CONFIDENTIAL MATTER
AMENDMENT NO. 2 TO
POWER PURCHASE AGREEMENT
BETWEEN
NEW YORK STATE ELECTRIC & GAS CORPORATION
AND
SARANAC POWER PARTNERS. L.P.,
THIS AMENDMENT made this 24th day of February 1994, by and between New
York State Electric & Gas Corporation, a New York corporation having an office
for the transaction of business in Binghamton, N.Y. ("Buyer"), and Saranac Power
Partners, L.P., a Delaware limited partnership having an office for the
transaction of business in Houston, Texas ("Seller"), amends that power purchase
agreement between Buyer and Seller dated April 27, 1990 and amended August 29,
1991 (the "Agreement").
WITNESSETH:
WHEREAS, Buyer submitted to Seller a proposal for the amendment of the
Agreement to provide for, among other things, Buyer's ability to schedule the
operation of Seller's cogeneration facility to be located in Plattsburgh, New
York (The "Plant"); and
WHEREAS, it is the objective of Buyer to obtain among other ratepayer
benefits, increased operating flexibility associated with the ability to
schedule the Plant; and
WHEREAS, Buyer and Seller, pursuant to a letter of intent dated March
1, 1993, as amended, have met to negotiate the terms of such an amendment to the
Agreement; and
WHEREAS, as a result of those successful negotiations, Buyer and Seller
desire to amend hereby the Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration given by one party to the other, the sufficiency of which
each party acknowledges, Buyer and Seller agree as follows:
1. A new article, designated as Article XXI, is added to the Agreement
and shall read as follows:
Article XXI - Scheduling of Plant
(1) Scheduling. Beginning with the latter of (a) the effective date of
Amendment No. 2 to this Agreement or (b) the Commercial Operation Date,
through the remaining term of this Agreement, and notwithstanding
anything in this Agreement to the contrary, Buyer shall have the right
to schedule the operation of the Plant in accordance with the
scheduling instructions and operating procedures contained in Exhibit I
to this Agreement; provided, however, that in no event shall Seller be
required to operate the Plant in a manner inconsistent with (i)
maintaining the Plant's status as a qualifying facility, as required by
Section 1.1(b) of Article I hereof, and (ii) operating the Plant in
conformity with all laws and governmental rules, regulations and
permits applicable to the Plant and Seller during the Term of this
Agreement; provided further, however, that if Seller's operation of the
Plant consistent with constraints (i) and (ii) above, or Seller's
failure to comply with the scheduling directions given by Buyer
pursuant to this Article XXI, results in Seller failing to reduce the
electric generation of the Plant in any Gas Supply Year for less than
the number of megawatt hours scheduled by Buyer for that Gas Supply
Year in accordance with the terms hereof (The "Requested Scheduling"),
then Seller shall credit Buyer with the difference between the
Requested Scheduling and the number of megawatt hours of electric
generation reduction provided by Seller for that Gas Supply Year, which
credit shall be applied toward the following
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Gas Supply Year, and Buyer shall be permitted to schedule the
generation of the Plant in the following Gas Supply Year for 200,000
megawatt hours plus the number of megawatt hours credited from the
prior Gas Supply Year. In The event that the number of megawatt hours
available for scheduling by Buyer in any Gas Supply Year exceeds
240,000 megawatt hours, Buyer shall provide written notice of said
exceedance on or before that date which is sixty (60) days after the
commencement of a Gas Supply Year. Upon Seller's receipt of said
written notice, Seller and Buyer shall engage in good faith
negotiations for a period of sixty (60) days in order to finalize an
amendment to this Agreement restoring to Buyer scheduling and other
rights commensurate with those embodied in Amendment No. 2 to this
Agreement. If Seller and Buyer fail to so finalize such an amendment
within such sixty (60) day period, then Buyer shall have the option, in
addition to other remedies and rights under this Agreement, to rescind
Amendment No. 2 to this Agreement and, upon such rescission, Buyer's
right to curtail the electric generation of the Plant shall be
reinstated to the extent said right was waived under Amendment No. 2 to
this Agreement; provided, however, that such option shall only apply if
Buyer notifies Seller within sixty (60) days of the expiration of the
sixty (60) day period for finalizing an amendment of its intent to
rescind Amendment No. 2; provided, further, that any notice to rescind
Amendment No. 2 pursuant to this Article XXI shall be in writing and
any such notice shall state that the rescission of Amendment No. 2
shall be effective as of the last day of the first month that ends at
least ten (10) business days after Seller receives such written notice.
(2) Waiver of Curtailment Rights. Buyer shall not curtail Seller
during the term of this Agreement pursuant to Article X hereof, or
otherwise, due to the existence of conditions satisfying the
requirements of section 292.304(f) of the PURPA regulations or pursuant
To any order issued by the Commission in Cases 92-E-0814 and 88-E-081
that (i) interprets said section 292.304(f) and (ii) permits
(utility-specific) curtailment. Neither Buyer nor Seller shall commence
or join any judicial or regulatory proceeding seeking to overturn
Amendment No. 2 to this Agreement.
2. A new exhibit is added to the Agreement, and is attached hereto as
Appendix A. This exhibit shall be entitled "Exhibit I - Operating Procedures,"
and shall be incorporated into and made a part of the Agreement.
