Exhibit 10.2
EXECUTION COPY
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POWER PURCHASE AGREEMENT
Dated as of May 18, 1998
Between
LSP ENERGY LIMITED PARTNERSHIP,
as Seller
And
VIRGINIA ELECTRIC AND POWER COMPANY,
as Purchaser
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TABLE OF CONTENTS
PAGE
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SECTION I DEFINITIONS...................................................... 1
Section 1.1 Defined Terms............................................. 1
Section 1.2 Interpretation............................................16
Section 1.3 Technical Meanings........................................17
SECTION II TERM.............................................................17
Section 2.1 Initial Term..............................................17
Section 2.2 Extension of Term.........................................17
Section 2.3 Purchaser's Option to Buy.................................18
SECTION III COMMENCEMENT OF OPERATION AND MILESTONES.........................18
Section 3.1 Milestones................................................18
Section 3.2 Consequences of Delays....................................19
Section 3.3 Credit Support Requirement................................20
SECTION IV SALE AND PURCHASE OBLIGATIONS....................................21
Section 4.1 Sale and Purchase of Energy...............................21
Section 4.2 Sale and Purchase of Capacity.............................21
Section 4.3 Sale of Power to Third Parties............................22
Section 4.4 Measurement and Quality of Electricity....................22
SECTION V OPERATION OF THE FACILITY........................................22
Section 5.1 Operation and Maintenance of Facility.....................22
Section 5.2 Scheduled Maintenance.....................................23
Section 5.3 Access and Information....................................24
Section 5.4 Permits; Compliance with Laws.............................25
Section 5.5 Operating Procedures......................................25
Section 5.6 Relationship to Other Purchasers..........................26
SECTION VI SCHEDULING, DISPATCH AND DELIVERY................................26
Section 6.1 Automatic Generation Control..............................26
Section 6.2 Dispatch; Scheduling for Delivery.........................27
Section 6.3 [NOT USED]................................................28
Section 6.4 Forced Outages............................................28
Section 6.5 Electronic Communications.................................28
SECTION VII INTERCONNECTION; ANCILLARY SERVICES; ETC.........................29
Section 7.1 Interconnection Facilities................................29
Section 7.2 Interconnection Points....................................29
Section 7.3 [NOT USED]................................................29
Section 7.4 Additional Agreements.....................................29
SECTION VIII FUEL ARRANGEMENTS................................................31
Section 8.1 Lateral Pipeline..........................................31
Section 8.2 Fuel for Commissioning and Testing Prior to the
Commercial Operation Date...................31
Section 8.3 Fuel for Operations; Delivery and Acceptance..............32
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Section 8.4 Risk of Loss..............................................33
Section 8.5 Measurement and Quality of Fuel...........................33
Section 8.6 Fuel Oil Alternative......................................33
SECTION IX METERING.........................................................34
Section 9.1 Metering Devices for Electricity..........................34
Section 9.2 Metering Devices for Fuel.................................34
Section 9.3 Inspection of Metering Devices............................35
Section 9.4 Adjustments for Inaccurate
Measurements................................35
SECTION X PAYMENTS.........................................................36
Section 10.1 Reservation Payments.....................................36
Section 10.2 Reservation Charges......................................37
Section 10.3 Energy Payments..........................................38
Section 10.4 Start Payments...........................................38
Section 10.5 System Upgrade Credit....................................38
Section 10.6 Start-Up Payments........................................38
SECTION XI COMMISSIONING AND TESTING........................................39
Section 11.1 Performance Tests........................................39
Section 11.2 Sale of Test Energy......................................40
SECTION XII HEAT RATE GUARANTEE..............................................40
Section 12.1 Guaranteed Heat Rate.....................................40
Section 12.2 Tracking Account.........................................40
SECTION XIII BILLING AND PAYMENT..............................................41
Section 13.1 Billing and Payment......................................41
Section 13.2 Other Payments...........................................42
Section 13.3 [NOT USED]...............................................42
Section 13.4 Currency and Timing of Payment...........................42
Section 13.5 Records..................................................42
Section 13.6 Default Interest.........................................43
SECTION XIV REPRESENTATIONS AND WARRANTIES;
ADDITIONAL COVENANTS OF SELLER AND PURCHASER....................................43
Section 14.1 Representations and Warranties of
Seller......................................43
Section 14.2 Representations and Warranties of
Purchaser...................................44
Section 14.3 Certificates.............................................46
Section 14.4 Books and Records; Information...........................46
SECTION XV TAXES............................................................46
Section 15.1 Taxes and Fees............................................46
SECTION XVI INSURANCE........................................................47
Section 16.1 Insurance Required.......................................47
Section 16.2 Evidence and Scope of Insurance..........................47
Section 16.3 Term and Modification of Insurance.......................48
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Section 16.4 Application of Proceeds..................................49
SECTION XVII FORCE MAJEURE EVENT..............................................49
Section 17.1 Force Majeure Event Defined..............................49
Section 17.2 Applicability of Force Majeure Event.....................50
Section 17.3 Other Effects of Force Majeure Events....................50
Section 17.4 Delivery Excuse..........................................51
SECTION XVIII TERMINATION AND DEFAULT..........................................52
Section 18.1 Event of Default.........................................52
Section 18.2 Remedies for Default.....................................54
SECTION XIX INDEMNIFICATION AND LIABILITY....................................54
Section 19.1 Indemnification..........................................54
Section 19.2 Fines....................................................55
Section 19.3 Limitations of Liability, Remedies and
Damages.....................................55
SECTION XX DISPUTE RESOLUTION...............................................57
Section 20.1 Senior Officers..........................................57
Section 20.2 Litigation...............................................58
SECTION XXI MISCELLANEOUS....................................................58
Section 21.1 Prudent Industry Practices...............................58
Section 21.2 Assignment...............................................59
Section 21.3 Notices..................................................59
Section 21.4 Choice of Law; Submission to
Jurisdiction; Waiver of Jury Trial..........60
Section 21.5 Entire Agreement.........................................60
Section 21.6 Waiver...................................................60
Section 21.7 Modification or Amendment................................61
Section 21.8 Severability.............................................61
Section 21.9 [NOT USED]...............................................61
Section 21.10 Counterparts............................................61
Section 21.11 Confidential Information................................61
Section 21.12 Independent Contractors.................................62
Section 21.13 Third Parties...........................................62
Section 21.14 Headings................................................62
Section 21.15 Initial Design..........................................62
APPENDICES
Appendix A - Option to Buy Term Sheet
Appendix B - Capacity Testing Procedures
Appendix C - Metering Equipment
Appendix D - Design Limits
Appendix E - [NOT USED]
Appendix F - Electricity Specifications
Appendix G - Replacement Power
Appendix H - Guaranteed Heat Rate
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Appendix I - Insurance
Appendix J - Form of Letter of Credit
Appendix K - Form of Guaranty
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POWER PURCHASE AGREEMENT
This POWER PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May
18, 1998, is entered into between LSP Energy Limited Partnership, a Delaware
limited partnership ("SELLER") and Virginia Electric and Power Company, a
Virginia public service corporation ("PURCHASER") (each, a "PARTY" and
collectively, the "PARTIES").
