Exhibit 10.14
CAPACITY AGREEMENT
by and between
DUQUESNE LIGHT COMPANY
and
ORION POWER MIDWEST, L.P.
Dated as of February 15, 2002
CAPACITY AGREEMENT
This Capacity Agreement (this "Agreement") is made and entered into as of
February 15, 2002 by and between Duquesne Light Company, a Pennsylvania
corporation ("DLC"), and Orion Power MidWest, L.P., a Delaware limited
partnership (the "Supplier"). DLC and the Supplier are referred to individually
as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, DLC and the Supplier are parties to (i) that certain POLR
Agreement dated as of September 24, 1999, as the same may be amended from time
to time (the "POLR Agreement") and (ii) that certain Amended and Restated POLR
II Agreement dated as of December 7, 2000, as the same may be amended from time
to time (the "POLR II Agreement");
WHEREAS, DLC has stated its intention to become a load serving entity in
PJM West (as defined herein);
WHEREAS, PJM West requires that its load serving entities satisfy certain
capacity obligations;
WHEREAS, the Supplier has or is willing to secure the necessary resources
to meet certain of DLC's capacity obligations in PJM West;
WHEREAS, DLC desires to purchase from the Supplier and the Supplier desires
to sell to DLC capacity on the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the mutual covenants, representations
and agreements hereinafter set forth, and intending to be legally bound hereby,
the Parties agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN MATTERS
1.1 Definitions. As used in this Agreement, the following terms have the
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meanings set forth below:
"ACAP" means "Available Capacity Resources" as defined under the PJM West
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Protocols, measured in megawatts of net capacity.
"ACAP Insurance Amount" means, for a particular calendar day, an amount of
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megawatts equal to the product of (i) the percentage of the amount of ACAP that
is then eligible for Alternative Deficiency Charges as a result of the amount of
ICAP actually
designated by the Supplier, on DLC's behalf, from the Designated ICAP Units and
such of DLC's interruptible load as is "qualified interruptible load" under the
PJM West Protocols, pursuant to Section 3.1 hereof, for the then current season
under the PJM West Protocols, multiplied by (ii) the amount of ACAP then
required by PJM West for the DLC Zone for such calendar day.
"ACAP Market Transaction Costs" has the meaning set forth in Section 3.2 hereof.
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"ACAP Supply Payment" means an amount equal to three million, six hundred
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forty-one thousand, six hundred sixty-seven dollars ($3,641,667).
"Affiliate" means, with respect to a corporation, partnership, or other entity,
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each such other corporation, partnership, or other entity that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such corporation, partnership, or other entity.
"Agreement" means this Capacity Agreement together with the Schedules and
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Exhibits attached hereto, as such may be amended from time to time.
"Alternative Deficiency Charges" means those "alternate deficiency charges"
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imposed under the PJM West Protocols in respect of a deficiency in the delivery
of ACAP.
"Amended Communications Agreement" means that certain System Operations Center
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Service Agreement, effective as of April 28, 2000, by and between DLC and the
Supplier, amended, pursuant to Section 4.5 hereof, to conform to the form of the
Amended System Operations Center Service Agreement attached hereto as Exhibit 3.
"Amended Connection Agreements" means those certain Connection and Site
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Agreements, dated as of September 24, 1999, by and between DLC and the Supplier
(as successor in interest to Orion Power Holdings, Inc.) in respect of each of
the Supplier's Cheswick generating plant, Elrama generating plant, Xxxxxx Island
generating plant and Philips generating plant, each amended, pursuant to Section
4.4 hereof, to conform to the form of the First Amended Connection and Site
Agreement attached hereto as Exhibit 2.
"Ancillary Services Agreement" has the meaning set forth in Section 4.3 hereof.
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"Ancillary Services Tariffs" means stand-alone tariff sheets for DLC in the form
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of Schedule 9A and Schedule 9B to DLC's Open Access Transmission Tariff, as in
existence on the date hereof.
"Business Day" means any day other than Saturday, Sunday and any day which is a
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day on which banking institutions in the Commonwealth of Pennsylvania are
authorized by law or other governmental action to close.
"Designated ICAP Units" has the meaning set forth in Section 3.1 hereof.
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"Dispatch Agreement" has the meaning set forth in Section 4.6 hereof.
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"DLC Zone" means the DLC service territory under the PJM West Protocols as such
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service territory is described in the "List of Communities Served" under DLC's
retail tariff on file with the PUC on the date hereof.
"DLC Zone Daily Peak Forecast" means, for each calendar day during the term of
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this Agreement on and following the Effective Date, the DLC Zone Hourly Forecast
with the greatest Energy requirements forecasted for any hour of that calendar
day.
"DLC Zone Hourly Forecast" means, for each hour during the term of this
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Agreement on and following the Effective Date, DLC's forecast of the Energy
requirements (measured in megawatts) of the DLC Zone.
"ECAR" means the East Central Area Reliability Council, a regional reliability
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council established pursuant to the East Central Area Reliability Coordination
Agreement, and any successor entity thereto.
"Effective Date" means the later of (i) the date on which DLC is obligated to
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supply ACAP under the PJM West Protocols, (ii) the date on which the FERC issues
an order, in a form reasonably acceptable to the Parties, accepting this
Agreement (including the POLR Agreement Amendments, the POLR II Agreement
Amendments and the Amended Connection Agreements) for filing, (iii) the date on
which the FERC issues an order, in a form reasonably acceptable to DLC,
accepting the FE Capacity Agreement for filing, (iv) the date on which the
Supplier ACAP Resources (as defined under the FE Capacity Agreement) are
certified as capacity resources in accordance with the PJM West Protocols, (v)
the date on which the Internal ACAP Resources are certified as capacity
resources in accordance with the PJM West Protocols, (vi) if the Supplier has
elected the pre-certification of External ACAP Resources pursuant to Section 3.1
hereof, the date on which the Elected Amount of capacity, if any, from the
External ACAP Resources are pre-certified as capacity resources in accordance
with the PJM West Protocols (unless the failure to achieve such
pre-certification is attributable to a lack of firm transmission from the
External ACAP Resources to the DLC Zone or attributable to any action or
omission of the Supplier that is inconsistent with the pre-certification
requirements of the PJM West Protocols, in which case this definition shall be
read as if this clause (vi) were not a part hereof), (vii) the date on which the
PUC issues an order, in a form reasonably acceptable to DLC, approving the
Retail Tariff Changes, together with such changes thereto as are acceptable to
DLC in its sole discretion, (viii) the date on which the PUC issues an order, in
a form reasonably acceptable to the Parties, approving the Supplier Tariff
Changes, together with such changes thereto as are acceptable to the Parties
hereto, (ix) the date on which the FERC issues an order, in a form reasonably
acceptable to the Parties, accepting the Ancillary Services Agreement for
filing, (x) the date on which the FERC issues an order, in a form reasonably
acceptable to DLC, accepting the Ancillary Services Tariffs for filing, (xi) the
date on which the Supplier secures the Required Lenders' Consent or notifies DLC
that the Required Lenders' Consent is no longer required, (xii) the date on
which the Parties receive reasonable assurances from PJM
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Interconnection, L.L.C., or the Supplier notifies DLC that such assurances are
no longer required, that DLC will be permitted to qualify for Alternative
Deficiency Charges with respect to a portion, rather than all, of its capacity
obligation in PJM West, and (xiii) the date on which the FE Capacity Agreement
is amended to provide that the Supplier (as defined under the FE Capacity
Agreement) schedules the FE Swap Amount (as defined under the FE Capacity
Agreement) to the "DLC Load Zone" as defined under and pursuant to the PJM West
Protocols on a day-ahead basis.
"EGS" means an Electric Generation Supplier as defined in DLC's then current
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Electric Generation Supplier Coordination Tariff.
"Elected Amount" has the meaning set forth in Section 3.1 hereof.
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"Energy" means electrical energy.
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"Event of Default" has the meaning set forth in Section 6.1 hereof.
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"External ACAP Resources" means the Supplier's generating units at the Avon Lake
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generating plant, the Supplier's generating units at the Niles generating plant,
the Supplier's generating units at the New Castle generating plant and the
Supplier's generating units at the Ceredo generating plant.
"FE" means FirstEnergy Corp., an Ohio corporation.
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"FE Capacity Agreement" means that certain capacity agreement dated as of
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December 18, 2001 by and between FirstEnergy Solutions Corp., on the one hand,
and DLC, on the other hand, relating to certain capacity and Energy obligations.
"FERC" means the Federal Energy Regulatory Commission and any successor agency
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thereto.
"FE Swap Percentage" means a fixed percentage between zero percent (0%) and
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sixty-five percent (65%), as set by the Supplier, on a daily basis, for the next
calendar day; provided, however, that if the Supplier fails to set and deliver
notice of an FE Swap Percentage, as contemplated by Section 3.2 hereof, for a
particular calendar day, then the FE Swap Percentage for such day shall equal
sixty-five percent (65%).
"Force Majeure" has the meaning set forth in Section 5.2 hereof.
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"Good Utility Practice" means any of the applicable practices, methods and acts:
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required by any Governmental Authority or applicable regional or national
reliability council, including NERC or ECAR or PJM West or the successor of
any of them, whether or not the Party whose conduct is at issue is a member
thereof; and
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otherwise engaged in or approved by a significant portion of the electric
utility industry during the relevant time period, 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 a
reasonable cost consistent with law, regulation and good business practices
(which may include aspects of reliability, safety, environmental
protection, economy and expediency). 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 practices, methods, or acts generally accepted in
the electric utility industry.
"Governmental Authority" means any federal, state, local or other governmental,
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regulatory or administrative agency, court, commission, department, board, or
other governmental subdivision, legislature, rulemaking board, tribunal,
arbitrating body, or other governmental authority.
"Governmental Charges" has the meaning set forth in Section 3.5 hereof.
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"ICAP" means net installed capacity of owned or contracted for generating
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facilities the designation of which satisfies the conditions of "Alternative
Deficiency Charges" under the PJM West Protocols, measured in megawatts of net
capacity.
"Internal ACAP Resources" means the Supplier's generating units at the Cheswick
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generating plant, the Supplier's generating units at the Elrama generating plant
and the Supplier's generating units at the Xxxxxx Island generating plant.
"Law" means any law, treaty, code, rule, regulation, or order or determination
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of an arbitrator, court or other Governmental Authority, or any franchise,
license, lease, permit, certificate, authorization, qualification, easement,
right of way, right or approval binding on a Party or any of its property.
"Material Adverse Effect" means any event or condition that has a material
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adverse effect on the rights or obligations of the affected Party under this
Agreement; provided, however, that an increase or decrease in the market price
of capacity that renders the payments to the Supplier hereunder no longer
reflective of market conditions shall not constitute a Material Adverse Effect.
"NERC" means the North American Electric Reliability Council and any successor
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entity thereto.
"Party" has the meaning set forth in the Recitals.
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"Person" means any individual, partnership, limited liability company, joint
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venture, corporation, trust, unincorporated organization or governmental entity
or any department or agency thereof.
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"PJM West" means the PJM West Region of PJM Interconnection, L.L.C., and any
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successor thereto (including any modification, and any successor, thereto
resulting from any regional transmission organization for the northeastern
United States).
"PJM West Protocols" means the provisions, protocols, rules or other
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requirements of any tariff or equivalent document, reliability assurance
agreement, operating agreement, transmission owner agreement or similar
agreement, manuals or similar documents, and their respective successors, then
in effect in and applicable to DLC as a load serving entity within, or the DLC
Zone as a part of, PJM West.
"POLR Agreement" has the meaning set forth in the Recitals.
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"POLR II Agreement" has the meaning set forth in the Recitals.
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"PUC" means the Pennsylvania Public Utility Commission and any successor agency
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thereto.
"Qualified Interruptible Load" means any load located within the DLC Zone that
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is subject to interruption by PJM West or DLC and is certified as a qualified
capacity resource in accordance with the PJM West Protocols.
"Retail Tariff Changes" means those changes to the schedules of rates pursuant
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to which DLC bills or intends to xxxx its retail customers, as set forth on
Schedule 3 hereto.
"Required Lenders' Consent" has the meaning set forth in Section 2.1 hereof.
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"Required Level" means (i) prior to the Supplier's repowering of the Xxxxxx
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Island generating plant, the greater of (x) an amount of megawatts equal to the
sum of the summer net demonstrated capacity of all Internal ACAP Resources
(determined under the PJM West Protocols), plus all Qualified Interruptible Load
to the extent it qualifies for Alternative Deficiency Charges, and plus any
other "Available Capacity Resources" under the PJM West Protocols that are
located in the DLC Zone and available to the Supplier and (y) 1220 megawatts;
and (ii) on or after the Supplier's repowering of the Xxxxxx Island generating
plant, the greater of (x) an amount of megawatts equal to the sum of the summer
net demonstrated capacity of all Internal ACAP Resources (determined under the
PJM West Protocols), plus all Qualified Interruptible Load to the extent it
qualifies for Alternative Deficiency Charges, and plus any other "Available
Capacity Resources" under the PJM West Protocols that are located in the DLC
Zone, owned by or under contract to the Supplier and available to the Supplier
and (y) 1360 megawatts.
"Supplier" has the meaning set forth in the Recitals.
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"Supplier ACAP Deficiency" means, for any calendar day, any negative difference
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between the Supplier ACAP Obligation and the amount of ACAP actually delivered
by the Supplier from Supplier ACAP Resources pursuant to Section 3.2 hereof for
such day.
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"Supplier ACAP Deficiency Charges" has the meaning set forth in Section 3.3
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hereof.
"Supplier ACAP Obligation" means for a particular calendar day an amount of ACAP
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equal to the difference resulting from (i) the amount of ACAP then required by
PJM West for the DLC Zone for such calendar day under the PJM West Protocols,
minus (ii) the DLC Zone Daily Peak Forecast for such calendar day multiplied by
a factor equal to the FE Swap Percentage for such calendar day (with the
resulting product rounded down to the nearest whole megawatt).
"Supplier ACAP Resources" means (i) the Designated ICAP Units, (ii) any
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Qualified Interruptible Load, (iii) other resources qualified under the PJM West
Protocols, and (iv) ACAP market transactions under the PJM West Protocols.
"Supplier Tariff Changes" means those changes to DLC's Electric Generation
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Supplier Coordination Tariff, as set forth on Schedule 4 hereto.
1.2 Certain Interpretive Matters. In this Agreement, unless otherwise
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specified or the context otherwise requires, the singular shall include the
plural, the masculine shall include the feminine and neuter, and vice versa. The
term "includes" or "including" shall mean "including without limitation." Unless
otherwise specified or the context otherwise requires, references to a Section,
Article, Schedule or Exhibit mean a Section, Article, Schedule or Exhibit of
this Agreement and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented or
restated through the date as of which such reference is made.
ARTICLE II
TERM
2.1 Term. Unless terminated earlier pursuant to the terms of this
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Agreement, the term of this Agreement shall commence as of the date on which the
"Required Lenders" (as defined in the Supplier's credit agreement dated as of
April 28, 2000) consent (on terms and conditions reasonably satisfactory to the
Supplier) to this Agreement and to the amendments, restatements and
terminations, as applicable, of each related document as described in Article IV
hereof, together with the POLR Issues Settlement Agreement of even date herewith
between the Parties, the side letter agreement of even date herewith between the
Parties regarding reactive power compensation and the letter of even date
herewith from the Parties to PJM West regarding payment for reactive power,
under the terms of such credit agreement (such consent, the "Required Lenders'
Consent"), or the date on which the Supplier notifies DLC that the Required
Lenders' Consent is no longer required, and continue until December 31, 2004,
unless extended by mutual agreement of the Parties.
2.2 Termination. If the Supplier fails to secure the Required Lenders'
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Consent, or to notify DLC that the Required Lenders' Consent is no longer
required, by the date that is forty-five (45) days following the date first
above written, DLC may terminate this Agreement by delivering a written notice
of such termination to the
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Supplier, following which delivery this Agreement shall become null and void and
of no further force or effect. Unless the Parties agree otherwise, if the
Effective Date has not occurred by the date that is one hundred eighty (180)
days following the date first above written, this Agreement shall automatically,
without any further action of the Parties, terminate and become null and void
and of no further force or effect; provided, however, that if the Effective Date
has not occurred by such date solely because DLC is not yet obligated to supply
ACAP under the PJM West Protocols, then this Agreement shall not terminate and
the foregoing one hundred eighty (180) day period shall be extended by an
additional ninety (90) days, following which if DLC is not obligated to supply
ACAP under the PJM West Protocols, this Agreement shall automatically, without
any further action of the Parties, terminate and become null and void and of no
further force or effect. In addition, this Agreement may be terminated before
the end of its term pursuant to Section 6.2 hereof.
ARTICLE III
CAPACITY SUPPLY
3.1 ICAP Designation. The Supplier shall take all actions necessary on its
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part to satisfy any requirements necessary for the certification of the Internal
ACAP Resources, and, if it so elects pursuant to the next sentence, the
pre-certification of the External ACAP Resources, in each case as qualified
capacity resources in accordance with the PJM West Protocols. The Supplier may
elect to pre-certify an amount of megawatts, up to and including 1300 megawatts
(such amount, the "Elected Amount"), of capacity from the External ACAP
Resources by delivering a written notice of the same to DLC no later than the
date that is forty-five (45) days following the date first above written, which
notice shall include the Elected Amount. The Supplier shall take all actions
necessary to designate under the PJM West Protocols, on behalf of DLC and as
DLC's agent for such purpose, beginning on the Effective Date and continuing
through the term of this Agreement (i) such generating units as Supplier may
designate that qualify as ICAP units within PJM West and have an aggregate net
demonstrated capacity of at least the Required Level of megawatts or (ii) to the
extent the aggregate net demonstrated capacity of such units does not equal at
least the Required Level of megawatts, such of Supplier's generating units at
the Internal ACAP Resources as is necessary to bring the aggregate net
demonstrated capacity of all units designated hereunder to at least the Required
Level of megawatts (all such units designated hereunder, the "Designated ICAP
Units") in any case such that DLC is deemed to have satisfied the conditions of
any Alternative Deficiency Charges resulting from such designation hereunder.
The Supplier shall be responsible for all costs, under the PJM West Protocols or
otherwise, associated with satisfying the obligations contained in this Section
3.1.
3.2 ACAP Designation and Supply. Beginning on the calendar day immediately
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preceding the Effective Date and continuing through the term of this Agreement,
on a daily basis: (i) DLC shall deliver to the Supplier, no later than three
hours prior to the close of the ACAP market then set by the PJM West Protocols,
the DLC Zone Hourly Forecasts, including the DLC Zone Daily Peak Forecast, for
the following calendar day, (ii) the Supplier shall deliver to DLC (and, on
DLC's behalf, to
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FE), no later than two hours prior to the close of the ACAP market then set by
the PJM West Protocols, notice of the FE Swap Percentage that the Supplier has
set for the following calendar day, and (iii) the Supplier shall, on DLC's
behalf and as DLC's agent for such purpose, designate under the PJM West
Protocols, no later than the hour then set by the PJM West Protocols for the
close of ACAP market, from Supplier ACAP Resources an amount of ACAP equal to
the Supplier ACAP Obligation for the following calendar day and shall be
responsible for all costs, under the PJM West Protocols or otherwise, associated
therewith. The Parties agree that in designating ACAP from Supplier ACAP
Resources on a particular day, the Supplier shall, on DLC's behalf and as DLC's
agent for such purpose, (i) designate under the PJM West Protocols ACAP from the
Designated ICAP Units in an amount equal to the ACAP Insurance Amount (to the
extent such amount of ACAP is physically available from the Designated ICAP
Units on such day), and (ii) bid into the ACAP market under the PJM West
Protocols all available ACAP from Designated ICAP Units in excess of the ACAP
Insurance Amount. The Parties further agree to cooperate in good faith to
establish a process pursuant to which the Supplier, in satisfying its
obligations to deliver the Supplier ACAP Obligation, may, on DLC's behalf and as
DLC's agent for such purpose, enter into ACAP market transactions under the PJM
West Protocols to purchase an amount of ACAP to meet the unsupplied balance, if
any, of the Supplier ACAP Obligation (or if the PJM West Protocols do not permit
the Supplier to act as DLC's agent for such purposes, a process pursuant to
which the Supplier and DLC will cooperate to enter into such ACAP market
transactions), provided that the Supplier shall be responsible for all costs
associated with all such ACAP market transactions (such costs, the "ACAP Market
Transaction Costs"), which ACAP Market Transaction Costs shall be immediately
due and payable to DLC and, as such, shall be included as a component of
"Supplier Charges" imposed on the Supplier under the POLR II Agreement, as
contemplated by the POLR II Amendments. The Parties agree that "ACAP Market
Transaction Costs" shall also include all costs associated with ACAP market
transactions executed on DLC's behalf by PJM West under the PJM West Protocols,
including any buy bids thereunder, to secure the ACAP necessary to supply any
portion of the Supplier ACAP Obligation. In addition, the Parties shall use
their best efforts to certify the Interruptible Service (as defined under the
POLR Agreement and the POLR II Agreement) as "Qualified Interruptible Load"
under the PJM West Protocols for the purpose of inclusion as an "Available
Capacity Resource" under the PJM West Protocols.
3.3 ACAP Deficiencies. Beginning on the Effective Date and continuing
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through the term of this Agreement, if on any calendar day there is a Supplier
ACAP Deficiency, the Supplier shall be responsible for any charges assessed to
or imposed on DLC under the PJM West Protocols (or charges incurred by DLC on
behalf of EGSs under the PJM West Protocols) in respect of any such Supplier
ACAP Deficiency (such charges, the "Supplier ACAP Deficiency Charges"), which
Supplier ACAP Deficiency Charges shall be immediately due and payable to DLC and
included as a component of "Supplier Charges" imposed on the Supplier under the
POLR II Agreement, as contemplated by the POLR II Amendments; provided, however,
that any Supplier ACAP Deficiency Charges shall take into account, so that the
Supplier is entitled to the benefit of, up to the amount of the Supplier ACAP
Obligation, any Alternative Deficiency Charges resulting from and to the extent
of any ACAP Insurance
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Amount, so long as the Supplier has complied with its obligations contained in
Sections 3.1 and 3.2 hereof. The Parties agree that "Supplier ACAP Deficiency
Charges" shall also include all charges assessed to or imposed on DLC under the
PJM West Protocols (or charges incurred by DLC on behalf of EGSs under the PJM
West Protocols) as a result of the Supplier's failure to designate as ACAP or
bid into the ACAP market, in either case as may be required under the PJM West
Protocols, the full amount of available ACAP of the Designated ICAP Units.
3.4 Payment for ACAP. Beginning on the twentieth day after the end of the
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calendar month during which the Effective Date occurs (or if such day is not a
Business Day, then on the next succeeding Business Day), and continuing monthly
on the tenth day after the end of each successive calendar month (or if such day
is not a Business Day, then on the next succeeding Business Day) through the
term of this Agreement, DLC shall pay to the Supplier the ACAP Supply Payment
for the preceding calendar month. The Parties recognize and agree that they
shall, as necessary, pro rate on a daily basis the ACAP Supply Payment for the
month during which the Effective Date occurs to account, and pay the Supplier
only, for the number of days during such month that the Supplier was obligated
to deliver the Supplier ACAP Obligation hereunder.
3.5 Taxes. The payment of any local, state and federal taxes, fees, and
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levies ("Governmental Charges") imposed on or with respect to the Supplier's
delivery of the Supplier ACAP Obligation shall be the responsibility of the
Supplier.
3.6 Payments and Payment Disputes. Except as may otherwise be provided in
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this Agreement, beginning on the Effective Date and continuing on each Business
Day thereafter through the term of this Agreement, all payments then due under
this Agreement shall be made to the Party owed such payment by electronic
transmission to the bank account designated by such Party in Section 12.3
hereof. All such payments shall be denominated and paid in U.S. dollars. The
Parties shall use their good faith best efforts to resolve all disputes relating
to payments hereunder pursuant to the dispute resolution provisions of Article
VII of this Agreement.
3.7 Survival of Payment Obligations. Notwithstanding any other provision of
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this Agreement to the contrary, the payment provisions of this Article III, and
the rights and obligations of the Parties thereunder, shall survive the
expiration of the term or the termination of this Agreement for the purpose of
satisfying the rights and obligations of the Parties that arose or accrued prior
to such termination or expiration relating to the payment of the ACAP Supply
Payments, Supplier ACAP Deficiency Charges and ACAP Market Transaction Costs.
3.8 Fixed Transmission Rights and Network Resource Designations. Beginning
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on the Effective Date and continuing through the term of this Agreement, upon
receipt of written notice from the Supplier requesting such transfer, DLC shall
transfer to the Supplier its rights to those "Fixed Transmission Rights", if
any, under the PJM West Protocols that are associated, from time to time, with
such amount of megawatts as are designated from the Supplier's resources as
"Network Resources" under the PJM West Protocols. In addition, beginning on the
Effective Date and
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continuing through the term of this Agreement, DLC, at the Supplier's request,
shall, as permitted under the PJM West Protocols, designate such amount of
megawatts as the Supplier may elect from its resources as "Network Resources"
under the PJM West Protocols.
ARTICLE IV
POLR AGREEMENT, POLR II AGREEMENT
AND RELATED AGREEMENTS
4.1 Amendments to the POLR Agreement. The Parties recognize and agree that
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those amendments to the POLR Agreement set forth on Schedule 1 to this Agreement
(the "POLR Agreement Amendments") form an integral part of this Agreement and
form a part of the consideration for the obligations of the Parties hereunder.
Toward that end, on the Effective Date, the POLR Agreement shall be amended to
reflect the POLR Agreement Amendments without any further action required by
either Party to effect such POLR Agreement Amendments.
4.2 Amendments to the POLR II Agreement. The Parties recognize and agree
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that those amendments to the POLR II Agreement set forth on Schedule 2 to this
Agreement (the "POLR II Agreement Amendments") form an integral part of this
Agreement and form a part of the consideration for the obligations of the
Parties hereunder. Toward that end, on the Effective Date, the POLR II Agreement
shall be amended to reflect the POLR II Agreement Amendments without any further
action required by either Party to effect such POLR II Agreement Amendments.
4.3 Ancillary Services. The Parties recognize and agree that entering into
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an Amended and Restated Ancillary Services Agreement that will become effective
on the Effective Date and that is in the form attached hereto as Exhibit 1 (the
"Ancillary Services Agreement") forms an integral part of this Agreement and
forms a part of the consideration for the obligations of the Parties hereunder.
Toward that end, in connection with the execution and delivery of this
Agreement, the Parties, on even date herewith, shall execute and deliver the
Ancillary Services Agreement.
4.4 Amended Connection Agreements. The Parties recognize and agree that
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entering into the Amended Connection Agreements on the Effective Date, each in
the form attached hereto as Exhibit 2, forms an integral part of this Agreement
and forms a part of the consideration for the obligations of the Parties
hereunder. Toward that end, on the Effective Date, the Parties shall execute and
deliver the Amended Connection Agreements. In addition to the foregoing, on a
mutually convenient date following the date hereof, the Parties shall meet to
discuss the impact of the PJM West Protocols on the terms of connection service
under the Amended Connection Agreements and, if necessary, make such changes to
the form of Amended Connection Agreements attached hereto as Exhibit 2 as the
Parties may mutually agree.
4.5 Amended Communications Agreement. The Parties recognize and agree that
--------------------------------
entering the Amended Communications Agreement, in the form attached
11
hereto as Exhibit 3, forms an integral part of this Agreement and forms a part
of the consideration for the obligations of the Parties hereunder. Toward that
end, on the Effective Date, the Parties shall execute and deliver the Amended
Communications Agreement.
4.6 Dispatch Agreement. The Parties recognize and agree that on and after
------------------
the Effective Date, either Party may, by written notice to the other Party,
terminate that certain Generation Dispatch Service Agreement, dated as of April
28, 2000, by and between the Parties (the "Dispatch Agreement"), and that upon
any such termination, the Dispatch Agreement shall become null and void and of
no further force or effect.
4.7 Wheeling-Out Agreement. The Parties recognize and agree that on the
----------------------
Effective Date that certain Agreement for Reactive Supply and Voltage Control
From Generation Sources Service, dated as of April 24, 2001, by and between the
Parties shall automatically, without any further action of the Parties,
terminate and become null and void and of no further force or effect.
ARTICLE V
FORCE MAJEURE
5.1 Force Majeure. Notwithstanding anything in this Agreement to the
-------------
contrary, neither Party shall be liable in damages, or otherwise responsible to
the other Party, for its failure to perform or observe any of its obligations
under this Agreement if and only to the extent that it is unable to so perform
or is prevented from performing by an event of Force Majeure; provided, however,
that to the extent that the Supplier fails to deliver the Supplier ACAP
Obligation in accordance with Section 3.2 hereof, whether as a result of an
event of Force Majeure or for any other reason, the provisions of Section 3.3
hereof shall apply to such failure. The Parties recognize and agree that an
event of Force Majeure will not relieve any Party of its obligation to make
payments when due hereunder.
5.2 Definition of Force Majeure. The term "Force Majeure" as used herein
---------------------------
means those causes beyond the reasonable control of the Party affected that, by
the exercise of reasonable diligence, including Good Utility Practice, such
Party is unable to prevent, avoid, mitigate, or overcome, including an act of
God, labor dispute (including a strike), act of the public enemy, war, civil
disturbance, insurrection, riot, fire (unless resulting from the fault or
negligence of the Party asserting Force Majeure), storm or flood, lightning,
explosion (unless resulting from the fault or negligence of the Party asserting
Force Majeure), order, government decree or rule, regulation or restriction
imposed by governmental, military or lawfully-established civilian authorities,
or any other cause of a similar nature beyond such Party's reasonable control.
Events that cause a change in the market value of capacity or otherwise affect
the Supplier's or DLC's cost of performance under this Agreement or that are
otherwise covered by Section 6.2(b) of this Agreement shall not be considered
Force Majeure events.
12
5.3 Force Majeure Procedures. Upon the occurrence of an event of Force
------------------------
Majeure, the Party affected by such event shall (a) provide prompt written
notice of such Force Majeure event to the other Party, including an estimation
of its expected duration and the probable impact on the performance of its
obligations hereunder; (b) exercise all reasonable efforts in accordance with
Good Utility Practice to continue to perform its obligations under this
Agreement; (c) expeditiously take action to correct or cure the event or
condition excusing performance, provided, however, that settlement of labor
disputes will be completely within the sole discretion of the Party affected by
such labor dispute; (d) exercise all reasonable efforts to mitigate or limit
damages to the other Party; and (e) provide prompt notice to the other Party of
the cessation of the event or condition giving rise to its excuse from
performance. Any obligation under this Agreement shall be suspended only to the
extent caused by such Force Majeure event and only during the continuance of any
inability of performance caused by such Force Majeure event but for no longer
period.
ARTICLE VI
DEFAULT AND TERMINATION
6.1 Event of Default. Unless excused by Force Majeure, each of the
----------------
following events shall be considered an Event of Default:
(a) The material breach by either Party of any agreement, covenant or
obligation under this Agreement; provided that such breach is not caused by the
material breach of the other Party, and provided further that, if such breach is
curable, a default shall not occur until the Party in breach has failed to cure
such breach within thirty (30) days after receipt of written notice thereof by
the non-defaulting Party;
(b) The discovery that any representation or warranty made by a Party
hereunder was false or misleading in any material respect when made that is not
cured within thirty (30) days and which has a material adverse effect on the
ability of the Party making such representation or warranty to perform its
obligations hereunder;
(c) The filing of an involuntary petition in bankruptcy against either
Party or the appointment of a receiver or liquidator or trustee for either Party
or of any substantial part of the property of a Party, provided that if such
Party is working diligently to have such petition, receiver, liquidator or
trustee stayed, dismissed or discharged, a default shall not occur unless such
petition, receiver, liquidator or trustee is not stayed, dismissed or discharged
within thirty (30) days ;
(d) The entry of a decree adjudicating a Party or any substantial part
of the property of a Party bankrupt or insolvent, provided that if such Party is
working diligently to have such decree discharged or stayed, a default shall not
occur unless such decree is continued undischarged and unstayed for a period of
thirty (30) days;
13
(e) The filing of a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law by a Party or against it;
(f) The failure of either Party to pay the other Party undisputed
amounts owed within ten (10) days after receiving written notice from such Party
that any such amount is overdue;
(g) A default by the Supplier on its indebtedness to third parties,
resulting in obligations of the Supplier in an amount of $50,000,000 or more
being accelerated;
6.2 Termination.
-----------
(a) Upon the occurrence of an Event of Default, the non-defaulting
Party may terminate this Agreement by providing one hundred eighty (180) days'
written notice to the defaulting Party of a specified date of termination;
provided, however, that upon the occurrence of an Event of Default specified in
Section 6.1 (c), (d) and (e) hereof, the non-defaulting Party may terminate this
Agreement by delivering to the defaulting Party a written notice of termination,
which termination shall be effective upon the defaulting Party's receipt of such
notice. The non-defaulting Party may exercise all such rights and remedies as
may be available to it to recover damages caused by such Event of Default.
(b) Following the Effective Date, if:
(i) the PUC issues an order modifying the Retail Tariff Changes
(together with such changes thereto as may have been acceptable to DLC on
or prior to the Effective Date) in a manner that materially impairs DLC's
ability to recover from its customers the amounts paid to the Supplier
under this Agreement,
(ii) either (x) the PUC issues an order modifying the Supplier Tariff
Changes (together with such changes thereto as may have been acceptable to
the Parties on or prior to the Effective Date), (y) the FERC issues an
order or (z) the PJM West Protocols or FE Protocols are modified, in any
such case, in a manner that affects the rights or obligations of a Party
respecting matters under this Agreement so as to cause such Party a
Material Adverse Effect (but specifically excluding from this clause (ii)
any order or modification as a result of which DLC is no longer able to
satisfy its capacity obligations under the PJM West Protocols by supplying
ACAP), or
(iii) DLC is no longer able to satisfy its capacity obligations under
the PJM West Protocols by supplying ACAP,
then, the affected Party may deliver written notice of the occurrence of any
such event(s) to the other Party (such notice, a "Renegotiation Notice").
Promptly after the delivery and receipt of a Renegotiation Notice, the Parties
shall, in good faith, attempt to negotiate
14
a mutually satisfactory amendment to this Agreement to restore the respective
rights and obligations of the Parties under this Agreement as they existed
immediately prior to such event(s) or to achieve another mutually satisfactory
result. If within thirty (30) days following the delivery of any such
Renegotiation Notice that notices an event described in clause (i), (ii) or
(iii) hereof the Parties fail to agree upon any such amendment, the affected
Party may then terminate the Agreement by providing the other Party with one
hundred eighty (180) days' prior written notice of such termination. Any
amendment to this Agreement negotiated as a result of a Renegotiation Notice
shall be deemed to be retroactively effective to the date on which the event(s)
described in such Renegotiation Notice occurred; provided, however, that if
following any such event, the order giving rise to such event is no longer in
effect (or is modified in a manner described in clause (i), (ii) or (iii)
hereof) by virtue of a decision by a Governmental Authority or governing body
that has become final and non-appealable, then any such amendment shall be of no
further force and effect and this Agreement shall be read so as not to include
such amendment (and in the event such order is modified in a manner described in
clause (i), (ii) or (iii) hereof, the Parties may deliver a Renegotiation Notice
with respect thereto as otherwise contemplated hereunder). Upon any termination
pursuant to this Section 6.2(b), neither Party shall have any further liability
to the other Party under this Agreement, except for any obligations that arose
or accrued prior to the effective date of such termination.
(c) If, following the Effective Date, the FE Capacity Agreement is
terminated, DLC shall immediately so notify the Supplier and then as of the date
on which the FE Capacity Agreement's termination is effective, this Agreement
shall be amended so that: (i) the Supplier shall continue to be obligated to
supply ICAP as contemplated by Section 3.1 hereof, (ii) in lieu of supplying the
Supplier ACAP Obligation, the Supplier shall, on DLC's behalf and as DLC's agent
for such purpose, supply on each calendar day the lesser of (x) an amount of
ACAP equal to the Required Level of megawatts of net capacity or (y) an amount
of ACAP equal to the amount of ACAP then required by PJM West for the DLC Zone
for such calendar day under the PJM West Protocols, (iii) the Supplier shall be
responsible for any charges assessed to or imposed on DLC, or incurred by DLC on
behalf of EGSs, under the PJM West Protocols for the Supplier's failure to
supply ICAP and ACAP as contemplated by this Agreement as modified by this
Section 6.2(c), and (iv) the Supplier shall continue to receive the ACAP Supply
Payment. In addition, if, following the Effective Date, the FE Capacity
Agreement is terminated, following such termination and continuing until the
termination or the expiration of the POLR II Agreement, DLC shall, beginning
with the next monthly payment of the ACAP Supply Payment, increase the amount of
the monthly ACAP Supply Payment by an additional $750,000.
(d) If the POLR II Agreement is terminated, then the Parties shall
negotiate in good faith such amendments to this Agreement as shall be necessary
to (i) provide that all payments due DLC under this Agreement are to be invoiced
by DLC and paid by the Supplier to DLC on a weekly basis, and all payments due
either Party under the Ancillary Services Agreement are to be invoiced by DLC
and paid and/or offset by the appropriate Party, as necessary, on a monthly
basis, in each case with subsequent monthly settlement statements of account
(and any related payments) and monthly true-
15
up statements of account (and any related payments), to be delivered (and paid)
in a manner that is substantially similar to those invoices and statements of
account (and any related payments) contemplated by the POLR II Agreement as
amended by the POLR II Agreement Amendments attached hereto, (ii) provide that
the Supplier shall post, supplement and replace letter(s) of credit in favor of
DLC, and that DLC may draw on any such letter(s) of credit, in such amounts and
in circumstances that are substantially similar to those contemplated by the
POLR II Agreement as amended by the POLR II Agreement Amendments attached
hereto, and (iii) provide DLC with remedies in the event that the Supplier fails
to post, supplement or replace any such letter(s) of credit that are
substantially similar to those contemplated by the POLR II Agreement as amended
by the POLR II Agreement Amendments attached hereto.
6.3 Additional Remedies. The Supplier acknowledges and specifically agrees
-------------------
that its obligations under this Agreement are essential to ensure the
reliability of the DLC Zone; that breach of the Supplier's obligations may
result in irreparable harm and damage to DLC which cannot adequately be
compensated by a monetary award; and that, as a consequence thereof, DLC shall,
in addition to any other remedy to which DLC may be entitled by reason of the
Supplier's breach of this Agreement, be entitled to seek and obtain temporary,
preliminary and permanent injunctive relief from any court or Governmental
Authority of competent jurisdiction restraining the Supplier from committing or
continuing any breach of this Agreement.
6.4 Reimbursement for Replacement Costs.
-----------------------------------
(a) Upon the termination of this Agreement pursuant to Section 6.2(a)
hereof as a result of any Event of Default, other than those Events of Default
specified in Sections 6.1(c), (d) and (e) hereof, the defaulting Party shall be
liable to the non-defaulting Party for all losses and costs reasonably incurred
by the non-defaulting Party as a direct result of the defaulting Party's Event
of Default, including all reasonable costs associated with replacing the
obligations of the defaulting Party hereunder.
(b) Upon the termination of this Agreement pursuant to Section 6.2(a)
hereof as a result of an Event of Default specified in Sections 6.1(c), (d) and
(e) hereof, the defaulting Party shall be liable to the non-defaulting Party for
all of the non-defaulting Party's Losses (as defined in the next sentence) as a
result thereof. For purposes of this Section 6.4(b), "Losses" means an amount
that the non-defaulting Party, or its agent, determines in good faith and in a
commercially reasonable manner to be the total losses and costs, net of gains,
that the non-defaulting Party has and/or would incur in replacing the
obligations of the defaulting Party for the remaining term of this Agreement.
The non-defaulting Party, or its agent, may determine such Losses by using
pricing or other valuation models and by reference to information available to
it internally or supplied by one or more third parties (including, without
limitation, dealers, information vendors and other sources of market
information), which information may include, without limitation, quotations
(either firm or indicative) of relevant rates, prices, yields, yield curves,
volatilities, spreads or other relevant market data in the relevant
16
markets. The defaulting Party shall pay an amount equal to the Losses to the
non-defaulting Party within thirty (30) days after the defaulting Party receives
written notice from the non-defaulting Party of such amount.
(c) In addition to the foregoing amounts, the defaulting Party shall
be liable for reasonable administrative and legal expenses incurred by the
non-defaulting Party as a result of the defaulting Party's Event of Default. The
Parties expressly agree that the obligations of each Party under this Section
6.4 shall survive and continue in full force following any termination of this
Agreement pursuant to Section 6.2(a) hereof.
ARTICLE VII
DISPUTE RESOLUTION
7.1 Disputes. A Party with a claim or dispute under this Agreement shall
--------
submit to the other Party a notification of such claim or dispute within sixty
(60) days of the date on which the Party knew of the occurrence of the
circumstances that gave rise to the claim or the question or issue in dispute,
and shall provide the Administration Committee (as defined in the POLR II
Agreement) with a copy of such notification. Any such notification shall be in
writing and shall include a concise statement of the claim or the issue or
question in dispute, a statement of the relevant facts and documentation to
support the claim. The Administration Committee (as defined in the POLR II
Agreement) shall use its good faith best efforts to resolve the claim or dispute
within thirty (30) days after its receipt of a notification specifying the
claim, issue or question in dispute. If the Administration Committee (as defined
in the POLR II Agreement) is unable to do so, the Parties shall refer the claim
or dispute to their respective senior management. Subject to Section 7.4 hereof,
if, after using their good faith best efforts to resolve the dispute, the
Parties' senior management cannot resolve the dispute within thirty (30) days,
the Parties may, if they both so agree in writing, utilize the alternative
dispute resolution procedures set forth below in Sections 7.2 and 7.3 hereof.
7.2 Arbitration. Any arbitration initiated under this Agreement shall be
-----------
conducted before a single neutral arbitrator appointed by the Parties within
thirty (30) days of receipt by respondent of the demand for arbitration. If the
Parties are unable to agree on an arbitrator, such arbitrator shall be appointed
by the American Arbitration Association. Unless the Parties agree otherwise, the
arbitrator shall be an attorney or retired judge with at least fifteen (15)
years of experience and shall not have any current or past substantial business
or financial relationships with any Party to the arbitration. In addition, if
possible, the arbitrator shall have significant system operations experience in
the electric industry. Unless otherwise agreed, the arbitration shall be
conducted in accordance with the American Arbitration Association's Commercial
Arbitration Rules, then in effect, in Pittsburgh, Pennsylvania. Any arbitration
proceedings, decision or award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement shall be governed by the Federal
Arbitration Act of the United States, 9 U.S.C. Sections 1 et seq.
17
7.3 Arbitration Terms. The arbitration shall, if possible, be concluded not
-----------------
later that six (6) months after the date that it is initiated. The arbitrator
shall be authorized only to interpret and apply the provisions of this Agreement
or any related agreements entered into under this Agreement and shall have no
power to modify or change any of the above in any manner. The arbitrator shall
have no authority to award punitive or multiple damages or any damages
inconsistent with this Agreement. The arbitrator shall, within thirty (30) days
of the conclusion of any hearing, unless such time is extended by agreement of
the Parties, notify the Parties in writing of his or her decision, stating his
or her reasons for such decision and separately listing his or her findings of
fact and conclusions of law. The decision of the arbitrator rendered in such a
proceeding shall be final and binding on the Parties. Judgment on any award made
by the arbitrator may be entered in any court having jurisdiction.
7.4 FERC Jurisdiction. Notwithstanding any other provision of this
-----------------
Agreement to the contrary, nothing in this Agreement shall preclude, or be
construed to preclude, any Party from filing a petition or complaint with FERC
with respect to any arbitrable claim over which FERC has jurisdiction. In such a
case, the other Party may request FERC to reject or to waive jurisdiction. If
FERC rejects or waives jurisdiction with respect to all or a portion of such
claim, the portion of such claim not so accepted by FERC may be resolved through
arbitration, as provided in this Agreement. To the extent that FERC asserts or
accepts jurisdiction over such claim, the decision, findings of fact or order of
FERC shall be final and binding, subject to judicial review under the Federal
Power Act, and any arbitration proceedings that may have commenced with respect
to such claim prior to the assertion or acceptance of jurisdiction by FERC shall
be terminated.
