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Exhibit 4
Operating Agreement
by and between
International Transmission Company
and
The Detroit Edison Company
Dated as of May __, 2000
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OPERATING AGREEMENT
BY AND BETWEEN
INTERNATIONAL TRANSMISSION COMPANY
AND
THE DETROIT EDISON COMPANY
Dated as of May __, 2000
(PRO FORMA AGREEMENT)
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OPERATING AGREEMENT
BY AND BETWEEN
INTERNATIONAL TRANSMISSION COMPANY
AND
THE DETROIT EDISON COMPANY
This agreement is made and entered into as of this __ day of May, 2000,
by and between International Transmission Company ("ITC"), a Michigan
corporation, having its principal place of business at 0000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, and The Detroit Edison Company ("DETROIT EDISON"), a
Michigan corporation, having its principal place of business at 0000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. (ITC and Detroit Edison may be referred to
individually as "PARTY" or collectively as the "PARTIES").
WHEREAS, as a consequence of the comprehensive restructuring of the
bulk power and retail electric markets in the State of Michigan, Detroit Edison
has entered into an agreement pursuant to which it will sell substantially all
of its integrated transmission facilities located in the State of Michigan with
voltage ratings of 120 kilovolts ("kV") and above (collectively, the
"TRANSMISSION SYSTEM") to ITC (the "TRANSFER TRANSACTION");
WHEREAS, Detroit Edison desires to exit from the transmission business
and transfer operational control to ITC over certain facilities classified as
"distribution" with voltage ratings of 120 kV and above that are used to serve
retail end-use customers ("END-USE FACILITIES");
WHEREAS, ITC desires to engage in the transmission of electric energy
in interstate commerce and to exercise operational control over both the
Transmission System and End-Use Facilities for purposes of providing open
access, non-discriminatory transmission service to Detroit Edison and all other
eligible customers;
WHEREAS, ITC also desires to provide open access, non-discriminatory
transmission service over certain facilities owned and operated by Detroit
Edison with voltage ratings below 120 kV ("DISTRIBUTION FACILITIES") that are
used to serve certain wholesale customers and credit all charges collected
therefrom to Detroit Edison; and
WHEREAS, ITC and Detroit Edison desire to enter into a comprehensive
agreement defining the post-Transfer Transaction responsibilities for the
Transmission System and End-Use Facilities, including the exercise of
operational control, planning, and expansion thereof by ITC.
NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, ITC and Detroit Edison agree as follows:
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ARTICLE 1. DEFINITIONS
1.1 The following terms shall have the meanings set forth below. Any
term used in this Agreement that is not defined herein shall have the meaning
customarily attributed to such term within the electric utility industry.
"AGREEMENT" means this Operating Agreement By and Between International
Transmission Company and The Detroit Edison Company, as it may be amended from
time to time.
"CLOSING DATE" means the date and time upon which the closing of the
Transfer Transaction actually occurs.
"CONTROL AREA" means the Transmission System as bounded by
interconnections (tie line) metering and telemetry such that Generation
Resources are controlled directly to maintain interchange schedules with other
control areas and to contribute to the frequency regulation of the
interconnected transmission grid.
"CONTROL AREA OPERATOR" means the person and/or entity responsible for
exercising operational control over the Transmission System.
"ECAR" means the Eastern Coordination and Reliability Agreement, its
successors and assigns.
"FERC" means the Federal Energy Regulatory Commission.
"GENERATION RESOURCES" means the facilities used for the production of
electric energy, which are owned and operated by Detroit Edison and located
within ITC's Control Area available to meet the capacity and energy needs of
Detroit Edison.
"GOOD UTILITY PRACTICES" means any of the practices, methods, or acts
engaged in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time 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 the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation, environmental
protection, and expedition. Good Utility Practices are not intended to be
limited to the optimum practices, methods, or acts to the exclusion of all
others, but rather to delineate the acceptable practices, methods, or acts
generally accepted in such industry.
"ITC OATT" means the tariff pursuant to which ITC provides or will
provide open access, non-discriminatory transmission service, as amended from
time to time, or any successor tariff on file, or to be filed, with the FERC, as
such may be amended from time to time.
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"LOAD REQUIREMENTS" means the demand and energy which Detroit Edison is
obligated to provide to satisfy retail service territory commitments, wholesale
requirements tariffs or agreements, and planning reserves.
"MECS" means Michigan Electric Coordination System, its successors or
assigns.
"OASIS STANDARDS OF CONDUCT" means the rules and regulations
promulgated by the FERC, 18 C.F.R. Part 37 (1999), as amended from time to time,
requiring the implementation of Standards of Conduct governing the transfer of
information and communications between public utilities' wholesale merchant and
transmission system operation functions, and that of their affiliates.
"OFF-SYSTEM PURCHASES" means purchases from a third-party of energy,
associated capacity, or ancillary services to reduce costs or to provide
reliability for the Transmission System or as required by law.
"OFF-SYSTEM SALES" means all wholesale sales of power and energy made
by Detroit Edison to third-parties.
"REGULATORY AUTHORITY" means any federal, state, local, or other
governmental, regulatory, or administrative agency having jurisdiction over the
subject matter of this Agreement.
"RTO" means regional transmission organization as contemplated by the
FERC in Order No. 2000, Regional Transmission Organizations, 89 FERC
[paragraph]. 61,285 (1999).
"SYSTEM CONTROL CENTER" means the facilities used by ITC to provide the
services necessary for the operation of the Transmission System as a single
Control Area.
"SYSTEM DISPATCH" means the centralized, commitment and dispatch of
Generating Resources and Off-System Purchases by ITC.
"TRANSMISSION ASSETS" means all individual facilities used to transmit
electric energy with voltage ratings of 120 kV and above, including all
transmission lines and stations (including rights-of-way, certain land, towers,
poles, and conductors), transformers, the MECS Control Center facility and
related equipment (including associated land and rights), generation tie lines,
radial taps from the Transmission System (up to, but not including the
facilities that establish the final circuit connection to distribution
facilities or retail customers), voltage control devices and power flow control
devices directly connected to the Transmission System, associated substations,
mobile capacitor banks, and necessary inventory and equipment spares.
"TRANSMISSION CUSTOMER" means a transmission customer taking service
under the ITC OATT, any entity that is a party to a transaction under the ITC
OATT, including Detroit Edison, or any entity on whose behalf ITC is providing
transmission service as the agent for Detroit Edison.
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1.2 Each of the following terms have the meaning specified in the
section set forth opposite such term:
Term Section
---- -------
ATC 3.1.3
CONFIDENTIAL INFORMATION 15.8
DEFAULTING PARTY 8.2
DIRECT CLAIM 7.3.3
DISCLOSING PARTY 15.8
DISTRIBUTION FACILITIES Recitals
EFFECTIVE DATE 2.1
END-USE FACILITIES Recitals
EVENT OF DEFAULT 10
GRANDFATHERED AGREEMENTS 3.5
FORCE MAJEURE EVENT 9.1
INDEMNIFIED PARTY 7.1
INDEMNIFYING PARTY 7.1
INDEMNITEE 7.2
INDEMNIFIABLE LOSS(ES) 7.1
INITIAL TERM 2.1
NITS 3.5
NON-DEFAULTING PARTY 8.2
OASIS 3.1.5
RECIPIENT 15.8
RENEWAL TERM 2.1
THIRD PARTY CLAIM 7.3.1
TRANSFER TRANSACTION Recitals
TRANSMISSION SYSTEM Recitals
ARTICLE 2. TERM AND TERMINATION
2.1 This agreement shall become effective when signed by the Parties.
Parties' corresponding obligations as set forth herein shall begin at 12:01 a.m.