RECITALS
A. Seller proposes to develop, finance, construct, own, operate
and maintain the Facility, located in Batesville, Mississippi.
B. Seller wishes to deliver and sell to Purchaser, and Purchaser
wishes to purchase and take from Seller, electrical capacity and energy from the
Facility on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged, the Parties
hereby agree as follows:
AGREEMENT
SECTION I
DEFINITIONS
Section 1.1 DEFINED TERMS. Unless otherwise defined herein or in
any exhibit, schedule or appendix hereto, the following terms, when used herein
or in any exhibit, schedule or appendix hereto shall have the meanings set forth
below.
"ACTUAL CONTRACT CAPACITY" means, as to a Dedicated Unit, the sum
of the Standard Capacity and the Supplemental Capacity of such Dedicated Unit.
"AGREEMENT" means this Power Purchase Agreement and the Appendices
hereto, which are hereby incorporated herein by reference.
"ANR" means ANR Pipeline Company.
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"ANR PIPELINE" means the facilities of ANR to be used by the
Parties for the delivery of Fuel as required by this Agreement.
"APPENDIX" means an appendix attached to this Agreement.
"ASSETS" has the meaning assigned to such term in paragraph 2 of
Appendix A.
"ASSET PURCHASE PRICE" has the meaning assigned to such term in
paragraph 6(a) of Appendix A.
"AVAILABILITY ADJUSTMENT FACTOR" or "AAF" means, as to a Dedicated
Unit, the actual availability factor calculated Monthly in accordance with the
following formulae:
(a) for the period beginning with the Commercial Operation Date for
such Dedicated Unit through May 31, 2001:
AAF = (8760 - EFOH) / 8391; and
(b) thereafter:
(i) if EFOH is less than or equal to 1,752:
AAF = (8760 - EFOH) / 8515; or
(ii) if EFOH is greater than 1,752, but less than or equal to
2,628:
AAF = (8760 - (EFOH + (0.25 * (EFOH - 1,752)))) / 8515; or
(iii) if EFOH is greater than 2,628:
AAF = (8760 - (EFOH + (0.25 * (2,628 - 1,752)) + (0.40 * (EFOH -
2628)))) / 8515
Where:
EFOH = the sum of the Equivalent Forced Outage Hours for the
preceding 12-Month period;
PROVIDED that in no event shall AAF be greater than 1.
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"BILLING PERIOD" means each Month used for billing purposes
pursuant to Section XIII.
"BTU" means British Thermal Units.
"BUSINESS DAY" means any Day except Saturday, Sunday or a weekday
that is observed by Purchaser as a holiday. As of the date of this Agreement,
the holidays are New Year's Day, Xxxxxx Xxxxxx Xxxx'x Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Veteran's Day, Thanksgiving Day, Day
after Thanksgiving Day, Christmas Eve Day, and Christmas Day). Purchaser may
change these holidays by providing one year's written notice to Seller.
"CAPACITY FACTOR" means, as to a Dedicated Unit over a specified
period of time, the ratio, expressed as a percentage, of (a) the total Net
Electrical Output of such Dedicated Unit requested or projected to be requested
for Dispatch pursuant to this Agreement, divided by (b) the maximum Net
Electrical Output of such Dedicated Unit that Purchaser is entitled to request
pursuant to this Agreement.
"CHANGE-IN-LAW" means, after the Effective Date, the adoption,
imposition, promulgation or modification by a Government Agency of any Law or
Governmental Approval, or the issuance of an order, judgment, award or decree of
a Government Agency having the effect of the foregoing. For the purpose of this
definition, Change-in-Law shall not include any Law that becomes effective after
the Effective Date but that, as of the Effective Date (a) had been introduced,
in the most current applicable session of a House of Congress or a house of a
state legislature, as a xxxx before such House of Congress or such house of a
state legislature, or (b) had been published as a proposed regulation by a
Government Agency of the United States Federal government or a state government.