ARTICLE VIII
ASSIGNMENT
8.1 Assignment. The Supplier shall not assign this Agreement in whole or in
----------
part, or any of the rights, interests, or obligations hereunder, without the
prior written consent of DLC, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the Supplier, or its permitted
assignee, may assign, transfer, pledge or otherwise dispose of its rights and
interests hereunder to a trustee, lending institution, or other Person for the
purposes of financing or refinancing the POLR Supply Service (as defined in the
POLR Agreement and the POLR II Agreement) opportunity or the generation
facilities and other assets associated with the Asset Sale (as defined in the
POLR Agreement and the POLR II Agreement), including upon or pursuant to the
exercise of remedies under such financing or refinancing, or by way of
assignments, transfers, conveyances of dispositions in lieu thereof; provided,
however, that no such assignment or disposition shall relieve or in any way
discharge the Supplier or any such permitted assignee from the performance of
the duties and obligations of the Supplier under this Agreement. DLC agrees to
execute and deliver such documents as may be reasonably necessary to accomplish
any such assignment, transfer, conveyance, pledge or disposition of rights
hereunder for purposes of such
18
financing or refinancing, so long as DLC's rights under this Agreement are not
materially altered, amended, diminished or otherwise impaired thereby.
8.2 Release of Rights and Obligations. No assignment (including a merger,
---------------------------------
consolidation or sale of all or substantially all of the assets of the
Supplier), transfer, conveyance, pledge or disposition of rights, interests,
duties or obligations under this Agreement by a Party shall relieve that Party
from liability and financial responsibility for the performance thereof after
any such transfer, assignment, conveyance, pledge or disposition unless and
until (i) the transferee or assignee shall agree in writing to assume the
obligations and duties of that Party under this Agreement and (ii) the
non-assigning Party has consented in writing to such assumption and to a release
of the assigning Party from such liability, such consent not to be unreasonably
conditioned, delayed or withheld.
8.3 Successors & Assigns. This Agreement and all of the provisions hereof
--------------------
are binding upon, and inure to the benefit of, the Parties and their respective
successors and permitted assigns.
ARTICLE IX
REPRESENTATIONS OF THE PARTIES
9.1 Representations of the Supplier. The Supplier hereby represents and
-------------------------------
warrants to DLC as follows:
(a) Organization. The Supplier is a limited partnership duly
------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority to own, lease and operate
its material assets and properties and to carry on its business as now being
conducted.
(b) Authority. The Supplier has full power and authority to execute
---------
and deliver this Agreement and to consummate the transactions contemplated
hereby and, subject to the procurement of applicable regulatory approvals, to
carry out the actions required of it by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action required on
the part of the Supplier. This Agreement has been duly and validly executed and
delivered by the Supplier and, assuming that it is duly and validly executed and
delivered by DLC, constitutes a legal, valid and binding agreement of the
Supplier.
(c) Regulatory Approval. The Supplier has obtained any and all
-------------------
approvals or waivers of, and has given any and all notices to, any Governmental
Authority that are required for the Supplier to execute and deliver this
Agreement. The Supplier has obtained, or will obtain by the Effective Date, any
and all approvals or waivers of, and has given, or will give by the Effective
Date, any and all notices to, any Governmental Authority that are required for
the Supplier to consummate the transactions contemplated hereby.
19
(d) Compliance With Law. The Supplier is not in violation of any
-------------------
applicable law, statute, order, rule, regulation, or judgment promulgated or
entered by any federal, state, or local Governmental Authority, which violation
could reasonably be expected to materially adversely affect the Supplier's
performance of its obligations under this Agreement.
9.2 Representations of DLC. DLC represents and warrants to the Supplier as
----------------------
follows:
(a) Incorporation. DLC is a corporation duly incorporated, validly
-------------
existing and is in good standing under the laws of the Commonwealth of
Pennsylvania, and has all requisite corporate power and authority to own, lease
and operate its material assets and properties and to carry on its business as
now being conducted.
(b) Authority. DLC has full corporate power and authority to execute
---------
and deliver this Agreement and to consummate the transactions contemplated
hereby and, subject to the procurement of applicable regulatory approvals, to
carry out the actions required of it by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
required on the part of DLC. This Agreement has been duly and validly executed
and delivered by DLC and, assuming that it is duly and validly executed and
delivered by the Supplier, constitutes a legal, valid and binding agreement of
DLC.
(c) Regulatory Approval. DLC has obtained any and all approvals or
-------------------
waivers of, and has given any and all notices to, any Governmental Authority
that are required for DLC to execute and deliver this Agreement. DLC has
obtained, or will obtain by the Effective Date, any and all approvals or waivers
of, and has given, or will give by the Effective Date, any and all notices to,
any Governmental Authority that are required for DLC to consummate the
transactions contemplated hereby.
(d) Compliance With Law. DLC is not in violation of any applicable
-------------------
law, statute, order, rule, regulation, or judgment promulgated or entered by any
federal, state, or local Governmental Authority, which violation could
reasonably be expected to materially adversely affect DLC's performance of its
obligations under this Agreement.
9.3 Representations of Both Parties. The representations and warranties in
-------------------------------
this Article IX shall survive the date hereof and continue in full force and
effect for the term of this Agreement.
ARTICLE X
INDEMNIFICATION
20
10.1 DLC's Indemnification. DLC shall indemnify, hold harmless and defend
---------------------
the Supplier, its parent, its Affiliates, and its and their successors,
officers, directors, employees, shareholders, agents, contractors,
subcontractors, invitees and successors, from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs, losses, judgments,
damages and expenses (including the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements, and compromises
relating thereto, reasonable attorneys' and expert fees and reasonable
disbursements in connection therewith) for damage to property, injury to or
death of any Person, including the Supplier's employees, DLC's employees and
their Affiliates' employees, or any third parties, to the extent caused wholly
or in part by any act or omission, negligent or otherwise, by DLC or its
officers, directors, employees, agents, contractors, subcontractors and invitees
arising out of or connected with DLC's performance or breach of this Agreement,
or the exercise by DLC of its rights hereunder. In furtherance of the foregoing
indemnification and not by way of limitation thereof, DLC hereby waives any
defense it otherwise might have under applicable workers' compensation laws.
10.2 Supplier's Indemnification. The Supplier shall indemnify, hold
--------------------------
harmless and defend DLC, its parent, Affiliates, and its and their successors,
officers, directors, employees, shareholders, agents, contractors,
subcontractors, invitees and successors, from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs, losses, judgments,
damages and expenses (including the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements, and compromises
relating thereto reasonable attorneys' and expert fees and reasonable
disbursements in connection therewith) for damage to property, injury to or
death of any Person, including DLC's employees, the Supplier's employees and
their Affiliates' employees, or any third parties, to the extent caused wholly
or in part by any act or omission, negligent or otherwise, by the Supplier or
its officers, directors, employees, agents, contractors, subcontractors and
invitees arising out of or connected with the Supplier's performance or breach
of this Agreement, or the exercise by the Supplier of its rights hereunder. In
furtherance of the foregoing indemnification and not by way of limitation
thereof, the Supplier hereby waives any defense it otherwise might have under
applicable workers' compensation laws.
10.3 Indemnification Procedures. Any Party seeking indemnification under
--------------------------
this Agreement shall give the other Party notice of such claim promptly but in
any event on or before the earlier of the fifteenth (15th) day after the Party's
actual knowledge of such claim or action or the ninetieth (90th) day from
commencement of the event or circumstance giving rise to the claim. Such notice
shall describe the claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the claim that has been, or may be sustained by,
said Party. To the extent that the other Party will have been actually and
materially prejudiced as a result of the failure to provide such notice, such
notice will be a condition precedent to any liability of the other Party under
the indemnification provisions contained in this Agreement. Neither Party may
settle or compromise any claim for which indemnification is sought under this
Agreement without the prior consent of the other Party, provided that such
consent shall not be unreasonably withheld or delayed.
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10.4 Survival. The indemnification obligations of each Party under this
--------
Article for acts or occurrences that occur prior to expiration, termination, or
cancellation of this Agreement shall survive and continue in full force and
effect regardless of whether this Agreement expires or terminates, or is
canceled, surrendered or completed. Such indemnification obligations shall not
be limited in any way by any limitation on insurance, by the amount or types of
damages, or by any compensation or benefits payable by the Parties under
worker's compensation acts, disability benefit acts or other employee acts, or
otherwise.
ARTICLE XI
CONFIDENTIALITY
11.1 Generally.
---------
(a) Each Party (i) shall maintain the confidentiality of all
information provided to it by the other Party under the terms of this Agreement,
(ii) shall not disclose such information to third parties (other than its
Affiliates, advisors, and parties prospectively providing financing and risk
management) without the prior written consent of the other Party, unless
otherwise provided hereunder, and (iii) agrees to use such information only for
such purposes and in such manner as is contemplated by the terms of this
Agreement. Notwithstanding the foregoing, each Party shall be permitted to use
any information provided to it by the other Party under the terms of this
Agreement in support of any claim or counterclaim respecting an alleged breach
of such other Party's obligations under this Agreement.
(b) Upon the other Party's prior written approval (which shall not be
unreasonably withheld), either Party may provide information provided to it by
the other Party under the terms of this Agreement to the PUC, FERC or other
Governmental Authority with jurisdiction, as may be necessary, to obtain
required regulatory approvals or to comply generally with any applicable Law. In
such an instance, the disclosing Party shall seek confidential treatment for
such information provided to any Governmental Authority and will notify the
other Party, as far in advance as is practicable, of its intention to release
such information to any Governmental Authority.
ARTICLE XII
MISCELLANEOUS
12.1 Limitation of Liability. Except as specifically provided in Article
-----------------------
III hereof, Sections 6.3 and 6.4 hereof and Article X hereof, neither DLC nor
the Supplier, nor their respective officers, directors, agents, employees,
parents, Affiliates, successors, assigns, contractors or subcontractors shall be
liable to the other Party or its shareholders, subsidiaries, Affiliates,
officers, directors, agents, employees, successors, assigns, contractors or
subcontractors for claims, suits, actions, causes of action or otherwise for
incidental, punitive, special, indirect, multiple, or consequential damages
(including attorneys' fees or litigation costs and lost profits) connected with,
or resulting
22
from, performance or non-performance of this Agreement, or any actions
undertaken in connection with or related to this Agreement, including any such
damages which are based upon causes of action for breach of contract, tort
(including negligence and misrepresentation), breach of warranty, or strict
liability.
12.2 Amendments. This Agreement may be amended, modified or supplemented
----------
only by written agreement of both DLC and the Supplier. Such amendments or
modifications shall become effective only after the Parties have received all
authorizations, if any, as may be required from the relevant Governmental
Authorities.
12.3 Notices and Bank Account Information. All notices and other
------------------------------------
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission, or mailed by overnight
courier or registered or certified mail (return receipt requested), postage
prepaid, to the recipient Party at its address, and all transfer of funds
hereunder shall be made to the recipient Party at its bank account, set forth
below (or at such other address or facsimile number, or bank account, for a
Party as shall be designated by such Party in a notice delivered hereunder;
provided however, that notices of a change of address, or change of bank
account, shall be effective only upon receipt thereof):
(a) If to the Supplier to:
Orion Power MidWest, L.P.
c/o Orion Power Holdings, Inc.
0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax: 000-000-0000
with a copy to:
W. Xxxxxxxx Xxxxxx
Orion Power Holdings, Inc.
0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Bank Account: to be provided prior to the Effective Date
(b) If to DLC to:
Duquesne Light Company
System Operations (N2-S0)
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Fax: 000-000-0000
23
with a copy to:
Xxxx X. Xxxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
1440 New York Avenue, N.W.
Washington, D.C. 2005
Fax: 000-000-0000
Bank Account: to be provided prior to the Effective Date.
(c) If to FE to:
Xxxxx Xxxxxxx
Director, Commodity Accounting
FirstEnergy Solutions Corp.
000 Xxxxx Xxxx
Xxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx
President, FirstEnergy Solutions Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, XX 00000 Fax: 000-000-0000
12.4 No Third Party Beneficiaries. Nothing in this Agreement, express or
----------------------------
implied, is intended to confer on any other Person except the Parties hereto any
rights, interests, obligations or remedies hereunder.
12.5 Waiver. A waiver of any failure of a Party to comply with any
------
obligation, covenant, agreement, or condition herein by the Party entitled to
the benefits thereof shall be effective only by a written instrument signed by
the Party granting such waiver, but such waiver of such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent failure to comply therewith.
12.6 Severability. Each covenant, condition, restriction and other term of
------------
this Agreement is intended to be, and shall be construed as, independent and
severable from each other covenant, condition, restriction and other term. If
any covenant, condition, restriction or other term of this Agreement is held to
be invalid by any Governmental Authority, the invalidity of such covenant,
condition, restriction or other term shall not affect the validity of the
remaining covenants, conditions, restrictions or
24
other terms hereof. In such an event, the Parties shall, to the extent possible,
negotiate an equitable adjustment to any provision of this Agreement as
necessary to effect the purpose of this Agreement.
12.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the law of the Commonwealth of Pennsylvania, without giving
effect to the conflict of law principles thereof (except to the extent that such
law is preempted by federal law). THE PARTIES HERETO AGREE THAT VENUE IN ANY AND
ALL ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT
SHALL BE IN THE STATE AND FEDERAL COURTS IN AND FOR PITTSBURGH, PENNSYLVANIA,
WHICH COURTS SHALL HAVE EXCLUSIVE PERSONAL AND SUBJECT MATTER JURISDICTION FOR
SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS
MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
12.8 Independent Contractors. The Parties acknowledge and agree that except
-----------------------
for purposes of the limited agency relationship contemplated by Article III of
this Agreement: (i) they are independent contractors, (ii) neither Party shall
have any right, power or authority to enter into any agreement or commitment,
act on behalf of, or otherwise bind the other Party in any way, and (iii)
nothing contained in this Agreement shall create any relationship between DLC
and the Supplier other than that of independent contractors.
12.9 Counterparts. This Agreement may be executed in more than one (1)
------------
counterpart, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits hereto, embodies the entire agreement and understanding of the Parties
in respect of the obligations and requirements set forth in this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the Parties
with respect to the subject matter contained herein.
12.11 Article, Section, Schedule and Exhibit Headings. The Article,
-----------------------------------------------
Section, Schedule and Exhibit headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the Parties and
shall not in any way affect the meaning or interpretation of this Agreement.
25
12.12 Further Assurances. The Parties hereto agree to execute and deliver
------------------
promptly, at the expense of the Party requesting such action, any and all other
and further instruments, documents and information which may be reasonably
requested in order to consummate the transactions contemplated hereby. Each
Party agrees to cooperate with, assist and accommodate all reasonable requests
made by the other Party in respect of any regulatory approval necessary for, or
any regulatory proceeding relating to, the execution and deliver of this
Agreement and the consummation of the transactions contemplated hereby. Each
Party further agrees to comply with all Laws of all Governmental Authorities
relating to this Agreement and the consummation of the transactions contemplated
hereby. In addition, if during the term of this Agreement the Parties determine
that as a result of the consummation of the transactions contemplated hereby, or
the implementation of the PJM West Protocols as contemplated hereby, any other
agreement between the Parties (other than the POLR I Agreement, the POLR II
Agreement and the Ancillary Services Agreement) requires amendment or
modification in order to accommodate the consummation of such transactions, or
such implementation of the PJM West Protocols, then the Parties shall cooperate
in good faith to negotiate such amendments and modifications to any such
agreement (other than the POLR I Agreement, the POLR II Agreement and the
Ancillary Services Agreement) as shall be necessary to accommodate the
consummation of the transactions contemplated hereby, or the implementation of
the PJM West Protocols as contemplated hereby, in a manner that is consistent
with the relative economic benefits and risks contemplated under such
agreements.
[SIGNATURES FOLLOW ON NEXT PAGE]
26
IN WITNESS WHEREOF, each of DLC and the Supplier has caused this Agreement
to be executed as of the date first above written.
DUQUESNE LIGHT COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: President
ORION POWER MIDWEST, L.P.
By:its general partner,
ORION POWER MIDWEST GP, INC.
By: /s/ Xxxx X. Xxxxx
-------------------
Name: Xxxx X. Xxxxx
Title: President
27
SCHEDULE 1
POLR AMENDMENTS
Section 1.1 is hereby amended by deleting therefrom the definitions of
"Escrow Account" and "Escrow Agreement".
Section 1.1 is hereby amended by restating the following definitions in
their entirety to read as follows:
"DLC Control Area" means the DLC Zone.
----------------
"OATT" means DLC's Open Access Transmission Tariff, or its successor (including,
----
but not limited to, any applicable tariff under the PJM West Protocols) and, as
applicable, any stand-alone tariff sheets for DLC relating to Schedule 9A and
Schedule 9B formerly attached to DLC's Open Access Transmission Tariff.
"POLR Energy Imbalance" means any difference between the hourly Energy supplied
---------------------
by the POLR Supplier under this Agreement and the POLR Supply Amount. The
Parties recognize and agree that POLR Energy Imbalance exists when there is FE
POLR Energy Imbalance, DLC POLR Energy Imbalance or both.
"Preliminary Supplier Charges" means an estimate of Supplier Charges based on
----------------------------
forecast Energy requirements (and associated losses) and other data available at
the time of the estimate including FE Tally Sheets and evidence of Energy
scheduled by the POLR Supplier to the DLC Control Area on a day-ahead basis and
using day-after E-schedules, as contemplated by Section 5.2 hereof.
Section 1.1 is hereby amended by amending the definition of "Net Billed
Generation Revenue" such that clause (ii) of the first sentence of such
definition is restated to read as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that the costs for RRRAS (as
defined under the Ancillary Services Agreement) are calculated using the
rates set forth in Schedule 9B to the OATT as in effect on the date of the
Ancillary Services Agreement and the costs for any other Ancillary Services
(except for energy imbalance) are calculated using the rates set forth in
Schedule 9B to the OATT then in effect).
Section 1.1 is hereby amended by adding the following definitions thereto:
"Ancillary Services Agreement" means that certain Amended and Restated Ancillary
----------------------------
Services Agreement, dated as of February 15, 2002 by and between DLC and the
POLR Supplier and attached to the Capacity Agreement as Exhibit 1 thereto.
"Capacity Agreement" means that certain Capacity Agreement, dated as of February
------------------
15, 2002, by and between DLC and the POLR Supplier relating to certain capacity
obligations.
"Capacity Agreement Effective Date" means the "Effective Date" as defined in the
---------------------------------
Capacity Agreement.
"DLC POLR Energy Imbalance" means the difference between the hourly Energy
-------------------------
supplied by the POLR Supplier to the DLC Zone pursuant to this Agreement and the
DLC POLR Supply Amount.
"DLC POLR Supply Amount" means the positive difference, if any, between the POLR
----------------------
Supply Amount and the FE Swap Amount. The Parties recognize and agree that if
the FE Swap Amount is equal to or greater than the POLR Supply Amount, there
shall be no DLC POLR Supply Amount.
"DLC Zone" means the DLC service territory under the PJM West Protocols as such
--------
service territory is described in the "List of Communities Served" under DLC's
Retail Tariff on file with the PUC on the date of the Capacity Agreement.
"DLC Zone Hourly Forecast" means, for each hour, DLC's day-ahead forecast of the
------------------------
Energy requirements of the DLC Zone, as delivered by DLC to the POLR Supplier
pursuant to Section 5.1 hereof.
"FE" means FirstEnergy Corp., an Ohio corporation.
--
"FE Capacity Agreement" means that certain capacity agreement dated as of
---------------------
December 18, 2001 by and between FirstEnergy Solutions Corp., on the one hand,
and DLC, on the other hand, relating to certain capacity and Energy obligations.
"FE Charge" means the Supplier's (as defined under the FE Capacity Agreement)
---------
costs under the FE Protocols in purchasing replacement Energy, including related
transmission charges, to cover the amount of Energy equal to the FE POLR Energy
Imbalance, if any, for a particular hour.
"FE Control Area" means that portion of the FE Control Area, as defined in the
---------------
applicable FE tariff, or its successor (including, but not limited to, any
applicable control area or zone under any applicable RTO or ISO tariff or
protocols), that includes The Cleveland Electric Illuminating Company, Ohio
Edison Company, Pennsylvania Power Company and The Toledo Edison Company, as in
existence on the date of the FE Capacity Agreement.
"FE Credit" means the net amount, if any, received by the Supplier (as defined
---------
under the FE Capacity Agreement) under the FE Protocols in disposing of any
Energy delivered by the POLR Supplier to the FE Control Area for a particular
hour that is in excess of the FE POLR Supply Amount for such hour.
2
"FE POLR Energy Imbalance" means any difference between the hourly Energy
------------------------
supplied by the POLR Supplier to the FE Control Area pursuant to this Agreement
and the FE POLR Supply Amount.
"FE POLR Supply Amount" means (i) if the POLR Supply Amount is equal to or less
---------------------
than the FE Swap Amount, the entire POLR Supply Amount, or (ii) if the POLR
Supply Amount is greater than the FE Swap Amount, that portion of the POLR
Supply Amount that is equal to the FE Swap Amount.
"FE Protocols" means the provisions, protocols, rules or other requirements of
------------
any tariff or equivalent document, reliability assurance agreement, operating
agreement, transmission owner agreement or similar agreement, operating manual
or similar document, and their respective successors, then in effect in and
applicable to the FE Control Area.
"FE Swap Amount" means, for each hour, an amount of Energy equal to the product
--------------
of the DLC Zone Hourly Forecast for such hour multiplied by a factor equal to
the FE Swap Percentage (with the resulting product rounded down to the nearest
whole megawatt for that hour).
"FE Swap Percentage" means the FE Swap Percentage as defined in and set under
------------------
the Capacity Agreement for the day that Energy is delivered hereunder.
"FE Tally Sheet" means a tally sheet, in a form reasonably acceptable to DLC, on
--------------
which the POLR Supplier shall set forth, for a particular day, the amount of
Energy actually delivered each hour by the POLR Supplier to the FE Control Area
listing the generation resources and import schedules for all such Energy.
"PJM West" means the PJM West Region of PJM Interconnection, L.L.C., and any
--------
successor thereto (including any modification, and any successor, thereto
resulting from any regional transmission organization for the northeastern
United States).
"PJM West Protocols" means the provisions, protocols, rules or other
------------------
requirements of any tariff or equivalent document, reliability assurance
agreement, operating agreement, transmission owner agreement or similar
agreement, manuals or similar documents, and their respective successors, then
in effect in and applicable to PJM West.
"PJM West Surcharge" means any non-by-passable surcharge that may be imposed on
------------------
DLC's customers to permit DLC to recover any incremental costs for capacity and
Ancillary Services resulting from DLC joining PJM West, any grid management or
other fees which may be charged to DLC based on PJM West start-up and operating
costs and other similar fees and costs.
3
Section 1.2 is hereby amended by adding the following two sentences to the
end thereof:
For the avoidance of doubt, the Parties acknowledge and agree that the
term "losses" as it may be used throughout this Agreement shall expressly
exclude therefrom any 500 kilovolt losses of PJM Interconnection, L.L.C., unless
such 500 kilovolt losses occur due to the POLR Supplier's delivery of the DLC
POLR Supply Amount, in which case "losses" shall include any 500 kilovolt losses
of PJM Interconnection, L.L.C. resulting therefrom. In addition, the Parties
expressly agree that notwithstanding any other provision of this Agreement to
the contrary, Generation Rates shall not include any PJM West Surcharges (and,
as a result, Billed Generation Revenue shall not include any PJM West Surcharges
nor shall it be reduced by the amount of any PJM West Surcharges in calculating
Net Billed Generation Revenue) and that DLC, and not the POLR Supplier, shall
exclusively be entitled to receive any and all PJM West Surcharges imposed on or
billed to DLC's customers as a result of the Retail Tariff Changes (as defined
under the Capacity Agreement) or otherwise.
Section 3.3 is hereby amended and restated in its entirety as follows:
Section 3.3 Letter of Credit. The POLR Supplier shall post a $10
----------------
million irrevocable letter of credit issued by a Commercial Bank in form and
substance reasonably acceptable to DLC, as such letter of credit may be
supplemented or replaced pursuant to the terms of this Agreement, which
letter(s) of credit shall remain in place for such amount for the entire term of
this Agreement. In the event that the POLR Supplier is required to increase the
amount of such letter(s) of credit pursuant to the terms of this Agreement, then
such letter(s) of credit for such increased amount shall remain in place for
such time as may be required under the terms of this Agreement, provided,
however, that, notwithstanding any other provision of this Agreement to the
contrary, at all times during the term of this Agreement the minimum amount of
any such letter(s) of credit posted by the POLR Supplier shall be equal to or
greater than $10 million.
Section 3.5 is hereby amended and restated in its entirety as follows:
Section 3.5 Additional Security. If at any time during the term of
-------------------
this Agreement the Certifying Company's Tangible Net Worth is below the Minimum
Tangible Net Worth and the Certifying Company's investment rating is below the
Minimum Investment Rating, then DLC, in its sole discretion, may require, upon
ten (10) Business Days' written notice to the POLR Supplier, that the POLR
Supplier supplement or replace the letter(s) of credit then currently posted
pursuant to this Article III with another irrevocable letter of credit issued by
a Commercial Bank in form and substance reasonably acceptable to DLC such that
the aggregate amount of such letter(s) of credit equals $50 million, which
letter(s) of credit shall remain in place for such aggregate amount until such
time as the Certifying Company's Tangible Net Worth is equal to or greater than
the Minimum Tangible Net Worth or the Certifying Company's investment rating is
equal to or greater than the Minimum Investment Rating (at which time,
4
although the letter of credit requirements in this Section 3.5 shall not apply,
the POLR Supplier shall continue to comply with any other applicable letter of
credit requirements set forth in this Article III).
Section 4.1(b) is hereby amended and restated in its entirety as follows:
(b) Points of Delivery. The POLR Supplier shall deliver the FE POLR
------------------
Supply Amount to the FE Control Area and shall deliver the DLC POLR Supply
Amount to the DLC Zone. On a daily basis, no later than 10 a.m. (eastern time),
the POLR Supplier shall furnish DLC with an FE Tally Sheet for the FE POLR
Supply Amounts delivered during the preceding calendar day.
Section 4.1(d) is hereby amended such that the first sentence of such
section is restated to read as follows:
The POLR Supplier acknowledges and agrees that DLC shall be responsible for
securing and providing all Ancillary Services associated with DLC's retail
customers whose Energy is secured under this Agreement (provided that by
separate, mutual agreement between the POLR Supplier and DLC, the POLR
Supplier may provide certain or all of such Ancillary Services).
Section 4.2 (h) is hereby amended by adding a new subsection (v) thereto
that reads as follows:
(v) As soon as DLC receives schedule and settlement information from PJM
West relating to the Energy supplied by the POLR Supplier pursuant to this
Agreement, DLC shall make such information available to the POLR Supplier,
or DLC shall otherwise use all commercially reasonable efforts necessary to
cause PJM West to give the POLR Supplier real-time access to scheduling and
settlement information related to Energy that is scheduled and delivered to
the DLC Zone pursuant to this Agreement.
Section 4.2(i) is hereby amended and restated in its entirety as follows:
(i) Ancillary Services. DLC shall be responsible for securing and
------------------
providing all Ancillary Services associated with DLC's retail customers whose
Energy is secured under this Agreement (provided that by separate, mutual
agreement between the POLR Supplier and DLC, the POLR Supplier may provide
certain or all of such Ancillary Services).
5
The last sentence of Section 4.2(j) is hereby amended and restated in its
entirety as follows:
In addition, DLC agrees to refrain from filing with the PUC any request for
modification of the Generation Rates (other than (x) a request for a waiver
of an adjustment of electric distribution company rates for changes in
state tax liability pursuant to applicable Law, (y) as contemplated by the
Retail Tariff Changes (as defined under the Capacity Agreement) together
with such changes to the Retail Tariff Changes as may have been acceptable
to DLC on or prior to the Capacity Agreement Effective Date, and (z) a
request by DLC for a change in the PJM West Surcharge), unless the Parties
shall mutually agree otherwise.
Sections 4.3(a), (b) and (c) are hereby amended and restated in their
entirety as follows:
4.3 POLR Energy Imbalance and Supply Violation Charges. For any hour
--------------------------------------------------
during which there is DLC POLR Energy Imbalance or FE POLR Energy Imbalance, the
POLR Supplier shall pay to DLC, in accordance with the billing procedures set
forth in Article VII of this Agreement, the following amounts, as applicable:
(a) DLC POLR Energy Imbalance. If the POLR Supplier fails to
-------------------------
deliver to the DLC Zone the DLC POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount of
dollars equal to the charge under the PJM West Protocols applicable to an
under-delivery of an amount of Energy equal to the DLC POLR Energy Imbalance,
and in the event of an over-delivery, receive a credit from DLC in an amount of
dollars equal to the credit under the PJM West Protocols applicable to an
over-delivery of an amount of Energy equal to the DLC POLR Energy Imbalance (net
of any costs DLC incurs in disposing of such Energy). For the avoidance of
doubt, the POLR Supplier's delivery of Energy to the DLC Zone in any given hour
shall first be allocated to the DLC POLR Supply Amount under this Agreement and
then to the DLC POLR Supply Amount under the POLR II Agreement. In addition, if
the POLR Supplier's failure to deliver the POLR Supply Amount in accordance with
Section 4.1 hereof causes DLC to Shed Load during any hour, the POLR Supplier
shall pay to DLC, in addition to any amounts otherwise due hereunder, $1,000 per
megawatt-hour of Shed Load attributable to such failure plus any out-of-pocket
costs incurred by DLC as the result of claims, penalties, repairs, expenses or
other damages resulting from such Shed Load; provided, however, that if during
any such hour (x) the POLR Supplier delivers the full output of all of its
operable generation (e.g., all generation in the DLC Control Area and the FE
Control Area that is not on forced or planned outage and/or forced or planned
curtailments) to the DLC Control Area and, to the extent applicable under this
Agreement, the FE Control Area (and delivers to DLC a certificate executed by a
duly authorized officer of the POLR Supplier to such effect) and nevertheless
fails to deliver the POLR Supply Amount and (y) DLC is unable to procure
alternative sources of Energy in the market sufficient to compensate for the
6
POLR Supplier's under-delivery, then the POLR Supplier shall pay to DLC, in
addition to any amounts otherwise due hereunder, but in lieu of the $1,000 per
megawatt-hour of Shed Load described above, $100 per megawatt-hour of Shed Load
attributable to such failure plus any of the aforementioned out-of-pocket costs
incurred by DLC. For purposes of this Section 4.3(a), DLC shall determine the
amount of such Shed Load using Good Utility Practice.
(b) FE POLR Energy Imbalance. If the POLR Supplier fails to
------------------------
deliver to the FE Control Area the FE POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount of
dollars equal to the FE Charge applicable to an under-delivery of an amount of
Energy equal to the FE POLR Energy Imbalance, and in the event of an
over-delivery, receive a credit from DLC in an amount of dollars equal to the FE
Credit applicable to an over-delivery of an amount of Energy equal to the FE
POLR Energy Imbalance (net of any costs DLC incurs in disposing of such Energy).
For the avoidance of doubt, the POLR Supplier's delivery of Energy to the FE
Control Area in any given hour shall first be allocated to the FE POLR Supply
Amount under this Agreement and then to the FE POLR Supply Amount under the POLR
II Agreement.
(c) Reserved.
--------
Section 4.3 is hereby amended by adding the following new Section 4.3(f)
thereto:
(f) The Parties will cooperate in good faith to establish a
mechanism, at no cost to DLC, to provide the POLR Supplier and FE with a means
to Dynamically Schedule Energy between the FE Control Area and PJM West.
Article V is hereby amended and restated in its entirety as follows:
5.1 Load Forecasting.
----------------
(a) On a daily basis, DLC shall deliver to the POLR Supplier, no
later than three hours prior to the close of the ACAP market then set by the PJM
West Protocols, the POLR Supply Forecasts and the DLC Zone Hourly Forecasts for
the following calendar day. DLC shall provide updates to the POLR Supply
Forecasts and DLC Zone Hourly Forecasts delivered to the POLR Supplier by
delivering to the POLR Supplier a real-time POLR Supply Forecast and DLC Zone
Hourly Forecast for each hour.
(b) In addition, DLC shall deliver to the POLR Supplier, as often
as is practicable but in no event later than the end of each month, a report
listing known
7
changes in the POLR Supply Amount, as well as any known changes to the Schedules
attached hereto, which changes shall be incorporated into and become a part of
the Schedules to which they relate, subject, however, to the prior consent of
the POLR Supplier to such changes to such Schedules if such consent is required
under this Agreement.
5.2 Scheduling. On a daily basis, the POLR Supplier shall schedule,
----------
pursuant to the FE Protocols, the FE POLR Supply Amounts. On a daily basis, the
POLR Supplier shall schedule, pursuant to the PJM West Protocols, the DLC POLR
Supply Amounts, provided, that any portion of any DLC POLR Supply Amount not
scheduled on a day-ahead basis shall be scheduled, pursuant to the PJM West
Protocols, by the POLR Supplier using day-after E-schedules according to such
rules and procedures as may be then required by the PJM West Protocols. DLC
shall provide the POLR Supplier with a copy of any Dispatch Notice issued
pursuant to the DLC Must-Run Agreements at the same time such Dispatch Notice is
given to the owner(s) of the Cheswick and/or Elrama generating plants. Within
two (2) hours of receipt of any such Dispatch Notice, the POLR Supplier shall
submit to PJM West (with a copy provided simultaneously to DLC of) a revised
schedule incorporating the DLC Must-Run Purchases referenced in such Dispatch
Notice.
5.3 Reconciliation. Any POLR Energy Imbalance shall be hourly energy
--------------
imbalance attributable to the POLR Supplier for purposes of calculating Supply
Violation Charges. On a daily basis, no later than the prevailing time deadline
in the PJM West Protocols for internal transactions, the POLR Supplier shall
have completed any E-schedules contemplated by Section 5.2 hereof in respect of
the DLC POLR Supply Amounts for the preceding calendar day and shall deliver to
DLC an FE Tally Sheet in respect of the FE POLR Supply Amounts for the preceding
calendar day. The Parties recognize and agree that POLR Energy Imbalance is
comprised of FE POLR Energy Imbalance and DLC POLR Energy Imbalance and that
separate Supply Violation Charges shall be calculated for any FE POLR Energy
Imbalance and any DLC POLR Energy Imbalance.
Sections 7.2, 7.3, 7,4, 7.5 and 7.6 are hereby amended and restated in
their entirety as follows:
7.2 Weekly Invoicing of Preliminary Supplier Charges. DLC shall, on
------------------------------------------------
each Monday, invoice the POLR Supplier for all Preliminary Supplier Charges
attributable to the preceding calendar week. Invoices rendered pursuant to this
Section 7.2 shall be immediately due from the POLR Supplier and payable to DLC
by offset pursuant to Section 7.5. Credits owing to the POLR Supplier reflected
on any invoices rendered pursuant to this Section 7.2 shall be immediately due
from DLC and netted against any payments owing to DLC on such invoice with any
excess amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the invoice reflecting such
excess is rendered.
8
7.3 Monthly Settlement Statement of Account for Preliminary Supplier
----------------------------------------------------------------
Charges. DLC shall, within ten (10) days following the end of each calendar
-------
month, provide a statement of account to the POLR Supplier setting forth all
Preliminary Supplier Charges invoiced during the immediately preceding calendar
month and adjusting such Preliminary Supplier Charges, as necessary, based on
the information then available to DLC. Payments owing to DLC reflected on any
statement of account rendered pursuant to this Section 7.3 shall be immediately
due from the POLR Supplier and payable to DLC by offset pursuant to Section 7.5.
Credits owing to the POLR Supplier reflected on any statement of account
rendered pursuant to this Section 7.3 shall be immediately due from DLC and
netted against any payments owing to DLC on such statement of account with any
excess amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the statement of account
reflecting such excess is rendered.
7.4 Monthly True-Up Statement of Account for Supplier Charges. DLC
---------------------------------------------------------
shall, after all customer accounts have been fully metered for a calendar month
(which shall occur approximately forty-five (45) days following the end of such
calendar month), provide a statement of account to the POLR Supplier adjusting
one or more prior statements of account rendered pursuant to Section 7.3 hereof
for the difference between Preliminary Supplier Charges and Supplier Charges for
such prior months. Payments owing to DLC reflected on any statement of account
rendered pursuant to this Section 7.4 shall be immediately due from the POLR
Supplier and payable to DLC by offset pursuant to Section 7.5. Credits owing to
the POLR Supplier reflected on any statement of account rendered pursuant to
this Section 7.4 shall be immediately due from DLC and netted against any
payments owing to DLC on such statement of account with any excess amount
payable to the POLR Supplier by increasing by the amount of any such excess the
amount of Net Billed Generation Revenue to be paid to the POLR Supplier under
Section 7.1 hereof on the day that the statement of account reflecting such
excess is rendered.
7.5 DLC Right to Offset.
-------------------
(a) In addition to any other right to offset against payments to
the POLR Supplier under this Agreement, DLC shall have the right to offset any
amounts the POLR Supplier owes DLC pursuant to Sections 7.2, 7.3 and 7.4 hereof
(except for such amounts reasonably disputed by the POLR Supplier) against the
amounts owed by DLC pursuant to Section 7.1 hereof. In doing so, on any
particular day, if an amount is owing to DLC pursuant to Section 7.2, Section
7.3 or Section 7.4 hereof, DLC may retain such portion of the Net Billed
Generation Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
for such day as an offset in satisfaction thereof; if any such amount owing to
DLC exceeds the Net Billed Generation Revenue otherwise owing to the POLR
Supplier under Section 7.1 hereof for such day, DLC may retain such Net Billed
Generation Revenue as an offset and withhold further payments of Net Billed
Generation Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
as
9
an offset until the amount owing to DLC pursuant to Sections 7.2, 7.3 and 7.4
has been fully recovered by DLC.
(b) In addition to the right to offset set forth in Section
7.5(a), if, on any day after reviewing the E-schedules and FE Tally Sheet
described in Section 5.3 hereof attributable to the immediately preceding
calendar day, DLC determines that the Preliminary Supplier Charges for such day
exceed $5 million, such Preliminary Supplier Charges shall become immediately
due from the POLR Supplier and payable to DLC as an offset. In such an instance,
DLC may retain such portion of the Net Billed Generation Revenue otherwise owing
to the POLR Supplier under Section 7.1 hereof for such day equal to such
Preliminary Supplier Charges as an offset in satisfaction thereof; if any such
Preliminary Supplier Charges owing to DLC exceeds the Net Billed Generation
Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof for such
day, DLC may retain such Net Billed Generation Revenue as an offset and withhold
further payments of Net Billed Generation Revenue otherwise owing to the POLR
Supplier under Section 7.1 hereof as an offset until the amount of such
Preliminary Supplier Charges has been fully recovered by DLC.
7.6 Right to Immediate Payment and to Draw on Letter of Credit. In
----------------------------------------------------------
addition to the rights to offset under Section 7.5 hereof, DLC shall further
have the right to immediate payment from the POLR Supplier, and to draw upon the
letter(s) of credit posted by the POLR Supplier under the terms of this
Agreement, in the amounts and under the circumstances provided below:
(a) If at any time Preliminary Supplier Charges or Supplier
Charges in an amount in excess of $30 million are then due from the POLR
Supplier and payable to DLC under the terms of this Agreement and the POLR II
Agreement (as defined under the Capacity Agreement), DLC shall provide notice of
the same to the POLR Supplier and, upon receipt thereof, the POLR Supplier shall
make immediate payment to DLC of the dollar amount of such Preliminary Supplier
Charges or Supplier Charges, as the case may be, in immediately available funds
to the bank account designated by DLC in Section 15.3 hereof.
(b) If, within ten (10) days following notice to the POLR
Supplier given by DLC pursuant to Section 7.6(a), DLC has not received payment
in full of the Preliminary Supplier Charges or Supplier Charges so noticed, then
DLC has the right to draw upon the letter(s) of credit posted by the POLR
Supplier under the terms of this Agreement in an amount up to, but not
exceeding, any portion of such Preliminary Supplier Charges or Supplier Charges
then unpaid by the POLR Supplier, and if DLC draws upon such letter(s) of
credit, such letter(s) of credit are insufficient to pay to DLC such Preliminary
Supplier Charges or Supplier Charges and the POLR Supplier fails to replace such
letter(s) of credit with letter(s) of credit in such amounts as are sufficient
to pay to DLC such Preliminary Supplier Charges or Supplier Charges, then DLC
shall also have the right to terminate this Agreement upon ten (10) days written
notice to the POLR Supplier.
10
Section 7.9 is hereby amended and restated in its entirety as follows:
7.9 Survival. Notwithstanding any other provision of this Agreement to the
--------
contrary, the provisions of this Article VII, and the rights and obligations of
the Parties hereunder, shall survive the expiration of the term or the
termination of this Agreement for the purpose of satisfying the rights and
obligations of the Parties that arose or accrued prior to such termination or
expiration relating to the POLR Supply Service provided through the date of
termination or expiration of this Agreement.
Article XV is hereby amended by adding the following new Sections 15.13 and
15.14 thereto:
15.13 Effect of Termination of the FE Capacity Agreement Only or
----------------------------------------------------------
Termination of the FE Capacity Agreement and the Capacity Agreement.
-------------------------------------------------------------------
(a) In the event that either the FE Capacity Agreement is terminated
or both the FE Capacity Agreement and the Capacity Agreement are terminated,
then, in either case, (i) all those amendments to this Agreement that became
effective on the Capacity Agreement Effective Date (and that are contained in
Schedule 1 to the Capacity Agreement, except for those in respect of this
Article XV) shall be of no further force and effect and this Agreement shall be
read so as not to include any such amendments and, for the avoidance of doubt,
except as amended below in this Section 15.13, the provisions of this Agreement
shall revert to the form in which such provisions appeared immediately prior to
the Capacity Agreement Effective Date, and (ii) this Agreement shall be further
amended as follows:
Section 1.1 shall be amended by deleting therefrom the definitions of
"Escrow Account" and "Escrow Agent".
Section 1.1 shall be amended by restating the following definitions in
their entirety to read as follows:
"DLC Control Area" means the DLC Zone.
----------------
"OATT" means DLC's Open Access Transmission Tariff, or its successor
----
(including, but not limited to, any applicable tariff under the PJM
West Protocols) and, as applicable, any stand-alone tariff sheets for
DLC relating to Schedule 9A and Schedule 9B formerly attached to DLC's
Open Access Transmission Tariff.
"Preliminary Supplier Charges" means an estimate of Supplier Charges
----------------------------
based on forecast Energy requirements (and associated losses) and
other data available at the time of the estimate including evidence of
Energy scheduled by the POLR Supplier to the DLC Control Area on a
day-ahead
11
basis and using day-after E-schedules, as contemplated by Section 5.2
hereof.
Section 1.1 shall be amended by amending the definition of "Net Billed
Generation Revenue" such that clause (ii) of the first sentence of such
definition is restated to read as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that prior to the
termination or expiration of the Ancillary Services Agreement, the
costs for RRRAS (as defined under the Ancillary Services Agreement)
are calculated using the rates set forth in Schedule 9B to the OATT as
in effect on the date of the Ancillary Services Agreement and the
costs for any other Ancillary Services (except for energy imbalance)
are calculated using the rates set forth in Schedule 9B to the OATT
then in effect, and provided further that following the termination or
expiration of the Ancillary Services Agreement, the costs attributable
to all Ancillary Services (except energy imbalance) shall be
calculated using the rates set forth in Schedule 9B to the OATT then
in effect).
Section 1.1 shall be amended by adding the following definitions
thereto:
"Ancillary Services Agreement" means that certain Amended and Restated
----------------------------
Ancillary Services Agreement, dated as of February 15, 2002 by and
between DLC and the POLR Supplier and attached to the Capacity
Agreement as Exhibit 1 thereto.
"Capacity Agreement" means that certain Capacity Agreement, dated as
------------------
of February 15, 2002 by and between DLC and the POLR Supplier relating
to certain capacity obligations.
"DLC Zone" means the DLC service territory under the PJM West
--------
Protocols as such service territory is described in the "List of
Communities Served" under DLC's Retail Tariff on file with the PUC on
the date of the Capacity Agreement.
"DLC Zone Hourly Forecast" means, for each hour, DLC's day-ahead
------------------------
forecast of the Energy requirements of the DLC Zone, as delivered by
DLC to the POLR Supplier pursuant to Section 5.1 hereof.
"PJM West" means the PJM West Region of PJM Interconnection, L.L.C.,
--------
and any successor thereto (including any modification, and any
successor, thereto resulting from any regional transmission
organization for the northeastern United States).
12
"PJM West Protocols" means the provisions, protocols, rules or other
------------------
requirements of any tariff or equivalent document, reliability
assurance agreement, operating agreement, transmission owner agreement
or similar agreement, manuals or similar documents, and their
respective successors, then in effect in and applicable to PJM West.
