Exhibit 10.26.1
AMENDED AND RESTATED STEAM PURCHASE AGREEMENT
This Amended and Restated Steam Purchase Agreement is made
this 17th day of September, 1993 by and among PHILADELPHIA
THERMAL ENERGY CORPORATION ("PTEC"), ADWIN EQUIPMENT COMPANY
("Adwin"), O'BRIEN ENVIRONMENTAL ENERGY, INC. (O'Brien") and
GRAYS FERRY COGENERATION PARTNERSHIP, a Pennsylvania general
partnership ("Seller").
BACKGROUND TO RESTATEMENT
PTEC, Philadelphia United Power Corporation. formerly known
as United Thermal Development Corporation ("PUPC0"), Adwin,
O'Brien and Seller are parties to some or all of a series of
agreements1 each dated November 11, 1991. as follows
(collectively1 "Original Agreements"):
(1) Steam Venture Agreement by and among O'Brien, Adwin,
PUPCO and PTEC ("Original Venture Agreement");
(2) Site Lease by and between PTEC and Seller ("Original
Lease");
(3) Steam Purchase Agreement by and among PTEC1 Adwin,
O'Brien and Seller ("Original Purchase Agreement");
(4) Project Services and Development Agreement by and
between Seller and PUPCO ("Original Development Agreement");
(5) Penn Selection Agreement by and among PTEC1 PUPCO,
Adwin, O'Brien and Seller ("Original Penn Agreement"); and
(6) Dock Facilities by and among PTEC, Seller and
Philadelphia Thermal Development Corporation ("Original Dock
Agreement").
The Original Agreements set forth the terms and conditions
under which Adwin and O'Brien formed Seller for the purpose. of
constructing and owning a Cogeneration Facility (as defined
hereafter). which will be located on a portion of PTEC's
Schuylkill Station site. The Cogeneration Facility will produce
steam and electrical power, and will be operated and maintained
by PUPCQ. Steam from the Cogeneration Facility will be purchased
by PTEC for use in PTEC's steam distribution system. The parties
have subsequently agreed to terminate the Original Penn
Agreement.
The original Agreements contemplated that the Cogeneration
Facility would consist of a Phrase 7 Gas Turbine, a Heat Recovery
Steam Generator9 a steam turbine and high pressure auxiliary
boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil
rating) which would be capable of burning both No. 6 oil and
natural gas. The Original Agreements further contemplated that
the auxiliary boiler would, under certain circumstances, be
constructed on an accelerated basis prior to the remainder of the
equipment described above.
Adwin and O'Brien have now requested, and PTEC and PUPCO
have agreed. that the installation of the Cogeneration Facility
("Project") be restructured in certain ways, including the
development of the Project in two discrete phases, consisting of
(i) installation in Phase I of a high pressure auxiliary boiler
with a 40 megawatt steam turbine ("Phase I Project"), and
(ii) installation in Phase II of the Frame 7 Gas Turbine and
related equipment ("Phase II Project"). The parties intend that
the Phase I Project be completed on an expedited basis.
The parties have further agreed to amend certain of the
Original Agreements and to restate those Original Agreements,. so
amended, in their entirety, to reflect the changes to. the
Project described above.
Now, therefore, intending to be legally bound hereby, the
parties hereby amend the Original Purchase Agreement and restate
the Original Purchase Agreement in its entirety, as follows:
BACKGROUND
Seller is a general partnership formed by Adwin and O'Brien.
Adwin and O'Brieen are parties to an Amended and Restated Steam
Venture Agreement with PTEC of even date herewith ("Amended Steam
Venture Agreement"), pursuant to which Adwin and O'Brien will,
together, through Seller, develop, construct, own and operate a
cogeneration facility for the production of steam and electric
energy (the "Project"). The Project will be located in the
Schuylkill Station facility owned or leased by PTEC, a portion of
which will be leased to Seller under an Amended and Restated Site
Lease of even date herewith ("Amended Site Lease"). The Project
will be owned by Seller and operated by PUPCO, under an Amended
and Restated Project Services and Development Agreement of even
date herewith ("Amended Project Services Agreement", and with the
Amended Site Lease, the Amended Steam Venture Agreement and this
Agreement, collectively the "Amended Project Documents").
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PTEC is a public utility certificated by the Pennsylvania
Public Utility Commission to sell steam in a defined area of the
City of Philadelphia consisting of portions of Center City and
West Philadelphia ("PTEC's Service Area") through a steam
distribution system ("Steam Loop").
Seller is willing to sell and PTEC is willing to purchase
the steam produced by Seller, on the terms and conditions -
hereunto set forth.