"CHANGE-IN-LAW TAXES" means any Taxes of the United States or the
state of Mississippi arising from a Change-in-Law and imposed on or measured by
the volume or amount of consumption of fuel, the production of energy or the
provision of electric generation capacity, or gross revenue, gross receipts or
comparable measure thereof, and whether characterized as an ad valorem, sales,
gross receipts, BTU, energy production or other similar Taxes. A Change-in-Law
Tax must result in either a net increase or a net decrease in the affected Tax
due by the appropriate Party and shall not include changes in Federal or state
Tax Laws that have the effect of substituting a new Tax for an existing Tax
(e.g., eliminate property taxes in favor of tax on energy). Change-in-Law Taxes
shall not include any Taxes imposed upon or measured by the income or net income
of either Party.
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"CLAIMS" means any claims, judgments, losses, liabilities, costs,
expenses (including reasonable attorneys' fees) and damages of any nature
whatsoever (except workers' compensation claims) in relation to personal injury,
death or property damage incurred or made by third parties.
"COMMENCEMENT OF CONSTRUCTION" means the date on which Seller has
issued to its construction contractor an unrestricted notice to proceed for the
construction of the Facility for completion in accordance with the terms of the
construction contract between Seller and such contractor.
"COMMERCIAL OPERATION DATE" means, as to a Dedicated Unit, the
date on which (a) Seller has achieved all Milestones listed in Section 3.1 for
such Dedicated Unit, (b) such Dedicated Unit is demonstrated, pursuant to
Section 11.1, to meet and maintain the Minimum Dependable Capacity for at least
eight hours, and (c) Seller provides to Purchaser a certificate stating that
Commercial Operation Date has been achieved for such Dedicated Unit; PROVIDED
that the Commercial Operation Date for such Dedicated Unit shall occur no
earlier than April 1, 2000.
"COMMERCIALLY REASONABLE" or "COMMERCIALLY REASONABLE EFFORTS"
means, with respect to any purchase or sale or other action required to be made,
attempted or taken by a Party under this Agreement, such efforts as a reasonably
prudent business would undertake for the protection of its own interest under
the conditions affecting such purchase or sale or other action, including
without limitation, the amount of notice of the need to take such action, the
duration and type of the purchase or sale or other action, the competitive
environment in which such purchase or sale or other action occurs.
"COMMITTED CAPACITY" means, as to a Dedicated Unit, a capacity of
283 MW.
"COMMON FACILITIES" means the equipment of the Facility (other
than the Units) necessary for the generation and transmission of Net Electrical
Output from the Dedicated Units including, but not limited to, control room,
machine shops, warehouse, parking, domestic water supply and waste disposal,
switch yards, electrical bus bars, Interconnection Facilities, natural gas
supply lines and headers.
"COMPLETION SECURITY" means Credit Support substantially in the
form of Appendix J.
"CONTEST" means, with respect to any Person, a contest of (a) any
Governmental Approval, acts or omissions by Governmental Agencies or any related
matters or (b) the amount or validity of any claim pursued by such Person in
good faith and by appropriate legal, administrative or other proceedings
diligently conducted so long as: (i) appropriate notations are
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included in the Parties' financial statements regarding possible liabilities in
accordance with GAAP, (ii) neither Party could reasonably be expected to incur
criminal or civil liability with respect thereto and (iii) during the period of
such contest the enforcement of such claim is effectively stayed.
"CONTRACT CAPACITY" means, as to any Dedicated Unit, the sum of
the Summer Condition Standard Capacity and the Summer Condition Supplemental
Capacity for such Dedicated Unit; PROVIDED that the Contract Capacity for a
Dedicated Unit shall not, in any event, (a) be less than the Minimum Dependable
Capacity or (b) exceed the Committed Capacity.
"CONTRACT YEAR" means, initially, the period commencing on the
Commercial Operation Date and ending 12 Months after the last Day of the Month
in which the Commercial Operation Date occurs, and, subsequently, each 12-Month
period thereafter. If the Commercial Operation Date is not June 1, 2000, then
the last Contract Year shall be a partial Contract Year ending May 31, 2010 for
the Initial Term or May 31, 2025 for the Extended Term, as the case may be.
"CONTROL CENTER" means the generation control center of TVA,
Entergy or Independent System Operator, as may be designated in writing by
Purchaser from time to time as being the primary control center for the Dispatch
of the Dedicated Units; PROVIDED that such designation shall be reasonably
acceptable to Seller.
"CREDIT SUPPORT" means any of the following in form and substance
acceptable to the Party receiving such document: (a) one or more letters of
credit substantially in the form of Appendix J issued by one or more domestic or
foreign banks whose rating is Investment Grade, (b) a guaranty or several
guaranties substantially in the form of Appendix K issued by one or more Persons
whose rating is Investment Grade, or (c) one or more performance bonds provided
by one or more Persons whose rating is Investment Grade.
"DAY" or "CALENDAR DAY" means the 24-hour period beginning and
ending at 12:00 midnight (Eastern Prevailing Time). The terms Day and Calendar
Day may be used interchangeably and shall have the same meaning.
"DEDICATED UNITS" means the two Units of the Facility, as
designated pursuant to Section 4.1(a), the Actual Contract Capacity of each of
which is dedicated to Purchaser pursuant to this Agreement.
"DEFAULT RATE" has the meaning assigned to such term in Section
13.6.
"DEFERRED EXTENSION FEE AMOUNT" has the meaning assigned to such
term in Section 2.2.
