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Exhibit B-1
OPERATING AGREEMENT
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WHEREAS, FirstEnergy Corp. has formed a wholly-owned
subsidiary, American Transmission Systems, Inc. ("ATSI") to own, plan, and
operate Transmission Facilities transferred from The Cleveland Electric
Illuminating Company, Ohio Edison Company, Pennsylvania Power Company, and The
Toledo Edison Company (FirstEnergy Operating Companies) and to become the
Control Area Operator for the Transmission System;
WHEREAS, the FirstEnergy Operating Companies have delivered a
Xxxx of Sale transferring ownership of their transmission facilities to ATSI;
WHEREAS, the FirstEnergy Operating Companies have entered into
Ground Leases which provide for non-exclusive use of transmission rights-of-way
by ATSI;
WHEREAS, the FirstEnergy Operating Companies and ATSI desire
to enter into an Agreement providing for the planning, operation, and control of
the Transmission System by ATSI;
THIS OPERATING AGREEMENT, including all appendices attached
hereto (hereinafter "Agreement") is entered into by ATSI and the FirstEnergy
Operating Companies, (Individually a "Party" and collectively the "Parties")
transferring the ownership, planning, and operation of the FirstEnergy
Transmission System to ATSI.
ARTICLE ONE
DEFINITIONS
1. IN GENERAL
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Unless the context otherwise specifies or requires, the following terms
used in this Agreement, or in any appendix to this Agreement, shall have the
meanings set forth below. Additional terms are defined in other provisions of
this Agreement as needed.
1.1 AGENCY AGREEMENT. The agreement appended hereto as Appendix C which
allows ATSI
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to act as agent for the FirstEnergy Operating Companies to the extent necessary
to provide transmission service to wholesale customers served at voltages below
69 kV over Distribution Facilities under the Transmission Tariff.
1.2 CONTROL AREA OPERATOR. Means operating an electric power system or
combinations of electric power systems to which a common automatic generation
control scheme is applied in order to:
a. match, at all times, the power output of the
generators within the electric power system(s) and
capacity and energy purchased from or sold to
entities outside or within the electric power
system(s), in accordance with transmission service
requests with the load within the electric power
system(s);
b. maintain scheduled interchange with other Control
Areas, within the limits of Good Utility Practice;
c. maintain the frequency of the electric power
system(s) to NERC standards and provide emergency
services in cooperation with the FirstEnergy
Operating Companies and Good Utility Practice;
d. provide sufficient generating capacity to maintain
operating reserves in accordance with Good Utility
Practice; and
e. administer and implement all transmission
reservations in accordance to the "Open Access Same
Time Information System" (OASIS). Following FERC
approval, ATSI will be the Control Area Operator for
the FirstEnergy electric power system.
1.3 DISTRIBUTION FACILITIES. All facilities with nominal voltages below
69 kV which are owned or operated by the FirstEnergy Operating Companies.
Distribution Facilities include the 36, 34.5, 33 and 23 kv lines and associated
facilities defined in Section 3.1.3 of this Agreement. Distribution
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facilities shall include the final circuit connection into substations,
including substation facilities, providing transformation or connection to any
wholesale or retail customer, regardless of the nominal voltage level.
Distribution Facilities include all metering and related facilities necessary to
serve such customers, including customer owned Distribution Facilities operated
by the FirstEnergy Operating Companies and such other facilities defined in
Appendix D.
1.4 EFFECTIVE DATE. The Effective Date of this Agreement is the date
that FERC approves the application of the FirstEnergy Operating Companies for
transfer of ownership, operation, and control of Transmission Facilities to
ATSI.
1.5 FERC. The Federal Energy Regulatory Commission, or any successor
agency.
1.6 FIRSTENERGY OPERATING COMPANIES. Ohio Edison Company, Pennsylvania
Power Company, The Cleveland Electric Illuminating Company, and The Toledo
Edison Company.
1.7 GENERATION FACILITIES. Generating Facilities are facilities used
for the production of electric energy and which are owned and operated by the
FirstEnergy Operating Companies. The Generation Facilities are described in more
detail in Appendix D.
1.8 GOOD UTILITY PRACTICE. Any of the practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods, and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at reasonable cost consistent with good business practices, reliability,
safety, and expedition. Good Utility Practice is not intended to be limited to
the optimum practice, method, or act, to the exclusion of all others, but rather
to be a range of acceptable practices, methods, or act generally accepted in the
region.
1.9 GRANDFATHERED TRANSMISSION AGREEMENTS. Grandfathered Transmission
Agreements has the meaning given in Section 2.1.5 of this Agreement.
1.10 REGULATORY AUTHORITY(IES). Regulatory Authority(ies) includes any
federal, state, local or
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other governmental, regulatory or administrative agency having jurisdiction over
the subject matter of this Agreement.
1.11 TRANSFER DATE. The first business day following the Effective Date
when ownership, operation, and control of Transmission Facilities is transferred
to ATSI.
1.12 TRANSMISSION FACILITIES. Transmission facilities of 69 kV nominal
rating and above, all transformers where the nominal low-side voltage is 69 kV
and above, the System Control Center facility and equipment, and such other
facilities described in Appendix D, sold to, and owned by ATSI. The Transmission
Facilities also include any other facilities built, purchased, leased, or
otherwise acquired by ATSI in furtherance of its obligations under this
Agreement, including any new metering necessary between ATSI and either the
Distribution Facilities or Generation Facilities.
1.13 TRANSMISSION TARIFF. The Transmission Tariff on file with the FERC
under which ATSI will offer open access transmission service, or any successor
tariff.
1.14 TRANSMISSION SYSTEM. The Transmission Facilities owned, operated,
and controlled by ATSI that are used to provide service under the Transmission
Tariff.
1.15 TRANSMISSION CUSTOMER. A Transmission Customer under the
Transmission Tariff or any entity that is a party to a transaction under the
Transmission Tariff. Transmission Customer includes the FirstEnergy Operating
Companies.
ARTICLE TWO
RIGHTS, POWERS, AND OBLIGATIONS OF ATSI
2. PLANNING AND OPERATIONS.
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2.1.1 PLANNING ACTIVITIES. ATSI shall plan the Transmission System in
order to provide all Transmission Customers with efficient, reliable, and
non-discriminatory transmission service under the Transmission Tariff. Such
planning shall conform to applicable reliability requirements of the North
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American Electric Reliability Council (NERC), applicable regional reliability
councils, or any successor organizations, and all applicable requirements of
federal or state laws or Regulatory Authorities and any reliability procedures
or guidelines adopted by ATSI. Such planning shall seek to minimize costs for
both ATSI and Transmission Customers, consistent with Good Utility Practice and
the reliability and other requirements set forth in this Agreement, but shall
also include consideration of economic Transmission System expansion, whether by
construction or acquisition of new Transmission Facilities. ATSI shall plan the
Transmission System as provided in Appendix A to this Agreement.
2.1.2 RELIABILITY. ATSI shall have responsibility for the reliability
of the Transmission System.
2.1.3 OPERATIONAL CONTROL. ATSI shall operate the Transmission System
and the high side (69 kV or higher) devices of the Distribution Facilities as
necessary to provide all Transmission Customers with efficient, reliable, and
non-discriminatory transmission service under the Transmission Tariff. Such
operation shall be exercised in accordance with Good Utility Practice and shall
conform to applicable reliability requirements of the NERC, applicable regional
reliability councils, or any successor organizations, and all applicable
requirements of federal or state laws or Regulatory Authorities. ATSI shall
establish reliability guidelines or procedures necessary to implement and comply
with applicable reliability requirements. ATSI's operation of the Transmission
System shall be in accordance with Appendix B to this Agreement.