(EPT) on the day immediately following the Closing Date ("EFFECTIVE DATE"). The
initial term of this Agreement shall commence as of the Effective Date and shall
continue for one (1) year ("INITIAL TERM"), unless terminated earlier in
accordance with the provisions of this Agreement. Following the Initial Term, or
each subsequent Renewal Term (as hereinafter defined), as the case may be, this
Agreement shall automatically be renewed for a period of one (1) year ("RENEWAL
TERM"), unless either Party delivers a written notice of termination to the
other Party at least sixty (60) days prior to the end of the then current term.
2.2 Upon entering into this Agreement, the Parties have acknowledged
that by no later than December 31, 2001, ITC will either join a FERC-approved
RTO or constitute itself as an RTO that satisfies all of the minimum
characteristics and functions of an RTO as determined by the FERC. Should ITC
seek to transfer ownership, operation, and/or control of the
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Transmission System to a FERC-approved RTO, the Parties shall have the right to
leave in effect all or part of this Agreement for an interim period following
such transfer, upon the express written consent of each Party (whose consent
shall not be unreasonably withheld); provided however, that if the transfer of
ownership, operation, or control of the Transmission System occurs as a result
of ITC's participation in a FERC-approved RTO, ITC shall be required to secure
the consent of the RTO regarding the continued effectiveness of this Agreement.
2.3 Any obligations incurred by the Parties under this Agreement to
make payments due, remit costs, or complete construction of designated
facilities, as agreed to prior to the termination hereof, shall survive the
termination of this Agreement.
ARTICLE 3.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES OF
INTERNATIONAL TRANSMISSION COMPANY
3.1 Operation of Transmission System. Pursuant to the terms of this
Agreement, upon the consummation of the Transfer Transaction, ITC shall be
responsible for operating the Transmission System (including all End-Use
Facilities as defined herein) in order to provide all Transmission Customers
with safe, efficient, reliable, and non-discriminatory transmission service
pursuant to terms and conditions set forth in the ITC OATT. As more fully set
forth in the Operating Protocols attached hereto as Appendix 1, such operation
shall be in accordance with Good Utility Practices and shall conform to the
applicable reliability requirements of NERC, ECAR or other regional reliability
councils, or any successor organizations, and all applicable requirements of
federal or state laws or Regulatory Authorities. ITC shall establish reliability
guidelines or procedures necessary to implement and comply with the applicable
reliability requirements. As further detailed in Appendix 1, ITC shall assume
the following operational responsibilities from Detroit Edison:
3.1.1 Administration and Maintenance of ITC OATT. ITC shall be
responsible for administering the ITC OATT and for providing open access,
non-discriminatory transmission service to all Transmission Customers taking
service under such tariff and for maintaining the ITC OATT on file with the
FERC.
3.1.2 Review and Approval of Requests for Transmission Service
Under the ITC OATT. ITC shall be responsible for reviewing and approving, as
appropriate, all requests for open access, non-discriminatory transmission
service under the ITC OATT.
3.1.3 Determination of Available Transmission Capacity. ITC
shall be responsible for calculating available transmission capacity ("ATC") for
the Transmission System in accordance with the terms and conditions set forth in
the ITC OATT.
3.1.4 Provision of Ancillary Services. ITC shall be
responsible for offering ancillary services, as required by the rules and
regulations of the FERC, to all Transmission Customers taking service under the
ITC OATT. ITC shall procure ancillary services on a non-preferential and
competitive basis from Detroit Edison at currently FERC-approved rates set forth
in Docket No. OA96-78-000, and from any third-party suppliers of such services
at XXXX-
00
0
approved rates. So long as ITC and Detroit Edison are corporate affiliates, ITC
shall only procure ancillary services from Detroit Edison at FERC-approved
cost-based rates.
3.1.5 Administration of Open Access Same-Time Information
System. ITC shall assume responsibility for operating the open access same-time
information system ("OASIS") for the Transmission System, subject to the
oversight of ECAR.
3.1.6 Maintenance and Operation Services. ITC shall be
responsible for maintenance and operation of the Transmission System and may
employ persons and enter into agreements as necessary to perform these services.
ITC may contract with Detroit Edison to perform these services. Pursuant to the
terms of a separate services agreement, Detroit Edison agrees to perform
maintenance and operation services for ITC, in accordance with Good Utility
Practices. The services agreement shall continue until such time that ITC either
becomes a member of an existing FERC-approved RTO or constitutes itself as an
RTO that fully satisfies the minimum characteristics or functions of an RTO, and
is no longer affiliated with Detroit Edison and its parent, DTE Energy Company,
whichever shall occur first; provided however, that nothing in this Agreement
shall preclude the Parties from renewing or renegotiating such services
agreement.
3.1.7 Coordination of Maintenance Schedules. ITC shall be
responsible for establishing, in coordination with all Transmission Customers, a
maintenance schedule for all Transmission Assets making up the Transmission
System, and shall coordinate with Detroit Edison and all other generators, as
appropriate, the scheduling of maintenance on all Generation Resources connected
to the Transmission System.
3.1.8 Maintenance of Transmission System Security. ITC shall
be responsible for maintaining the security of the Transmission System and shall
monitor and coordinate voltage levels with neighboring control areas.
3.1.9 Construction of New Transmission Assets. ITC shall be
responsible for the construction of new Transmission Assets where necessary or
desirable to provide transmission service over the Transmission System, or in
response to requests for transmission service under the ITC OATT. ITC shall be
responsible for acquiring all land, licenses, or rights-or-way necessary for
such construction. ITC may, in its reasonable business judgment, contract with
Detroit Edison for design, construction, and related real estate services.
Pursuant to the terms of separate construction agreement, Detroit Edison agrees
to construct all new Transmission Assets for ITC. The construction agreement
will continue until such time as ITC either becomes a full member of an existing
FERC-approved RTO, or constitutes itself as an RTO that satisfies the FERC's
minimum characteristics and functions of an RTO, and is no longer affiliated
with Detroit Edison and its parent, DTE Energy Company, whichever shall occur
first; provided however, that nothing in this Agreement shall preclude the
Parties from renewing or renegotiating such construction agreement.
3.1.10 Access to Transmission System. During reasonable
business hours and under reasonable conditions, ITC shall, upon request, allow a
duly-authorized representative(s) of Detroit Edison such access to the
Transmission System as is necessary for Detroit Edison to
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perform its obligations under this Agreement or to comply with the requirements
of Regulatory Authorities. Any such access provided pursuant to this section
3.1.10 shall be subject to the relevant rules and regulations set forth in the
OASIS Standards of Conduct.
3.1.11 Providing Information to Detroit Edison. ITC shall
provide such information to Detroit Edison as is necessary for Detroit Edison to
perform the obligations set forth in Article IV of this Agreement or any
Grandfathered Agreement, or to comply with the requirements of any Regulatory
Authority. All such information provided by ITC shall be submitted in accordance
with the relevant rules and regulations set forth in the OASIS Standards of
Conduct. Information identified as "confidential" shall be treated as
confidential to the extent permitted by law. Any information provided pursuant
to this section 3.1.11 shall be subject to the relevant rules and regulations
set forth in the OASIS Standards of Conduct.
