Exhibit b.1
NORTHEAST GENERATION COMPANY-NORTHEAST GENERATION SERVICES COMPANY
MANAGEMENT AND OPERATION AGREEMENT
MANAGEMENT AND OPERATION AGREEMENT ("Agreement") made and entered into as of
the __ day of _________, 1999, by and between NORTHEAST GENERATION COMPANY, a
Connecticut corporation with its principal place of business in Berlin
Connecticut ("NGC"), and NORTHEAST GENERATION SERVICES COMPANY, a
Connecticut corporation with its principal place of business in Rocky Hill,
Connecticut ("NGS"). NGC and NGS shall be referred to individually as the
"Party" and collectively as the "Parties".
WHEREAS, NGC and NGS are wholly-owned subsidiaries of NU Enterprises, Inc.,
which in turn are wholly-owned by Northeast Utilities; and
WHEREAS, NGC has acquired through a public auction process certain electric
generation facilities listed on Exhibit 1 hereto (the "Facilities") from The
Connecticut Light and Power Company ("CL&P") and Western Massachusetts
Electric Company ("WMECO"), which NGC intends to own and operate as exempt
wholesale generators ("EWGs); and
WHEREAS, NGC desires to have NGS manage and operate the Facilities on behalf
of and as agent for NGC on the terms and conditions stated in this Agreement
and NGS has agreed to do so.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein, it is agreed as follows:
SECTION 1 - DEFINED TERMS
1.1 Definitions. For the purposes of this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, with respect to any entity, any other entity that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such entity. For this
purpose, "control" means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests
having ordinary voting power.
"Bankrupt" means with respect to a Party, such Party (i) files a petition or
otherwise commences a proceeding under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or commenced
against it, (ii) makes an assignment or any general arrangement (other than
an assignment undertaken in connection with a financing) for the benefit of
creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced),
(iv) has a liquidator, administrator, receiver, trustee, conservator or
similar official appointed with respect to it or any substantial portion of
its property or assets, or (v) is generally unable to pay its debts as they
fall due.
"Business Day" means any day except Saturday, Sunday, a Federal Reserve Bank
holiday or a holiday according to the North American Electric Reliability
Council or any successor organization thereto; and a Business Day shall open
at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight) time.
"Buyer" means the entity or entities (which may or may not be Affiliates of
NGC), with which NGC has designated and contracted to sell or broker Products
from the Facilities.
"Delivery Point" means the point(s) at which the Energy of the Facilities
will be delivered by NGS and received by NGC or its designee specified in
writing to NGS, which may be Buyer, ("the Designee"). For the purposes of
this Agreement, the Delivery Point shall be the high side of the step-up
transformer in the switchyard for each Facility.
"Designee" means the corporate entity (which may or may not be an Affiliate)
which NGC has designated in writing to NGS to exercise certain specified
rights and duties of NGC under this Agreement
"Energy" means electric energy in the form of merchantable electricity
expressed in megawatt hours and shall be three-phase, 60-cycle alternating
current.
"FERC" means the Federal Energy Regulatory Commission or any successor
government agency.
"Fuel Delivery Point" means the inlet flange of the jet fuel tank at the
Tunnel Jet site.
"Good Industry Practice" means any of the practices, methods, and acts
engaged in or approved by a significant portion of the electric generation
facility operation industry during the relevant time period, or any of the
practices, methods, and acts 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 reasonably expected to accomplish the
desired result at a reasonable cost consistent with full compliance with
applicable laws and regulations, good practices, reliability, safety,
environmental protection, sound business practices and expedition. Good
Industry Practice is not limited to a single, optimum practice, method or act
to the exclusion of others, but rather is intended to include all acceptable
practices, methods or acts generally accepted in the industry. With respect
to the Facilities, Good Industry Practice includes but is not limited to
taking reasonable steps to ensure that:
(1) Adequate materials, resources and supplies are available to meet
the Facility's needs.
(2) Sufficient operating personnel are available and are adequately
experienced and trained to operate the Facilities properly and
efficiently and are capable of responding to emergency conditions.
(3) Preventive, routine and non-routine maintenance and repairs are
performed on a basis that ensures reliable long-term and safe
operation, and are performed by knowledgeable, trained and experienced
personnel utilizing proper equipment and tools.
(4) Appropriate monitoring and testing is done to ensure equipment is
functioning as designed and to provide assurance that equipment will
function properly under both normal and emergency conditions.
(5) Equipment is not operated in a reckless manner, or in a manner
unsafe to workers or the general public or without regard to defined
limitations such as operating voltage, current, frequency, rotational
speed, synchronization and control system limits.
"Interest Rate" means, for any date, the per annum rate of interest equal to
the prime lending rate as may from time to time be published in the Wall
Street Journal under "Money Rates";
"ISO-NE" means the New England Independent System Operator, or its successor.
"Lead Participant" shall have the meaning stated in the NEPOOL Market Rules.
"Lender" means any financial institution or other entity or individual
providing financing or refinancing to NGC for any or all of the Facilities,
whether on a senior or subordinated basis.
"NEPOOL" means the New England Power Pool or its successor in interest.
"NEPOOL Agreement" means the Restated NEPOOL Agreement, dated as of
December 1, 1996 as amended from time to time.
"NEPOOL Standards" means all Criteria, Rules, Standards, NEPOOL Automated
Billing System Procedures, NEPOOL Operating Procedures and NEPOOL Market
Rules issued or adopted by NEPOOL, ISO-NE and their satellite agencies, or
their successors, as amended from time to time.
"Participant" shall have the meaning stated in the NEPOOL Agreement.
"Product" means the various electrical products, services, and capabilities
(including, but not limited to, for example, energy-related products,
capacity-related products, and generation ancillary services related
products) recognized as market products that can be produced or offered by
the Facilities.
"Schedule" or "Scheduling" means the acts of NGC, its Designee and/or their
designated representatives, if applicable, of notifying, requesting and
confirming to each other the quantity and type of Product to be provided from
each Facility on any given day or days.