2.1.4 PERFORMANCE OF REGULATORY OBLIGATIONS. ATSI shall comply with
transmission operation and planning obligations of the FirstEnergy Operating
Companies imposed by federal or state laws or Regulatory Authorities, as of the
Effective Date of this Agreement, including all transmission related obligations
adopted by FERC in OHIO EDISON, ET AL., 81 FERC section 61,110 (1997), and
license conditions imposed by the Nuclear Regulatory Commission or its
predecessor, which can no longer be performed solely by the FirstEnergy
Operating Companies following transfer of ownership and control of their
Transmission Facilities to ATSI, until such time as such obligations are changed
or revised to relieve
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the FirstEnergy Operating Companies or ATSI in whole or in part of such
obligations.
2.1.5 GRANDFATHERED TRANSMISSION AGREEMENTS. Where the FirstEnergy
Operating Companies are responsible for providing transmission service under
agreements or tariffs which were executed or effective prior to July 9, 1996
(Grandfathered Transmission Agreements), ATSI and the FirstEnergy Operating
Companies will execute a network integration service agreement under the
Transmission Tariff to ensure that the FirstEnergy Operating Companies'
obligation to provide transmission service under the Grandfathered Transmission
Agreements is satisfied. The load served pursuant to the Grandfathered
Transmission Agreements will be included in the FirstEnergy Operating Companies'
member load ratio calculation under the Transmission Tariff, and the FirstEnergy
Operating Companies shall compensate ATSI for this service under the
Transmission Tariff. The FirstEnergy Operating Companies will continue to xxxx
customers served under Grandfathered Transmission Agreements in accordance with
those agreements.
2.2 NON-DISCRIMINATORY TRANSMISSION SERVICE.
2.2.1 TRANSMISSION. ATSI shall offer transmission service over the
entire Transmission System, to all "Eligible Customers", as defined in the
Transmission Tariff, including the FirstEnergy Operating Companies, on a
non-discriminatory basis, pursuant to the Transmission Tariff and Agency
Agreement attached hereto as Appendix C. ATSI shall be the Transmission Provider
under the Transmission Tariff.
2.2.2 PRICING. ATSI may propose to the FERC such pricing for
transmission service as is necessary to fulfill its obligations under this
Agreement and may propose to the FERC such changes in prices, pricing methods,
terms, and conditions as are necessary to continue to fulfill such obligations.
2.2.3 STANDARDS OF CONDUCT. ATSI, the FirstEnergy Operating Companies,
their affiliates, and their directors, officers, employees, contractors, and
agents shall adhere to the ATSI Standards of Conduct as approved by this
Commission.
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2.2.4 OASIS. ATSI shall assume responsibility for the OASIS or
successor system(s) currently maintained by FirstEnergy Operating Companies. The
OASIS shall conform to the requirements for such systems as specified by the
FERC in Xxxxx Xx. 000, XXXX Xxxx. & Regs. Section 31,037 (1996), as amended by
rehearing orders.
2.2.5 ANCILLARY SERVICES. ATSI shall offer, as part of the Transmission
Tariff, such ancillary services as are required by the FERC to be offered. ATSI
shall obtain ancillary services on a least cost basis. ATSI may obtain ancillary
services from the FirstEnergy Operating Companies or from such other generators
as make these services available to ATSI at their FERC approved rates for these
services consistent with ATSI's reliability responsibilities and other
obligations under this Agreement. The FirstEnergy Operating Companies will
continue to provide ancillary services to support transmission service using the
Transmission System when requested by ATSI.
2.2.6 INSPECTION AND AUDITING PROCEDURES. ATSI shall grant each of the
FirstEnergy Operating Companies, its directors, officers, employees or agents,
external auditors, and Regulatory Authorities having jurisdiction over ATSI,
such access to ATSI's books and records as is necessary to verify compliance by
ATSI with this Agreement and to audit and verify transactions under this
Agreement. Such access shall be at reasonable times and under reasonable
conditions. ATSI shall also comply with the reporting requirements of Regulatory
Authorities having jurisdiction over ATSI with respect to the business aspects
of its business operations, and shall maintain such accounting records and
metering data as is necessary to perform its obligations under this Agreement.
ARTICLE THREE
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RIGHTS, POWERS, AND OBLIGATIONS OF THE PARTIES
3. CONSTRUCTION AND OPERATION OF THE PARTIES' FACILITIES
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3.1.1 OPERATION OF FIRSTENERGY OPERATING COMPANY FACILITIES. The
FirstEnergy Operating Companies shall cooperate with ATSI, its directors,
officers, employees, or agents, in performing its duty as Control Area Operator
in operating high side (69 kV or higher) devices of the Distribution Facilities,
redispatching Generation Facilities, providing reactive supply and voltage
control from generation sources or other ancillary services, and curtailing
load, when reasonably requested by ATSI, in accordance with the Transmission
Tariff and Good Utility Practice. The FirstEnergy Operating Companies shall not
operate their Generation and Distribution Facilities in a manner which unduly
interferes with the provision of transmission service by ATSI.
3.1.2 DISTRIBUTION FACILITIES USED FOR WHOLESALE SERVICES. ATSI will
arrange for transmission service over the Distribution Facilities to wholesale
customers served at voltages below 69 kV under the Transmission Tariff. ATSI
will cooperate with the FirstEnergy Operating Companies to provide service over
these Distribution Facilities to these wholesale customers at FERC approved
rates as set forth in Appendix C.
3.1.3 OPERATION OF CERTAIN DISTRIBUTION FACILITIES BY ATSI. For a
period of no more than three years from the Effective Date, ATSI will operate,
as agent for the FirstEnergy Operating Companies, 36, 34.5, 33 and 23 kV
Distribution Facilities currently classified as "transmission" under the FERC
Uniform System Accounts. The FirstEnergy Operating Companies will remain
responsible for maintaining these facilities in accordance with Good Utility
Practice. ATSI will be reimbursed by the FirstEnergy Operating Companies for its
cost of operating these Distribution Facilities. Except as provided in Section
3.1.2, these 36, 34.5, 33 and 23 kV Distribution Facilities are not available
for service under the Transmission Tariff. The FirstEnergy Operating Companies
will assume responsibility for the operation of these Distribution Facilities at
the earliest possible date that they can do so consistent with
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Good Utility Practice. ATSI will cooperate with the FirstEnergy Operating
Companies to facilitate the transfer of operational control.
3.1.4 MAINTENANCE AND OPERATION SERVICES. ATSI is responsible for
maintenance, and operation of the Transmission System and may employ persons and
enter into agreements as necessary to perform these services. ATSI may contract
with the FirstEnergy Operating Companies to perform these services. For a period
of three years from the Effective Date, the FirstEnergy Operating Companies
agree to perform the maintenance and operation services identified in a separate
services agreement for ATSI in accordance with Good Utility Practice. This
services agreement will continue from year to year thereafter unless terminated
by either Party by written notice at least one year prior to the expiration of
the annual term, or if this Agreement is terminated in accordance with Article
IV. The FirstEnergy Operating Companies shall coordinate performance of these
services with ATSI as set forth in more detail in Appendix B to this Agreement.
3.1.5 CONSTRUCTION.
A. ATSI is responsible for the design and construction of new
Transmission Facilities where necessary or desirable to provide transmission
service over the Transmission System, or in response to requests for
transmission service under the Transmission Tariff. ATSI will acquire all land,
licenses, or rights-of-way, necessary for such construction. ATSI may contract
with the FirstEnergy Operating Companies for design, construction and related
real estate services. For a period of three years from the Effective Date, the
FirstEnergy Operating Companies agree to construct all new Transmission
Facilities for ATSI as provided in a separate construction agreement. The
construction agreement will continue from year to year thereafter unless
terminated by either Party by written notice at least one year prior to
expiration of the annual term, or if this Agreement is terminated in accordance
with Article IV.
B. The FirstEnergy Operating Companies shall use due diligence
to plan and construct Distribution Facilities necessary to provide adequate and
reliable transmission service to
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wholesale customers served at voltages below 69 kV, or in response to requests
for service under the Transmission Tariff.
