EXHIBIT B-10
APS POWER AGREEMENT
BATH COUNTY PUMPED STORAGE PROJECT
This Agreement entered into this 14th day of August, 1981,
among Monangahela Power Company, an Ohio corporation ("Mon"), The
Potomac Edison Company, a Virginia and Maryland corporation
("PE"), West Penn Power Company, a Pennsylvania corporation
("WPP") (Mon, PE and WPP being hereinafter referred to
individually as "Company" and collectively as the "Companies"),
and Allegheny Generating Company, a Virginia corporation ("AGC")
(AGC and the Companies being hereinafter sometimes collectively
referred to as the "Parties").
WHEREAS, the Companies are engaged in furnishing electric
service in portions of Maryland, Ohio, Pennsylvania, West
Virginia and Virginia and, as such, own and operate facilities
for generation, transmission and distribution of electricity
within those states and will own all of the outstanding common
stock of AGC; and
WHEREAS, the Companies currently are parties to a Power
Supply Agreement which among other things provides for the
coordination in the planning and operation of their electric
systems yielding important benefits to each of them and to the
users of electric energy in their service areas; and
WHEREAS , the Parties have entered into the Purchase
Agreement, the Capacity Agreement and the Operating Agreement,
with Virginia Electric and Power Company, a Virginia corporation
("VEPCO"), relating to the ownership, construction,
replacement, retirement, control, management, operation and
maintenance of the Bath County Pumped Storage Project (the
"Project") and to the purchase of capacity therefrom; and
WHEREAS, Mon and PE have entered into the Transmission
Facilities Exchange Agreement, dated June 17, 1981, with VEPCO,
relating to certain transmission lines and facilities; and
WHEREAS, AGC will purchase, and own as a tenant in common,
an undivided interest in the Project as described in the Purchase
Agreement, including all of the lands, dams, reservoirs,
buildings and other structures, electrical and hydraulic
equipment, substations and transmission lines described in the
Federal Power Commission License for Project No. 2716; and
WHEREAS, the Parties desire to enter into this Agreement for
the purpose, among others, of setting forth certain of the
obligations and rights of the Companies with respect to the
capacity and power of the Project.
NOW, THEREFORE, in consideration of these premises and the
mutual covenants set forth herein, the Parties agree as follows:
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ARTICLE I
Definitions
1.1. Definitions. Except as otherwise expressly
provided in Section 1.2 or elsewhere herein or unless the
context otherwise requires, the terms used in this Agreement
shall have the same meanings set forth in the Purchase Agree-
ment.
1.2. Additional Definitions. Unless the context
otherwise requires, the following terms, whenever used in this
Agreement, shall have the following respective meanings:
"Agreement" means this APS Power Agreement as it may
from time to time be amended or supplemented.
"Capacity Responsibility" of a Company for a Period
means the average of the Company's three highest Demands
occurring in different months during the 24 month period ending
at the end of such Period.
"Capacity Responsibility Ratio" of a Company for a
Period means the ratio of its Capacity Responsibility for such
Period to the Total Capacity Responsibility for such Period.
"Demand" means, in general, the expression in
kilowatts of the energy requirement of a system or systems,
stated in kilowatthours per hour, occurring in any one hour
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interval beginning on the clock hour during any period. As
applied to any Company, Demand means the demand attributable to
the energy required by that Company for retail sales to its
customers, for its own use other than in the operation of its
generating facilities, and for sales to local distributing and
other electric utility systems that are regularly dependent upon
that Company for a part of their power supply. Demands
attributable to interruptible power and other scheduled sales
shall be included to the extent determined by the Power Supply
Committee in the light of the effect of such sales on the need
for generating capacity. In cases where hourly meter records are
not available for certain components of a Company's Demand, the
amounts of such components shall be estimated in the manner
prescribed by the Power Supply Committee.
"FERC" means the Federal Energy Regulatory Commission.
"Period" means a calendar year during the term of this
Agreement, except that the Initial Period and Final Period, if
any, may be less than a calendar year in duration. The initial
Period will commence with the Commercial Operation Date and end
on the next succeeding December 31. The Final Period with respect
to any Company will commence with the January 1 immediately
following the last full calendar year during which such Company
shall have purchased capacity
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from AGC pursuant to this Agreement and end on the day on which
the obligation of such Company to purchase capacity from AGC
pursuant to this Agreement ceased.
"Power Supply Agreement" means the Power Supply
Agreement, dated January 1, 1968, among the Companies, as
amended from time to time thereafter, or any agreement that
replaces or supersedes such Power Supply Agreement.