3.1.12 Inspection and Auditing of Records. During reasonable
business hours and under reasonable conditions, ITC shall, upon request, grant a
duly-authorized representative(s) of Detroit Edison and/or Regulatory
Authorities such access to ITC's books and records as is necessary to verify
compliance by ITC under this Agreement, and to audit and verify transactions
under this Agreement. ITC shall also comply with all applicable reporting
requirements of Regulatory Authorities having jurisdiction over ITC with respect
to the business aspects of its operations, and shall maintain such accounting
records and metering data as is necessary to perform its obligations under this
Agreement. The inspection and auditing of ITC's books and records pursuant to
this section 3.1.12 shall be subject to the relevant rules and regulations of
the OASIS Standards of Conduct.
3.2 Provision of Transmission Service over Distribution Facilities ITC.
ITC shall provide open access, non-discriminatory transmission service to
certain wholesale customers over the Distribution Facilities, as defined herein,
pursuant to the terms of the ITC OATT and shall credit all charges associated
with the provision of such services over the Distribution Facilities to Detroit
Edison.
3.3 Obligation to Dispatch System. Upon consummation of the Transfer
Transaction, ITC shall administer and perform the function of system dispatch in
order to meet Load Requirements and Off-System Sales obligations through the
dispatch of Detroit Edison's Generation Resources and Off-System Purchases,
consistent with Good Utility Practices, as well as any applicable standards
established by NERC and ECAR.
3.3.1 Detroit Edison and ITC shall provide communications,
metering, and other facilities necessary for the metering and control of the
Generating Resources and interconnected Transmission Assets, respectively.
Detroit Edison shall be responsible for any expenses incurred regarding the
installation, operation, and maintenance of facilities that constitute a portion
of a particular Generation Resource. ITC shall be responsible for any expenses
it incurs for the installation, operation, and maintenance of interconnected
Transmission Assets or the Transmission System.
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3.4 Obligations as Control Area Operator. Upon consummation of Transfer
Transaction, ITC shall administer and perform the duties, as defined in this
section 3.4, of Control Area Operator for the Transmission System and, at a
minimum, shall be obligated to:
3.4.1 match, at all times, the power from generators located
within the Transmission System with capacity and energy purchased from or sold
to entities located outside of the Transmission System with load located within
the Transmission System;
3.4.2 maintain scheduled interchange with other Control Area
Operators, within the limits of Good Utility Practices;
3.4.3 maintain the frequency of the Transmission System within
reasonable limits in accordance with Good Utility Practices;
3.4.4 procure from Detroit Edison, or from other third-party
generators, sufficient generating capacity to maintain operating reserves in
accordance with Good Utility Practices; and
3.4.5 administer, maintain, and implement all transmission
reservations in accordance with the OASIS.
3.5 Grandfathered Transmission Agreements. Where Detroit Edison is
obligated to provide transmission under agreements or tariffs which were
executed or effective prior to July 9, 1996 ("GRANDFATHERED AGREEMENTS"), ITC
and Detroit Edison will execute a Network Integration Transmission Service
("NITS") agreement under the ITC OATT to ensure that Detroit Edison's obligation
to provide transmission service under the Grandfathered Agreements is satisfied.
The load served under the Grandfathered Agreements will be included in Detroit
Edison's load ratio calculation under the ITC OATT, and Detroit Edison shall
compensate ITC for this service under the ITC OATT. Detroit Edison will continue
to xxxx customers served pursuant to the Grandfathered Agreements in accordance
with the rates, terms and conditions set forth therein.
ARTICLE 4.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
OF THE DETROIT EDISON COMPANY
4.1 Duty to Cooperate with ITC. Detroit Edison shall, to the greatest
extent practicable, cooperate with ITC as ITC performs its duties as system
dispatcher and Control Area Operator, including providing reactive supply and
voltage control from generation sources or other ancillary services and reducing
load, when reasonably requested by ITC, in accordance with the terms and
conditions of the ITC OATT and Good Utility Practices. Detroit Edison shall not
operate its Generation Resources or Distribution Facilities in a manner which
unduly interferes with the provision of transmission service by ITC.
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4.2 Construction of New Distribution Facilities. Detroit Edison shall,
at the request of ITC, plan and construct such Distribution Facilities necessary
to provide adequate and reliable transmission service to wholesale customers
served over the Distribution Facilities.
4.2.1 Detroit Edison shall obtain all required authorizations,
permits, licenses, or other regulatory approvals, including without limitation,
siting and environmental requirements as may be imposed by state, local, and
federal laws and regulations, for all facilities constructed by Detroit Edison.
Construction of new facilities shall be performed in accordance with Good
Utility Practices, industry standards, and any requirements of Regulatory
Authorities.
4.3 Access to Distribution Facilities. During reasonable business hours
and under reasonable conditions, Detroit Edison shall, upon request, allow a
duly-authorized representative(s) of ITC access to the Distribution Facilities
as is necessary for ITC to perform its obligations under this Agreement, the ITC
OATT, and any service agreements thereunder, or to comply with the requirements
of Regulatory Authorities. Any such access provided pursuant to this section 4.3
shall be subject to the relevant rules and regulations set forth in the OASIS
Standards of Conduct.
4.4 Future Transfer of Operational Control of Distribution Facilities
to ITC. Should Detroit Edison transfer operational control of the Distribution
Facilities to ITC, subject to approval of the applicable Regulatory
Authority(ies), Detroit Edison shall appoint ITC as its agent hereunder for
purposes of providing all customers taking service over such Distribution
Facilities with open access transmission service under the ITC OATT.
4.5 Providing Information to ITC. Detroit Edison shall provide such
information to ITC as is necessary for ITC to perform its obligations under this
Agreement, the ITC OATT, and any transmission service agreements thereunder, or
to comply with the requirements of Regulatory Authorities. Any such information
provided pursuant to this section 4.4 shall be subject to the relevant rules and
regulations established pursuant to the OASIS Standards of Conduct.
4.6. Inspection and Auditing of Records. During reasonable business
hours and under reasonable conditions, Detroit Edison shall, upon request, allow
a duly-authorized representative(s) of ITC such access to books and records as
is necessary for ITC to perform its obligations under this Agreement, the ITC
OATT, and any service agreements thereunder, or to comply with the requirements
of Regulatory Authorities, for purposes of auditing and verifying transactions
under this Agreement. Detroit Edison shall, upon consummation of the Transfer
Transaction, comply with all applicable reporting requirements of Regulatory
Authorities having jurisdiction over Detroit Edison with respect to the business
aspects of its operations and shall maintain such accounting records and
metering data as is necessary to perform its obligations under this Agreement.
Any such inspection and auditing of Detroit Edison's books and records conducted
by ITC pursuant to this section 4.5 shall be subject to the relevant rules and
regulations set forth in the OASIS Standards of Conduct.
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4.7 Fixed Costs of Existing Generation Resources. Detroit Edison shall
remain responsible for all costs of Generation Resources subject to its
ownership and control, including generating unit retirements and permanent
derates.
4.8 New Generation Resources. Detroit Edison shall be responsible for
the costs of any new Generation Resources constructed, purchased, leased, or
otherwise acquired by Detroit Edison during the term of this Agreement. These
costs include, but are not limited to, the cost of environmental compliance.
4.9 Demand Charges from Off-System Purchases. Demand Charges from
existing Off-System Purchases to enable Detroit Edison to meet safely, reliably,
and economically its Load Requirements shall remain the responsibility of
Detroit Edison.
ARTICLE 5. ASSIGNMENT OF REVENUES
Transmission revenues from all Grandfathered Agreements will be billed
and collected by Detroit Edison. ITC will xxxx and collect all revenues for open
access transmission service agreements assigned by Detroit Edison to ITC
pursuant to the terms of the Transfer Transaction. The revenues billed,
collected, and received pursuant to open access transmission service provided
pursuant to the terms and conditions of the ITC OATT shall be retained by ITC.
