FIRST AMENDMENT
TO GEOTHERMAL LEASE
THIS FIRST AMENDMENT TO GEOTHERMAL LEASE (the "Amendment") is made and
entered into effective as of April 30th, 1987 (the "Effective Date") by and
between Magma Energy, Inc., a Nevada corporation (the "Lessor") and
Mammoth-Pacific, a California general partnership (the "Lessee"), collectively
referred to herein as the "Parties".
Recitals
WHEREAS, the Parties made and entered into that certain Geothermal Lease
dated the 31st day of August, 1983, by and between Lessor and Xxxx Geothermal
Company, to which Lessee is the successor-in-interest as Lessee (the "Lease"), a
copy of which is attached as Exhibit "A" to this Amendment and incorporated by
reference herein; and
WHEREAS, the Parties now desire to modify the Lease with respect to the
royalties to be paid by Lessee to Lessor in connection with the operation of one
or more electric power plants fueled by geothermal resources underlying the
leased land, the expansion of the existing electric power plant and the
construction of additional electric power plants, and any other matters referred
to herein.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, Lessor and Lessee agree to amend
the Lease as follows:
1. Paragraph 3 of the Lease is hereby deleted in its entirety and a new
Paragraph 3, reading as follows, is substituted in its place instead:
3. Term. TO HAVE AND TO HOLD the leased land for a period of thirty (30)
years from the date hereof (the "primary term") and so long thereafter as
electricity is produced on the leased land from the geothermal resources
therein, or excused under the terms of Paragraph 17 of this Lease.
2. Paragraph 5 of the Lease is hereby deleted in its entirety and a new
Paragraph 5, reading as follows, is substituted in its place instead:
5. Royalty. Lessee shall pay to Lessor as royalty during the balance of the
full term of this Lease compensation as follows:
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5.1 Existing Plant Base Royalty. As to electricity or other energy
generated by all facilities in commercial operation on or before the
Effective Date of this Amendment (the "Existing Plant"), Lessee shall pay
to Lessor as royalties during the balance of the full term of the Lease the
following percentage of the "Gross Proceeds", as such term is defined
below, received by Lessee from each such facility (the "Existing Plant Base
Royalty"), together with applicable "Bonus Royalties," as such term is
defined at Subparagraph 5.3 below:
(a) From April 1, 1987, and for a period of twenty-four (24)
consecutive months thereafter, the higher of (i) twenty-five percent
(25%), or (ii) twelve and one half-percent (12.5%) of "Baseline
Revenue," as such term is defined at Subparagraph 5.3 below, and
applicable "Bonus Royalties," as such term is defined at Subparagraph
5.3 below;
(b) From the date following the conclusion of the period set out in
Subparagraph 5.1(a), above, and for a period of twelve (12)
consecutive months thereafter, the higher of (i) twenty percent (20%),
or (ii) twelve and one half-percent (12.5%) of "Baseline Revenue," as
such term is defined at Subparagraph 5.3 below, and applicable "Bonus
Royalties," as such term is defined at Subparagraph 5.3 below;
(c) From the date following the conclusion of the period set out in
Subparagraph 5.1(b), above, and for a period of twelve (12)
consecutive months thereafter, the higher of (i) sixteen percent
(16%), or (ii) twelve and one half-percent (12.5%) of "Baseline
Revenue," as such term is defined at Subparagraph 5.3 below, and
applicable "Bonus Royalties," as such term is defined at Subparagraph
5.3 below; and,
(d) From the date following the conclusion of the period set out in
Subparagraph 5.1(c), above, and for the balance of the term of this
Lease, twelve and one-half percent (12.5%), together with applicable
"Bonus Royalties," as such term is defined at Subparagraph 5.3 below.