SECTION 2 - TERM OF THE AGREEMENT
2.1 Term. The term of this Agreement ("Term") shall commence on the date
that NGC first obtains ownership of any or all of the Facilities, shall
remain in effect for an initial period of four (4) years (the "Initial
Period"), and shall continue thereafter on a year-to-year basis from the end
of the Initial Period unless and until terminated by either Party by one (1)
year advance written notice by that Party to the other Party given prior to
the commencement of the next year. Provided, however that the Parties'
obligations under this Agreement with respect to a particular Facility shall
not commence until the date NGC obtains full ownership of that Facility. In
the event that a termination notice is given by one Party to the other Party,
the Parties shall reasonably cooperate to ensure a smooth transition to a new
manager and operator without adversely affecting the physical condition,
operations or costs of the Facilities.
2.2 Material Changes. In the event that any regulatory agency with
jurisdiction over this Agreement makes substantial changes or modifications
to any of the terms or conditions contained herein, the Parties shall
cooperate to make such changes as will keep the Parties on substantially the
same economic terms as contained herein. If the Parties cannot reach
agreement, either Party may terminate this Agreement, without further
obligation, upon sixty (60) days prior written notice. Such termination will
result in a payment to NGS of its actual incremental demobilization costs,
not to exceed ten (10) percent of the average annual fixed fee described in
Section 4.2.
2.3 Termination Rights. Termination by either Party in accordance with the
terms of this Agreement shall not affect or excuse the performance of either
Party under any provision of this Agreement that by its terms survives any
such termination, including, but not limited to xxxxxxxx, and indemnification
and liability.
SECTION 3 - SCOPE OF SERVICES
3.1 General Scope of Services. For the Term of this Agreement, NGS will
manage, operate, and maintain the Facilities and provide the administrative
services required for the Facilities, on behalf of and as agent for NGC as
more fully described in Exhibit 2 hereto (the "Services"). The Services shall
be provided in accordance with Good Industry Practice and NEPOOL Standards.
NGS's obligations to NGC shall pertain solely to the Services provided under
this Agreement's, and NGS shall not be deemed to be assuming any of the risks
of ownership of the Facilities.
3.2 Specific Purchase and Sale Agreement Obligations. NGS recognizes that
NGC in its Purchase and Sales Agreements with CL&P and WMECO, each dated
July 2, 1999 (the "PSAs") has agreed to certain continuing obligations to CL&P
and WMECO. NGS agrees to comply with, and assist NGC in complying with the
obligations listed on Exhibit 3 hereto in the course of providing the
Services to NGC with respect to the Facilities.
3.3 Excluded Costs. Exhibit 4 lists cost items ("Excluded Costs") which NGS
will not be responsible for paying or bearing, unless otherwise agreed by the
Parties. If NGS pays any such Excluded Cost as part of its Services, it
shall invoice NGC, which shall reimburse NGS within thirty (30) days of its
receipt of such invoice. In addition, NGS will not pay or bear the cost of
(a) any unanticipated major repairs requiring single occurrence cost of
greater than $100,000, or (b) any Approved Capital Expenditures set forth in
Exhibit 5 hereto or other capital expenditures.
3.4 Additional Capital Expenditures. NGC, or its Designee with NGC's
consent, shall have the right to request NGS to incur additional capital
expenditures beyond those included in the Approved Capital Expenditures in
Exhibit 5 during a particular year, as long as NGC pays the associated
capital cost.
3.5 Additional Operation and Maintenance Costs. NGC, or its Designee with
NGC's consent, shall have the right to request NGS to make changes in its
operation or maintenance practices for the Facilities or to undertake
additional activities not required by Section 3 of this Agreement or by Good
Industry Practice. NGS shall make such change, or undertake such additional
activities, provided that NGC fully compensates NGS for any incremental costs
it incurs and that such change is consistent with Good Industry Practice.
Additionally, if NGC fails to fund any Approved Capital Expenditures and such
failure results in additional operating and maintenance costs to NGS, NGC
shall fully compensate NGS for any resulting incremental costs NGS incurs.
3.6 Maintenance Schedules. The annual fixed fee and Approved Capital
Expenditures were developed based upon an Assumed Maintenance Schedule
contained in Exhibit 7 hereto and the scope of Services to be provided. Any
deviations from such schedule or scope, are subject to the approval of NGC.
The Parties shall mutually agree to adjustments to the annual fixed fee to
reflect the economic impacts of any such change in schedule or scope. NGS
shall use all reasonable efforts to not schedule maintenance during peak
production periods, except with the consent of NGC or as required by Good
Industry Practice.
SECTION 4 - PAYMENTS
4.1 Payments. The payments from NGC to NGS for the Services NGS provides
under Section 3 of this Agreement shall consist of two (2) components: an
annual fixed fee as described in Section 4.2 to be paid in monthly
installments, and an annual incentive payment or penalty as described in
Section 4.3.
4.2 Annual Fixed Fee. NGC shall pay NGS the annual fixed fee stated on
Exhibit 6 applicable for each Facility owned by NGC for each calendar year
for the services NGS provides under Section 3 of this Agreement. The fixed
fee for a calendar year shall be paid by NGC in twelve (12) equal annual
monthly installments on the first business day of each month for that month,
or in amounts predetermined and agreed upon by the Parties based on scheduled
maintenance activity. Except as otherwise specifically stated in this
agreement, the fixed fee will cover all Services rendered by NGS under this
Agreement. No later than eighteen (18) months prior to the end of the
Initial Period, the Parties will negotiate in good faith the annual fixed
fee(s) for any extension of the Initial Period. Either Party may terminate
this Agreement if the Parties fail to come to Agreement to such fixed fee(s)
within one (1) year of the end of the Term.
4.3 Annual Incentive Payment or Penalty. In addition to the annual fixed
fee, NGC shall pay NGS an annual incentive payment for each calendar year of
up to ten (10) percent, of the applicable year's fixed fees or assess an
incentive penalty on NGS of up to five (5) percent of the applicable years'
fixed fee based on the formula described in Exhibit 6 or using such other
incentive payment formula agreed to by the Parties in writing. Any incentive
payment shall be made within sixty (60 ) days after the end of the calendar
year. Any incentive penalty shall be applied as a reduction to the annual
fixed fee within sixty (60) days after the end of a calendar year. NGS will
calculate the appropriate Incentive Payment or Penalty as an invoice charge
or credit to NGC.