ITC shall credit to Detroit Edison those charges billed and collected for the
use of the Distribution Facilities by wholesale customers taking transmission
service under ITC OATT.
ARTICLE 6.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
OF THE OPERATING COMMITTEE
6.1 Creation of Operating Committee. Upon the consummation of the
Transfer Transaction, the Parties hereto shall create an Operating Committee
which shall consist of one member designated by each party; provided however,
that any third-party transferring ownership and/or control over its
FERC-jurisdictional transmission facilities to ITC shall be granted the
opportunity to designate one representative to the Operating Committee.
6.2 Meeting Dates. The Operating Committee shall hold such meetings at
such times designated by the Committee, but at least once per calendar year.
Meetings of the Operating Committee may also be held at any time upon the
request of a member of the Operating Committee. Minutes of the Operating
Committee meeting shall be prepared and maintained.
6.3 Decisions. All decisions of the Operating Committee shall be made
by unanimous vote of the members present or voting by proxy at the meeting at
which the vote is taken.
6.4 Duties. The Operating Committee shall have the following duties,
unless such duties are otherwise assigned by a vote of the Operating Committee
to ITC or Detroit Edison, in which case the so-assigned party shall perform such
duties. The Operating Committee shall:
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6.4.1 Be responsible for the day-to-day administration of this
Agreement and the development of any amendments thereto.
6.4.2 Review and recommend additional duties and
responsibilities for ITC or Detroit Edison consistent with FERC Order Nos. 888,
889 and 2000, and review and recommend changes to the procedures for System
Dispatch and interchange coordination.
6.4.3 Monitor the adequacy of reserves for the Parties and the
Transmission System.
6.4.4 Provide coordination of maintenance schedules for major
Generation Resources.
6.4.5 Provide coordination of other matters not specifically
provided herein which the Parties agree are necessary to operate the
Transmission System reliably and economically.
6.5 Committee Expenses. Each Party shall pay the expenses of its
representative to the Operating Committee.
ARTICLE 7. INDEMNIFICATION
7.1 Indemnification. Each Party (as an "INDEMNIFYING PARTY") shall
indemnify, hold harmless, and defend the other Party (an "INDEMNIFIED PARTY"),
its parent, affiliates and successors, and their officers, directors, employees,
agents, subcontractors and successors, from and against any and all claims,
demands, liabilities, costs, losses, judgments, damages, and expenses
(including, without limitation, reasonable attorney and expert fees and
disbursements incurred by Indemnified Party in any actions or proceedings
between Indemnified Party and a third party, the Indemnifying Party or any other
party) to the extent the foregoing are not covered by insurance ("INDEMNIFIABLE
LOSS(ES)") suffered by or asserted against Indemnified Party by a third party to
the extent caused by the gross negligence or willful misconduct of the
Indemnifying Party and/or its respective officers, directors, employees, agents
and subcontractors and arising out of this Agreement and not caused by the
negligence or willful misconduct of any such Indemnitee.
7.2 Indemnification Procedures. Any Party entitled to receive
indemnification under this Agreement (an "INDEMNITEE") as a result of having a
claim under these indemnification provisions shall make a good faith effort to
recover all losses, damages, costs, and expenses from insurers of such
Indemnitee under applicable insurance policies so as to reduce the amount of any
Indemnifiable Loss hereunder. The amount of any Indemnifiable Loss shall be
reduced to the extent that Indemnitee receives any insurance proceeds with
respect to an Indemnifiable Loss. The obligations of the Parties under this
Article 7 shall not be limited in any way by any limitation on insurance, by the
amount or types of damages (except as otherwise limited under section 7.1), or
by any compensation or benefits payable by the Parties under workers'
compensation acts, disability benefit acts or other employee acts, or otherwise.
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7.3 Defense of Claims.
7.3.1 If any Indemnitee receives written notice of the
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a Party to this Agreement or
any affiliate of a Party to this Agreement (a "THIRD PARTY CLAIM") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee will give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than thirty (30) days after the Indemnitee's
receipt of written notice of such Third Party Claim. Such notice shall describe
the nature of the Third Party Claim in reasonable detail and will indicate the
estimated amount, if practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel, and the Indemnitee will
cooperate in good faith in such defense at such Indemnitee's own expense.
7.3.2 If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in the last sentence of section 7.3.1, the Indemnifying Party will
not be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within twenty (20) calendar days (unless waiting 20 calendar days
would prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps, the Indemnitee may assume its own defense, and the Indemnifying
Party will be liable for all reasonable expenses thereof. Without the prior
written consent of the Indemnitee, the Indemnifying Party will not enter into
any settlement of any Third Party Claim which would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will
give written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10) business days after its receipt of
such notice, the Indemnitee may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will be the amount of such settlement offer, plus
reasonable costs and expenses paid or incurred by the Indemnitee up to the date
of such notice. Notwithstanding the foregoing, the Indemnitee shall have the
right to pay, compromise, or settle any Third Party Claim at any time, provided
that in such event the Indemnitee shall waive any right to indemnity hereunder
unless the Indemnitee shall have first sought the consent of the Indemnifying
Party in writing to such payment, settlement, or compromise and such consent was
unreasonably withheld or delayed, in which event no claim for indemnity therefor
hereunder shall be waived.
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7.3.3 Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a "DIRECT
CLAIM") will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, stating the nature of such claim in reasonable detail
and indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indemnifying Party will have a period of thirty (30) calendar
days within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the Indemnifying
Party will be deemed to have accepted such Direct Claim. If the Indemnifying
Party rejects such Direct Claim, the Indemnitee will be free to seek enforcement
of its rights to indemnification under this Agreement.
7.3.4 If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement, or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement, or payment by or
against any other entity, the amount of such reduction, less any costs,
expenses, or premiums incurred in connection therewith (together with interest
thereon from the date of payment thereof at the prime rate as published in The
Wall Street Journal) will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any indemnity payment, the Indemnifying Party
will, to the extent of such indemnity payment, be subrogated to all rights of
the Indemnitee against any third party in respect of the Indemnifiable Loss to
which the indemnity payment relates; provided, however, that (i) the
Indemnifying Party will then be in compliance with its obligations under this
Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party on account of said indemnity
payment are hereby made expressly subordinated and subjected in right of payment
to the Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights. Nothing in this section 7.3.4 shall be construed to
require any Party hereto to obtain or maintain any insurance coverage.
7.3.5 A failure to give timely notice as provided in this
section 7.3 will not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the Party
which was entitled to receive such notice was actually prejudiced as a result of
such failure.
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ARTICLE 8. LIMITATION OF LIABILITY
8.1 No Consequential Damages. Neither ITC nor Detroit Edison, nor their
respective officers, directors, agents, employees, successors, assigns, or
subcontractors shall be liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees, successors, assigns, or
subcontractors for claims, suits, actions, causes of action, or otherwise for
incidental, punitive, special, indirect, multiple, or consequential damages
(including attorneys' fees or litigation costs) connected with, or resulting
from, performance or non-performance of this 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, statutory (including negligence and misrepresentation), breach of
warranty, or strict liability.