For all purposes herein, the term "Gross Proceeds" shall mean (i) with
respect to the Existing Plant, all amounts received by Lessee, directly or
indirectly, from the sale to others of electricity, including energy and
capacity payments, or energy in any other form, produced on the leased land
from the geothermal
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resources therein or, if applicable, the "Adjacent Lease", as such term is
defined at Subparagraph 5.8 below, and (ii) with respect to the "New Plants", as
such term is defined at Subparagraph 5.2 below, all amounts received by Lessee,
directly and indirectly, from the sale to others of electricity, including
energy and capacity payments, or energy in any other form produced from any
lands or geothermal resources without regard to ownership thereof.
5.2 New Plant Base Royalty. As to electricity or other energy generated by
all additional plants utilizing the "Standard Offer Number Four Contracts",
as such term is defined at Subparagraph 7.1 below (the "New Plants"),
Lessee shall pay to Lessor for the balance of the full term of the Lease,
twelve percent (12%) of the Gross Proceeds received by Lessee {the "New
Plant Base Royalty"), together with applicable "Bonus Royalties," as such
term is defined at Subparagraph 5.3 below.
5.3 Bonus Royalties. The Existing Plant Base Royalty and New Plant Base
Royalty payable by Lessee to Lessor with respect to the Existing Plant and
each New Plant pursuant to Subparagraphs 5.1 and 5.2 above, shall be
augmented by additional royalties (the "Bonus Royalties") calculated in
accordance with the procedure set forth in Appendix "A" attached to this
Amendment and incorporated by reference herein. Except as otherwise
provided at Subparagraph 5.1(a), (b) and (c) above, the Existing Plant Base
Royalty for the Existing Plant and the New Plant Base Royalty for each New
Plant (collectively, the "Base Royalties") shall be applied to all Gross
Proceeds for each such plant at or below the "Baseline Revenue" in any
year. The term "Baseline Revenue" for each such plant shall mean the
forecasts of annual revenues determined as set forth in Appendix "A" to
this Amendment. For all Gross Proceeds from the Existing Plant and each of
the New Plants, respectively, in excess of the Baseline Revenue (the
"Additional Revenue") for such plants, the Bonus Royalties shall be applied
to calculate the total amount of royalty payable to Lessor.
5.4 Inflation Adjustment. The applicable Baseline Revenue for each of the
plants shall not be subject to adjustment during the fixed price period of
any power purchase agreement associated with such plant. The Baseline
Revenue for each of the plants shall be adjusted annually for all years
after expiration of the period of firm prices provided in the power
purchase agreement associated with such plant to account for the difference
between an assumed inflation rate of five percent (5%) per annum and the
actual inflation
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experienced (the "Inflation Adjustment"). For the purpose of the Inflation
Adjustment, the "Actual Inflation" shall be determined from comparison of
the value of the Producer Price Index for Finished Goods Excluding Food
(the "Inflation Index") on December 31st of the then current year to the
value of the Inflation Index on December 31, 1986. The Actual Inflation
shall be equal to the ratio of the value of the Inflation Index on December
31st of the then current year to the value of the Inflation Index on
December 31, 1986. The "Assumed Inflation" shall be equal to one and five
hundredths ("1.05") raised to a power equal to the number of years between
1986 and the then current year. The "Inflation Adjustment Factor" shall be
equal to the Actual Inflation divided by the Assumed Inflation. The
"Adjusted Baseline Revenue" for each year shall be determined by
multiplying the Baseline Revenue for each year by the Inflation Adjustment
Factor.
In determining the foregoing Inflation Adjustment, the percentage of
increase or decrease in the Inflation Index shall be calculated to the
nearest one hundredth of one percent (1/100th of 1%). Percentage changes in
the Inflation Index shall be calculated based on the original released
United States Department of Labor, Bureau of Labor Statistics published
data with the base "1967-100" until a new base period is established.
Calculations shall be made based on data on the new base period from that
time forward. If, for any reason, the statistics compiled by the United
States Department of Labor, Bureau of Labor Statistics and referred to
above, are not available for use for the foregoing adjustment, an
adjustment shall be made by mutual agreement of Lessor and Lessee. If the
United States Department of Labor, Bureau of Labor Statistics designates an
index with a new title and/or code number as being continuous with the
Inflation Index then such new index shall be used for the foregoing
adjustment.