C. All facilities constructed pursuant to this Agreement shall
be subject to such siting, permitting, and environmental requirements as may be
imposed by state, local, and federal laws and regulations, and subject to the
approval of Regulatory Authorities . Construction of new facilities shall be
performed in accordance with Good Utility Practice, industry standards, and any
Regulatory Authorities. All new Transmission Facilities shall be owned by ATSI
and all new Distribution Facilities shall be owned by the FirstEnergy Operating
Companies.
3.1.6 ACQUISITION. If ATSI constructs, leases, or otherwise acquires
ownership or control of Transmission Facilities after the Transfer Date, such
facilities shall become part of the Transmission System.
3.1.7 PROVIDING INFORMATION. ATSI shall provide such information to the
FirstEnergy Operating Companies as is necessary for them to perform their
obligations under this Agreement or any Grandfathered Transmission Agreement, or
to comply with requirements of Regulatory Authorities. All such information
shall be submitted in accordance with Order No. 889. Information identified as
confidential shall be treated as confidential to the extent permitted by law.
3.1.8 FACILITIES ACCESS. ATSI shall allow the FirstEnergy Operating
Companies, their directors, officers, employees, or agents such access to its
Transmission Facilities as is necessary for the FirstEnergy Operating Companies
to perform their obligations under this Agreement or to comply with the
requirements of Regulatory Authorities. Such access shall be at reasonable times
and under reasonable conditions.
3.2 ADDITIONAL OBLIGATIONS OF THE FIRSTENERGY OPERATING COMPANIES.
3.2.1 PROVIDING INFORMATION. The FirstEnergy Operating Companies shall
provide such information to ATSI as is necessary for it to perform its
obligations under this Agreement, the
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Transmission Tariff, and any service agreements thereunder, or to comply with
the requirements of Regulatory Authorities. All such information shall be
submitted in accordance with Order No. 889. Information identified as
confidential shall be treated as confidential to the extent permitted by law.
3.2.2 FACILITIES ACCESS. The FirstEnergy Operating Companies shall allow ATSI,
its directors, officers, employees, or agents, such access to their Distribution
Facilities and Generation Facilities as is necessary for ATSI to perform its
obligations under this Agreement, the Transmission Tariff, and any service
agreements thereunder, or to comply with the requirements of Regulatory
Authorities. Such access shall be at reasonable times and under reasonable
conditions.
3.3.3 INSPECTION AND AUDITING PROCEDURES. The FirstEnergy Operating
Companies shall grant the FERC, ATSI, its directors, officers, employees, and
agents, and each state regulatory authority having jurisdiction over the
FirstEnergy Operating Companies, such access to books and records as is
necessary for ATSI to perform its obligations under this Agreement, the
Transmission Tariff, and any service agreements thereunder, to comply with the
requirements of Regulatory Authorities, and to audit and verify transactions
under this Agreement. Such access shall be at reasonable times and under
reasonable conditions. The FirstEnergy Operating Companies shall comply with the
reporting requirements of Regulatory Authorities having jurisdiction over the
FirstEnergy Operating Companies with respect to the business aspects of their
operations, and shall maintain such accounting records and metering data as is
necessary to perform its obligations under this Agreement.
ARTICLE FOUR
TERM AND TERMINATION
4.1 The term of this Agreement shall commence on the Effective Date and
the Agreement will remain in effect for an initial period of three years unless
terminated earlier by the mutual consent of the Parties, or in accordance with
Section 4.2 below. After the initial three year term, this Agreement shall
thereafter remain in effect from year to year unless terminated by either Party
upon at least one year's
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written notice prior to the annual renewal date.
4.2 In entering into this Agreement the Parties contemplate that ATSI
will join a regional transmission organization (RTO) during the initial
three-year term of the Agreement. In preparing for the implementation of a
transfer of ownership, control or operation of the Transmission System through
ATSI's participation in a RTO (or otherwise through the divestiture of ownership
of ATSI by FirstEnergy Corp.), the Parties may desire to leave in place all or
part of this Agreement for an interim period following the date of transfer or
divestiture to permit permanent arrangements to be negotiated and made effective
among the Parties and the RTO or new owner(s). Accordingly, upon consent of the
Parties (which will not be unreasonably withheld), this Agreement may remain in
place for an interim period following the date of transfer or divestiture of the
Transmission System; provided, however, that if the transfer of ownership,
control or operation of the Transmission System takes place through ATSI's
participation in a RTO, ATSI must secure the consent of the RTO to permit any
continued effectiveness of this Agreement past the date of transfer.
4.3 The Parties' obligation to make any payments owing or due under
this Agreement or to complete the construction of specific facilities agreed to
prior to termination of this Agreement, shall survive the termination of this
Agreement.
ARTICLE FIVE
REGULATORY APPROVALS
5. REGULATORY AUTHORITIES. This Agreement is subject to acceptance or approval
by the FERC and may be subject to the actions of Regulatory Authorities to which
ATSI and the FirstEnergy Operating Companies may be subject and which may affect
the ability of ATSI or the FirstEnergy Operating Companies to participate in
this Agreement.
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5.1.1 In the event one or more of the Regulatory Authorities rejects,
disapproves or refuses in whole or in part to accept this Agreement, then this
Agreement shall cease to be effective.
5.1.2 In the event one or more of the Regulatory Authorities by order
imposes conditions on approval or acceptance of the Agreement which adversely
affect either Party, the affected Party may, no later than thirty (30) days
after the date of such order, withdraw from this Agreement.
5.2 RENEGOTIATION. If any provision of this Agreement, or the
application thereof to any person, entity, or circumstance, is held by a
Regulatory Authority or court of competent jurisdiction to be invalid, void, or
unenforceable, then the Parties shall endeavor in good faith to negotiate such
amendment or amendments to this Agreement as will restore the relative benefits
and obligations of the Parties under this Agreement immediately prior to such
holding. If such negotiations are unsuccessful, then the Parties may withdraw
from this Agreement.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.1 DESCRIPTIVE HEADINGS. The descriptive headings of Articles,
Sections, Paragraphs, Subparagraphs, and other provisions of this Agreement have
been inserted for convenience of reference only and shall not define, modify,
restrict, construe, or otherwise affect the construction or interpretation of
any of the provisions of this Agreement.
6.2 GOVERNING LAW. This Agreement shall be interpreted, construed, and
governed by the laws of the State of Ohio, except to the extent preempted by the
laws of the United States of America.
6.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument, binding upon the
FirstEnergy Operating Companies and ATSI.
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6.4 NO IMPLIED WAIVERS. The failure of a Party to insist upon or
enforce strict performance of any of the specific provisions of this Agreement
at any time shall not be construed as a waiver or relinquishment to any extent
of such Party's right to assert or rely upon any such provisions, rights, or
remedies in that or any other instance, or as a waiver to any extent of any
specific provision of this Agreement; rather the same shall be and remain in
full force and effect.
6.5 FURTHER ASSURANCES. Each Party agrees that it shall hereafter
execute and deliver such further instruments, provide all information, and take
or forbear such further acts and things as may be reasonably required or useful
to carry out the intent and purpose of this Agreement and as are not
inconsistent with the provisions of this Agreement.
6.6 DELIVERY OF NOTICES. Except as otherwise expressly provided herein,
notices required under this Agreement shall be in writing and shall be sent to
the FirstEnergy Operating Companies or ATSI by U.S. mail, overnight courier,
hand delivery, telefacsimile, or other reliable electronic means. Any notice
required under this Agreement shall be deemed to have been given either upon
delivery, if by U.S. mail, overnight courier, or hand delivery, or upon
confirmation, if given by telefacsimile or other reliable electronic means.