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"DELIVERED COST OF FUEL" means (a) all costs incurred by Purchaser
to cause gas to be delivered to the Fuel Metering Points when gas has been
scheduled for delivery to the Fuel Metering Points, or (b) if no gas has been
scheduled for delivery to the Fuel Metering Points, the Gas Index.
"DELIVERY EXCUSE" has the meaning assigned to such term in Section
17.4(a).
"DELIVERY START DATE" means June 1, 2000, as such date may be
extended pursuant to Section XVII.
"DESIGN LIMITS" means the parameters set forth on Appendix D.
"DISPATCH" means the right of Purchaser or the Control Center on
behalf of Purchaser to schedule and to control the delivery of Net Electrical
Output of a Dedicated Unit in accordance with this Agreement. Any form of the
term Dispatch (E.G., "Dispatched" or "Dispatching") shall refer to the exercise
of such right by Purchaser.
"DOLLARS" or "$" means the lawful currency of the United States of
America.
"EARLY TERMINATION DATE" has the meaning assigned to such term in
Section 18.2(a).
"EASTERN PREVAILING TIME" means Eastern Daylight Saving Time when
such time is applicable and otherwise means Eastern Standard Time.
"EFFECTIVE DATE" means the date of execution and delivery of this
Agreement by Seller and Purchaser.
"ELECTRICITY METERING POINTS" has the meaning assigned to such
term in Section 9.1(a).
"EMERGENCY CONDITION" means a condition or situation that presents
an imminent physical threat of danger to life, health or property, or could
reasonably be expected to cause a significant disruption on the Entergy System
or the TVA System, as applicable.
"ENERGY PAYMENT" means, for each Billing Period, the payment to be
made by Purchaser to Seller for the Net Electrical Output or Replacement Energy
during such Billing Period, in accordance with Section 10.3.
"ENTERGY" means Entergy Mississippi, Inc.
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"ENTERGY INTERCONNECTION AGREEMENT" means the Interconnection
Agreement between Seller and Entergy, providing for the construction and
operation of the Interconnection Facilities between the Facility and the Entergy
System.
"ENTERGY SYSTEM" means the transmission system of Entergy with a
substation located in Batesville, Mississippi, to be used by Purchaser for the
purpose of transmitting and distributing electricity generated by the Facility.
"EQUIVALENT FORCED OUTAGE HOURS" means, for each Dedicated Unit
for any Month, the Forced Outage Hours of such Dedicated Unit for such Month
multiplied by the Weighting Factor applicable to such Month.
"EVENT OF ABANDONMENT" means the failure of a Dedicated Unit to be
available (including as a result of a failure of Common Facilities to be
available) to produce any Net Electrical Output for a period of more than 90
consecutive Days, other than as a result of a Force Majeure Event, Delivery
Excuse, Emergency Condition or Scheduled Maintenance Outage or other Forced
Outage for which Seller is not diligently pursuing a remedy.
"EXPECTED ECONOMIC DISPATCH SCHEDULE" has the meaning assigned to
such term in Appendix G.
"EXTENDED OUTAGE PERIOD" has the meaning assigned to such term in
paragraph 4 of Appendix G.
"EXTENDED TERM" has the meaning assigned to such term in Section
2.2
"EXTENSION REQUEST" has the meaning assigned to such term in
Section 2.2
"FACILITY" means the natural gas fueled electrical generation
plant consisting of three combined cycle Units and having a total output of
approximately 800 MW, to be located in Batesville, Mississippi, together with
the Common Facilities, including any additions or replacements thereof, to be
constructed, supplied and delivered at the Facility Site.
"FACILITY SITE" means the approximately 60 acre parcel of land
upon which the Facility is located, in the Batesville Industrial Park in
Batesville, Panola County, Mississippi.
"FERC" means the Federal Energy Regulatory Commission.
"FINANCIAL CLOSING DATE" means the date on which (a) binding
commitments to provide the financing for the estimated cost to complete
construction of the Facility are issued by the Financing Parties and are
effective, (b) conditions on initial borrowings are satisfied and (c)
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amounts become available for borrowing from the Financing Parties and any other
documents relating to the financing or refinancing of the acquisition,
construction, ownership, operation, maintenance or leasing of the Facility.
"FINANCING DOCUMENTS" means any document relating to the financing
or refinancing of the acquisition, construction, ownership, operation,
maintenance or leasing of the Facility.
"FINANCING PARTIES" means institutions (including any trustee or
agent on behalf of such institutions) providing financing or refinancing to
Seller for the acquisition, construction, ownership, operation, maintenance or
leasing of the Facility and the Lateral Pipeline.
"FORCE MAJEURE EVENT" means, with respect to a Dedicated Unit, an
event, condition or circumstance described in Section 17.1.
"FORCED OUTAGE" means, for any Dedicated Unit, a reduction of,
cessation in the delivery of, or inability to deliver, the Net Electrical Output
Dispatched by Purchaser from such Unit that is not the result of (a) a Scheduled
Maintenance Outage, (b) a Force Majeure Event, (c) a Delivery Excuse, (d) an
Emergency Condition or (e) operation outside of the deviation band limits for
which operation Seller is responsible for a portion of any associated imbalance
charge or penalty imposed under a tariff by Entergy or TVA in accordance with
Section 6.2(d); PROVIDED that, for the purposes of this Agreement, a period of
reduction of, cessation in the delivery of, or inability to deliver, Net
Electrical Output Dispatched by Purchaser from a Dedicated Unit shall not be
deemed to be a Forced Outage if and to the extent either Party provides
Replacement Power during such period in accordance with Section 3.2 or 6.4.