5.5 Consequences of Default by Lessee. The payment when due by Lessee to
Lessor of the total compensation provided for in this Paragraph 5, for the
balance of the full term of the Lease, is a condition to the continuation
of Lessee's rights under the Lease and its right to use or occupy the
leased land or any part thereof. In the event, that Lessee shall default
under any covenant or condition of the Lease and shall fail to remedy such
default or to commence in good faith to remedy such default, if such
default cannot be remedied within the notice period, Lessor shall have the
right, upon expiration of sixty (60) days written notice of default, to
terminate the Lease and all of Lessee's rights hereunder.
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5.6 Payment of Royalties. Lessee shall pay to Lessor the Base Royalties,
and any applicable Bonus Royalties, on the last day of each month for
accrued royalties for the preceding calendar month. Lessee shall calculate
the amount of actual Bonus Royalties due under the Lease at the end of each
calendar year during the term of the Lease, and shall make payment of any
underpayment to Lessor or Lessor shall make payment of any overpayment to
Lessee, as the case may be, for any amount due (the "Additional Royalties")
and payable no later than forty-five (45) days after the end of each
calendar year during the term of the Lease. When applicable under
Subparagraph 5.4 above, Inflation Adjustments to the Baseline Revenue
resulting from application of the Inflation Index shall be made on a dollar
basis by each January 31st during the term of the Lease before calculating
the actual Bonus Royalties. The Baseline Revenue for the first year of
operation for any New Plant shall be prorated from the date of first
delivery to the end of the calendar year to adjust for differences in
actual and forecasted revenue set forth in the schedules of Baseline
Revenue established for such plant.
5.7 Insufficiency of Geothermal Resources.
(a) With respect to both the Existing Plant and any New Plants or any
"Additional Plants," as such term is defined at Subparagraph 5.9
below, built on the leased land or the "Adjacent Lease", as such term
is defined at Subparagraph 5.8 below, Lessee shall utilize geothermal
resources produced from the leased land and/or the "Adjacent Lease".
If the geothermal resources obtainable from the leased land and the
Adjacent Lease are insufficient for operation of the Existing Plant,
any New Plant, or any Additional Plant at their respective average
capacity during the preceding three (3) calendar years, Lessor may,
but shall not be obligated to, make available geothermal resources
from other lands at the applicable royalty rates provided in
Subparagraphs 5.1, 5.2 and 5.3 above. In such case, Lessor shall pay
all underlying, overriding, or other form of royalty or production
payment, net revenue interest, or other form of compensation payable
to the United States of America or any other third party on geothermal
resources supplied from such other land. If Lessor is unwilling or
unable, as provided above, to make available sufficient geothermal
resources for the Existing Plant or for any such New Plant or any such
Additional Plant, Lessee may secure geothermal resources from other
lands ("Other Lands") for any such plant without paying
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royalty to Lessor on the geothermal resources so secured. In such a
case, Lessee shall have the right to commingle the geothermal
resources provided with geothermal resources provided from such Other
Lands and to pay Lessor's royalty on the basis of production allocable
to the leased land and the Adjacent Lease, and the Other Lands made
available by Lessee, as determined by metering or gauging same.
(b) With respect to any New Plant built on land other than the leased land
or the Adjacent Lease, Lessee shall pay Lessor the full royalty due
under Subparagraphs 5.2 and 5.3 above regardless of the source of the
geothermal resources, in accordance with definition of Gross Proceeds
in Subparagraph 5.1 above and the last sentence of Subparagraph 7.1
below, and the provisions of Subparagraph 5.7(a) above shall have no
application.