6.7 ENTIRE AGREEMENT. This Agreement, including the appendices attached
hereto, the Transmission Tariff, Service Agreements thereunder, the Agency
Agreement, the Xxxx of Sale, Ground Lease, and other agreements referenced
herein constitute the entire agreement among the Parties with respect to the
subject matter of this Agreement, and no previous or contemporary oral or
written representations, agreements, or understandings made by any director,
officer, agent, or employee of the FirstEnergy Operating Companies or ATSI shall
be binding on the other unless contained in this Agreement, including the
appendices attached hereto, the Transmission Tariff, Service Agreements
thereunder, the Agency Agreement, the Xxxx of Sale, Ground Lease, or other
agreements referenced herein. No amendment, modification or change in this
Agreement shall be valid and enforceable unless reduced
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in writing and executed by the Parties.
6.8 GOOD FAITH EFFORTS. Each Party agrees that it shall in good faith
take all reasonable actions necessary to fulfill its obligations under this
Agreement. Where the consent, agreement, or approval of any Party must be
obtained hereunder, such consent, agreement, or approval shall not be
unreasonably withheld, conditioned, or delayed. Where any Party is required or
permitted to act, or omit to act, based on its opinion or judgment, such opinion
or judgment shall not be unreasonably exercised. To the extent that the
jurisdiction of any Regulatory Authorities applies to any part of this Agreement
or the transactions or actions covered by this Agreement, each Party shall
cooperate to secure any necessary or desirable approval or acceptance of such
Regulatory Authorities of such part of this Agreement or such transactions or
actions.
6.9 THIRD-PARTY AGREEMENTS. This Agreement, including the appendices to
this Agreement, the Transmission Tariff, the Service Agreements thereunder, the
Agency Agreement, Xxxx of Sale, and the Ground Leases, and other agreements
referenced herein, shall not be construed, interpreted or applied in such a
manner as to cause the FirstEnergy Operating Companies to be in material breach,
anticipatory or otherwise, of any agreement between the FirstEnergy Operating
Companies and one or more third parties who are not Parties to this Agreement
for the joint ownership, operation, or maintenance of any electrical facilities
covered by this Agreement, the Transmission Tariff, or the Agency Agreement. A
FirstEnergy Operating Company which has such a third-party joint agreement shall
discuss with ATSI any material conflict between such third-party joint agreement
and this Agreement, the Transmission Tariff, or the Agency Agreement raised by a
third party to such joint agreement, and shall act in good faith to resolve such
conflict in accordance with Good Utility Practice.
IN WITNESS WHEREOF, the Parties have caused their duly
authorized representatives
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to execute and attest this Agreement, on their respective behalf, as of this
____ day of ____________, 199__.
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Signature Signature
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Title of Signatory Title of Signatory
ATSI TRANSMISSION SYSTEMS, INC. THE FIRSTENERGY OPERATING
COMPANIES:
OHIO EDISON COMPANY
PENNSYLVANIA POWER COMPANY
THE CLEVELAND ELECTRIC ILLUMINATING CO.
THE TOLEDO EDISON COMPANY
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APPENDIX A
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SYSTEM PLANNING
1. OVERVIEW.
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This Appendix A describes the process to be used by ATSI in
planning the Transmission System. Nothing in this Appendix is intended to
restrict or expand existing federal or state laws.
ATSI has overall responsibility for planning the Transmission
System to provide all Transmission Customers with efficient, reliable, and
non-discriminatory transmission service, and has exclusive responsibility for
planning the ATSI Transmission Facilities. ATSI will cooperate with all
Transmission Customers to ensure that costs to both ATSI and Transmission
Customers are minimized in the planning process. ATSI will also coordinate the
planning of Transmission Customer owned facilities which affect operation of the
Transmission System, or are necessary to provide service to wholesale customers,
and shall review and comment on any plans developed by the Transmission Customer
for these facilities. With respect to Distribution Facilities, ATSI shall have
only that planning authority necessary to carry out its responsibilities under
this Agreement and the Transmission Tariff. When performing System Impact and
Facilities Studies as defined in the Transmission Tariff, ATSI shall treat
Transmission Customer owned facilities on a comparable basis with ATSI's own
facilities. ATSI shall make all determinations of Available Transmission
Capability (ATC) over the Transmission System, including determinations
involving the impact on Transmission Customer owned facilities of providing ATC.
2. THE PLANNING PROCESS
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A. NEW LOAD
1. FirstEnergy Operating Companies will be the point of
contact for retail customers planning to increase existing load or to connect
new load to either the Transmission System or to Distribution Facilities. The
FirstEnergy Operating Companies shall inform ATSI of any new load proposed to
connect directly to the Transmission System.
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2. The FirstEnergy Operating Companies shall coordinate load
and facility additions with ATSI for the planning of new Transmission
Facilities. The FirstEnergy Operating Companies will be required to obtain the
approval of ATSI before proceeding with any modifications or additions to the
Transmission System. ATSI will be obligated to act on the proposals submitted by
FirstEnergy Operating Companies in an expeditious manner, consistent with its
obligation to serve the FirstEnergy Operating Companies' network loads under the
Transmission Tariff.
3. Transmission Customers may contact ATSI directly with
regard to initiating any transmission planning activities to accommodate
increased loads or power transfers. ATSI will act on the proposals submitted by
Transmission Customers in an expeditious manner, consistent with its obligation
to serve the Transmission Customers' network loads under the Transmission
Tariff.
B. NEW GENERATION
1. ATSI is responsible for connection of new generation
synchronized to the Transmission System. The connection will be established
through a joint process with the generator. ATSI will develop "Facility
Connection Requirements" which will set out the minimum technical, design,
reliability, protection and operational criteria which must be complied with by
generators wishing to connect and synchronize generation to the Transmission
System. This will include, but not be limited to the must run and black start
requirements of the generator. ATSI will enter into the necessary agreements to
permit the connection.
2. DISTRIBUTED GENERATION. The FirstEnergy Operating Companies
are responsible for arrangements with retail customers who install generation
which is connected to the Transmission System. The FirstEnergy Operating
Companies will cooperate with the retail customers to develop procedures for the
operation of such generation.
C. PLANNING RESPONSIBILITIES OF ATSI
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(1) ATSI will have ultimate decision-making responsibility for
transmission planning, including the approval or rejection of any proposed
modification or addition that significantly affects the capability of the
Transmission System.
(2) ATSI will have ultimate responsibility for planning the
Transmission System to:
(a) meet reliability standards (as defined by NERC, applicable
regional reliability councils and any successor or other
industry or reliability organizations) in a manner consistent
with Good Utility Practice;
(b) meet transmission requirements associated with the distributed
load growth of the FirstEnergy Operating Companies and ATSI's
Transmission Customers;
(c) increase transfer capability on the Transmission System in
response to congestion price signals, to relieve interregional
constraints, and in response to requests for service; and
(d) minimize costs to ATSI and its Transmission Customers.
(3) ATSI will develop the "Planning Criteria" for the Transmission
System and will cooperate with the FirstEnergy Operating Companies and connected
generators to determine the must run status of their units.
(4) ATSI will conduct power flow and stability studies for the
Transmission System, and will participate in joint studies with other control
areas or reliability councils as necessary to ensure compliance with NERC and
applicable regional planning criteria, including, but not limited to the
following.
(a) ATSI will maintain transmission modeling information.
(b) ATSI will maintain specific transmission line and equipment
information to develop a database for determining the thermal
ratings of circuits and transformers. This will include
information such as transmission line plan and
20
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profile and transformer test data.
(c) ATSI will be responsible for maintaining data necessary for a
system short circuit database, relay setting database, and
other information necessary for performing dynamic system
studies and assessing system performance.
(d) ATSI will be responsible for performing short circuit adequacy
studies and providing verification of compliance or a schedule
for planned facility replacements to achieve compliance.
(e) The FirstEnergy Operating Companies will cooperate with ATSI
in the preparation of geographic transmission maps, system one
lines, design drawings, and substation schematic one lines of
the Transmission Facilities for use by ATSI and submittal to
various reliability and regulatory organizations. The
materials so developed will be owned by ATSI.