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3. The first full paragraph of Article III of the Agreement is deleted
in its entirety and is replaced with the following text:
Seller agrees to deliver and make available to Buyer, and Buyer agrees
to purchase from Seller, except as otherwise provided in this
Agreement, all of the electric energy and capacity produced or made
available by the Plant at the delivery point during the term of this
Agreement, including any extension or renewal thereof, at the following
rates:
(a) the purchase price for "Actual Generation" (as defined in
Exhibit J) shall be the applicable rate set forth in Exhibit B
to this Agreement.
(b) the purchase price for "Available Generation" (as defined in
Exhibit J) shall be the applicable rate set forth in Exhibit J
to this Agreement.
(c) to the extent that Seller delivers to the delivery point an
amount of energy associated with more than 240 MW of capacity,
as averaged over a five (5) minute period ("Excess Energy"),
then Buyer shall pay for said Excess Energy at a rate equal to
the lower of (i) ninety-five percent (95%) of Seller's
Variable Cost at the time said energy was delivered, or (ii)
eighty percent (80%) of Buyer's avoided energy cost as
designated in Buyer's Service Classification No. 10 tariff, as
the same may be amended or superseded ("SC-10"), which avoided
energy cost shall not include the minimum rate referenced in
Section 66-c of the New York Public Service Law. Buyer's
avoided energy cost shall be calculated at a Transmission
level (115 kV) and shall be time-differentiated (namely,
separated into on-peak and off-peak rates). Seller shall not
receive, and Seller hereby waives, any capacity payment for
said Excess Energy and any energy payment for said Excess
Energy greater than that rate provided under this subparagraph
(c); provided, however, that if Buyer requests that Seller
deliver Excess Energy to the delivery point, then Buyer shall
pay a rate for such Excess Energy equal to the greater of (i)
one hundred and five percent (105%) of Seller's Variable Cost
at the time said energy is delivered, and (ii) eighty percent
(80%) of Buyer's avoided energy cost as designated in SC-10.
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4. The first paragraph of Article IV of the Agreement is revised to
read as follows,
Buyer shall pay Seller via wire transfer, or such other agreed upon
payment method, for the electric energy and capacity delivered or made
available during the preceding calendar month, applying the price terms
set forth in Article III. Buyer shall make said payment to Seller's
account at such bank as Seller may from time to time designate in
writing on or before the twenty-fifth (25th) day of each month. Buyer
shall make said payment provided that Seller shall notify Buyer in
writing, at least thirty (30) days in advance of a required payment
hereunder, of any change in the account to which such payment is to be
directed, and that, during any period that the Lenders (as defined in
Exhibit B) hold a security interest in the Plant, such notice shall not
be effective unless accompanied by a written authorization signed by a
representative of the Lenders. Along with this payment, Buyer shall
enclose a statement explaining how the payment amount was calculated.
5. The text of the Article V entitled "Price for Electricity Sold to
Buyer" is deleted in its entirety and replaced by "Reserved."
6. The third paragraph of Article XI of the Agreement is deleted in its
entirety.
7. A new exhibit is added to the Agreement, and is attached hereto as
Appendix B. This exhibit shall be entitled "Exhibit J - Payment for Available
Generation," and shall be incorporated into and made a part of the Agreement.
8. A new exhibit is added to the Agreement, and is attached hereto as
Appendix C. This exhibit shall be entitled "Exhibit K - Payment for Start-Up
Costs," and shall be incorporated into and made a part of the Agreement.
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A new article, designated Article XXII, is added to the Agreement and
shall read as follows:
Article XXII - Reactive Power Support
Seller shall provide to Buyer, upon Buyer's request, up to 40,000 MVAR
- hours of reactive power support during each Gas Supply Year during
the term of this Agreement. Buyer understands that, while the Plant's
VAR capability varies with ambient temperature, in no event shall
Seller be able to provide reactive power support from each of Seller's
three (3) generators in excess of a power factor of 0.85 in the lag
(namely, providing reactive power support to Buyer's system) and unity
in the lead; provided, however, that in no case shall Seller be
required to provide to Buyer MVAR in excess of the maximum level the
Plant can generate without reducing The Plant's ability to generate
240 MW net output as measured at the delivery point, as said maximum
level is designated in the D-curve provided by Seller hereunder. As
part of the monthly statement provided by Buyer to Seller pursuant to
Article IV of this Agreement, Buyer shall provide a written report of
the amount of reactive power support provided by Seller during the
prior month. Seller shall provide to Buyer, no later than thirty (30)
days prior to the Date of Commercial Operation, the D-curve for each
of the Plant's generators, which D-curves shall be updated by Seller
and provided to Buyer on or before each January 1 during the term of
this Agreement. Seller shall provide said reactive power support (a)
upon Buyer's telephonic request to the Plant control room, followed by
a confirming facsimile notice, the form of which facsimile notice
shall be finalized by Seller and Buyer within ten (10) days following
the execution by Seller and Buyer of Amendment No. 2 to this
Agreement, and (b) without compensation from Buyer. Buyer's requests
for reactive power support shall specify the magnitude of the VAR
support to be provided by Seller. Unless Seller determines that, for
Plant security reasons, the Plant must operate at some other power
factor, Seller shall operate the Plant at the power factor capability
requested by Buyer until otherwise notified by Buyer.