5.8 Unitization of Geothermal Resources. Lessor may not voluntarily commit
federal Geothermal Lease Number CA-11667-A (the "Adjacent Lease") to any
unit or cooperative agreement without the prior written consent of Lessee
and shall cooperate fully with Lessee, at no cost to Lessor, in accepting
or opposing, as determined by Lessee, any attempt to compel unitization or
other form of joinder of the Adjacent Lease pursuant to applicable laws and
regulations including, but not limited to, the Geothermal Steam Act of
1970, and implementing regulations published at Title 43 Code of Federal
Regulations, Part 3200, et seq., with all seasonable expenses thereof to be
borne by Lessee. In the event that the Adjacent Lease becomes unitized or
otherwise joined with any other land leased or otherwise controlled by
Lessee, Lessor may not propose, or make any election with respect to, any
"Participating Area", as such term is defined in applicable laws and
regulations without the prior written consent of Lessee.
5.9 Additional Plants. As to electricity or other energy generated by all
additional plants built on the leased land or, if applicable, the Adjacent
Lease from geothermal resources therein, other than the Existing Plant or
the New Plants (the "Additional Plants"), Lessee shall pay to Lessor during
the remainder of the full term of the Lease, royalties as provided at
Subparagraphs 5.2, 5.3, 5.4, 5.6 and 5.7 above.
5.10 Minimum Royalty. Notwithstanding Subparagraph 5.7 hereof, Lessee shall
pay to Lessor during the remainder of the full term of the Lease, a minimum
royalty of 3%
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of gross proceeds from the sale to others of electricity, including energy
and capacity payments, or energy in any other form generated by plants
built on the leased land or when applicable, the Adjacent Lease.
5.11 No Guaranteed Internal Rate of Return. Lessor shall not be deemed to
have guaranteed Lessee a minimum internal rate of return with respect to
the Existing Plant, any New Plant, or any Additional Plant.
3. Paragraph 7 of the Lease is hereby deleted in its entirety and a new
Paragraph 7, reading as follows, is substituted in its place instead.
7. Plant Expansion. Lessee shall have the right to expand its operations on
the leased land, the Adjacent Lease, or any other lands without regard to
ownership thereof beyond the capacity of the Existing Plant as follows:
7.l Plant Expansion. Subject to the provisions of Subparagraph 7.2 below,
Lessee shall have the right to increase the capacity of the Existing Plant
or build the New Plants on the leased land, if operations under the Lease
demonstrate the availability of an adequate supply of geothermal resources,
on the terms and conditions set forth herein. Subject to the provisions of
Subparagraph 7.2 below and the first and second provisos to this sentence,
Lessee shall have the right of first refusal for the development of
electricity available from utilization of geothermal resources underlying
the Adjacent Lease; provided that Lessee's operation proves the adequacy of
the geothermal resources and the commercial feasibility of producing
electricity therefrom; and provided further, that Lessee shall have
committed to construction of one or more of the New Plants associated with
the Standard Offer Number Four Power Purchase Contracts between Lessee and
Southern California Edison Company bearing Document Numbers 2433H and 2435H
(the "Standard Offer Number Four Contracts") or expanded the Existing Plant
in an amount of no less than ten (10) megawatts nameplate rating prior to
the expiration of the Standard Offer Number Four Contracts.
Lessee hereby agrees to exercise good faith efforts to obtain all
necessary governmental permits, authorizations, and approvals to build and
operate two (2) New Plants on the leased land or on adjacent land leased or
otherwise controlled by Lessor and, if it obtains governmental permits,
authorizations, and approvals which, in its sole discretion, are such that
make construction of the two New Plants economically
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viable, agrees to seek all necessary internal corporate and partnership
authorizations, and sufficient financing for the construction of such two
New Plants. In the event that Lessee is unable, in the exercise of good
faith efforts, to obtain all necessary external and internal permits,
authorizations, approval and financing to build and operate any New Plants
or determine not to build any New Plants for any reason or no reason,
Lessee shall proceed in accordance with the terms of Subparagraph 7.2,
below. Regardless of ownership of the land or geothermal resource
dedicated to any New Plant, Lessee shall pay Lessor royalties on the Gross
Proceeds of such New Plants as provided in Subparagraphs 5.2 and 5.3,
above.