"Power Supply Committee" has the meaning set forth
in the Power Supply Agreement.
"Purchase Agreement" means the Project Construction
and Purchase Agreement, dated June 17, 1981, between VEPCO, on
the one hand, and the Parties, on the other, as such Agreement
may from time to time be amended or supplemented.
"System" has the meaning set forth in the Power
Supply Agreement.
"Total Capacity Responsibility" for any Period means
the sum of the Capacity Responsibilities of all the Companies
for such Period.
ARTICLE II
Purchase of Capacity
2.1 Purchase and Sale of Capacity. On and after the
Commercial Operation Date AGC shall sell to the Companies, and
the Companies, severally and not jointly, shall
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purchase, in proportion to their respective Capacity Respon
sibility Ratios then in effect, (A) such number of megawatts of
capacity of the Project as is equal to AGC's Ownership Share of
the megawatt capacity of the Project plus (B) such megawatts of
capacity of the Project as AGC shall have purchased from VEPCO
pursuant to the Capacity Agreement. If some portion or all of the
capacity of the Project is unavailable because of maintenance,
scheduled or forced, or for any other reason, then each Company's
entitlement to capacity shall be reduced in proportion to the
ratio of unavailable Project capacity to total Project capacity,
but each Company's payments hereunder shall not be reduced.
2.2 Purchase Price for Capacity. The price for
capacity purchased pursuant to Section 2.1 shall be the rate set
forth in Appendix I and accepted for filing by the FERC and such
other regulatory agencies, if any, having jurisdiction with
respect to such rate; provided, however, that if AGC and any one
or more of the Companies are unable to agree on a change in the
rate or in the interpretation of Appendix I, AGC may make an
appropriate filing with the FERC and such other regulatory
agencies, and any one or more of the Companies may contest or
seek modification of such filing in any appropriate proceeding or
proceedings.
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ARTICLE III
Project Energy
3.1 Pumping and Taking Energy. Each Company shall
have the right to furnish its share, in proportion to its
Capacity Responsibility Ratio, of the pumping energy furnished
by AGC pursuant to the Capacity Agreement and shall have the
concomitant right to receive its share, in proportion to its
Capacity Responsibility Ratio, of the energy generated from the
Project and received by AGC. Subject to the terms of the Basic
Agreements, the pumping and taking of energy of the Project by
the Companies shall be conducted under the direction of the
Power Supply Committee in accordance with the Power Supply
Agreement.
ARTICLE IV
Metering
4.1 Metering Facilities. Arrangements with respect to
location, type and ownership of metering facilities required for
purposes of controlling the pumping and taking of energy of the
Project by the Companies hereunder shall be made by the Power
Supply Committee, subject to the provisions of Article V of the
Operating Agreement.
4.2 Testing and Reading of Meters. All Project meters
belonging to a Party shall be inspected and tested by the owner
thereof at such intervals as may be specified
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by the Power Supply Committee. Any inaccuracy disclosed by such
tests shall be promptly corrected by the owner. Additional
inspections and tests at particular installations shall be made
by the owner upon request of any Company. Representatives of
the requesting Company shall be afforded an opportunity to be
present at all such additional inspections and tests. If in any
test a meter is found to be inaccurate by more than one percent,
fast or slow, an adjustment shall be made in payments hereunder
to compensate for
such inaccuracy over such period, not more than two months, as
the inaccuracy is determined to have existed. It at any time a
meter should fail to register or its registration should be so
erratic as to be meaningless, the estimated correct registration
for billing purposes shall be based upon records of check
meters, if available, or otherwise from the best obtainable
data. Arrangements with respect to the reading of Project meters
belonging to VEPCO shall be made by the Power Supply Committee.
ARTICLE V
General
5.1 Uncontrollable Forces. No Party shall be
considered to be in default in respect of any obligation
hereunder if prevented from fulfilling such obligations by,
reason of any cause beyond the reasonable control or such
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Party, including, without limitation, strikes or labor disputes.
5.2 Waivers. Any waiver at any time of any rights as
to any default hereunder or any other matter arising hereunder
shall not be deemed a waiver as to any subsequent default or
matter.
5.3 Regulatory Authority. This Agreement is made
subject to the jurisdiction of any governmental authority or
authorities having jurisdiction in the premises.
5.4 Duration. The term of this Agreement shall
commence on the Commercial Operation Date and this Agreement
shall continue in effect until (1) AGC shall cease to own an
undivided interest in the Project and shall cease to be obligated
to purchase any capacity of the Project, or (2) the Project is
retired, whichever shall first occur.