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10. A new article, designated Article XXIII, is added to the Agreement
and shall read as follows;
Article XXIII - Coordination of Maintenance
Notwithstanding any other provision of this Agreement to the contrary,
Seller shall provide to Buyer, on or before September 1st of each year
during the term of this Agreement, a five-year schedule of maintenance
outages for the Plant, which schedule shall provide (a) the duration of
each outage and (b) the extent to which said maintenance outage(s) for
the first year of said schedule may be rescheduled by Buyer, either
earlier or later. Should the extent to which said maintenance outage
can be rescheduled, either earlier or later, be equal to or less than
one and one-half (1/1/2) months, Seller shall provide all
documentation and information reasonably requested by Buyer supporting
Seller's inability to reschedule the maintenance outage more than one
and one-half (1/1/2) months. Seller shall schedule and coordinate these
planned outages with Buyer and shall use reasonable efforts to conduct
all deferable maintenance during Buyer's off-peak periods, which shall
be defined as (a) those periods other than 7:00 am to 10:00 pm, Monday
through Friday, and (b) the following holidays: New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
Subject to the limitations in rescheduling as specified by Seller in
accordance with the above paragraph, Buyer shall have the right to
modify the first-year of the five-year schedule of maintenance outages
submitted by Seller, without compensation to Seller, by providing
written notice to Seller no later than sixty (60) days prior to the
earlier of (a) the date the outage is being rescheduled by Buyer to
commence, and (b) the date the outage was scheduled by Seller To
commence. If Buyer provides less than sixty (60) days' written notice
to Seller of its intent to modify Seller's maintenance schedule, Buyer
shall compensate Seller for any incremental charges reasonably incurred
by Seller under its fuel supply agreements and for Seller's other
reasonably incurred incremental costs; provided, however, that Seller
shall provide to Buyer, by facsimile transmission, a statement
detailing these incremental charges within two (2) business days of
Seller's receipt of Buyer's written notice. Seller's failure to provide
this statement timely shall be deemed as an acceptance by Seller of
Buyer's direction to modify the maintenance schedule without
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compensation from Buyer. Buyer shall have the right to rescind the
notice to Seller within two (2) business days of Buyer's receipt of
Seller's statement of incremental charges. In no event shall Seller be
required to take any action to implement a revision to the maintenance
schedule until Buyer's right to rescind has expired,
Seller may modify its schedule of planned outages at any time subject
to Buyer's consent, which consent shall not be unreasonably withheld.
Seller shall provide to Buyer in writing the expected duration of a
forced outage within forty-eight (48) hours after the start of the
outage.
11. A new article, designated as Article XXIV, is added to the
Agreement and shall read as follows:
Article XXIV - Right of First Refusal
Buyer shall have a right of first refusal with respect to the sale by
Seller of any additional capacity, and associated energy, produced by
the Plant above 240 MW (the "Additional Capacity"). Seller shall notify
Buyer in writing of its receipt of any acceptable, bona fide offer from
a third party for the purchase of all or part of the Additional
Capacity. Within thirty (30) days from the date of its receipt of said
notice from Seller, Buyer may provide written notice to Seller that it
will purchase the Additional Capacity pursuant to the terms of said
third party offer. If Buyer provides said notice to Seller, Buyer and
Seller shall immediately commence negotiations for a power purchase
agreement to memorialize the terms of said third party offer, If Buyer
does not provide said notice to Seller, Seller may accept said third
party offer and Buyer shall be deemed to have provided any written
approval of such sale of power to a third party that might otherwise be
required under Articles XII and XIII of this Agreement. Seller shall
not sell any Additional Capacity to a third party unless Buyer has
failed to exercise its right of first refusal hereunder,
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12. A new article, designated Article XXV, is added to the Agreement
and shall read as follows:
Article XXV - Fuel Remarketing Obligations
Seller hereby acknowledges and agrees that, to the extent that Seller's
fuel supplies exceed that amount of fuel that is needed (a) to operate
the Plant consistent with maintaining its status as a qualifying
facility, as required by Section 1.1(b) of Article 1 hereof, (b) to
operate the Plant in compliance with its various governmental permits
and authorizations (as in effect from time to time) and good utility
and engineering practices, and (c) to operate the Plant so as to comply
with Seller's obligations to supply steam to Seller's steam host,
either party may undertake the exploration of various means for
utilizing such excess fuel supplies for purposes other than consumption
at the Plant for the mutual benefit of Seller and Buyer. Buyer hereby
acknowledges and agrees that any means of utilizing Seller's fuel
supplies that would require Seller to become a gas corporation under
the New York State Public Service Law or would subject Seller to
regulation by the New York State Public Service Commission or other
federal or state governmental agency, or result in a reduction of net
revenue to Seller, would not be to the mutual benefit of the Seller and
Buyer and will not be undertaken under this Article XXV. Both parties
agree to cooperate in good faith in exploring such mutually beneficial
endeavors, which cooperation shall include (a) subject to any
confidentiality restrictions or provisions, Seller providing to Buyer
all information and documents pertaining to Seller's existing fuel
supply and transportation arrangements reasonably required by Buyer and
(b) the negotiation and execution of all necessary documents and
agreements as reasonably requested by either party in connection with
the exploration of such alternatives. Seller and Buyer agree that the
expenses either party incurs to consummate the ultimate transaction(s)
contemplated hereunder, along with the benefits of the transaction(s)
hereunder, shall be subject to negotiation by the parties as to their
allocation. The parties hereto acknowledge and agree that the
consummation of any transaction that may be contemplated by this
Article XXV, and the obligation of the parties with regard thereto, is
subject to and specifically conditioned upon (aa) The negotiation and
execution of acceptable agreements in form and content acceptable To
each party, in their respective reasonable discretion, (bb) the receipt
of any required
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governmental approval(s), and (cc) the receipt of necessary consents,
in form and content acceptable to Seller and its counsel, of Seller's
constituent partners, Seller's Lenders, Seller's fuel suppliers
(currently Shell Canada Limited) and, if required, the consent of
Seller's gas transporter and steam host. Nothing in this Article XXV
shall be construed so as to require Seller to violate the
confidentiality provisions of its fuel supply and transportation
arrangements with third parties.