"PJM West Surcharge" means any non-by-passable surcharge that may be
------------------
imposed on DLC's customers to permit DLC to recover any incremental
costs for capacity and Ancillary Services resulting from DLC joining
PJM West, any grid management or other fees which may be charged to
DLC based on PJM West start-up and operating costs and other similar
fees and costs.
"POLR Energy Imbalance" means any difference between the hourly Energy
---------------------
supplied by the POLR Supplier under this Agreement and the POLR Supply
Amount.
Section 1.2 shall be amended by adding the following two sentences to
the end thereof:
For the avoidance of doubt, the Parties acknowledge and agree that the
term "losses" as it may be used throughout this Agreement shall
expressly exclude therefrom any 500 kilovolt losses of PJM
Interconnection, L.L.C., unless such 500 kilovolt losses occur due to
the POLR Supplier's delivery of the DLC POLR Supply Amount, in which
case "losses" shall include any 500 kilovolt losses of PJM
Interconnection, L.L.C. resulting therefrom. In addition, the Parties
expressly agree that notwithstanding any other provision of this
Agreement to the contrary, Generation Rates shall not include any PJM
West Surcharges (and, as a result, Billed Generation Revenue shall not
include any PJM West Surcharges nor shall it be reduced by the amount
of any PJM West Surcharges in calculating Net Billed Generation
Revenue) and that DLC, and not the POLR Supplier, shall exclusively be
entitled to receive any and all PJM West Surcharges imposed on or
billed to DLC's customers as a result of the Retail Tariff Changes (as
defined under the Capacity Agreement) or otherwise.
Section 3.3 shall be amended and restated in its entirety as follows:
Section 3.3 Letter of Credit. The POLR Supplier shall post a $10
----------------
million irrevocable letter of credit issued by a Commercial Bank in
form and substance reasonably acceptable to DLC, as such letter of
credit may be supplemented or replaced pursuant to the terms of this
Agreement, which letter(s) of credit shall remain in place for such
amount for the
13
entire term of this Agreement. In the event that the POLR Supplier is
required to increase the amount of such letter(s) of credit pursuant
to the terms of this Agreement, then such letter(s) of credit for such
increased amount shall remain in place for such time as may be
required under the terms of this Agreement, provided, however, that,
notwithstanding any other provision of this Agreement to the contrary,
at all times during the term of this Agreement the minimum amount of
any such letter(s) of credit posted by the POLR Supplier shall be
equal to or greater than $10 million.
Section 3.5 shall be amended and restated in its entirety as follows:
Section 3.5 Additional Security. If at any time during the term of
-------------------
this Agreement the Certifying Company's Tangible Net Worth is below
the Minimum Tangible Net Worth and the Certifying Company's investment
rating is below the Minimum Investment Rating, then DLC, in its sole
discretion, may require, upon ten (10) Business Days' written notice
to the POLR Supplier, that the POLR Supplier supplement or replace the
letter(s) of credit then currently posted pursuant to this Article III
with another irrevocable letter of credit issued by a Commercial Bank
in form and substance reasonably acceptable to DLC such that the
aggregate amount of such letter(s) of credit equals $50 million, which
letter(s) of credit shall remain in place for such aggregate amount
until such time as the Certifying Company's Tangible Net Worth is
equal to or greater than the Minimum Tangible Net Worth or the
Certifying Company's investment rating is equal to or greater than the
Minimum Investment Rating (at which time, although the letter of
credit requirements in this Section 3.5 shall not apply, the POLR
Supplier shall continue to comply with any other applicable letter of
credit requirements set forth in this Article III).
Section 4.1(b) shall be amended and restated in its entirety as
follows:
(b) Points of Delivery. The POLR Supplier shall deliver the POLR
------------------
Supply Amount to the DLC Zone.
Section 4.1(d) shall be amended such that the first sentence of such
section is restated to read as follows:
The POLR Supplier acknowledges and agrees that DLC shall be
responsible for securing and providing all Ancillary Services
associated with DLC's retail customers whose Energy is secured under
this Agreement (provided that by separate, mutual agreement between
the
14
POLR Supplier and DLC, the POLR Supplier may provide certain or all of
such Ancillary Services).
Section 4.2 (h) shall be amended by adding a new subsection (v)
thereto that reads as follows:
(v) As soon as DLC receives schedule and settlement information from
PJM West relating to the Energy supplied by the POLR Supplier pursuant
to this Agreement, DLC shall make such information available to the
POLR Supplier, or DLC shall otherwise use all commercially reasonable
efforts necessary to cause PJM West to give the POLR Supplier
real-time access to scheduling and settlement information related to
Energy that is scheduled and delivered to the DLC Zone pursuant to
this Agreement.
Section 4.2(i) is shall be amended and restated in its entirety as
follows:
(i) Ancillary Services. DLC shall be responsible for securing and
------------------
providing all Ancillary Services associated with DLC's retail
customers whose Energy is secured under this Agreement (provided that
by separate, mutual agreement between the POLR Supplier and DLC, the
POLR Supplier may provide certain or all of such Ancillary Services).
Sections 4.3 (a), (b) and (c) shall be amended and restated in their
entirety as follows:
4.3 POLR Energy Imbalance and Supply Violation Charges. For any
--------------------------------------------------
hour during which there is POLR Energy Imbalance, the POLR Supplier
shall pay to DLC, in accordance with the billing procedures set forth
in Article VII of this Agreement, the following amounts, as
applicable:
(a) POLR Energy Imbalance. If the POLR Supplier fails to deliver
---------------------
to the DLC Zone the POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount
of dollars equal to the charge under the PJM West Protocols applicable
to an under-delivery of an amount of Energy equal to the POLR Energy
Imbalance, and in the event of an over-delivery, receive a credit from
DLC in an amount of dollars equal to the credit under the PJM West
Protocols applicable to an over-delivery of an amount of Energy equal
to the POLR Energy Imbalance (net of any costs DLC incurs in disposing
of such Energy). For the avoidance of doubt, the POLR Supplier's
delivery of Energy to the DLC Zone in any given hour shall first be
allocated to the
15
POLR Supply Amount under this Agreement and then to the POLR Supply
Amount under the POLR II Agreement. In addition, if the POLR
Supplier's failure to deliver the POLR Supply Amount in accordance
with Section 4.1 hereof causes DLC to Shed Load during any hour, the
POLR Supplier shall pay to DLC, in addition to any amounts otherwise
due hereunder, $1,000 per megawatt-hour of Shed Load attributable to
such failure plus any out-of-pocket costs incurred by DLC as the
result of claims, penalties, repairs, expenses or other damages
resulting from such Shed Load; provided, however, that if during any
such hour (x) the POLR Supplier delivers the full output of all of its
operable generation (e.g., all generation in the DLC Control Area and
the FE Control Area that is not on forced or planned outage and/or
forced or planned curtailments) to the DLC Control Area (and delivers
to DLC a certificate executed by a duly authorized officer of the POLR
Supplier to such effect) and nevertheless fails to deliver the POLR
Supply Amount and (y) DLC is unable to procure alternative sources of
Energy in the market sufficient to compensate for the POLR Supplier's
under-delivery, then the POLR Supplier shall pay to DLC, in addition
to any amounts otherwise due hereunder, but in lieu of the $1,000 per
megawatt-hour of Shed Load described above, $100 per megawatt-hour of
Shed Load attributable to such failure plus any of the aforementioned
out-of-pocket costs incurred by DLC. For purposes of this Section
4.3(a), DLC shall determine the amount of such Shed Load using Good
Utility Practice.
(b) Reserved.
--------
(c) Reserved.
--------
Article V shall be amended and restated in its entirety as follows:
5.1 Load Forecasting.
----------------
(a) On a daily basis, DLC shall deliver to the POLR Supplier, no
later than three hours prior to the close of the ACAP market then set
by the PJM West Protocols, the POLR Supply Forecasts and the DLC Zone
Hourly Forecasts, as applicable, for the following calendar day. DLC
shall provide updates to the POLR Supply Forecasts and the DLC Zone
Hourly Forecasts, as applicable, delivered to the POLR Supplier by
delivering to the POLR Supplier a real-time POLR Supply Forecast and
DLC Zone Hourly Forecast, as applicable, for each hour.
(b) In addition, DLC shall deliver to the POLR Supplier, as often
as is practicable but in no event later than the end of each month, a
report listing known changes in the POLR Supply Amount, as well as any
known changes to the Schedules attached hereto, which changes shall be
16
incorporated into and become a part of the Schedules to which they
relate, subject, however, to the prior consent of the POLR Supplier to
such changes to such Schedules if such consent is required under this
Agreement.
5.2 Scheduling. On a daily basis, the POLR Supplier shall
----------
schedule, pursuant to the PJM West Protocols, the POLR Supply Amounts,
provided, that any portion of any POLR Supply Amount not scheduled on
a day-ahead basis shall be scheduled, pursuant to the PJM West
Protocols, by the POLR Supplier using day-after E-schedules according
to such rules and procedures as may be then required by the PJM West
Protocols. DLC shall provide the POLR Supplier with a copy of any
Dispatch Notice issued pursuant to the DLC Must-Run Agreements at the
same time such Dispatch Notice is given to the owner(s) of the
Cheswick and/or Elrama generating plants. Within two (2) hours of
receipt of any such Dispatch Notice, the POLR Supplier shall submit to
PJM West (with a copy provided simultaneously to DLC of) a revised
schedule incorporating the DLC Must-Run Purchases referenced in such
Dispatch Notice.
5.3 Reconciliation. Any POLR Energy Imbalance shall be hourly
--------------
energy imbalance attributable to the POLR Supplier for purposes of
calculating Supply Violation Charges. On a daily basis, no later than
the prevailing time deadline in the PJM West Protocols for internal
transactions, the POLR Supplier shall have completed any E-schedules
contemplated by Section 5.2 hereof in respect of the POLR Supply
Amounts for the preceding calendar day.
Sections 7.2, 7.3, 7.4, 7.5 and 7.6 shall be amended and restated in
their entirety as follows:
7.2 Weekly Invoicing of Preliminary Supplier Charges. DLC shall,
------------------------------------------------
on each Monday, invoice the POLR Supplier for all Preliminary Supplier
Charges attributable to the preceding calendar week. Invoices rendered
pursuant to this Section 7.2 shall be immediately due from the POLR
Supplier and payable to DLC by offset pursuant to Section 7.5. Credits
owing to the POLR Supplier reflected on any invoices rendered pursuant
to this Section 7.2 shall be immediately due from DLC and netted
against any payments owing to DLC on such invoice with any excess
amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to
the POLR Supplier under Section 7.1 hereof on the day that the invoice
reflecting such excess is rendered.
17
7.3 Monthly Settlement Statement of Account for Preliminary
-------------------------------------------------------
Supplier Charges. DLC shall, within ten (10) days following the end of
----------------
each calendar month, provide a statement of account to the POLR
Supplier setting forth all Preliminary Supplier Charges invoiced
during the immediately preceding calendar month and adjusting such
Preliminary Supplier Charges, as necessary, based on the information
then available to DLC. Payments owing to DLC reflected on any
statement of account rendered pursuant to this Section 7.3 shall be
immediately due from the POLR Supplier and payable to DLC by offset
pursuant to Section 7.5. Credits owing to the POLR Supplier reflected
on any statement of account rendered pursuant to this Section 7.3
shall be immediately due from DLC and netted against any payments
owing to DLC on such statement of account with any excess amount
payable to the POLR Supplier by increasing by the amount of any such
excess the amount of Net Billed Generation Revenue to be paid to the
POLR Supplier under Section 7.1 hereof on the day that the statement
of account reflecting such excess is rendered.
7.4 Monthly True-Up Statement of Account for Supplier Charges.
---------------------------------------------------------
DLC shall, after all customer accounts have been fully metered for a
calendar month (which shall occur approximately forty-five (45) days
following the end of such calendar month), provide a statement of
account to the POLR Supplier adjusting one or more prior statements of
account rendered pursuant to Section 7.3 hereof for the difference
between Preliminary Supplier Charges and Supplier Charges for such
prior months. Payments owing to DLC reflected on any statement of
account rendered pursuant to this Section 7.4 shall be immediately due
from the POLR Supplier and payable to DLC by offset pursuant to
Section 7.5. Credits owing to the POLR Supplier reflected on any
statement of account rendered pursuant to this Section 7.4 shall be
immediately due from DLC and netted against any payments owing to DLC
on such statement of account with any excess amount payable to the
POLR Supplier by increasing by the amount of any such excess the
amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the statement of
account reflecting such excess is rendered.
7.5 DLC Right to Offset.
-------------------
(a) In addition to any other right to offset against payments to
the POLR Supplier under this Agreement, DLC shall have the right to
offset any amounts the POLR Supplier owes DLC pursuant to Sections
7.2, 7.3 and 7.4 hereof (except for such amounts reasonably disputed
by the POLR Supplier) against the amounts owed by DLC pursuant to
Section 7.1 hereof. In doing so, on any particular day, if an amount
is owing to DLC pursuant to Section 7.2, Section 7.3 or Section 7.4
hereof,
18
DLC may retain such portion of the Net Billed Generation Revenue
otherwise owing to the POLR Supplier under Section 7.1 hereof for such
day as an offset in satisfaction thereof; if any such amount owing to
DLC exceeds the Net Billed Generation Revenue otherwise owing to the
POLR Supplier under Section 7.1 hereof for such day, DLC may retain
such Net Billed Generation Revenue as an offset and withhold further
payments of Net Billed Generation Revenue otherwise owing to the POLR
Supplier under Section 7.1 hereof as an offset until the amount owing
to DLC pursuant to Sections 7.2, 7.3 and 7.4 has been fully recovered
by DLC.
(b) In addition to the right to offset set forth in Section
7.5(a), if, on any day after reviewing the E-schedules described in
Section 5.3 hereof attributable to the immediately preceding calendar
day, DLC determines that the Preliminary Supplier Charges for such day
exceed $5 million, such Preliminary Supplier Charges shall become
immediately due from the POLR Supplier and payable to DLC as an
offset. In such an instance, DLC may retain such portion of the Net
Billed Generation Revenue otherwise owing to the POLR Supplier under
Section 7.1 hereof for such day equal to such Preliminary Supplier
Charges as an offset in satisfaction thereof; if any such Preliminary
Supplier Charges owing to DLC exceeds the Net Billed Generation
Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
for such day, DLC may retain such Net Billed Generation Revenue as an
offset and withhold further payments of Net Billed Generation Revenue
otherwise owing to the POLR Supplier under Section 7.1 hereof as an
offset until the amount of such Preliminary Supplier Charges has been
fully recovered by DLC.
7.6 Right to Immediate Payment and to Draw on Letter of Credit.
----------------------------------------------------------
In addition to the rights to offset under Section 7.5 hereof, DLC
shall further have the right to immediate payment from the POLR
Supplier, and to draw upon the letter(s) of credit posted by the POLR
Supplier under the terms of this Agreement, in the amounts and under
the circumstances provided below:
(a) If at any time Preliminary Supplier Charges or Supplier
Charges in an amount in excess of $30 million are then due from the
POLR Supplier and payable to DLC under the terms of this Agreement and
the POLR II Agreement (as defined under the Capacity Agreement), DLC
shall provide notice of the same to the POLR Supplier and, upon
receipt thereof, the POLR Supplier shall make immediate payment to DLC
of the dollar amount of such Preliminary Supplier Charges or Supplier
Charges, as the case may be, in immediately available funds to the
bank account designated by DLC in Section 15.3 hereof.
(b) If, within ten (10) days following notice to the POLR
Supplier given by DLC pursuant to Section 7.6(a), DLC has not received
19
payment in full of the Preliminary Supplier Charges or Supplier
Charges so noticed, then DLC has the right to draw upon the letter(s)
of credit posted by the POLR Supplier under the terms of this
Agreement in an amount up to, but not exceeding, any portion of such
Preliminary Supplier Charges or Supplier Charges then unpaid by the
POLR Supplier, and if DLC draws upon such letter(s) of credit, such
letter(s) of credit are insufficient to pay to DLC such Preliminary
Supplier Charges or Supplier Charges and the POLR Supplier fails to
replace such letter(s) of credit with letter(s) of credit in such
amounts as are sufficient to pay to DLC such Preliminary Supplier
Charges or Supplier Charges, then DLC shall also have the right to
terminate this Agreement upon ten (10) days written notice to the POLR
Supplier.
Section 7.9 shall be amended and restated in its entirety as follows:
7.9 Survival. Notwithstanding any other provision of this
--------
Agreement to the contrary, the provisions of this Article VII, and the
rights and obligations of the Parties hereunder, shall survive the
expiration of the term or the termination of this Agreement for the
purpose of satisfying the rights and obligations of the Parties that
arose or accrued prior to such termination or expiration relating to
the POLR Supply Service provided through the date of termination or
expiration of this Agreement.
(b) In addition to the foregoing and notwithstanding any other
provision of this Section 15.13 to the contrary, in the event, and only in the
event, that the FE Capacity Agreement is terminated but the Capacity Agreement
is not terminated, this Agreement shall be further amended as set forth below
(provided, however, that immediately upon the termination of the Capacity
Agreement all such further amendments to this Agreement shall be of no further
force or effect and this Agreement shall be read so as not to include any such
further amendments):
Section 1.1 shall be further amended to add the following additional
definitions:
"Capacity Agreement" means that certain Capacity Agreement, dated as
------------------
of February 15, 2002, by and between DLC and the POLR Supplier
relating to certain capacity obligations.
"Capacity Agreement Effective Date" means the "Effective Date" as
---------------------------------
defined in the Capacity Agreement.
20
The last sentence of Section 4.2(j) shall be further amended and
restated in its entirety as follows:
In addition, DLC agrees to refrain from filing with the PUC any
request for modification of the Generation Rates (other than (x) a
request for a waiver of an adjustment of electric distribution company
rates for changes in state tax liability pursuant to applicable Law,
(y) as contemplated by the Retail Tariff Changes (as defined under the
Capacity Agreement) together with such changes to the Retail Tariff
Changes as may have been acceptable to DLC on or prior to the Capacity
Agreement Effective Date, and (z) a request by DLC for a change in the
PJM West Surcharge), unless the Parties shall mutually agree
otherwise.
(c) Finally, for the avoidance of doubt, and notwithstanding any other
provision of this Section 15.13 to the contrary, in the event that the
conditions to the effectiveness of Section 15.14 of this Agreement have been
satisfied prior to the satisfaction of the conditions to the effectiveness of
this Section 15.13, and subsequent thereto the FE Capacity Agreement is
terminated, then the amendments made pursuant to Section 15.14 of this Agreement
shall be of no further force or effect and this Agreement shall be read so as to
exclude therefrom, for all purposes whatsoever, such amendments, and the
provisions of Section 15.13(a) shall be the sole effective amendments to this
Agreement pursuant to this Article XV.
15.14 Effect of Termination of Capacity Agreement Only. In the
------------------------------------------------
event that the Capacity Agreement is terminated but the FE Capacity Agreement is
not terminated, this Agreement shall be amended as follows:
Section 1.1 shall be amended by restating the following definition in
its entirety:
"FE Swap Percentage" means sixty-five percent (65%).
------------------
Section 1.1 shall be further amended by amending the definition of
"Net Billed Generation Revenue" such that clause (ii) of the first
sentence of such definition is restated to read as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that prior to the
termination or expiration of the Ancillary Services Agreement, the
costs for RRRAS (as defined under the Ancillary Services Agreement)
are calculated using the rates set forth in Schedule 9B to the OATT as
in effect on the date of the Ancillary Services Agreement and the
costs for any other Ancillary Services (except for energy imbalance)
are calculated using the rates set
21
forth in Schedule 9B to the OATT then in effect, and provided further
that following the termination or expiration of the Ancillary Services
Agreement, the costs attributable to all Ancillary Services (except
energy imbalance) shall be calculated using the rates set forth in
Schedule 9B to the OATT then in effect).
22
SCHEDULE 2
POLR II AMENDMENTS
Section 1.1 is hereby amended by deleting therefrom the definitions of
"Escrow Account" and "Escrow Agreement".
Section 1.1 is hereby amended by restating the following definitions in
their entirety to read as follows:
"DLC Control Area" means the DLC Zone.
----------------
"OATT" means DLC's Open Access Transmission Tariff, or its successor (including,
----
but not limited to, any applicable tariff under the PJM West Protocols) and, as
applicable, any stand-alone tariff sheets for DLC relating to Schedule 9A and
Schedule 9B formerly attached to DLC's Open Access Transmission Tariff.
"POLR Energy Imbalance" means any difference between the hourly Energy supplied
---------------------
by the POLR Supplier under this Agreement and the POLR Supply Amount. The
Parties recognize and agree that POLR Energy Imbalance exists when there is FE
POLR Energy Imbalance, DLC POLR Energy Imbalance or both.
"Preliminary Supplier Charges" means an estimate of Supplier Charges based on
----------------------------
forecast Energy requirements (and associated losses) and other data available at
the time of the estimate including FE Tally Sheets and evidence of Energy
scheduled by the POLR Supplier to the DLC Control Area on a day-ahead basis and
using day-after E-schedules, as contemplated by Section 5.2 hereof.
"Supplier Charges" means any charges to the POLR Supplier under this Agreement,
----------------
any charges to the POLR Supplier as the "Supplier" under the Capacity Agreement,
and any charges to the POLR Supplier as the "POLR Supplier" under the Ancillary
Services Agreement, including Supply Violation Charges, Transmission Congestion
Charges, ACAP Market Transaction Costs (as defined under the Capacity
Agreement), Supplier ACAP Deficiency Charges (as defined under the Capacity
Agreement), RRRAS Charge Amounts (as defined under the Ancillary Services
Agreement, including any negative EGS RRRAS Imbalance Amount described
thereunder), and shall include any adjustments necessary to account for DLC's
costs in purchasing Energy for Passthrough Power under the Interruptible
Service, the payment for which shall be the responsibility of the POLR Supplier,
and the revenues received by DLC from Interruptible Service customers for the
incremental charges for Energy related to the amount of Passthrough Power
actually supplied to such customers, which revenues shall be credited to the
POLR Supplier to the extent such revenues have not been otherwise included in
the Billed Generation Revenue attributable to such Passthrough Power.
Section 1.1 is hereby amended by amending the definition of "Net Billed
Generation Revenue" such that clause (ii) of such definition is restated to read
as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that the costs for RRRAS (as
defined under the Ancillary Services Agreement) are calculated using the
rates set forth in Schedule 9B to the OATT as in effect on the date of the
Ancillary Services Agreement and the costs for any other Ancillary Services
(except for energy imbalance) are calculated using the rates set forth in
Schedule 9B to the OATT then in effect)
Section 1.1 is hereby amended by adding the following definitions thereto:
"Ancillary Services Agreement" means that certain Amended and Restated Ancillary
----------------------------
Services Agreement, dated as of February 15, 2002 by and between DLC and the
POLR Supplier and attached to the Capacity Agreement as Exhibit 1 thereto.
"Capacity Agreement" means that certain Capacity Agreement, dated as of February
------------------
15, 2002, by and between DLC and the POLR Supplier relating to certain capacity
obligations.
"Capacity Agreement Effective Date" means the "Effective Date" as defined in the
---------------------------------
Capacity Agreement.
"DLC POLR Energy Imbalance" means the difference between the hourly Energy
-------------------------
supplied by the POLR Supplier to the DLC Zone pursuant to this Agreement and the
DLC POLR Supply Amount.
"DLC POLR Supply Amount" means the positive difference, if any, between the POLR
----------------------
Supply Amount and the Net FE Swap Amount. The Parties recognize and agree that
if the Net FE Swap Amount is equal to or greater than the POLR Supply Amount,
there shall be no DLC POLR Supply Amount.
"DLC Zone" means the DLC service territory under the PJM West Protocols as such
--------
service territory is described in the "List of Communities Served" under DLC's
Retail Tariff on file with the PUC on the date of the Capacity Agreement.
"DLC Zone Hourly Forecast" means, for each hour, DLC's day-ahead forecast of the
------------------------
Energy requirements of the DLC Zone, as delivered by DLC to the POLR Supplier
pursuant to Section 5.1 hereof.
"FE" means FirstEnergy Corp., an Ohio corporation.
--
"FE Capacity Agreement" means that certain capacity agreement dated as of
---------------------
December 18, 2001 by and between FirstEnergy Solutions Corp., on the one hand,
and DLC, on the other hand, relating to certain capacity and Energy obligations.
"FE Charge" means the Supplier's (as defined under the FE Capacity Agreement)
---------
costs under the FE Protocols in purchasing replacement Energy, including related
transmission
2
charges, to cover the amount of Energy equal to the FE POLR Energy Imbalance, if
any, for a particular hour.
"FE Congestion Charge" means, for each hour, a charge equal to the FE Swap
--------------------
Amount for that hour multiplied by $.10/MWh.
"FE Control Area" means that portion of the FE Control Area as defined in the
---------------
applicable FE tariff, or its successor (including, but not limited to, any
applicable control area or zone under any applicable RTO or ISO tariff or
protocols) that includes The Cleveland Electric Illuminating Company, Ohio
Edison Company, Pennsylvania Power Company and The Toledo Edison Company, as in
existence on the date of the FE Capacity Agreement.
"FE Credit" means the net amount, if any, received by the Supplier (as defined
---------
under the FE Capacity Agreement) under the FE Protocols in disposing of any
Energy delivered by the POLR Supplier to the FE Control Area for a particular
hour that is in excess of the FE POLR Supply Amount for such hour.
"FE POLR Energy Imbalance" means any difference between the hourly Energy
------------------------
supplied by the POLR Supplier to the FE Control Area pursuant to this Agreement
and the FE POLR Supply Amount.
"FE POLR Supply Amount" means (i) if the POLR Supply Amount is equal to or less
---------------------
than the Net FE Swap Amount, the entire POLR Supply Amount, or (ii) if the POLR
Supply Amount is greater than the Net FE Swap Amount, that portion of the POLR
Supply Amount that is equal to the Net FE Swap Amount.
"FE Protocols" means the provisions, protocols, rules or other requirements of
------------
any tariff or equivalent document, reliability assurance agreement, operating
agreement, transmission owner agreement or similar agreement, operating manual
or similar document, and their respective successors, then in effect in and
applicable to the FE Control Area.
"FE Swap Amount" means, for each hour, an amount of Energy equal to the product
--------------
of the DLC Zone Hourly Forecast for such hour multiplied by a factor equal to
the FE Swap Percentage (with the resulting product rounded down to the nearest
whole megawatt for that hour).
"FE Swap Percentage" means the FE Swap Percentage as defined in and set under
------------------
the Capacity Agreement for the day that Energy is delivered hereunder.
"FE Tally Sheet" means a tally sheet, in a form reasonably acceptable to DLC, on
--------------
which the POLR Supplier shall set forth, for a particular day, the amount of
Energy actually delivered each hour by the POLR Supplier to the FE Control Area
listing the generation resources and import schedules for all such Energy.
3
"Material Adverse Effect" means any event or condition that has a material
-----------------------
adverse effect on the rights or obligations of the affected Party under this
Agreement; provided, however, that an increase or decrease in the market price
of Energy that renders the payments to the POLR Supplier hereunder no longer
reflective or market conditions shall not constitute a Material Adverse Effect.
"Net FE Swap Amount" means the positive difference, if any, between the FE Swap
------------------
Amount and the FE POLR Supply Amount (as defined under the POLR I Agreement).
The Parties recognize and agree that if the FE POLR Supply Amount (as defined
under the POLR I Agreement) is equal to or greater than the FE Supply Amount,
there shall be no Net FE Swap Amount.
"PJM West" means the PJM West Region of PJM Interconnection, L.L.C., and any
--------
successor thereto (including any modification, and any successor, thereto
resulting from any regional transmission organization for the northeastern
United States).
"PJM West Protocols" means the provisions, protocols, rules or other
------------------
requirements of any tariff or equivalent document, reliability assurance
agreement, operating agreement, transmission owner agreement or similar
agreement, manuals or similar documents, and their respective successors, then
in effect in and applicable to PJM West.
"PJM West Surcharge" means any non-by-passable surcharge that may be imposed on
------------------
DLC's customers to permit DLC to recover any incremental costs for capacity and
Ancillary Services resulting from DLC joining PJM West, any grid management or
other fees which may be charged to DLC based on PJM West start-up and operating
costs and other similar fees and costs.
"Transmission Congestion Charges" means all transmission congestion charges,
-------------------------------
losses, if any, and similar charges, costs and fees imposed under the PJM West
Protocols and associated with the delivery of Energy by the POLR Supplier to and
within the DLC Zone pursuant to this Agreement (other than Energy, in an amount
equal to the FE Swap Amount, that is contemplated hereunder to be scheduled or
delivered to the DLC Zone by the Supplier (as defined under the FE Capacity
Agreement)) and by the POLR Supplier (as defined in the POLR I Agreement) to and
within the DLC Zone pursuant to the POLR I Agreement (other than Energy, in an
amount equal to the FE Swap Amount, that is contemplated hereunder to be
scheduled or delivered to the DLC Zone by the Supplier (as defined under the FE
Capacity Agreement)). Transmission Congestion Charges shall also include all
transmission congestion charges, losses, if any, and similar charges, costs and
fees imposed under the FE Protocols and associated with the delivery of Energy
by the POLR Supplier to and within the FE Control Area pursuant to this
Agreement and by the POLR Supplier (as defined in the POLR I Agreement) to and
within the FE Control Area pursuant to the POLR I Agreement. Transmission
Congestion Charges shall also include all FE Congestion Charges.
4
Section 1.2 is hereby amended by adding the following two sentences to the
end thereof:
For the avoidance of doubt, the Parties acknowledge and agree that the
term "losses" as it may be used throughout this Agreement shall expressly
exclude therefrom any 500 kilovolt losses of PJM Interconnection, L.L.C., unless
such 500 kilovolt losses occur due to the POLR Supplier's delivery of the DLC
POLR Supply Amount, in which case "losses" shall include any 500 kilovolt losses
of PJM Interconnection, L.L.C. resulting therefrom. In addition, the Parties
expressly agree that notwithstanding any other provision of this Agreement to
the contrary, Generation Rates shall not include any PJM West Surcharges (and,
as a result, Billed Generation Revenue shall not include any PJM West Surcharges
nor shall it be reduced by the amount of any PJM West Surcharges in calculating
Net Billed Generation Revenue) and that DLC, and not the POLR Supplier, shall
exclusively be entitled to receive any and all PJM West Surcharges imposed on or
billed to DLC's customers as a result of the Retail Tariff Changes (as defined
under the Capacity Agreement) or otherwise.
Section 3.3 is hereby amended and restated in its entirety as follows:
Section 3.3 Letter of Credit. On or before the earliest Rate Class
----------------
Effective Date hereunder, the POLR Supplier shall post a $10 million irrevocable
letter of credit issued by a Commercial Bank in form and substance reasonably
acceptable to DLC, as such letter of credit may be supplemented or replaced
pursuant to the terms of this Agreement, which letter(s) of credit shall remain
in place for such amount for the entire term of this Agreement. In the event
that the POLR Supplier is required to increase the amount of such letter(s) of
credit pursuant to the terms of this Agreement, then such letter(s) of credit
for such increased amount shall remain in place for such time as may be required
under the terms of this Agreement, provided, however, that, notwithstanding any
other provision of this Agreement to the contrary, at all times during the term
of this Agreement following the earliest Rate Class Effective Date hereunder the
minimum amount of any such letter(s) of credit posted by the POLR Supplier shall
be equal to or greater than $10 million.
Section 3.5 is hereby amended and restated in its entirety as follows:
Section 3.5 Additional Security. If at any time during the term of
-------------------
this Agreement the Certifying Company's Tangible Net Worth is below the Minimum
Tangible Net Worth and the Certifying Company's investment rating is below the
Minimum Investment Rating, then DLC, in its sole discretion, may require, upon
ten (10) Business Days' written notice to the POLR Supplier, that the POLR
Supplier supplement or replace the letter(s) of credit then currently posted
pursuant to this Article III with another irrevocable letter of credit issued by
a Commercial Bank in form and substance reasonably acceptable to DLC such that
the aggregate amount of such letter(s) of credit
5
equals $50 million, which letter(s) of credit shall remain in place for such
aggregate amount until such time as the Certifying Company's Tangible Net Worth
is equal to or greater than the Minimum Tangible Net Worth or the Certifying
Company's investment rating is equal to or greater than the Minimum Investment
Rating(at which time, although the letter of credit requirements in this Section
3.5 shall not apply, the POLR Supplier shall continue to comply with any other
applicable letter of credit requirements set forth in this Article III).
Section 4.1(b) is hereby amended and restated in its entirety as follows:
(b) Points of Delivery. The POLR Supplier shall deliver the FE
------------------
POLR Supply Amount to the FE Control Area and shall deliver the DLC POLR Supply
Amount to the DLC Zone. On a daily basis, no later than 10 a.m. (eastern time),
the POLR Supplier shall furnish DLC with an FE Tally Sheet for the FE POLR
Supply Amounts delivered during the preceding calendar day.
Section 4.1(d) is hereby amended such that the first sentence of such
section is restated to read as follows:
The POLR Supplier acknowledges and agrees that DLC shall be responsible for
securing and providing all Ancillary Services associated with DLC's retail
customers classified in a Rate Class for which the Transition Period has
terminated and Company Use Energy (provided that by separate, mutual
agreement between the POLR Supplier and DLC, the POLR Supplier may provide
certain or all of such Ancillary Services).
Section 4.2 (h) is hereby amended by adding a new subsection (iv) thereto
that reads as follows:
(iv) As soon as DLC receives schedule and settlement information from PJM
West relating to the Energy supplied by the POLR Supplier pursuant to this
Agreement, DLC shall make such information available to the POLR Supplier,
or DLC shall otherwise use all commercially reasonable efforts necessary to
cause PJM West to give the POLR Supplier real-time access to scheduling and
settlement information related to Energy that is scheduled and delivered to
the DLC Zone pursuant to this Agreement.
Section 4.2(i) is hereby amended and restated in its entirety as follows:
(i) Ancillary Services. DLC shall be responsible for securing and
------------------
providing all Ancillary Services associated with DLC's retail customers
classified in a Rate Class for which the Transition Period has terminated and
Company Use Energy
6
(provided that by separate, mutual agreement between the POLR Supplier and DLC,
the POLR Supplier may provide certain or all of such Ancillary Services).
The last sentence of Section 4.2(j) is hereby amended and restated in its
entirety as follows:
In addition, DLC agrees to refrain from filing with the PUC any request for
modification of the Generation Rates (other than (x) as contemplated by the
Retail Tariff Changes (as defined under the Capacity Agreement) together
with such changes to the Retail Tariff Changes as may have been acceptable
to DLC on or prior to the Capacity Agreement Effective Date, and (y) a
request by DLC for a change in the PJM West Surcharge), unless the Parties
shall mutually agree otherwise.
Sections 4.3(a), (b) and (c) are hereby amended and restated in their
entirety as follows:
4.3 POLR Energy Imbalance and Supply Violation Charges. For any hour
--------------------------------------------------
during which there is DLC POLR Energy Imbalance or FE POLR Energy Imbalance, the
POLR Supplier shall pay to DLC, in accordance with the billing procedures set
forth in Article VII of this Agreement, the following amounts, as applicable:
(a) DLC POLR Energy Imbalance. If the POLR Supplier fails to
-------------------------
deliver to the DLC Zone the DLC POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount of
dollars equal to the charge under the PJM West Protocols applicable to an
under-delivery of an amount of Energy equal to the DLC POLR Energy Imbalance,
and in the event of an over-delivery, receive a credit from DLC in an amount of
dollars equal to the credit under the PJM West Protocols applicable to an
over-delivery of an amount of Energy equal to the DLC POLR Energy Imbalance (net
of any costs DLC incurs in disposing of such Energy). For the avoidance of
doubt, the POLR Supplier's delivery of Energy to the DLC Zone in any given hour
shall first be allocated to the DLC POLR Supply Amount under the POLR I
Agreement and then to the DLC POLR Supply Amount under this Agreement. In
addition, if the POLR Supplier's failure to deliver the POLR Supply Amount in
accordance with Section 4.1 hereof causes DLC to Shed Load during any hour, the
POLR Supplier shall pay to DLC, in addition to any amounts otherwise due
hereunder, $1,000 per megawatt-hour of Shed Load attributable to such failure
plus any out-of-pocket costs incurred by DLC as the result of claims, penalties,
repairs, expenses or other damages resulting from such Shed Load; provided,
however, that if during any such hour (x) the POLR Supplier delivers the full
output of all of its operable generation (e.g., all generation in the DLC
Control Area and the FE Control Area that is not on forced or planned outage
and/or forced or planned curtailments) to the DLC Control Area and, to the
extent applicable under this Agreement, the FE Control Area (and delivers to
7
DLC a certificate executed by a duly authorized officer of the POLR Supplier to
such effect) and nevertheless fails to deliver the POLR Supply Amount and (y)
DLC is unable to procure alternative sources of Energy in the market sufficient
to compensate for the POLR Supplier's under-delivery, then the POLR Supplier
shall pay to DLC, in addition to any amounts otherwise due hereunder, but in
lieu of the $1,000 per megawatt-hour of Shed Load described above, $100 per
megawatt-hour of Shed Load attributable to such failure plus any of the
aforementioned out-of-pocket costs incurred by DLC. For purposes of this Section
4.3(a), DLC shall determine the amount of such Shed Load using Good Utility
Practice.
(b) FE POLR Energy Imbalance. If the POLR Supplier fails to
------------------------
deliver to the FE Control Area the FE POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount of
dollars equal to the FE Charge applicable to an under-delivery of an amount of
Energy equal to the FE POLR Energy Imbalance, and in the event of an
over-delivery, receive a credit from DLC in an amount of dollars equal to the FE
Credit applicable to an over-delivery of an amount of Energy equal to the FE
POLR Energy Imbalance (net of any costs DLC incurs in disposing of such Energy).
For the avoidance of doubt, the POLR Supplier's delivery of Energy to the FE
Control Area in any given hour shall first be allocated to the FE POLR Supply
Amount under the POLR I Agreement and then to the FE POLR Supply Amount under
this Agreement.
(c) Reserved.
--------
Section 4.3 is hereby amended by adding the following new Sections 4.3(f)
and (g) thereto:
(f) The Parties will cooperate in good faith to establish a
mechanism, at no cost to DLC, to provide the POLR Supplier and FE with a means
to Dynamically Schedule Energy between the FE Control Area and PJM West.
(g) If, in any hour, the sum of the actual POLR Supply Amount (as
defined in the POLR I Agreement) and the actual POLR Supply Amount hereunder is
less than the FE Swap Amount, then DLC shall pay to the POLR Supplier an amount
of dollars equal to the then applicable hourly locational marginal price under
the PJM West Protocols multiplied by the positive difference, if any, between
(x) the amount of Energy delivered by the POLR Supplier to the FE Control Area
during such hour pursuant to the POLR I Agreement and this Agreement and (y) the
actual POLR Supply Amount (as defined in the POLR I Agreement) for such hour
plus the actual POLR Supply Amount hereunder for such hour.
8
Article V is hereby amended and restated in its entirety as follows:
5.1 Load Forecasting.
----------------
(a) On a daily basis, DLC shall deliver to the POLR Supplier, no
later than three hours prior to the close of the ACAP market then set by the PJM
West Protocols, the POLR Supply Forecasts and the DLC Zone Hourly Forecasts for
the following calendar day. DLC shall provide updates to the POLR Supply
Forecasts and DLC Zone Hourly Forecasts delivered to the POLR Supplier by
delivering to the POLR Supplier a real-time POLR Supply Forecast and DLC Zone
Hourly Forecast for each hour.
(b) In addition, DLC shall deliver to the POLR Supplier, as often
as is practicable but in no event later than the end of each month, a report
listing known changes in the POLR Supply Amount, as well as any know changes to
the Schedules attached hereto, which changes shall be incorporated into and
become a part of the Schedules to which they relate, subject, however, to the
prior consent of the POLR Supplier to such changes to such Schedules if such
consent is required under this Agreement.
5.2 Scheduling. On a daily basis, the POLR Supplier shall schedule,
----------
pursuant to the FE Protocols, the FE POLR Supply Amounts. On a daily basis, the
POLR Supplier shall schedule, pursuant to the PJM West Protocols, the DLC POLR
Supply Amounts, provided, that any portion of any DLC POLR Supply Amount not
scheduled on a day-ahead basis shall be scheduled, pursuant to the PJM West
Protocols, by the POLR Supplier using day-after E-schedules according to such
rules and procedures as may be then required by the PJM West Protocols. DLC
shall provide the POLR Supplier with a copy of any Dispatch Notice issued
pursuant to the DLC Must-Run Agreements at the same time such Dispatch Notice is
given to the owner(s) of the Cheswick and/or Elrama generating plants. Within
two (2) hours of receipt of any such Dispatch Notice, the POLR Supplier shall
submit to PJM West (with a copy provided simultaneously to DLC of) a revised
schedule incorporating the DLC Must-Run Purchases referenced in such Dispatch
Notice.
5.3 Reconciliation. Any POLR Energy Imbalance shall be hourly energy
--------------
imbalance attributable to the POLR Supplier for purposes of calculating Supply
Violation Charges. On a daily basis, no later than the prevailing time deadline
in the PJM West Protocols for internal transactions, the POLR Supplier shall
have completed any E-schedules contemplated by Section 5.2 hereof in respect of
the DLC POLR Supply Amounts for the preceding calendar day and shall deliver to
DLC an FE Tally Sheet in respect of the FE POLR Supply Amounts for the preceding
calendar day. The Parties recognize and agree that POLR Energy Imbalance is
comprised of FE POLR Energy Imbalance and DLC POLR Energy Imbalance and that
separate Supply Violation Charges shall be calculated for any FE POLR Energy
Imbalance and any DLC POLR Energy Imbalance.
9
Section 7.1 is hereby amended by adding the following Section 7.1(d)
thereto:
(d) In addition to any amounts paid by DLC to the POLR Supplier
pursuant to the foregoing provisions, during the term of the Ancillary Services
Agreement, DLC shall pay to the POLR Supplier all RRRAS Payment Amounts (as
defined under the Ancillary Services Agreement) due and payable under the
Ancillary Services Agreement by summing the RRRAS Payment Amounts for each day
of a particular calendar month on the twentieth calendar following the last day
of such calendar month and increasing the amount of the Net Billed Generation
Revenue to be paid to the POLR Supplier on such calendar day pursuant to Section
7.1(a) hereof by an amount of dollars equal to such summed RRRAS Payment
Amounts.
Sections 7.2, 7.3, 7,4, 7.5 and 7.6 are hereby amended and restated in
their entirety as follows:
7.2 Weekly Invoicing of Preliminary Supplier Charges. DLC shall, on
------------------------------------------------
each Monday, invoice the POLR Supplier for all Preliminary Supplier Charges
attributable to the preceding calendar week. Invoices rendered pursuant to this
Section 7.2 shall be immediately due from the POLR Supplier and payable to DLC
by offset pursuant to Section 7.5. Credits owing to the POLR Supplier reflected
on any invoices rendered pursuant to this Section 7.2 shall be immediately due
from DLC and netted against any payments owing to DLC on such invoice with any
excess amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the invoice reflecting such
excess is rendered.
7.3 Monthly Settlement Statement of Account for Preliminary Supplier
----------------------------------------------------------------
Charges. DLC shall, within ten (10) days following the end of each calendar
-------
month, provide a statement of account to the POLR Supplier setting forth all
Preliminary Supplier Charges invoiced during the immediately preceding calendar
month and adjusting such Preliminary Supplier Charges, as necessary, based on
the information then available to DLC. Payments owing to DLC reflected on any
statement of account rendered pursuant to this Section 7.3 shall be immediately
due from the POLR Supplier and payable to DLC by offset pursuant to Section 7.5.
Credits owing to the POLR Supplier reflected on any statement of account
rendered pursuant to this Section 7.3 shall be immediately due from DLC and
netted against any payments owing to DLC on such statement of account with any
excess amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the statement of account
reflecting such excess is rendered.