8.2 Direct Damages. Subject to the indemnity obligations set forth in
Article 7, upon an Event of Default by one Party (the "DEFAULTING PARTY") under
this Agreement, which Event of Default is not excusable due to a Force Majeure
Event or due to an Event of Default by the other Party (the "NON-DEFAULTING
PARTY") under this Agreement, the Defaulting Party's liability to the
Non-Defaulting Party shall be limited to the Non-Defaulting Party's direct
damages incurred by the Non-Defaulting Party as a result of such Event of
Default by the Defaulting Party.
ARTICLE 9. FORCE MAJEURE
9.1 Force Majeure. A Party shall not be considered to be in default or
breach of this Agreement, and shall be excused from performance, or liability
for damages to the other Party, to the extent it shall be delayed in or
prevented from performing or carrying out any of the obligations or
responsibilities of this Agreement because of a Force Majeure Event. "FORCE
MAJEURE EVENT" means any occurrence beyond the reasonable control of a Party
which causes such Party to be delayed in or prevented from performing or
carrying out any of its obligations under this Agreement and which by the
exercise of due diligence in accordance with Good Utility Practices, that Party
is unable to prevent, avoid, mitigate, or overcome, including any of the
following: any act of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, ice, explosion, breakage or accident
to machinery or equipment, order, regulation or restriction imposed by
governmental military or lawfully established civilian authorities, provided
that a Force Majeure Event shall not include lack of finances or change in
market conditions, and provided further that any failure by ITC to obtain
services for the Transmission System due to the failure of any supplier or
subcontractor of ITC to perform any obligation to ITC (including Detroit Edison
as maintenance supplier) shall not constitute a Force Majeure Event hereunder
unless such subcontractor or supplier is unable to perform for reasons that
would constitute a "Force Majeure Event" hereunder.
9.2 Procedure. Any Party claiming that a Force Majeure Event has
occurred shall (i) provide prompt written notice of such Force Majeure Event to
the other Party giving a detailed written explanation of the event and an
estimate of its expected duration and probable effect on the performance of that
Party's obligations hereunder; and (ii) use commercially reasonable
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efforts in accordance with Good Utility Practices to mitigate the effect of the
Force Majeure Event on the other Party, except that settlement of any labor
dispute shall be in the sole judgment of the affected Party.
ARTICLE 10. DEFAULT
Unless excused by a Force Majeure Event, or the other Party's Event of
Default, each of the following events shall be deemed to be an "EVENT OF
DEFAULT" hereunder: failure of either Party, in a material respect, to comply
with, observe, or perform any covenant, warranty, or obligation under this
Agreement, without limitation, and such failure is not cured or rectified within
thirty (30) days after receipt of written notice of such failure from the other
Party or such longer period as may be reasonably required, provided that the
defaulting Party diligently attempts to cure the Event of Default.
ARTICLE 11. ADDITIONAL REMEDIES
Subject to section 7.1, and to the extent permitted by law, the Parties
shall be entitled to injunctive relief to prevent breaches by a Party, and
specific performance to enforce the terms of this Agreement, in addition to any
other remedy to which a Party is entitled under this Agreement, at law, or in
equity.
ARTICLE 12. DISPUTES
Any disagreement between ITC and Detroit Edison as to their rights and
obligations under this Agreement shall first be addressed by the Parties. If
representatives of the Parties are unable in good faith to satisfactorily
resolve their disagreement, the Parties shall refer the matter to their
respective senior management. If, after using their best efforts to try to
resolve the dispute, senior management cannot resolve the dispute in thirty (30)
days, either Party may exercise any right or remedy available pursuant to this
Agreement.
ARTICLE 13. REPRESENTATIONS AND WARRANTIES
13.1 ITC. ITC represents and warrants to Detroit Edison as follows:
13.1.1 Organization. ITC is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan
and ITC has the requisite corporate power and authority to carry on its business
as now being conducted.
13.1.2 Authority Relative to this Agreement. ITC has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required corporate action. The Agreement has been duly and validly executed and
delivered by ITC and constitutes a valid and binding Agreement of ITC.
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13.1.3 Regulatory Approval. ITC has obtained or will obtain by
the Closing Date any and all approvals of, and given notice to, any public
authority that is required for it to execute and deliver this Agreement.
13.1.4 Compliance With Law. ITC represents and warrants that
it is not in violation of any applicable law, statute, order, rule, or
regulation promulgated or judgment entered by any Federal, state, or local
governmental authority, which violation would materially affect ITC's
performance of its obligations under this Agreement. ITC represents and warrants
that it will comply in all material respects with all applicable laws, rules,
regulations, codes, and standards of all Federal, state, and local governmental
agencies having jurisdiction over this Agreement, except to the extent that a
failure to so comply would not have a material adverse effect on ITC's
obligations hereunder.
13.2 Detroit Edison. Detroit Edison represents and warrants to ITC as
follows:
13.2.1 Organization. Detroit Edison is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Michigan, and has the requisite power and authority to carry on its business as
is now being conducted.
13.2.2 Authority Relative to this Agreement. Detroit Edison
has the requisite power and authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory approvals, to carry out the
actions required of it by this Agreement. The execution and delivery of this
Agreement and the actions it contemplates have been duly and validly authorized
by all required corporate action. The Agreement has been duly and validly
executed and delivered by Detroit Edison and constitutes a valid and binding
Agreement of Detroit Edison.
13.2.3 Regulatory Approval. Detroit Edison has obtained or
will obtain by the Closing Date any and all approvals of, and given notice to,
any public authority that is required for it to execute and deliver this
Agreement.
13.2.4 Compliance With Law. Detroit Edison represents and
warrants that it is not in violation of any applicable law, statute, order,
rule, or regulation promulgated or judgment entered by any Federal, state, or
local governmental authority, which violation would materially affect its
performance of its obligations under this Agreement. Detroit Edison represents
and warrants that it will comply in all material respects with all applicable
laws, rules, regulations, codes, and standards of all Federal, state, and local
governmental agencies having jurisdiction over this Agreement, except to the
extent that a failure so to comply would not have a material adverse effect on
its obligations hereunder.
13.3 Effectiveness. The representations and warranties in sections 13.1
and 13.2 shall continue in full force and effect for the term of this Agreement.
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ARTICLE 14.
ASSIGNMENT OR OTHER CHANGE IN CORPORATE IDENTITY
This Agreement and all of the provisions hereof shall be binding upon,
and inure to the benefit of the Parties and their respective successors and
permitted assigns, but assignment of any right, interest, or obligation under
this Agreement may not be made without the other Party's prior written consent,
which consent shall not be unreasonably withheld. Assignments to which there is
not consent may be voided by the non-assigning Party.
ARTICLE 15. MISCELLANEOUS
15.1 Waiver. Except as otherwise provided in this Agreement, any
failure of a Party to comply with any obligation, covenant, agreement, or
condition herein may be waived by the Party entitled to the benefit thereof only
by a written instrument signed by the Party granting such waiver, but such
waiver shall not operate as a waiver of, or estoppel with respect to any
subsequent failure of the first Party to comply with such obligation, covenant,
agreement, or condition.
15.2 Governing Law. This Agreement, and all rights, obligations, and
performances of the Parties hereunder, are subject to all applicable Federal and
state laws, and to all duly-promulgated orders, and other duly-authorized action
of governmental authorities having jurisdiction. When not in conflict with or
preempted by Federal law, this Agreement will be governed by and construed in
accordance with the laws of the State of Michigan, without giving effect to the
conflict of law principles thereof.
15.3 Severability. If any of the provisions of this Agreement are held
to be unenforceable or invalid by any court or regulatory authority of competent
jurisdiction, the Parties shall, to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement with a view toward effecting the
purpose of this Agreement, and the validity and enforceability of the remaining
provisions hereof shall not be affected thereby.