All capitalized terms not otherwise defined herein shall
have the same meanings as in the Amended Project Services
Agreement.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Steam Purchase by PTEC
A. During Phase I Project testing and prior to the Phase I
Project Acceptance Date, PTEC 8hall not be obliged to purchase
any minimum amount or requirement of steam, but shall purchase
Project steam flow to the extent such purchases are consistent
with prudent operation and system reliability of the Steam Loop,
and any steam purchased by PTEC during such Phase I Project
testing and prior to the Phase I Project Acceptance Date shall be
at PTEC's Avoided Cost of Steam (as defined in Appendix 1
hereto). However, after the Phase I Project Acceptance Date,
PTEC shall pay the full price for steam delivered from Phase I as
provided in Section 2 below. The Project will supply and PTEC
shall be obligated to purchase Distribution Sendout Steam (low
pressure steam) as defined in Appendix 2 of this Agreement (210-
240 psi, 40 degrees F above saturation, but not greater than 450
degrees F) from the Phase I Project for the full term of this
Agreement, in the amounts and at the prices specified herein,
until the Phase II Project Acceptance Date. All references in
this Agreement and the other Amended Project Agreements to the
purchase of "steam" prior to the Phase II Project Acceptance
Date shall refer to Distribution Sendout Steam.
B. During Phase II Project testing and prior to the Phase II
Project Acceptance Date, PTEC shall not be obliged to purchase
any minimum amount or requirement of steam in excess of the
minimum take requirement for Phase I, but shall purchase such
excess Project steam flow to the extent such purchases are
consistent with prudent operation and system reliability of the
Steam Loop, and any steam in excess of the Phase I minimum take
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requirement purchased by PTEC during such Phase II Project
testing and prior to the Phase II Project Acceptance Date shall
be at PTEC's Avoided Cost of Steam (as defined in Appendix 1
hereto). However, after the Phase II Project Acceptance Date.,
PTEC shall pay the full price for steam delivered from Phase II
as provided in Section 2 below.
C. During the term of this Agreement, (i) after the Phase I
Project Acceptance Date, PTEC shall be obliged to purchase steam
at the minimum take obligations as described in subsection E(i)
below, and (ii) after the Phase II Project Acceptance Date, PTEC
shall be obliged to purchase steam at the minimum take
obligations as described in subsection E(ii) below.
D. During the term of this Agreement, following Phase I
Project Acceptance and following Phase II Project Acceptance, Seller
will sell all steam produced by the Project (net of the Project's
internal requirements) to PTEC, and PTEC will purchase all of its
steam requirements from Seller, except that PTEC shall be free to
utilize other sources of steam when necessary (i) to operate
boilers at other PTEC facilities to meet the minimum loading
requirements for maintaining adequate pressure and to provide
system reliability, or (ii) to satisfy PTEC steam send out
requirements above and beyond the capabilities of the Project.
E. (i) Beginning on the Phase I Project Acceptance Date,
PTEC will pay on an annual basis for the greater of (i) the amount of
steam actually accepted by or (ii) 3.0 million thousand pounds
("Mlbs."). If the Project is unable to deliver at least 3.0
million Mlbs. of steam in any year, for reasons other than a
default by PTEC under any agreement to supply demineralized water
to Seller, the 3.0 million Mlbs. minimum requirement will be
reduced to the amount of steam actually delivered by the Project.
The 3.0 million Mlbs. minimum take requirement will also be
reduced in the event of a Penn Event by an amount equal to the
volume of steam PTEC is unable to purchase from the Project
directly attributable to the reduction in purchases by the
University of Pennsylvania.
(ii) Beginning on the Phase II Project Acceptance Date, PTEC
will pay on an annual basis for the greater of (i) the amount of
steam actually accepted by PTEC or (ii) 3.3 million Mlbs. If the
Project is unable to deliver at least 3.3-million Mlbs. of steam
in any year, for reasons other than a default by PTEC under any
agreement to supply demineralized water to Seller, the 3.3
million Mlbs. minimum requirement will be reduced to the amount
of steam actually delivered by the Project. The 3.3 million
Mlbs. minimum take requirement will also be reduced in
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the event of a Penn Event by an amount equal to the volume of
steam PTEC is unable to purchase from the Project directly
attributable to the reduction in purchases by the University of
Pennsylvania.
F. If neither PUPCO nor any of its affiliates is serving as
operator of the Project, then PTEC's obligation to purchase steam
hereunder is conditional on the steam produced by Seller
conforming fully with the minimum requirements for temperature.
pressure. p55 content and other specifications set forth in
Xxxxxxxx 0 xxxxxx.
X. All Project equipment will be designated for continuous
utility grade service and designed for a useful life of at least
thirty (30) years. PTEC shall have the right to approve in
advance the equipment selection and the location of the equipment
on the site, such approval not to be unreasonably withheld.