7.4 Monthly True-Up Statement of Account for Supplier Charges. DLC
---------------------------------------------------------
shall, after all customer accounts have been fully metered for a calendar month
10
(which shall occur approximately forty-five (45) days following the end of such
calendar month), provide a statement of account to the POLR Supplier adjusting
one or more prior statements of account rendered pursuant to Section 7.3 hereof
for the difference between Preliminary Supplier Charges and Supplier Charges for
such prior months. Payments owing to DLC reflected on any statement of account
rendered pursuant to this Section 7.4 shall be immediately due from the POLR
Supplier and payable to DLC by offset pursuant to Section 7.5. Credits owing to
the POLR Supplier reflected on any statement of account rendered pursuant to
this Section 7.4 shall be immediately due from DLC and netted against any
payments owing to DLC on such statement of account with any excess amount
payable to the POLR Supplier by increasing by the amount of any such excess the
amount of Net Billed Generation Revenue to be paid to the POLR Supplier under
Section 7.1 hereof on the day that the statement of account reflecting such
excess is rendered.
7.5 DLC Right to Offset.
-------------------
(a) In addition to any other right to offset against payments to
the POLR Supplier under this Agreement, DLC shall have the right to offset any
amounts the POLR Supplier owes DLC pursuant to Sections 7.2, 7.3 and 7.4 hereof
(except for such amounts reasonably disputed by the POLR Supplier) against the
amounts owed by DLC pursuant to Section 7.1 hereof. In doing so, on any
particular day, if an amount is owing to DLC pursuant to Section 7.2, Section
7.3 or Section 7.4 hereof, DLC may retain such portion of the Net Billed
Generation Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
for such day as an offset in satisfaction thereof; if any such amount owing to
DLC exceeds the Net Billed Generation Revenue otherwise owing to the POLR
Supplier under Section 7.1 hereof for such day, DLC may retain such Net Billed
Generation Revenue as an offset and withhold further payments of Net Billed
Generation Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
as an offset until the amount owing to DLC pursuant to Sections 7.2, 7.3 and 7.4
has been fully recovered by DLC.
(b) In addition to the right to offset set forth in Section
7.5(a), if, on any day after reviewing the E-schedules and FE Tally Sheet
described in Section 5.3 hereof attributable to the immediately preceding
calendar day, DLC determines that the Preliminary Supplier Charges for such day
exceed $5 million, such Preliminary Supplier Charges shall become immediately
due from the POLR Supplier and payable to DLC as an offset. In such an instance,
DLC may retain such portion of the Net Billed Generation Revenue otherwise owing
to the POLR Supplier under Section 7.1 hereof for such day equal to such
Preliminary Supplier Charges as an offset in satisfaction thereof; if any such
Preliminary Supplier Charges owing to DLC exceeds the Net Billed Generation
Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof for such
day, DLC may retain such Net Billed Generation Revenue as an offset and withhold
further payments of Net Billed Generation Revenue otherwise owing to the POLR
Supplier under Section 7.1 hereof as an offset until the amount of such
Preliminary Supplier Charges has been fully recovered by DLC.
11
7.6 Right to Immediate Payment and to Draw on Letter of Credit. In
----------------------------------------------------------
addition to the rights to offset under Section 7.5 hereof, DLC shall further
have the right to immediate payment from the POLR Supplier, and to draw upon the
letter(s) of credit posted by the POLR Supplier under the terms of this
Agreement, in the amounts and under the circumstances provided below:
(a) If at any time Preliminary Supplier Charges or Supplier
Charges in an amount in excess of $30 million are then due from the POLR
Supplier and payable to DLC under the terms of this Agreement and the POLR
Agreement, DLC shall provide notice of the same to the POLR Supplier and, upon
receipt thereof, the POLR Supplier shall make immediate payment to DLC of the
dollar amount of such Preliminary Supplier Charges or Supplier Charges, as the
case may be, in immediately available funds to the bank account designated by
DLC in Section 15.3 hereof.
(b) If, within ten (10) days following notice to the POLR
Supplier given by DLC pursuant to Section 7.6(a), DLC has not received payment
in full of the Preliminary Supplier Charges or Supplier Charges so noticed, then
DLC has the right to draw upon the letter(s) of credit posted by the POLR
Supplier under the terms of this Agreement in an amount up to, but not
exceeding, any portion of such Preliminary Supplier Charges or Supplier Charges
then unpaid by the POLR Supplier, and if DLC draws upon such letter(s) of
credit, such letter(s) of credit are insufficient to pay to DLC such Preliminary
Supplier Charges or Supplier Charges and the POLR Supplier fails to replace such
letter(s) of credit with letter(s) of credit in such amounts as are sufficient
to pay to DLC such Preliminary Supplier Charges or Supplier Charges, DLC shall
also have the right to terminate this Agreement upon ten (10) days written
notice to the POLR Supplier.
Section 7.9 is hereby amended and restated in its entirety as follows:
7.9 Survival. Notwithstanding any other provision of this Agreement to the
--------
contrary, the provisions of this Article VII, and the rights and obligations of
the Parties hereunder, shall survive the expiration of the term or the
termination of this Agreement for the purpose of satisfying the rights and
obligations of the Parties that arose or accrued prior to such termination or
expiration relating to the POLR Supply Service provided through the date of
termination or expiration of this Agreement.
Section 9.2(c) is hereby amended and restated in its entirety as follows:
(c) Following the earliest Rate Class Effective Date hereunder, if:
(i) the PUC issues an order requiring a change that will directly or
indirectly reduce or increase the Generation Rates (other than as
contemplated by the Capacity Agreement) or that will result in any
other material change to the Retail Tariff, in a manner that adversely
affects the
12
rights or obligations of a Party respecting matters under this
Agreement so as to cause such Party a Material Adverse Effect,
(ii) the PUC issues an order requiring a change to the Supplier Tariff
(other than as contemplated by the Capacity Agreement) in a manner
that adversely affects the rights or obligations of a Party respecting
matters under this Agreement so as to cause such Party a Material
Adverse Effect,
(iii) the FERC issues an order requiring a change (other than changes
to Schedule 9B to the OATT) in a manner that adversely affects the
rights or obligations of a Party respecting matters under this
Agreement so as to cause such Party a Material Adverse Effect,
(iv) there is any change in the rates of any Governmental Charges
imposed on or with respect to the Parties rights or obligations
hereunder, or in the manner in which any such Governmental Charges are
imposed, in either case in a manner that adversely affects the rights
or obligations of a Party respecting matters under this Agreement so
as to cause such Party a Material Adverse Effect, or
(v) the PJM West Protocols or FE Protocols are modified in a manner
that affects the rights and obligations of a Party respecting matters
under this Agreement so as to cause such Party a Material Adverse
Effect,
then, the affected Party may deliver written notice of the occurrence of any
such event(s) to the other Party (such notice, a "Renegotiation Notice").
Promptly after the delivery and receipt of a Renegotiation Notice, the Parties
shall, in good faith, attempt to negotiate a mutually satisfactory amendment to
this Agreement to restore the respective rights and obligations of the Parties
under this Agreement as they existed immediately prior to such event(s) or to
achieve another mutually satisfactory result. If within thirty (30) days
following the delivery of any such Renegotiation Notice the Parties fail to
agree upon any such amendment, the affected Party may then terminate the
Agreement by providing the other Party with fifteen (15) days' prior written
notice of such termination. Any amendment to this Agreement negotiated as a
result of a Renegotiation Notice shall be deemed to be retroactively effective
to the date on which the event(s) described in such Renegotiation Notice
occurred; provided, however, that if following any such event, the order giving
rise to such event is no longer in effect (or is modified in a manner described
in clause (i), (ii) or (iii) hereof) by virtue of a decision by a Governmental
Authority that has become final and non-appealable, then any such amendment
shall be of no further force and effect and this Agreement shall be read so as
not to include such amendment (and in the event such order is modified in a
manner described in clause (i), (ii) or (iii) hereof, the Parties may deliver a
Renegotiation Notice with respect thereto as otherwise contemplated hereunder).
Upon any termination pursuant to this Section 9.2(c), neither Party shall have
any further liability to the other Party under this Agreement, except for any
obligations that arose or accrued prior to the effective date of such
termination.
13
Section 9.2 is hereby amended by adding the following new section (d)
thereto:
(d) Following the earliest Rate Class Effective Date hereunder, if
following the issuance by the PUC of an order described in Section
6.2(b)(i) of the Capacity Agreement DLC notices the termination of the
Capacity Agreement pursuant to Section 6.2(b) thereof, then upon receiving
such written notice from DLC, the POLR Supplier may, by written notice to
DLC, designate the effective date of the termination of the Capacity
Agreement as the termination date of this Agreement. Any such notice to DLC
must be given, if at all, within ninety (90) days following the POLR
Supplier's receipt of DLC's notice of the termination of the Capacity
Agreement. Upon any termination pursuant to this Section 9.2(c), neither
Party shall have any further liability to the other Party under this
Agreement, except for any obligations that arose or accrued prior to the
effective date of such termination.
Article XV is hereby amended by adding the following new Sections 15.13 and
15.14 thereto:
15.13 Effect of Termination of the FE Capacity Agreement Only or
----------------------------------------------------------
Termination of the FE Capacity Agreement and the Capacity Agreement.
-------------------------------------------------------------------
(a) In the event that either the FE Capacity Agreement is terminated
or both the FE Capacity Agreement and the Capacity Agreement are terminated,
then, in either case, (i) all those amendments to this Agreement that became
effective on the Capacity Agreement Effective Date (and that are contained in
Schedule 2 to the Capacity Agreement, except for those in respect of this
Article XV) shall be of no further force and effect and this Agreement shall be
read so as not to include any such amendments and, for the avoidance of doubt,
except as amended below in this Section 15.13, the provisions of this Agreement
shall revert to the form in which such provisions appeared immediately prior to
the Capacity Agreement Effective Date, and (ii) this Agreement shall be further
amended as follows:
Section 1.1 shall be amended by deleting therefrom the definitions of
"Escrow Account" and "Escrow Agent".
Section 1.1 shall be amended by restating the following definitions in
their entirety to read as follows:
"DLC Control Area" means the DLC Zone.
----------------
"OATT" means DLC's Open Access Transmission Tariff, or its successor
----
(including, but not limited to, any applicable tariff under the PJM
West Protocols) and, as applicable, any stand-alone tariff sheets for
DLC relating to Schedule 9A and Schedule 9B formerly attached to DLC's
Open Access Transmission Tariff.
14
"Preliminary Supplier Charges" means an estimate of Supplier Charges
----------------------------
based on forecast Energy requirements (and associated losses) and
other data available at the time of the estimate including evidence of
Energy scheduled by the POLR Supplier to the DLC Control Area on a
day-ahead basis and using day-after E-schedules, as contemplated by
Section 5.2 hereof.
"Supplier Charges" means any charges to the POLR Supplier under this
----------------
Agreement, and any charges to the POLR Supplier as the "POLR Supplier"
under the Ancillary Services Agreement, including Supply Violation
Charges and Transmission Congestion Charges, RRRAS Charges Amounts (as
defined under the Ancillary Services Agreement, including any negative
EGS RRRAS Imbalance Amount described thereunder), and shall include
any adjustments necessary to account for DLC's costs in purchasing
Energy for Passthrough Power under the Interruptible Service, the
payment for which shall be the responsibility of the POLR Supplier,
and the revenues received by DLC from Interruptible Service customers
for the incremental charges for Energy related to the amount of
Passthrough Power actually supplied to such customers, which revenues
shall be credited to the POLR Supplier to the extent such revenues
have not been otherwise included in the Billed Generation Revenue
attributable to such Passthrough Power.
Section 1.1 shall be amended by amending the definition of "Net Billed
Generation Revenue" such that clause (ii) of the first sentence of
such definition is restated to read as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that prior to the
termination or expiration of the Ancillary Services Agreement, the
costs for RRRAS (as defined under the Ancillary Services Agreement)
are calculated using the rates set forth in Schedule 9B to the OATT as
in effect on the date of the Ancillary Services Agreement and the
costs for any other Ancillary Services (except for energy imbalance)
are calculated using the rates set forth in Schedule 9B to the OATT
then in effect, and provided further that following the termination or
expiration of the Ancillary Services Agreement, the costs attributable
to all Ancillary Services (except for energy imbalance) shall be
calculated using the rates then set forth in Schedule 9B to the OATT
then in effect).
Section 1.1 shall be amended by adding the following definitions
thereto:
15
"Ancillary Services Agreement" means that certain Amended and Restated
----------------------------
Ancillary Services Agreement, dated as of February 15, 2002 by and
between DLC and the POLR Supplier and attached to the Capacity
Agreement as Exhibit 1 thereto.
"Capacity Agreement" means that certain Capacity Agreement, dated as
------------------
of February 15, 2002 by and between DLC and the POLR Supplier relating
to certain capacity obligations.
"Congestion Payment" means, so long as the Capacity Agreement remains
------------------
in effect, $108,333.33 to be paid by DLC, on a monthly basis within
ten days following the end of each calendar month (beginning with the
month during which the effective date of the termination of the FE
Capacity Agreement occurs) as an additional amount that is due and
payable to the POLR Supplier pursuant to Section 7.3 hereof; provided,
however, that in the event the Capacity Agreement is terminated, then
beginning only after the effective date of the termination of the
Capacity Agreement and continuing through the term of this Agreement,
the Congestion Payment shall be increased to $333,333.33 to be paid by
DLC, on a monthly basis within ten days following the end of each
calendar month (beginning with the month during which the effective
date of the termination of the Capacity Agreement occurs) as an
additional amount that is due and payable to the POLR Supplier
pursuant to Section 7.3 hereof. The Parties recognize and agree that
no increase in the Congestion Payment is required while the Capacity
Agreement remains in effect.
"DLC Zone" means the DLC service territory under the PJM West
--------
Protocols as such service territory is described in the "List of
Communities Served" under DLC's Retail Tariff on file with the PUC on
the date of the Capacity Agreement.
"DLC Zone Hourly Forecast" means, for each hour, DLC's day-ahead
------------------------
forecast of the Energy requirements of the DLC Zone, as delivered by
DLC to the POLR Supplier pursuant to Section 5.1 hereof.
"Material Adverse Effect" means any event or condition that has a
-----------------------
material adverse effect on the rights or obligations of the affected
Party under this Agreement; provided, however, that an increase or
decrease in the market price of Energy that renders the payments to
the POLR Supplier hereunder no longer reflective or market conditions
shall not constitute a Material Adverse Effect.
"PJM West" means the PJM West Region of PJM Interconnection, L.L.C.,
--------
and any successor thereto (including any modification, and any
successor, thereto resulting from any regional transmission
organization for the northeastern United States).
16
"PJM West Protocols" means the provisions, protocols, rules or other
------------------
requirements of any tariff or equivalent document, reliability
assurance agreement, operating agreement, transmission owner agreement
or similar agreement, manuals or similar documents, and their
respective successors, then in effect in and applicable to PJM West.
"PJM West Surcharge" means any non-by-passable surcharge that may be
------------------
imposed on DLC's customers to permit DLC to recover any incremental
costs for capacity and Ancillary Services resulting from DLC joining
PJM West, any grid management or other fees which may be charged to
DLC based on PJM West start-up and operating costs and other similar
fees and costs.
"POLR Energy Imbalance" means any difference between the hourly Energy
---------------------
supplied by the POLR Supplier under this Agreement and the POLR Supply
Amount.
"Transmission Congestion Charges" means all transmission congestion
-------------------------------
charges, losses, if any, and similar charges, costs and fees imposed
under the PJM West Protocols and associated with the delivery of
Energy by the POLR Supplier to and within the DLC Zone pursuant to
this Agreement and by the POLR Supplier (as defined in the POLR I
Agreement) to and within the DLC Zone pursuant to the POLR I
Agreement.
"Transmission Payment" means, beginning only after the effective date
--------------------
of the termination of the Capacity Agreement and continuing through
the term of this Agreement, $750,000 to be paid by DLC, on a monthly
basis within ten days following the end of each calendar month
(beginning with the month during which the effective date of the
termination of the Capacity Agreement occurs) as an additional amount
that is due and payable to the POLR Supplier pursuant to Section 7.3
hereof. The Parties recognize and agree that no Transmission Payment
is required while the Capacity Agreement remains in effect.
Section 1.2 shall be amended by adding the following two sentences to
the end thereof:
For the avoidance of doubt, the Parties acknowledge and agree that the
term "losses" as it may be used throughout this Agreement shall
expressly exclude therefrom any 500 kilovolt losses of PJM
Interconnection, L.L.C., unless such 500 kilovolt losses occur due to
the POLR Supplier's delivery of the DLC POLR Supply Amount, in which
case "losses" shall include any 500 kilovolt losses of PJM
Interconnection, L.L.C. resulting therefrom. In addition, the Parties
expressly agree that notwithstanding
17
any other provision of this Agreement to the contrary, Generation
Rates shall not include any PJM West Surcharges (and, as a result,
Billed Generation Revenue shall not include any PJM West Surcharges
nor shall it be reduced by the amount of any PJM West Surcharges in
calculating Net Billed Generation Revenue) and that DLC, and not the
POLR Supplier, shall exclusively be entitled to receive any and all
PJM West Surcharges imposed on or billed to DLC's customers as a
result of the Retail Tariff Changes (as defined under the Capacity
Agreement) or otherwise.
Section 3.3 shall be amended and restated in its entirety as follows:
Section 3.3 Letter of Credit. The POLR Supplier shall post a $10
----------------
million irrevocable letter of credit issued by a Commercial Bank in
form and substance reasonably acceptable to DLC, as such letter of
credit may be supplemented or replaced pursuant to the terms of this
Agreement, which letter(s) of credit shall remain in place for such
amount for the entire term of this Agreement. In the event that the
POLR Supplier is required to increase the amount of such letter(s) of
credit pursuant to the terms of this Agreement, then such letter(s) of
credit for such increased amount shall remain in place for such time
as may be required under the terms of this Agreement, provided,
however, that, notwithstanding any other provision of this Agreement
to the contrary, at all times during the term of this Agreement the
minimum amount of any such letter(s) of credit posted by the POLR
Supplier shall be equal to or greater than $10 million.
Section 3.5 shall be amended and restated in its entirety as follows:
Section 3.5 Additional Security. If at any time during the term
-------------------
of this Agreement the Certifying Company's Tangible Net Worth is below
the Minimum Tangible Net Worth and the Certifying Company's investment
rating is below the Minimum Investment Rating, then DLC, in its sole
discretion, may require, upon ten (10) Business Days' written notice
to the POLR Supplier, that the POLR Supplier supplement or replace the
letter(s) of credit then currently posted pursuant to this Article III
with another irrevocable letter of credit issued by a Commercial Bank
in form and substance reasonably acceptable to DLC such that the
aggregate amount of such letter(s) of credit equals $50 million, which
letter(s) of credit shall remain in place for such aggregate amount
until such time as the Certifying Company's Tangible Net Worth is
equal to or greater than the Minimum Tangible Net Worth or the
Certifying Company's investment rating is equal to or greater than the
Minimum Investment Rating (at which time, although the letter of
credit requirements in this Section 3.5 shall not apply, the POLR
Supplier shall
18
continue to comply with any other applicable letter of credit
requirements set forth in this Article III).
Section 4.1(b) shall be amended and restated in its entirety as
follows:
(b) Points of Delivery. The POLR Supplier shall deliver the POLR
------------------
Supply Amount to the DLC Zone.
Section 4.1(d) shall be further amended such that the first sentence
of such section is restated to read as follows:
The POLR Supplier acknowledges and agrees that DLC shall be
responsible for securing and providing all Ancillary Services
associated with DLC's retail customers classified in a Rate Class for
which the Transition Period has terminated and Company Use Energy
(provided that by separate, mutual agreement between the POLR Supplier
and DLC, the POLR Supplier may provide certain or all of such
Ancillary Services).
Section 4.2 (h) shall be amended by adding a new subsection (iv)
thereto that reads as follows:
(iv) As soon as DLC receives schedule and settlement information from
PJM West relating to the Energy supplied by the POLR Supplier pursuant
to this Agreement, DLC shall make such information available to the
POLR Supplier, or DLC shall otherwise use all commercially reasonable
efforts necessary to cause PJM West to give the POLR Supplier
real-time access to scheduling and settlement information related to
Energy that is scheduled and delivered to the DLC Zone pursuant to
this Agreement.
Section 4.2(i) shall be further amended and restated in its entirety
as follows:
(i) Ancillary Services. DLC shall be responsible for securing and
------------------
providing all Ancillary Services associated with DLC's retail
customers classified in a Rate Class for which the Transition Period
has terminated and Company Use Energy (provided that by separate,
mutual agreement between the POLR Supplier and DLC, the POLR Supplier
may provide certain or all of such Ancillary Services).
19
Section 4.2 shall be further amended by adding a new Section 4.2(o)
thereto which shall read in its entirety as follows:
4.2(o) Fixed Transmission Rights and Network Resource
----------------------------------------------
Designations. Following the termination of the Capacity Agreement and
------------
upon receipt of written notice from the POLR Supplier requesting such
transfer, DLC shall transfer to the POLR Supplier its rights to those
"Fixed Transmission Rights", if any, under the PJM West Protocols that
are associated, from time to time, with such amount of megawatts as
are designated from the POLR Supplier's resources as "Network
Resources" under the PJM West Protocols. In addition, following
termination of the Capacity Agreement, DLC, at the POLR Supplier's
request, shall, as permitted under the PJM West Protocols, designate
such amount of megawatts as the POLR Supplier may elect from its
resources as "Network Resources" under the PJM West Protocols.
Sections 4.3 (a), (b) and (c) shall be amended and restated in their
entirety as follows:
4.3 POLR Energy Imbalance and Supply Violation Charges. For any
--------------------------------------------------
hour during which there is POLR Energy Imbalance, the POLR Supplier
shall pay to DLC, in accordance with the billing procedures set forth
in Article VII of this Agreement, the following amounts, as
applicable:
(a) POLR Energy Imbalance. If the POLR Supplier fails to deliver
---------------------
to the DLC Zone the POLR Supply Amount for such hour, the POLR
Supplier shall in the event of an under-delivery, pay to DLC an amount
of dollars equal to the charge under the PJM West Protocols applicable
to an under-delivery of an amount of Energy equal to the POLR Energy
Imbalance, and in the event of an over-delivery, receive a credit from
DLC in an amount of dollars equal to the credit under the PJM West
Protocols applicable to an over-delivery of an amount of Energy equal
to the POLR Energy Imbalance (net of any costs DLC incurs in disposing
of such Energy). For the avoidance of doubt, the POLR Supplier's
delivery of Energy to the DLC Zone in any given hour shall first be
allocated to the POLR Supply Amount under the POLR I Agreement and
then to the POLR Supply Amount under this Agreement. In addition, if
the POLR Supplier's failure to deliver the POLR Supply Amount in
accordance with Section 4.1 hereof causes DLC to Shed Load during any
hour, the POLR Supplier shall pay to DLC, in addition to any amounts
otherwise due hereunder, $1,000 per megawatt-hour of Shed Load
attributable to such failure plus any out-of-pocket costs incurred by
DLC as the result of claims, penalties, repairs, expenses or other
damages resulting from such Shed Load; provided, however, that if
during any such hour (x) the POLR
20
Supplier delivers the full output of all of its operable generation
(e.g., all generation in the DLC Control Area and the FE Control Area
that is not on forced or planned outage and/or forced or planned
curtailments) to the DLC Control Area (and delivers to DLC a
certificate executed by a duly authorized officer of the POLR Supplier
to such effect) and nevertheless fails to deliver the POLR Supply
Amount and (y) DLC is unable to procure alternative sources of Energy
in the market sufficient to compensate for the POLR Supplier's
under-delivery, then the POLR Supplier shall pay to DLC, in addition
to any amounts otherwise due hereunder, but in lieu of the $1,000 per
megawatt-hour of Shed Load described above, $100 per megawatt-hour of
Shed Load attributable to such failure plus any of the aforementioned
out-of-pocket costs incurred by DLC. For purposes of this Section
4.3(a), DLC shall determine the amount of such Shed Load using Good
Utility Practice.
(b) Reserved.
--------
(c) Reserved.
--------
Article V shall be amended and restated in its entirety as follows:
5.1 Load Forecasting.
----------------
(a) On a daily basis, DLC shall deliver to the POLR Supplier, no
later than three hours prior to the close of the ACAP market then set
by the PJM West Protocols, the POLR Supply Forecasts and the DLC Zone
Hourly Forecasts, as applicable, for the following calendar day. DLC
shall provide updates to the POLR Supply Forecasts and the DLC Zone
Hourly Forecasts, as applicable, delivered to the POLR Supplier by
delivering to the POLR Supplier a real-time POLR Supply Forecast and
the DLC Zone Hourly Forecasts, as applicable, for each hour.
(b) In addition, DLC shall deliver to the POLR Supplier, as often
as is practicable but in no event later than the end of each month, a
report listing known changes in the POLR Supply Amount, as well as any
know changes to the Schedules attached hereto, which changes shall be
incorporated into and become a part of the Schedules to which they
relate, subject, however, to the prior consent of the POLR Supplier to
such changes to such Schedules if such consent is required under this
Agreement.
5.2 Scheduling. On a daily basis, the POLR Supplier shall
----------
schedule, pursuant to the PJM West Protocols, the POLR Supply Amounts,
provided, that any portion of any POLR Supply Amount not scheduled on
a day-ahead basis shall be scheduled, pursuant to the PJM
21
West Protocols, by the POLR Supplier using day-after E-schedules
according to such rules and procedures as may be then required by the
PJM West Protocols. DLC shall provide the POLR Supplier with a copy of
any Dispatch Notice issued pursuant to the DLC Must-Run Agreements at
the same time such Dispatch Notice is given to the owner(s) of the
Cheswick and/or Elrama generating plants. Within two (2) hours of
receipt of any such Dispatch Notice, the POLR Supplier shall submit to
PJM West (with a copy provided simultaneously to DLC of) a revised
schedule incorporating the DLC Must-Run Purchases referenced in such
Dispatch Notice.
5.3 Reconciliation. Any POLR Energy Imbalance shall be hourly
--------------
energy imbalance attributable to the POLR Supplier for purposes of
calculating Supply Violation Charges. On a daily basis, no later than
the prevailing time deadline in the PJM West Protocols for internal
transactions, the POLR Supplier shall have completed any E-schedules
contemplated by Section 5.2 hereof in respect of the POLR Supply
Amounts for the preceding calendar day.
Section 7.1 shall be amended by adding the following Section 7.1(d)
thereto:
(d) In addition to any amounts paid by DLC to the POLR Supplier
pursuant to the foregoing provisions, during the term of the Ancillary
Services Agreement, DLC shall pay to the POLR Supplier all RRRAS
Payment Amounts (as defined under the Ancillary Services Agreement)
due and payable under the Ancillary Services Agreement by summing the
RRRAS Payment Amounts for each day of a particular calendar month on
the twentieth calendar following the last day of such calendar month
and increasing the amount of the Net Billed Generation Revenue to be
paid to the POLR Supplier on such calendar day pursuant to Section
7.1(a) hereof by an amount of dollars equal to such summed RRRAS
Payment Amounts.
Sections 7.2, 7.3, 7,4, 7.5 and 7.6 shall be amended and restated in
their entirety as follows:
7.2 Weekly Invoicing of Preliminary Supplier Charges. DLC shall,
------------------------------------------------
on each Monday, invoice the POLR Supplier for all Preliminary Supplier
Charges attributable to the preceding calendar week. Invoices rendered
pursuant to this Section 7.2 shall be immediately due from the POLR
Supplier and payable to DLC by offset pursuant to Section 7.5. Credits
owing to the POLR Supplier reflected on any invoices rendered pursuant
to this Section 7.2 shall be immediately due from DLC and
22
netted against any payments owing to DLC on such invoice with any
excess amount payable to the POLR Supplier by increasing by the amount
of any such excess the amount of Net Billed Generation Revenue to be
paid to the POLR Supplier under Section 7.1 hereof on the day that the
invoice reflecting such excess is rendered.
7.3 Monthly Settlement Statement of Account for Preliminary
--------------------------------------------------------
Supplier Charges. DLC shall, within ten (10) days following the end of
----------------
each calendar month, provide a statement of account to the POLR
Supplier setting forth all Preliminary Supplier Charges invoiced
during the immediately preceding calendar month and adjusting such
Preliminary Supplier Charges, as necessary, based on the information
then available to DLC. Payments owing to DLC reflected on any
statement of account rendered pursuant to this Section 7.3 shall be
immediately due from the POLR Supplier and payable to DLC by offset
pursuant to Section 7.5. Credits owing to the POLR Supplier reflected
on any statement of account rendered pursuant to this Section 7.3, or
any amounts payable to the POLR Supplier as a Congestion Payment or
Transmission Payment as of such date, shall be immediately due from
DLC and netted against any payments owing to DLC on such statement of
account with any excess amount payable to the POLR Supplier by
increasing by the amount of any such excess the amount of Net Billed
Generation Revenue to be paid to the POLR Supplier under Section 7.1
hereof on the day that the statement of account reflecting such excess
is rendered.
7.4 Monthly True-Up Statement of Account for Supplier Charges.
----------------------------------------------------------
DLC shall, after all customer accounts have been fully metered for a
calendar month (which shall occur approximately forty-five (45) days
following the end of such calendar month), provide a statement of
account to the POLR Supplier adjusting one or more prior statements of
account rendered pursuant to Section 7.3 hereof for the difference
between Preliminary Supplier Charges and Supplier Charges for such
prior months. Payments owing to DLC reflected on any statement of
account rendered pursuant to this Section 7.4 shall be immediately due
from the POLR Supplier and payable to DLC by offset pursuant to
Section 7.5. Credits owing to the POLR Supplier reflected on any
statement of account rendered pursuant to this Section 7.4 shall be
immediately due from DLC and netted against any payments owing to DLC
on such statement of account with any excess amount payable to the
POLR Supplier by increasing by the amount of any such excess the
amount of Net Billed Generation Revenue to be paid to the POLR
Supplier under Section 7.1 hereof on the day that the statement of
account reflecting such excess is rendered.
7.5 DLC Right to Offset.
-------------------
23
(a) In addition to any other right to offset against payments to
the POLR Supplier under this Agreement, DLC shall have the right to
offset any amounts the POLR Supplier owes DLC pursuant to Sections
7.2, 7.3 and 7.4 hereof (except for such amounts reasonably disputed
by the POLR Supplier) against the amounts owed by DLC pursuant to
Section 7.1 hereof. In doing so, on any particular day, if an amount
is owing to DLC pursuant to Section 7.2, Section 7.3 or Section 7.4
hereof, DLC may retain such portion of the Net Billed Generation
Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
for such day as an offset in satisfaction thereof; if any such amount
owing to DLC exceeds the Net Billed Generation Revenue otherwise owing
to the POLR Supplier under Section 7.1 hereof for such day, DLC may
retain such Net Billed Generation Revenue as an offset and withhold
further payments of Net Billed Generation Revenue otherwise owing to
the POLR Supplier under Section 7.1 hereof as an offset until the
amount owing to DLC pursuant to Sections 7.2, 7.3 and 7.4 has been
fully recovered by DLC.
(b) In addition to the right to offset set forth in Section
7.5(a), if, on any day after reviewing the E-schedules described in
Section 5.3 hereof attributable to the immediately preceding calendar
day, DLC determines that the Preliminary Supplier Charges for such day
exceed $5 million, such Preliminary Supplier Charges shall become
immediately due from the POLR Supplier and payable to DLC as an
offset. In such an instance, DLC may retain such portion of the Net
Billed Generation Revenue otherwise owing to the POLR Supplier under
Section 7.1 hereof for such day equal to such Preliminary Supplier
Charges as an offset in satisfaction thereof; if any such Preliminary
Supplier Charges owing to DLC exceeds the Net Billed Generation
Revenue otherwise owing to the POLR Supplier under Section 7.1 hereof
for such day, DLC may retain such Net Billed Generation Revenue as an
offset and withhold further payments of Net Billed Generation Revenue
otherwise owing to the POLR Supplier under Section 7.1 hereof as an
offset until the amount of such Preliminary Supplier Charges has been
fully recovered by DLC.
7.6 Right to Immediate Payment and to Draw on Letter of Credit.
-----------------------------------------------------------
In addition to the rights to offset under Section 7.5 hereof, DLC
shall further have the right to immediate payment from the POLR
Supplier, and to draw upon the letter(s) of credit posted by the POLR
Supplier under the terms of this Agreement, in the amounts and under
the circumstances provided below:
(a) If at any time Preliminary Supplier Charges or Supplier
Charges in an amount in excess of $30 million are then due from the
POLR Supplier and payable to DLC under the terms of this Agreement and
the POLR Agreement, DLC shall provide notice of the same to the POLR
Supplier and, upon receipt thereof, the POLR Supplier shall make
24
immediate payment to DLC of the dollar amount of such Preliminary
Supplier Charges or Supplier Charges, as the case may be, in
immediately available funds to the bank account designated by DLC in
Section 15.3 hereof.
(b) If, within ten (10) days following notice to the POLR
Supplier given by DLC pursuant to Section 7.6(a), DLC has not received
payment in full of the Preliminary Supplier Charges or Supplier
Charges so noticed, then DLC has the right to draw upon the letter(s)
of credit posted by the POLR Supplier under the terms of this
Agreement in an amount up to, but not exceeding, any portion of such
Preliminary Supplier Charges or Supplier Charges then unpaid by the
POLR Supplier, and if DLC draws upon such letter(s) of credit, such
letter(s) of credit are insufficient to pay to DLC such Preliminary
Supplier Charges or Supplier Charges and the POLR Supplier fails to
replace such letter(s) of credit with letter(s) of credit in such
amounts as are sufficient to pay to DLC such Preliminary Supplier
Charges or Supplier Charges, DLC shall also have the right to
terminate this Agreement upon ten (10) days written notice to the POLR
Supplier.
Section 7.9 shall be amended and restated in its entirety as follows:
7.9 Survival. Notwithstanding any other provision of this
--------
Agreement to the contrary, the provisions of this Article VII, and the
rights and obligations of the Parties hereunder, shall survive the
expiration of the term or the termination of this Agreement for the
purpose of satisfying the rights and obligations of the Parties that
arose or accrued prior to such termination or expiration relating to
the POLR Supply Service provided through the date of termination or
expiration of this Agreement.
Section 9.2(c) shall be amended and restated in its entirety as
follows:
(c) Following the earliest Rate Class Effective Date hereunder, if:
(i) the PUC issues an order requiring a change that will directly or
indirectly reduce or increase the Generation Rates (other than as
contemplated by the Capacity Agreement when initially executed) or
that will result in any other material change to the Retail Tariff, in
a manner that adversely affects the rights or obligations of a Party
respecting matters under this Agreement so as to cause such Party a
Material Adverse Effect,
(ii) the PUC issues an order requiring a change to the Supplier Tariff
(other than as contemplated by the Capacity Agreement when initially
25
executed) in a manner that adversely affects the rights or obligations
of a Party respecting matters under this Agreement so as to cause such
Party a Material Adverse Effect,
(iii) the FERC issues an order requiring a change (other than changes
to Schedule 9B to the OATT) in a manner that adversely affects the
rights or obligations of a Party respecting matters under this
Agreement so as to cause such Party a Material Adverse Effect,
(iv) there is any change in the rates of any Governmental Charges
imposed on or with respect to the Parties rights or obligations
hereunder, or in the manner in which any such Governmental Charges are
imposed, in either case in a manner that adversely affects the rights
or obligations of a Party respecting matters under this Agreement so
as to cause such Party a Material Adverse Effect, or
(v) the PJM West Protocols or FE Protocols are modified in a manner
that affects the rights and obligations of a Party respecting matters
under this Agreement so as to cause such Party a Material Adverse
Effect,
then, the affected Party may deliver written notice of the occurrence
of any such event(s) to the other Party (such notice, a "Renegotiation
Notice"). Promptly after the delivery and receipt of a Renegotiation
Notice, the Parties shall, in good faith, attempt to negotiate a
mutually satisfactory amendment to this Agreement to restore the
respective rights and obligations of the Parties under this Agreement
as they existed immediately prior to such event(s) or to achieve
another mutually satisfactory result. If within thirty (30) days
following the delivery of any such Renegotiation Notice the Parties
fail to agree upon any such amendment, the affected Party may then
terminate the Agreement by providing the other Party with fifteen (15)
days' prior written notice of such termination. Any amendment to this
Agreement negotiated as a result of a Renegotiation Notice shall be
deemed to be retroactively effective to the date on which the event(s)
described in such Renegotiation Notice occurred; provided, however,
that if following any such event, the order giving rise to such event
is no longer in effect (or is modified in a manner described in clause
(i), (ii) or (iii) hereof) by virtue of a decision by a Governmental
Authority that has become final and non-appealable, then any such
amendment shall be of no further force and effect and this Agreement
shall be read so as not to include such amendment (and in the event
such order is modified in a manner described in clause (i), (ii) or
(iii) hereof, the Parties may deliver a Renegotiation Notice with
respect thereto as otherwise contemplated hereunder). Upon any
termination pursuant to this Section 9.2(c), neither Party shall have
any further liability to the other Party under this Agreement, except
for any obligations that arose or accrued prior to the effective date
of such termination.
26
(b) In addition to the foregoing and notwithstanding any other
provision of this Section 15.13 to the contrary, in the event, and only in the
event, that the FE Capacity Agreement is terminated but the Capacity Agreement
is not terminated, this Agreement shall be further amended as set forth below
(provided, however, that immediately upon the termination of the Capacity
Agreement all such further amendments to this Agreement shall be of no further
force or effect and this Agreement shall be read so as not to include any such
further amendments):
Section 1.1 shall be further amended by restating the following
definition in its entirety to read as follows:
"Supplier Charges" means any charges to the POLR Supplier under this
----------------
Agreement, any charges to the POLR Supplier as the "Supplier" under
the Capacity Agreement, and any charges to the POLR Supplier as the
"POLR Supplier" under the Ancillary Services Agreement, including
Supply Violation Charges, Transmission Congestion Charges, ACAP Market
Transaction Costs (as defined under the Capacity Agreement), Supplier
ACAP Deficiency Charges (as defined under the Capacity Agreement),
RRRAS Charge Amounts (as defined under the Ancillary Services
Agreement, including any negative EGS RRRAS Imbalance Amount described
thereunder), and shall include any adjustments necessary to account
for DLC's costs in purchasing Energy for Passthrough Power under the
Interruptible Service, the payment for which shall be the
responsibility of the POLR Supplier, and the revenues received by DLC
from Interruptible Service customers for the incremental charges for
Energy related to the amount of Passthrough Power actually supplied to
such customers, which revenues shall be credited to the POLR Supplier
to the extent such revenues have not been otherwise included in the
Billed Generation Revenue attributable to such Passthrough Power.
Section 1.1 shall be further amended to add the following additional
definitions:
"Ancillary Services Agreement" means that certain Amended and Restated
----------------------------
Ancillary Services Agreement, dated as of February 15, 2002 by and
between DLC and the POLR Supplier and attached to the Capacity
Agreement as Exhibit 1 thereto.
"Capacity Agreement" means that certain Capacity Agreement, dated as
------------------
of February 15, 2002, by and between DLC and the POLR Supplier
relating to certain capacity obligations.
"Capacity Agreement Effective Date" means the "Effective Date" as
---------------------------------
defined in the Capacity Agreement.
27
The last sentence of Section 4.2(j) shall be further amended and
restated in its entirety as follows:
In addition, DLC agrees to refrain from filing with the PUC any
request for modification of the Generation Rates (other than (x) as
contemplated by the Retail Tariff Changes (as defined under the
Capacity Agreement) together with such changes to the Retail Tariff
Changes as may have been acceptable to DLC on or prior to the Capacity
Agreement Effective Date, and (y) a request by DLC for a change in the
PJM West Surcharge), unless the Parties shall mutually agree
otherwise.
(c) Finally, for the avoidance of doubt, and notwithstanding any other
provision of this Section 15.13 to the contrary, in the event that the
conditions to the effectiveness of Section 15.14 of this Agreement have been
satisfied prior to the satisfaction of the conditions to the effectiveness of
this Section 15.13, and subsequent thereto the FE Capacity Agreement is
terminated, then the amendments made pursuant to Section 15.14 of this Agreement
shall be of no further force or effect and this Agreement shall be read so as to
exclude therefrom, for all purposes whatsoever, such amendments, and the
provisions of Section 15.13(a) shall be the sole effective amendments to this
Agreement pursuant to this Article XV.
15.14 Effect of Termination of Capacity Agreement Only. In the
------------------------------------------------
event that the Capacity Agreement is terminated but the FE Capacity Agreement is
not terminated, this Agreement shall be amended as follows:
Section 1.1 shall be amended by restating the following definition in
its entirety:
"FE Swap Percentage" means sixty-five percent (65%).
------------------
Section 1.1 shall be further amended by amending the definition of
"Net Billed Generation Revenue" such that clause (ii) of the first
sentence of such definition is restated to read as follows:
(ii) DLC's costs attributable to Ancillary Services (except for energy
imbalance) associated therewith (provided that prior to the
termination or expiration of the Ancillary Services Agreement, the
costs for RRRAS (as defined under the Ancillary Services Agreement)
are calculated using the rates set forth in Schedule 9B to the OATT as
in effect on the date of the Ancillary Services Agreement and the
costs for any other Ancillary Services (except for energy imbalance)
are calculated using the rates set
28
forth in Schedule 9B to the OATT then in effect, and provided further
that following the termination or expiration of the Ancillary Services
Agreement, the costs attributable to all Ancillary Services (except
for energy imbalance) shall be calculated using the rates then set
forth in Schedule 9B to the OATT then in effect).
Section 1.1 shall be amended by adding the following definition
thereto:
"Congestion Payment" means, beginning only after the effective date of
------------------
the termination of the Capacity Agreement and continuing until the
earlier of the termination of the FE Capacity Agreement or the
termination or expiration of this Agreement, $225,000 to be paid by
DLC, on a monthly basis within ten days following the end of each
calendar month (beginning with the month during which the effective
date of the termination of the Capacity Agreement occurs) as an
additional amount that is due and payable to the POLR Supplier
pursuant to Section 7.3 hereof. The Parties recognize and agree that
no Congestion Payment is required while the Capacity Agreement remains
in effect.
Section 7.3 shall be amended and restated in its entirety to read as
follows:
7.3 Monthly Settlement Statement of Account for Preliminary
-------------------------------------------------------
Supplier Charges. DLC shall, within ten (10) days following the end of
----------------
each calendar month, provide a statement of account to the POLR
Supplier setting forth all Preliminary Supplier Charges invoiced
during the immediately preceding calendar month and adjusting such
Preliminary Supplier Charges, as necessary, based on the information
then available to DLC. Payments owing to DLC reflected on any
statement of account rendered pursuant to this Section 7.3 shall be
immediately due from the POLR Supplier and payable to DLC by offset
pursuant to Section 7.5. Credits owing to the POLR Supplier reflected
on any statement of account rendered pursuant to this Section 7.3, or
any amounts payable to the POLR Supplier as a Congestion Payment as of
such date, shall be immediately due from DLC and netted against any
payments owing to DLC on such statement of account with any excess
amount payable to the POLR Supplier by increasing by the amount of any
such excess the amount of Net Billed Generation Revenue to be paid to
the POLR Supplier under Section 7.1 hereof on the day that the
statement of account reflecting such excess is rendered.
29
SCHEDULE 3
RETAIL TARIFF CHANGES
NEW PROPOSED RIDER NO. 15 - PJM WEST SURCHARGE
----------------------------------------------
(Applicable to All Rates)
In addition to all other charges provided in this Tariff, a non-bypassable
surcharge will apply to all billed consumption on any bills rendered by the
Company under this Tariff during the period beginning at one minute after 11:59
p.m. (eastern time) on the day prior to the date on which the Company joins PJM
West and continuing through one minute after 11.59 pm (eastern time) on December
31, 2004, as set forth for each rate class and calculated in the manner
described below pursuant to the Pennsylvania Public Utility Commission
authorization of (the "PJM West Surcharge"). The PJM West Surcharge
------------
is intended to compensate the Company for any incremental costs for capacity and
ancillary services resulting from the Company joining PJM West, and any grid
management or other fees which may be charged to the Company based on PJM West
start-up and operating costs and other similar fees and costs. The portion of
the PJM West Surcharge related to incremental costs for capacity and ancillary
services is fixed, while the portion of the PJM West Surcharge related to any
grid management, start-up costs or other fees is subject to adjustment (up or
down) as described below.