13. A new article, designated XXVI, is added to the Agreement and shall
read as follows:
Article XXVI - No Partnership or Agency Relationship
This Agreement shall not be interpreted or construed to create an
association, joint venture or partnership between the parties hereto or
to impose any partnership obligations or liability upon either party.
Further, neither party (nor such party's employees, representatives,
agents and subcontractors) shall have any right, power or authority to
enter into any agreement or undertaking for or on behalf of, to act as
or be an agent or representative of, or to otherwise bind the other
party. It is covenanted and agreed that neither party shall act or make
any representation to any person or persons whomsoever to the effect
that such party, its agents, representatives, or subcontractors is the
agent or agents of the other party.
14. The second to last sentence of the second paragraph of Exhibit B -
Performance Guarantee, which appears on page B-25 of the Agreement, shall be
revised to read as follows:
The capacity factor calculation will exclude curtailments made in
accordance with Article X by subtracting the curtailed MWHRS from the
maximum possible MWHRS, and will be performed using Potential
Generation (as defined in Exhibit J) as the numerator in the
appropriate formula(s). To the extent that the unavailability of the
Plant would, absent this provision, result in (a) the Plant failing a
capacity factor test under this Exhibit B - Performance Guarantee, with
the attendant reduction in the rate paid by Buyer for electricity and
(b) The Seller not receiving payment for Available Generation, then
Buyer may be compensated for such
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unavailability in an amount equal to the greater of either (a) the
payments withheld to Seller pursuant to Article XXI due to said
unavailable generation for such unavailability or (b) the reduction in
the rate payable by Buyer for electricity pursuant to Exhibit B
Performance Guarantee, but not both. Upon performing the capacity
factor tests pursuant to Exhibit B - Performance Guarantee of the
Agreement, Buyer shall compare any resulting reduction in rates that
Buyer is permitted to initiate as a result of Seller's failure, if any,
to satisfy said capacity factor test against the amount of payments
withheld from Seller during the period over which the capacity factor
test was performed. If the capacity factor test rate reduction is
greater than the amount of withheld payments, then Buyer may initiate
a reduction in the rates payable to Seller for electricity for that
period of time necessary to recover the positive difference between the
reduction allowed under Exhibit B and the withheld payments for
unavailable generation. If the capacity factor test reduction is less
than the amount of withheld payments, then Buyer shall not be permitted
to initiate any reduction in rates payable to Seller for electricity.
15. The third through seventh paragraphs of Exhibit B - Pricing
Description are revised to read as provided in Appendix D hereto.
16. The third paragraph of Exhibit B - security language - 8. Security
for Front-Load is revised by inserting the parenthetical "(assuming the Plant's
power was sold under a must-run contract)" after "such payments", where it
appears in the second sentence.
17. This Amendment, and each of the new articles and exhibits added to
the Agreement, shall become effective when executed by Buyer and Seller, subject
to a condition subsequent of Seller's constituent limited partners ("Limited
Partners") and Lenders' consents. In the event that the Limited Partners' and
Lenders' consents are not obtained within ninety (90) days after the effective
date of this Amendment, or the Limited Partners or Lenders insist on any
material modification to
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this Amendment as a condition to its consent, Buyer may Terminate this Amendment
upon written notice to Seller without any liability by Buyer to Seller. Seller
shall submit this Amendment to the Limited Partners and Lenders promptly after
the Amendment is fully executed and Seller shall use its reasonable efforts (a)
to obtain the Limited Partners' and Lenders' consents and (b) to keep Buyer
apprised of Seller's discussions with such entities regarding requests for such
consents.
The Limited Partners and Lenders may consent to all or part of this
Agreement, and this Amendment shall survive to the extent to which the Limited
Partners' and Lenders grant their consents, provided, however, that the Limited
Partners and Lenders must consent, to (a) the entirety of proposed Article XXI
of the Agreement, and related provisions, as proposed in paragraphs 1, 2, 4, 5,
6, 7, 8 and 9 of this Amendment, and (b) identical terms.
18. Notwithstanding Article XIX of the Agreement, Buyer and Seller
hereby agree that the effectiveness of this Amendment is not contingent upon, or
otherwise subject to, the approval of the New York State Public Service
Commission.
19. Except as otherwise modified by this Amendment, the terms of the
Agreement remain unchanged and in full force and effect.
20. Seller and Buyer agree that this Agreement constitutes Confidential
Matter as defined in the Confidentiality Agreement between Seller and Buyer, and
Seller agrees to support any request for trade secret protection for this
Amendment made by Buyer to the New York Public Service Commission.
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IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to be
executed as of the day and year first above written.
NEW YORK STATE ELECTRIC & GAS
CORPORATION
/s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Senior Vice President -
Electric Business Unit
SARANAC POWER PARTNERS, L.P.
By: Saranac Energy Company, Inc.
