EX-10.(E)(3)
5
x10e3netting.htm
PJM
MASTER SETOFF AND NETTING AGREEMENT
Exhibit 10(e)(3)
MASTER SETOFF AND NETTING
AGREEMENT
This Master Setoff and Netting Agreement
(the “Agreement”) is made and entered into effective as of September
30, 2004, by and among PJM Interconnection, L.L.C. (“PJM”) and Appalachian Power
Company, Columbus Southern Power Company, Indiana Michigan Power Company,
Kentucky Power Company, Kingsport Power Company, Ohio Power Company and Wheeling
Power Company, by and through American Electric Power Service Corporation, their
agent (collectively, “AEP”).
RECITALS
Whereas, PJM and AEP have entered into the Amended and Restated
Operating Agreement of PJM Interconnection, LLC, service agreements under the
PJM Open Access Transmission Tariff, the Transmission Owners Agreement and the
Reliability Assurance Agreement among Load Serving Entities in the PJM Control
Area providing for the purchase, transmission, sale, exchange, or similar
transactions with respect to electricity or other energy related services,
including ancillary services, and such other additional contracts providing for
payments among the Parties for various and sundry reasons as listed on
Attachment A (collectively, the “Documents”).
Whereas, PJM and AEP acknowledge that based on this Agreement PJM
will deal with AEP as if AEP Parties (as defined below) were a single legal
entity, and not separate entities, for credit purposes. The Parties (as defined
below) acknowledge that the AEP Parties, with the exception of Kingsport Power
Company and Wheeling Power Company1, are signatories to (1) an Interconnection Agreement,
dated July 15, 1951, as modified and supplemented; (2) a System Integration
Agreement, dated May 15, 2000, as supplemented, and (3) a Transmission
Agreement, dated April 1, 1984, as modified and supplemented, (collectively,
“the AEP Documents”) which provide for a net pooling arrangement and allocation
of payments and liabilities for generation, load, transmission and third party
transactions among the AEP Parties.
Whereas, PJM and AEP acknowledge they will benefit directly or
indirectly from the this Agreement and that the promises made herein and other
consideration exchanged between the Parties hereto in connection herewith
constitute good and valuable consideration exchanged between the respective
Parties, the receipt and sufficiency of which are hereby acknowledged.
NOW THEREFORE, for and in consideration of
the mutual agreements herein made and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. Definitions. Capitalized terms used or
incorporated by reference in this Agreement and not otherwise defined herein
have the same meanings in this Agreement as given to them within the Documents.
In the event of any conflict or inconsistency between a term defined herein and
in any of the Documents, such term as used in the Documents shall in all events
be controlling. All references within this Agreement are to this Agreement
unless otherwise expressly stated. The following terms used in this Agreement
are defined as follows:
“AEP” means the AEP Parties and AEPSC.
“AEP Parties” (collectively) or an “AEP
Party” (individually) means the Eastern electric utility subsidiaries of
American Electric Power Company, Inc., consisting of Appalachian Power Company,
1 | Kingsport Power Company and Wheeling Power Company have separate
power supply agreements with Appalachian Power Company and Ohio Power
Company, respectively, that govern power transactions between them.
|
Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky
Power Company, Kingsport Power Company, Ohio Power Company and Wheeling Power
Company.
“AEPSC” means American Electric Power
Service Corporation, as agent for the AEP Parties.
“Collateral” means security pledged or
transferred in accordance with any of the Documents by AEP to secure payment or
performance of any of its/their Obligations to PJM, including without
limitation, letters of credit, cash and/or any guaranties.
“Obligation” or “Obligations” means
each and every requirement or liability for which AEP is bound to PJM under the
Documents, any Transaction thereunder, or this Agreement, whether financial or
otherwise, including, without limitation, payment and delivery obligations, any
debt, any obligation arising under a guaranty, any requirement to deliver or
maintain Collateral, and each and every other obligation or requirement.
“Party” means PJM or AEP as the context
indicates, and “Parties” means all of the foregoing.
“Transaction” or “Transactions”
means each and every trade, transaction, or other open contractual commitment,
between PJM and any AEP Party arising under any of the Documents.
2. Payment Netting. PJM will provide to AEP
one or more invoices which shall be combined to comprise a single net xxxx for
all activities, Transactions and/or Obligations incurred by the AEP Parties
under the Documents during each billing period.
