EXHIBIT B-4
XXXXXXXX POWER STATION CONSTRUCTION AND OPERATING
AGREEMENT, dated as of March 3, 1971, among MONONGAHELA POWER
COMPANY, an Ohio corporation ("Monongahela"), THE' POTOMAC EDISON
COMPANY, a Maryland corporation ("Potomac"), and WEST PENN POWER
COMPANY, a Pennsylvania corporation ("West Penn"),
W I T N E S S E T H:
1. Station.
Monongahela, Potomac, and West Penn (the "Companies") hereby
provide for the construction and operation of a steam electric
generating station in Xxxxxxxx and Xxxxx Counties, West Virginia,
with 3 generating units, each with a name plate capacity of
approximately 600,000 kw, and a water impoundment (hereinafter
called the "Station") to be owned by the Companies as tenants in
common with undivided ownership interests as follows:
Monongahela 25%, Potomac 25%, and West Penn 50% (each such
interest being hereinafter referred to as its owner's "Ownership
Share), all as contemplated in the deed dated March 31, 1971 (the
"Deed") from Monongahela to West Penn and Potomac. The provisions
of this Agreement are intended, as contemplated in the Deed, to
establish among the Companies more detailed provisions and
procedures for carrying out the provisions of the Deed.
2. Construction.
Construction of the Station shall be carried out by the
Companies pursuant to their agreements with Allegheny Power
Service Corporation under the general supervision and direction
of that Corporation's Director, Power Engineering and
Construction (the "Director").
The Companies will use their best efforts to effect
completion of construction and commencement of full-scale
operation of (a) the first generating unit at the Station on or
before December 1, 1972, (b) the second generating unit there on
or before October 1, 1973, and (c) the third generating unit
there on or before May 1, 1975.
The Companies shall, with reasonable expedition, enter
into contracts (which may be purchase order contracts) providing
for (a) the purchase of materials, equipment and services for,
and the construction of, the Station and (b) insurance to insure
all work under construction against risks usually insured against
for such work. Each such contract shall provide, among other
things, that the performance of the contract shall be for the
account of , and the charges therefor shall be billed to and paid
by, the Companies in proportion to their respective Ownership
Shares.
Books of account and records containing details of the
items of cost applicable to the construction of each unit at the
Station shall be kept under the supervision of the Director and
shall be open to examination at any time by any Company or its
representatives. The Director shall cause the Companies to be
furnished with counterparts of such books of account and records
as they may request.
3. Operation and Maintenance.
The Station will be operated and maintained by one of
the Companies (hereinafter referred to as the "Operating
Company") under the supervision of the Vice President, System
Power Supply, of Allegheny Power Service Corporation. Until
otherwise agreed by all the Companies, Monongahela shall be the
Operating Company. The Operating Company shall not be liable to
the other Companies for loss, damage, or injury arising out of
such operating or maintenance unless caused by its gross
negligence or willful misconduct. The Operating Company shall
keep or cause to be kept books of account and records containing
details of the items of cost applicable to the operation and
maintenance of the Station. Such books of account and records
shall be open to examination at any time by any Company or its
representatives. The Operating Company shall furnish the
Companies with copies of such books of account and records as
they may request.
4. Renewals , Replacements Additions, and Retirements.
Renewals and replacements necessary for the operation of
the Station shall be made as required in accordance with good
utility operating practice
Other renewals and replacements of, and any additions to, the
Station may be made only upon agreement of all the Companies.
Retirements, sales, and other dispositions of property shall be
effected only in a manner consistent with the Companies' mortgage
indentures, if any. Renewals, replacements, additions and
retirements (and related dispositions and sales) shall be
effected by the Operating Company under the supervision of the
Director.
5. Title to Property.
Title to all property acquired or constructed in
connection with the Station (including, without limitation,
property acquired for use or consumption in connection with its
construction, operation, or maintenance) shall be in the
Companies as tenants in common in proportion to their Ownership
Shares. Construction, acquisitions. and purchases shall be made
in such manner that title shall vest in accordance with the
foregoing; except that any land required for the Station in
addition to that described in the Deed my be acquired by
Monongahela and, in such event, Monongahela shall convey to
Potomac and West Penn undivided interests therein of 25% and 50%
respectively, upon receipt from them of those percentages of the
price it paid for said land.