7.2 Consequences of Failure to Expand. If Lessee shall fail to complete
prior to the expiration of the Standard Offer Number Four contracts an
increase in the capacity of the Existing Plant of no less than ten (10)
megawatts nameplate rating or the construction of at least one (1) New
Plant, Lessee shall relinquish to Lessor its rights under the Lease to the
surface and subsurface area not actually used for the Existing Plant,
gathering and injection lines, and xxxxx and shall further relinquish its
right to use the geothermal resource underlying the leased land or the
Adjacent Lease for any purpose other than operating the Existing Plant as
provided herein. If Lessee so relinquishes its rights to the surface and
subsurface area and the geothermal resource, with respect to the surface
and subsurface actually used for the Existing Plant, gathering and
injection lines and xxxxx, Lessee and Lessor shall jointly hold such rights
on a non-interference basis. If Lessee so relinquishes the foregoing
rights, Lessor shall have the right, to utilize (i) the surface and
subsurface not actually used for the Existing Plant, gathering and
injection lines, and xxxxx and the geothermal resources underlying the
leased land, and (ii) the Adjacent Lease, for any purpose; provided,
however Lessor may not exercise any of the foregoing reserved rights which,
in the reasonable opinion of Lessee, might interfere with the operation of
the Existing Plant.
4. A new Paragraph number 24 is hereby added to the Lease as follows:
24. Upon request, Lessee shall provide Lessor with full access to review,
and, with respect to Lessor operations on the leased land or Adjacent
Lease, to use without charge all geotechnical data, geotechnical reports,
and documents containing geotechnical information of any kind related to
Lessee's operations on the leased land.
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5. A new Paragraph number 25 is hereby added to the Lease as follows:
25. Lessee hereby waives, discharges and releases Lessor from any and all
claims of Lessee against Lessor, its directors, officers, employees or
agents which have accrued prior to April 1, 1987 and which arose out of, in
connection with, or relate to the negotiations of Lessee's entering into,
or Lessor's performance or nonperformance of the Lease.
6. As modified or added to by the terms of this Amendment, all terms and
conditions of the Lease shall remain in full force and effect. All capitalized
terms contained herein, unless otherwise defined, shall have the meaning
ascribed to such terms in the Lease.
IN WITNESS WHEREOF, this Amendment has been executed on the first date
written above by the duly authorized representatives of the parties.
MAGMA ENERGY, INC., Lessor MAMMOTH-PACIFIC, Lessee
By: PACIFIC GEOTHERMAL COMPANY,
general partner of MAMMOTH-PACIFIC
By: /s/ Illegible By: /s/ Illegible
------------------------------- ------------------------------------
Title: President & CEO Title: President
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Appendix "A"
Calculation of Additional Royalties
As provided in Paragraph 5 of the Amendment to which this Appendix "A" is
attached, the basic structure of the royalty arrangement for the Existing Plant
and each New Plant includes a mutually agreed upon baseline revenue forecast
(the "Baseline Revenue") and a two-tier royalty rate. For all Gross Proceeds, as
such term is defined at Subparagraph 5.1 of the Lease, as amended by the
Amendment, in a given year in excess of the applicable Baseline Revenue for a
plant (the "Additional Revenues"), additional royalties (the "Bonus Royalties")
equal to 50% of such Additional Revenues (the "Bonus Royalty Percentage") shall
be paid. The procedure set forth below details the steps to be followed in the
calculation of Bonus Royalties for the Existing Plant and each New Plant.
Calculations shall be made separately for the Existing Plant and each New Plant.