"FORCED OUTAGE HOUR" means any hour in which a Forced Outage
occurs or is continuing. In a Forced Outage Hour, if the Net Electrical Output
delivered is greater than zero but less than the level of energy Dispatched,
then such partial Forced Outage Hour shall be determined by the ratio of the Net
Electrical Output deviation to the Dispatched level.
"FUEL" means natural gas, which is the primary fuel used by the
Facility.
"FUEL METERING POINTS" means the location of meters at or near the
interconnection of the Lateral Pipeline to the Interstate Pipelines.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"GAS INDEX" means that index published in Gas Daily at the Xxxxx
Hub (midpoint), plus all additional costs determined pursuant to Purchaser's gas
transportation
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agreements or, if no such agreements are applicable, an appropriate basis
differential as the Parties may agree from time to time, which would be incurred
by Purchaser to deliver gas to the Fuel Metering Points. Should the index
specified herein be discontinued or no longer reflect the market price of gas
delivered to the Facility, an index specified by the appropriate entity as the
replacement index, if any, shall be used. If no replacement index is specified,
a new index which most accurately reflects changes for the applicable cost
component shall be substituted by mutual agreement of the Parties. If the basis
of the calculation of the index specified herein is substantially modified, the
index as modified may continue to be used or another index may be substituted by
mutual agreement of the Parties. A minor change in weighting, and minor changes
in benchmarks shall not be construed as substantial modification to the index
and the affected values shall be re-established in accordance with the
instructions issued by the appropriate index entity.
"GOVERNMENT AGENCY" means any federal, state, local, territorial
or municipal government and any department, commission, board, bureau, agency,
instrumentality, judicial or administrative body thereof.
"GOVERNMENTAL APPROVAL" means any authorization, consent,
approval, license, ruling, permit, exemption, variance, order, judgment, decree,
declarations of or regulation by any Government Agency relating to the
acquisition, ownership, occupation, construction, start-up, testing, operation
or maintenance of the Dedicated Units and Common Facilities or to the execution,
delivery or performance of this Agreement.
"GOVERNMENTAL APPROVAL FORCE MAJEURE EVENT" means, with respect to
a Dedicated Unit, the failure of Seller to obtain, or any delay in obtaining,
any Governmental Approval required for the acquisition, ownership, occupation,
construction, start-up, testing, operation or maintenance of such Dedicated Unit
(other than as a result of a Delivery Excuse) and the result of such failure or
delay is a delay in the Commercial Operation Date of such Dedicated Unit until a
date following the Delivery Start Date.
"GUARANTEED HEAT RATE" means the Guaranteed Heat Rate as
determined in accordance with Appendix H.
"INCREMENTAL REPLACEMENT POWER COST" has the meaning assigned to
such term in Appendix G.
"INDEPENDENT SYSTEM OPERATOR" or "ISO" means an independent entity
formed under jurisdiction of the FERC (or any federal or state agency assuming
that regulatory authority currently residing with the FERC with respect to the
formation and operation of ISOs), that is
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responsible for the safe and reliable operation of the electric transmission
grid and administration of transmission service, within its defined boundaries.
"INITIAL OUTAGE PERIOD" has the meaning assigned to such term in
paragraph 4 of Appendix G.
"INITIAL TERM" has the meaning assigned to such term in Section
2.1.
"INTERCONNECTION AGREEMENTS" means the TVA Interconnection
Agreement and the Entergy Interconnection Agreement.
"INTERCONNECTION FACILITIES" means the interconnection facilities
that shall connect the Facility with the Entergy System and the TVA System, as
more fully described in the Interconnection Agreements.
"INTERCONNECTION POINTS" means the physical points at which the
Facility is connected with the Entergy System and the TVA System, as more fully
described in the Interconnection Agreements, or such other point as the Parties
may agree.
"INTERSTATE PIPELINE " means either the Tennessee Gas Pipeline or
the ANR Pipeline.
"INVESTMENT GRADE" means, with respect to any Person, a rating of
BBB- or better by S&P and Baa3 or better by Moody's (or an equivalent rating by
another nationally recognized statistical rating organization of similar
standing if either S&P or Xxxxx'x is then no longer rating such debt of such
Person) for such Person's long-term unsecured debt obligations; PROVIDED that
for purposes of this Agreement, the rating of two statistical rating
organizations shall be required to determine whether the rating of a Person's
long-term unsecured debt obligations is Investment Grade.
"KW" means kilowatt.
"KWH" means kilowatt-hour.
"LATERAL PIPELINE" means the pipeline to be constructed and
installed pursuant to Section 8.1 to connect the Facility with the Tennessee Gas
Pipeline and the ANR Pipeline.
"LAW" means any statute, law, rule or regulation imposed by a
Government Agency, whether in effect now or at any time in the future.
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"LIEN" shall mean, with respect to any property of any Person, any
mortgage, lien, pledge, charge, lease, easement, servitude, right of others or
security interest or encumbrance of any kind in respect of such property of such
Person.
"MILESTONE" has the meaning assigned to such term in Section 3.1.
"MILESTONE DATE" has the meaning assigned to such term in Section
3.1.
"MINIMUM DEPENDABLE CAPACITY" means, as to a Dedicated Unit, a
capacity of 241 MW.
"MINIMUM LOAD" means, with respect to a Dedicated Unit, 70% of the
Standard Capacity of such Dedicated Unit.
"MMBTU" means million BTU.
"MONTH" means a calendar month.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MW" means Megawatt.
"MWh" means megawatt-hour.
"NERC" means the North American Electric Reliability Council.