Its General Partner
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and
Chief Financial officer
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APPENDIX A
EXHIBIT I - OPERATING PROCEDURES
A. Information To be Supplied by Seller to Buyer
a. At least thirty (30) days prior to the Commercial Operation Date,
and on or before each January 15 thereafter during the term of this Agreement,
Seller shall provide to Buyer in writing an estimate of the Variable Cost for
that calendar year. Following the Commercial Operation Date, on or before the
fifteenth (15th) day of each month during the term of this Agreement, Seller
shall provide to Buyer in writing an updated estimate of the Variable Cost for
the upcoming month. Seller shall furnish to Buyer, with the estimates provided
to Buyer hereunder, those documents and data used by Seller to calculate the
estimate of the yearly or monthly Variable Cost.
b. Within ninety (90) days after the effective date of this Amendment,
Seller shall provide to Buyer a heat rate curve designating the Plant's heat
rate for the following load levels based on the average monthly ambient
temperatures expected at the Plant site: operation at 100% of the maximum net
output that can safely and reliably be achieved under expected operating
conditions (but in no event greater than 240 MW), 75% of such level, 100% of
the maximum net output that can safely and reliably be achieved under expected
operating conditions with one of the Plant's gas-fired turbines shut down, and
75% of such level (such outputs correspond to the
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following nominal outputs: 240, 187, 115 and 90 MW based on the average ambient
temperatures expected at the Plant site). The set of heat rate curves shall
identify a heat rate curve applicable to each month of the calendar year taking
into account the expected average ambient temperature for each month. On or
before each January 15 after the Commercial Operation Date and before the
expiration of the term of this Agreement, Seller shall provide updated versions
of said heat rate curves based on testing of the Plant's heat rate during the
prior calendar year and, as appropriate, revised estimates of expected average
monthly ambient temperatures. The Plant's heat rate shall be tested during
normal Plant operating conditions. Buyer shall be afforded the opportunity to
have a representative present at any heat rate test of the Plant. Seller shall
provide to Buyer a two (2) week written notice of any heat rate test of the
Plant. Buyer shall have the right to review the data used by Seller to create
the heat rate curves provided To Buyer hereunder.
B. Buyer's Scheduling instructions
a. Commencing on the date that Seller receives the consent of its
Lenders and Limited Partners to this Amendment, by no later than the Scheduling
Deadline (as defined herein) for each Gas Day (as defined herein), Buyer shall
notify Seller of the expected schedule for the Plant for such Gas Day (the
"Schedule"). For the purposes of this Agreement: (1) a Gas Day shall be the
Twenty-four (24) hour period beginning at the time specified for the
commencement of a "day" by the tariff issued
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by Seller's gas transporter (for gas delivered to the United States' border with
Canada at a point near Xxxxxxxxxxx, Xxxxxx, Xxxxxx and applicable to Seller's
gas supply) and ending at the same time on the following day; (2) the Scheduling
Deadline for any particular Gas Day shall be 11:00 A.M. Eastern Time of the
business day prior to the Gas Nomination Deadline for such Gas Day, adjusted
forward or back in concert with any changes in the Gas Nomination Deadline;
provided, however, that adjustments related to a change in the Gas Nomination
Deadline shall not increase the time span between the Gas Nomination Deadline
and the start of the associated Gas Day by more than six (6) hours; and (3) the
Gas Nomination Deadline for any particular Gas Day shall be the deadline for
notifying Seller's gas transporter of the amount of gas to be transported during
such Gas Day, as such deadline is established in the tariff issued by Seller's
gas transporter for gas delivered to the United States border with Canada at a
point near Xxxxxxxxxxx, Xxxxxx, Xxxxxx and applicable to Seller's gas supply.
Currently, Seller's gas transporter is TransCanada PipeLines Limited; a Gas Day
commences each day at 8 A.M. Eastern Standard Time and ends at 8 A.M. the
following day; and the Gas Nomination Deadline is 11 A.M. Mountain Time of the
day prior to the day on which a Gas Day commences. Seller agrees to promptly
notify Buyer in the event that Seller's gas transporter amends its tariff in a
manner that affects the Scheduling Deadline or the period covered by a Gas Day.
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b. The Schedule shall be transmitted by Buyer to Seller by facsimile,
and receipt of which shall be confirmed by telephonic message from Seller to
Buyer. The Schedule shall be transmitted to Seller on a form to be finalized by
Seller and Buyer within ten (10) days following the execution of Amendment No.
2 to the Agreement by Seller and Buyer. The Schedule shall include the
operating levels for the applicable period (Gas Day), which shall be either 100%
of the maximum net output that can safely and reliably be achieved under actual
operating conditions (but in no event greater than 240 MW), 75% of such level,
100% of the maximum net output that can safely and reliably be achieved under
actual operating conditions with one of the Plant's gas-fired turbines shut
down, and 75% of such level (such output levels correspond to the following
nominal outputs: 240, 187, 115 and 90 MW, based on the average ambient
temperatures expected at the Plant site). The Schedule shall be consistent with
the provisions of this Exhibit I. Should Buyer fail to provide a Schedule to
Seller, Seller shall operate the Plant at its discretion (not to exceed 240 MW)
until such period (Gas Day) as Seller receives a timely Schedule from Buyer. On
the twentieth (20th) day of each month during the term of this Agreement, Buyer
shall provide to Seller in writing a preliminary schedule for operation of the
Plant for the upcoming month. Buyer shall have the right to modify this
preliminary monthly schedule pursuant to this section b.
c. Buyer shall have the right to request a modification of the
previously scheduled operating level of the Plant for any particular period (Gas
Day), or remaining
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part thereof, by providing telephonic notice to Seller no later than five and
one-quarter (5 1/4) hours prior to the commencement of the hour for which the
change in the Schedule is being requested by Buyer, provided that said
scheduling directive is consistent with the provisions of this Exhibit I. Buyer
may make its request in the form of a direction to Seller to implement the
modification to the schedule for said Gas Day provided that the incremental
costs to be incurred by Seller are equal to or less than an amount specified by
Buyer.
d. In the event Buyer requests a modification to a scheduled operating
level of the Plant pursuant to subparagraph c above, Seller shall promptly use
reasonable efforts to obtain the approval of its non-affiliated gas suppliers
and transporters (currently, Shell Canada Limited and TransCanada PipeLines
Limited, respectively) and determine its costs of complying with such a request.