XXX Xxxx Xxxxxxxxx 0/ 0/
- -
--------------------------------------------------------------------------------
Xxxxxxxxxxx Incremental Total
ACAP and Grid Management, Start-Up PJM West
Ancillary Services Charges and Other Charges* Surcharge*
cents per cents per cents per
kilowatt-hour kilowatt-hour kilowatt-hour
--------------------------------------------------------------------------------
RA 0.4174 0.0552 0.4726
--------------------------------------------------------------------------------
RS 0.4214 0.0552 0.4766
--------------------------------------------------------------------------------
RH 0.4073 0.0552 0.4625
--------------------------------------------------------------------------------
GS/GM 0.5389 0.0552 0.5941
--------------------------------------------------------------------------------
GMH 0.4837 0.0552 0.5389
--------------------------------------------------------------------------------
GL 0.3946 0.0552 0.4498
--------------------------------------------------------------------------------
GLH 0.4174 0.0552 0.4726
--------------------------------------------------------------------------------
X 0.0000 0.0000 0.0000
--------------------------------------------------------------------------------
XXXX 0.4486 0.0552 0.5038
--------------------------------------------------------------------------------
AL 0.0000 0.0552 0.0552
--------------------------------------------------------------------------------
SE 0.1142 0.0552 0.1694
--------------------------------------------------------------------------------
SM 0.1155 0.0552 0.1707
--------------------------------------------------------------------------------
SH 0.0985 0.0552 0.1537
--------------------------------------------------------------------------------
MTS 0.3353 0.0552 0.3905
--------------------------------------------------------------------------------
PAL 0.0850 0.0552 0.1402
--------------------------------------------------------------------------------
* Subject to adjustment
1/ In the event that the Company's capacity agreement with Orion Power MidWest,
-
L.P. is terminated, and in such an event only for so long as the Company's
capacity agreement with FirstEnergy Solutions Corp. remains in effect, the PJM
West Surcharge will be increased so that the Company recovers an additional
amount equal to $2.7 million on an annualized basis to compensate the Company
for additional congestion-related expenses that will be incurred by the Company
pursuant to the Company's POLR arrangement with Orion Power MidWest, L.P. in the
event of such a termination.
In the event that the Company's capacity agreement with FirstEnergy Solutions
Corp. is terminated, and in such an event only for so long as the Company's
capacity agreement with Orion Power MidWest, L.P remains in effect, the PJM West
Surcharge will be increased so that the Company recovers (i) an additional
amount equal to $1.3 million on an annualized basis to compensate the Company
for additional congestion-related expenses that will be incurred by the Company
pursuant to the Company's POLR arrangement with Orion Power MidWest, L.P. in the
event of such a termination, and (ii) an additional amount equal to $9 million
on an annualized basis to compensate the Company for additional
transmission-related expenses that will be incurred by the Company pursuant to
the Company's capacity agreement with Orion Power MidWest, L.P. in the event of
such a termination.
In the event that the Company's capacity agreement with FirstEnergy Solutions
Corp. is terminated and the Company's capacity agreement with Orion Power
MidWest, L.P. is terminated, then any increase to the PJM West Surcharge
contemplated by the two immediately preceding sentences shall no longer be
effective and the PJM West Surcharge will instead be increased so that the
Company recovers (i) an additional amount equal to $4 million on an annualized
basis to compensate the Company for additional congestion-related expenses that
will be incurred by the Company pursuant to the Company's POLR arrangement with
Orion Power MidWest, L.P. in the event of such terminations, and (ii) an
additional amount equal to $9 million on an annualized basis to compensate the
Company for additional transmission-related expenses that will be incurred by
the Company pursuant to the Company's POLR arrangement with Orion Power MidWest,
L.P. in the event of such terminations.
2/ Any revenues collected under this rider are subject to the state tax
-
adjustment under Rider 10.
On an annual basis, or such more frequent basis as the Company may from time to
time select, the Company will adjust any Grid Management, Start-Up, and Other
Charges used to calculate the PJM West Surcharge as may be necessary to fully
reconcile revenues collected from customers and costs for start-up and operating
costs and similar fees imposed on the Company by joining PJM West (and to
account for any additional payment then required to be made by the Company to
its POLR Supplier pursuant to the Pennsylvania Public Utility Commission
authorization of at page ). Such adjustments shall take into
------------ ---
account any over or under-recovered balances from a prior period, gross receipts
taxes, as well as any known changes in PJM West's Grid Management or Other
Charges related to start-up and operating costs, according to the following
formula:
Dollar Amount of
----------------
(Projected PJM West Grid Management and Other Charges for the Next 12
Months
-
Under (-) or Over (+) Recovery from Prior Period
+
Gross Receipts Tax applied to base rates)
All divided by
--------------
2
Projected Retail Sales for the Next 12 Months in kWh
This result shall be divided by 100 to convert from dollars per kilowatt-hour to
cents per kilowatt-hour to obtain the new Incremental Grid Management and Other
Charges used to calculate the PJM West Surcharge.
Every adjustment made pursuant to the above paragraph shall be submitted to the
Commission annually, or on such more frequent basis as the Company may from time
to time select, and if any such adjusted PJM West Surcharge is less than the one
then in effect the Company will, and if any such adjusted PJM West Surcharge is
more than the one then in effect the Company may, accompany such adjustment with
a Tariff or supplement to reflect such adjusted PJM West Surcharge, the
effective date of which, shall be ten (10) days after the filing of the Tariff
or supplement reflecting such adjusted PJM West Surcharge.
3
SCHEDULE 4
SUPPLIER TARIFF CHANGES
Proposed New Provision in Supplier Tariff
-----------------------------------------
(a) The RRRAS Charge Amount for an EGS for a day shall be that share of the
daily charges assessed by PJM to DLC for the provision of Reactive Supply and
Voltage Control from Generation Sources Service, Regulation and Frequency
Response Service, Operating Reserve - Spinning Reserve Service, and Operating
Reserve - Supplemental Reserve Service attributable to the EGS' share of DLC
Zone load.
(b) If an EGS schedules or bids load into PJM on a day-ahead basis in an amount
equivalent in each hour to the DLC Zone forecast for the EGS for that day, then
the RRRAS Charge Amounts for the EGS load for that day shall be the sole
responsibility of DLC;
(c) Alternatively, if an EGS schedules or bids load into PJM on a day-ahead
basis in an amount that differs in any hour from the DLC Zone forecast for the
EGS for that day, then the RRRAS Charge Amounts for the EGS load related to the
DLC Zone forecast for that day shall be the responsibility of DLC, while the EGS
shall be responsible for any imbalances due to EGS schedules or bids differing
from the DLC Zone forecast. These charges (or credits) shall be calculated
pursuant to sub-section (d) below.
(d) The amount for which the EGS is responsible or that the EGS is credited
shall be the "EGS RRRAS Imbalance Amount." The EGS RRRAS Imbalance Amount will
be calculated hourly.
The EGS RRRAS Imbalance Amount will be calculated in each hour as follows:
Definitions
-----------
For each hour, the following quantities and prices will be used to determine the
EGS RRRAS Imbalance Amount:
DLC DA = DLCs Day-Ahead Forecast for the EGS in MWhs
EGS DA = EGS Day-Ahead Energy Schedule for the in MWhs
EGS RT = EGS Real-Time Energy Usage in MWhs
DA ASP = PJM West Day-ahead Operating ReservesPrice in $/MWhs
RT ASP = PJM West Balancing Operating Reserves Price in $/MWhs
RRRAS IBA = EGS RRRAS Imbalance Amount in $
Calculation (Each Hour)
-----------------------
i) If EGS DA = DLC DA
Then RRRAS IBA = 0
ii) If EGS DA is greater than or less than the DLC DA, then the RRRAS IBA shall
be the sum of the following payments and/or credits in each hour:
1. Difference between the EGS RT and DLC DA
-------------------------------------------
. If the EGS RT is greater than the DLC DA, then the EGS shall receive a
credit for that difference between the EGS RT and DLC DA at the RT
ASP.
. If the DLC DA is greater than the EGS RT, then the EGS shall receive a
credit for that difference between the DLC DA and the EGS RT at the RT
ASP.
2. Differences between the EGS DA and EGS RT
--------------------------------------------
. If the EGS RT is greater than the EGS DA, then the EGS shall pay an
imbalance charge for that difference between the EGS RT and EGS DA at
the RT ASP.
. If the EGS DA is greater than the EGS RT, then the EGS shall pay an
imbalance charge for that difference between the EGS DA and the EGS RT
at the RT ASP.
3. Difference between the EGS DA and DLC DA
-------------------------------------------
. If the EGS DA is greater than the DLC DA then the EGS shall pay an
------
imbalance charge for that difference at the DA ASP
. If the EGS DA is less than the DLC DA, then the EGS shall receive a
----
credit for that difference at the DA ASP
-----
Example - EGS DA > DLC DA
[GRAPHIC]
2
Example - EGS DA * DLC DA
* = Less than
[GRAPHIC]
(e) DLC shall xxxx or credit the EGS monthly for each day's EGS RRRAS Imbalance
Amount. These imbalance charges or credits will be in addition to any
ancillary service charges billed to an EGS under DLC's schedule 9A.
(f) The EGS shall grant DLC access to their day-ahead schedule information for
the purposes of calculating the RRRAS imbalance amount.
3
EXHIBIT 1
AMENDED AND RESTATED ANCILLARY SERVICES SERVICE
AGREEMENT
This Amended and Restated Ancillary Services Service Agreement
("this Agreement") is made and entered into this 15th day of February, 2002, by
---------
and between Duquesne Light Company, a Pennsylvania corporation ("DLC"), and
---
Orion Power MidWest, L.P., a Delaware limited partnership (the "POLR Supplier").
-------------
DLC and the POLR Supplier may hereinafter be referred to individually as a
"Party" and collectively as the "Parties."
----- -------
WITNESSETH:
WHEREAS, DLC has sold its generating facilities and other assets associated
therewith to the POLR Supplier;
WHEREAS, DLC continues to have and retain its obligation as the electrical
energy ("Energy") provider of last resort ("POLR") for its retail customers
------ ----
until December 31, 2004;
WHEREAS, the POLR Supplier and DLC have entered into that certain POLR Agreement
("POLR I Agreement"), dated as of September 24, 1999, and that certain Amended
----------------
and Restated POLR II Agreement ("POLR II Agreement"), dated as of December 7,
-----------------
2000, to meet DLC's POLR obligations;
WHEREAS, the POLR Supplier and DLC have entered into that certain Ancillary
Services Agreement, dated as of December 7, 2000 ("Ancillary Services
------------------
Agreement"), and wish to modify the Ancillary Services Agreement due to changed
----------
circumstances;
WHEREAS, DLC anticipates joining PJM pursuant to the arrangement known as PJM
West once PJM West is capable of operation;
WHEREAS, DLC intends to supply ancillary services for all customers in its
service territory when it joins PJM, whether DLC's customers are served by the
POLR Supplier or by electric generation suppliers ("EGSs"), until December 31,
----
2004;
WHEREAS, pursuant to this Agreement, DLC desires to purchase from the POLR
Supplier and the POLR Supplier desires to provide to DLC certain ancillary
services to permit DLC's to supply ancillary services for all customers in its
service territory;
NOW, THEREFORE, in consideration of the mutual covenants, representations and
agreements hereinafter set forth, and intending to be legally bound, the Parties
agree as follows:
1 Definitions and Certain Matters
1.1 Affiliate means, with respect to a corporation, partnership, or other
---------
entity, each such other corporation, partnership, or other entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such corporation,
partnership, or other entity.
1.2 Capacity Agreement shall mean that certain capacity agreement dated as of
------------------
February 15, 2002 by and between DLC and the POLR Supplier relating to
certain capacity obligations.
1.3 Designated Agent shall have the meaning set forth in the OATT.
----------------
1.4 DLC Transmission System means the facilities owned, controlled, or operated
-----------------------
by DLC that are used to provide transmission service, as of the date of
this Agreement.
1.5 DLC Zone shall mean the DLC service territory under the PJM West Protocols
--------
as such service territory is described in the "List of Communities Served"
under DLC's retail tariff on file with the PUC on the date hereof.
1.6 ECAR means the East Central Area Reliability Council, a regional
----
reliability council established pursuant to the East Central Area
Reliability Coordination Agreement, and any successor entity thereto.
1.7 Effective Date shall mean the later of (1) the Effective Date (as defined
--------------
under the Capacity Agreement), and (2) the date on which the FERC issues an
order, in a form reasonably acceptable to the Parties, accepting this
Agreement for filing.
1.8 FERC shall mean the Federal Energy Regulatory Commission, or its successor.
----
1.9 Good Utility Practice means any of the applicable practices, methods and
---------------------
acts:
required by any Governmental Authority or applicable regional or
national reliability council, including NERC or ECAR or the successor
of any of them, whether or not the Party whose conduct is at issue is
a member thereof; and
otherwise engaged in or approved by a significant portion of the
electric utility industry during the relevant time period, 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 a reasonable cost consistent with law, regulation
and good business practices (which may include aspects of reliability,
safety, environmental protection, economy and expediency). Good
Utility Practice is not intended to be limited to the optimum
practice,
5
method, or act to the exclusion of all others, but rather to
practices, methods, or acts generally accepted in the electric utility
industry.
1.10 Governmental Authority shall mean any foreign, federal, state, local or
----------------------
other governmental, regulatory or administrative agency, court, commission,
department, board, or other governmental subdivision, legislature,
rulemaking board, tribunal, arbitrating body, or other governmental
authority.
1.11 Material Adverse Effect means any event or condition that has a material
-----------------------
adverse effect on the rights or obligations of the affected Party under
this Agreement; provided, however, that an increase or decrease in the
market price or market value of RRRAS that renders the payments to the POLR
Supplier hereunder no longer reflective of market conditions shall not
constitute a Material Adverse Effect.
1.12 NERC shall mean the North American Electric Reliability Council and any
----
successor entity thereto.
1.13 Open Access Transmission Tariff ("OATT") shall mean the Open Access
---------------------------------------
Transmission Tariff of PJM or its successor, accepted by the FERC.
1.14 Operating Reserve - Spinning Reserve Service shall have the meaning set
--------------------------------------------
forth in Schedule 5 to the OATT.
1.15 Operating Reserve - Supplemental Reserve Service shall have the meaning set
------------------------------------------------
forth in Schedule 6 to the OATT.
1.16 PJM shall mean the PJM Interconnection, L.L.C., and any successor thereto
---
(including any modification, and any successor thereto, resulting from any
regional transmission organization for the northeastern United States).
1.17 PJM West shall mean the PJM West Region of PJM.
--------
1.18 PJM West Protocols means the provisions, protocols, rules or other
------------------
requirements of any tariff or equivalent document, reliability assurance
agreement, operating agreement, transmission owner agreement or similar
agreement, manuals or similar documents, and their respective successors,
then in effect in and applicable to DLC as a load serving entity within, or
the DLC Zone as a part of, PJM West.
1.19 PUC shall mean the Pennsylvania Public Utility Commission and any successor
---
agency thereto.
6
1.20 Reactive Supply and Voltage Control from Generation Sources Service shall
-------------------------------------------------------------------
have the meaning set forth in Schedule 2 to the OATT.
1.21 Retail Tariff Changes means those changes to the schedules of rates
---------------------
pursuant to which DLC bills or intends to xxxx its retail customers, as set
forth on Schedule 3 to the Capacity Agreement.
1.22 Regulation and Frequency Response Service shall have the meaning set forth
-----------------------------------------
in Schedule 3 to the OATT.
1.23 Reactive, Regulation and Reserve Ancillary Services ("RRRAS") shall mean
------------------------------------------------------------
the services denominated by the FERC designations of Reactive Supply and
Voltage Control from Generation Sources Service, Regulation and Frequency
Response Service, Operating Reserve - Spinning Reserve Service, and
Operating Reserve - Supplemental Reserve Service.
1.24 RRRAS Charge Amount shall have the meaning set forth in Section 4.2 hereof.
-------------------
1.25 RRRAS Contract for Differences Amount shall have the meaning set forth in
-------------------------------------
Schedule 4 of the Capacity Agreement.
1.26 RRRAS Payment Amount shall mean, for a particular day, the product of $1.50
--------------------
multiplied by the number of megawatthours of DLC Zone load, measured at the
wholesale bus level, for such day.
1.27 Supplier Tariff Changes means those changes to DLC's Electric Generation
-----------------------
Supplier Coordination Tariff, as set forth on Schedule 4 to the Capacity
Agreement.
1.28 Certain Interpretive Matters. In this Agreement, unless otherwise specified
----------------------------
or the context otherwise requires, the singular shall include the plural,
the masculine shall include the feminine and neuter, and vice versa. The
term "includes" or "including" shall mean "including without limitation."
Unless otherwise specified or the context otherwise requires, references to
a Section, Article or Schedule mean a Section, Article or Schedule of this
Agreement and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended,
supplemented or restated through the date as of which such reference is
made.
1.29 Effect on Ancillary Services Agreement. DLC and the POLR Supplier hereby
--------------------------------------
amend and restate the Ancillary Services Agreement in its entirety, such
that the Ancillary Services Agreement is replaced in its entirety, as of
7
the Effective Date, for all purposes whatsoever, by this Agreement. DLC and
the POLR Supplier agree, however, that until the Effective Date hereunder,
the Ancillary Services Agreement shall remain in effect and unchanged by
virtue of this Agreement. Payments for RRAS and Reactive Supply (each as
defined in the Ancillary Services Agreement as it exists as of the date
hereof) shall be prorated for the month during which the Effective Date
occurs by the number of days during such month that the Ancillary Services
Agreement remains in effect and unchanged by this Agreement.
2 Term and Termination
2.1 Term. Unless terminated earlier pursuant to the terms of this Agreement,
----
the term of this Agreement shall commence on the same date that the term of
the Capacity Agreement commences and continue until December 31, 2004,
unless extended by mutual agreement of the Parties.
2.2 Termination. If the POLR Supplier fails to secure the Required Lenders'
-----------
Consent (as defined in the Capacity Agreement) by the date that is
forty-five (45) days following the date first above written, DLC may
terminate this Agreement by delivering a written notice of such termination
to the POLR Supplier, following which delivery this Agreement shall become
null and void and of no further force or effect. If the Effective Date has
not occurred by the date that is one hundred eighty (180) days following
the date first above written, this Agreement shall automatically, without
any further action of the Parties, terminate and become null and void and
of no further force or effect; provided, however, that if the Effective
Date has not occurred by such date solely because DLC is not yet obligated
to supply ACAP under the PJM West Protocols, then this Agreement shall not
terminate and the foregoing one hundred eighty (180) day period shall be
extended by an additional ninety (90) days, following which if DLC is not
obligated to supply ACAP under the PJM West Protocols, this Agreement shall
automatically, without any further action of the Parties, terminate and
become null and void and of no further force or effect. If it is not
otherwise terminated pursuant to this Section 2.2, this Agreement shall
remain in effect until the earlier of (1) December 31, 2004, or (2)
termination of this Agreement pursuant to Section 7.2.
3 RRRAS Supply
3.1 Quantity of RRRAS. Commencing on the Effective Date and continuing each day
-----------------
thereafter through the term of this Agreement, DLC shall purchase from the
POLR Supplier and the POLR Supplier shall provide to DLC for the
8
term of this Agreement an amount of RRRAS necessary to serve, as determined
by the PJM West Protocols, the DLC Zone. The POLR Supplier shall either
obtain the quantity of RRRAS necessary to serve the DLC Zone or supply such
quantity from the POLR Supplier's owned resources, in either case only in
accordance with the PJM West Protocols.
3.2 Designated Agent. In coordination with the POLR Supplier, DLC will take
----------------
such actions as PJM requires to permit the POLR Supplier to be DLC's
Designated Agent in PJM, if necessary, for the purpose of supplying RRRAS
to DLC and/or obtaining RRRAS from PJM for DLC in accordance with this
Agreement.
3.3 Delivery Point. The point of delivery under this Agreement shall be the DLC
--------------
Transmission System.
3.4 Other Services. The POLR Supplier shall have no obligation under this
--------------
Agreement to provide Energy Imbalance service or Scheduling, System Control
and Dispatch service to DLC.
4 Payment and Charges
4.1 Payment for RRRAS. Provided that the POLR Supplier has complied with its
-----------------
obligations hereunder, the purchase price for all amounts of RRRAS
purchased by DLC pursuant to this Agreement for a particular day shall be
the RRRAS Payment Amount for such day. All RRRAS Payment Amounts due and
payable hereunder shall be paid by DLC to the POLR Supplier on a monthly
basis by summing the RRRAS Payment Amounts for each day of a particular
calendar month on the twentieth calendar day following the last day of such
calendar month and increasing the amount of Net Billed Generation Revenue
(as defined under the POLR II Agreement) to be paid to the POLR Supplier on
such calendar day by the amount of dollars equal to such summed RRRAS
Payment Amounts. If the POLR II Agreement (as defined under the Capacity
Agreement) is terminated, then the Parties shall negotiate in good faith
such amendments to the Capacity Agreement as shall be necessary to provide
that all payments due either Party hereunder are to be invoiced by DLC and
paid and/or offset by the appropriate Party, as necessary, on a monthly
basis, under the terms of the Capacity Agreement, as contemplated by
Section 6.2(d) of the Capacity Agreement. If the POLR II Agreement (as
defined under the Capacity Agreement) and the Capacity Agreement are
terminated then the Parties shall negotiate in good faith such amendments
to this Agreement as shall be necessary to provide that all payments due
either Party hereunder are to be invoiced by DLC and paid
9
and/or offset by the appropriate Party, as necessary, on a monthly basis,
under the terms of this Agreement.
4.2 Charges Associated with RRRAS. The POLR Supplier shall be responsible for
-----------------------------
all charges associated with RRRAS incurred by DLC under the PJM West
Protocols beginning on the Effective Date until the termination of this
Agreement and shall pay to DLC on each day beginning on the Effective Date
through the termination of this Agreement an amount of dollars equal to the
amount of such charges then incurred by DLC (each such amount, an "RRRAS
Charge Amount"), which RRRAS Charge Amounts shall be immediately due and
payable by the POLR Supplier to DLC as a Supplier Charge (as defined under
the POLR II Agreement) pursuant to the terms of the POLR II Agreement. The
Parties agree that the RRRAS Charge Amount shall include all charges
assessed to or imposed on DLC under the PJM West Protocols, including any
penalties, as a result of the POLR Supplier's failure to supply DLC with
the necessary quantity of RRRAS. The Parties also agree that the POLR
Supplier shall be responsible, at POLR Supplier's cost, for any heightened
RRRAS obligations imposed upon DLC as a result of the POLR Supplier's
failure to supply DLC with the necessary quantity of RRRAS.
4.3 Supplier Tariff Changes. DLC will use its best efforts to cause revisions
-----------------------
to the Duquesne Light Company Electric Generation Supplier Tariff (together
with such changes thereto as are acceptable to the Parties hereto), as set
forth on Schedule 4 to the Capacity Agreement, to be accepted by the PUC.
Notwithstanding anything in Schedule 4 to the Capacity Agreement to the
contrary, and for the avoidance of doubt, the Parties recognize and agree
that the POLR Supplier will responsible for the charges identified in
Schedule 4 to the Capacity Agreement as the responsibility of DLC, and that
the POLR Supplier will be entitled to receive the payments identified in
Schedule 4 to the Capacity Agreement as payable to DLC, which charges or
credits shall be paid by or credited to the POLR Supplier as part of the
RRRAS Charge Amount set forth in Section 4.2.
4.4 Adjustment to RRRAS Payment Amount and RRRAS Charge Amount. The EGS RRRAS
----------------------------------------------------------
Imbalance Amount (as defined in Schedule 4 to the Capacity Agreement) as
calculated for an EGS and billed to the EGS monthly, if positive, shall be
added to the RRRAS Payment Amount due and payable hereunder by DLC to the
POLR Supplier three (3) business days after such EGS RRRAS Imbalance Amount
is received from an EGS; provided, however, that DLC will pursue collection
of the EGS RRRAS Imbalance Amount pursuant to the procedures available to
DLC under DLC's Electric
10
Generation Supplier Coordination Tariff. If the EGS RRRAS Imbalance Amount
for an EGS is negative, credits associated therewith shall be charged to
the POLR Supplier as RRRAS Charge Amounts pursuant to Section 4.2 hereof.
4.5 No Change. The rates for service specified herein shall remain in effect
---------
for the term of this Agreement, and shall not be subject to change through
application to the FERC pursuant to the provisions of Section 205 of the
Federal Power Act or otherwise absent the agreement of both Parties hereto.
5 Scheduling
5.1 Communication. The DLC dispatch office shall maintain communication with
-------------
the POLR Supplier's dispatch office as needed.
5.2 Good Utility Practice. Each Party agrees to adhere to Good Utility Practice
---------------------
and to specifically adhere to the applicable operating policies, criteria
and/or guidelines of PJM, NERC, ECAR and all other regional or subregional
requirements.
6 Force Majeure
6.1 Force Majeure. Notwithstanding anything in this Agreement to the contrary,
-------------
neither Party shall be liable in damages, or otherwise responsible to the
other Party, for its failure to perform or observe any of its obligations
under this Agreement if and only to the extent that it is unable to so
perform or is prevented from performing by an event of Force Majeure;
provided, however, that to the extent that the POLR Supplier fails to
supply RRRAS in accordance with Section 3.1 hereof, whether as a result of
an event of Force Majeure or for any other reason, the provisions of
Section 4.2 hereof shall apply to such failure. The Parties recognize and
agree that an event of Force Majeure will not relieve any Party of its
obligation to make payments when due hereunder.
6.2 Definition of Force Majeure. The term "Force Majeure" as used herein means
---------------------------
those causes beyond the reasonable control of the Party affected that, by
the exercise of reasonable diligence, including Good Utility Practice, such
Party is unable to prevent, avoid, mitigate, or overcome, including an act
of God, labor dispute (including a strike), act of the public enemy, war,
civil disturbance, insurrection, riot, fire (unless resulting from the
fault or negligence of the Party asserting Force Majeure), storm or flood,
lightning, explosion (unless resulting from the fault or negligence of the
Party asserting
11
Force Majeure), order, government decree or rule, regulation or restriction
imposed by governmental, military or lawfully-established civilian
authorities, or any other cause of a similar nature beyond such Party's
reasonable control. Events that cause a change in the market value of
Energy, the POLR Supplier's generation costs or otherwise affect the POLR
Supplier's cost of performance under this Agreement shall not be considered
Force Majeure events.
6.3 Force Majeure Procedures. Upon the occurrence of an event of Force Majeure,
------------------------
the Party affected by such event shall (a) provide prompt written notice of
such Force Majeure event to the other Party, including an estimation of its
expected duration and the probable impact on the performance of its
obligations hereunder; (b) exercise all reasonable efforts in accordance
with Good Utility Practice to continue to perform its obligations under
this Agreement; (c) expeditiously take action to correct or cure the event
or condition excusing performance, provided, however, that settlement of
labor disputes will be completely within the sole discretion of the Party
affected by such labor dispute; (d) exercise all reasonable efforts to
mitigate or limit damages to the other Party; and (e) provide prompt notice
to the other Party of the cessation of the event or condition giving rise
to its excuse from performance. Any obligation under this Agreement shall
be suspended only to the extent caused by such Force Majeure event and only
during the continuance of any inability of performance caused by such Force
Majeure event but for no longer period.
7 Default, Renegotiation and Termination
7.1 Event of Default. Unless excused by Force Majeure, each of the following
----------------
events shall be considered an Event of Default:
(a) The material breach by either Party of any agreement, covenant or
obligation under this Agreement; provided that such breach is not
caused by the material breach of the other Party, and provided further
that, if such breach is curable, a default shall not occur until the
Party in breach has failed to cure such breach within thirty (30) days
after receipt of written notice thereof by the non-defaulting Party;
(b) The discovery that any representation or warranty made by a Party
hereunder was false or misleading in any material respect when made
that is not cured within thirty (30) days and which has a material
adverse effect on the ability of the Party making such representation
or warranty to perform its obligations hereunder;
12
(c) The filing of an involuntary petition in bankruptcy against either
Party or the appointment of a receiver or liquidator or trustee for
either Party or of any substantial part of the property of a Party,
provided that if such Party is working diligently to have such
petition, receiver, liquidator or trustee stayed, dismissed or
discharged, a default shall not occur unless such petition, receiver,
liquidator or trustee is not stayed, dismissed or discharged within
thirty (30) days;
(d) The entry of a decree adjudicating a Party or any substantial part of
the property of a Party bankrupt or insolvent, provided that if such
Party is working diligently to have such decree discharged or stayed,
a default shall not occur unless such decree is continued undischarged
and unstayed for a period of thirty (30) days;
(e) The filing of a voluntary petition in bankruptcy under any provision
of any federal or state bankruptcy law by a Party or against it; or
(f) The failure of a Party to pay the other Party undisputed amounts owed
within ten (10) days after receiving written notice from a Party that
any such amount is overdue.
7.2 Termination.
-----------
(a) Upon the occurrence of an Event of Default, the non-defaulting
Party may terminate this Agreement by providing one hundred
twenty (120) days' written notice to the defaulting Party of a
specified date of termination; provided, however, that upon the
occurrence of an Event of Default specified in Section 7.1 (c),
(d) and (e) hereof, the non-defaulting Party may terminate this
Agreement by delivering to the defaulting Party a written notice
of termination, which termination shall be effective upon the
defaulting Party's receipt of such notice. The non-defaulting
Party may exercise all such rights and remedies as may be
available to it to recover damages caused by such Event of
Default.
(b) Following the Effective Date, if:
(i) the PUC issues an order modifying the Retail Tariff Changes
(together with such changes thereto as may have been acceptable
to DLC on or prior to the Effective Date) in a manner that
materially impairs DLC's ability to recover from its customers
the amounts paid to the POLR Supplier under this Agreement,
13
(ii) either (x) the PUC issues an order modifying the Supplier
Tariff Changes (together with such changes thereto as may have
been acceptable to the Parties on or prior to the Effective
Date), (y) the FERC issues an order or (z) the PJM West Protocols
are modified, in any such case, in a manner that affects the
rights or obligations of a Party respecting matters under this
Agreement so as to cause such Party a Material Adverse Effect, or
(iii) the Capacity Agreement is terminated,
then, the affected Party may deliver written notice of the occurrence
of any such event(s) to the other Party (such notice, a "Renegotiation
Notice"). Promptly after the delivery and receipt of a Renegotiation
Notice, the Parties shall, in good faith, attempt to negotiate a mutually
satisfactory amendment to this Agreement to restore the respective rights
and obligations of the Parties under this Agreement as they existed
immediately prior to such event(s) or to achieve another mutually
satisfactory result. If within thirty (30) days following the delivery of
any such Renegotiation Notice that notices an event described in clause
(i), (ii) or (iii) hereof the Parties fail to agree upon any such
amendment, the affected Party may then terminate the Agreement by providing
the other Party with one hundred twenty (120) days' prior written notice of
such termination. Any amendment to this Agreement negotiated as a result of
a Renegotiation Notice shall be deemed to be retroactively effective to the
date on which the event(s) described in such Renegotiation Notice occurred;
provided, however, that if following any such event, the order giving rise
to such event is no longer in effect (or is modified in a manner described
in clause (i) or (ii) hereof) by virtue of a decision by a Governmental
Authority or governing body that has become final and non-appealable, then
any such amendment shall be of no further force and effect and this
Agreement shall be read so as not to include such amendment (and in the
event such order is modified in a manner described in clause (i) or (ii)
hereof, the Parties may deliver a Renegotiation Notice with respect thereto
as otherwise contemplated hereunder). Upon any termination pursuant to this
Section 7.2(b), neither Party shall have any further liability to the other
Party under this Agreement, except for any obligations that arose or
accrued prior to the effective date of such termination.
7.3 Additional Remedies. The POLR Supplier acknowledges and specifically agrees
-------------------
that its obligations under this Agreement are essential to ensure the
reliability of the DLC Zone; that breach of the POLR Supplier's obligations
may result in irreparable harm and damage to DLC which cannot adequately be
compensated by a monetary award; and that, as a consequence thereof, DLC
shall, in addition to any other remedy to which DLC may be entitled by
14
reason of the POLR Supplier's breach of this Agreement, be entitled to seek
and obtain temporary, preliminary and permanent injunctive relief from any
court or Governmental Authority of competent jurisdiction restraining the
POLR Supplier from committing or continuing any breach of this Agreement.
8 Indemnification
8.1 DLC's Indemnification. DLC shall indemnify, hold harmless and defend the
---------------------
POLR Supplier, its parent, its Affiliates, and its and their successors,
officers, directors, employees, shareholders, agents, contractors,
subcontractors, invitees and successors, from and against any and all
claims, demands, suits, obligations, payments, liabilities, costs, losses,
judgments, damages and expenses (including the costs and expenses of any
and all actions, suits, proceedings, assessments, judgments, settlements,
and compromises relating thereto, reasonable attorneys' and expert fees and
reasonable disbursements in connection therewith) for damage to property,
injury to or death of any Person, including the POLR Supplier's employees,
DLC's employees and their Affiliates' employees, or any third parties, to
the extent caused wholly or in part by any act or omission, negligent or
otherwise, by DLC or its officers, directors, employees, agents,
contractors, subcontractors and invitees arising out of or connected with
DLC's performance or breach of this Agreement, or the exercise by DLC of
its rights hereunder. In furtherance of the foregoing indemnification and
not by way of limitation thereof, DLC hereby waives any defense it
otherwise might have under applicable workers' compensation laws.
8.2 POLR Supplier's Indemnification. The POLR Supplier shall indemnify, hold
-------------------------------
harmless and defend DLC, its parent, Affiliates, and its and their
successors, officers, directors, employees, shareholders, agents,
contractors, subcontractors, invitees and successors, from and against any
and all claims, demands, suits, obligations, payments, liabilities, costs,
losses, judgments, damages and expenses (including the costs and expenses
of any and all actions, suits, proceedings, assessments, judgments,
settlements, and compromises relating thereto reasonable attorneys' and
expert fees and reasonable disbursements in connection therewith) for
damage to property, injury to or death of any Person, including DLC's
employees, the POLR Supplier's employees and their Affiliates' employees,
or any third parties, to the extent caused wholly or in part by any act or
omission, negligent or otherwise, by the POLR Supplier or its officers,
directors, employees, agents, contractors, subcontractors and invitees
arising out of or connected with the POLR Supplier's performance or breach
of this Agreement, or the exercise by the POLR Supplier of its rights
hereunder. In furtherance of the foregoing
15
indemnification and not by way of limitation thereof, the POLR Supplier
hereby waives any defense it otherwise might have under applicable workers'
compensation laws.
8.3 Indemnification Procedures. Any Party seeking indemnification under this
--------------------------
Agreement shall give the other Party notice of such claim promptly but in
any event on or before the earlier of the fifteenth (15th) day after the
Party's actual knowledge of such claim or action or the ninetieth (90th)
day from commencement of the event or circumstance giving rise to the
claim. Such notice shall describe the claim in reasonable detail, and shall
indicate the amount (estimated if necessary) of the claim that has been, or
may be sustained by, said Party. To the extent that the other Party will
have been actually and materially prejudiced as a result of the failure to
provide such notice, such notice will be a condition precedent to any
liability of the other Party under the indemnification provisions contained
in this Agreement. Neither Party may settle or compromise any claim for
which indemnification is sought under this Agreement without the prior
consent of the other Party, provided that such consent shall not be
unreasonably withheld or delayed.
8.4 Survival. The indemnification obligations of each Party under this Article
--------
for acts or occurrences that occur prior to expiration, termination, or
cancellation of this Agreement shall survive and continue in full force and
effect regardless of whether this Agreement expires or terminates, or is
canceled, surrendered or completed. Such indemnification obligations shall
not be limited in any way by any limitation on insurance, by the amount or
types of damages, or by any compensation or benefits payable by the Parties
under worker's compensation acts, disability benefit acts or other employee
acts, or otherwise.
9 Dispute Resolution
9.1 Disputes. A Party with a claim or dispute under this Agreement shall submit
--------
to the other Party a notification of such claim or dispute within sixty
(60) days of the date on which the Party knew, or should have known, of the
occurrence of the circumstances that gave rise to the claim or the question
or issue in dispute, and shall provide the Administration Committee (as
defined in the POLR II Agreement) with a copy of such notification. Any
such notification shall be in writing and shall include a concise statement
of the claim or the issue or question in dispute, a statement of the
relevant facts and documentation to support the claim. The Administration
Committee (as defined in the POLR II Agreement) shall use its good faith
best efforts to resolve the claim or dispute within thirty (30) days after
its receipt of a
16
notification specifying the claim, issue or question in dispute. If
the Administration Committee (as defined in the POLR II Agreement) is
unable to do so, the Parties shall refer the claim or dispute to their
respective senior management. Subject to Section 7.4 hereof, if, after
using their good faith best efforts to resolve the dispute, the
Parties' senior management cannot resolve the dispute within thirty
(30) days, the Parties may, if they both so agree in writing, utilize
the alternative dispute resolution procedures set forth below in
Sections 7.2 and 7.3 hereof.
9.2 Arbitration. Any arbitration initiated under this Agreement shall be
-----------
conducted before a single neutral arbitrator appointed by the Parties
within thirty (30) days of receipt by respondent of the demand for
arbitration. If the Parties are unable to agree on an arbitrator, such
arbitrator shall be appointed by the American Arbitration Association.
Unless the Parties agree otherwise, the arbitrator shall be an
attorney or retired judge with at least fifteen (15) years of
experience and shall not have any current or past substantial business
or financial relationships with any Party to the arbitration. In
addition, if possible, the arbitrator shall have significant system
operations experience in the electric industry. Unless otherwise
agreed, the arbitration shall be conducted in accordance with the
American Arbitration Association's Commercial Arbitration Rules, then
in effect, in Pittsburgh, Pennsylvania. Any arbitration proceedings,
decision or award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act of the United States, 9 U.S.C. Sections 1 et
seq.
9.3 Arbitration Terms. The arbitration shall, if possible, be concluded
-----------------
not later than six (6) months after the date that it is initiated. The
arbitrator shall be authorized only to interpret and apply the
provisions of this Agreement or any related agreements entered into
under this Agreement and shall have no power to modify or change any
of the above in any manner. The arbitrator shall have no authority to
award punitive or multiple damages or any damages inconsistent with
this Agreement. The arbitrator shall, within thirty (30) days of the
conclusion of any hearing, unless such time is extended by agreement
of the Parties, notify the Parties in writing of his or her decision,
stating his or her reasons for such decision and separately listing
his or her findings of fact and conclusions of law. The decision of
the arbitrator rendered in such a proceeding shall be final and
binding on the Parties. Judgment on any award made by the arbitrator
may be entered in any court having jurisdiction.
17
9.4 FERC Jurisdiction. Notwithstanding any other provision of this
-----------------
Agreement to the contrary, nothing in this Agreement shall preclude,
or be construed to preclude, any Party from filing a petition or
complaint with FERC with respect to any arbitrable claim over which
FERC has jurisdiction. In such a case, the other Party may request
FERC to reject or to waive jurisdiction. If FERC rejects or waives
jurisdiction with respect to all or a portion of such claim, the
portion of such claim not so accepted by FERC may be resolved through
arbitration, as provided in this Agreement. To the extent that FERC
asserts or accepts jurisdiction over such claim, the decision,
findings of fact or order of FERC shall be final and binding, subject
to judicial review under the Federal Power Act, and any arbitration
proceedings that may have commenced with respect to such claim prior
to the assertion or acceptance of jurisdiction by FERC shall be
terminated.
10 Confidentiality
10.1 Generally.
---------
(a) Each Party (i) shall maintain the confidentiality of all information
provided to it by the other Party under the terms of this Agreement,
(ii) shall not disclose such information to third parties (other than
its Affiliates, advisors, and parties prospectively providing
financing and risk management) without the prior written consent of
the other Party, unless otherwise provided hereunder, and (iii) agrees
to use such information only for such purposes and in such manner as
is contemplated by the terms of this Agreement. Notwithstanding the
foregoing, each Party shall be permitted to use any information
provided to it by the other Party under the terms of this Agreement in
support of any claim or counterclaim respecting an alleged breach of
such other Party's obligations under this Agreement.
(b) Upon the other Party's prior written approval (which shall not be
unreasonably withheld), either Party may provide information provided
to it by the other Party under the terms of this Agreement to the PUC,
FERC or other Governmental Authority with jurisdiction, as may be
necessary, to obtain required regulatory approvals or to comply
generally with any applicable Law. In such an instance, the disclosing
Party shall seek confidential treatment for such information provided
to any Governmental Authority and will notify the other Party, as far
in advance as is practicable, of its intention to release such
information to any Governmental Authority.
11 Assignment
11.1 Assignment. The POLR Supplier shall not assign this Agreement in whole
----------
or in part, or any of the rights, interests, or obligations hereunder,
without the
18
prior written consent of DLC, which consent shall not be unreasonably
withheld.
Notwithstanding the foregoing, the POLR Supplier, or its permitted
assignee, may assign, transfer, pledge or otherwise dispose of its rights
and interests hereunder to a trustee, lending institution, or other Person
for the purposes of financing or refinancing the POLR Supply Service (as
defined in the POLR Agreement and the POLR II Agreement) opportunity or the
generation facilities and other assets associated with the Asset Sale (as
defined in the POLR Agreement and the POLR II Agreement), including upon or
pursuant to the exercise of remedies under such financing or refinancing,
or by way of assignments, transfers, conveyances of dispositions in lieu
thereof; provided, however, that no such assignment or disposition shall
relieve or in any way discharge the POLR Supplier or any such permitted
assignee from the performance of the duties and obligations of the POLR
Supplier under this Agreement. DLC agrees to execute and deliver such
documents as may be reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights hereunder for
purposes of such financing or refinancing, so long as DLC's rights under
this Agreement are not materially altered, amended, diminished or otherwise
impaired thereby.
11.2 Release of Rights and Obligations. No assignment (including a merger,
---------------------------------
consolidation or sale of all or substantially all of the assets of the
POLR Supplier), transfer, conveyance, pledge or disposition of rights,
interests, duties or obligations under this Agreement by a Party shall
relieve that Party from liability and financial responsibility for the
performance thereof after any such transfer, assignment, conveyance,
pledge or disposition unless and until (i) the transferee or assignee
shall agree in writing to assume the obligations and duties of that
Party under this Agreement and (ii) the non-assigning Party has
consented in writing to such assumption and to a release of the
assigning Party from such liability, such consent not to be
unreasonably conditioned, delayed or withheld.
11.3 Successors & Assigns. This Agreement and all of the provisions hereof
--------------------
are binding upon, and inure to the benefit of, the Parties and their
respective successors and permitted assigns.
12 Representations of the Parties
12.1 Representations of DLC. DLC hereby represents and warrants to the POLR
----------------------
Supplier as follows:
(a) Incorporation. DLC is a corporation duly incorporated, validly
-------------
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and has all requisite corporate power and authority to
own, lease and operate its material assets and properties and to carry
on its business as now being conducted.
(b) Authority. DLC has full corporate power and authority to execute and
---------
deliver this Agreement and, subject to the procurement of applicable
regulatory approvals, to carry out the actions required of it by this
Agreement. The
19
execution and delivery of this Agreement and the transaction
contemplated hereby have been duly and validly authorized by all
necessary corporate action required on the part of DLC. The Agreement
has been duly and validly executed and delivered by DLC and, assuming
that it is duly and validly executed and delivered by the POLR
Supplier, constitutes a legal, valid and binding agreement of DLC.
(c) Regulatory Approval. DLC has obtained any and all approvals of, and
-------------------
has given any and all notices to, any Governmental Authority that are
required for DLC to execute and deliver this Agreement. DLC has
obtained, or will obtain any and all approvals or waivers of, and has
given, or will give any and all notices to, any Governmental Authority
that are required for DLC to consummate the transactions contemplated
hereby.
(d) Compliance With Law. DLC represents and warrants that it is not in
-------------------
violation of any applicable law, statute, order, rule, regulation, or
judgment promulgated or entered by any federal, state, or local
Governmental Authority, which violation could reasonably be expected
to materially adversely affect DLC's performance of its obligations
under this Agreement. DLC represents and warrants that it will comply
with all laws, rules, regulations, codes, and standards of all
federal, state, and local Governmental Authorities applicable to DLC's
compliance with this Agreement.
12.2 Representations of the POLR Supplier. The POLR Supplier represents and
------------------------------------
warrants to DLC as follows:
(a) Incorporation. The POLR Supplier is a limited partnership duly
-------------
organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and
authority to own, lease and operate its material assets and
properties and to carry on its business as now being conducted.
(b) Authority. The POLR Supplier has full power and authority to
---------
execute and deliver this Agreement and, subject to the
procurement of applicable regulatory approvals, to carry out the
actions required of it by this Agreement. The execution and
delivery of this Agreement and the actions it contemplates have
been duly and validly authorized by all necessary action required
on the part of the POLR Supplier. This Agreement has been duly
and validly executed and delivered by the POLR Supplier and,
assuming that it is duly and validly executed and delivered by
DLC, constitutes a legal, valid and binding agreement of the POLR
Supplier.