"NET ELECTRICAL OUTPUT" means, for any Dedicated Unit for any
period, the net electric energy output (as measured in KWhs at the Electricity
Metering Points) of such Dedicated Unit during such period.
"NON-CONFORMING FUEL" means Fuel that does not meet the
specifications for gas delivered from the relevant Interstate Pipeline, in
accordance with Section 8.3(a).
"NON-CONFORMING POWER" has the meaning assigned to such term in
Section 4.4.
"NOTICE OF DELAY" has the meaning assigned to such term in
paragraph 2 of Appendix G.
"NOTICE OF EXERCISE OF OPTION" has the meaning assigned to such
term in paragraph 3 of Appendix A.
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"OFF PEAK HOUR" means any hour that is not a Peak Hour.
"OPTION TO BUY" has the meaning assigned to such term in Section
2.3.
"PEAK HOURS" means any hour between 0700 (Eastern Prevailing Time)
and 2300 (Eastern Prevailing Time) Monday through Friday excluding any holiday
recognized by NERC as not including peak hours.
"PEAK PERIOD" means the Months of January, February, June, July,
August and September.
"PEAK SEASON" means Summer Peak Months and Winter Peak Months.
"PERMITTING FAILURE" has the meaning assigned to such term in
paragraph 3 of Appendix G.
"PERSON" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or Government Agency.
"PURCHASER ASSIGNEE" has the meaning assigned to such term in
Section 21.2.
"PRUDENT INDUSTRY PRACTICES" means any of the practices, methods,
standards and acts (including, but not limited to, the practices, methods and
acts engaged in or approved by a significant portion of the electric power
generation industry in the United States) that, at a particular time, in the
exercise of reasonable judgment in light of the facts known or that should
reasonably have been known at the time a decision was made, could have been
expected to accomplish the desired result consistent with good business
practices, reliability, economy, safety and expedition, and which practices,
methods, standards and acts generally conform to operation and maintenance
standards recommended by the Facility's equipment suppliers and manufacturers,
the Design Limits and applicable Governmental Approvals and Law.
"RELATED AGREEMENTS" means this Agreement and each Interconnection
Agreement.
"REPLACEMENT CAPACITY" means electric generation capacity provided
to Purchaser from sources other than the Dedicated Units in accordance with the
requirements of Appendix G.
"REPLACEMENT ENERGY" means electric energy provided to Purchaser
from sources other than the Dedicated Units in accordance with the requirements
of Xxxxxxxx X.
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"XXXXXXXXXXX XXXXX" means either or both of Replacement Capacity
and Replacement Energy.
"REPLACEMENT POWER ARRANGEMENTS" means any arrangement made with
any interconnecting utilities and/or any other Person for the supply,
transmission and delivery of Replacement Power in accordance with the
requirements of Appendix G.
"REPLACEMENT POWER DELIVERY POINT" means either the
Interconnection Points or one or more points for the receipt of Replacement
Power designated by Purchaser in writing and accepted by Seller in accordance
with Appendix G.
"REPLACEMENT POWER NOTICE" has the meaning assigned to such term
in paragraph 2 of Appendix G.
"REPLACEMENT POWER OUTAGE" has the meaning assigned to such term
in paragraph 4 of Appendix G.
"RESERVATION PAYMENT" means, for each Billing Period, the payment
to be made by Purchaser to Seller for the Contract Capacity of a Dedicated Unit
available to Purchaser or for Replacement Capacity during such Billing Period,
in accordance with Section 10.1.
"SCHEDULED MAINTENANCE OUTAGE" means, as to a Dedicated Unit, a
time period during which such Dedicated Unit is shut down or its output reduced
for such Dedicated Unit and the Common Facilities or Lateral Pipeline
maintenance in accordance with Section 5.2.
"STANDARD CAPACITY" means, for each Dedicated Unit, the generating
capacity of such Unit without duct firing or steam injection, as such capacity
is determined in accordance with Section 11.1 and Appendix B.
"STANDARD CAPACITY TEST" has the meaning assigned to such term in
Appendix B.
"START" means, with respect to a Dedicated Unit, the ignition of
such Dedicated Unit pursuant to a Dispatch order and the sustained operation of
such Dedicated Unit at a level providing at least 80% of the KWhs that would
have been delivered pursuant to full compliance with such Dispatch order (unless
delivery of Net Electrical Output is delayed, terminated or reduced by
Purchaser, a Dispatch order, a Force Majeure Event or a Delivery Excuse). For
purposes of this Agreement there shall be deemed to be only one Start per
Dispatch order unless delivery of Net Electrical Output is terminated by a
Dispatch order, a Force Majeure Event or a Delivery Excuse.
"START PAYMENT" has the meaning assigned to such term in Section
10.4.
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"START-UP" means, with respect to a Dedicated Unit, the ignition
of such Dedicated Unit pursuant to a Dispatch order and the operation of such
Dedicated Unit up to the Minimum Load; PROVIDED that for purposes of this
Agreement, there shall be deemed to be only one Start-Up per Dispatch order,
unless delivery of energy is delayed, terminated or reduced by Purchaser, a
Dispatch order, a Force Majeure Event or a Delivery Excuse.
"SUMMER CONDITION STANDARD CAPACITY" means the Standard Capacity
adjusted in accordance with Appendix B to ambient conditions of 95 degrees
Fahrenheit and 60% relative humidity.
"SUMMER CONDITION SUPPLEMENTAL CAPACITY" means the Supplemental
Capacity adjusted in accordance with Appendix B to ambient conditions of 95
degrees Fahrenheit and 60% relative humidity.