4.4 Billing and Payment.
4.4.1 All payments required under this Agreement shall be made no later than
the date required by this Agreement, or if no date is specifically required,
within thirty (30) days of receipt by the Party being charged of an invoice
or xxxx from the other Party. Each Party will make payments by wire
transfer, or by other mutually agreeable method(s), to the account designated
by the other Party. Any amounts, both principal and interest, not paid by
the due date will be deemed delinquent and will accrue interest at the
Interest Rate, such interest to be calculated from the due date to the date
the unpaid amount is paid in full.
4.5 Disputes and Adjustments of Invoices. A Party may, in good faith,
challenge the correctness of any invoice rendered under the Agreement or
adjust any invoice for any arithmetic or computational error within six (6)
months of the date the invoice was rendered. In the event an invoice or
portion thereof, or any other claim or adjustment arising hereunder, is
challenged, payment of the invoice in full shall be made when due, with
notice of the objection as to the disputed portion given to the other Party
at the same time. Any billing challenge or billing adjustment shall be in
writing and shall state the specific basis for the challenge or adjustment.
If it is determined that an adjustment to the invoice is appropriate, then
such payment shall be made within two (2) Business Days of such determination
along with interest accrued at the Interest Rate from the due date until the
date paid. An invoice rendered under the Agreement shall be binding unless
challenged in accordance with this subsection within six (6) months after the
invoice is rendered or any specific adjustment to the invoice made by such
Party prior to such time.
SECTION 5 - COORDINATION WITH NGC, BUYER AND ISO-NE
5.1 Capacity Audits. NGC may request and NGS shall perform capacity audits
of the Facilities at least annually and NGS shall submit the result of such
audits to ISO-NE in accordance with NEPOOL procedures in effect from time to
time. In the event that any capacity audit results in a change in the
capacity rating of a Facility, NGS will promptly advise NGC and Buyer of the
change.
5.2 Generation Qualification. NGS shall have sole responsibility for the
qualification of each of the Facilities with the ISO-NE as a generation
resource in New England and compliance with applicable NEPOOL Standards.
5.3 Dispatch. Subject to Good Industry Practice, NGC, or its Designee,
shall have sole discretion to request commitment and dispatch of the Products
from each Facility, up to the capacity available from the Facilities at the
time.
5.4 Bidding and Scheduling Authority. NGC, or its Designee, shall be
designated by NGC as the Lead Participant for the Facilities with the ISO-NE.
NGC, or its Designee, shall have sole right and responsibility for bidding
and scheduling of the Facilities with the ISO-NE in accordance with the
NEPOOL Agreement. NGC, or its Designee, shall communicate to NGS all
scheduling and bidding information in a manner consistent with the timing
requirements of the ISO-NE and NEPOOL. NGS shall provide such support, as may
be reasonably requested by, in order to enable NGC, or its Designee, to
perform such obligations. All bidding and scheduling set by NGC, or its
Designee, shall be based upon operating parameters set by NGS in accordance
with the operation and maintenance of each of the Facilities as specified
herein.
5.5 Emergency Curtailment. NGS may curtail, reduce or interrupt its
delivery of all or a portion of the Product of any of the Facilities
whenever: (a) continued operation of such Facility would result in damage to
the Facility or to a transmission or distribution system with which such
Facility is directly interconnected, or (b) if a transmission or distribution
system with which such Facility is directly interconnected experiences an
emergency, as designated by the affected utility, or (c) whenever it is
necessary to aid in the restoration of service on a system with which such
Facility is directly or indirectly interconnected, or (d) whenever requested
by ISO-NE or a governmental authority with applicable jurisdiction, or (e) as
required by Good Industry Practice. NGS shall notify NGC, or its Designee,
as soon as reasonably practicable of any such curtailment, reduction or
interruption, it being understood that it may not be reasonably practicable
to provide such notice in advance of such an event. Such notice may be
either written or oral with length and content as mutually agreed by the
Parties depending on the nature of the incident. Any such curtailment,
reduction or interruption shall continue only for as long as reasonably
necessary.
5.6 Communications With ISO-NE. NGS shall be responsible for direct
communications with ISO-NE or its satellite operator with regards to the
hourly actual operation of each of the Facilities. NGS shall be responsible
for communications with NGC, or its Designee, regarding any and all
directions received from the ISO-NE or its satellite operator. NGC, or its
Designee shall have sole responsibility for direct communications with ISO-NE
regarding bidding and scheduling of each of the Facilities.
SECTION 6 - PUMPING POWER AND FUEL
6.1 Northfield and Rocky River Facilities. NGC, or its Designee, shall bear
the cost of and make appropriate arrangements for supplying electrical energy
for pumping operation and for the associated pumping costs for the Northfield
Facility and the Rocky River Facility. NGC, or its Designee, shall
communicate to NGS all pumping scheduling information in a manner consistent
with the timing requirements of ISO-NE and NEPOOL.
6.2 Tunnel Jet Fuel. NGC, or its Designee, shall supply and deliver to the
Fuel Delivery Point the fuel required to operate the Tunnel Jet Facility.
NGS will be responsible for the safe and efficient handling of such fuel
after the Fuel Delivery Point. NGC, or its Designee, will coordinate the
schedule of such fuel deliveries with NGS to provide for the efficient and
reliable acquisition and delivery of fuel for the Tunnel Jet Facility.
SECTION 7 - BUDGETING
7.1 Annual Budget. On or before October 1 of each year of this Agreement,
NGS will provide NGC and its Designee with a estimated budget of NGC's costs
under Sections 3 and 4 of this Agreement, including NGC's operating and
maintenance costs, capital costs, and other costs, if any, of the Facilities
on a Facility by Facility basis.
7.2 Additional Budget and Planning Information. To assist NGC and its
Designee with their financial planning, and budget management, NGS shall
respond to any reasonable requests from NGC and its Designee for additional
budget and projected cost information such as five (5) year budget planning
assumptions and projections.
SECTION 8 - REPORTING
8.1 General Reporting. NGS will provide NGC and its Designee with any and
all reports reasonably necessary to fulfill Lender, ISO-NE, regulatory,
legal or other requirements.