5.5 Successors and Assigns. This Agreement shall inure
to and bind the successors and assigns of the Parties. This
Agreement shall not be assigned by any Party without the written
consent of the others except to Allegheny Power System, Inc. (if,
at the time of such assignment, Allegheny Power System, Inc.
shall own directly an undivided interest in the Project or shares
of stock of AGC) or to a corporation into which such Party shall
be merged or with which it shall be consolidated or to a
corporation resulting from any merger
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or consolidation to which such Party. shall be a party or to a
person or corporation to which substantially all the business and
assets of such Party shall be transferred.
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be
duly executed.
MONONGAHELA POWER COMPANY
By/s/ XXXXX X. EPPPICH
Vice President
THE POTOMAC EDISON COMPANY
By/s/ XXXX XXXXX
Vice President
WEST PENN POWER COMPANY
By/s/ XXXXX XXXXXXX
Vice President
ALLEGHENY GENERATING COMPANY
By/s/ XXXX X. XXXX
Vice President
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Appendix I
SECTION 1. CAPACITY PURCHASE CHARGE
1.1 The Capacity Purchase Charge shall equal the sum
of the following two parts. Part A Shall be the charge for the
capacity purchased by a Company which is attributable to AGC's
Ownership Share of the Project ("Part A Capacity Purchase
Charge"). Part B shall be the charge for capacity of the Project
which AGC shall have purchased pursuant to the Capacity Agreement
("Part B Capacity Purchase Charge").
1.2 The Part A Capacity Purchase Charge shall be
determined as follows:
(a) AGC shall calculate a capacity charge per kilowatt
("Capacity Charge per Kilowatt") in accordance with subsection
(b) of this Section 1.2 for each Period, during the term of this
Agreement.
(b) The Capacity Charge per Kilowatt for any Period
during which any Company is obligated to purchase capacity shall
be calculated as follows:
(i) Total the amount of AGC's net investment
in production and transmission plant at the Project
in commercial service and in materials and supplies
applicable to the Project at the end of the month
immediately preceding the Period (or on the Commercial
Operation Date if the calculation is for the Initial
Period) and at the end of each month during the Period and
divide by the sum of the number of months (partial months,
if any, in the Initial Period and the Final Period shall be
reflected as an appropriate fraction) in the Period plus
one. The net investment in production and transmission plant
at the Project shall be the difference between AGC's cross
investment therein that is recorded in Account 101, Account
106 and Account 107 of the Uniform Systems of Accounts
(electric plant accounts 330 through 346,350 through 359,
and 389 through 398) and the sum of (1) the accumulated
provisions for depreciation applicable to the Project
recorded in Account 108 of the Uniform Systems of Accounts
and (2) accumulated deferred income taxes applicable to the
Project then recorded in Accounts 281, 282 and 283 of the
Uniform Systems of Accounts to the extent reflected as such
by the FERC in ratemaking decisions. The net investment in
materials and supplies applicable to the Project shall be
those recorded in Account 154 of the Uniform Systems of
Accounts.
(ii) Determine the weighted monthly average number of
kilowatts of the Project's capacity owned by AGC and in
commercial service during such Period.
(iii) Determine the actual investment per kilowatt by
dividing the amount determined under (i) by the amount
determined under (ii).
(iv) Determine the rate, which, after provision for
federal and state income taxes, (1) provides AGC with an
overall return of 15 1/2% on its common equity and (2)
reimburses AGC for its cost of preferred stock and debt
securities applicable to the financing of its Ownership
Share of the Project and outstanding during the Period. The
computation of income taxes shall reflect interest as a
deduction and shall reflect interperiod income tax
allocations to the extent reflected as such by the FERC in
ratemaking decisions and reflected in AGC's accounting
records.
(v) Determine the total amount of all expenses incurred by
AGC during the Period in connection with its Ownership Share
and recorded in the accounts listed in Exhibit 1. Indirect
expenses incurred by AGC but
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nonetheless attributable to its Ownership Share shall be
included and if an allocation is necessary such indirect
expenses shall be allocated to such Ownership Share by a
method customarily used by the FERC and considered rea
sonable in the circumstances.
(vi) Determine the expenses per kilowatt incurred by AGC
during the Period by dividing the amount determined under
(v) by the amount determined under (ii).
(vii) Complete the following table:
(1) Return in dollars per kilowatt = item (iv) x
item (iii) $_______
(2) Annual expenses in dollars per kilowatt = item
(vi)
$_______
(3) Subtotal
$_______
(4) Xxxxxxxx Xxxxx Receipts Tax = (line (3) x * )
$_______
(5)Capacity Charge per Kilowatt
$_______
(*The rate from time to time which will reimburse
AGC for its liability, if any, for this tax.)
