchange witness lists and copies of
any exhibits that they intend to utilize in their direct presentations at any
hearing before the arbitrator(s) at least ten (10) days prior to such hearing,
along with any other information or documents specifically requested by the
arbitrator(s) prior to the hearing. Unless otherwise agreed, the arbitrator(s)
shall render a decision within ninety (90) days of his, her, or their
appointment and shall notify the Parties in writing of such decision and the
reasons therefor, and shall make an award apportioning the payment of the costs
and expenses of arbitration, including panel costs, among the Parties,
provided, however, that each Party shall bear the costs and expenses of its own
attorneys, expert witnesses and consultants. The arbitrator(s) shall be
authorized only to interpret and apply the provisions of this Agreement and
shall have no power to amend or modify this Agreement in any manner. The
decision of the arbitrator(s) shall be final and binding upon the Parties, and
judgment on the award may be entered in any court having jurisdiction. The
decision of the arbitrator(s) may be appealed solely on the grounds that the
conduct of the arbitrator(s), or the decision itself, violated the standards
required under the Federal Arbitration Act (9 U.S.C.A. Sect. 1 et. al.) and/or
The Uniform Arbitration Act, as adopted in Massachusetts (M.G.L. c. 251. Sect. 1
et seq.).
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ARTICLE 14. Interpretation
The interpretation and performance of this Agreement shall be in
accordance with and shall be controlled by the laws of the Commonwealth of
Massachusetts, without regard to Massachusetts conflict of law principles.
ARTICLE 15. Severability of Provisions
Subject to the provisions of Article 13, a holding by any court having
jurisdiction that any provision of this Agreement is invalid or unenforceable
shall not result in invalidation or unenforceability of the entire Agreement but
all remaining terms shall remain in full force and effect.
ARTICLE 16. Accounts and Records
The Companies and Supplier shall keep complete and accurate records of
their operations hereunder and shall maintain such data for a period of at least
two (2) years after final billing. The Companies and Supplier shall have the
right, during normal business hours, to examine and inspect all such records
insofar as may be necessary for the purpose of ascertaining the reasonableness
and accuracy of all relevant data, estimates or statement of charges associated
with service hereunder.
ARTICLE 17. Limitations on Liability and Indemnification
Each Party agrees to indemnify, defend, and hold the other Party
(including the other Party's affiliated companies, trustees, directors, board
members, officers, employees, and agents) harmless from and against any and all
damages, costs, claims, liabilities, actions or proceedings arising from or
claimed to have arisen from the wrongful acts or omissions of the indemnifying
Party's employees or agents, unless caused by an act of negligence or willful
misconduct by the indemnified Party (including the Party's affiliated companies,
trustees, directors, board members, officers. employees or agents).
The Parties hereby waive and release the other Party as well as the
other Party's affiliated companies, trustees, directors, officers, employees,
and agents from any liability, claim, or action arising from damage to its
property due to the performance of this Agreement.
To the fullest extent permissible by law, neither the Companies nor
Seller, nor their respective officers, directors, agents, employees, parent or
Affiliates, successors or assigns, or their respective officers, directors,
agents or employees, successors or assigns, shall be liable to the other party
or its parent, subsidiaries. Affiliates, officers, directors, agents, employees,
successors or assigns, for claims, suits, actions or causes of action for
incidental, indirect, special, punitive, multiple or consequential damages
(including attorneys' fees or litigation costs) connected with or resulting from
performance or non-performance of the
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Agreement, or any actions undertaken in connection with or related to this
Agreement, including without limitation any such damages which are based upon
causes of action for breach of contract, tort (including negligence and
misrepresentation), breach of warranty, strict liability, Massachusetts General
Laws Chapter 93A, statute, operation of law, or any other theory of recovery.
The provisions of this Section 17 shall apply regardless of fault and shall
survive termination, cancellation, suspension, completion or expiration of this
Agreement.