8.2 Incident Reports. NGS will promptly inform NGC and its Designee of any
existing or potential permit violations or incidents, or operating
deficiencies which may materially impede plant operation, materially add to
cost or result in potential legal claims or actions. Such notification may
be either written or oral, with length and content as mutually agreed by the
Parties.
8.3 Regular, Periodic Reports. NGS shall furnish to NGC in writing a report
as soon as available but in no event more than thirty (30) days after the end
of each calendar quarter of each fiscal year, in a form agreed to by the
Parties, a summary of such quarter's operations and a summary of the calendar
year-to-date operations compared to the budget and forecasts delivered
pursuant to Section 7.1 and 7.2 of this Agreement, including information in
reasonable detail concerning (i) each Facility's production and availability
during such period, (ii) NGC operating costs during such period as compared
to the NGC operating budget last delivered to NGC under Section 7.1, (iii)
capital expenditures during such period as compared to the capital additions
and replacement budget last delivered to NGC under Section 7.1 and (iv) any
material developments during such period in the operations of each of the
Facilities, including material technical problems, discovery of any material
defects in the physical plants and equipment of the Facilities material,
material interruptions to operation, material disputes with any governmental
body (including tax authorities) or material labor difficulties. In the
event of a material deviation of NGC operating or capital costs from budgets
and forecasts delivered pursuant to Section 7.1 or 7.2, NGS shall promptly
notify NGC describing such deviation in reasonable detail and together with
such notice or as soon thereafter as possible, a description of the action,
if any that NGS proposes to take with respect thereto.
8.4 Notices of Material Events. NGS shall furnish to NGC in writing,
promptly after NGS obtains knowledge thereof, notice of:
(a) all legal or arbitral proceedings, and of all proceedings by or
before any governmental or regulatory authority or agency, and of
any material development in such legal or other proceedings, materially
affecting any of the Facilities, including without limitation, any
pending or threatened environmental claim.
(b) any other development that results in, or could reasonably be expected
to result in, a material adverse effect on any of the Facilities.
(c) any Event of Default, together with a description of any action
being taken or proposed to be taken with respect thereto.
(d) any casualty, damage or loss to the Facilities, whether or not
insured, through fire, theft, other hazard or casualty, involving a
probable loss of [500,000 or more (such amount to be deemed
increased annually consistent with increases in the consumer price
index on each anniversary of the execution hereof).
(e) any cancellation, notice of threatened or potential cancellation or
material change in the terms, coverage or amounts of any policy of
insurance required to be maintained by NGS hereunder.
(f) any event, occurrence or circumstance that reasonably could be
expected to render NGS incapable of or prevent NGS from performing
the Services hereunder.
(g) any fact, circumstance, condition or occurrence at, on, or arising
from, any Facility that results in noncompliance with any environmental
law that has resulted or could reasonably be expected to result in a
material adverse effect on the operations of any Facility.
(h) any material lien, except liens incurred in the ordinary course of
business such as mechanics liens, unless such liens are discharged
in the ordinary course of business.
Each notice delivered under this Section shall be accompanied by a statement
from NGS setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.
8.5 Other Requested Information. Subject to the requirements of Section
3.5, throughout the period of this Agreement, the Parties shall negotiate,
discuss and work together in good faith, and exchange and provide each other
with such information as they can reasonably provide and which would or might
assist the other in performing its obligations under this Agreement or NGC in
satisfying any of its obligations under any of the financing documents to
which it is a party. In particular, NGS shall keep NGC reasonably informed
of matters relating to the Facilities, the business of NGC relating to the
Facilities and the Services, and shall provide NGC with the relevant
documentation to the extent that such information and documentation is
reasonably available to NGS and provision thereof may occur without material
additional work or cost to NGS.
SECTION 9 - SUBCONTRACTS
9.1 Subcontracts. NGS may not subcontract Services which aggregate $1 million
or greater per calendar year for any single non-Affiliate subcontractor or
vendor, or $5 million in total for all non-Affiliate subcontractors and vendors
in a calendar year without prior written consent of NGC. In any case, NGS is
solely responsible to NGC for the management and operations of the Facilities,
subcontracting the Services or any portion thereof to a non-Affiliate shall not
relieve NGS of any of its duties, liabilities or obligations under this
Agreement, and NGS shall remain directly liable to NGC for the performance of
such subcontracted Services as if such services had been performed directly by
NGS and not by a non-Affiliate.
SECTION 10 - INSURANCE
10.1 Insurance. NGS shall obtain and maintain, at NGS's sole cost and expense,
Employer's Liability and/or Worker's Compensation insurance, in accordance with
applicable laws, in statutory amounts. NGS will obtain and maintain Automobile
Liability and Commercial General Liability insurance in such amounts and form
as NGC may reasonably require. Upon NGC's request, NGS will provide copies of
policies or other proof of insurance coverage as NGC may reasonably require.
With NGC's consent, NGS may self-insure such exposures.
All policies, other than Worker's Compensation, shall be endorsed to name NGC
as an additional insured with respect to any and all third party bodily
injury and/or property damage claims arising from NGS's performance
hereunder.
SECTION 11 - TITLE
11.1 Title. Title to all capitalized equipment and tools and to all materials
and supplies and fuel held in inventory, provided or procured by NGS pursuant
to this Agreement for the Facilities will pass to NGC immediately upon delivery
of the materials to NGS or the applicable Facility site (whichever occurs
first).
SECTION 12 - ENVIRONMENTAL
12.1 Environmental Liability. Subject to the limitations in Section 14, NGS
shall be liable to NGC for, hold NGC harmless against and indemnify NGC
against any on or off-site environmental liabilities attributable to
negligence, gross negligence or wanton or willful misconduct by NGS. NGS
shall not be liable to NGC, hold NGC harmless against or indemnify NGC with
respect to any other environmental liabilities.
SECTION 13 - EVENTS OF DEFAULT; REMEDIES
13.1 Events of Default. An "Event of Default" shall mean, with respect to a
Party ("Defaulting Party"), the occurrence of any of the following:
(a) the failure to make, when due, any payment required pursuant to
this Agreement, except if such payment is being contested in good
faith pursuant to Sections 4.5 and 15, if such failure is not
remedied within sixty (60) Business Days after written notice of
such failure;
(b) any representation or warranty made by the Defaulting Party herein
shall be false or misleading in any material respect when made or
when deemed to be repeated;
(c) the willful contravention of any applicable law or regulation
relating to the operation of the Facilities;
(d) the failure to perform any material obligation set forth in this
Agreement (other than the events that are otherwise specifically
covered as a separate Event of Default, and such failure is not
cured within sixty (60) Business Days after written notice of such
failure); or
(e) a Party shall be Bankrupt.