"SUMMER PEAK MONTHS" means the Months of June, July, August and
September.
"SUPPLEMENTAL CAPACITY" means, for each Dedicated Unit, any
capacity of such Unit in excess of the Standard Capacity achieved with duct
firing or steam injection, as such capacity is determined in accordance with
Section 11.1 and Appendix B.
"SUPPLEMENTAL CAPACITY TEST" has the meaning assinged to such term
in Appendix B.
"SYSTEM UPGRADE CREDIT" has the meaning assigned to such term in
Section 10.5.
"S&P" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
"TAXES" means, with respect to any Person, all taxes,
withholdings, assessments, imposts, duties, governmental fees, governmental
charges or levies imposed directly or indirectly on such Person or its income,
profits or property by any Government Agency.
"TENNESSEE GAS" means Tennessee Gas Pipeline Company.
"TENNESSEE GAS PIPELINE" means the facilities of Tennessee Gas to
be used by the Parties for the delivery of Fuel as required by this Agreement.
"TERM" means the Initial Term and any Extended Term.
"TEST ENERGY" has the meaning assigned to such term in Section
11.2.
"TRACKING ACCOUNT" has the meaning assigned to such term in
Section 12.2(a).
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"TRANSFER DATE" has the meaning assigned to such term in paragraph
3 of Appendix A.
"TRANSFER DOCUMENTS" has the meaning assigned to such term in
paragraph 7 of Appendix A.
"TVA" means Tennessee Valley Authority.
"TVA INTERCONNECTION AGREEMENT" means the Interconnection
Agreement between Seller and TVA, providing for the construction and operation
of the Interconnection Facilities between the Facility and the TVA System.
"TVA SYSTEM" means the transmission system of TVA with a
substation located in Batesville, Mississippi, to be used by Purchaser for the
purpose of transmitting and distributing electricity generated by the Facility.
"UNIT" means any of the three gas-fueled combined cycle electric
generating units of the Facility.
"UNIT METERS - FUEL" has the meaning assigned to such term in
paragraph 2(a) of Appendix C.
"UTILITY METERS" has the meaning assigned to such term in
paragraph 1(a) of Appendix C.
"WEIGHTING FACTOR" means, for any Month, the weighting factor set
forth opposite such Month in the table below:
Month Weighting Factor
January .75
February .75
March .35
April .35
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May .85
June 1.5
July 2.5
August 2.5
September 1.0
October .35
November .35
December .75
"WINTER PEAK MONTHS" means the Months of January and February.
Section 1.2 INTERPRETATION. Unless the context otherwise requires:
(a) Words singular and plural in number shall be deemed to include
the other and pronouns having masculine or feminine gender shall be deemed to
include the other.
(b) Subject to Section 1.2(g), any reference in this Agreement to
any Person includes its successors and assigns and, in the case of any
Government Agency, any Person succeeding to its functions and capacities.
(c) Any reference in this Agreement to any Section or Appendix
means and refers to the Section contained in, or Appendix attached to, this
Agreement.
(d) Other grammatical forms of defined words or phrases have
corresponding meanings.
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(e) A reference to writing includes typewriting, printing,
lithography, photography and any other mode of representing or reproducing
words, figures or symbols in a lasting and visible form.
(f) A reference to a specific time for the performance of an
obligation is a reference to that time in the place where that obligation is to
be performed.
(g) A reference to a Party to this Agreement includes that Party's
successors and permitted assigns.
(h) A reference to a document or agreement, including this
Agreement, includes a reference to that document or agreement as novated,
amended, supplemented or restated from time to time.
(i) If any payment, act, matter or thing hereunder would occur on
a Day that is not a Business Day, then such payment, act, matter or thing shall,
unless otherwise expressly provided for herein, shall occur on the last prior
Business Day.
Section 1.3 TECHNICAL MEANINGS. Words not otherwise defined herein
that have well-known and generally accepted technical or trade meanings are used
herein in accordance with such recognized meanings.
SECTION II
TERM
Section 2.1 INITIAL TERM. This Agreement shall become effective as
of the Effective Date and shall continue in effect for an initial period ending
on the date that is 10 years from the Delivery Start Date (the "INITIAL TERM"),
unless otherwise extended or terminated in accordance with the provisions of
this Agreement.
Section 2.2 EXTENSION OF TERM. The Term of this Agreement may be
extended for all Dedicated Units which have not been terminated pursuant to this
Agreement for an additional 15 years (the "EXTENDED TERM"), PROVIDED that
Purchaser requests in writing an extension of this Agreement (an "EXTENSION
REQUEST") not less than two years prior to the expiration of the Initial Term.
If Purchaser provides an Extension Request, Purchaser shall have a period of 90
Days from the date of the Extension Request to perform due diligence pursuant to
Section 5.3 before such Extension Request shall become irrevocable. If an
Extension Request is made and not revoked prior to the end of the due diligence
period, Purchaser shall, within 10 Days after the due diligence period, post
Credit Support in an amount equal to $70 per KW based on the average Contract
Capacity of all the Dedicated Units over the 24-Month period
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immediately preceding the date of posting of such Credit Support. Five Months
prior to the expiration of the Initial Term, Purchaser shall pay to Seller an
amount equal to $20.00 per KW based on the average Contract Capacity of all the
Dedicated Units over the 24-Month period immediately preceding the date of
payment of such amount, upon which payment the Credit Support required to be
provided pursuant to the preceding sentence shall be reduced by the amount of
such payment. On the commencement of the Extended Term, Purchaser shall, at its
election, either (a) pay to Seller an amount equal to $50.00 per KW based on the
average Contract Capacity of all the Dedicated Units over the 24-Month period
immediately preceding the date of the commencement of the Extended Term
("DEFERRED EXTENSION FEE AMOUNT"), in which case the remaining Credit Support
posted pursuant to this Section 2.2 shall be released, or (b) pay to Seller on
an annual basis 15 equal payments computed by amortizing the Deferred Extension
Fee Amount over a 15 year period using an interest rate of 13% per annum in
which case the Credit Support posted pursuant to this Section 2.2 shall be
reduced annually by the amount of the annual payment (but excluding interest and
such reduction shall be made only to the extent that the Credit Support exceeds
the sum of the remaining payments); PROVIDED that in the event that Purchaser
terminates this Agreement in accordance with Section XVIII, then Purchaser shall
have no obligation to make any further payments of the Deferred Extension Fee
Amount.