(c) Regulatory Approval. The POLR Supplier has obtained any and all
-------------------
approvals of, and has given any and all notices to, any
Governmental Authority that are required for the POLR Supplier to
execute and deliver this Agreement. The POLR Supplier has
obtained, or will
20
obtain, any and all approvals or waivers of, and has given, or
will give any and all notices to, any Governmental Authority that
are required for the POLR Supplier to consummate the transactions
contemplated hereby.
(d) Compliance With Law. The POLR Supplier represents and warrants
-------------------
that it is not in violation of any applicable law, statute,
order, rule, regulation, or judgment promulgated or entered by
any federal, state, or local Governmental Authority, which
violation could reasonably be expected to materially adversely
affect the POLR Supplier's performance of its obligations under
this Agreement. The POLR Supplier represents and warrants that it
will comply with all laws, rules, regulations, codes, and
standards of all federal, state, and local Governmental
Authorities applicable to the POLR Supplier's compliance with
this Agreement.
12.3 Representations of Both Parties. The representations and warranties in
-------------------------------
this Section shall continue in full force and effect for the term of
this Agreement.
13 Miscellaneous
13.1 Limitation of Liability. Neither DLC nor the POLR Supplier, nor their
-----------------------
respective officers, directors, agents, employees, parents,
Affiliates, successors, assigns, or subcontractors shall be liable to
the other Party or its shareholders, subsidiaries, Affiliates,
officers, directors, agents, employees, successors, assigns, or
subcontractors for claims, suits, actions, causes of action or
otherwise for incidental, punitive, special, indirect, multiple, or
consequential damages (including attorneys' fees or litigation costs)
connected with, or resulting from, performance or non-performance of
this Agreement, or any actions undertaken in connection with or
related to this Agreement, including any such damages which are based
upon causes of action for breach of contract, tort (including
negligence and misrepresentation), breach of warranty, or strict
liability.
13.2 Amendments. This Agreement may be amended, modified or supplemented
----------
only by written agreement of both DLC and the POLR Supplier. Such
amendments or modifications shall become effective only after the
Parties have received all authorizations, if any, as may be required
from the relevant Governmental Authorities.
13.3 Subcontractors. Nothing in this Agreement shall prevent a Party from
--------------
utilizing the services of such subcontractors as it deems appropriate
to perform its obligations under this Agreement; provided, however,
that each Party shall require each subcontractor to perform its
obligations under this
21
Agreement and to comply with the applicable terms and conditions of
this Agreement in providing such services. The creation of any
subcontract relationship shall not relieve the hiring Party of any of
its obligations under this Agreement. Each Party shall be fully
responsible to the other Party for the acts and omissions of any
subcontractor it hires as if it itself had acted or omitted to act.
Any obligation imposed by this Agreement upon a Party, where
applicable, shall be equally binding upon, and shall be construed as
having application to, any subcontractor of such Party.
13.4 Notices
-------
(a) All notices and other communications made hereunder shall be in
writing and shall be deemed given if delivered personally, by
facsimile transmission, by overnight courier, or by U.S. mail.
(b) Any notice or request made to or by either Party regarding this
Agreement shall be made to the representative of the other Party
as indicated below:
The POLR Supplier:
Orion Power MidWest, L.P.
c/o Orion Power Holdings, Inc.
0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxx
Fax: 000-000-0000
with a copy to:
W. Xxxxxxxx Xxxxxx
Orion Power Holdings, Inc.
0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
DLC:
Duquesne Light Company
System Operations (N2-SO)
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: X.X. Xxxxxx
22
13.5 No Third Party Beneficiaries. Nothing in this Agreement, express or
----------------------------
implied, is intended to confer on any other person except the Parties
hereto any rights, interests, obligations or remedies hereunder.
13.6 Waiver. A waiver of any failure of a Party to comply with any
------
obligation, covenant, agreement, or condition herein by the Party
entitled to the benefits thereof shall be effective only by a written
instrument signed by the Party granting such waiver, but such waiver
of such obligation, covenant, agreement, or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent
failure to comply therewith.
13.7 Severability. Each covenant, condition, restriction and other term of
------------
this Agreement is intended to be, and shall be construed as,
independent and severable from each other covenant, condition,
restriction and other term. If any covenant, condition, restriction or
other term of this Agreement is held to be invalid by any Governmental
Authority, the invalidity of such covenant, condition, restriction or
other term shall not affect the validity of the remaining covenants,
conditions, restrictions or other terms hereof. In such an event, the
Parties shall, to the extent possible, negotiate an equitable
adjustment to any provision of this Agreement as necessary to effect
the purpose of this Agreement.
13.8 Labor Relations. DLC and the POLR Supplier agree to notify the other
---------------
Party immediately orally, and then in writing, of any labor dispute
(including a strike or other labor dispute) or anticipated labor
disturbance of which its management has actual knowledge that may
reasonably be expected to affect the other Party with respect to its
rights or obligations under this Agreement.
13.9 Governing Law. When not in conflict with or preempted by federal law,
-------------
this Agreement will be governed by and construed in accordance with
the law of the Commonwealth of Pennsylvania, without giving effect to
the conflict of law principles thereof. THE PARTIES HERETO AGREE THAT
VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT
MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL COURTS IN
AND FOR PITTSBURGH, PENNSYLVANIA, WHICH COURTS SHALL HAVE EXCLUSIVE
PERSONAL AND SUBJECT MATTER JURISDICTION FOR SUCH PURPOSE, AND THE
PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF
SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS
MAY BE MADE IN ANY
23
MANNER RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
13.10 Independent Contractors. The Parties acknowledge and agree that: (i)
-----------------------
they are independent contractors, (ii) neither Party shall have any
right, power or authority to enter into any agreement or commitment,
act on behalf of, or otherwise bind the other Party in any way, and
(iii) nothing contained in this Agreement shall create any
relationship between DLC and the POLR Supplier other than that of
independent contractors.
13.11 Counterparts. This Agreement may be executed in more than one (1)
------------
counterpart, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.12 Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the Parties hereto regarding the purchase and sale of
RRRAS set forth in this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between
the Parties with respect to the subject matter contained herein.
13.13 Section and Schedule Headings. The Section and Schedule headings
-----------------------------
contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the Parties and shall not in any way
affect the meaning or interpretation of this Agreement.
13.14 Further Assurances. The Parties hereto agree to execute and deliver
------------------
promptly, at the expense of the Party requesting such action, any and
all other and further instruments, documents and information which may
be reasonably requested in order to effectuate the transactions
contemplated hereby, including but not limited to such instruments or
documents to establish, if necessary, an alternative arrangement for
access to RRRAS under this Agreement. The Parties agree to cooperate
and assist each other in acquiring any regulatory approval necessary
to effectuate this Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
DUQUESNE LIGHT COMPANY
24
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
ORION POWER MIDWEST, L.P.
By: its general partner,
ORION POWER MIDWEST GP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: President
-25-
EXHIBIT 2
FORM OF AMENDED CONNECTION AGREEMENTS
CHESWICK
GENERATING UNIT
Connection and Site Agreement
by and between
Duquesne Light Company
and
Orion Power MidWest, L.P.
as Generating Company
Dated as of , 2002
------------
-26-
CONNECTION AND SITE AGREEMENT
-----------------------------
This First Amended Connection and Site Agreement (this "Amended
Agreement") is entered into as of the day of , 2002, by and between
--- ------
Duquesne Light Company, a Pennsylvania corporation (hereinafter "DLC"), having a
place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 and
Orion Power MidWest, L.P. ("Generating Company"), a Delaware limited
partnership, having a place of business at 0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, XX 00000. DLC and Generating Company are individually referred to
herein as a "Party" and collectively as the "Parties."
WHEREAS, DLC and Generating Company entered into an Asset Purchase
Agreement ("APA"), dated as of September 24, 1999 for the sale of the Facility,
as hereinafter defined; and
WHEREAS, DLC and Generating Company entered into a Connection and Site
Agreement on September 24, 1999 (the "Agreement") to govern the
interconnection of the Facility to the Transmission system; and
WHEREAS, DLC has joined PJM Interconnection, L.L.C. pursuant to the
arrangement known as "PJM West" and has agreed to give PJM control of
certain of its transmission facilities, which may affect certain rights and
obligations of the Parties under the Agreement; and
WHEREAS, DLC and its Affiliates continue to operate their transmission
and distribution businesses from their present locations; and
WHEREAS, in the APA, DLC transferred to Generating Company certain
designated real and personal properties, contracts and licenses pertaining to
the Facilities; and
WHEREAS, the Facilities are connected to DLC's Transmission System,
and Generating Company will continue to connect the Units to DLC's Transmission
System on the terms set forth herein; and
WHEREAS, DLC needs access to parts of Generating Company's assets, and
Generating Company needs access to parts of DLC's assets; and
WHEREAS, Generating Company is willing to operate the Facilities in
accordance with Good Utility Practice in order to assist DLC in meeting its own
system reliability standards; and
WHEREAS, the Parties have agreed to execute this mutually acceptable
First Amended Connection and Site Agreement in order to continue providing
Connection Service to Generating Company and to define the continuing rights,
responsibilities and obligations of the Parties with respect to the use of
certain of their own and the other Party's property, assets and facilities.
NOW, THEREFORE, in order to carry out the transactions contemplated by
the APA and this Amended Agreement, and in consideration of their respective
commitments set forth herein, and intending to be legally bound hereby, the
Parties covenant and agree as follows:
-27-
14 Definitions
1. Wherever used in this Amended Agreement with initial capitalization, the
following terms shall have the meanings specified or referred to in this
Article 1.
1.1 Affiliate shall have the meaning set forth in Rule 12b-2 of the General
---------
Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
1.2 Auction Closing Date means the date on which the Auction Closing, as that
--------------------
term is defined in the APA and applies to the Facility, actually occurs.
1.3 Capacity Agreement shall mean that certain capacity agreement dated as of
------------------
February 15, 2002 by and between DLC and Generating Company relating to
certain capacity obligations.
1.4 Confidential Information shall have the meaning set forth in Section 20.1
------------------------
hereof.
1.5 Connection Equipment is all the equipment necessary for the connection of
--------------------
the Facilities to DLC's Transmission System, which is identified in Exhibit
1 hereto.
1.6 Connection Point shall mean the point at which the Facilities are connected
----------------
to the DLC's Transmission System, as set forth in Exhibit 1 hereto. More
than one Connection Point may be referred to in this Amended Agreement
collectively as the "Connection Points."
1.7 Connection Service shall mean the services provided by DLC to connect the
------------------
Units with DLC's Transmission System. Connection Service shall not mean any
of the services listed in Section 2.4(a) through (c).
1.8 Defaulting Party shall have the meaning set forth in Section 21.2 hereof.
----------------
1.9 Delinquent Party shall have the meaning set forth in Section 21.1 hereof.
----------------
1.10 Disclosing Party shall have the meaning set forth in Section 20.1 hereof.
----------------
-28-
1.11 Dispute shall have the meaning set forth in Section 25.1 hereof.
-------
1.12 DLC shall mean Duquesne Light Company.
---
1.13 Due Diligence shall mean the exercise of good faith efforts to perform a
-------------
required act on a timely basis and in accordance with Good Utility Practice
using the necessary technical and manpower resources.
1.14 Easements shall have the meaning set forth in Section 8.2 hereof.
---------
1.15 Easement, License and Attachment Agreement shall refer to the Easement,
------------------------------------------
License and Attachment Agreement between Generating Company and DLC related
to the Units.
1.16 ECAR shall mean the East Central Area Reliability Council, a regional
----
reliability council established pursuant to the East Central Area
Reliability Coordination Agreement, or its successor.
1.17 Emergency Condition means a condition or situation (i) that in the judgment
-------------------
of any Party is imminently likely to endanger life or property; or (ii)
that in the judgment of DLC or PJM is imminently likely (as determined in a
non-discriminatory manner) to cause a material adverse effect on the
security of, or damage to, the Transmission System, the Facilities, or the
transmission systems or distribution systems to which the Transmission
System is directly or indirectly connected; or (iii) that in the judgment
of Generating Company is imminently likely (as determined in a
non-discriminatory manner) to cause damage to the Facility. System
restoration and black start shall be considered Emergency Conditions. Any
condition or situation that results from lack of sufficient generating
capacity to meet load requirements or that results solely from economic
conditions shall not constitute an Emergency Condition, unless one or more
of the enumerated conditions or situations identified in this definition
also exists.
1.18 Facility or Facilities shall mean the Cheswick Unit and equipment related
-------- ----------
to operating the Units and the Connection Equipment.
-29-
1.19 FERC shall mean the Federal Energy Regulatory Commission or its successor
----
federal agency.
1.20 Forced Outage means, in the case of the Facility, an immediate reduction in
-------------
output or capacity or removal from service of the Facility, in whole or in
part, by reason of an Emergency Condition or threatened Emergency
Condition, unanticipated failure or other cause beyond the control of
Generating Company, when such reduction in output or capacity or removal
from service was not scheduled in accordance with Section 3.12. In the case
of the Transmission System, Forced Outage means the immediate removal from
service of the Transmission System, in whole or in part, by reason of an
Emergency Condition or threatened Emergency Condition, unanticipated
failure or other cause beyond the control of DLC.
1.21 Force Majeure shall have the meaning set forth in Article 15 hereof.
-------------
1.22 Generating Company shall mean Orion Power MidWest, L.P.
------------------
1.23 Good Utility Practice shall mean any of the applicable practices, methods,
---------------------
standards, guides or acts:
(a) required by any Governmental Authority, regional or national
reliability council, or national trade organization, including NERC,
ECAR, Edison Electric Institute, or American Society of Mechanical
Engineers, or the successor of any of them, whether or not the Party
whose conduct is at issue is a member thereof; or
(b) otherwise engaged in or approved by a significant portion of the
electric utility industry during the relevant time period which in the
exercise of reasonable judgment in light of the facts known or that
should have been known at the time a decision was made, could have
been expected to accomplish the desired result in a manner consistent
with law, regulation, good business practices, generation,
transmission, and distribution reliability, safety, environmental
protection, economy, and expediency. Good Utility Practice is intended
to be acceptable practices, methods, or acts generally accepted in the
region, and is not intended to be limited to the optimum practices,
methods, or acts to the exclusion of all others.
1.24 Governmental Authority means any foreign, federal, state, local or other
----------------------
governmental, regulatory or administrative agency, court, commission,
department,
-30-
board, or other governmental subdivision, legislature, rulemaking board,
tribunal, arbitrating body, or other governmental authority.
1.25 Interest Rate shall mean the interest rate calculated in accordance with
-------------
the methodology specified for interest on refunds in the FERC regulations
at 18 C.F.R. Section .35.19a(a)(2)(iii).
1.26 Joint Use Facilities shall mean equipment, identified as Joint Use
--------------------
Facilities in Exhibit E to the Easement, License and Attachment Agreement,
as may be amended from time to time, which are owned by either Generating
Company or DLC and which are primarily used for generation operations but
are also essential to the operational reliability of the Transmission
System and are, therefore, jointly operated by the Generating Company and
DLC or PJM.
1.27 Knowledge means the actual knowledge of the corporate officers or Plant
---------
managers of the specified Person charged with responsibility for the
particular function as of the date of this Amended Agreement, or, with
respect to any certificate delivered pursuant to this Amended Agreement,
the date of delivery of the certificate.
1.28 NERC shall mean the North American Electric Reliability Council or its
----
successor.
1.29 Non-Defaulting Party shall have the meaning set forth in Section 21.2
--------------------
hereof.
1.30 Non-Delinquent Party shall have the meaning set forth in Section 21.1
--------------------
hereof.
1.31 Open Access Transmission Tariff or OATT shall mean the open access
------------------------------- ----
transmission tariff of PJM accepted by the FERC.
1.32 Out of Service shall mean the condition of a Unit when it is electrically
--------------
disconnected from the DLC's Transmission System.
1.33 Party shall mean either DLC or Generating Company, where appropriate, when
-----
individually referred to herein.
-31-
1.34 Parties shall mean DLC and Generating Company, when collectively referred
-------
to herein.
1.35 Person means any individual, partnership, limited liability company, joint
------
venture, corporation, trust, unincorporated organization, or governmental
entity or any department or agency thereof.
1.36 PJM shall have the meaning set forth in the recitals.
---
1.37 PJM Operating Agreement means the then-current Operating Agreement of PJM
-----------------------
Interconnection, L.L.C., as accepted by the FERC.
1.38 Planned Outage shall mean action by (i) Generating Company to take the
--------------
Facility or any Unit thereof Out of Service, partially or completely, to
perform work on specific components that is scheduled in advance and has a
predetermined start date and duration pursuant to the procedures set forth
in Section 3.12, or (ii) DLC to take its equipment, facilities and systems
Out of Service, partially or completely, to perform work on specific
components that is scheduled in advance and has a predetermined start date
and duration pursuant to the procedures set forth in Section 3.12.
1.39 Qualified Personnel shall mean individuals trained for their positions
-------------------
pursuant to Good Utility Practice.
1.40 Receiving Party shall have the meaning set forth in Section 20.1 hereof.
---------------
1.41 Representatives shall mean, as to any person, such person's Affiliates and
---------------
its and their directors, officers, employees, agents and advisors
(including, without limitation, financial advisors, legal counsel and
accountants). As used in this definition, the term "person" shall be
broadly interpreted to include, without limitation, any corporation,
company, partnership, other entity or individual.
1.42 RTUs shall have the meaning set forth in Section 3.9 hereof.
----
-32-
1.43 Services shall mean those services provided by Generating Company to DLC,
--------
as specified in Article 4.
1.44 System Control shall mean DLC's system control center, which is responsible
--------------
for the dispatch and operation of DLC's Transmission System, including the
direction and orders for switching and tagging DLC facilities.
1.45 Term shall have the meaning set forth in Section 22.1 hereof.
----
1.46 Transmission System shall mean all facilities owned or controlled by DLC
-------------------
for the purpose of providing transmission services under the OATT and/or
Connection Service. The Transmission System does not include distribution
facilities of DLC.
1.47 Unit shall mean any of the following individual units or equipment:
----
Cheswick Unit 1.
ARTICLE 2 Connection Service
2.1 Subject to the terms and conditions of this Amended Agreement, DLC agrees
to allow Generating Company to continue the connection of the Units to
DLC's Transmission System at the locations identified in Exhibit 1, upon
Generating Company's acquisition of the Facility, and thereafter for the
Term of this Amended Agreement.
2.2 Generating Company or its Affiliate shall have, by the effective date of
this Amended Agreement pursuant to Section 22.1 hereof, executed the PJM
Operating Agreement.
2.3 The Connection Points for the Units are the disconnect switches described
and shown on Exhibit 1 hereto. The voltage at these Connection Points shall
be in the form of three phase, approximately sixty hertz alternating
current at the nominal voltage of the equipment at the Connection Point.
2.4 Generating Company shall be responsible for (a) making arrangements under
the OATT for transmission and any ancillary services associated with the
delivery of capacity and/or energy produced by the Units, which services
shall not be provided under
-33-
this Agreement, (b) obtaining capacity and/or energy to satisfy its station
service, or other requirements, and (c) making arrangements under
applicable tariffs for transmission services, losses, and ancillary
services associated with the use of the DLC's Transmission System for the
delivery of capacity and energy to the Units for the purpose of supplying
station service or for any other use by Generating Company. DLC shall
reasonably cooperate with Generating Company with respect to such
agreements.
ARTICLE 3 Operation and Maintenance
3.1 Each Party shall operate any equipment that might reasonably be expected to
have an impact on the operations of the other Party in a safe and efficient
manner and in accordance with all applicable federal, state, and local
laws, Good Utility Practice, the PJM Operating Agreement, and otherwise in
accordance with the terms of this Amended Agreement. Generating Company
shall be required to comply with the requests, orders, directives and
requirements of DLC to the extent such requests, orders, directives or
requirements are (a) issued pursuant to Good Utility Practice, (b) not
unduly discriminatory, (c) not inconsistent with the OATT, and (d)
otherwise in accordance with applicable tariffs or applicable federal,
state or local laws. In the event Generating Company believes that a
request, order or directive of DLC exceeds these limitations, it shall
nevertheless comply with the request, order or directive of DLC pending
resolution of the Dispute under Article 25. The Parties agree to cooperate
in good faith to expedite the resolution of any Disputes arising under this
Section 3.1.
3.2 Within the reactive power limitations of the Facility, including its
automatic voltage regulating equipment, and consistent with Good Utility
Practice, Generating Company shall, when the Facility is operating, adjust
the reactive power output of the Facility's main generators such that the
voltage at the Connection Points fall within the target voltage range or
such other voltage range as PJM or DLC may request. Generating Company
shall, upon the reasonable request of DLC or PJM and consistent with Good
Utility Practice, test, calibrate, verify or adjust the voltage regulator
control settings as necessary to meet the performance requirements of the
bulk power system. Generating Company shall notify System Control as soon
as possible in the event a Unit reaches any generator operating limit,
including a var limit or a generator winding temperature limit, or there is
a deviation from the voltage requirements, or if any voltage regulation
equipment is removed from or restored to service.
3.3 If Generating Company's generation is causing any condition on the
Transmission System which is not consistent with Good Utility Practice and
which results in an unacceptable deterioration of the quality of electric
service to other customers of DLC, Generating Company, upon being provided
notice of such condition in reasonable detail,
-34-
shall promptly modify its Facilities at its own expense in accordance with
Good Utility Practice and applicable federal, state and local law to
alleviate such condition.
3.4 Generating Company shall comply with Good Utility Practice for generator
controls for the Facility which impact the Transmission System, such as
excitation, droop and automatic generation control setting, provided,
however, that Generating Company shall not be required to install equipment
to remedy a failure to comply with such requirements that existed as of the
Auction Closing Date.
3.5 Generating Company shall not, without prior DLC authorization, energize a
de-energized DLC circuit, including line or bus elements, and, if
necessary, shall provide equipment at Generating Company's expense to
prevent this from occurring.
3.6 Generating Company and DLC shall test, calibrate, set, and maintain their
respective protective relay equipment in accordance with Good Utility
Practice, applicable federal, state or local laws and this Amended
Agreement, as set forth in Article 6 hereof.
3.7 (a) If DLC reasonably determines that (i) any of Generating Company's
Connection Equipment fails to perform in a manner consistent with
Good Utility Practice or this Amended Agreement, or (ii)
Generating Company has failed to perform proper testing or
maintenance of its Connection Equipment in accordance with Good
Utility Practice or this Amended Agreement, DLC shall give
Generating Company written notice to take corrective action. Such
written notice shall be provided by DLC as soon as practicable
upon such determination. If Generating Company fails to initiate
corrective action promptly, and in no event later than seven (7)
days after the delivery of such notification, and if in DLC's
reasonable judgment leaving Generating Company's facilities
connected with the Transmission System would create an Emergency
Condition, DLC may, with as much prior oral notification to
Generating Company as practicable, open the connection between
Generating Company and DLC until appropriate corrective actions
have been completed by Generating Company, as verified by DLC.
Any such interruption as permitted by this paragraph shall not
constitute an event of Force Majeure. DLC's judgment with regard
to an interruption of service under this paragraph shall be made
pursuant to Good Utility Practice and subject to Section 3.1
hereto. In the case of such interruption, DLC shall immediately
confer with Generating Company regarding the conditions causing
such interruption and its recommendation concerning timely
correction thereof.
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Both Parties shall act promptly to correct the condition leading
to such interruption and to restore the connection.
(b) If Generating Company reasonably determines that (i) any of DLC's
Connection Equipment fails to perform in a manner consistent with
Good Utility Practice or this Agreement, or (ii) DLC has failed
to perform proper testing or maintenance of its Connection
Equipment in accordance with Good Utility Practice or this
Amended Agreement, Generating Company shall give DLC written
notice to take corrective action. Such written notice shall be
provided by Generating Company as soon as practicable upon such
determination. If DLC fails to initiate corrective action
promptly, and in no event later than seven (7) days after the
delivery of the notification, and if in Generating Company's
reasonable judgment leaving the Transmission System connected
with Generating Company's facilities would create an Emergency
Condition, Generating Company may, with as much prior oral
notification to DLC as practicable, open the connection between
Generating Company and DLC, as verified by Generating Company.
Any such interruption as permitted by this paragraph shall not
constitute an event of Force Majeure. Generating Company's
judgment with regard to this interruption of service under this
paragraph shall be made pursuant to Good Utility Practice. In the
case of such interruption, Generating Company shall immediately
confer with DLC regarding the conditions causing such
interruption and its recommendation concerning timely correction
thereof. Both Parties shall act promptly to correct the condition
leading to such interruption and to restore the connection.
3.8 Generating Company shall comply with the provisions of the OATT, as well as
any requirement of any Governmental Authority, NERC, ECAR, PJM or any
successor of any of them, regarding the right of DLC to require reduced or
increased generation of the Units in the event of an Emergency Condition.
In addition, and without limiting the generality of the foregoing,
Generating Company shall operate its facilities to mitigate an Emergency
Condition when requested by DLC or PJM. Such operation may call for full or
partial interruption of the Connection Equipment either by manual or
automatic means. Notification of Emergency Conditions shall be completed in
accordance with the notification requirements set forth in Article 9.
3.9 Generating Company shall, at its expense, maintain real-time communications
equipment at the Unit to send generation data to System Control, as
reasonably required by DLC or PJM and as presently configured at the Remote
Terminal Units ("RTUs") at the Facility site. Such data shall include, but
not be limited to, normal operations, control of circuit breakers, status
and alarms of equipment and watts, vars, amperes, and voltage
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as presently configured in RTUs at the Facility site in existence prior to
the Auction Closing Date.
3.10 Subject to the confidentiality provisions in Article 20, Generating Company
shall, in the event of a Forced Outage, limitation of generation facilities
or anticipated Forced Outage or limitation, report that event immediately
to System Control. Generating Company shall notify DLC when the Forced
Outage, limitation, or anticipated Forced Outage or limitation has been
remedied.
3.11 Each Party shall provide access, in accordance with Article 8, to any of
its facilities that may impact the operations or business of the other
Party for the purpose of inspection by or, on behalf of, the other Party,
and shall provide, upon written request, copies of any inspection,
operations or maintenance documentation pertaining to such facilities.
3.12 The Parties shall coordinate inspections, Planned Outages, and maintenance
of their respective equipment, facilities and systems so as to minimize the
impact on the availability, reliability and security of both Parties'
systems and operations. Subject to the confidentiality provisions of
Article 20, the Parties shall exchange non-binding Planned Outage
schedules, which shall be developed and followed in accordance with Good
Utility Practice, in accordance with standards and procedures set forth in
the PJM Operating Agreement. The Parties shall keep each other updated
regarding any changes to such schedules.
3.13 The Parties shall use best efforts to coordinate operations in the event of
any Forced Outage or anticipated Forced Outage of their respective
facilities.
3.14 At its sole expense, Generating Company shall maintain in full force and
effect all permits, licenses, rights-of-way, and other authorizations as
may be required to maintain the Facilities. At DLC's reasonable request,
Generating Company shall furnish to DLC copies of each permit, license,
right of way and authorization that would have a material effect on DLC's
rights and obligations under this Amended Agreement promptly following
receipt thereof.
3.15 Joint Use Facilities.
--------------------
(a) Joint Use Facilities are identified in Exhibit E to the Easement,
License and Attachment Agreement. The Party owning such Joint Use
Facilities
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shall maintain those facilities pursuant to Good Utility Practice. The
Parties shall perform joint inspections of the Joint Use Facilities at
such times as mutually agreed upon by the Parties. Each Party shall
bear its respective costs of participating in such inspections.
(b) Following each inspection, the Parties shall discuss the results of
such inspection, including any observed defects. Unless the Parties
agree that an alternative to such correction is preferable, the Party
owning such Joint Use Facilities shall be responsible for correcting
any observed defects within a period mutually agreeable to the
Parties. The Party owning such Joint Use Facilities shall bear the
cost of such correction.
3.16 Generating Company shall give DLC two (2) years' advance written notice of
its intent to permanently retire or shut down the Facility. Such notice
shall indicate the effect such permanent retirement or shut down will have
on DLC's equipment on the Facility site or DLC's easements. In the event
that DLC's equipment on the Facility site or DLC's easements will be
unusable or incapable of operating pursuant to Good Utility Practice as a
result of such permanent retirement or shut down, Generating Company shall
pay DLC the reasonable costs of reconstructing such equipment and shall
provide, at Generating Company's cost, a suitable alternative site
accessible to DLC's substation for the relocation of DLC's equipment and
easements.
ARTICLE 4 Services
4.1 The Parties shall use their reasonable efforts to ensure that Services
provided by one Party to the other Party shall be continuously available
for the Term, as specified in Article 22 hereof.
4.2 Except as may otherwise be provided in that certain POLR Agreement, dated
as of September 24, 1999 by and between the Parties, and that certain
Amended and Restated POLR II Agreement, dated as of December 7, 2000, by
and between the Parties, Generating Company shall provide DLC, at no
charge, with AC and DC power for substation service and control systems in
quantities, at the levels, and in the locations where such power is
provided from the Units immediately prior to the Auction Closing Date. If
at any time Generating Company anticipates that it will be unable to meet
this obligation, it shall notify DLC immediately. If DLC desires a higher
level of service, the Parties shall mutually agree upon the upgrade and the
cost responsibility for the upgrade.
4.3 DLC or PJM may require Generating Company to provide reactive power from
the Units or to absorb reactive power from the Transmission System,
provided that such
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requirement does not require the Units to violate any operating limits. The
Parties recognize that the Generating Company will be compensated for this
service pursuant to Schedule 2 of the OATT.
4.4 To the extent Generating Company has black start capability immediately
prior to the Auction Closing Date, Generating Company will maintain such
capability to the extent required by DLC, subject to Section 3.12;
provided, however, that if Generating Company desires to shut down the
Facility, Generating Company shall provide reasonable notice of same and
DLC shall pay the reasonable costs, as approved by FERC, of maintaining the
Facility in such condition to provide black start capability. Subject to
the foregoing, in accordance with Good Utility Practice, Generating Company
agrees to cooperate in DLC's black start plan provided that Generating
Company may propose, subject to FERC approval, a rate to recover the just
and reasonable costs of complying with that plan.
4.5 DLC may request and the Generating Company shall provide DLC with
substation operating and maintenance services at substations used to
support the Facility at a mutually agreed upon rate.
4.6 Generating Company shall continue to provide and shall maintain polarizing
ground reference for protective relaying suitable to DLC, as and to the
extent provided prior to the Auction Closing Date.
4.7 At no cost to DLC, Generating Company shall provide potable water, storm
drain systems, and fire protection systems to DLC's switchyards, as and to
the extent in existence prior to the Auction Closing Date.
ARTICLE 5 Metering
5.1 Generating Company shall, in accordance with Good Utility Practice, own,
operate, test, and maintain, or if reasonably necessary, install revenue
quality meters and related equipment for the Connection Points that measure
electric power flows between Generating Company and DLC and are reasonably
acceptable to DLC. The information provided by the metering facilities
shall meet the reasonable needs and approvals of both Parties, consistent
with Good Utility Practice.
5.2 Meter and related equipment shall be as follows:
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(a) Each generating unit connected to the Transmission System shall have
revenue quality metering facilities installed to provide direct
readings of the Unit's bi-directional net real and reactive power and
energy output. The metering instrument transformers used to measure
the Unit's net output shall be installed on or compensated to the high
side (transmission voltage side) of the generator step-up transformer,
unless otherwise agreed by the Parties.
(b) All plant auxiliary power transformers (non-generator step-down
transformers) and lines directly connected to the Transmission System
shall have metering facilities installed to provide bi-directional
real and reactive power and energy flow. Metering instrument
transformers shall be connected to or compensated to the high side
(transmission voltage side) of the power transformer, unless otherwise
agreed to by the Parties.
(c) All metering instrument transformers installed must be strictly in
accordance with the latest version of IEEE Standard C57.13 and, if
applicable, ANSI Standard C93.1. The metering facilities installed
must be capable of providing the minimum data mutually agreed by the
Parties.
5.3 Notwithstanding Section 5.2, Generating Company and DLC agree that, if the
metering facilities and the Connection Point are not at the same physical
location, the metering data shall be compensated, as mutually agreed by the
Parties, to record delivery of electricity in a manner that accounts for
the total (load plus no-load) electrical energy losses occurring between
the metering points and the Connection Points when the Units are delivering
energy to the Transmission System, when DLC is delivering station service
electricity to Generating Company for the Units, or for any other use.
5.4 Remote data acquisition of the Unit's meters shall be performed by polling
of an RTU by System Control's Energy Management System computer at a scan
rate to be reasonably determined by DLC. The data collected shall include
the bi-directional instantaneous values of megawatts and megavars and
bi-directional accumulated megawatthours and megavarhours for each Unit,
and such other data as may be mutually agreed by the Parties. System
Control may adopt such measures as are necessary for security of the
metering facilities and data.
5.5 Generating Company shall provide reasonable access, in accordance with
Article 8 hereof, including, without limitation, telecommunications access,
to Qualified Personnel of DLC for the purposes of inspecting metering
equipment.
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5.6 Unless otherwise mutually agreed, all meters shall be sealed, and the seals
shall be broken only by Qualified Personnel of Generating Company upon
occasions when the meters are to be inspected, tested, adjusted or
recalibrated in accordance with Good Utility Practice and in the presence
of duly authorized Qualified Personnel of DLC.
5.7 All metering equipment installed pursuant to this Article 5 shall be
routinely tested by Generating Company in accordance with Good Utility
Practice. DLC may request one meter testing for each meter annually at no
cost to DLC. DLC may request any number of additional meter tests and
compensate the Generating Company for the actual cost to test the meters.
DLC may make unannounced inspections to conduct its own test of the meters,
provided that the Generating Company will be allowed to observe such tests.
If the metering facilities are found not to be accurate or are otherwise
defective, they shall be repaired, adjusted, or replaced by Generating
Company, and meter readings for the period of inaccuracy shall be corrected
so far as corrections can be reasonably ascertained.
5.8 Generating Company shall maintain and make available for review by DLC in a
timely manner records of all meter tests and maintenance conducted pursuant
to this Article 5.
ARTICLE 6 Relaying
6.1 DLC shall have the right, using Good Utility Practice, to review and
approve all new protective relaying logic equipment, including equipment
settings, drawings, and functionality associated with each Connection
Point, and to review all protective relaying logic equipment, including
equipment settings, drawings, and functionality for the Units.
6.2 Any protective relay control system which causes any DLC breaker or
Generating Company breaker connected to DLC bus to operate shall be
maintained and tested in accordance with the provisions of this Article 6.
6.3 DLC shall, in accordance with Good Utility Practice, own, operate, maintain
and test those protective relays, current transformers and potential
transformers listed in Exhibit 1 that provide protection for the
Transmission System. Generating Company shall, in accordance with Good
Utility Practice, own, operate, maintain and test any remaining protective
relays governed by this Article 6. The Parties shall maintain, and, as
necessary, upgrade their respective protective relay systems, and in the
case of Generating Company, any synchronization system equipment associated
with the Connection Points, in accordance with Good Utility Practice, and
shall provide the other
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Party with access to copies of operation and maintenance manuals and test
records for all relay equipment, and in the case of Generating Company, any
synchronization system equipment. DLC shall have the right, using Good
Utility Practice, to review and approve all synchronizing procedures
necessary to establish and maintain proper and safe connection between
Generating Company's Facilities and the Transmission System, which approval
shall not unreasonably be withheld.
6.4 The Parties shall test their respective relays associated with the
Connection Points for correct calibration and operation in accordance with
Good Utility Practice. Complete functional testing of the relay protection
schemes shall be performed at the same time. Repairs or modifications to
the protective relay systems which result in complete testing and
functional verification of all relay systems associated with each
Connection Point will be considered as a complete ECAR test and therefore
shall restart the normal ECAR maintenance and testing cycle.
6.5 Generating Company shall bear the cost of all relay calibration and
functional testing associated with the Connection Points to the extent such
calibration and testing are consistent with Good Utility Practice. All such
testing must be performed by a qualified contractor approved by DLC and
acceptable to Generating Company, or by Qualified Personnel of DLC. In
addition, Generating Company shall arrange with DLC for an annual, visual
inspection of all Connection Equipment and associated maintenance records.
Upon completion of all relay calibration testing and relay functional
testing, Generating Company shall make available copies of all test reports
for review by DLC. Generating Company shall review all test reports and
certify that the relay system's tests and settings, as shown on such test
reports, have been done in accordance with the Unit's specifications and
Good Utility Practice. Such certification shall be signed by Qualified
Personnel competent to perform protective relay system design and analysis.
6.6 As DLC system protection requirements change and as system protection
technology advances, DLC will upgrade its protection systems in accordance
with Good Utility Practice. If these upgrades affect the serviceability and
acceptability of the protective relaying systems on the Connection
Equipment which may be installed, owned, and operated by Generating
Company, Generating Company agrees to upgrade, at its expense, its
protective relaying systems to bring them into compatibility with and to
the same technological standards as that installed by DLC; provided,
however, that DLC shall give Generating Company notice of such upgrade as
soon as practicable prior to the anticipated date of such upgrade.
6.7 Generating Company shall provide the necessary space to install or expand
relay panels for substation system protection if requested by DLC.
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ARTICLE 7 New Construction and Modifications
7.1 Subject to this Article 7, DLC may construct or modify its Transmission
System and Generating Company may construct or modify its Facilities. All
such modifications and construction by either Party shall be conducted in
accordance with Good Utility Practice, all applicable NERC, ECAR and PJM
standards and any other DLC or Generating Company review or operational
requirements, so as to maintain the integrity of the generation,
transmission, distribution and communications capabilities of the other
Party.
7.2 Notwithstanding the foregoing, no modifications to, or new construction of,
facilities, or access thereto, including but not limited to rights-of-way,
fences, and gates, shall be made by either Party which might reasonably be
expected to have a material effect upon the other Party with respect to
operations or performance under this Amended Agreement, without (a) prior
written notification as set forth in this Article 7, and (b) providing the
other Party with sufficient information regarding the work prior to
commencement to enable such Party to evaluate the impact of the proposed
work on its operations. The information provided must be of sufficient
detail to satisfy reasonable DLC or Generating Company review or
operational requirements. Each Party shall use reasonable efforts to
minimize any adverse impact on the other Party.
7.3 For new generation installations or modifications by Generating Company at
the Facility site that are reasonably expected to have a material effect
upon the Transmission System, Generating Company shall furnish, install and
maintain equipment at the Unit necessary to establish and maintain
synchronism with the Transmission System consistent with applicable law and
Good Utility Practice. If said modifications involve a proposed new or
materially changed Connection Point, a change in the generating capacity of
the Facility, or the addition of a new generating unit, Generating Company
shall submit an application in accordance with PJM's procedures applicable
to new connections to the Transmission System if required by PJM.
7.4 If any Party intends to install any new facilities, equipment, systems or
circuits or any modifications to existing or future facilities, equipment,
systems or circuits that could reasonably be expected to have a material
effect upon the operation of the other Party, the Party desiring to perform
said work shall, in addition to the requirements of Sections 7.2 and 7.3,
if any, provide the other Party with drawings, plans, specifications and
other necessary documentation for review at least 90 days prior to the
start of the construction of any such installation.
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7.5 The Party receiving any drawings, plans, specifications, or other necessary
documentation for review shall promptly review the same and provide any
comments to the performing Party. The performing Party shall incorporate
all requested modifications to the extent required to maintain Good Utility
Practice and compliance with this Amended Agreement.
7.6 Within ninety (90) days following completion of any modification or
construction subject to this Article 7, the Party initiating the work shall
provide "as built" drawings, plans and related technical data to the other
Party. Approval or review of any document referenced herein shall not
relieve the initiating Party of its responsibility for the design or
construction of any proposed facility, nor shall it subject the other Party
to any liability, except with respect to the confidentiality provisions of
Article 20.
7.7 Each Party shall, at its own expense, have the right to inspect or observe
all maintenance activities, equipment tests, installation work,
construction work and modification work to the facilities of the other
Party that could have a material effect upon the facilities or operations
of the first Party.
7.8 Unless otherwise required by law, regulation, the OATT, Good Utility
Practice, PJM, or this Amended Agreement, DLC shall not be required at any
time to upgrade or otherwise modify the Transmission System.
ARTICLE 8 Access to Facilities
8.1 The Parties hereby agree to provide each other access to facilities,
properties, equipment and records as may be necessary and convenient to
enable each Party to maintain its respective facilities, equipment and
property in a manner consistent with Good Utility Practice. Such access
shall be provided in a manner so as not to unreasonably interfere with the
ongoing business operations, rights, and obligations of either Party.
8.2 Without limiting the generality of Section 8.1, DLC shall have access to
all of its substations, control systems, telecommunication, relaying,
metering, monitoring, and transmission systems, equipment and facilities
located on Generating Company's property through the easements granted
pursuant to the Easement, License and Attachment Agreement executed in
connection with the consummation of the transactions contemplated by the
APA ("Easements"), and Generating Company shall have access to all its
equipment, systems and facilities located on DLC's property through the
Easements.
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8.3 Such Easements granted to a Party ("Grantee") by the other Party
("Grantor") are intended to be of a permanent nature and shall not be
revoked by the Grantor, nor shall Grantor take any action that would
unreasonably impede, restrict, diminish, or terminate the rights of access
or use granted by such Easements. Notwithstanding the foregoing, (a) should
the Grantee, or its successors or assigns, decide to permanently abandon
the use of any Easement or portion thereof, Grantee shall send Grantor
written notice of such intent, and Grantee shall cause a release of said
Easement or any portion thereof to be recorded in the appropriate Registry
of Deeds; and (b) the Parties may mutually agree to relocate any or all of
the Easement locations within the Facilities, upon a generation station
site or at a Connection Point, provided, however, that the Party requesting
the relocation shall pay all reasonable costs and expenses associated with
the relocation and Grantor shall execute or obtain in a form reasonably
satisfactory to Grantee and suitable for recording, all instruments
necessary to establish the new Easement location. Both Parties agree to use
commercially reasonable efforts to establish a mutually agreeable location
if requested.
8.4 Neither Party shall unreasonably withhold consent to the other Party's
request for additional conveyances, easements or licenses as are reasonably
necessary for ownership, possession, maintenance, operation or repair of
its equipment and facilities and consistent with the purposes of this
Amended Agreement.
8.5 Each Party shall provide the other Party keys, access codes or other access
methods necessary to enter the other Party's facilities to exercise rights
under this Amended Agreement. Access shall only be granted to Qualified
Personnel.
8.6 Each Party agrees not to temporarily restrict the other Party's right
hereunder to access to the first Party's property, facilities or equipment
without prior written notification, except in any emergency situation (in
which case such restricted access shall last no longer than three (3)
calendar days, unless an alternate means of access is provided).
8.7 Neither Party shall make changes to the site topography or accesses,
including but not limited to grading or drainage, that could reasonably be
expected to have a material adverse effect upon the other Party's
facilities or common use drainage or pollution controls systems without the
prior written consent of the other Party, such consent not to be
unreasonably withheld.
ARTICLE 9 Notifications and Reporting
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9.1 Each Party shall provide prompt oral notice to the other Party of any
Emergency Condition which may be reasonably anticipated to affect the other
Party's equipment, facilities or operations, provided that, to the extent
applicable, notices regarding constraints, curtailments or interruptions
shall be provided consistent with FERC Order Nos. 889, 889-A and any
successor thereto. Such oral notification shall be followed by written
notification, describing the nature and extent of the condition, the impact
on operations and all corrective action, within forty-eight (48) hours of
the first-mentioned Party's knowledge of such Emergency Condition. Either
Party may take reasonable and necessary action, both on its own and the
other Party's system, equipment, and facilities, to prevent, avoid or
mitigate injury, danger, damage or loss to its own equipment and
facilities, or to expedite restoration of service; provided, however, that
the Party taking such action shall give the other Party prior notice if at
all possible before taking any action on the other Party's system,
equipment or facilities.
9.2 In the event of an Emergency Condition contemplated by Section 9.1,
Generating Company shall provide DLC with such information, documents, and
data necessary for operation of the Transmission System, including, without
limitation, such information which is to be supplied by DLC or its
Affiliates to any Governmental Authority, NERC, ECAR, PJM or System
Control.
9.3 In order to continue connection of the Facilities, each Party shall
promptly provide the other Party with all relevant information, documents,
or data regarding the Facilities and the Transmission System that would be
expected to affect the Transmission System or the Facilities, and which is
reasonably requested by NERC, ECAR, PJM, or any Governmental Authority.