15.4 Amendment. If the applicable provisions relating to the
implementation of this Agreement are changed materially from the policies,
methods, and procedures contemplated herein, the Parties shall endeavor in good
faith to make conforming changes to this Agreement with the intent to fulfill
the purposes of this Agreement. Any amendment to this Agreement shall be in
writing and signed by both Parties.
15.5 Further Assurances. The Parties hereto agree to promptly execute
and deliver, at the expense of the Party requesting such action, any and all
other and further instruments and documents which may be reasonably requested in
order to effectuate the transactions contemplated hereby, and shall carry out
their obligations under this Agreement.
15.6 No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to confer on any person, other than the Parties, any
rights or remedies under or by reason of this Agreement.
15.7 No Power of Representation. ITC shall have no power to represent,
bind, or otherwise obligate Detroit Edison.
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15.8 Confidentiality. All information regarding a Party (the
"DISCLOSING PARTY") that is furnished directly or indirectly to the other Party
(the "RECIPIENT") pursuant to this Agreement and marked "Confidential" shall be
deemed "CONFIDENTIAL INFORMATION". Notwithstanding the foregoing, Confidential
Information does not include information that (i) is rightfully received by
Recipient from a third party having an obligation of confidence to the
Disclosing Party, (ii) is or becomes in the public domain through no action on
Recipient's part in violation of this Agreement, (iii) is already known by
Recipient as of the date hereof, or (iv) is developed by Recipient independent
of any Confidential Information of the Disclosing Party. Information that is
specific as to certain data shall not be deemed to be in the public domain
merely because such information is embraced by more general disclosure in the
public domain.
15.8.1 Recipient shall keep all Confidential Information
strictly confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential Information
was received by Recipient, except as otherwise provided herein.
15.8.2 Recipient may disclose the Confidential Information to
its affiliates and its affiliates' respective directors, officers, employees,
consultants, advisors, and agents who need to know the Confidential Information
for the purpose of assisting Recipient with respect to its obligations under
this Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause such
parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
15.8.3 If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without limitation,
pursuant to the policies, methods, and procedures of the FERC, including the
OASIS Standards of Conduct, or other Regulatory Authority), Recipient will
provide the Disclosing Party with prompt written notice thereof so that the
Disclosing Party may seek a protective order or other appropriate remedy.
Recipient will furnish only that portion of the Confidential Information which
its counsel considers legally required, and Recipient will cooperate, at the
Disclosing Party's expense, with the Disclosing Party's counsel to enable the
Disclosing Party to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the Confidential Information. It is
further agreed that, if, in the absence of a protective order, Recipient is
nonetheless required to disclose any Confidential Information, Recipient will
furnish only that portion of the Confidential Information which its counsel
considers legally required.
15.9 Survival. The indemnification obligations of each Party under
Article 7 shall become effective upon the occurrence of the Closing Date, and,
for acts and occurrences prior to expiration, termination, completion,
suspension, or cancellation of this Agreement shall continue in full force and
effect regardless of whether this Agreement expires, terminates, or is
suspended, completed, or canceled. The provisions of Articles 8, 9, and 10 shall
survive termination, expiration, cancellation, suspension, or completion of this
Agreement.
15.10 Notices. All notices, requests, claims, demands, and other
communications hereunder shall be in writing and shall be deemed effective upon
receipt when delivered either by
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hand delivery, cable, telecopy (confirmed in writing), or telex, or by mail
(registered or certified, postage prepaid) to the respective Parties as follows:
If to ITC to:
--------------------------
--------------------------
--------------------------
Attention:
----------------
Fax:
----------------------
If to Detroit Edison to:
--------------------------
--------------------------
--------------------------
Attention:
----------------
Fax:
----------------------
15.11 Entire Agreement. This Agreement constitutes the entire
understanding between the Parties, and supersedes any and all previous
understandings, oral or written, which pertain to the subject matter contained
herein.
15.12 Counterparts. This Agreement may be executed in counterparts, all
of which will be considered one and the same Agreement and each of which will be
deemed an original.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date and year first above written.
INTERNATIONAL TRANSMISSION COMPANY
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
THE DETROIT EDISON COMPANY
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
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Appendix 1
Operating Protocols
24
OPERATING PROTOCOLS
Pursuant to and in accordance with the Operating Agreement between
International Transmission Company ("ITC") and The Detroit Edison Company
("DETROIT EDISON") entered into concurrently herewith, the Parties agree to the
following Operating Protocols. The Effective Date of this agreement is the same
as that described in the Operating Agreement ("Agreement"), and all capitalized
terms used herein shall have the same meaning ascribed thereto in the Operating
Agreement, unless otherwise indicated.
ARTICLE 1
CONTROL OF TRANSMISSION SYSTEM
1.1 ITC Operational Responsibilities. ITC shall have operational
control over the Transmission Assets and End-Use Facilities that comprise the
Transmission System. ITC shall function as System Dispatcher and Control Area
Operator and also have operational control over the End-Use Facilities. Upon
consummation of the Transfer Transaction, Detroit Edison will transfer
operational control of the End-Use Facilities to ITC in a manner consistent with
Good Utility Practices. ITC will cooperate with Detroit Edison to facilitate the
transfer of operational control of the End-Use Facilities.
1.1.1 ITC shall periodically review whether the Transmission
Assets and End-Use Facilities under its operational control constitute all of
the facilities necessary to provide reliable, non-discriminatory transmission
service as contemplated under the Operating Agreement and the ITC OATT.
1.1.2 ITC shall, in consultation with Detroit Edison, develop,
and revise from time-to-time as appropriate, operating procedures for its
exercise of operational control over the Transmission System and the End-Use
Facilities (hereinafter "Operating Procedures"). The Operating Procedures shall
be provided to Detroit Edison and, except to the extent determined necessary for
emergency or security reasons, such procedures shall be made available to the
public. ITC shall comply with its Operating Procedures in exercising its
operational control over the facilities described above.
1.1.3 ITC shall operate the Transmission System in such a way
as to preserve the rights of Detroit Edison's existing open access transmission
customers and transmission customers taking service under Grandfathered
Agreements.
1.1.4 ITC shall be responsible for coordinating the operation
of the Transmission System and End-Use Facilities with Detroit Edison, NERC,
ECAR, and any other applicable regional reliability councils. ITC may join such
regional reliability councils as appropriate.
1.1.5 ITC shall comply with any transmission operating
obligations imposed by federal or state law or Regulatory Authorities which can
no longer be performed solely by Detroit Edison following transfer of ownership
and operational control of the Transmission System to ITC, until such
obligations are revised or changed.
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1.2 Operational Responsibilities of Detroit Edison. Detroit Edison
shall own and maintain its End-Use and Distribution Facilities in accordance
with Good Utility Practices, and shall comply with the reasonable requests of
ITC with respect to such operation and maintenance issued in compliance with
these Operating Procedures.
1.2.1 Detroit Edison will operate its End-Use and Distribution
Facilities in such a way as to preserve the rights of parties taking
transmission service under Grandfathered Agreements and existing OATT customers.
1.3 Retained Rights by Detroit Edison. Detroit Edison shall retain all
rights of ownership in the End-Use and Distribution Facilities. Nothing in this
agreement shall be deemed to restrict or prohibit access to the Transmission
System by Detroit Edison, or its duly authorized representative(s), in
furtherance of its obligations under the Operating Agreement so long as such
access does not affect the provision of safe, reliable, and efficient
transmission service under the ITC OATT. Detroit Edison shall be notified by ITC
immediately of any event which results or which may result in unplanned outages
of a transmission line or transformer. ITC shall credit to Detroit Edison those
charges billed and collected for the use of the Distribution Facilities by
wholesale customers taking transmission service under ITC OATT.