2. Price
A. The price for low-pressure steam in dollars per Mlb. For
each month following the Phase I Project Acceptance Date shall be
calculated according to the following formula:
SP = (BF x 1.69) + ($0.31 x CWT/PWT) + ($1.00 x CPIC/CPIb)
where,
SP = Steam price for the current month
BF = weighted Average Price of Fuel (natural
gas, No. 6 oil, and No.2 oil) in U.S. dollars per MMBtu (higher
heating value) utilized by the Project at the Burner Tip of the
gas turbine and Auxiliary Boiler in each month following the
Phase I Project Acceptance Date or the Phase II Project
Acceptance Date, as the case may be.
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CPIc = The Consumer Price Index - Urban, All
Items for Philadelphia recorded for the current month.
CPIb = The Consumer Price Index - Urban, All
Items for Philadelphia for the first month following the Phase I
Project Acceptance date or the Phase II Project Acceptance Date,
as the case may be.
CWT = Current City of Philadelphia Tariff
Water & Sewer Rate for Domestic and Commercial Customers
effective in the first month following the Phase I Project
Acceptance Date or the Phase II Project Acceptance Date, as the
case may be.
PWT = City of Philadelphia Tariff Water &
Sewer Rate for Domestic and Commercial Customers effective
January 10, 1986.
The steam price shall not be increased as a result of the use of
different fuels or fuel mixes by Seller or b any change in steam
production efficiency associated with the two-Phase approach set
forth in the preamble to this Agreement.
B. Notwithstanding the provisions of Section 2.A, the price to
be paid by PTEC for steam under any renewal or extension of the
Amended Project Documents beyond the Initial Term shall be equal
to or less than the Avoided Cost of Steam (as defined in
Appendix 1) available to PTEC (including the unamortized capital
costs of the Project's steam generating equipment, fuel, water,
chemicals and any other appropriate costs).
C. PTEC will pay for high pressure steam from Phase II at an
auxiliary high pressure steam price equal to the Base Price plus
$0.50 per Mlb. The auxiliary high pressure steam price shall be
adjusted monthly in accordance with the Steam Price adjustment
set forth in subsection B above. If, after the Phase I Project
Acceptance Date but prior to the Phase II Project Acceptance
Date, Seller sells electrical capacity to the Philadelphia
Electric Company or any other utility or any party purchasing
capacity for its own direct end use, PUPCO's fee as set forth in
Section 6.4 of the Amended Project Development Agreement shall be
modified as set forth therein.
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3. Term and Extension
A. This agreement will be for an initial term ("Initial Term")
equal to (a) the period commencing on the Commencement Date (as
defined in the Site Lease) and ending on the Full Operation Date
(as defined in the Site Lease), plus (b) twenty-five (25) years,
commencing on the Full Operation Date and ending on the date
which is twenty-five (25) years thereafter, Seller shall have the
option to extend the term hereof as set forth in more detail in
Section 5 of the Amended Steam venture Agreement.
B. Seller will have the right to extend the terms hereof beyond
the Initial Term only if Seller agrees to adjust the steam price
charged to PTEC to be equal to or less than PTEC's Avoided Cost
of Steam (including the unamortized capital cost of the Project's
steam generating equipment, fuel, water, chemicals, and any other
appropriate costs).
4. Additional Charges. In contemplation of the "all
requirements" provisions and "minimum take" provisions of this
Agreement, if, during the life of the Project, O'Brien, whether
directly or indirectly, whether through Seller or otherwise,
whether as an owner or a developer, and whether through a
cogeneration facility or other steam producing facility, sells or
makes available steam to any entity, and such act causes or would
cause a reduction in the steam required from the Project to serve
the then current system steam load, then O'Brien shall pay to
PTEC for each thousand pounds of steam sold or generated by such
other project or facility, an amount equal to the sum PTEC pays
for equivalent amounts and quality of steam from the Project.
5. Default and Remedies.
A. Seller shall be in default under this Agreement (a "Major
Seller Default") if an Owner's Major Default occurs under the
Amended Project Services Agreement.
B. PTEC shall be in default under this Agreement (a "Major PTEC
Default") if in any Agreement Year PTEC fails to pay in full for
at least the minimum take requirements set forth in Section 1.D
of steam (as adjusted in accordance with the terms of Section 1.D
and as a result of Force Majeure as described in Section 11.1 the
Amended Project Services Agreement) within thirty (30) days after
the end of such Agreement Year.
C. PTEC shall be in default under this Agreement (a "Minor PTEC
Default"). if PTEC fails to pay for any steam purchased within
thirty (30) days after payment is due.
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D. Upon the occurrence of a Major Seller Default, PTEC shall
have the rights and remedies available to equity, but not the
right to terminate.