3. Netting Prior to Allocation of Liability.
Each of the AEP Parties agrees that PJM shall determine a net amount for all
activities Transactions and/or Obligations under the Documents prior to any
allocation of liability by AEP among the AEP Parties in accordance with the AEP
Documents for the activities and Obligations incurred by any and/or all AEP
Parties, and each AEP Party agrees to save PJM harmless from actions that any
one or more AEP Parties may take with respect to PJM pursuant to this Agreement.
4. Default and Remedies. A default by any
one AEP Party of any of the Obligations under the Documents will constitute a
default by all of the AEP Parties. PJM may exercise all rights to setoff of any
amounts owed to the AEP Parties against any amount due and owing from AEP,
including, but not limited, to any Collateral held by PJM. Notwithstanding the
foregoing, it shall not be a default under PJM’s credit policy, that Kingsport
Power Company (“Kingsport”) and Wheeling Power Company (“Wheeling”) are not
rated as “investment grade” by the corporate rating agencies relied on by PJM
from time to time.
5. Mutual Representations and Warranties.
Each Party represents and warrants to the other that (a) it is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder and has taken all necessary actions to authorize such execution,
delivery, and performance, (b) the person signing this Agreement on behalf of
each Party is duly authorized to do so on its behalf, (c) this Agreement
constitutes its legal, valid, and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, conservatorship, receivership, moratorium, or other similar laws
affecting creditors’ rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law), and (d) the location of its
incorporation or organization and the location of its chief executive office are
the locations set forth under its signature line to this Agreement.
6. AEP Representations. With respect
to Kingsport and Wheeling specifically, AEP represents that: (a) neither
Kingsport or Wheeling are currently, nor are they expected to be rated as
“investment
grade”; (b) neither Kingsport or Wheeling own any generation assets, and
all transmission assets owned by such companies will be turned over
operationally to PJM; (c) any and all entitlements to Kingsport and/or Wheeling
from the operation of such transmission assets shall remain unencumbered and
shall be included with all other funds due and owing to the AEP Parties,
hereunder; (d) any and all retail load of Kingsport and Wheeling will be
supplied by the AEP Parties, under exclusive supply contracts, and neither
Kingsport or Wheeling will be Market Participants in any PJM market.
7. Interpretation and Headings. The
Parties intend that this Agreement constitutes and should be deemed to be a
“master setoff agreement” and that the Parties are and should be deemed to be
“master setoff agreement participants” within the meaning of and as such terms
are used in any law, rule, regulation, statute, or order applicable to the
Parties’ rights herein, whether now or hereafter enacted or made applicable. The
use of headings and subheadings in this Agreement, and the division of this
Agreement into sections and sub-sections, are for convenience of reference only
and shall not affect the interpretation or construction of this Agreement.
8. Governing Law. This Agreement
shall be governed by, and construed in accordance with the laws of the State of
Pennsylvania.
9. Assignment and Amendment. (a)
This Agreement, and any rights to amounts payable to a Party there under, shall
not be assigned by PJM or any AEP Party without the prior written consent of AEP
or PJM, respectively, which consent shall not be unreasonably withheld. It shall
be considered reasonable for a Party to withhold consent if the other Party is
attempting to assign to an unaffiliated party.
(b) This Agreement may not be amended except by an
amendment to this Agreement signed by each Party. Confirmations of Transactions
under any of the Documents shall not serve as an amendment.
10. Conflicts and Inconsistencies;
Confidentiality. In the event of any conflict or inconsistency between any
provision of this Agreement and any provision of any of the Documents, the
provision of the Documents shall govern and supercede the provisions of this
Agreement. The contents of this Agreement shall be subject to the same
confidentiality as provided for in the Amended and Restated Operating Agreement
of PJM Interconnection, LLC.
11. Severability. In the event any one or
more of the provisions contained in this Agreement should be held invalid,
illegal, or unenforceable in any respect under the law of any jurisdiction, the
validity, legality, and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby. If any portion
of this Agreement is deemed or held to be invalid, illegal, or unenforceable,
the Parties will use their best efforts to reform such portion of this Agreement
to give effect to the original intention of the Parties as indicated herein.
12. Corrective or Supplemental
Documents. The Parties agree that they will promptly execute any additional
or corrective documentation and/or agreements reasonably necessary to correct or
effectuate the intent of the Parties, as evidenced or recited herein.
13. No Waiver. A failure or delay in
exercising any right, power, or privilege in respect of the Documents or this
Agreement will not be presumed to operate as a waiver of that right, power, or
privilege, and a single or partial exercise of any right, power, or privilege
will not be presumed to preclude any subsequent or further exercise of that
right, power, or privilege, or the exercise of any other right, power, or
privilege.