ARTICLE 2
DETERMINATION OF AVAILABLE TRANSMISSION CAPACITY
AND TRANSMISSION SCHEDULING
2.1 Determination of Available Transmission Capacity. ITC shall
determine the ATC consistent with the terms of the ITC OATT.
2.1.1 ITC shall review all data received from other control
areas, independent transmission system operators, regional reliability councils,
or other entities that impact ATC calculations.
2.1.2 ITC shall share data with other control areas,
independent transmission system operators, regional reliability councils, or
other entities with whom data must be exchanged, as requested, in order to
determine ATC.
2.1.3 ITC shall determine the capacity, rating, control
settings, and contingencies for all Transmission Assets used to calculate ATC.
2.2 Transmission Service Requests. ITC shall receive and process all
transmission service requests in accordance with the ITC OATT.
2.2.1 ITC shall be responsible for conducting all System
Impact Studies associated with a request for transmission service. To the extent
that a request for transmission service under the ITC OATT will or may have an
adverse affect on Detroit Edison's ability to safely and reliably serve its
transmission customers pursuant to the terms of
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the Grandfathered Agreements, ITC shall coordinate its System Impact Study
analysis with Detroit Edison as follows:
2.2.1.1 ITC shall provide sufficient information to
representatives of Detroit Edison to allow them to
model load consequences of the requested service on Distribution Facilities.
2.2.1.2 ITC shall coordinate with Detroit Edison
representatives when processing requests for open
access, non-discriminatory transmission service over Distribution Facilities
pursuant the terms of the ITC OATT.
2.2.1.3 ITC shall consult with Detroit Edison with
respect to the construction of new Transmission
Assets, or the expansion of existing Transmission Assets, which affects or may
affect the Distribution Facilities.
2.2.1.4 Upon completion of any required System Impact
Studies, ITC shall be responsible for making the
final determination as to the amount of firm and non-firm transmission capacity
that is available under the ITC OATT and for resolving requests for transmission
service in accordance with the terms of the ITC OATT.
2.2.2 To the extent that there is not adequate transmission
capability to satisfy a transmission request, ITC shall relieve or facilitate
the relief of the transmission constraint consistent with Good Utility Practices
and the terms of the ITC OATT.
2.2.3 ITC shall document all requests for transmission
requests under the ITC OATT, the disposition of such requests, and any
supporting data required to support the decision with respect to such requests.
2.3 Implementation of Transmission Service Transactions. ITC shall
process and implement all requests for transmission service made under the ITC
OATT, as follows:
2.3.1 ITC shall schedule and curtail transmission service in
accordance with the terms of ITC OATT.
2.3.2 ITC shall, in consultation with Detroit Edison, develop,
and from time-to-time amend, as necessary, scheduling protocols ("Scheduling
Procedures"). The Scheduling Procedures shall not conflict with the terms of the
ITC OATT or requirements of any applicable Regulatory Authorities. All
scheduling shall be performed in accordance with the Scheduling Procedures.
2.3.3 ITC shall operate its Control Area to maintain load and
generator balance. In so doing, ITC shall comply with the scheduling
instructions issued pursuant to the Scheduling Procedures.
2.3.4 In performing its scheduling functions, ITC shall ensure
that the Transmission System is operated in compliance with applicable NERC,
ECAR or other
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regional reliability council or successor organizations' reliability
requirements, and all other applicable operating reliability criteria.
2.3.5 ITC shall perform all inadvertent flow accounting for
its control area and shall coordinate the performance of such accounting with
other control areas.
ARTICLE 3
ITC'S OBLIGATIONS PURSUANT TO THE ITC OATT
3.1 ITC shall be solely responsible for administering the ITC OATT.
3.2 ITC shall negotiate as appropriate to develop reciprocal service,
equitable tariff application, compensation principles, and any related
arrangements.
3.3 ITC shall credit to Detroit Edison those charges billed and
collected for the use of the Distribution Facilities by wholesale customers
taking transmission service under ITC OATT.
ARTICLE 4
SECURITY OF THE TRANSMISSION SYSTEM
4.1 Obligations of ITC to Maintain the Security of the Transmission
System. ITC shall be responsible for the security and reliability of the
Transmission System. In addition, ITC shall be responsible for operating its
control area in a secure and reliable manner. As Control Area Coordinator, ITC
shall exercise security monitoring and emergency response functions, as
described in more detail below.
4.2 Security Monitoring.
4.2.1 ITC shall perform load-flow and stability studies of the
Transmission System to identify and address security problems.
4.2.2 ITC shall monitor its control area for system security.
It shall be responsible for identifying and addressing local security problems.
4.2.3 ITC shall exchange necessary security information with
other control areas, independent transmission system operators, ECAR, and any
other applicable regional reliability councils consistent with NERC (or
successor organizations) and regional requirements, and the OASIS Standards of
Conduct.
4.2.4 Detroit Edison shall continuously provide ITC with all
data required to assess the security of the Transmission System consistent with
NERC (or successor organizations), ECAR, and any other applicable regional
requirements, and OASIS Standards of Conduct.
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4.3 Emergency Response. ITC shall work with Detroit Edison, other
security coordinators, NERC, ECAR, and other applicable regional councils to
develop regional security plans and emergency operating procedures.
4.3.1 ITC shall, in coordination with Detroit Edison, other
security coordinators, NERC, ECAR, or other applicable regional reliability
councils, develop, and from time-to-time update, procedures for responding to
emergencies (hereinafter the "Emergency Procedures"). Such Emergency Procedures
shall include procedures for responding to specified critical contingencies.
4.3.2 ITC shall continuously analyze issues that may require
the initiation of emergency response actions. Such analysis may be made at ITC's
initiative, or at the request of Detroit Edison and/or other Transmission
Customers, NERC, regional reliability councils, security coordinators, or other
system operators. The Emergency Procedures shall be amended to include any
changes or additions resulting from such analysis.
4.3.3 ITC shall direct the response to any emergency in the
Transmission System pursuant to the Emergency Procedures. Detroit Edison and
other Transmission Customers shall carry out the required emergency actions as
directed by ITC. ITC will alert Detroit Edison and other Transmission Customers
to the possibility of load shedding and will provide as much advance notice as
possible of the need to shed firm load.
ARTICLE 5
ANCILLARY SERVICES
Pursuant to section 3.1.4 of the Operating Agreement, ITC shall be
obligated to offer ancillary services, as required by the applicable rules and
regulations of the FERC, to all Transmission Customers taking service under the
ITC OATT. ITC shall procure such ancillary services on a non-preferential and
competitive basis from Detroit Edison and from any third-party suppliers of such
services at FERC-approved rates. Upon request, Detroit Edison shall provide
ancillary services to ITC. So long as ITC and Detroit Edison are corporate
affiliates, the charges for such ancillary services shall be in accordance with
FERC-approved cost-based rates. ITC will determine and obtain any black start
service necessary to maintain the reliability of the Transmission System.
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ARTICLE 6
TRANSMISSION AND GENERATION MAINTENANCE
6.1 Planned Transmission Maintenance. ITC is responsible for reviewing,
establishing, and updating schedules for all planned maintenance of the
Transmission System. ITC shall establish its planned transmission maintenance
schedules for a minimum of a rolling one (1) year period, which shall be updated
monthly.