9.4 For routine maintenance and inspection activities which do not require
major equipment or system outages, the Party performing the same shall
provide the other Party with at least twenty-four (24) hours' prior written
notice. For routine maintenance and inspection activities that will require
major equipment or system outages, the Party performing the same shall
provide the other Party with not less than seventy-two (72) hours' prior
written notice. These notices are in addition to, and do not substitute
for, the requirements of Section 3.12.
9.5 DLC shall notify Generating Company's watch engineer at the Units (or other
designated person) prior to entering Generating Company's Facilities for
routine measurements, inspections and meter reads in accordance with the
requirements of Section 9.4. Generating Company shall notify System Control
prior to entering DLC's
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facilities, including the switchyard, for routine maintenance, operations,
measurements, inspections and meter reads, in accordance with the
requirements of Section 9.4.
9.6 Any information that Generating Company provides to ECAR or other
organization or agency relative to the Connection Equipment or other
facilities associated with the Connection Points shall first be provided to
DLC for review and comment. At Generating Company's reasonable discretion,
in accordance with Good Utility Practice, Generating Company shall include
DLC's comments prior to providing ECAR or other organization or agency such
information.
9.7 Generating Company shall provide modeling data as it pertains to the
Transmission System and this Amended Agreement and perform testing as
required by NERC, ECAR, and PJM. A copy of all such reports shall be
provided to DLC for review.
9.8 Each Party shall provide prompt oral notice to the other Party of any
system alarms which are not automatically sent to the other Party.
9.9 Each Party shall provide a report or copy of the data from a system events
recorder or digital fault recorder that applies to the other Party's
equipment.
9.10 Each Party agrees to immediately notify the other Party, immediately orally
and then in writing, of any labor dispute or anticipated labor dispute of
which its management has actual knowledge that might reasonably be expected
to affect the operations of the other Party with respect to this Amended
Agreement.
ARTICLE 10 Safety
10. Each Party shall be solely responsible for the safety and supervision of
its own employees, agents, Representatives and subcontractors. Each Party
will observe all applicable safety standards, practices and procedures of
the Occupational Safety and Health Administration, the National Electric
Safety Code and Good Utility Practice when entering or working in the other
Party's property or facilities or switching area, and shall immediately
report any injuries to appropriate agencies and to the other Party's
designated Representative. Each Party will provide the other with its
clearing/tagging/lockout procedures. For clearances involving only
Generating Company clearance points, Generating Company procedures shall
govern. For clearances involving
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DLC clearance points and for clearances involving the Connection Point, the
Parties shall observe DLC's procedures.
ARTICLE 11 Environmental Compliance and Procedures
11. Each Party shall notify the other Party, orally, immediately upon discovery
of any Release of any hazardous substance by it on the property or
facilities of the other Party, or which may migrate to, or adversely impact
the property, facilities or operations of, the other Party. Such oral
notification shall be followed by written notification within twenty-four
(24) hours. The Party responsible for the Release of any hazardous
substance on the property or facilities of the other Party, or which may
migrate to, or adversely impact the property, facilities or operations of,
the other Party shall be responsible for performing any remediation or
abatement activity and submitting all reports or filings required by
Environmental Laws. Advance written notification (except in emergency
situations, in which oral, followed by written notification, shall be
provided as soon as practicable) shall be provided by any Party performing
any remediation or abatement activity on the property or facilities of the
other Party, or which may adversely impact the property, facilities or
operations of, the other Party. Except in emergency situations, such
remediation or abatement activity shall be performed only with the consent
of the Party owning the affected property or facilities. The Parties agree
to coordinate, to the extent necessary, the preparation of site plans,
reports or filings required by law or regulation, including but not limited
to Spill Prevention, Control and Countermeasures (SPCC) and Stormwater
Pollution Prevention Plans (SWPPP) required by any regulatory agency of
competent jurisdiction.
ARTICLE 12 Xxxxxxxx and Payment
12.1 Throughout the Term of this Amended Agreement, there shall be no payments
due to DLC by Generating Company solely for the continued connection of the
Units to the Transmission System in existence on the Auction Closing Date.
12.2 Throughout this Amended Agreement, where one Party is requested or required
to pay expenses incurred by the other Party, such expenses shall be paid
only to the extent they are reasonable and incurred in accordance with Good
Utility Practice and applicable law.
12.3 Any invoices for reimbursable services provided to the other Party under
this Amended Agreement during the preceding month shall be prepared within
a reasonable time after the first day of each month. Each invoice shall
delineate the month in which the services were provided, shall fully
describe the services rendered and shall be
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itemized to reflect the services performed or provided. The invoice shall
be paid within fifteen (15) days of the invoice date. All payments shall be
made in immediately available funds payable to the other Party, or by wire
transfer to a bank named by the Party being paid, provided that payments
expressly required by this Amended Agreement to be mailed shall be mailed
in accordance with Section 27.8.
12.4 The rate of interest on any amount not paid when due shall be equal to the
Interest Rate in effect at the time such amount became due. Interest on
delinquent amounts shall be calculated from the due date of the xxxx to the
date of payment. When payments are made by mail, bills shall be considered
as having been paid on the date of receipt by the other Party. Nothing
contained in this Article is intended to limit either Party's remedies
under Article 21 of this Amended Agreement.
12.5 Payment of an invoice shall not relieve the paying Party from any
responsibilities or obligations it has under this Amended Agreement, nor
shall such payment constitute a waiver of any claims arising hereunder.
12.6 If all or part of any xxxx is disputed by a Party, that Party shall
promptly pay the amount that is not disputed and provide the other Party a
reasonably detailed written explanation of the basis for the Dispute
pursuant to Article 25. The disputed amount shall be paid into an
independent escrow account pending resolution of the Dispute, at which time
the prevailing Party shall be entitled to receive the disputed amount, as
finally determined to be payable, along with interest accrued at the
Interest Rate through the date on which payment is made, within ten (10)
business days of such resolution.
12.7 Within two (2) years following a calendar year, during normal business
hours, Generating Company and DLC shall have the right to audit each
other's accounts and records pertaining to transactions under this Amended
Agreement that occurred during such calendar year at the offices where such
accounts and records are maintained; provided that the audit shall be
limited to those portions of such accounts and records that reasonably
relate to the services provided to the other Party under this Amended
Agreement for said calendar year. The Party being audited shall be entitled
to review the audit report and any supporting materials. To the extent that
audited information includes Confidential Information, the auditing Party
shall keep all such information confidential pursuant to Article 20 and
FERC Order Nos. 888 and 889, and any successors thereto.
ARTICLE 13 Applicable Regulations and Interpretation
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13.1 Each Party's performance under this Amended Agreement is subject to the
condition that all requisite governmental and regulatory approvals for such
performance are obtained in form and substance satisfactory to the other
Party in its reasonable discretion. Each Party shall exercise Due Diligence
and shall act in good faith to secure all appropriate approvals.
13.2 This Amended Agreement is made subject to present or future state or
federal laws, regulations, or orders properly issued by state or federal
bodies having jurisdiction. This Amended Agreement shall be interpreted
pursuant to the laws of the State of Pennsylvania, the Federal Power Act,
and the regulatory agency or agencies having jurisdiction over the
particular matter.
ARTICLE 14 Representations
14.1 Representations of DLC. DLC represents and warrants to Generating Company
----------------------
as follows:
14.1.1 Incorporation. DLC is a corporation duly incorporated, validly
-------------
existing and in good standing under the laws of Pennsylvania, and has
all requisite corporate power and authority to own, lease and operate
its material assets and properties and to carry on its business as now
being conducted.
14.1.2 Authority. DLC has full corporate power and authority to execute and
---------
deliver this Amended Agreement and, subject to the procurement of
applicable regulatory approvals, to carry out the actions required of
it by this Amended Agreement. The execution and delivery of this
Amended Agreement and the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action required
on the part of DLC. The Amended Agreement has been duly and validly
executed and delivered by DLC and, assuming that it is duly and
validly executed and delivered by Generating Company, constitutes a
legal, valid and binding agreement of DLC.
14.1.3 Regulatory Approval. DLC has obtained, or will obtain by the
-------------------
Effective Date (as defined under the Capacity Agreement), any and all
approvals of, and given any notices to, any Governmental Authority
that are required for DLC to execute deliver, and perform under this
Amended Agreement. DLC shall cooperate with Generating Company to the
extent reasonably required by Generating Company to obtain the
regulatory approvals referred to in Section 14.2.3.
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14.1.4 Compliance With Law. DLC represents and warrants that it is not in
-------------------
violation of any applicable law, statute, order, rule, regulation, or
judgment promulgated or entered by any federal, state, or local
Governmental Authority, which violation could reasonably be expected
to materially adversely affect DLC's performance of its obligations
under this Amended Agreement. DLC represents and warrants that it will
comply with all laws, rules, regulations, codes, and standards of all
federal, state, and local Governmental Authorities applicable to DLC's
compliance with this Amended Agreement.
14.2 Representations of Generating Company. Generating Company represents and
-------------------------------------
warrants to DLC as follows:
14.2.1 Incorporation. Generating Company is a limited partnership, validly
-------------
existing and in good standing under the laws of Delaware, and has all
requisite power and authority to own, lease and operate its material
assets and properties and to carry on its business as now being
conducted.
14.2.2 Authority. Generating Company has full corporate power and authority
---------
to execute and deliver this Amended Agreement and, subject to the
procurement of applicable regulatory approvals, to carry out the
actions required of it by this Amended Agreement. The execution and
delivery of this Amended Agreement and the transaction contemplated
hereby have been duly and validly authorized by all necessary
corporate action required on the part of Generating Company. The
Amended Agreement has been duly and validly executed and delivered by
Generating Company and, assuming that it is duly and validly executed
and delivered by DLC, constitutes a legal, valid and binding agreement
of Generating Company.
14.2.3 Regulatory Approval. Generating Company has obtained, or will obtain
-------------------
by the Effective Date (as defined under the Capacity Agreement), any
and all approvals of, and given any notices to, any Governmental
Authority that are required for Generating Company to execute, deliver
and perform under this Amended Agreement. Generating Company shall
cooperate with DLC to the extent reasonably required by DLC to obtain
the regulatory approvals referred to in Section 14.1.3.
14.2.4 Compliance With Law. Generating Company represents and warrants that
-------------------
it is not in violation of any applicable law, statute, order, rule,
regulation, or judgment promulgated or entered by any federal, state,
or local Governmental Authority, which violation could reasonably be
expected to materially adversely affect Generating Company's
performance of its
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obligations under this Amended Agreement. Generating Company
represents and warrants that it will comply with all laws, rules,
regulations, codes, and standards of all federal, state, and local
Governmental Authorities applicable to Generating Company's compliance
with this Amended Agreement.
14.3 Representations of Both Parties. The representations and warranties in
-------------------------------
Sections 14.1.4 and 14.2.4 shall continue in full force and effect for the
Term of this Amended Agreement.
ARTICLE 15 Force Majeure
15.1 Notwithstanding anything in this Amended Agreement to the contrary, neither
Generating Company nor DLC shall be liable in damages, or otherwise
responsible to the other Party, for its failure to perform or observe any
of its obligations under this Amended Agreement, if and only to the extent
that it is unable to so perform or is prevented from performing by an event
of Force Majeure. An event of Force Majeure does not relieve any Party of
its obligation to make timely payments hereunder.
15.2 The term "Force Majeure" as used herein means those causes beyond the
reasonable control of the Party affected, which by the exercise of
reasonable diligence, including Good Utility Practice, that Party is unable
to prevent, avoid, mitigate, or overcome, including the following: any act
of God, labor dispute (including a strike), act of the public enemy, war,
civil disturbance, insurrection, riot, fire, storm or flood, lightning,
explosion, order, government decree or rule, regulation or restriction
imposed by governmental, military or lawfully-established civilian
authorities, or any other cause of a similar nature beyond a Party's
reasonable control that prevents performance under this Amended Agreement.
Neither the cost to maintain the Facility or the Transmission System nor
any mechanical or electrical breakdown or failure of machinery or plant
owned or operated by Generating Company or DLC due to normal wear and tear
on such machinery or plant or due to the manner in which such machinery or
plant has been operated shall be deemed an event of Force Majeure.
15.3 Each Party shall have the obligation to operate in accordance with Good
Utility Practice at all times and to use Due Diligence to overcome and
remove any cause of failure to perform.
15.4 If a Party relies on the occurrence of an event or condition described
above as a basis for being excused from performance of its obligation under
this Amended Agreement, then the Party relying on the event or condition
shall: (i) provide prompt
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written notice of such Force Majeure event to the other Party, giving an
estimate of its expected duration and the probable impact on the
performance of its obligations hereunder; (ii) exercise all reasonable
efforts to continue to perform its obligations under this Amended
Agreement; (iii) expeditiously take action to correct or cure the event or
condition excusing performance; provided, however, that settlement of
strikes or other labor disputes will be completely within the sole
discretion of the Party affected by such strike or labor dispute; (iv)
exercise all reasonable efforts to mitigate or limit damages to the other
Party; and (v) provide prompt notice to the other Party of the cessation of
the event or condition giving rise to its excuse from performance. All
performance obligations hereunder shall be extended by a period equal to
the period of inability to perform caused by such Force Majeure event.
15.5 If a Party responding to a Force Majeure event has the ability to obtain,
for additional expenditures, expedited material deliveries or labor
production which would allow a response to the event in a manner that is
above and beyond Good Utility Practice, such a response could shorten the
duration of the event, and a shorter duration of the event could lessen the
economic hardship of the other Party, the Party responding to the event
may, at its discretion, present the other Party with the option of funding
the expenditures for expediting material deliveries or labor production in
an effort to reduce the duration of the event and economic hardship. Each
such opportunity will be negotiated on a case-by-case basis by the Parties.
ARTICLE 16 Liability
16.1 Except to the extent of the other Party's negligence or willful misconduct
(or that of its employees, agents, contractors, subcontractors or
invitees), each Party shall be responsible for all physical damage to or
destruction of the property, equipment and/or facilities owned by it and
its Affiliates, regardless of who brings the claim and regardless of who
caused the damage, and shall not seek recovery or reimbursement from the
other Party for such damage; but in any such case DLC and Generating
Company will exercise Due Diligence to remove the cause of any disability
at the earliest practicable time.
16.2 To the fullest extent permitted by law and notwithstanding other provisions
of this Amended Agreement, in no event shall DLC, its Affiliates, or any of
their respective officers, directors, employees, agents, successors or
assigns be liable to Generating Company, whether in contract, warranty,
tort, negligence, strict liability, or otherwise, for special, indirect,
incidental, multiple, consequential (including, without limitation,
replacement power costs, lost profits or revenues, and lost business
opportunities), or punitive damages, related to or resulting from
performance or nonperformance of this
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Amended Agreement or any activity associated with or arising out of this
Amended Agreement.
16.3 To the fullest extent permitted by law and notwithstanding other provisions
of this Amended Agreement, in no event shall Generating Company, its
Affiliates, or any of their respective officers, directors, employees,
agents, successors or assigns be liable to DLC, whether in contract,
warranty, tort, negligence, strict liability, or otherwise, for special,
indirect, incidental, multiple, consequential (including, without
limitation, replacement power costs, lost profits or revenues, and lost
business opportunities), or punitive damages, related to or resulting from
performance or nonperformance of this Amended Agreement or any activity
associated with or arising out of this Amended Agreement.
16.4 No Party shall be liable to another Party for any action that it takes in
responding to an Emergency Condition, so long as such action is made in
good faith, is consistent with Good Utility Practice, and is not contrary
to the directives of PJM with respect to such Emergency Condition.
16.5 The provisions of this Article 16 shall survive termination, cancellation,
suspension, completion or expiration of this Amended Agreement.
ARTICLE 17 Indemnification
17.1 Generating Company's Indemnification. Subject to the provisions of Sections
------------------------------------
16.1, 16.2 and 16.3, Generating Company shall indemnify, hold harmless and
defend DLC, its parent, its Affiliates, and its and their successors,
officers, directors, employees, shareholders, agents, contractors,
subcontractors, invitees and successors, from and against any and all
claims, demands, suits, obligations, payments, liabilities, costs, losses,
judgments, damages and expenses (including the reasonable costs and
expenses of any and all actions, suits, proceedings, assessments,
judgments, settlements, and compromises relating thereto, reasonable
attorneys' and expert fees and reasonable disbursements in connection
therewith) for damage to property, injury to or death of any person,
including DLC's employees, Generating Company's employees and their
Affiliates' employees, or any third parties, to the extent caused wholly or
in part by any act or omission, negligent or otherwise, by Generating
Company or its officers, directors, employees, agents, contractors,
subcontractors and invitees arising out of or connected with Generating
Company's performance or breach of this Amended Agreement, or the exercise
by Generating Company of its rights hereunder. In furtherance of the
foregoing
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indemnification and not by way of limitation thereof, Generating Company
hereby waives any defense it otherwise might have under applicable workers'
compensation laws.
17.2 DLC's Indemnification. Subject to the provisions of Sections 16.1,
---------------------
16.2 and 16.3 DLC shall indemnify, hold harmless and defend Generating
Company, its parent, Affiliates, and successors, and their officers,
directors, employees, shareholders, agents, contractors,
subcontractors, invitees and successors, from and against any and all
claims, demands, suits, obligations, payments, liabilities, costs,
losses, judgments, damages and expenses (including the reasonable
costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements, and compromises relating thereto
reasonable attorneys' and expert fees and reasonable disbursements in
connection therewith) for damage to property, injury to or death of
any person, including Generating Company's employees, DLC's employees
and their Affiliates' employees, or any third parties, to the extent
caused wholly or in part by any act or omission, negligent or
otherwise, by DLC or its officers, directors, employees, agents,
contractors, subcontractors and invitees arising out of or connected
with DLC's performance or breach of this Amended Agreement, or the
exercise by DLC of its rights hereunder. In furtherance of the
foregoing indemnification and not by way of limitation thereof, DLC
hereby waives any defense it otherwise might have under applicable
workers' compensation laws.
17.3 Indemnification Procedures. Any Party seeking indemnification under
--------------------------
this Amended Agreement shall give the other Party notice of such claim
promptly but in any event on or before the earlier of the tenth (10th)
day after the Party's actual knowledge of such claim or action or the
ninetieth (90th) day from commencement of the event or circumstance
giving rise to the claim. Such notice shall describe the claim in
reasonable detail, and shall indicate the amount (estimated if
necessary) of the claim that has been, or may be sustained by, said
Party. To the extent that the other Party will have been actually and
materially prejudiced as a result of the failure to provide such
notice, such notice will be a condition precedent to any liability of
the other Party under the provisions for indemnification contained in
this Amended Agreement. Neither Party may settle or compromise any
claim for which indemnification is sought under this Amended Agreement
without the prior consent of the other Party; provided, however, said
consent shall not be unreasonably withheld or delayed.
ARTICLE 18 Insurance
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18.1 The Parties agree to maintain, at their own cost and expense, fire,
liability, worker's compensation, and other forms of insurance relating to
their property and facilities in the manner, and amounts, and for the
durations set forth in Exhibit 2 to this Amended Agreement, as both Parties
may, from time-to-time, agree to amend. Each Party may require the other
Party to maintain coverage for five years on all policies written on a
"claims made" basis.
18.2 Every contract of insurance providing the coverages required in Exhibit 2
shall include provisions or endorsements (i) stating that such insurance is
primary insurance with respect to the interest of the other Party and that
any insurance maintained by the other Party is excess and not contributory
insurance required hereunder, and (ii) providing that no reduction,
cancellation or expiration of the policy shall be effective until ninety
(90) days from the date written notice thereof is actually received by the
other Party. Upon a Party's receipt of any notice of reduction,
cancellation or expiration, that Party shall immediately provide written
notice thereof to the other Party.
18.3 Each Party and its Affiliates shall be named as additional insureds on the
general liability insurance policies of the other Party set forth in
Exhibit 2 as their interests may appear with respect to this Amended
Agreement.
18.4 At least fifteen (15) days prior to the anniversary of the Auction Closing
Date during the term of this Amended Agreement, each Party shall provide to
the other Party, properly executed and current certificates of insurance
with respect to all insurance policies required to be maintained by such
Party under this Amended Agreement. Certificates of insurance shall provide
the following information:
(a) Name of insurance company, policy number and expiration date.
(b) The coverage required and the limits on each, including the
amount of deductibles or self-insured retentions, which shall be
for the account of the Party maintaining such policy.
(c) A statement indicating that the other Party shall receive at
least thirty (30) days prior written notice of cancellation or
expiration of a policy, or reduction of liability limits with
respect to a policy, and
(d) A statement indicating that the other Party and its Affiliates
have been named as additional insureds.
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18.5 At a Party's request, in addition to the foregoing certifications, the
other Party shall deliver to the first Party a copy of each insurance
policy, certified as a true copy by an authorized representative of the
issuing insurance company.
18.6 Each Party shall have the right to inspect the original policies of
insurance applicable to this Amended Agreement at the other Party's place
of business during regular business hours.
ARTICLE 19 Several Obligations
19. Except where specifically stated in this Amended Agreement to be otherwise,
the duties, obligations and liabilities of the Parties are intended to be
several and not joint or collective. Nothing contained in this Amended
Agreement shall ever be construed to create an association, trust,
partnership, or joint venture or to impose a trust or partnership duty,
obligation or liability or agency relationship on or with regard to either
Party. Each Party shall be individually and severally liable for its own
obligations under this Amended Agreement.
ARTICLE 20 Confidentiality
20.1 Certain information provided by each Party (the "Disclosing Party") to the
other Party (the "Receiving Party") pursuant to the provisions of this
Agreement may be considered confidential and/or proprietary ("Confidential
Information"). To be considered confidential, such information must be
clearly marked "Confidential Information." If disclosed orally, such
information shall be clearly identified as confidential and such status
shall be promptly thereafter confirmed in writing.
20.2 The Receiving Party agrees not to disclose Confidential Information to any
third party not a Representative of the Receiving Party absent advance
written consent of the Disclosing Party, except as may be necessary to
enforce the terms of this Amended Agreement, provided that the Receiving
Party uses reasonable efforts to maintain the confidentiality of such
information in any proceeding or suit to enforce this Amended Agreement.
The Receiving Party further agrees that, with respect to Confidential
Information, it shall (a) restrict disclosure of Confidential Information
solely to its Representatives on a need-to-know basis; and (b) advise those
Representatives of their obligations with respect to the Confidential
Information.
20.3 Confidential Information shall not be deemed to include information which:
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(a) is or becomes generally available to the public other than as a
result of a disclosure by the Receiving Party;
(b) was available to the Receiving Party on a non-confidential basis
prior to its disclosure by the Disclosing Party; or
(c) becomes available to the Receiving Party on a non-confidential
basis from a person other than the Disclosing Party or its
Representative who is not otherwise bound by a confidentiality
agreement with Disclosing Party or its Representative, or is
otherwise not under any obligation to Disclosing Party or its
Representative not to disclose the information to the Receiving
Party.
20.4 The Receiving Party shall treat any Confidential Information with at least
the same degree of care regarding its secrecy and confidentiality as the
Receiving Party's similar information is treated within the Receiving
Party's organization. The Receiving Party shall notify the Disclosing Party
of any unauthorized disclosure to third parties that the Receiving Party
discovers, and Receiving Party shall endeavor to prevent further such
disclosures. Receiving Party will be responsible for any breach of the
terms of this Article 20 by Receiving Party's Representatives.
20.5 In the event that Receiving Party is requested, pursuant to or as required
by applicable law or regulation, by legal process, to disclose any
Confidential Information, the Receiving Party shall provide the Disclosing
Party with prompt notice of such request or requirement in order to enable
Disclosing Party to seek an appropriate protective order or other remedy;
and to consult with Disclosing Party with respect to Disclosing Party
taking steps to resist or narrow the scope of such request or legal
process. The Receiving Party agrees not to oppose any action by the
Disclosing Party to obtain a protective order or other appropriate remedy.
In the event that no such protective order or other remedy is obtained, the
Receiving Party shall furnish only that portion of the Confidential
Information which the Receiving Party is advised by counsel is legally
required. In any such event, Receiving Party shall use its commercially
reasonable efforts to ensure that all Confidential Information so disclosed
will be accorded confidential treatment.
20.6 The Parties agree that remedies at law may be inadequate to protect each
other in the event of a breach of this Article 20, and the Receiving Party
hereby in advance agrees that the Disclosing Party shall be entitled to
seek and obtain, without proof of actual damages, temporary, preliminary
and permanent injunctive relief from any court or Governmental Authority of
competent jurisdiction restraining Receiving Party from committing or
continuing any breach of this Article 20.
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20.7 The confidentiality obligations of each Party under this Article 20 shall
continue in full force and effect for a period of two (2) years following
the termination of this Amended Agreement.
ARTICLE 21 Remedies
21.1 In the event that either Party (the "Delinquent Party") fails to make full
payment of the undisputed portion of any invoice rendered under this
Amended Agreement on or before the due date, the other Party (the
"Non-Delinquent Party") shall give the Delinquent Party notice in writing
of such delinquency, and the Delinquent Party will have thirty (30)
business days from the date of its receipt of such written notice to cure
such delinquency. In the event the Delinquent Party fails to make full
payment of the delinquent amount (including interest accrued at the
Interest Rate) within such 30-day period, the Delinquent Party will be in
default. In the event of a default by Generating Company, DLC shall have
the right to apply to the FERC to terminate service under this Amended
Agreement.
21.2 If either Party fails to fulfill obligations under this Amended Agreement
(in such event, a "Defaulting Party") and such failure could adversely
affect the use, operation, or economic benefit of the Transmission System
or Generating Company's Facilities, including without limitation the
Connection Equipment, or the regional network, the other Party (the
"Non-Defaulting Party"), following thirty (30) days' prior written notice
(which specifies the nature of such failure in reasonable detail) to the
Defaulting Party (except in cases of emergencies in which case only such
notice as shall be reasonably practicable in the circumstances), the
Defaulting Party shall be deemed in default, and the Non-Defaulting Party
may, but shall not be obligated to, apply to the FERC to terminate service
under this Amended Agreement.
21.3 The enumeration of the foregoing remedies shall not be deemed to be a
waiver of any other remedies at law or in equity to which the
Non-Delinquent Party or the Non-Defaulting Party is legally entitled.
ARTICLE 22 Term
22.1 This Agreement shall become effective as of the Effective Date (as defined
under the Capacity Agreement) and shall continue in full force and effect
as long as the Facilities are connected to the Transmission System, unless
modified by written agreement of the Parties (such period, the "Term").
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22.2 For Connection Service and voltage and reactive control requirements set
forth in Articles 2, 3, and 4:
(a) if (i) FERC, any state or state regulatory commission, implements
a change in any law, regulation, rule or practice, or (ii) DLC or
PJM upon approval of FERC, implements a change in any regulation,
rule or practice, which change materially affects or is
reasonably expected to materially affect DLC's provision of
Connection Service to Generating Company or voltage and reactive
control requirements set forth in Articles 2, 3 and 4, the
Parties shall negotiate in good faith to determine the
amendments, if any, to this Amended Agreement necessary to
conform the terms of Connection Service or voltage or reactive
control requirements to such change, and DLC shall file such
amendments with the FERC; provided that in negotiating such
amendments the Parties shall attempt, in good faith, to preserve,
to the extent reasonably possible, the bargain initially struck
in this Amended Agreement; and provided further that no such
amendment shall require any payment to be made by Generating
Company to DLC for the connection of the Units to the
Transmission System in existence on the Auction Closing Date; and
(b) in addition, on a mutually convenient date after the date hereof
and thereafter as requested by either Party during the Term of
this Amended Agreement, the Parties shall meet to discuss the
impact on the terms of Connection Service of any changes in the
OATT, or any rule or practice of NERC, ECAR, PJM, or any other
regulatory agency.
22.3 The applicable provisions of this Amended Agreement shall continue in
effect after cancellation or termination hereof to the extent necessary to
provide for final xxxxxxxx, billing adjustments and payments pertaining to
liability and indemnification obligations arising from acts or events that
occurred while this Amended Agreement was in effect.
ARTICLE 23 Assignment/Change in Corporate Identity
23.1 Neither this Amended Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned, except to an Affiliate or
successor of DLC that owns or operates all or any portion of the
Transmission System (including an independent system operator or
independent transmission company), or to an Affiliate of Generating Company
that owns the Facilities or any subsequent purchaser of any of the
Facilities, by any Party hereto, including by operation of law, without the
prior written consent of the
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other Party, said consent not to be unreasonably withheld. Any assignment
of this Amended Agreement in violation of the foregoing shall be, at the
option of the non-assigning Party, void.
(a) Notwithstanding the foregoing, Generating Company or its
permitted assignee may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee,
lending institution, or any Person for the purposes of financing
or refinancing the Facility, including upon or pursuant to the
exercise of remedies under such financing or refinancing, or by
way of assignments, transfers, conveyances of dispositions in
lieu thereof; provided, however, that no such assignment or
disposition shall relieve or in any way discharge Generating
Company or such permitted assignee from the performance of its
duties and obligations under this Amended Agreement. DLC agrees
to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer,
conveyance, pledge or disposition of rights hereunder for
purposes of the financing or refinancing of the Facility, so long
as DLC's rights under this Amended Agreement are not thereby
materially altered, amended, diminished or otherwise impaired.
(b) Notwithstanding the foregoing, Generating Company may assign its
obligations hereunder in order to facilitate Generating Company
obtaining or maintaining exempt wholesale generator status so
long as Generating Company provides written notice to DLC of any
such assignment.
(c) Notwithstanding the foregoing, either Party may assign this
Amended Agreement to a successor to all or substantially all of
the assets of such Party by way of merger, consolidation, sale or
otherwise, provided such successor assumes and becomes liable for
all of such Party's duties and obligations hereunder.
23.2 No assignment or transfer of rights or obligations under this Amended
Agreement by Generating Company shall relieve Generating Company from full
liability and financial responsibility for the performance thereof after
any such transfer or assignment unless and until the transferee or assignee
shall agree in writing to assume the obligations and duties of Generating
Company under this Amended Agreement and DLC has consented in writing to
such assumption; said consent not to be unreasonably withheld.
Notwithstanding the foregoing, an assignment by the Generating Company to
an Affiliate as contemplated in Section 23.1 shall relieve the Generating
Company from full liability and financial responsibility, effective on the
date that Affiliate assumes ownership of the Facilities.
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23.3 Except as set forth in Section 23.1 above, no assignment or transfer of
rights or obligations under this Amended Agreement by DLC shall relieve DLC
from full liability and financial responsibility for the performance
thereof after any such transfer or assignment unless and until the
transferee or assignee shall agree in writing to assume the obligations and
duties of DLC under this Amended Agreement and Generating Company has
consented in writing to such assumption; said consent not to be
unreasonably withheld.
23.4 If either Party terminates its existence as a corporate entity by merger,
acquisition, sale, consolidation or otherwise, or if all or substantially
all of such Party's assets are transferred to another person or business
entity, without complying with Sections 23.2 and 23.3 above, the other
Party shall have the right, enforceable in a court of competent
jurisdiction, to enjoin the first Party's successor from using the property
in any manner that interferes with, impedes, or restricts such other
Party's ability to carry out its ongoing business operations, rights and
obligations.
23.5 This Amended Agreement and all of the provisions hereof are binding upon,
and inure to the benefit of, the Parties and their respective successors
and permitted assigns.
ARTICLE 24 Subcontractors
24.1 Nothing in this Amended Agreement shall prevent the Parties from utilizing
the services of subcontractors as they deem appropriate; provided, however,
the Parties agree that, where applicable, all said subcontractors shall
comply with the terms and conditions of this Amended Agreement.
24.2 The creation of any subcontract relationship shall not relieve the hiring
Party of any of its obligations under this Amended Agreement. Each Party
shall be fully responsible to the other Party for the acts and/or omissions
of any subcontractor it hires as if no subcontract had been made. Any
obligation imposed by this Amended Agreement upon the Parties, where
applicable, shall be equally binding upon and shall be construed as having
application to any subcontractor.
24.3 Each Party shall be liable for, indemnify, and hold harmless the other
Party, its Affiliates and their officers, directors, employees, agents,
servants and assigns from and against any and all claims, demands, or
actions from the first-mentioned Party's subcontractors, and shall pay all
costs, expenses and legal fees associated therewith and all judgments,
decrees and awards rendered therein.
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24.4 No subcontractor is intended to be or shall be deemed a third-party
beneficiary of this Amended Agreement.
24.5 To the extent of the responsibility and liability Generating Company has
agreed to assume in Article 16 above, and to the fullest extent permitted
by law, Generating Company shall require its subcontractors to indemnify
and hold harmless and defend DLC, its parent and Affiliates and their
respective officers, directors, employees, agents and assigns from and
against any and all claims and/or liability for damage to property, injury
to or death of any person, including DLC's employees, Generating Company's
employees and their respective Affiliates' employees, or any other
liability incurred by DLC or its parent or Affiliates including all
expenses, legal or otherwise, to the extent caused by any act or omission,
negligent or otherwise, by said subcontractor and/or its officers,
directors, employees, agents and assigns arising out of or connected with
the operation of DLC's and its Affiliates' or Generating Company's and its
Affiliates' facilities, equipment and property described in this Amended
Agreement, regardless of whether caused in part by a Party indemnified
hereunder.
24.6 To the extent of the responsibility and liability DLC has agreed to assume
in Article 16 above, and to the fullest extent permitted by law, DLC shall
require its subcontractors to indemnify and hold harmless and defend
Generating Company, its parent and Affiliates and their respective
officers, directors, employees, agents and assigns from and against any and
all claims and/or liability for damage to property, injury to or death of
any person, including DLC's employees, Generating Company's employees and
their respective Affiliates' employees, or any other liability incurred by
Generating Company or its parent or Affiliates including all expenses,
legal or otherwise, to the extent caused by any act or omission, negligent
or otherwise, by said subcontractor and/or its officers, directors,
employees, agents and assigns arising out of or connected with the
operation of DLC's and its Affiliates' or Generating Company's and its
Affiliates' facilities, equipment and property described in this Amended
Agreement, regardless of whether caused in part by a Party indemnified
hereunder.
24.7 The obligations under this Article 24 shall not be limited in any way by
any limitation on subcontractor's insurance.
24.8 Each Party shall require its subcontractors to comply with all federal and
state laws regarding insurance requirements and shall maintain standard and
ordinary insurance coverages.
ARTICLE 25 Dispute Resolution
-63-
25.1 Any claim or dispute which either Party may have against the other arising
out of or relating to this Amended Agreement or the breach, termination or
validity thereof (any such claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. The submission of any Dispute
shall include a concise statement of the question or issue in dispute,
together with a statement listing the relevant facts and documentation that
support the claim. In the event that Representatives of DLC and Generating
Company are unable in good faith to satisfactorily resolve their
disagreement within thirty (30) days from the receipt of notice of the
Dispute, either Party may by written notice to the other refer the Dispute
to their respective senior management.
25.2 If any Dispute arising hereunder is not resolved within thirty (30) days
after notice thereof to the other Party, either Party may demand in writing
the submission of the Dispute to binding arbitration in Pittsburgh,
Pennsylvania. Any arbitration initiated under this Amended Agreement shall
be conducted before a single neutral arbitrator appointed by the Parties
within thirty (30) days of receipt by respondent of the demand for
arbitration. If the Parties are unable to agree on an arbitrator, such
arbitrator shall be appointed by the American Arbitration Association.
Unless the Parties agree otherwise, the arbitrator shall be an attorney or
retired judge with at least fifteen (15) years of experience, and shall not
have any current or past substantial business or financial relationships
with any Party to the arbitration. If possible, the arbitrator shall have
experience in the electric utility industry. Unless otherwise agreed, the
arbitration shall be conducted in accordance with the American Arbitration
Association's Commercial Arbitration Rules then in effect. Any arbitration
proceedings, decision or award rendered hereunder and the validity, effect
and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act of the United States, 9 U.S.C. Sections 1 et seq.
25.3 The arbitration shall, if possible, be concluded not later than six (6)
months after the date that it is initiated. The arbitrator shall be
authorized only to interpret and apply the provisions of this Amended
Agreement or any related agreements entered into under this Amended
Agreement and shall have no power to modify or change any of the above in
any manner. The arbitrator shall have no authority to award punitive or
multiple damages or any damages inconsistent with this Amended Agreement.
The arbitrator shall within thirty (30) days of the conclusion of the
hearing, unless such time is extended by agreement of all Parties, notify
the Parties in writing of his or her decision, stating his or her reasons
for such decision and separately listing his or her findings of fact and
conclusions of law. The decision of the arbitrator rendered in such a
proceeding shall be final and binding on the Parties. Judgment on the award
may be entered upon it in any court having jurisdiction.
-64-
25.4 Nothing in this Amended Agreement shall preclude, or be construed to
preclude, any Party from filing a petition or complaint with FERC with
respect to any arbitrable claim over which FERC has jurisdiction. In such
case, the other Party may request FERC to reject or to waive jurisdiction.
If FERC rejects or waives jurisdiction with respect to all or a portion of
the claim, the portion of the claim not so accepted by FERC shall be
resolved through arbitration, as provided in this Amended Agreement. To the
extent that FERC asserts or accepts jurisdiction over the claim, the
decision, finding of fact or order of FERC shall be final and binding,
subject to judicial review under the Federal Power Act, and any arbitration
proceedings that may have commenced with respect to the claim prior to the
assertion or acceptance of jurisdiction by FERC shall be terminated. Each
of the Parties hereto irrevocably waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection
with this Amended Agreement or the transactions contemplated hereby.
ARTICLE 26 Additional Cost Responsibilities
26. If Generating Company requests an upgrade to the Transmission System,
Generating Company will be responsible for its share of the cost of
the upgrade pursuant to the OATT.
ARTICLE 27 Miscellaneous Provisions
27.1 This Amended Agreement shall constitute the entire agreement between the
Parties hereto relating to the subject matter hereof, and all previous
agreements, discussions, communications, and correspondence with respect to
the subject matter hereof not set forth in this Amended Agreement are of no
force and effect.
27.2 In the event that it is deemed necessary to amend this Amended Agreement,
the Parties will attempt to agree upon such amendment and will submit such
mutually agreed upon amendment(s) to the FERC for filing and acceptance.
However, either Party shall have the right at any time to propose an
amendment to the provisions of this Amended Agreement relating to the
amount that Party charges the other Party to provide service under this
Amended Agreement by filing an amendment with the FERC and serving such
amendment on the other Party. Such an amendment shall become effective as a
change of rate under Section 205 of the Federal Power Act upon acceptance
by FERC. Notwithstanding the above, no application will be made to FERC by
DLC to recover any costs associated with the connection of the Units to the
Transmission System in existence on the Auction Closing Date.
-65-
27.3 No failure or delay on the part of DLC or Generating Company in exercising
any of its rights under this Amended Agreement, no partial exercise by
either Party of any of its rights under this Amended Agreement, and no
course of dealing between the Parties shall constitute a waiver of the
rights of either Party under this Amended Agreement. Any waiver shall be
effective only by a written instrument signed by the Party granting such
waiver, and such shall not operate as a waiver of, or estoppel with respect
to, any subsequent failure to comply therewith.
27.4 Nothing in this Amended Agreement, express or implied, is intended to
confer on any other person except the Parties hereto any rights, interests,
obligations or remedies hereunder.
27.5 In the event that any clause or provision of this Amended Agreement or any
part hereof shall be held to be invalid, void, or unenforceable by any
court or governmental authority of competent jurisdiction, said holding or
action shall be strictly construed and shall not affect the validity or
effect of any other provision hereof, and the Parties shall endeavor in
good faith to replace such invalid or unenforceable provisions with a valid
and enforceable provision which achieves the purposes intended by the
Parties to the greatest extent permitted by law.
27.6 The Parties hereto agree to execute and deliver promptly, at the expense of
the Party requesting such action, any and all other and further
instruments, documents and information which may be reasonably requested in
order to effectuate the transactions contemplated hereby. The Parties agree
to cooperate and assist each other in acquiring any regulatory approval
necessary to effectuate this Amended Agreement.
27.7 The Article and section headings herein are inserted for convenience only
and are not to be construed as part of the terms hereof or used in the
interpretation of this Amended Agreement.
27.8 In the event an ambiguity or question of intent or interpretation arises,
this Amended Agreement shall be construed as if drafted jointly by the
Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of authorship of any of the provisions of
this Amended Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
The word "including" in this Amended Agreement shall mean including without
limitation.
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27.9 This Amended Agreement may be executed in one or more counterparts, each of
which shall be deemed an original.
27.10 Any notice required to be given by either Party to the other in connection
with this Amended Agreement shall be given in writing and shall be deemed
given on the date of receipt personally or by facsimile transmission (if
sent by facsimile on a business day during normal business hours of the
recipient, or if not, on the next succeeding business day, with
transmission confirmed by the sender's facsimile machine and if sender
thereafter sends such notice to recipient by any of the other methods
provided in this Section 27.10) or mailed by registered or certified U.S.
mail, return receipt requested, postage prepaid, or by reputable overnight
courier, with acknowledged receipt of delivery, to the Parties at the
address below (or at such other address as shall be specified by like
notice). Notice provided by mail or overnight courier shall be deemed given
at the date of acceptance or refusal of acceptance shown on such receipt.
Notice to DLC shall be to the following address:
Duquesne Light Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Notice to Generating Company shall be to the following address:
Orion Power MidWest, L.P.
0 Xxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx Xxxx
Any payments required to be made by Generating Company under this
Amended Agreement shall be made to DLC at the following address:
Orion Power MidWest, L.P.
0 Xxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx Xxxx
-67-
Any payments required to be made by DLC under this Amended Agreement
shall be made to Generating Company at the following address:
Duquesne Light Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
27.11 Each Party shall act as an independent contractor with respect to the
provision of services hereunder.
-68-
IN WITNESS WHEREOF, DLC and Generating Company have caused this
Agreement to be signed by their respective duly authorized representatives.
ORION POWER MIDWEST, L.P. DUQUESNE LIGHT COMPANY
By: Orion Power MidWest G.P., Inc.,
Its General Partner
---------------------------- ---------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: President Title: President
EXHIBIT 1
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EXHIBIT 2
Minimum Insurance Requirements of DLC:
(1) Worker's Compensation Insurance in accordance with statutory requirements
including Employer's Liability Insurance with limits of not less than $1
million per occurrence and endorsement providing insurance for obligations
under the U.S. Longshoremen's and Harbor Worker's Compensation Act and the
Xxxxx Act where applicable.
(2) General Liability Insurance including, but not limited to, bodily injury,
property damage, products/completed operations, contractual and personal
injury liability with a combined single limit of at least $5 million per
occurrence, at least $10 million annual aggregate.
(3) Automobile Liability Insurance including owned, non-owned and hired
automobiles with combined bodily injury and property damage limits of at
least $2 million per occurrence, $4 million aggregate.
Minimum Insurance Requirements of Generating Company:
(1) Worker's Compensation Insurance in accordance with statutory requirements
including Employer's Liability Insurance with limits of not less than $1
million per occurrence and endorsement providing insurance for obligations
under the U.S. Longshoremen's and Harbor Worker's Compensation Act and the
Xxxxx Act where applicable.
(2) General Liability Insurance including, but not limited to, bodily injury,
property damage, products/completed operations, contractual and personal
injury liability with a combined single limit of at least $5 million per
occurrence, at least $10 million annual aggregate.
(3) All Risk Property Insurance including Boiler and Machinery against damage
to all owned, leased or operated property that is part of the Facility
within limits consistent with industry practice.
(4) Automobile Liability Insurance including owned, non-owned and hired
automobiles with combined bodily injury and property damage limits of at
least $2 million per occurrence, $4 million aggregate.
EXHIBIT 3
FORM OF
AMENDED
SYSTEM OPERATIONS CENTER
SERVICE AGREEMENT
by and between
DUQUESNE LIGHT COMPANY
and
ORION POWER MIDWEST, L.P.
Dated as of , 2002
------------ ---
Exhibit 3
AMENDED
SYSTEM OPERATIONS CENTER
SERVICE AGREEMENT
THIS AMENDED SYSTEM OPERATIONS CENTER SERVICE AGREEMENT ("Agreement")
---------
is dated as of , 2002 (the "Effective Date") and is entered into
------------- --- --------------
by and among ORION POWER MIDWEST, L.P. a Delaware limited partnership ("Orion
-----
Midwest"), and DUQUESNE LIGHT COMPANY, a Pennsylvania corporation ("DLC"). Orion
------- ---
Midwest and DLC may be referred to herein individually as a "Party" and together
-----
as the "Parties."