ARTICLE 18. Regulation
(1) This Agreement and all rights, obligations, and performances of the
Parties hereunder, are subject to all applicable state and federal laws, and to
all duly promulgated orders and other duly authorized actions of governmental
authority having jurisdiction, provided, however, that this Agreement shall not
be subject to change through unilateral application under Sections 205 and 206
of the Federal Power Act,
(2) This Agreement is intended to comply with all NEPOOL Criteria,
Rules, and Standards ("Rules"). If, during the term of this Agreement, the
Restated NEPOOL Agreement is terminated or amended in a manner that would
eliminate or alter a Rule affecting a right or obligation of a Party hereunder,
or if such a Rule is eliminated or altered by NEPOOL or the ISO, in a manner
which materially affects the costs and obligations to provide Standard Offer
Service, the Companies and Supplier shall meet to determine appropriate
compensation to the affected Party. In the event that the Parties are not able
to agree on the materiality of the cost or obligations or the amount to be
reimbursed, Parties shall attempt to resolve the matter in accordance with
Article 13.
(3) In the event that the Standard Offer Service or the Terms and
Conditions for Suppliers are terminated, amended or replaced by any governmental
or regulatory agency having jurisdiction over the provision of Standard Offer
Service in a manner which materially increases Supplier's costs or obligations
to provide Standard Offer Service or the Companies are prevented from
recovering from customers taking Standard Offer Service the cost of electricity
provided by Supplier, the Companies and Supplier shall meet to determine
appropriate compensation to the negatively impacted Party. In the event that the
Parties are not able to agree on the materiality of the increased cost or
obligations or the amount to be reimbursed, Parties shall attempt to resolve the
matter in accordance with Article 13.
ARTICLE 19. Notices
Any notice, demand, or request permitted or required under this
Agreement shall be delivered in person or mailed by certified mail, postage
prepaid, return receipt requested, or otherwise confirmed receipt, to a Party at
the applicable address set forth below:
To Companies:
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Xxxxx X. Xxxxx
Vice President - Power Supply
EUA Service Corporation
P.0. Box 543
000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxxx, XX 00000
To Supplier:
NRG Power Marketing Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxxxxx, President
Facsimile: 000-000-0000
With a copy to:
Xxxxx Xxxxxx, Vice President
Facsimile: 000-000-0000
Such addresses may be changed from time to time by written notice by
either Party to the other Party.
ARTICLE 20, Miscellaneous:
(1) Each Party shall prepare, execute and deliver to the other Party
any documents reasonably required to implement any provision hereof.
(2) Each Party represents to the other that this Agreement and such
Party's performance thereof are within the corporate powers of such
Party and have been duly authorized by proper corporate action on the
part of such Party.
(3) Any number of counterparts to this Agreement may be executed and
each shall have the same force and effect as the original.
(4) This Agreement shall constitute the entire understanding between
the Parties and shall supersede all prior correspondence and
understandings pertaining to the subject matter of this Agreement.
(5) Failure of either Party to enforce any provision of this Agreement
or to require performance by the other Party of any of the provisions
hereof, shall not be construed as a waiver of such provisions or affect
the validity of this Agreement, any
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part hereof, or the right of either Party to thereafter enforce each
and every provision.
(6) Article and Section headings used throughout this Agreement are for
the convenience of the Parties only and are not to be construed as part
of this Agreement.
(7) Nothing in this Agreement shall be construed as creating any
relationship between the Parties other than that of independent
contractor for the sale and purchase of electricity at wholesale.
(8) Notwithstanding any other provision of this Agreement to the
contrary, the rights and obligations of the Companies herein are
several and not joint. Each of the Companies share of such rights and
obligations shall be determined by the portion of its monthly Standard
Offer Service energy requirements represented as a percentage of the
Companies' total Standard Offer Service requirement.
(Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF. Supplier and the Companies have caused this
Agreement to be signed by their respective duly authorized representatives as
of the date first above written.
Supplier: NRG POWER MARKETING, INC.
By: /s/ XXXXX XXXXXXXXXXX
---------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: President
On Behalf of the Companies:
Blackstone: BLACKSTONE VALLEY ELECTRIC COMPANY
By: /s/ XXXXX X. XXXXX
---------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
Eastern: EASTERN EDISON COMPANY
By: /s/ XXXXX X. XXXXX
---------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
Newport: NEWPORT ELECTRIC CORPORATION
By: /s/ XXXXX X. XXXXX
---------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
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