6.1.1 ITC shall determine if, and to the extent which, such
planned transmission maintenance affects transmission service, ATC, ancillary
services, the security of the Transmission System, and any other relevant
effects. This determination shall include appropriate analytical detail. As part
of its review process, ITC shall identify planned transmission maintenance
schedules that limit ATC, and opportunities and associated costs for
rescheduling planned maintenance to enhance ATC.
6.1.2 ITC will coordinate planned outages of the Transmission
System with Detroit Edison. Detroit Edison shall inform ITC of all
customer-owned equipment outages that could impact loading on the Transmission
System.
6.1.3 In developing its transmission maintenance schedule, ITC
will comply with all applicable reliability standards, including, but not
limited to, the current maintenance practices of Detroit Edison, will meet
Detroit Edison's requirements for access to the Transmission System, and will
endeavor to minimize transmission congestion.
6.2 Unplanned and Emergency Transmission Maintenance. ITC shall
coordinate unplanned transmission maintenance with Detroit Edison to assure that
reliability of the Transmission System is maintained. For emergency conditions
which are likely to result in significant disruption of service or damage to
Generation Resources, the Transmission System or Distribution Facilities, or are
likely to endanger life, property, or the environment, Detroit Edison (to the
extent responsible for performing said maintenance) shall notify ITC of such
emergency maintenance. Prior approval by ITC for such emergency transmission
maintenance is not required.
6.3 Generation Maintenance. Detroit Edison shall coordinate the
maintenance of Generation Resources with ITC to the extent such generation
maintenance affects the capability or reliability of the Transmission System as
follows:
6.3.1 Detroit Edison shall submit its planned generating unit
maintenance schedules to ITC annually for a two (2) year period, updated to
include changes. A five (5) year ahead schedule shall be submitted bi-annually.
6.3.2 ITC shall analyze planned generating unit maintenance
schedules to determine the effect on Detroit Edison (and other Transmission
Customers), ATC, ancillary services, the security of the Transmission System,
identification of must-run units, and any other relevant effects. ITC shall
inform Detroit Edison if its generation maintenance schedule is expected to have
an impact on the security of the Transmission System.
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6.3.3 As part of its review process, ITC shall identify
Generation Resource maintenance schedules that limit ATC and shall recommend
opportunities for rescheduling planned maintenance to enhance ATC. If Detroit
Edison reschedules maintenance at ITC's request, Detroit Edison shall be
compensated for additional costs associated with rescheduling such planned
maintenance pursuant to procedures adopted by ITC, and applied on a
non-discriminatory basis to all similarly situated generation owners located
within ITC's Control Area.
6.3.4 With respect to all Generating Resources connected to
the Transmission System, ITC will enter into interconnection agreements and, if
necessary, must-run agreements which define coordinated operations and such
other operating requirements as are necessary to ensure the safe and reliable
operation of such Generation Resources with the Transmission System.
6.4 Unplanned Generation Maintenance. Detroit Edison shall notify ITC
promptly in the event of an unplanned outage of the Generation Resources,
including partial forced outages. Detroit Edison will coordinate unplanned
generation maintenance with ITC to ensure that the reliability of the
Transmission System is maintained. For emergency conditions which are likely to
result in significant disruption of service or damage to Generation Resources,
the Transmission System, or Distribution Facilities, or are likely to endanger
life, property, or the environment, Detroit Edison shall notify ITC of the
emergency generation maintenance. Prior approval for emergency generation
maintenance is not required.
ACCEPTED AND AGREED THIS day of May, 2000.
------
International Transmission Company The Detroit Edison Company
--------------------------------- ------------------------------
By: By:
Its: Its:
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Appendix 2
Index of Detroit Edison Open Access Transmission Customers
72
32
SERVICE AGREEMENTS
WITH
THE DETROIT EDISON COMPANY
THE DETROIT EDISON COMPANY OPEN ACCESS TRANSMISSION TARIFF
DOCKET NO. OA96-78-000
TRANSMISSION CUSTOMER DOCKET NUMBER SERVICE DATE NETWORK FIRM NON FIRM
AGREEMENT P-T-P P-T-P
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Cargill-Alliant, L.L.C. ER99-1697-000 1/5/99 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
DECo. Merchant Operations ER97-1024 1/1/97 X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
DECo. Merchant Operations ER97-2297-000 2/28/97 X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Duke Energy Corporation ER99-2871-000 5/24/99 X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
MEGA ER99-2873-000 5/21/99 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Nordic Electric, L.L.C. ER00-0841-000 12/24/99 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Toledo Edison Company ER97-2806 4/2/97 X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Tenaska Power Services ER98-3517-000 6/10/98 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Tractebel Energy Marketing, Inc ER98-4465-000 7/12/98 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
Western Resources ER99-2872-000 5/21/99 X X
--------------------------------------- --------------------- -------------- ----------------- --------------- ------------------
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33
SERVICE AGREEMENTS
WITH
THE DETROIT EDISON COMPANY
JOINT OPEN ACCESS TRANSMISSION TARIFF
THE DETROIT EDISON COMPANY/CONSUMERS ENERGY COMPANY
DOCKET NO. OA97-249-000
JOINT NETWORK JOINT
TRANSMISSION CUSTOMER DOCKET NUMBER SERVICE DATE AGREEMENT JOINT FIRM NON FIRM
P-T-P P-T-P
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
American Electric Power ER97-4091-000 7/11/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
American Electric Power ER97-4096-000 7/16/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Cargill-Alliant, L.L.C. ER99-1699-000 1/1/99 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
CMS Marketing Trading ER97-3479-000 5/13/97 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Cinergy Services, Inc. ER97-3480-000 5/23/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Cleveland Electric ER97-3478-000 5/13/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Commonwealth Edison ER97-4218-000 5/2/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Constellation Pwr.Source, Inc. ER99-4273-000 8/31/99 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Xxxxxxxx, Xxxx xx XX00-0000-000 9/22/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
DECo Merchant Operations ER97-2061-000 2/28/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
DTE Energy Trading ER98-2776-000 4/1/98 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Duke Energy Corporation ER99-2871-000 5/24/99 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Enron Power Marketing, Inc. ER97-4413-000 8/11/97 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Illinois Power Company ER97-3470-000 5/20/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Louisville Gas & Electric Co. ER97-4094-000 5/11/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
MEGA ER99-2873-000 5/21/99 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Minnesota Power Light ER97-3468-000 6/12/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
New York State Electric & Gas ER98-690-000 9/17/97 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Northern Indiana (NIPSCO) ER97-4092-000 7/11/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Ohio Edison Corporation & ER97-3471-000 5/23/97 X
Pennsylvania Power
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
PanEnergy Trading & Mkt. ER97-3476-000 5/13/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Pennsylvania P & L Co. ER98-690-000 9/17/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Public Service Elec.& Gas-NJ ER98-690-000 9/17/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
PECo. Energy Co.-Power Team ER97-4093-000 7/11/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Xxxxxxxxx, Xxxxxxx xx XX00-0000-000 9/22/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Tenaska Power Services Co. ER98-3517-000 6/10/98 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Thumb Electric Co-op. ER97-4436-000 9/1/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Toledo Edison Company ER97-3477-000 4/2/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Tractebel Energy Marketing, Inc ER98-4464-000 7/12/98 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Virginia Electric & Power ER97-3475-000 6/9/97 X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
Wolverine Power Supply Coop. ER00-0878-000 1/1/00 X X
--------------------------------------- -------------------- --------------- ----------------- --------------- ------------------
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