E. Upon the occurrence of a Major PTEC Default, Seller shall
have the right to (i) recover from PTEC the difference between
(x) the sale price for the minimum annual take requirement set
forth in Section 1.D, and (y) the actual amount paid by PTEC to
Seller for steam during that year, less (z) the marginal cost of
fuel. water and other supplies which Seller would have incurred
had PTEC purchased the minimum required amount of steam. Upon
the occurrence of a Minor PTEC Default, Seller shall have the
right to recover from PTEC the unpaid amount due for steam sold
plus interest at two percent (2%) over the Prime Rate.
6. Miscellaneous
A. No change, amendment or modification of this Agreement shall
be valid or binding on the parties unless made in a writing
signed by all parties.
B. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and vice
versa. Titles of Sections are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
C. Notices. Any notice, demand, offer, consent, report,
approval or other written instrument required or permitted to be
given pursuant to this Agreement shall be in writing signed by
the party giving such notice and shall be hand delivered, or sent
by overnight delivery or by certified mail to the other parties
at the following addresses and shall be effective upon receipt.
PTEC: President
Philadelphia Thermal Energy Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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With a copy to: President
Philadelphia United Power Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xx 00000
Seller: Grays Furry Cogeneration Partnership
000 X. 0xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
O'Brien: Vice President, Operations
O'Brien Environmental Energy. Inc.
000 X. 0xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Adwin: Vice President
Adwin Equipment Company
000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Each party shall have the right to change the place to which
notice shall be sent or delivered by notice to the other parties.
The effective date of any notice issued pursuant to this
Agreement shall be as of the addressee's receipt of such notice.
D. Assignment. No party shall either assign or otherwise
transfer this Agreement (or any right or obligation contained
herein) without the prior written consent of the other parties,
and any assignment, subletting or other transfer without such
consent shall be void. Notwithstanding the foregoing, this
Agreement may be assigned by Seller for security purposes to any
construction or permanent lender for the Project or to any entity
purchasing electricity from the Project.
E. No Waiver. No consent or waiver, express or implied, by a
party to or of any breach or default by the party in the
performance by it of any of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such party of the same or
any other obligation of such party hereunder.
F. Applicable Law. This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania, exclusive of conflicts
of laws provisions.
G. Successors and Assigns. Subject to the restrictions on
transfers set forth herein, this Agreement shall inure to the
benefit of, be binding upon and be enforceable by
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and against the parties and their respective successors and
assigns.
H. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute but one agreement.
It shall not be necessary that any counterpart be signed by all
parties so long as each party shall have executed two
counterparts.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized representatives
on the date first above written.
PTEC:
PHILADELPHIA THERMAL ENERGY
CORPORATION
By:/s/ X. X. Xxxxx
SELLER:
GRAYS FERRY COGENERATION
PARTNERSHIP
By: O'Brien Environmental Energy,
Inc.
By: /s/ Xxxxxx X. Xxxxx
By: Adwin Equipment Company
By: /s/ Xxxxxx X. Xxxxx
XXXXX:
ADWIN EQUIPMENT COMPANY
By:/s/ Xxxxxx X. Xxxxx
O'BRIEN:
O'BRIEN ENVIRONENNTAL ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxx
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LIST OF APPENDICES
APPENDIX 1 Avoided Cost of Steam
APPENDIX 2 Usable Steam Requirements
APPENDIX 1 TO STEAM PURCHASE AGREEMENT
AVOIDED COST OF STEAM
APPENDIX 1
Avoided Cost of Steam
PTEC's avoided cost of steam to be used in accordance with
section 1A of the Steam Purchase Agreement shall be calculated as
follows:
Avoided Cost per Mlb = F + W + C
Mlb
Where:
F = Actual gallons of fuel consumed by PTEC during the
month for steam production (net of TG 3 usage) times
average purchased cost per gallon for the month (or
previous month if no current purchase made).
W = Actual gallons of water consumed by PTEC during
the month for steam production times the current City
of Philadelphia water and sewer tariff rate.
C = Actual quantity of chemicals used by PTEC during
the month for steam production times the current month
chemical unit cost purchase price.
Mlb = PTEC Schuylkill plant boiler out.
APPENDIX 2 TO STEAM PURCHASE AGREEMENT
USABLE STEAM REQUIREMENTS
APPENDIX 2
USABLE STEAM REQUIREMENTS
High Pressure Steam
Pressure 1300 max - 1200 psi min
Temperature 925F max - 900F min
Sodium < 15 ppb
Chloride < 10 ppb
Silica < 15 ppb
Cation Conductivity < 0.35 umhos
Distribution Sendout Steam
Pressure 240 psi max - 210 psi min
Temperature Steam temperature shall be 40F
above saturation temperature but
not higher than 450F.
M Alkalinity < 1.0 ppm
Free CO2 < 1.5 ppm
TDS < 0.2 ppm
All chemicals carried over into the distribution steam system
must be suitable for use in the preparation of food,
humdification and sterilization of surgical instruments as
specified by the FDA and USDA.
All desuperheating spray water must meet the same criteria
established for boiler feed water.