If Seller succeeds in obtaining the consent of its non-affiliated gas suppliers
and transporters and Seller reasonably determines that its cost of complying
with such request would not exceed the upper bound on costs, if any, previously
specified by Buyer, then Seller shall modify the Plant's operation to match
Buyer's request and promptly notify Buyer of the same. Buyer shall reimburse
Seller for all incremental costs reasonably incurred by Seller as a result of
such change, but in no, event shall those costs exceed the ceiling on
incremental costs, if any, specified by Buyer and furnished to Seller in writing
in advance of such modification as provided for by subparagraph c above. If
Seller is unable to obtain The consent of its non-affiliated gas suppliers and
transporters or
I - 5
Seller reasonably determines that its cost of complying with such request would
exceed the upper bounds on costs, if any, previously specified by Buyer, then
(i) Seller shall promptly so notify Buyer, (ii) Seller shall not be required to
modify its operation to match Buyer's request. and (iii) any megawatt-hours
included in any such request shall not be used in determining Requested
Scheduling and the number of megawatt-hours Buyer requested for the purposes of
Article XXI(1), except to the extent that such MWHs were scheduled by Buyer
prior to such request.
e. Upon one (1) hours' telephonic notice to Seller, Buyer may request a
modification in the scheduled operating level of the Plant from 240 MW to 187
MW, or from 187 MW to 240 MW, for a particular hour in a Gas Day provided said
scheduling change(s) do not result in a modification of the volume of gas
nominated for Seller for said Gas Day, and Seller shall comply with that request
without requiring reimbursement from Buyer for incremental costs, and provided
further that said rescheduling does not eliminate the required eight (8)
consecutive hour operating period of the Plant at 240 MW.
f. Buyer's scheduling directions to Seller shall be subject to the
following parameters:
i. Buyer may schedule the Plant to operate at any of the
following levels: 100% of the maximum net output that can safely and reliably be
achieved under actual operating conditions (but in no event greater than 240
MW), 75% of such level, 100% of the maximum net output that can safely and
reliably be achieved
I - 6
under actual operating conditions with one of the Plant's gas-fired turbines
shut down, and 75% of such level (such output levels correspond to the following
nominal outputs: 240 MW, 187 MW, 115 MW, and 90 MW based on average ambient
temperatures expected at the Plant site); provided, however, that during any Gas
Day, Buyer may schedule the Plant to operate at either 240 or 187 MW for each
hour of that Gas Day provided The Plant operates at 240 MW during said Gas Day
for a period of at least eight (8) consecutive hours;
ii. the start-up time for a gas turbine shall be two (2) hours
if a cold start (which is defined as after a shutdown of four (4) hours or more)
is scheduled, and one (1) hour if a hot start (which is defined as after a
shutdown of less than four (4) hours) is scheduled;
iii. in the event that (1) Seller's gas transporter's
tariff(s) covering the transportation of Seller's fuel is amended, revised or
otherwise changed, and (2) Seller notifies Buyer in writing of such amendment,
revision or change, Buyer thereafter shall not schedule the Plant in a manner
that would cause Seller to violate or breach any nomination requirement(s)
contained in the tariff of Seller's transporter, as in effect from time to time;
provided, however, that if said amendment, revision or change to the tariff of
Seller's fuel transporter has a material and adverse impact on Buyer's ability
to schedule the operation of the Plant, Buyer and Seller shall commence good
faith negotiations, upon Seller's receipt of written notice from Buyer
requesting same, and continue same for a period of sixty (60) days for an
amendment to this
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Agreement restoring to Buyer scheduling and other rights commensurate with those
embodied in Amendment No. 2 to this Agreement. If Seller and Buyer fail to so
finalize such an amendment Within said sixty (60) day period, Then Buyer shall
have the option to, in addition to other remedies and rights under this
Agreement, to rescind Amendment No. 2 to this Agreement, and upon such
rescission Buyer's right to curtail the electric generation of the Plant shall
be reinstated to the extent said right was waived under Amendment No. 2 to this
Agreement; provided, however, that such option shall only apply if Buyer
notifies Seller within sixty (60) days of the expiration of the sixty (60) day
period for finalizing an amendment of its intent to rescind Amendment No. 2;
provided, further, that any notice to rescind Amendment No. 2 pursuant to this
Exhibit I shall be in writing and any such notice shall state that the
rescission of Amendment No. 2 shall be effective as of the last day of the first
month that ends at least ten (10) business days after Seller receives such
written notice;
iv. the minimum scheduled downtime for a gas turbine shall be
eight (8) hours, and the minimum run time between gas turbine start and stop
shall be eight (8) hours;
v. Seller shall endeavor to transition between operating
states as quickly as is reasonably feasible, based on equipment specifications,
operating conditions, project contracts and other relevant limiting factors. The
expected average minimum ramp rate shall be 1,000 KW per minute (up or down)
except that for transitions between generating states that do not require a gas
turbine start, the
I - 8
expected ramp rate will be up to 5,000 KW per minute (up or down), as requested
by Buyer;
vi. provided that Seller's auxiliary boiler has not been
unavailable for more than ten (10) days in the Gas Supply Year in which Buyer
schedules the Plant hereunder, which unavailability shall be verified by Buyer
through its inspection of Seller's documents relating to the outages of its
auxiliary boiler, Buyer shall not schedule the Plant so as to require Seller to
take a turbine off-line during periods in which Seller's auxiliary boiler is
temporarily unavailable for operation, whether due to maintenance or otherwise
for reasons beyond Seller's reasonable control;
vii. the maximum number of gas turbine starts during any
calendar year shall be 50; provided, however, that a start Of a gas turbine
following a forced outage or scheduled outage shall not constitute a start for
purposes of this section vii; and
viii. except as provided in Article XXI(1) of this Agreement,
the maximum reduction in the Plant's electric output that can be scheduled by
Buyer during any gas supply year ("Gas Supply Year") is 200,000 megawatt hours.