1. The Schedule of Baseline Revenue attached as Exhibit "A-l" to this
Appendix "A" has been established in accordance with mutually agreed upon
parameters for the New Plant scheduled to be completed first (see Paragraph 4
below). If the actual date of "Firm Operation", as such term is defined in any
applicable power purchase agreement, is other than that used in the agreed upon
parameters, the Baseline Revenue for the first year of operation and the tenth
year of operation (when energy pricing switches from the fixed price schedule to
as-available pricing) will be adjusted to reflect the actual date of Firm
Operation. The Baseline Revenue for any additional New Plants will be
established utilizing substantially the same bases as those utilized in
calculating the Baseline Revenue for the first New Plant. The Schedule of
Baseline Revenue attached as Exhibit "A-2" to this Appendix "A" has been
established for the Existing Plant in accordance with mutually agreed upon
parameters.
2. Bonus Royalties will be calculated separately for the Existing Plant and
each New Plant and will be paid when earned. During any month in a given
calendar year in which the aggregate Gross Proceeds for a plant exceed the
applicable Baseline Revenues for that plant, Bonus Royalties will become payable
and will be paid at the same time that the Baseline Royalties for the plant are
to be paid. The Bonus Royalties for a plant will be calculated by multiplying
the Additional Revenues received during that month for that plant by the Bonus
Royalty Percentage.
3. No later than forty-five (45) days after the end of each calendar year,
Lessee will calculate the amount of the actual Bonus Royalties due during such
year, and shall
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make payment of any underpayment to Lessor, or Lessor shall make payment of any
overpayment to Lessee, as the case may be. Calculation of actual Bonus Royalties
will be based on the following formulas:
(a) Adjusted Baseline Revenue.
During the period commencing on the date of Firm Operation of each New
Plant and ending ten years thereafter, and during the period
commencing on January 1, 1987, and ending on December 31, 1995 for the
Existing Plant (the "First Period"), the Adjusted Baseline Revenue
shall equal the Baseline Revenue.
After the expiration of the First Period, the Baseline Revenue shall
be adjusted annually by the Inflation Adjustment Factor to reflect the
difference between the assumed inflation index used in the calculation
of the Baseline Revenue (the "Assumed Inflation") and the actual
inflation rate as reported by the Producer Price Index for Finished
Goods Excluding Food published by the department of Labor, Bureau of
Labor Statistics for December of each year (the "Inflation Index").
The method of adjustment is as follows:
Baseline Revenue(n) Inflation Index(n)
Adjusted Baseline Revenue(n) = -------------------------- X ---------------------
Assumed Inflation Index(n) Inflation Index(1986)
where "n" is the year of adjustment, and the Assumed Inflation index
for such year is taken from the following table:
Assumed Inflation Index
Index Index Index
Year Value Year Value Year Value
---- ----- ---- ----- ---- -----
1986 1.000 1997 1.710 2008 2.925
1987 1.050 1998 1.796 2009 3.072
1988 1.103 1999 1.886 2010 3.225
1989 1.158 2000 1.980 2011 3.386
1990 1.216 2001 2.079 2012 3.556
1991 1.276 2002 2.183 2013 3.733
1992 1.340 2003 2.292 2014 3.920
1993 1.407 2004 2.407 2015 4.116
1994 1.477 2005 2.527 2016 4.322
1995 1.551 2006 2.653 2017 4.538
1996 1.629 2007 2.786 2018 4.765
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(B) Additional Revenue = Gross Proceeds - Adjusted Baseline Revenue
except that if Gross Proceeds for any year is less than Adjusted
Baseline Revenue for such year, then
Additional Revenue = 0
(c) Except as provided in Subparagraph 5.1(a), (b) and (c),
Base Royalties = Base Royalties
percentage of 12% or
12.5%, as the case may
be, X Adjusted Baseline
Revenue
except that if Gross Proceeds for any year is less than Adjusted
Baseline Revenue for such year, then
Base Royalties = Base Royalties percentage of 12%
or 12.5%, as the case may be, X
Gross Proceeds
(d) Bonus Royalties = Bonus Royalties percentage of
50% X Additional Revenue
(e) Total Royalties = Base Royalties + Bonus Royalties
(f) Additional Royalties = Total Royalties - Base Royalties Paid
4. The Schedule of Baseline Revenue attached as Exhibit "A-l" to
this Appendix "A" has been established for a New Plant consisting of a 12MW
facility with a Firm Operation date of November, 1988. Bases include: 85% load
factor after Firm Operation, energy revenue at the applicable Standard Offer
Number Four Contract rate for ten years, and then fixed at 50% of the Standard
Offer Number Four Contract rate in 1999, and escalating at 6% thereafter; and
100% of the capacity revenue based on the standard Offer Number Four Contract
as-available capacity schedule through 1998, and then fixed at the 1998 price
thereafter.