13.2 Remedies. Upon an Event of Default, the non-Defaulting Party has the
right to terminate this Agreement upon thirty (30) days written notice to the
Defaulting Party. This Agreement will be reinstated if the default is cured
within the thirty (30) day period.
SECTION 14 - LIABILITY AND DAMAGES
14.1 Limitation of Liability. Notwithstanding anything to the contrary
express or implied in this Agreement, direct actual damages only, neither
Party shall be liable to the other Party hereto in tort, contract, indemnity
provision under statute or otherwise in law or equity or by contract for any
indirect, consequential, incidental, punitive or exemplary damages, lost
profits or other business interruption damages.
14.2 Limitation of Damages. Notwithstanding anything to the contrary
expressed or implied in this Agreement, in no event shall either Party be
liable to the other Party for damages for all events and occurrences that
occur in a calendar year that exceed the sum of the annual amounts paid by
NGC to NGS for that calendar year pursuant to Section 4 plus any applicable
insurance proceeds.
SECTION 15 - DISPUTE RESOLUTION
15.1 Step Negotiation. In the event of a dispute regarding this Agreement,
the Parties shall attempt, in good faith, to resolve the dispute amicably and
promptly by appointing a senior executive of each Party to attempt to
mutually agree upon a resolution. Either Party may give the other Party
written notice of any dispute or claim. Within ten (10) days after delivery
of said notice, the executives will meet at a mutually acceptable time and
place and thereafter as often as they reasonably deem necessary to exchange
information and attempt to resolve the dispute or claim within thirty (30)
days. If the two senior executives cannot reach a resolution, the dispute
may be set for arbitration as defined herein.
15.2 Arbitration. If the senior executives of the Parties are unable to
resolve the dispute, and adjudication of the dispute is not within the
exclusive jurisdiction of the FERC, the dispute may be submitted upon request
of either Party to binding arbitration by one arbitrator who has not
previously been employed by either Party, and does not have a direct or
indirect interest in either Party or the subject matter of the arbitration.
Such arbitrator shall either be as mutually agreed by the Parties within
thirty (30) days after written notice from either Party requesting
arbitration, or failing agreement, shall be selected under the expedited
rules of the American Arbitration Association (the "AAA") unless otherwise
agreed by the Parties. Such arbitration shall be held in alternating
locations of the home offices of the Parties or in any other mutually agreed
upon location. The rules of the AAA shall apply to the extent not
inconsistent with the rules herein specified. The judgment rendered by the
arbitrator may be enforced in any court having jurisdiction of the subject
matter and the Parties. All costs of the arbitration shall be paid equally
by the Parties, unless the award shall specify a different division of the
costs. Each Party shall be responsible for its own expenses, including
attorney's fees. Both Parties shall be afforded adequate opportunity to
present information in support of its position on the dispute being
arbitrated. The arbitrator may also request additional information from the
Parties.
15.3 Arbitration Rules. The arbitrator shall be bound by the terms of this
Agreement and may not detract from or add to its terms. The Parties may by
mutual agreement specify the rules that are to govern the arbitration
proceedings and limit the matters to be considered. The findings and award
of the arbitrator shall be final and conclusive and shall be binding upon the
Parties, except as otherwise provided by law. Each Party agrees that it will
not bring a lawsuit concerning any dispute covered by this arbitration
provision. Any monetary award of the arbitrator may be enforced by the Party
in whose favor such monetary award is made in any court of competent
jurisdiction.
SECTION 16 - FORCE MAJEURE
16.1 Force Majeure. As used in this Agreement, "Force Majeure" means an
event or circumstances which prevents one party from performing its
obligations under this Agreement, which event or circumstances was not
anticipated as of the date of the Agreement and is not within the reasonable
control of, and without fault or negligence of, the Party claiming Force
Majeure (the "Claiming Party"), and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided.
Consistent with the above, Force Majeure includes, without limitation,
sabotage, strikes or other labor difficulties, riots or civil disturbance,
acts of God, act of public enemy, drought, earthquake, flood, explosion,
fire, lightning, landslide, or similarly cataclysmic occurrence, or
appropriation or diversion of electricity by sale or binding order of any
court or governmental authority having jurisdiction thereof (so long as the
Claiming Party has not applied for or assisted in the application for such
Court or government action or any other case, whether of the kind herein
enumerated or otherwise). In the event of a strike or other labor
difficulties, NGS will use all reasonable efforts to ensure that the
Facilities are operated as if there were no strike or other labor
difficulties during the time such events exist.
16.2 Procedure on Force Majeure Claim.
(a) If a Claiming Party wishes to claim relief by reason of Force
Majeure, it shall give written notice stating the date of
commencement of such Force Majeure event and the predicted extent,
estimated consequences and the cause thereof, to the other Party as
soon as reasonably possible and in any case within ten (10) days of
it becoming aware of such event or circumstances, time being of the
essence.
(b) The Claiming Party shall keep the other Party fully informed of any
developments with respect to the Force Majeure.
(c) If either Party claims relief for Force Majeure pursuant to Section 16.1
and the other Party disputes the existence, nature, extent or condition
of the event of circumstances giving rise to such claim for relief, then
such dispute shall be resolved pursuant to Section 15.
(i) the Parties shall meet promptly in order to resolve such dispute
within such period as the Parties hereto may agree (or, failing
agreement, within thirty (30) days); and
(ii) if such dispute is not resolved by the Parties pursuant to
paragraph (i) above, then such dispute shall be resolved pursuant
to Section 15.
(d) The Claiming Party shall give notice to the other Party of the cessation
of the relevant event or circumstances of Force Majeure as soon as
practicable after becoming aware of such cessation.
(e) In the event that Force Majeure causes any Party to be unable to serve
any notice hereunder, the period for the serving of such notice if any)
shall be extended for every day while such event or circumstance of
Force Majeure prevents the service of such notice.