14. Term. This Agreement shall
continue in effect from the date hereof until terminated by either Party upon
one hundred eighty (180) days prior written notice.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed, and to be effective as of the latest to occur of the following: (1)
the date written above; (2) the date PJM received a fully executed original; and
(3) the date on which Kingsport Power Company and Wheeling Power Company join
PJM as evidenced by their due execution, delivery and effective date of the
STANDARD FORM OF AGREEMENT TO BECOME A MEMBER OF THE PJM INTERCONNECTION, LLC.
[Signatures on following pages.]
PJM INTERCONNECTION, LLC
| | |
| |
BY: | | /s/ XXXXXX
XXXXXX |
PRINTED NAME:
| | Xxxxxx Xxxxxx |
TITLE:
| | President and Chief Executive
Officer |
|
Location of state of incorporation or
organization:
Delaware
|
Location of chief executive
office:
000 Xxxxxxxxx Xxxxxx, Xxxxxx Forge Corporate
Center, Xxxxxxxxxx, XX 00000-0000
|
AMERICAN ELECTRIC POWER SERVICE CORPORATION,
AS AGENT FOR THE AEP OPERATING COMPANIES
| | |
| |
BY: | | /s/ J.
XXXXX
XXXXX |
PRINTED NAME:
| | J.
Xxxxx Xxxxx |
TITLE:
| | Senior Vice President – Regulatory
Services |
|
Location of state of incorporation or
organization: New York
|
Location of chief executive office: 0
Xxxxxxxxx Xxxxx, Xxxxxxxx, XX 00000
|
| | | | | | | | |
APPALACHIAN POWER COMPANY,
by its agent American Electric Power
Service Corporation
| | | | COLUMBUS
SOUTHERN POWER COMPANY, by its agent American Electric Power Service
Corporation |
| | | | |
BY: | | /s/ XXXXX
XXXXXXX | | | | BY: | | /s/ XXXXX
XXXXXXX |
PRINTED NAME:
| | Xxxxx
Xxxxxxx | | | |
PRINTED NAME:
| | Xxxxx Xxxxxxx |
TITLE:
| | Vice
President | | | |
TITLE:
| | Vice
President |
| | |
Location of state of incorporation or
organization:
Virginia
| | | |
Location of state of incorporation or
organization:
Ohio
|
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
| | | |
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
|
| | |
INDIANA MICHIGAN POWER
COMPANY,
by its agent American Electric Power
Service Corporation
| | | |
KENTUCKY POWER COMPANY,
by its agent American Electric Power
Service Corporation
|
| | | | |
BY: | | /s/ XXXXX
XXXXXXX | | | | BY: | | /s/ XXXXX
XXXXXXX |
PRINTED NAME:
| | Xxxxx
Xxxxxxx | | | |
PRINTED NAME:
| | Xxxxx Xxxxxxx |
TITLE:
| | Vice
President | | | |
TITLE:
| | Vice
President |
| | |
Location of state of incorporation or
organization:
Indiana
| | | |
Location of state of incorporation or
organization:
Kentucky
|
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
| | | |
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
|
[Signatures continued on following pages.]
| | | | | | | | |
OHIO POWER COMPANY,
by its agent American Electric Power
Service Corporation
| | | |
KINGSPORT POWER COMPANY,
by its agent American Electric Power
Service Corporation
|
| | | | |
BY: | | /s/ XXXXX
XXXXXXX | | | | BY: | | /s/ XXXXX
XXXXXXX |
PRINTED NAME:
| | Xxxxx
Xxxxxxx | | | |
PRINTED NAME:
| | Xxxxx Xxxxxxx |
TITLE:
| | Vice
President | | | |
TITLE:
| | Vice
President |
| | |
Location of state of incorporation or
organization:
Ohio
| | | |
Location of state of incorporation or
organization:
Virginia
|
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
| | | |
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
|
| | |
WHEELING POWER COMPANY,
by its agent American Electric Power
Service Corporation
|
| |
BY: | | /s/ XXXXX
XXXXXXX |
PRINTED NAME:
| | Xxxxx
Xxxxxxx |
TITLE:
| | Vice
President |
|
Location of state of incorporation or
organization:
West Virginia
|
Location of chief executive
office:
0 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX
00000
|
ATTACHMENT A
ADDITIONAL CONTRACTS SUBJECT TO SETOFF AND
NETTING