(5) Proposed Distribution Facilities or Transmission Customer owned
facilities which will be configured in a manner that establish a parallel path
with the Transmission System will require coordination of planning and operation
with ATSI. Transmission Customers seeking to establish a parallel path with the
Transmission System will provide the necessary data for review and resolution of
potential operating problems.
D. PLANNING RESPONSIBILITIES OF FIRSTENERGY OPERATING COMPANIES
(1) The FirstEnergy Operating Companies will:
(a) Annually submit to ATSI a load forecast for all
delivery points from the Transmission System. This
includes transmission (retail) connected substations,
FirstEnergy Operating Companies' distribution
substations, and any delivery point to wholesale
customers served under grandfathered transmission
agreements.
21
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(b) Submit on an annual basis, forecasts of the monthly
peak demands for each delivery point for the next 10
years, together with corresponding projected power
factors.
(c) Annually submit to ATSI planned facility (new
delivery point) connections to the Transmission
System for the next 10 years.
(2) All such information shall be used for planning
purposes only and shall be kept confidential by ATSI
to the extent permitted by law.
(3) The FirstEnergy Operating Companies are responsible for
maintaining modeling data used by ATSI for dynamic stability and planning
studies. The FirstEnergy Operating Companies will also maintain a schedule of
planned generation maintenance outages, for a minimum of 5 years ahead, and
submit this schedule together with forecasts of generator availability to ATSI
biannually. Periodic unit tests will be required to verify reactive capability.
(4) Changes to Generation Facilities' equipment and operation,
such as GSU tap settings, which could impact the available reactive capability
of a generating unit, must be submitted to ATSI for approval. ATSI will specify
generating unit voltage schedules when required for must run operation.
3. DISTRIBUTION PLANNING
Except as provided above, the planning of all Transmission
Customer owned transmission and distribution facilities shall be done by the
Transmission Customer. Furthermore, the Transmission Customer, in carrying out
their planning responsibilities to meet the reliability needs of all loads
connected to the Transmission System may, as appropriate, develop and propose
plans involving modifications or expansions to any Transmission Facilities which
are part of the Transmission System. All such plans proposed by the Transmission
Customers will be reviewed by ATSI, and may be incorporated into
22
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Transmission System plan developed by ATSI if appropriate. ATSI will assist
Transmission Customers, to the extent consistent with this Agreement and the
Transmission Tariff, in satisfying the planning requirements of Regulatory
Authorities.
00
XXXXXXXX X
----------
SYSTEM OPERATIONS
1. OPERATIONAL RESPONSIBILITIES.
-----------------------------
A. ATSI'S RESPONSIBILITIES. ATSI shall be responsible for the following
operational functions:
1. ATSI shall operate the Transmission System, the 36, 34.5, 33 and 23
kV Distribution Facilities, and will control the high side (69 kV or higher)
devices of the Distribution Facilities necessary to the reliable operation of
the Transmission System, and will be the Control Area Operator for the
FirstEnergy System.
2. ATSI shall review and approve, as appropriate, requests for
transmission service, will schedule transmission transactions, and shall
determine available transmission capability (hereinafter "ATC") under the
Transmission Tariff.
3. ATSI shall provide service over the Transmission System pursuant to
the Transmission Tariff.
4. ATSI shall be responsible for the security of the Transmission
System.
5. ATSI shall offer ancillary services required to support transmission
service under the Transmission Tariff.
6. ATSI shall establish, in cooperation with Transmission Customers,
the schedule for maintenance of all Transmission Facilities making up the
Transmission System and shall coordinate with the FirstEnergy Operating
Companies and other generation owners, as appropriate, the scheduling of
maintenance on generation facilities connected to the Transmission System.
7. ATSI shall be responsible for operations of the OASIS system in
accordance with the Transmission Tariff.
8. ATSI shall monitor and coordinate voltage levels that are the
responsibility of control areas to maintain.
24
9. ATSI will operate and maintain the reliability of the Transmission
System in accordance with Good Utility Practice and applicable NERC, ECAR, and
Regulatory Authorities. For purposes of this paragraph, Good Utility Practice
means a standard of reliability which meets or succeeds the average CAIDI,
SAIDI, SAIFI, or other commonly used reliability indices maintained in the
industry, of FirstEnergy Transmission Facilities for the three years prior to
the Transfer Date.
B. THE FIRSTENERGY OPERATING COMPANIES' RESPONSIBILITIES. As described more
fully below, the FirstEnergy Operating Companies shall have the following
responsibilities:
1. The FirstEnergy Operating Companies shall own, operate and maintain
the Distribution and Generation Facilities in accordance with Good Utility
Practice. Except as provided below, operation of the Distribution Facilities by
ATSI shall be limited to the high side (69 kV or higher) devices of the
Distribution Facilities where necessary to ensure reliable operation of the
Transmission System.
2. The FirstEnergy Operating Companies shall cooperate with ATSI to
provide transmission service to wholesale customers served at voltages below 69
kV through their Distribution Facilities at the direction of ATSI pursuant to
the terms of the Transmission Tariff.
3. The FirstEnergy Operating Companies shall comply with the
instructions of ATSI in its role as Control Area Operator.
4. The FirstEnergy Operating Companies shall maintain Transmission
Facilities included in the Transmission System under maintenance schedules
approved by ATSI unless other arrangements are made in accordance with Section
3.I.B of the Agreement. The FirstEnergy Operating Companies shall coordinate
maintenance on their Generation Facilities significantly affecting the
capability or reliability of the Transmission System with ATSI. Maintenance of
Transmission Facilities shall be performed in accordance with Good Utility
Practice. For purposes of this paragraph, and for a period of three years from
the Effective Date of this Agreement, "Good Utility Practice" shall include
maintenance
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25
practices which meet or exceed the FirstEnergy's maintenance practices for
Transmission Facilities in the three years prior to this Agreement.
5. The FirstEnergy Operating Companies shall offer to
redispatch their Generation Facilities units in accordance with the Transmission
Tariff, when feasible, subject to receiving appropriate compensation. The
FirstEnergy Operating Companies shall submit and coordinate Generation Facility
outage schedules with ATSI when such outages affect transmission capability or
transmission reliability.
6. The FirstEnergy Operating Companies shall provide advance
written notice, if possible, to ATSI before taking Distribution Facilities out
of service if the outage will affect operation of the Transmission System.
II. CONTROL OVER TRANSMISSION FACILITIES.
-------------------------------------
A. ATSI CONTROL.
1. ATSI shall have operational control over the Transmission
Facilities that make up the Transmission System. ATSI shall also have
operational control over the 36, 34.5, 33 and 23 kV Distribution Facilities for
a period of no more than three years from the Effective Date of this Agreement.
ATSI will transfer operational control of these Distribution Facilities to the
FirstEnergy Operating Companies at the earliest possible date that it can do so
consistent with Good Utility Practice. ATSI will cooperate with the FirstEnergy
Operating Companies to facilitate the transfer of operational control of these
Distribution Facilities.
2. ATSI shall periodically review whether the Transmission
Facilities under its operational control constitute all of the facilities
necessary to provide reliable transmission service contemplated under the
Agreement and the Transmission Tariff.
3. ATSI shall, in consultation with the FirstEnergy Operating
Companies, develop, and then revise from time-to-time as appropriate, operating
procedures for its exercise of operational
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26
control over the Transmission System, the 36, 34.5, 33, and 23 kV Distribution
Facilities, the high side (69 kV or higher) devices of the Distribution
Facilities, and those Distribution Facilities used to serve wholesale customers
at voltages below 69 kV (hereinafter "Operating Procedures"). The Operating
Procedures shall be provided to the FirstEnergy Operating Companies and, except
to the extent determined necessary for emergency or security reasons, such
procedures shall be made available to the public. ATSI shall comply with its
Operating Procedures in exercising its operational control over the facilities
described above.