6. Power and Energy.
Subject to Section 9, each Company shall at all times
have full ownership of and available to it at the Station a
portion of the generating capability of the Station, and the
energy associated therewith, corresponding to its Ownership
Share. Each Company shall cause the Operating Company to be kept
informed as to the amount of power it requires be generated for
it at the Station.
Subject to its capability and to necessary or
unavoidable outages, the Station shall be operated so as to
produce continually an electrical energy output equal to the sum
of the power requirements of the Companies therefrom.
7. Expenditures
All expenditures in respect of the Station shall be
accounted for in accordance with the Uniform. System of Accounts
prescribed by the Federal
Power Commission for Public Utilities and Licenses (Class A and B
Electric Utilities) in effect on the date of this Agreement.
All expenditures (other than fuel) for the construction,
operation, and maintenance of the Station (including, without
limitation, all expenditures for administration, labor, payroll
taxes, employee benefits, research and development, materials,
supplies and services) and all expenditures for renewals,
replacements, additions, and retirements in respect of the
Station shall be shared by the Companies in proportion to their
Ownership Shares. All expenditures in respect of the Station
properly chargeable to Account 501 (Fuel) of such Uniform System
of Accounts for any period shall be shared by the Companies pro
rata according to the total kilowatt-hours of electrical energy
they take from the Station during such period.
Interest charges on borrowed funds, income taxes, and
property, business and occupation and like taxes imposed upon
each Company shall be borne entirely by such Company; and such
items, as well as depreciation, amortization and interest charged
during construction, shall not be deemed expenditures for
purposes of this Section.
8. Joint Account.
The Companies shall maintain one or. more joint accounts
(collectively, the "Joint Account") in a bank or banks agreed
upon by them. All expenditures referred to in the second
paragraph of Section 7 hereof shall be paid out of the Joint
Account.
From time to time the Director or the Operating Company
through the Vice President, System Power Supply, of Allegheny
Power Service Corporation may request the Companies to advance to
the Joint Account such amount as is then needed for cash working
capital. Within ten days thereafter the Companies pro rata
according to their respective Ownership Shares, shall deposit in
such Joint Account the amount specified in such request.
As promptly as practicable after the end of each month,
the Director shall send, and the Operating Company shall cause
the aforesaid Vice President
to send, to each of the Companies a statement in reasonable
detail of all expenditures hereunder for such month and the
amount of each Company's share thereof. Within ten days after its
receipt of such statement, each Company shall deposit its share
in the Joint Account.
The Director or Operating Company shall cause to be
drawn against the Joint Account, and to be delivered, checks or
drafts in the names of the Companies in payment of expenditures.
Funds shall be disbursed from the Joint Account in accordance
with sound accounting and disbursement procedures. All persons
authorized to handle or disburse funds from the Joint Account
shall be bonded in favor of Monongahela, Potomac, and West Penn,
as their respective interests may appear, for not less than
$500,000.
9. Default.
During any period that a Company is in default in whole
or in part in making a deposit in the Joint Account required
under this Agreement, (a) such Company shall be entitled to no
energy from the Station (but it shall be obligated to pay any
damages to the non-defaulting Companies resulting from such
default) and (b) the non-defaulting Companies shall be entitled
to all of the energy from the Station in proportion to their
Ownership Shares. No such default shall affect any Company's
ownership interest, or any Company's obligations under Sections 7
and 8.
10. Arbitration.
Any controversy relating to this Agreement or the Deed
shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association, and judgment upon an award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
11. Term of Agreement
This Agreement shall continue in full force and effect
for a period of 45 years from the date hereof and for such longer
period as the Companies shall by mutual agreement continue to
operate any of the units at the Station. Termination of this
Agreement shall not terminate the provisions of Section 10.
12. Successors and Assigns.
This Agreement shall inure to the benefit of and bind
the successors and assigns of the parties hereto, but it may be
assigned in whole or in part only in connection with transfer to
the assign of the assignor's corresponding ownership interest in
the Station.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement
to be duly executed.
MONONGAHELA POWER COMPANY
By
__________/s/__________________
President
THE POTOMAC EDISON COMPANY
By
____________/s/_________________
President
WEST PENN POWER COMPANY
By
_____________/s/________________
President