16.3 Effects of Force Majeure. If either Party to this Agreement is
rendered wholly or partly unable to perform its obligations hereunder because
of Force Majeure as defined above, that Party shall be excused from whatever
performance is affected by the Force Majeure to the extent so affected,
provided that:
(a) the non-performing Party promptly, but in no case longer than ten (10)
Business Days after the occurrence of the Force Majeure, gives the other Party
written notice describing the particulars of the occurrence;
(b) the suspension of performance shall be of no greater scope and of no
longer duration than is reasonably required by the Force Majeure; and
(c) the non-performing Party uses due diligence to remedy its inability to
perform.
In the event that the Force Majeure is of a duration greater than ninety (90)
days, the performing Party may terminate this Agreement with respect to the
Facility or Facilities whose performance is affected by the Force Majeure
upon ninety (90) days prior written notice, unless the Force Majeure has
been cured within that later ninety (90) day period.
SECTION 17 - NO NGS WARRANTIES
EXCEPT AS PROVIDED IN SECTION 3 OF THIS AGREEMENT, NGS MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, FOR THE BENEFIT OF NGC OR
ANY THIRD PARTY CONCERNING THE QUALITY, MERCHANTABILITY AND FITNESS FOR ITS
INTENDED PURPOSE OF THE SERVICES IT PROVIDES UNDER THIS AGREEMENT.
SECTION 18 - INSPECTION AND AUDIT RIGHTS
18.1 Audit Rights. NGC shall have the right throughout the Term and for a
period of three (3) years following the end of the Term, upon reasonable
prior notice, to inspect the Facilities, to request copies of and review
documents and to examine the books and records of NGS to the extent
reasonably necessary to verify the accuracy and basis for any claim by NGS
for payments from NGC or to determine NGS's compliance with the terms of this
Agreement. NGS shall make all such records available as appropriate at each
Facility or NGS's office in Rocky Hill, Connecticut during normal business
hours.
SECTION 19 - INDEMNIFICATION
19.1 Indemnification. NGC and NGS shall each be liable to, indemnify, defend
and hold the other Party, its directors, officers, employees and agents
(including but not limited to affiliates and contractors and their employees),
harmless from and against all third party liabilities, damages, losses,
penalties, claims, demands, suits, expenses, attorneys' fees and proceedings
of any nature whatsoever for personal injury (including death) or property
damage that arise out of or are in any manner connected with the performance of
this Agreement by that party, except to the extent that such injury or damage
may be attributable to the negligence, gross negligence or willful misconduct
of the Party seeking to be indemnified. In the case of NGS, its
indemnification obligation shall be limited to the amounts described in
Section 14.
19.2 Employee Obligations. NGS, either directly or through its Affiliate
service company, Northeast Utilities Service Company ("NUSCO") shall be
solely responsible for employing the employees who shall perform the Services
and other obligations hereunder on behalf of NGS (the "Employees") and shall
maintain employment of Employees with such qualifications and expertise as
necessary for NGS to provide the Services to NGC pursuant hereto. NGS,
either directly or through NUSCO, shall be responsible for the payment of all
salaries and benefits, whether contractual or statutory, associated with the
employment of the Employees, including but not limited to, expense
reimbursements, health insurance, workers compensation and social security,
and NGS shall indemnify and hold harmless NGC from and against all claims,
demands, costs, expenses (including reasonable attorneys' fees) as incurred,
liabilities and losses which may result from the failure of NGS to comply
with such responsibilities in connection with its employees.
19.3 Proceedings. The indemnifying Party shall be promptly notified of any
claim made against the indemnified Party arising out of the matters specified
in this Section 19.
19.4 (a) The indemnifying Party may at its own cost conduct negotiations
for the settlement of any claim made against the indemnified Party
arising out of the matters specified in this Section 19 and any
litigation that may arise therefrom in such reasonable manner as the
indemnified Party shall from time to time approve (such approval not
to be unreasonably withheld).
19.4 (b) The indemnified Party shall not make any admission which might be
prejudicial to the indemnifying Party unless the indemnifying Party
has failed to take over the conduct of the negotiations or litigation
or provide security under this Section 19.4 within a reasonable time
of having been so requested.
SECTION 20 - INTELLECTUAL PROPERTY
20. 1 "Intellectual Property Rights" means: (a)
(i) patents, trade marks, service marks, rights in designs, trade
names, copyrights and topography rights, in each case whether
registered or not;
(ii) applications for registration of any of the above;
(iii) rights under licenses and consents in relation to any of
the above; and
(iv) all forms of protection of a similar nature or having equivalent
or similar effect to any of them which may subsist anywhere in
the world.
(b) NGC Intellectual Property. Designs, drawings, specifications,
instructions, manuals and other documents created, produced or
commissioned by NGC and relating to the Facilities and to the
carrying out of the Services at the Facilities and copyright
therein and all Intellectual Property Rights relating thereto
("NGC Intellectual Party") are, shall be, and shall remain the
property of NGC. NGC hereby grants to NGS a revocable, non-
exclusive, royalty free, non-transferable license to use NGC
Intellectual Property in connection with the providing of the
Services to NGC only.
(c) Operator Intellectual Property. NGS hereby grants to NGC an
irrevocable, non-exclusive, royalty-free, transferable license to
use solely with regard to the providing of Services to NGC any
Intellectual Property Rights owned by NGS required in connection
with the Services.
(d) Third Party Intellectual Property. Prior to concluding any
contract with any third parties relating to the supply of materials
or services specifically created by third parties for the purposes
of providing the Services, NGS shall use reasonable efforts to
provide that such third party grant irrevocable non-exclusive,
royalty-free licenses to each of NGS and NGC to use all Intellectual
Property Rights pertaining to such contract with the right for NGC
to assign such license to, or grant a sub-license to, any person
appointed operator of the Facilities from time to time.
SECTION 21 - MISCELLANEOUS
21.1 Amendments. This Agreement may be amended only by a writing executed
by the Parties hereto.
21.2 Governing Law.
21.2.1. Choice of Law and Jurisdiction. This Agreement and the rights and
duties of the parties hereunder shall be governed by and construed, enforced
and performed in accordance with the laws of the State of Connecticut,
without regard to principles of conflicts of law. Each Party waives its
respective right to any jury trial with respect to any litigation arising
under or in connection with this Agreement.