4. ATSI shall operate the Transmission System in such a way as
to preserve the rights of parties to Third Party or Grandfathered Transmission
Agreements.
5. ATSI shall be responsible for coordinating system operation
with the applicable regional reliability councils and may join such councils as
appropriate.
6. ATSI shall comply with any transmission operating
obligations imposed by federal or state law or Regulatory Authorities which can
no longer be performed solely by the FirstEnergy Operating Companies following
transfer of ownership and operational control of its Transmission Facilities to
ATSI, until such obligations are revised or changed.
7. ATSI shall take no action that would impair the safety and
reliability of nuclear facilities, and shall take actions consistent with
nuclear license conditions or requirements of the Nuclear Regulatory Commission
("NRC") imposed on the FirstEnergy Operating Companies.
B. FIRSTENERGY OPERATING COMPANIES' RESPONSIBILITIES.
--------------------------------------------------
1. The FirstEnergy Operating Companies shall own, operate, and
maintain their Distribution Facilities in accordance with Good Utility Practice,
and comply with the reasonable requests of ATSI with respect to such operation
and maintenance issued in compliance with the Operating Procedures.
2. The FirstEnergy Operating Companies will operate their
Distribution Facilities in
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27
such a way as to preserve the rights of parties to Third Party or Grandfathered
Transmission Agreements.
C. RETAINED RIGHTS OF THE FIRSTENERGY OPERATING COMPANIES. The FirstEnergy
Operating Companies shall retain all rights of ownership in Distribution
Facilities. Nothing in this Appendix B shall be deemed to restrict or prohibit
access to the Transmission Facilities by the FirstEnergy Operating Companies, or
those acting under their authority, in furtherance of this Agreement when such
access does not affect the provision of transmission services. ATSI shall be
notified promptly by the FirstEnergy Operating Companies should an event occur
which results in unplanned outages of a transmission line or transformer.
III. DETERMINATION OF AVAILABLE TRANSMISSION CAPABILITY AND TRANSMISSION
-------------------------------------------------------------------
SCHEDULING.
-----------
A. AVAILABLE TRANSMISSION CAPABILITY. ATSI shall determine the ATC
consistent with the terms of the Transmission Tariff and this Agreement.
1. ATSI shall review all data received from other control areas,
independent transmission system operators, regional reliability councils, or
other entities that impact ATC calculations.
2. ATSI 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.
3. ATSI shall determine the capacity, rating, control settings, and
contingencies for all Transmission Facilities used to calculate ATC.
B. TRANSMISSION SERVICE REQUESTS. ATSI shall receive and process all
transmission service requests in accordance with the Transmission Tariff.
1. ATSI shall be responsible for conducting all System Impact
Studies associated with a request for transmission service. The required
analysis shall be coordinated between ATSI and the FirstEnergy Operating
Companies as follows:
-5-
28
a. ATSI shall provide sufficient information to representatives of
the FirstEnergy Operating Companies to allow them to model load consequences of
the requested service on Distribution Facilities.
b. ATSI shall coordinate with FirstEnergy Operating Companies
representatives when processing requests for service through Distribution
Facilities.
c. ATSI shall consult and with the FirstEnergy Operating Companies
with respect to the installation of equipment which affects Distribution
Facilities.
2. Upon completion of any required System Impact Studies, ATSI shall be
responsible for making the final determination as to the amount of firm and
non-firm transmission capacity that is available under the Transmission Tariff,
and for resolving requests for transmission service in accordance with the terms
of the Transmission Tariff.
3. When there is not adequate transmission capability to satisfy a
transmission request, ATSI shall relieve or facilitate the relief of the
transmission constraint consistent with the terms of the Transmission Tariff.
4. ATSI shall be responsible for documenting all transmission service
requests under the Transmission Tariff, the disposition of such requests, and
any supporting data required to support the decision with respect to such
requests.
C. SCHEDULING TRANSMISSION SERVICE TRANSACTIONS. ATSI shall schedule all
transmission service transactions involving the Transmission Tariff, as follows:
1. ATSI shall schedule and curtail transmission service and schedule
the allocation of losses and ancillary services in accordance with the
Transmission Tariff.
2. ATSI shall, in consultation with the FirstEnergy Operating
Companies, develop and from time-to-time, amend when necessary, scheduling
protocols ("Scheduling Protocols"). For the FirstEnergy Operating Companies'
nuclear generating facilities, ATSI shall enter into written agreements,
-6-
29
which define Scheduling Protocols, limitations, and restrictions necessary to
ensure the availability of off site power to such facilities. The Scheduling
Protocols shall not conflict with the provisions of the Transmission Tariff or
requirements of Regulatory Authorities. All scheduling shall be performed in
accordance with the Scheduling Protocols.
3. ATSI shall operate its control area for local generation
control and economic dispatch purposes. In so doing, ATSI shall comply with the
scheduling instructions issued pursuant to the Scheduling Protocols.
4. In performing its scheduling functions, ATSI shall ensure
that the Transmission System is operated in compliance with applicable NERC,
regional reliability council or successor organizations, and all other
applicable operating reliability criteria.
5. ATSI shall inform representatives of the FirstEnergy
Operating Companies of the approved schedules under the Transmission Tariff, and
of any subsequent changes made thereto.
6. ATSI shall perform all inadvertent flow accounting for its
control area and shall coordinate the performance of such accounting with other
control areas.
IV. ADMINISTRATION OF TRANSMISSION TARIFF.
--------------------------------------
A. ATSI RESPONSIBILITIES.
1. ATSI shall be solely responsible for administering the
Transmission Tariff.
2. ATSI shall negotiate as appropriate to develop reciprocal
service, equitable tariff application, compensation principles, and any related
arrangements.
3. ATSI shall cooperate with the FirstEnergy Operating
Companies to ensure that the rates to wholesale customers charged for use of the
FirstEnergy Operating Companies Distribution Facilities under the Transmission
Tariff adequately compensate the FirstEnergy Operating Companies. ATSI shall, at
the FirstEnergy Operating Companies' direction, file an application with FERC
under
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30
Section 205 of the Federal Power Act to establish or adjust the rates charged
for use of FirstEnergy Operating Companies's Distribution Facilities in
providing service under the Transmission Tariff.
B. FIRSTENERGY OPERATING COMPANIES' RESPONSIBILITIES. The FirstEnergy
Operating Companies shall provide transmission service for wholesale customers
served at voltages below 69 kV through their Distribution Facilities as directed
by ATSI to the extent necessary to provide service under the Transmission
Tariff. The FirstEnergy Operating Companies shall provide the necessary
information to support any filing made by ATSI at the FERC relating to the
Distribution Facilities.
V. SECURITY OF THE TRANSMISSION SYSTEM.
------------------------------------
A. GENERAL.
1. The security and reliability of the Transmission System
shall be the responsibility of ATSI.
2. ATSI shall be responsible for operating its control area in
a secure and reliable manner.
3. ATSI is hereby designated and shall be the Control Area
Operator for the Transmission System. In this role, ATSI shall exercise security
monitoring and emergency response functions, as described in more detail below.
B. SECURITY MONITORING.
1. ATSI shall periodically perform load-flow and stability
studies of the Transmission System to identify and address security problems.
2. ATSI shall monitor its control area for system security. It
shall be responsible for identifying and addressing local security problems. .
3. The FirstEnergy Operating Companies shall continuously
provide ATSI with all data required to assess the security of the Transmission
System consistent with NERC (or successor
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31
organizations) requirements, and consistent with regional requirements and the
ATSI Standards of Conduct.
4. ATSI shall exchange necessary security information with
other control areas, independent transmission system operators and regional
reliability councils consistent with NERC (or successor organizations)
requirements, with regional requirements and the ATSI Standards of Conduct.