For the purposes of this Agreement, a Gas Supply Year shall mean (1) in the case
of the first Gas Supply Year, the period commencing at 12:00:01 a.m. on the
Commercial Operation Date and concluding with the last day of the calendar month
that encompasses a period of at least twelve (12) full, consecutive calendar
months but less than thirteen (13) full, consecutive calendar months, and (2)
thereafter, the period
I - 9
commencing at 12:00:01 a.m. on the first day immediately following the last day
of the prior Gas Supply Year and continuing for twelve (12) full, consecutive
calendar months.
The amount of reduction in electric output scheduled by Buyer shall be
calculated by determining the difference, in each hour that the Plant is
available for scheduling, between 240 megawatts (or such lower maximum operating
state that the Plant could have achieved during said hour if the Plant had not
been scheduled by Buyer) and The output scheduled by Buyer for that hour;
provided that Plant's scheduled output shall never be deemed to exceed 240
megawatts and that, in any hour That the Plant was available for scheduling but
was not scheduled by Buyer, the scheduled output shall be deemed to have been
240 megawatt hours. The sum of all such calculations for each hour since The
start of the current Gas Supply Year shall represent The total amount of
reduction to which the 200,000 megawatt hour (or such higher number as provided
in Article XXI(1) upper limit applies.
g. (i) If Buyer schedules the Plant at a level below 240 MW (the
"Initial Level"), and then schedules the Plant to achieve a higher generating
level (the "Requested Level") and the Plant (aa) cannot comply with this
subsequent direction, the Plant will be deemed to have been unavailable at an
operating level above the Initial Level for the time period from the hour the
Plant was scheduled to commence operating at the Requested Level to the hour the
Requested Level is achieved and no compensation shall be paid by Buyer for
Available Generation above the Initial Level of operation
I - 10
during that deemed period of unavailability, or (bb) is able to return only to
an operating level less than the Requested Level but more than the Initial Level
(the "Interim Level"), the Plant will be deemed to have been unavailable at an
operating level above the Interim Level for the time period from the hour the
Plant was scheduled to commence operating at the Requested Level to the hour the
Requested Level is achieved and no compensation shall be paid by Buyer for
Available Generation above the Interim Level during that deemed period of
unavailability.
(ii) If Seller is unable To comply with Buyer's scheduling directions
involving a Requested Level of 240 MW and an Initial Level of 187 MW, as such
inability is described in subparagraphs (aa) and (bb) of paragraph (i), more
than twenty percent (20%) of the time such directions have been given in the
twelve (12) month period preceding a failure to follow such a direction, then
the period of unavailability for such failure shall be deemed to have commenced
at the hour that the Plant was scheduled To operate at the Initial Level of 187
MW.
(iii) If Seller is unable to comply with Buyer's scheduling directions
involving an Initial Level less than 187 MW (namely, involving the complete
shut-down of one of the Plant's gas-fired generators), as such inability is
described in subparagraphs (aa) and (bb) of paragraph (i), more than twenty
percent (20%) of the time such, directions have been given in the twelve (12)
month period preceding a failure to follow such a direction or, if less than ten
(10) such directions have been given in said twelve (12) month period, more than
twenty percent (20%) of the last ten (10) such directions
I - 11
given to Seller, then the period of unavailability for such failure shall be
deemed to have commenced at the hour that the Plant was scheduled to operate at
the Initial Level.
h. Seller shall immediately notify Buyer if (i) Seller elects to
perform maintenance that would interfere with Buyer's ability to schedule the
Plant within the bounds of this Agreement, or (ii) the Plant is otherwise
unavailable, during any period that Buyer has directed the Plant to operate at a
level other than 240 MW If the Plant is derated by Seller for any reason, Seller
shall notify Buyer immediately via facsimile transmission to Buyer's chief
system dispatcher or such person's designee of the commencement and cessation
hour for such derating period. To the extent that such derating is not the
result of force majeure, or otherwise excused under the terms of this Agreement,
and such derating conflicts with Buyer's ability to schedule the Plant as
otherwise provided for by this Agreement, the Potential Generation (as defined
in Exhibit J) of the Plant during this period shall be adjusted by Buyer
accordingly,
i. Notwithstanding any other provision of this Amendment, Seller shall
not be required to comply with any Schedule supplied by Buyer to the extent that
such Schedule would interfere with: (a) EPC performance testing for establishing
project completion during the first six (6) months following the Commercial
Operation Date; (b) DMNC testing, as required by this Agreement, as amended; and
(c) testing in accordance with industry practices following major Plant
overhauls and repairs;
I - 12
provided however, that (aa) with respect to subparagraph (a) above, Seller shall
provide prompt telephonic and written notice to Buyer upon the completion of
such EPC performance testing, and (bb) with respect to subparagraph (c) above,
Seller shall (aaa) provide prompt telephonic and written notice to Buyer upon
the commencement and completion of all such major Plant overhauls and repairs,
(bbb) limit such testing to no more than three (3) months, and (ccc) provide
prompt telephonic and written notice to Buyer upon the completion of such
testing.