21.2.2. Applicable Laws, Regulations, Orders, Approvals and Permits. This
Agreement is made subject to all existing or future applicable federal,
state, and local laws and to all existing or future duly promulgated orders
or other duly authorized actions of governmental authorities having
jurisdiction over the matters contained in this Agreement.
21.3 Notices. All notices, requests, statements, or payments required to be
made under this Agreement shall be made as specified below. Notices required
to be in writing shall be delivered in person, by letter, facsimile or other
documentary form. Notice by facsimile or hand delivery shall be deemed to
have been received by the close of the Business Day on which it was
transmitted or hand delivered (unless transmitted or hand delivered after
close, in which case it shall be deemed received by the close of the next
Business Day). Notice by overnight mail or courier shall be deemed to have
been received the next Business Day after it was sent. A Party may change
its addresses by providing notice of same in accordance herewith:
To NGC: Northeast Generation Company
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Asset Management Division,
Xxxxxx X. Xxxxxxxxxx, Director
FAX: (000) 000-0000
To NGS: Northeast Generation Services Company
000 Xxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Vice President and Chief Operating Officer
FAX: (000) 000-0000
Either Party by written notice to the other Party may change the address or
the persons to whom notices or copies thereof shall be directed.
21.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
21.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of each Party hereto. Neither Party
shall assign its obligations hereunder to any other Person without the prior
written consent of the other Party, which in the case of a proposed
assignment by NGS may be withheld by NGC in its sole discretion, and in the
case of a proposed assignment by NGC may not be unreasonably withheld by NGS;
provided, however, that NGC may assign its rights hereunder to an Affiliate
or to a Lender in connection with financing or refinancing of the Facilities.
21.6 Waivers. The failure of either Party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of a Party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
21.7 No Third Party Beneficiaries. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the Parties and their
respective permitted successors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third persons to either Party, nor to give any third persons any right of
subrogation or action against either Party..
21.8 Section Headings. The section headings used in this Agreement are for
convenience only and shall not be deemed to be a binding portion of this
Agreement.
21.9 Independent Contractors. The Parties are independent contractors.
Except as otherwise specified in this Agreement, nothing contained herein
shall be deemed to create association, joint venture, partnership or
principal/agent relationship between the Parties hereto or impose any
partnership obligation or liability on either Party, and 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.
21.10 Successors Included. Reference to any individual, corporation or
other entity shall be deemed a reference to such individual, corporation or
other entity, together with its successors and permitted assigns from time to
time.
21.11 Entire Agreement. This Agreement (including the Schedules hereto)
constitute the entire agreement between the Parties relating to the subject
matter contemplated by this Agreement. This Agreement shall be considered
for all purposes as prepared through the joint efforts of the parties and
shall not be construed against one party or the other as a result of the
preparation, substitution, submission or other event of negotiation, drafting
or execution hereof.
21.12 Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
and any provision declared or rendered unlawful by any applicable court of
law or regulatory agency or deemed unlawful because of a statutory change
will not otherwise affect the remaining lawful obligations that arise under
this Agreement, unless such a construction of the remainder of the Agreement
would be unreasonable or deprive a Party of a material benefit under this
Agreement. In such event, the Parties shall seek to amend this Agreement to
remove the invalid provision and otherwise provide the benefit unless
prohibited by law.
21.13 Surviving Rights. All indemnity and audit rights shall survive the
termination of this Agreement for three (3) years.
SECTION 22 - REPRESENTATIONS AND WARRANTIES
On the date of this Agreement, each Party represents and warrants to the
other Party that: (i) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation, (ii) it has all
regulatory authorizations necessary for it to legally perform its obligations
under this Agreement and any other documentation relating to this Agreement
to which it is a party, (iii) the execution, delivery and performance of this
Agreement and any other documentation relating to this Agreement to which it
is a party are within its powers, have been duly authorized by all necessary
action and do not violate any of the terms and conditions in its governing
documents, any contracts to which it is a party or any law, rule, regulation,
order or the like applicable to it, (iv) this Agreement and each other
document executed and delivered in accordance with this Agreement constitutes
its legally valid and binding obligation enforceable against it in accordance
with its terms, (v) there are no bankruptcy proceedings pending or being
contemplated by it or, to its knowledge, threatened against it, (vi) there is
not pending or, to its knowledge, threatened against it any legal proceedings
that could materially adversely affect its ability to perform its obligations
under this Agreement or any other document relating to this Agreement to
which it is a party, (vii) no Event of Default or event which, absent a cure,
with the giving of notice or lapse of time, or both, would constitute an
Event of Default with respect to it has occurred and is continuing and no
such event or circumstance would occur as a result of its entering into or
performing its obligations under this Agreement or any other document
relating to this Agreement.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
Northeast Generation Company
By: _____________________________
Name:
Title:
Northeast Generation Services Company
By: _____________________________
Name:
Title:
EXHIBIT 1
ELECTRIC GENERATING FACILITIES
HOUSATONIC HYDROELECTRIC SYSTEM
Falls Village Station
Bulls Bridge Station
Rocky River Station
Shepaug Station
Xxxxxxxxx Station
Robertsville Station
Bantam Station
EASTERN HYDROELECTRIC SYSTEM
Tunnel Station
Taftville Station
Scotland Station
Tunnel ICU
NORTHFIELD MOUNTAIN HYDROELECTRIC SYSTEM
Northfield Mountain Pumped Storage Station
Cabot Station
Xxxxxx Falls #1 Station
Northfield Environmental Recreational Center
EXHIBIT 2
SCOPE OF SERVICES
The Services provided under Section 3 of the Agreement include management,
operations, maintenance, administrative, labor, consumable materials (except
station services for electrical needs and fuel for electric generation),
water, supervision and other goods and services necessary for the safe,
efficient, and reliable management, operation and maintenance of the
Facilities on a daily basis.