5. ATSI shall monitor real-time data to determine whether any
control areas are experiencing generation capacity deficiencies. If a generation
capacity deficiency event threatens the security of the system, ATSI shall take
appropriate action, including if necessary, ordering the shedding of firm load
in accordance with operating agreements under the Transmission Tariff.
Implementation of specific load shedding measures is the responsibility of the
Transmission Customer.
C. EMERGENCY RESPONSE.
1. ATSI shall work with Transmission Customers, appropriate
state agencies, NERC, regional reliability councils, and other security
coordinators to develop regional security plans and emergency operating
procedures.
2. ATSI shall, in coordination with Transmission Customers,
appropriate state agencies, NERC, regional reliability councils, security
coordinators, or other system operators, develop, and from time-to-time update,
procedures for responding to emergencies (hereinafter the "Emergency
Procedures").
a. The Emergency Procedures shall include procedures
for responding to specified critical contingencies.
b. ATSI shall continuously analyze issues that may
require the initiation of emergency response actions. Such analysis may be made
at ATSI's initiative, or at the request of 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
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32
from such analysis.
c. The Emergency Procedures shall make provision for system
restoration including priority restoration of off-site power to nuclear
generating facilities.
3. ATSI shall direct the response to any emergency in the
Transmission System pursuant to the Emergency Procedures. The Transmission
Customers shall carry out the required emergency actions as directed by ATSI.
ATSI will alert Transmission Customers to the possibility of load shedding and
will provide as much advance notice as possible of the need to shed firm load.
VI. ANCILLARY SERVICES.
-------------------
A. ATSI shall offer to provide all Ancillary Services as defined and
required under the Transmission Tariff.
B. ATSI may acquire the ancillary services required to be offered by
the Transmission Tariff from the FirstEnergy Operating Companies or third
parties, consistent with a least cost procurement strategy.
C. ATSI will determine and obtain any black start service necessary to
maintain the reliability of the Transmission System.
D. The FirstEnergy Operating Companies, shall provide ancillary
services to ATSI upon request. The charges for such ancillary services shall be
in accordance with FERC approved rate schedules for the FirstEnergy Operating
Companies.
VII. TRANSMISSION AND GENERATION MAINTENANCE.
----------------------------------------
A. PLANNED TRANSMISSION MAINTENANCE. ATSI is responsible for reviewing,
establishing, and updating schedules for all planned maintenance of Transmission
Facilities in the Transmission System.
1. ATSI shall establish its planned transmission maintenance
schedules for a
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33
minimum of a rolling one year period. The planned maintenance schedules shall be
updated monthly.
2. ATSI shall determine if, and the extent to which, such
planned transmission maintenance affect transmission service, ATC, ancillary
services, the security of the Transmission System, and any other relevant
effects. This determination shall include appropriate analytical detail.
3. As part of its review process, ATSI shall identify planned
transmission maintenance schedules that limit ATC and shall identify
opportunities and associated costs for rescheduling planned maintenance to
enhance ATC.
4. ATSI will coordinate planned outages of Transmission
Facilities with the Transmission Customers . Transmission Customers will inform
ATSI of all customer owned equipment outages that could impact loading on the
Transmission System.
5. In developing its transmission maintenance schedule, ATSI
will comply with all applicable reliability standards, including, but not
limited to, the current maintenance practices of the FirstEnergy Operating
Companies, will meet the FirstEnergy Operating Companies' requirements for
access to ATSI Transmission Facilities, and will endeavor to minimize
congestion.
B. UNPLANNED AND EMERGENCY TRANSMISSION MAINTENANCE. ATSI shall
coordinate unplanned transmission maintenance with Transmission Customers 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 the Generation, Transmission, and Distribution Facilities, or are
likely to endanger life, property or the environment, the FirstEnergy Operating
Companies (to the extent responsible for performing said maintenance) shall
notify ATSI of such emergency maintenance. Prior approval by ATSI for such
emergency transmission maintenance is not required.
C. GENERATION MAINTENANCE. The FirstEnergy Operating Companies shall
coordinate the maintenance of Generating Facilities with ATSI to the extent such
generation maintenance affects the transmission capability or transmission
reliability of the Transmission System as follows:
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34
1. The FirstEnergy Operating Companies' shall submit their
planned generating unit maintenance schedules to ATSI annually for a two year
period, updated for changes. A five year ahead schedule shall be submitted
bi-annually.
2. ATSI shall analyze planned generating unit maintenance
schedules to determine the effect on Transmission Customers, ATC, ancillary
services, the security of the Transmission System, identification of must run
units, and any other relevant effects. ATSI shall inform the FirstEnergy
Operating Companies if its generation maintenance schedule is expected to have
an impact on the security of the Transmission System.
3. As part of its review process, ATSI shall identify
generating unit maintenance schedules that limit ATC and shall recommend
opportunities for rescheduling planned maintenance to enhance ATC. If the
FirstEnergy Operating Companies reschedule maintenance at ATSI's request, the
FirstEnergy Operating Companies shall be compensated for additional costs
associated with rescheduling such planned maintenance pursuant to procedures
adopted by ATSI, and applied on a non-discriminatory basis to all similarly
situated generation owners.
4. For all generators connected to the Transmission System,
ATSI will enter into connection, and if necessary, must run agreements, which
define coordinated operations and such other operating requirements as are
necessary to ensure the safe and reliable of such generators with the
Transmission System.
D. UNPLANNED GENERATION MAINTENANCE
The FirstEnergy Operating Companies shall notify ATSI promptly
in the event of an unplanned outage of the Generation Facilities. This includes
partial forced outages of Generation Facilities. The FirstEnergy Operating
Companies will coordinate unplanned generation maintenance with ATSI to ensure
that reliability of the Transmission System is maintained. For emergency
conditions which are likely to result in significant disruption of service or
damage to the Generation, Transmission, and
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35
Distribution Facilities, or are likely to endanger life, property or the
environment, the FirstEnergy Operating Companies shall notify ATSI of the
emergency generation maintenance. Prior approval by ATSI for emergency
generation maintenance is not required.
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36
APPENDIX C
AGENCY AGREEMENT
Through this Agreement ("Agency Agreement"), the FirstEnergy
Operating Companies authorize ATSI to offer and provide transmission service
over certain facilities as detailed below.
RECITALS
A. Upon FERC approval pursuant to Section 203 of the Federal Power Act,
16 U.S. C. section 824b and the transfer of ownership and operational control of
Transmission Facilities in accordance with the Agreement, ATSI will own the
Transmission Facilities identified in Appendix D. ATSI will provide open access
transmission service across those facilities in accordance with a Transmission
Tariff filed with FERC.
B. The FirstEnergy Operating Companies will retain ownership of
Distribution Facilities that may be used in part to provide transmission service
to wholesale customers served at voltages below 69 kV under ATSI's Transmission
Tariff.
C. In order for ATSI to offer service to these customers , it is
necessary that the FirstEnergy Operating Companies provide the authority to ATSI
to provide the transmission and other services necessary to effectuate the
Transmission Tariff.
D. The FirstEnergy Operating Companies are entering into this Agency
Agreement to authorize ATSI to act as their agent in the performance of its
tariff administration duties with regard to Distribution Facilities used to
provide service to wholesale customers served at voltages below 69 kV; to
commit, where necessary, Distribution Facilities used to provide service to
wholesale customers served at voltages below 69 kV as required for the
performance of service agreements under the Transmission Tariff; to make rate
filings with the FERC under Section 205 of the Federal Power Act; to xxxx and
collect FERC approved rates on behalf of the FirstEnergy Operating Companies;
and for other purposes as specified herein and in the Agreement.
37
TERMS OF AGREEMENT
1. INCORPORATION OF TRANSMISSION TARIFF.
1.1 INCORPORATION OF TRANSMISSION TARIFF INTO AGREEMENT
The Transmission Tariff, including each and every constituent
part, is incorporated into this Agency Agreement as though set forth herein in
its entirety. In the event of any conflict between any provision of this Agency
Agreement and the Transmission Tariff, the Transmission Tariff shall control.