(c) The Part A Capacity Purchase Charge for a Company
for any Period shall be the product of the Capacity Charge per
Kilowatt for such Period and the kilowatts or capacity of the
Project owned by AGC which such Company is obligated to purchase
during such Period.
1.3The Part B Capacity Purchase Charge for a Company for
any Period shall be the amount paid by AGC pursuant to the
Capacity Agreement for such Period times such Company's Capacity
Responsibility Ratio for such Period.
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SECTION 2. PAYMENT
2.1 The payment for the Part A Capacity Purchase
Charge shall be determined as follows:
(a) AGC shall calculate, in accordance with Section
1.2 of this Appendix I, an estimated Part A Capacity Purchase
Charge for each Company for each Period using such estimates,
where actual amounts are not known, which in AGC's best judgment
shall reasonably approximate actual amounts called for in such
section. AGC shall inform each Company of the result of such
calculation no later than 45 days before the Period to which the
estimated billing shall apply.
(b) Each Company shall pay its estimated Part A
Capacity Purchase Charge for any Period in equal monthly
installments beginning with the first month of such Period.
Payment by each Company is due on the 15th of each month.
(c) Within 90 days following the close of any Period,
AGC shall render an invoice to each Company for its Part A
Capacity Purchase Charge less such amounts as shall have been
paid by such Company pursuant to subsection (b) of this Section
2.1. Within 10 days after the date of such invoice each Company
shall pay AGC the deficiency of such payments by such Company, if
any, or AGC shall refund to such Company the excess of such
payments by it, if any.
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2.2 The payment for the Part B Capacity Charge
shall be determined as follows:
(a) Before the beginning of any Period, AGC shall furnish the
Companies with a payment schedule showing the estimated amount
(which shall also be apportioned among them in accordance with
their estimated Capacity Responsibility Ratios) and due date of
each payment required during such Period pursuant to the Capacity
Agreement.
(b) Each Company will make payments to AGC in
accordance with such payment schedule, as such
schedule may be modified from time to time by AGC
to reflect changes in the estimated amounts
required pursuant to the Capacity Agreement or in
the Companies' estimated Capacity Responsibility
Ratios.
(c) As soon as practicable after receiving VEPCO's invoice
showing the billing amount (determined in accordance with the
Capacity Agreement) for the Period, AGC shall render the
Companies an invoice showing their respective shares, in
proportion to their respective Capacity Responsibility Ratios,
less such amounts as shall have been paid by them pursuant to
subsection (b) of this Section 2.2. Each Company shall pay AGC
the deficiency of such payments by such Company, if any, or AGC
shall refund to such Company the excess of such payments, if any.
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SECTION 3. OTHER PROVISIONS
3.1 Nothing contained herein shall be construed as
affecting in any way the right of AGC to unilaterally make
application to the FERC (or any other regulatory authority having
jurisdiction with respect to the price for capacity purchased
pursuant to this Agreement) for a change in rates or charges
under Section 205 of the Federal Power Act (or otherwise) and
pursuant to the applicable rules and regulations of the FERC (or
such other regulatory authority).
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Operation and maintenance expenses for the Project
recordable in the following accounts:
535 Operation supervision and engineering
536 Water for power
537 Hydraulic expenses
538 Electric expenses
539 Miscellaneous hydraulic power generation expenses
540 Rents
541 Maintenance supervision and engineering
542 Maintenance of structures
543 Maintenance of reservoirs, dams and waterwavs
544 Maintenance of electric plant
545 Maintenance of miscellaneous hydraulic plant
546 Operation supervision and engineering
547 Fuel
548 Generation expenses
549 Miscellaneous other power generation
550 Rents
551 Maintenance supervision and engineering
552 Maintenance of structures
553 Maintenance of generating and electric equipment
554 Maintenance of miscellaneous other power generation plant
560 Generation supervision and engineering
562 Station expenses
563 Overhead line expenses
566 Miscellaneous transmission expenses
567 Rents
568 Maintenance supervision and engineering
569 Maintenance of structures
570 Maintenance of station equipment
571 Maintenance of overhead lines
573 Maintenance of miscellaneous transmission plant
920 Administrative and general salaries
921 Office supplies and expenses
922 Administrative expenses transferred - Cr.
923 Outside services employed
924 Property insurance
925 Injuries and damages
926 Employee pensions and benefits
928 Regulatory commission expenses
930.2 Miscellaneous general expenses
931 Rents
932 Maintenance of general plant