-------
BACKGROUND
----------
WHEREAS, DLC, Orion Power Holdings, Inc. ("Orion Holdings") and certain
--------------
subsidiaries of FirstEnergy Corp. ("FE") were parties to that certain Asset
--
Purchase Agreement dated as of September 24, 1999 ("APA") whereby, among other
---
things, DLC agreed to convey certain DLC assets and certain FE assets to Orion
Holdings; and
WHEREAS, Orion Holdings assigned its right, obligations, and interest in
and to the APA to Orion Midwest pursuant to an instrument dated April 27, 2000;
and
WHEREAS, the transactions contemplated by the APA were consummated on April
28, 2000 and concurrently therewith, the Parties entered into that certain
System Operations Center Service Agreement (the "Original Agreement"); and
WHEREAS, the DLC assets transferred to Orion Midwest under the APA included
the Xxxxxx Island Plant, Cheswick Plant, Elrama Plant and Xxxxxxxx Plant (each
as defined below) (collectively, the "Plants"); and
WHEREAS, the Parties subsequently entered into that certain Capacity
Agreement dated as of February 15, 2002 (the "Capacity Agreement"), pursuant to
which the Parties agreed that upon the "Effective Date" (as defined under the
Capacity Agreement) the Parties would amend the Original Agreement by entering
into this Amended System Operation Center Service Agreement; and
WHEREAS, the "Effective Date" (as defined under the Capacity Agreement)
having occurred on the date hereof, the Parties now hereby amend the Original
Agreement by entering into this Amended System Operation Center Service
Agreement.
NOW THEREFORE, the Parties hereto, in consideration of the mutual covenants
contained herein, each intending to be legally bound and to bind their
respective successors and assigns, hereby mutually agree as follows:
-1-
ARTICLE I
Definitions and Certain Matters
-------------------------------
1.1. Definitions. Whenever used in this Agreement with initial
-----------
capitalization, the following terms shall have the following meanings.
Capitalized terms not defined in this Article I shall have the meanings ascribed
---------
to such terms in the APA.
1.1.1. "Active Server Page" shall mean a hypertext markup language
------------------
page that includes one or more scripts that are processed on a
Microsoft web server before the page is sent to the user
1.1.2. "Affiliate" shall mean, with respect to a corporation,
---------
partnership or other entity, each other corporation, partnership
or other entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such corporation, partnership or other entity.
1.1.3. "Agreement" shall mean this Amended System Operations Center
---------
Service Agreement.
1.1.4. "APA" shall mean that certain Asset Purchase Agreement, dated
---
as of September 24, 1999, by and among DLC, Orion Holdings and
Ohio Edison Company, Pennsylvania Power Company and The Cleveland
Electric Illuminating Company.
1.1.5. "Xxxxxx Island Plant" shall mean the electric power generation
-------------------
station located in the 27th Xxxx of the City of Pittsburgh,
Pennsylvania, that is being transferred to Orion Midwest pursuant
to the APA.
1.1.6. "Cheswick Plant" shall mean the electric power generation
--------------
facility located in the Borough of Springdale and Township of
Springdale, Allegheny County, Pennsylvania, that is being
transferred to Orion Midwest pursuant to the APA.
1.1.7. "Control Area," for any Person, shall mean that Person's
------------
electric system, bounded by interconnection metering and
telemetry, capable of controlling generation to maintain its
interchange schedule with other Control Areas and contributing to
frequency regulation of the Eastern Interconnection.
-2-
1.1.8. "Defaulting Party" shall have the meaning set forth in Section
---------------- -------
8.1 below.
---
1.1.9. "DLC" shall mean Duquesne Light Company, a Pennsylvania
---
Corporation.
1.1.10. "DLC Control Area" shall mean the Control Area operated by DLC
----------------
or an Affiliate of DLC.
1.1.11. "DLC Control Center" shall mean DLC's system operations
------------------
control center located in Pittsburgh, Pennsylvania.
1.1.12. "DLC ICCP Server" shall mean the ICCP server located at the
DLC Control Center.
1.1.13. "Due Diligence" shall mean the exercise of good faith efforts
-------------
to perform a required act on a timely basis and in accordance
with Good Utility Practice using the necessary technical and
manpower resources.
1.1.14. "Effective Date" shall mean the date first above written.
--------------
1.1.15. "EGS" shall mean an electric generation supplier participating
---
in retail choice in the DLC service territory.
1.1.16. "Elrama Plant" shall mean the electric power generation
------------
station located partly in the Borough of Jefferson, Allegheny
County, Pennsylvania, and partly in the Township of Union,
Washington County, Pennsylvania, that is being transferred to
Orion Midwest pursuant to the APA.
1.1.17. "FERC" shall mean the Federal Energy Regulatory Commission.
----
1.1.18. "Force Majeure" shall have the meaning set forth in Section
------------- -------
10.1 below.
----
1.1.19. "Good Utility Practice" shall mean any of the acceptable
---------------------
practices, methods, standards, guides or acts:
(a) required by any Governmental Authority, regional or
national reliability council, or national trade
organization, including the NERC, the East Central Area
Reliability Council, the Edison Electric Institute or the
American Society of Mechanical
-3-
Engineers, or the successor of any of them, whether or not
the Party whose conduct is at issue is a member thereof; or
(b) otherwise engaged in or approved by a significant
portion of the electric utility industry during the relevant time
period which in the exercise of reasonable judgment in light of the
facts known or that should have been known at the time a decision was
made, could have been expected to accomplish the desired result in a
manner consistent with law, regulation, good business practices,
generation, transmission, and distribution reliability, safety,
environmental protection, economy, and expediency. Good Utility
Practice is intended to be acceptable practices, methods, or acts
generally accepted in the region, and is not intended to be limited to
the optimum practices, methods, or acts to the exclusion of others;
and
(c) such other acts or practices as are reasonably necessary to
maintain the reliability of the DLC Control Center, the
Orion Midwest Control Center or the Joint Communication
Means, as the case may be.
1.1.20. "Governmental Authority" shall mean any foreign, federal,
----------------------
state, local or other governmental, regulatory or administrative
agency, court, commission, department, board, or other
governmental subdivision, legislature, rulemaking board,
tribunal, arbitrating body, or other governmental authority.
1.1.21. "ICCP" shall mean Intercontrol Center Protocol IEC
----
870-6-802TASE.2, or any new or revised ICCP that the Parties may
agree to in writing.
1.1.22. "ICCP Bilateral Table" shall mean the means for providing
--------------------
access control on an association basis as defined in the ICCP
specification.
1.1.23. "Indemnified Party" shall have the meaning set forth in
-----------------
Section 9.3 below.
-----------
1.1.24. "Indemnifying Party" shall have the meaning set forth in
------------------
Section 9.3 below.
-----------
1.1.25. "Joint Communication Means" shall mean a means agreed upon by
-------------------------
the Parties for the transmission of digital signals via ICCP
between the DLC Control Center and the Orion Midwest Control
Center.
-4-
1.1.26. "Loss" shall mean any losses, liabilities, costs, damages,
----
expenses, claims, proceedings, actions, demands, obligations,
deficiencies, lawsuits, judgments, or awards.
1.1.27. "MW" shall mean megawatts.
--
1.1.28. "MWH" shall mean megawatt-hours.
---
1.1.29. "NERC" shall mean the North American Electric Reliability
----
Council, and any successor entity thereto.
1.1.30. "Non-Defaulting Party" shall have the meaning set forth in
--------------------
Section 8.1 below.
-----------
1.1.31. "Orion Midwest" shall mean Orion Midwest Power Midwest, L.P.
-------------
Delaware limited partnership.
1.1.32. "Orion Midwest Control Center" shall mean the Orion Midwest
----------------------------
system operations control center in Baltimore, Maryland, or such
other control center locations as Orion Midwest may specify in
writing to DLC.
1.1.33. "Orion Holdings" shall mean Orion Power Holdings, Inc., a
--------------
Delaware corporation.
1.1.34. "Party" or "Parties" shall mean, individually or collectively
----- -------
as the case may be, DLC and Orion Midwest.
1.1.35. "Person" shall mean any natural person, firm, corporation,
------
company, voluntary association, general or limited partnership,
joint venture, trust, limited liability company, unincorporated
organization, Governmental Authority or any other entity, whether
acting in an individual, fiduciary or other capacity.
1.1.36. "Xxxxxxxx Plant" shall mean the electric power generation
--------------
station located partly in Township of Crescent, Allegheny County,
Pennsylvania, and partly in the Borough of South Heights, Beaver
County, Pennsylvania, that is being transferred to Orion Midwest
pursuant to the APA.
-5-
1.1.37. "Plants" shall mean, collectively, the Xxxxxx Island Plant,
------
the Cheswick Plant, the Elrama Plant and the Xxxxxxxx Plant.
1.1.38. "Proprietary Information" of a Party shall mean all
-----------------------
information about the Party or its Affiliates, including their
respective properties or operations, furnished to the other Party
or its Representatives by the Party or its Representatives, in
connection with this Agreement, whether before or after the
Effective Date, regardless of the manner or medium in which it is
furnished. Proprietary Information does not include information
that: (a) is or becomes generally available to the public, other
than as a result of a disclosure by the other Party or its
Representatives; (b) was available to the other Party on a
nonconfidential basis prior to its disclosure by the Party or its
representatives; (c) becomes available to the other Party on a
nonconfidential basis from a Person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality
agreement with the Party or its Representatives, or is not
otherwise under any obligation to the Party or any of its
Representatives not to transmit the information to the other
Party or its Representatives; or (d) is independently developed
by the other Party.
1.1.39. "Representatives" shall mean, with respect to any Party, such
---------------
Party's authorized representatives, including without limitation,
its professional and financial advisors.
1.1.40. "Station Service Usage" shall mean the electrical energy usage
---------------------
at a Plant or generating unit.
1.1.41. "TCP/IP" shall mean the transmission control protocol/Internet
------
protocol method of transmitting data over a network.
1.1.42. "Third Party" shall mean any entity that is not a Party, a
-----------
Party's successor or assign or a Party's Affiliate.
1.1.43. "Third Party Control Area" shall mean a Control Area operated
------------------------
by any Person other than DLC, FE or their Affiliates.
1.2 Effect on Original Agreement. In accordance with Section 13.11 of the
----------------------------
Original Agreement, as of the Effective Date this Agreement amends, supercedes
and replaces the Original Agreement in its entirety.
-6-
ARTICLE II
Obligations of DLC
------------------
2.1 Obligations of DLC. DLC shall perform the duties specified in Schedules
------------------ ---------
2.1 through 2.5, which are attached hereto, as such Schedules may be modified
---------------
from time to time pursuant to the terms of this Agreement or deleted pursuant to
Article VI hereof.
----------
ARTICLE III
Obligations of Orion Midwest
----------------------------
3.1 Obligations of Orion Midwest. Orion Midwest shall perform the duties
----------------------------
specified in Schedules 3.1 through 3.5, which are attached hereto, as
-------------------------
such Schedules may be modified from time to time pursuant to the terms
of this Agreement or deleted pursuant to Article VI hereof.
----------
ARTICLE IV
Joint Obligations of Orion Midwest and DLC
------------------------------------------
4.1 Joint Communication Means. Each of DLC and Orion Midwest shall comply
-------------------------
with the obligations relating to the Joint Communication Means set
forth in Schedule 4.1 attached hereto.
------------
4.2 Confidentiality of Information.
------------------------------
4.2.1 Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of the
other Party confidential and, without the prior written consent
of such other Party, not disclose or reveal any such Proprietary
Information to any Person other than its Representatives or
Affiliates as necessary in connection with performing or
satisfying such Party's obligations to such other Party under any
agreement between the Parties hereto and (ii) use such
Proprietary Information only for such purposes and in such manner
as is contemplated by the terms of this Agreement.
Notwithstanding the foregoing, each Party shall be permitted to
use any Proprietary Information provided to it by the other Party
under the terms of this Agreement in support of any claim or
counterclaim respecting a breach of such other Party's
obligations under this Agreement. The obligations of the Parties
under this Section 4.7.1 will survive the termination of this
-------------
Agreement and the discharge of all other obligations owed by the
Parties to each other.
-7-
4.2.2 Upon the other Party's prior written approval (which shall not
be unreasonably withheld), either Party may disclose Proprietary
Information provided to it by the other Party under the terms of
this Agreement to any Governmental Authority, as may be necessary
to obtain required regulatory approvals or comply generally with
any applicable law or regulation. The disclosing Party shall seek
confidential treatment for the Proprietary Information of the
other Party provided to any Governmental Authority and the
disclosing Party shall notify the other Party, as far in advance
as is practicable, of its intention to release to any
Governmental Authority any Proprietary Information of such other
Party.
4.2.3 Each Party acknowledges and agrees that it shall not, and shall
not permit its Representatives or Affiliates to, disclose or
share any Proprietary Information provided to it by the other
Party in connection with this Agreement to (a) any Person
performing any merchant function for it or any of its Affiliates
or (b) otherwise in violation of any applicable law or regulation
relating to such Proprietary Information.
ARTICLE V
Payments
--------
5.1 Payments by Orion Midwest. In consideration of the services provided
-------------------------
by DLC pursuant Article II, Orion Midwest shall pay DLC the amounts
----------
specified in Schedules 2.1 through 2.5. The amounts identified in each
-------------------------
such Schedule shall be the amounts due for services provided in the
year 2002. Payment amounts for services provided in subsequent years
shall be increased by five percent (5%) per year, compounded annually,
unless otherwise agreed to in writing by the Parties.
5.2 Payments by DLC. In consideration of the services provided by Orion
---------------
Midwest pursuant Article III, DLC shall pay Orion Midwest the amounts
-----------
specified in Schedules 3.1 through 3.5. The amounts identified in each
-------------------------
such Schedule shall be the amounts due for services provided in the
year 2002. Payment amounts for services provided in subsequent years
shall be increased by five percent (5%) per year, compounded annually,
unless otherwise agreed to in writing by the Parties.
5.3 Payment Terms. Each Party shall make all payments due to the other
-------------
Party under this Article V in any calendar month by the fifteenth
---------
(15th) day of that month. A late fee of two percent (2%) per month
shall apply to all amounts unpaid when due.
-8-
5.4 Consequences of Non-Payment. If either Party fails to make any payment
---------------------------
within thirty (30) days after having received written notice from the
other Party that a payment is overdue, the other Party may pursue all
rights and remedies it has against the non-paying Party in respect of
such unpaid amounts at law or in equity.
ARTICLE VI
New Construction and Modifications
----------------------------------
6.1 Additional Service Requirements. The Parties may add to or otherwise
-------------------------------
modify any Schedule to this Agreement by preparing a written
instrument, signed by both Parties, that describes such modification
and the Schedule to which it relates. In addition, (i) Orion Midwest
may, in its sole discretion, upon thirty (30) days' written notice to
DLC (unless a different notification period is set forth in the
applicable Schedule, in which case the notice period set forth in such
Schedule shall apply) delete any of Schedules 2.1 through 2.5 (or any
portion of such Schedules) and neither Party shall thereafter have any
further rights or obligations with respect to the Schedules (or
portions thereof) deleted, and (ii) DLC may, in its sole discretion,
upon thirty (30) days' written notice to Orion Midwest (unless a
different notification period is set forth in the applicable Schedule,
in which case the notice period set forth in such Schedule shall
apply) delete any of Schedules 3.1 through 3.5 (or any portion of such
Schedules) and neither Party shall thereafter have any further rights
or obligations with respect to the Schedules (or portions thereof)
deleted.
ARTICLE VII
Representations and Warranties
------------------------------
7.1 Representations and Warranties of Orion Midwest. Orion Midwest hereby
-----------------------------------------------
makes the following representations and warranties to DLC:
7.1.1 Organization, Power and Authority. Orion Midwest is a limited
---------------------------------
partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite
partnership power and authority to own, lease and operate its
properties and to carry on its business as presently conducted or
contemplated. Orion Midwest is duly qualified and in good
standing as a foreign corporation authorized to transact business
and to own and lease property in each jurisdiction in which the
nature of the business conducted by it or the character or
location of the properties owned or leased by it requires such
qualification. Orion Midwest is not in violation of any term of
its certificate of
-9-
incorporation, code of regulations or by-laws, as amended through
and including the Effective Date, or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to it, which would have a material adverse effect on
DLC.
7.1.2 Authorization and Validity of Agreement. Orion Midwest has the
---------------------------------------
full partnership power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, the performance of the obligations
hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary partnership
action of Orion Midwest. This Agreement has been duly executed
and delivered by Orion Midwest and constitutes a valid and
binding obligation of Orion Midwest, enforceable against it in
accordance with its terms, except that the enforcement hereof and
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors rights generally and general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
7.1.3 Government and Third-Party Approvals. Except for those already
------------------------------------
obtained or made, no consent, approval or authorization of or
filing, registration or qualification with any Governmental
Authority or any Person (including any Third Party) is required
by or with respect to Orion Midwest in connection with the
execution, delivery or performance of this Agreement by Orion
Midwest and the consummation of the transactions contemplated
hereby.
7.1.4 Consent and Approvals; No Violation. The execution, delivery and
-----------------------------------
performance of this Agreement will not (i) conflict with or
result in any breach of any provision of the articles of
incorporation, code of regulations or by-laws of Orion Midwest,
(ii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, material agreement or other instrument or obligation
to which Orion Midwest is a party or by which Orion Midwest or
any of its assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or that would
not, individually or in the aggregate, create a material adverse
effect on DLC; or (iii) constitute violations of any law,
regulation,
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order, judgment or decree applicable to Orion Midwest, which
violation, individually or in the aggregate, would create a
material adverse effect on DLC.
7.2 Representations and Warranties of DLC. DLC hereby makes the following
-------------------------------------
representations and warranties to Orion Midwest:
7.2.1 Organization, Power and Authority. DLC is a corporation duly
---------------------------------
organized, validly existing and in good standing under the laws
of the State of Pennsylvania and has the requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as presently conducted or contemplated.
DLC is duly qualified and in good standing as a foreign
corporation authorized to transact business and to own and lease
property in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties
owned or leased by it requires such qualification. DLC is not in
violation of any term of its certificate of incorporation or
by-laws, as amended through and including the Effective Date, or
any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to it, which would have a
Material Adverse Effect on Orion Midwest.
7.2.2 Authorization and Validity of Agreement. DLC has the full
---------------------------------------
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, the performance of the obligations
hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action of DLC. This Agreement has been duly executed and
delivered by DLC and constitutes a valid and binding obligation
of DLC, enforceable against it in accordance with its terms,
except that the enforcement hereof and thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors
rights generally and general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
7.2.3 Government and Third-Party Approvals. Except for those already
------------------------------------
obtained or made, no consent, approval or authorization of or
filing, registration or qualification with any Governmental
Authority or any Person (including any Third Party) is required
by or with respect to DLC
-11-
in connection with the execution, delivery or performance of this
Agreement by DLC and the consummation of the transactions
contemplated hereby.
7.2.4 Consents and Approvals; No Violation. The execution, delivery
------------------------------------
and performance of this Agreement will not (i) conflict with or
result in any breach of any provision of the articles of
incorporation or by-laws of DLC; (ii) result in a default (or
give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, material agreement or other
instrument or obligation to which DLC is a party or by which DLC
or any of its assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or that would
not, individually or in the aggregate, create a material adverse
effect on Orion Midwest; or (iii) constitute violations of any
law, regulation, order, judgment or decree applicable to DLC,
which violation, individually or in the aggregate, would create a
material adverse effect on Orion Midwest.
ARTICLE VIII
Defaults
--------
8.1 Events of Default. If either Party fails to fulfill any of its
-----------------
obligations under this Agreement (in such event, a "Defaulting Party")
----------------
and such failure could reasonably be expected to materially and
adversely affect the use, operation, or economic benefit of the DLC
Control Center, DLC Control Area, the Orion Midwest Control Center or
any of the Plants, and the other Party (the "Non-Defaulting Party")
--------------------
provides written notice (which specifies the nature of such failure in
reasonable detail) to the Defaulting Party (except in cases of
emergencies, in which case only such notice as shall be reasonably
practicable in the circumstances shall be required), then, provided
such failure has not been cured, thirty (30) days after delivery of
such written notice the Defaulting Party shall be deemed in default,
and the Non-Defaulting Party may, but shall not be obligated to,
terminate this Agreement pursuant to Section 12.2 hereof.
------------
ARTICLE IX
Indemnification/Limitation of Liability
---------------------------------------
9.1 Limitation on Liability. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement:
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9.1.1 Neither Party shall be liable to the other Party for any Loss
(other than (i) a failure to receive payments due under Article V
---------
of this Agreement or (ii) any Loss associated with a Party's
non-compliance with Section 4.2 of this Agreement) incurred by
-----------
such other Party as a result of any action or failure to act by
any party in connection with this Agreement, or the services
contemplated under this Agreement, unless the action or failure
to act constitutes the gross negligence or willful misconduct of
such Party.
9.1.2 Neither Party shall be liable to the other Party for any Loss
incurred by such other Party as a result of any failure of the
Joint Communication Means.
9.1.3 In no event will either Party be liable to the other Party under
this Agreement for the payment of any indirect, special,
incidental or consequential damages (including, without
limitation, lost profits).
9.2 Indemnities.
-----------
9.2.1 Orion Midwest's Indemnity. Orion Midwest shall indemnify, defend
-------------------------
and hold harmless DLC and its Affiliates (including
Representatives of DLC and their Affiliates) from and against any
and all Losses (including reasonable attorney's fees) asserted
against, resulting from, imposed upon or incurred by DLC or its
Affiliates or their Representatives by reason of or resulting
from claims of Third Parties arising directly or indirectly, in
whole or in part, out of the gross negligence or willful
misconduct of Orion Midwest or its Representatives in connection
with this Agreement, including claims for injury to or death of
persons or for loss or claims for loss of or damage to property.
9.2.2 DLC's Indemnity. DLC shall indemnify, defend and hold harmless
---------------
Orion Midwest and its Affiliates (including Representatives of
Orion Midwest and their Affiliates) from and against any and all
Losses (including reasonable attorney's fees) asserted against,
resulting from, imposed upon or incurred by Orion Midwest or its
Affiliates or their Representatives by reason of or resulting
from claims of Third Parties arising directly or indirectly, in
whole or in part, out of the gross negligence or willful
misconduct of DLC or its Representatives in
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connection with this Agreement, including claims for injury to or
death of persons or for loss or claims for loss of or damage to
property.
9.3 Co-operation Regarding Claims. If any Party (in such capacity an
-----------------------------
"Indemnified Party") receives notice or has knowledge of any Loss that may
-----------------
result in a claim for indemnification by such Indemnified Party against the
other Party (in such capacity, an "Indemnifying Party") pursuant to this Article
------------------
IX, such Indemnified Party shall as promptly as possible give the Indemnifying
Party notice of such Loss, including a reasonably detailed description of the
facts and circumstances relating to such Loss, and a complete copy of all
notices, pleadings and other papers related thereto, and in reasonable detail
the basis for its potential claim for indemnification with respect thereto;
provided, that failure promptly to give such notice or to provide such
information and documents shall not relieve the Indemnifying Party from the
obligation hereunder to respond to or to defend the Indemnified Party against
such Loss unless such failure shall materially diminish the ability of the
Indemnifying Party to respond to such claim or to defend the Indemnified Party.
The Indemnifying Party, upon its acknowledgment in writing of its obligation to
indemnify the Indemnified Party, shall be entitled to assume the defense or to
represent the interests of the Indemnified Party seeking indemnification in
respect of such Loss, which shall include the right to select and direct legal
counsel and other consultants as acceptable to the other Party, appear in
proceedings on behalf of such Indemnified Party and to propose, accept or reject
offers of settlement, all at its sole cost; provided, that no such settlement
shall be made without the consent of the Indemnified Party (which consent shall
not be unreasonably withheld); provided, further, that if any such settlement is
reasonably likely to involve injunctive, equitable or prospective relief or
materially and adversely to affect the Indemnified Party's business or
operations other than as a result of money damages or other money payments, then
the Indemnified Party shall be entitled to take control of the defense and
investigation of such Loss, to employ and engage legal counsel and other
consultants of its own choice to handle and defend the same, and to compromise
or settle such claim, all at the Indemnifying Party's cost, risk and expense;
and provided, further that if the Loss is settled without the Indemnifying
Party's consent (which consent shall not be unreasonably withheld), the
Indemnified Party shall be deemed to have waived all rights hereunder against
the Indemnifying Party for damages arising out of such Loss. Nothing herein
shall prevent an Indemnified Party from retaining its own legal counsel and
other consultants and participating in its own defense at its own cost and
expense. The Parties shall cooperate with each other in any notifications to
insurers.
ARTICLE X
Force Majeure
-------------
-14-
10.1 Definition of Force Majeure. The term "Force Majeure" as used herein
---------------------------
means those causes beyond the reasonable control of the Party
affected, which by the exercise of reasonable diligence, including
Good Utility Practice, such Party is unable to prevent, avoid,
mitigate or overcome, including the following: any act of God, labor
dispute (including a strike), act of the public enemy, war, civil
disturbance, insurrection, riot, fire, storm or flood, lightning,
explosion, order, government decree or rule, regulation or restriction
imposed by governmental, military or lawfully-established civilian
authorities, or any other cause of a similar nature beyond such
Party's reasonable control.
10.2 Limitation of Liability. Notwithstanding anything in this Agreement to
-----------------------
the contrary, neither DLC nor Orion Midwest shall be liable in
damages, or otherwise responsible to each other, for its failure to
perform or observe any of its obligations under this Agreement, if and
only to the extent that it is unable to perform or is prevented from
performing by an event of Force Majeure during its continuance,
provided that the Party affected by such event has taken all
reasonable precautions and exercised due care to avoid the effect of
such event on such Party's ability to perform or observe its
obligations under this Agreement.
10.3 Force Majeure Procedures. Upon the occurrence of an event of Force
------------------------
Majeure, the Party affected by such event shall: (a) provide prompt
written notice of such Force Majeure event to the other Party,
including an estimation of its expected duration and the probable
impact on the performance of its obligations hereunder; (b) exercise
all reasonably efforts in accordance with Good Utility Practice to
continue to perform its obligations under this Agreement; (c)
expeditiously take action to correct or cure the event or condition
excusing performance, provided, however, that settlement of labor
disputes will be completely within the sole discretion of the Party
affected by such labor dispute; (d) exercise all reasonable efforts to
mitigate or limit damages to the other Party; and (e) provide prompt
notice to the other Party of the cessation of the event or condition
giving rise to its excuse from performance. Any obligation under this
Agreement shall be suspended only to the extent caused by such Force
Majeure event and only during the continuance of any inability of
performance caused by such Force Majeure event but for no longer
period.
ARTICLE XI
Insurance
---------
11.1 Required Insurance. Each of the Parties shall properly maintain the
------------------
following coverage during the Term: Statutory Workers' Compensation
Insurance in full compliance with the Workers' Compensation and
Occupational Disease Acts of each
-15-
and every state in which Work is to be performed and the U.S.
Longshoremen's and Harbor Workers' Compensation Act, if applicable,
which Statutory Worker's Compensation Insurance requirement may be
satisfied by a Party's self-insurance if the Party is an approved
self-insurer; Employer's Liability Insurance with a limit of $500,000;
Commercial General Liability Insurance with a combined single limit of
$1,000,000 per occurrence and $2,000,000 aggregate; Excess Umbrella
Liability Insurance with a single limit of $3,000,000; Automobile
Liability insurance covering all owned, hired and non-owned vehicles
with a combined single limit of $1,000,000 per occurrence.
ARTICLE XII
Term and Termination
--------------------
12.1 Initial Term. This Agreement shall have an initial term of five (5)
------------
years from the Effective Date and shall be automatically renewed for
five (5) successive one-year terms, unless either Party provides the
other Party with a notice of intent not to renew at least ninety (90)
days prior to the end of a term.
12.2 Termination of Agreement. Upon the occurrence of an event of default
------------------------
as described in Section 8.1, the Non-Defaulting Party may terminate
-----------
this Agreement by providing ninety (90) days' written notice to the
Defaulting Party of a specified date of termination. In addition, if
at any time neither Party has any rights or obligations remaining
under any of Schedules 2.1 through 2.5 or Schedules 3.1 through 3.5,
this Agreement shall automatically terminate.
ARTICLE XIII
Miscellaneous
-------------
13.1 Exhibits and Schedules. All Exhibits and Schedules attached to this
----------------------
Agreement are part of this Agreement, and the material contained in
such Exhibits and Schedules shall be construed and interpreted as if
contained within the text of the Agreement.
13.2 Headings. The Article and Section headings of this Agreement and the
--------
Table of Contents preceding this Agreement are for convenience and
reference only and in no way define, limit, or describe the scope and
intent of this Agreement, nor in any way affect this Agreement.
13.3 Interpretation. Words of any gender in this Agreement shall be held to
--------------
include any other gender. Words in the singular number shall be held
to include the plural when
-16-
the sense requires. The word "including" shall, unless used with the
word "only," mean including, without limitation.
13.4 Relation to APA. Neither the making nor the acceptance of this
---------------
Agreement shall enlarge, restrict or otherwise modify the terms of the
APA or any Ancillary Agreement or constitute a waiver or release by
DLC, Orion Midwest or Orion Holdings of any liabilities, duties or
obligations imposed on any of them by the terms of the APA or any
Ancillary Agreement, including, without limitation, the
representations and warranties and other provisions which the APA or
any Ancillary Agreement provides shall survive the date hereof. In the
event that any provision of this Agreement is construed to conflict
with a provision of the APA or any Ancillary Agreement, the provision
in the APA or the Ancillary Agreement, as applicable, shall be deemed
controlling.
13.5 Assignment. No Party may assign all or any part of its rights
----------
hereunder without the express written consent of the other Party,
provided, however, that either Party may assign this Agreement to an
Affiliate of such Party, and provided, further that Orion Midwest may
assign this Agreement pursuant to the exercise of remedies by Orion
Midwest's lenders if the person or entity to whom this Agreement is
transferred is also the purchaser of the right, title and interest in
and to the Plants.
13.6 Notices.
-------
13.6.1 On or prior to the effective date of this Agreement, each Party
shall indicate to the other Parties, by notice, the name, address
and phone number of the appropriate Person to contact during each
eight-hour work shift in the event of an emergency, a scheduled
or forced interruption, or reduction in services. The notice last
received by a Party shall be effective until modified by another
notice received by that Party.
13.6.2 All notices, requests, claims, demands, invoices, and other
communications hereunder shall be in writing and shall be given
(and except as otherwise expressly provided herein, will be
deemed to have been duly given if so given) by hand delivery, by
telecopy (confirmed in writing), by mail (registered or
certified, postage prepaid), or by reputable overnight delivery
service (prepaid or billed to sender) to the respective Parties
as follows:
-17-
for DLC
-------
Duquesne Light Company
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
ATTN: Manager, System Operations
for Orion Midwest
-----------------
Orion Power Midwest, L.P.
0 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
ATTN: Xxxx Xxxxxx
or to such other address or telecopier number as is furnished by notice received
from the addressee and any such communication shall be deemed to have been given
as of the date so delivered, telecopied or mailed.
13.7 Independent Contractor. Each of DLC and Orion Midwest shall be deemed
----------------------
an independent contractor with respect to each other, and neither
Party shall be considered an agent or employee of the other.
13.8 Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the law of the Commonwealth of
Pennsylvania, exclusive of its choice of law rules. THE PARTIES HERETO
AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL
COURTS IN AND FOR PITTSBURGH, PENNSYLVANIA, WHICH COURTS SHALL HAVE
EXCLUSIVE PERSONAL AND SUBJECT MATTER JURISDICTION FOR SUCH PURPOSE,
AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY
SUCH COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
-18-
13.9 Dispute Resolution.
-------------------
13.9.1 A Party with a claim or dispute under this Agreement shall
submit to the other Party a notification of such claim or dispute
within sixty (60) days after the occurrence of the circumstances
that gave rise to the claim or the question or issue in dispute.
Any such notification shall be in writing and shall include a
concise statement of the claim or the issue or question in
dispute, a statement of the relevant facts and documentation to
support the claim. The Parties shall use good faith best efforts
to resolve the claim or dispute within thirty (30) days after
delivery of such notice. If, after using their good faith best
efforts to resolve the dispute, the Parties cannot resolve the
dispute within thirty (30) days, the Parties may, if they both so
agree in writing, utilize the alternative dispute resolution
procedures set forth below in Sections 13.9.2 and 13.9.3.
---------------------------
13.9.2 Any arbitration initiated under this Agreement shall be
conducted before a single neutral arbitrator appointed by the
Parties within thirty (30) days of receipt by respondent of the
demand for arbitration. If the parties are unable to agree on an
arbitrator, such arbitrator shall be appointed by the American
Arbitration Association. Unless the Parties agree otherwise, the
arbitrator shall be an attorney or retired judge with at least
fifteen (15) years of experience, and shall not have any current
or past substantial business or financial relationships with any
Party to the arbitration. If possible, the arbitrator shall have
experience in the electric utility industry. Unless otherwise
agreed by the Parties, the arbitration shall be conducted in
accordance with the American Arbitration Association's Commercial
Arbitration Rules, then in effect, in Pittsburgh, Pennsylvania.
Any arbitration proceedings, decision or award rendered hereunder
and the validity, effect and interpretation of this arbitration
agreement shall be governed by the Federal Arbitration Act of the
Xxxxxx Xxxxxx, 0 U.S.C.Sections 1 et seq.
13.9.3 The arbitration shall, if possible, be concluded not later than
six (6) months after the date that it is initiated. The
arbitrator shall be authorized only to interpret and apply the
provisions of this Agreement or any related agreements entered
into under this Agreement and shall have no power to modify or
change any of the above in any manner. The arbitrator shall have
no authority to award punitive or multiple damages or any damages
inconsistent with this Agreement. The arbitrator shall, within
thirty (30)
-19-
days of the conclusion of the hearing, unless such time is
extended by agreement of the Parties, notify the Parties in
writing of his or her decision, stating his or her reasons for
such decision and separately listing his or her findings of fact
and conclusions of law. The decision of the arbitrator rendered
in such a proceeding shall be final and binding on the Parties.
Judgment on the award may be entered upon it in any court having
jurisdiction.
13.10 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the Parties hereto with respect to the subject matter
contained herein and, subject to Section 13.4, supersedes all prior
------------
agreements and undertakings relating to the subject matter hereof.
13.11 Modifications, Waivers, Consents. This Agreement may not be modified,
--------------------------------
amended or discharged except by an instrument in writing signed by
each of the Parties. No waiver or consent may be enforced unless such
waiver or consent shall be in writing and signed by the Party against
whom enforcement thereof is sought.
13.12 Severability of Void Provisions. In the event that any of the
--------------------------------
provisions of this Agreement are held to be unenforceable or invalid
by any court or regulatory authority of competent jurisdiction, the
Parties shall, to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement, with a view toward
effecting the purpose of this Agreement, and the validity and
enforceability of the remaining provision hereof shall not be affected
by such holding.
13.13 No Third Party Beneficiaries. Nothing in this Agreement, express or
-----------------------------
implied, is intended to confer on any other Person, except the Parties
hereto, any rights, interests, obligations or remedies hereunder.
13.14 Waiver. A waiver of any failure of a Party to comply with any
------
obligation, covenant, agreement, or condition herein by the Party
entitled to the benefits thereof shall be effective only by a written
instrument signed by the Party granting such waiver, but such waiver
of such obligation, covenant, agreement, or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent
failure to comply therewith.
13.15 Further Assurances. The Parties hereto agree to execute and deliver
------------------
promptly, at the expense of the Party requesting such action, any and
all other and further instruments, documents and information which may
be reasonably requested in order to consummate the transactions
contemplated hereby. Each Party agrees to
-20-
cooperate with, assist and accommodate all reasonable requests made by
the other Party in respect of any regulatory approval necessary for,
or any regulatory proceeding relating to, the execution and deliver of
this Agreement and the consummation of the transactions contemplated
hereby. Each Party further agrees to comply with all laws of all
Governmental Authorities relating to this Agreement and the
consummation of the transactions contemplated hereby.
13.16 Counterparts. This Agreement may be signed in more than one
counterpart, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
-21-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
DUQUESNE LIGHT COMPANY ORION POWER MIDWEST, L.P.
By: By: its general partner,
---------------------------- ORION POWER MIDWEST, G.P. INC.
Name: Xxxxxx X. Xxxxx
Title: President
By:
----------------------------
Name: Xxxx X. Xxxxx
Title: President
(351451)
-22-
-23-
SCHEDULE 2.1
DLC Obligation Relating to Real Time Values (System Summary)
DLC shall make the following real-time data available on a web interface and an
ICCP Datalink that is accessible via the Joint Communication Means set forth on
Schedule 4.1 of this Agreement:
1) DLC shall update and make the following data available at least once every
six (6) seconds. All units shall be MW. All data shall be defined by DLC at the
time of availability.
a) System data.
(i) System Load (i.e., actual power demand for the DLC service
territory).
b) Industrial Loads.
J&L River
Gypsum, LTV, J&L
J&L Midland
J&L Furnace
ET Works & BOC Gas
USS Clairton
US Illinois
Xxxxx Works
Westinghouse Airbrake
Westinghouse East Pittsburgh
Xxxxxx Hammer
USA Zinc
Xxxxxx
Bucyrus
PMAC
USAP
----
c) Payment due to DLC.
In consideration for the data collection and transmission services
described in this Schedule 2.1, Orion Midwest shall pay DLC a fee of $386 per
month.
SCHEDULE 2.2
DLC Obligation Relating to POLR and EGS Load Forecasting
DLC will make the following information available to Orion Midwest through a web
page and also through one or more Active Server Pages and an ICCP Datalink:
1) The following values will be provided one value per hour:
a) Hourly DLC POLR supply forecast.
b) Hourly EGS provided load forecast (forecast of aggregate EGS customer
load).
c) Frequency
2) Payment due to DLC:
The data collection and transmission services described in this Schedule
2.2 shall be provided by DLC to Orion Midwest at no charge.
-2-
SCHEDULE 2.3
[RESERVED]
-3-
SCHEDULE 2.4
[RESERVED]
-4-
SCHEDULE 2.5
[RESERVED]
-5-
SCHEDULE 3.1
Orion Midwest Obligations Relating to Cheswick Plant Unit Data
If DLC elects in writing to cause this Schedule 3.1 to apply, the rights and
obligations set forth below shall become effective as soon as practicable
following Orion Midwest's receipt of any such written notice. This Schedule 3.1
shall have no effect, however, until such time as DLC makes any such election.
Orion Midwest shall collect data from the Cheswick Plant generating units and
deliver such data to DLC as described below:
1) Collection of Cheswick Plant MW data.
a) Orion Midwest shall, at least once every ten (10) seconds, collect the
following data from the Cheswick Plant generating units:
i) The net power output (in MW) from Cheswick Plant Unit 1.
2) Collection of Cheswick Plant MWH data
a) Orion Midwest shall, no more than twenty-one (21) minutes after each
hour, based on the data that it collects pursuant to part 1) above,
calculate the following MWH output for the previous hour for each unit
of the Cheswick Plant generating units:
i) The net power output (in MWH) from Cheswick Plant Unit 1.
3) Transmission of Cheswick Plant data to DLC.
a) Orion Midwest shall make the data identified in item 1) above
available to DLC via the Joint Communication Means.
b) Orion Midwest shall make the data identified in item 2) above
available to DLC via the Joint Communications Means.
4) Payment to Orion Midwest.
a) In consideration for the data collection and transmission services
described in this Schedule 3.1, DLC shall pay Orion Midwest a fee of
$1,091 per month.
-6-
SCHEDULE 3.2
Orion Midwest Obligations Relating to Elrama Plant Unit Data
If DLC elects in writing to cause this Schedule 3.2 to apply, the rights and
obligations set forth below shall become effective as soon as practicable
following Orion Midwest's receipt of any such written notice. This Schedule 3.2
shall have no effect, however, until such time as DLC makes any such election.
Orion Midwest shall collect data from the Elrama Plant generating units and
deliver such data to DLC as described below:
1) Collection of Elrama Plant MW data.
a) Orion Midwest shall, at least once every ten (10) seconds, collect the
following data from the Elrama Plant generating units:
i) The net power output (in MW) from each of the Elrama Plant
generating units.
2) Collection of Elrama Plant MWH data
a) Orion Midwest shall, no more than twenty-one (21) minutes after each
hour, based on the data that it collects pursuant to part 1) above,
calculate the following MWH output for the previous hour for each unit
of the Elrama Plant generating units:
i) The net power output (in MWH) from the Elrama Plant generating
units.
3) Transmission of Elrama Plant data to DLC.
a) Orion Midwest shall make the data identified in item 1) above
available to DLC via the Joint Communication Means.
b) Orion Midwest shall make the data identified in item 2) above
available to DLC via the Joint Communications Means.
4) Payment to Orion Midwest.
a) In consideration for the data collection and transmission services
described in this Schedule 3.2, DLC shall pay Orion Midwest a fee of
$1,091 per month.
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SCHEDULE 3.3
Orion Midwest Obligations Relating to Xxxxxx Island Unit Data
If DLC elects in writing to cause this Schedule 3.3 to apply, the rights and
obligations set forth below shall become effective as soon as practicable
following Orion Midwest's receipt of any such written notice. This Schedule 3.3
shall have no effect, however, until such time as DLC makes any such election.
Orion Midwest shall collect data from the Xxxxxx Island Plant generating units
and deliver such data to DLC as described below:
1) Collection of Xxxxxx Island Plant MW data.
a) Orion Midwest shall, at least once every ten (10) seconds, collect the
following data from the Xxxxxx Island Plant generating units:
i) The net power output (in MW) from each of the Xxxxxx Island Plant
generating units.
2) Collection of Xxxxxx Island Plant MWH data
a) Orion Midwest shall, no more than twenty-one (21) minutes after each
hour, based on the data that it collects pursuant to part 1) above,
calculate the following MWH output for the previous hour for each unit
of the Xxxxxx Island Plant generating units:
i) The net power output (in MWH) from the Xxxxxx Island Plant
generating units.
3) Transmission of Xxxxxx Island Plant data to DLC.
a) Orion Midwest shall make the data identified in item 1) above
available to DLC via the Joint Communication Means.
b) Orion Midwest shall make the data identified in item 2) above
available to DLC via the Joint Communications Means.
4) Payment to Orion Midwest.
a) In consideration for the data collection and transmission services
described in this Schedule 3.3, DLC shall pay Orion Midwest a fee of
$1,091 per month.
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SCHEDULE 3.4
[RESERVED]
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SCHEDULE 3.5
[RESERVED]
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SCHEDULE 4.1
Joint Communications Means
1. Joint Communications Means consists of a bi-directional ICCP Datalink as well
as Active Server Pages and web pages to relay information from DLC to Orion
Midwest. Each Party shall provide access control by the ICCP Bilateral Tables.
2. Security of Joint Communications Means. Each of the Parties shall maintain
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appropriate network connections, routers, firewall software and other items to
ensure the security of the data and the proper filtering levels at each Party's
border routers. The transport protocol shall be TCP/IP. Each Party shall provide
access control by the ICCP Bilateral Tables and filtering levels set at each
Party's border routers.
3. Maintenance of Equipment. Each Party shall operate and maintain any
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equipment, software and control centers described in this Agreement that might
reasonably be expected to have an effect on the operations of the other Party in
a safe and efficient manner and in accordance with Good Utility Practice. Such
equipment, software and control centers include, but are not limited to, the DLC
Control Center and Orion Midwest Control Center and the software and equipment
contained or used therein.
4. Maintenance of Monitoring Points. DLC and Orion Midwest understand and agree
--------------------------------
that to maintain reliable operation of DLC transmission, distribution and other
equipment, DLC and Orion Midwest must use common metering devices and monitoring
locations to collect the data identified in the Schedules to this Agreement.
Therefore, neither DLC nor Orion Midwest shall change the location of, or type
of equipment used at, any monitoring point required to collect data listed in
any Schedule to this Agreement without the prior written consent of the other
Party, which shall not be unreasonably withheld or delayed; provided, however,
consent shall not be required regarding maintenance and repair of metering
devices or monitoring equipment and routine replacement of metering devices or
monitoring equipment with the same or substantially similar device or equipment.
5. Allocation of Costs to Maintain Joint Communications. Each Party shall be
----------------------------------------------------
responsible for all costs associated with the maintenance of its own equipment
used in connection with the Joint Communications Means and the Parties shall
share equally in all costs associated with the installation and maintenance of
any additional equipment required for the Joint Communications Means.
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