2. APPOINTMENT OF ATSI AS AGENT
The FirstEnergy Operating Companies appoint ATSI as its agent
to enter into service agreements in conformity with the Transmission Tariff on
its behalf for transmission service to wholesale customers using Distribution
Facilities to connect to the Transmission System. It is agreed that all such
service agreements will bind the FirstEnergy Operating Companies to perform to
the requirements and specifications of the Transmission Tariff and service
agreements where appropriate. The FirstEnergy Operating Companies will cooperate
with ATSI in developing the rate charged for use of their Distribution
Facilities (Distribution Adder), and will provide the necessary support for any
filing under Section 205 of the FPA made by ATSI to establish a rate for
transmission service using Distribution Facilities.
3. PERFORMANCE BY THE FIRSTENERGY OPERATING COMPANIES
The FirstEnergy Operating Companies agree to provide all
services necessary or appropriate for performance under the Transmission Tariff,
and service agreements thereunder, for wholesale transmission service using
Distribution and Transmission Facilities. Upon ATSI's request, the FirstEnergy
Operating Companies further agree to provide ATSI with all information necessary
to permit ATSI to perform its tariff administration functions under the
Transmission Tariff.
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38
4. PAYMENT TO THE FIRSTENERGY OPERATING COMPANIES.
-----------------------------------------------
ATSI will be responsible for billing and collection of all
rates charged under the Transmission Tariff, including any Distribution Adder
developed pursuant to this Agreement. ATSI shall distribute revenues collected
from the Distribution Adder to the FirstEnergy Operating Companies.
5. EFFECTIVENESS, DURATION OF AGENCY AGREEMENT, AND WITHDRAWAL RIGHTS.
-------------------------------------------------------------------
The Agency Agreement is effective on the Effective Date as
defined in the Agreement. The Agency Agreement will terminate upon mutual
agreement of ATSI and the FirstEnergy Operating Companies.
6. INTEGRATION AND AMENDMENT.
--------------------------
This is an integrated agreement which contains all terms and
conditions of agreement between the parties concerning the subject matter. Any
prior or oral agreements concerning the subject matter not stated herein are
superseded by this Agency Agreement. This Agency Agreement may be amended only
by a writing executed by both Parties.
7. AUTHORITY.
----------
The Parties represent that the person executing this agreement
on their behalf is authorized to execute this agreement and bind the Parties to
its terms, and that such authorization has been made in compliance with all
applicable laws, articles of incorporation, bylaws, and resolutions and in a
manner that the authorization is binding upon the FirstEnergy Operating
Companies and ATSI.
FIRSTENERGY OPERATING COMPANIES
OHIO EDISON COMPANY
PENNSYLVANIA POWER COMPANY
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39
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
THE TOLEDO EDISON COMPANY
-----------------------------------------
Signature
Title:
----------------------------------
Date:
----------------------------------
ATSI TRANSMISSION SYSTEMS, INC.
-----------------------------------------
Signature
Title:
----------------------------------
Date:
----------------------------------
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APPENDIX D
PRINCIPLES GUIDING THE DIVISION OF ASSETS
BETWEEN THE FIRSTENERGY OPERATING COMPANIES
AND AMERICAN TRANSMISSION SYSTEMS, INC.
1. American Transmission Systems, Inc. (ATSI), as a wholly owned
subsidiary of FirstEnergy Corp., will purchase, own, and operate the
FirstEnergy Operating Companies' Transmission Facilities currently
operating at nominal voltages of generally 345 kV and 138 kV ("bulk
transmission") and 69 kV facilities ("area transmission"). These
facilities include Transmission lines (i.e., towers, poles, conductors)
and Transmission substations.
2. Transmission substations provide transformation between portions of the
bulk transmission system (e.g., 345-138 kV transformers) and between
the bulk and area transmission systems (e.g., 138-69 kV transformers).
ATSI will own all Transmission substations and transformers.
Substations with common use/miscellaneous facilities providing both a
Transmission (ATSI) function and a Distribution (FirstEnergy) function
will be Transmission Facilities (i.e., primary transmission function)
owned by ATSI if they meet one of the following conditions:
(i) a substation bus with more than two 69 kV or higher network
sources; (exception being customer substations with revenue
metering on each supply)
(ii) a substation bus with one or more 69 kV or higher line network
sources and a connection (through transformation) to a higher
voltage system;
(iii) a direct interconnection to another transmission system.
All other substations will be Distribution Facilities owned by the
FirstEnergy Operating Companies. The primary purpose of the designation
as a Transmission (ATSI) versus a Distribution (FirstEnergy) substation
is to allocate the cost of the common use facilities (e.g, control
buildings). Both ATSI and the FirstEnergy Operating Companies may own
major equipment within each Transmission substation.
3. All voltage control devices (e.g., fixed and switched capacitors,
reactors, synchronous condensers, static VAR controllers) and power
flow control devices directly connected to the Transmission System will
be owned by ATSI. Transmission voltage control devices (rated 69 kV and
higher) and located in FirstEnergy Operating Companies' Distribution
substations will be owned by ATSI, although the remainder of the
Distribution substation will be owned by FirstEnergy Operating
Companies.
4. ATSI will own Transmission lines providing connections to Generation
Facilities. ATSI will also
41
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own the Step Up (plant) Substations at Generation Facilities. The
FirstEnergy Operating Companies will own the Generator Step Up
Transformers, terminating facilities providing the connection for the
Generation Facilities to the Step Up Substations, including terminating
connections which provide alternative power supply to the Generation
Facility, and all generation plant and auxiliary facilities.
5. ATSI will own the radial taps from the Transmission System that are 69
kV and above, excluding the facilities establishing the final circuit
connection to substations providing transformation or other connection
to Distribution Facilities or retail customers. For example, in the
case of a radial 138 kV supply to a 138-12.47 kV substation, the radial
line section up to the point of the final circuit connection to the
138-12.47 kV substation will be owned by ATSI. The FirstEnergy
Operating Companies will own the final circuit connection to the
Distribution substation. The final circuit connections described above
are Distribution Facilities.
6. For looped transmission system supply configurations, ATSI ownership
will also exclude the final connection to Distribution substations
providing transformation or other connection to assets not owned by
ATSI. For example, in the case of a loop supply to a 138-12.47 kV
substation, the final circuit connections providing the loop supply to
the 138-12.47 kV substation will be owned by the FirstEnergy Operating
Companies. The final circuit connections will be Distribution
Facilities owned by the FirstEnergy Operating Companies.
7. The FirstEnergy Operating Companies currently owns three mobile
substations/transformers where there is a choice of two low side
windings/taps: two with a choiceof 69 kV or 23 kV, and one with a
choice of 69 kV or 34.5 kV. One of these mobile tranformers will be
transferred to ATSI .
8. All mobile capacitor banks 69 kV or higher are Transmission Facilities
and will be owned by ATSI.
9. ATSI will own the System Control Center facility and equipment in
Wadsworth, Ohio, not including the associated land and land rights. The
FirstEnergy Operating Companies will pay ATSI for use of the System
Control Center. ATSI will pay Cleveland Electric Illuminating Company
(CEI) for the use of the System Operation Center (SOC) in Brecksville,
Ohio until such time that use for transmission-related functions is no
longer needed. The FirstEnergy Operating Companies (CEI) will retain
ownership of the SOC.
10. The FirstEnergy Operating Companies will continue to own all land,
easements, franchises, and other rights which they have or have upon,
under or over which Transmission Facilities are located on the Transfer
Date. The land, easements, franchises, and other rights associated with
these Transmission Facilities will be leased by ATSI from the
FirstEnergy Operating Companies pursuant to a Ground Lease.
11. All equipment spares for Transmission Facilities will be owned by ATSI.
All spare parts and equipment spares for Distribution Facilities will
be owned by the FirstEnergy Operating Companies.