The scope of services includes, the following:
A. Facility Management
1. Recruiting, hiring and training of qualified personnel, vendors and
subcontractors;
2. Strategic planning to ensure that the Facilities' day-to-day and long-
term operational and maintenance needs are satisfied;
3. Compliance with and maintenance of standard operating procedures;
4. Preparation and maintenance of operating and maintenance records and
reports;
5. Preparation and processing of invoices to support payments by NGC of
items directly charged to NGC;
6. Procurement and payment for goods, services and supplies provided by
vendors, suppliers and contractors;
7. Development and implementation of policies and procedures relating to
safety, environmental and security practices;
8. Development and maintenance of an effective inventory management system;
9. Supervision of all personnel, vendors and subcontractors;
10. Development of operating reports and budgets for NGC costs;
11. Development of recommendations for Facility capital improvements and
programs which may be of benefit to NGC;
12. Reasonable coordination with NGC and Buyer;
13. Development and implementation of an effective maintenance process
including all necessary procedures;
14. Utilization of predictive maintenance program;
15. Utilization of computer based maintenance management system;
16. Inspection of dams as required;
17. Operation and Maintenance of all recreational facilities associated with
the Facilities;
18. Provision of hand tools and equipment determined to be less than units
of property under NGC's retirement catalogue;
19. Administration and assurance of compliance with and maintenance of
all licenses, permits, leases, and contracts associated with the
Facilities;
20. Coordinating with CL&P, WMECO, NGC and Buyer under the terms of the
Interconnection Agreements with NGC dated 7/2/99;
21. Community Relations.
B. Operations
NGS will provide all services necessary to operate the Facilities in strict
compliance with all legal requirements and government authorizations or
licenses and in accordance with Good Industry Practices and NEPOOL Standards.
Operations shall include, but not be limited to the following:
1. Operating the hydroelectric, pumped storage and jet plants with Good
Industry Practice; this includes all auxiliary systems, motor control
centers and electrical switchgear;
2. Scheduling of operations and personnel;
3. Coordinating with transmission/distribution tagging;
4. Removal of debris and ice from trash racks;
5. Operation of intakes, spillways, gateways and outlet works;
6. Public notification of draw down events;
7. Assuring compliance with applicable environmental, safety and health
regulations;
8. Maintenance of NGC's spare parts inventory to enable performance of all
maintenance and continued operations;
9. Operation of lubrication and control systems;
10. Performance of equipment testing and adjustments;
11. Providing Facility security;
12. Caring for Facilities and grounds, including housekeeping.
C. Maintenance
To ensure the long-term operability of systems and equipment, NGS will provide
services necessary to maintain the Facilities' equipment, including on-site
electrical interconnection Facilities owned by NGC, in proper working condition
under the current mode of operation as of the effective date of this Agreement.
Maintenance includes but not be limited to the following:
1. Ordinary Maintenance - daily repairs, maintenance and upkeep of the
Facilities to maintain plant capacity and uninterrupted, economical
production and delivery of electricity.
2. Scheduled Maintenance - overhauls, repairs, maintenance and upkeep to
the Facilities at scheduled intervals to preserve and maintain plant
capacity and uninterrupted and economical production and delivery of
electricity.
3. Forced Maintenance - repairs and maintenance of the Facilities not
reasonably anticipated which must be performed to preserve and maintain
plant capacity and uninterrupted economical production of electricity
and energy products.
4. Facility Maintenance - inspection, and minor maintenance and repair of
all buildings, structures, facilities and grounds.
EXHIBIT 3
ONGOING PURCHASE AND SALE AGREEMENT OBLIGATION
CL&P and WMECO PSAs
Section 5.7 Employee Matters
Section 5.8 Access After Closing to Records and Employees
Section 5.13 Discharge of Environmental Liabilities
Section 7.0 Confidentiality
Section 11.1 Press Releases and Public Announcement
Exhibit E - Interconnection Agreements Dated 7/2/99
EXHIBIT 4
NGS EXCLUDED COSTS
NGS will not be responsible for paying or bearing the costs of the following
items, although NGS may process invoices or bills for such costs for payment
by NGC as part of the administrative service it provides:
1. Fuel, fuel testing, and emission fees for the Tunnel Jet Facility.
2. Pumping Costs for either the Rocky River facility or Northfield Mountain
facility
3. Property taxes for the Facilities
4. Insurance premiums for property, liability or business interruption
insurance for the Facilities
5. Costs associated with any headwater or backwater benefit agreements
entered into by NGC for the Facilities, including fees for FERC gauging
stations.
6. Inventory carrying charges associated with the Facilities.
7. Costs associated with Stand-By/Back-up Services for the Facilities and
those related for use of non-PTF or distribution Facilities.
8. FERC annual hydroelectric license fee.
9. FERC hydroelectric license related expenses beyond those required for
compliance on a daily basis with the FERC licenses which are not included
in the Annual Fee in Exhibit 6.
10. Environmental fees for the Facilities which are not included in the Annual
Fee in Exhibit 6.
11. Costs payable under contracts that are not included in the Annual Fee in
Exhibit 6.
12. Sales, gross receipts, value added and similar taxes.
EXHIBIT 5
APPROVED CAPITAL EXPENDITURES
Year Approved Capital Expenditures
2000
2001
2002
2003
[By Facility]
EXHIBIT 6
PAYMENTS
a. Fixed Fee
Annual Fee - All Facilities Monthly Payment - All Facilities
1999 - -
2000 - -
2001 - -
2002 - -
2003 - -
** The fixed fee for a calendar year shall be paid by NGC in twelve (12)
equal annual monthly installments on the first business day of each month
for that month, or in amounts predetermined and agreed upon by the Parties
based on scheduled maintenance activity.
Payment for any partial month shall be prorated based on the number of
days in a month that NGS operates a Facility as a percentage of the total
number of days in that month.
b. Incentive Payment/Penalty Component
NGC will pay NGS an annual incentive payment of up to ten (10) percent or
impose an annual incentive penalty of up to five (5) percent of the Fixed Fee
based on NGS's performance against performance goals such as:
1. Overall availability of the Facilities
2. Availability of the Facilities during peak periods
3. Northfield Mountain Facility only - availability during 200 annual
highest price hours
NGC and NGS will work collaboratively to design and implement the specific
performance goals and incentive calculation.
EXHIBIT 7
ASSUMED MAINTENANCE SCHEDULE BY FACILITY
2000
2001
2002
2003