I - 00
XXXXXXXX X
EXHIBIT J - PAYMENT FOR AVAILABLE GENERATION
Provided that Buyer scheduled the operation of the Plant for said
monthly billing pursuant to Article XXI of this Agreement, Buyer shall make a
monthly payment to Seller for Available Generation equal to the monthly
summation of the following formula calculated for each hour during the said
billing period:
Payment for Available Generation = AVG x (CR - (.95 x VC)) where
AVG = Available Generation, shall be equal to PG - AG.
PG = Potential Generation, is the number of KWH the Plant could
have produced for said hour had the Plant been available and
operated at the Potential Capacity (as defined on page J-2).
AG = Actual Generation, shall be the number of KWH that are both
scheduled for delivery by Buyer (based on the output state
chosen by Buyer) and actually produced by the Plant and
delivered to the delivery point for said hour, which amount
shall not exceed 240 MW net when averaged over a five (5)
minute period.
CR = Contract Rate, shall be the rate specified in Exhibit B of
this Agreement.
APPENDIX C
EXHIBIT K
PAYMENT FOR START-UP COSTS
In addition to payments for Actual Generation and Available Generation,
Buyer shall pay Seller an amount for each start-up of a gas turbine requested by
Buyer pursuant to Article XXI of this Agreement equal to five thousand dollars
($5,000.00) for calendar year 1994, which amount shall escalate at a compounded
rate of four (4) percent each calendar year as set forth below:
Calendar Year Start-Up Cost
------------- -------------
1994 $ 5,000.00
1995 5,200.00
1996 5,408.00
1997 5,624.32
1998 5,849.29
1999 6,083.26
2000 6,326.60
2001 6,579.66
2002 6,842.85
2003 7,116.56
2004 7,401.22
2005 7,697.27
2006 8,005.16
2007 8,325.37
2008 8,658.38
2009 9,004.72
2010 9,364.91
2011 9,739.50
APPENDIX D
With regard to Period A, all electricity delivered by Seller to Buyer
during peak hours shall constitute Class I electricity. In addition, all
electricity delivered by Seller to Buyer during off-peak hours shall constitute
Class I electricity up to a maximum number of off-peak KWh such that the ratio
of peak to off-peak hours in the then current billing period shall equal the
ratio of Potential Peak Generation to Class I off-peak KWh delivered during The
same period. (Kilowatt hours of Potential Peak Generation shall be calculated by
summing the Potential Generation (as defined in Exhibit J) in each peak hour of
the relevant billing period). Except as otherwise as provided below, any
electricity delivered during off-peak in excess of that maximum number of
off-peak KWh shall be considered Class II electricity and shall be paid for at a
rate equal to Buyer's off-peak short-run avoided cost as defined in Exhibit H.
If the number of KWh delivered during the off-peak hours in any billing
period is less than the maximum off-peak permitted for Class I, the difference
between such maximum permitted amount and the amount actually delivered shall be
tracked in a notional account. In The event that in later billing periods, there
is an excess of off-peak KWh hours in comparison to the maximum Class I off-peak
KWh permitted, such additional off-peak KWh shall also be paid for at the Class
I rate up to any amount then in the notional account and the notional account
will be reduced by the additional KWh paid for at the Class I rate,
With regard to the offset to be applied during Period A, no offset
shall be applied through the end of 1994 (the period during which LRAC is less
than 6 cents/KWh under the Commission's current estimate). Instead, the period
between commencement of commercial operation to the end of 1994 shall be used to
establish
the Plant's base output. Specifically, a second notional account shall be used
to track (1) the total number of Class I KWh purchases by Buyer through the end
of 1994 plus the total amount of Available Generation (as defined in Exhibit J)
paid for based on a Contract Rate (as defined in Exhibit J) equal to the Class I
electricity rate through the same period less Variable Cost (as defined in
Exhibit J), and (2) the total number of hours from the time of commercial
operation through the end of 1994. The first number will then be divided by the
second to compute the Plant's Base Output.
Commencing in January 1995 and for each monthly billing period
thereafter through the end of Period A, the sum of the Potential Generation of
the Plant for each hour of the current monthly billing period and the preceding
eleven monthly billing periods shall be divided by the total number of hours in
the same twelve monthly billing periods less any hours of Force Majeure outages
in the same period; the resulting number shall be referred to as the Plant's
"Current Output."
If the Plant's Current Output is less than the Plant's Base Output,
then an offset in the amount of that difference times twelve times the
difference between Buyer's short-run avoided cost as defined in Exhibit H and
six cents/KWh times the number of hours in the then current billing period shall
be applied to the amount due from Buyer during that billing period; provided,
however, that if six cents/KWh exceeds Buyer's short-run avoided cost as
defined in Exhibit H, then no offset shall be applied. In any monthly billing
period that an offset is applied, the Plant's total Potential Generation for the
corresponding period shall be deemed to equal the Plant's Base Output times the
number of hours in that period for the purpose of all future calculations of
offsets.