5. The Schedule of Baseline Revenue attached as Exhibit "A-2" to this
Appendix "A" has heen established for the Existing Plant. Bases include: 70,000
MWh of energy sold per year through December 31, 1995, and 68,268 MWh per year
through December 31, 2015; energy and capacity revenues at rates provided in the
Amended and Restated Power Purchase and Sales Agreement for the Existing Plant,
dated December 12, 1986 through December 31, 1995; and then at 50% of the
Standard Offer Number Four Contract energy payment rate in 1996, and escalating
at 6% thereafter; and 100% of the capacity revenue payment rate of $.0194/Kwh
thereafter.
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Exhibit "A-1"
New Plant Baseline Revenue Forecast
BASELINE
REVENUE
FORECAST
YEAR ($M)
---- --------
1988 1,776
1989 7,782
1990 8,302
1991 8,829
1992 9,650
1993 10,457
1994 11,272
1995 12,177
1996 13,018
1997 14,021
1998 14,921
1999 9,059
2000 9,495
2001 9,958
2002 10,448
2003 10,967
2004 11,518
2005 12,101
2006 12,720
2007 13,376
2008 14,071
2009 14,808
2010 15,589
2011 16,417
2012 17,294
2013 18,225
2014 19,211
2015 20,256
2016 21,364
2017 22,538
2018 23,783
2019 and for the To be calculated
balance of the using the same
term of the Lease. bases.
EXHIBIT "A-2"
EXISTING PLANT BASELINE REVENUE FORECAST
BASELINE
NET REVENUE
CAPACITY MW HRS ENERGY AGREEMENT FORECAST
PRICE SOLD PRICE PRICE ($M)
-------- ------ ------ --------- --------
1987 .0194 70,000 .0700 .0894 6,258
1988 .0194 70,000 .0700 .0894 6,258
1989 .0194 70,000 .0700 .0894 6,258
1990 .0194 70,000 .0700 .0894 6,258
1991 .0194 70,000 .0700 .0894 6,258
1992 .0194 70,000 .0700 .0894 6,258
1993 .0194 70,000 .0700 .0894 6,258
1994 .0194 70,000 .0700 .0894 6,258
1995 .0194 70,000 .0700 .0894 6,258
1996 .0194 68,273 .0630 .0824 5,626
1997 .0194 68,273 .0668 .0862 5,884
1998 .0194 68,273 .0708 .0902 6,157
1999 .0194 68,273 .0750 .0944 6,447
2000 .0194 68,273 .0795 .0989 6,755
2001 .0194 68,273 .0843 .1037 7,080
2002 .0194 68,273 .0894 .1088 7,426
2003 .0194 68,273 .0947 .1141 7,792
2004 .0194 68,273 .1004 .1198 8,180
2005 .0194 68,273 .1064 .1258 8,591
2006 .0194 68,273 .1128 .1322 9,027
2007 .0194 68,273 .1196 .1390 9,489
2008 .0194 68,273 .1268 .1462 9,979
2009 .0194 68,273 .1344 .1538 10,499
2010 .0194 68,273 .1424 .1618 11,049
2011 .0194 68,273 .1510 .1704 11,633
2012 .0194 68,273 .1600 .1794 12,251
2013 .0194 68,273 .1696 .1890 12,907
2014 .0194 68,273 .1798 .1992 13,602
2015 .0194 68,273 .1906 .2100 14,338
2016 and for the balance of the term of the Lease to be calculated using the
same bases.