Section 2.3 PURCHASER'S OPTION TO BUY. If Purchaser shall have
exercised its option to extend the Term in accordance with Section 2.2,
Purchaser shall have the option ("OPTION TO BUY"), at the end of the Extended
Term, to purchase from Seller the Dedicated Units designated for the Extended
Term and certain other property in accordance with Appendix A.
SECTION III
COMMENCEMENT OF OPERATION AND MILESTONES
Section 3.1 MILESTONES. The following milestones (each, a
"MILESTONE") and the dates specified for achieving each Milestone (each, a
"MILESTONE DATE") shall be met by Seller for each Dedicated Unit, subject to
extension in accordance with Section XVII:
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Milestone Milestone Date
--------- --------------
Financial Closing December 31, 1998
Commencement of Construction December 31, 1998
Completion of the foundations for the
combustion turbine generator and the steam November 1, 1999
turbine generator
Delivery of the combustion turbine December 1, 1999
generator
Delivery of the steam turbine generator January 1, 2000
Completion of Lateral Pipeline required by March 31, 2000
Section 8.1
Completion of pressure testing of the heat
recovery steam generator and steam blows
of the piping system and synchronization May 1, 2000
with the Entergy System and the TVA
System
Commercial Operation Date June 1, 2000
Section 3.2 CONSEQUENCES OF DELAYS.
(a) In the event of a failure by Seller to achieve any Milestone
with respect to a Dedicated Unit on or before the applicable Milestone Date, the
Replacement Power provisions contained in Sections 2 and 3 of Appendix G shall
apply.
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(b) Purchaser may terminate this Agreement as to a Dedicated Unit
if the Commercial Operation Date as to such Dedicated Unit is not achieved by
the first anniversary of the Delivery Start Date (PROVIDED that such date shall
be extended in accordance with Section XVII as to a Dedicated Unit on a
Day-to-Day basis for any delay in achieving such Commercial Operation Date that
results from (i) a Force Majeure Event (but excluding a Government Approval
Force Majeure Event) that is excused pursuant to Section 17.2 or (ii) a Delivery
Excuse that is excused pursuant to Section 17.4(b)). In order to exercise the
termination right pursuant to this Section 3.2(b), Purchaser must provide
written notice of termination to Seller within 10 Days after the first
anniversary of the Delivery Start Date.
Section 3.3 CREDIT SUPPORT REQUIREMENT
(a) On the Financial Closing Date, Seller shall provide to
Purchaser Completion Security in an amount equal to $10/KW of the Committed
Capacity of each Dedicated Unit; PROVIDED that if the Financial Closing Date
does not occur on or before December 31, 1998, Seller shall post the Completion
Security required by this Section 3.3(a) on the earlier of the (i) Financial
Closing Date and (ii) January 31, 1999. If Seller fails to post Completion
Security in the amount required under this Section 3.3(a), then either Party may
terminate this Agreement upon five Business Days' prior written notice to the
other Party and, upon such termination, neither Party shall have any further
liabilities under this Agreement.
(b) Pursuant to the provisions contained in Sections 2 and 3 of
Appendix G, Purchaser may require Seller to provide additional Completion
Security, provided that the Completion Security with respect to each Dedicated
Unit shall not exceed at any time $20/KW of the Committed Capacity of such
Dedicated Unit.
(c) With respect to each Dedicated Unit, on the Commercial
Operation Date, to the extent that the face amount of the Completion Security
provided by Seller shall exceed $10/KW of the Committed Capacity, the excess
Completion Security shall be surrendered for reduction to an amount equal to
$10/KW of the Committed Capacity.
(d) With respect to each Dedicated Unit, Purchaser agrees to
release any excess Completion Security at any time the face amount of the
Completion Security shall exceed the amount of Completion Security required to
be provided pursuant to this Agreement.
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(e) To the extent that any Incremental Replacement Power Costs are
due by Seller in accordance with Appendix G, then the Completion Security posted
by Seller may be drawn by Purchaser or released to Seller to the extent of the
Incremental Replacement Power Costs that are due in accordance with Appendix G.
If the Completion Security is drawn pursuant to this Section 3.3(e), then (i)
prior to the Commercial Operation Date, Seller shall have no obligation to
replenish the Completion Security, but (ii) upon the Commercial Operation Date
and thereafter, as required, Seller shall have the obligation to replenish the
Completion Security to an amount equal to $10/KW of the Committed Capacity of
each Dedicated Unit.
(f) If this Agreement is terminated by either Party in accordance
with Section 3.3(a) (other than as a result of Purchaser's failure to cooperate
in good faith with Seller to achieve financial closing), Seller covenants that
it will not directly or indirectly operate the Dedicated Units (or any
replacement or alternative generation units that functionally replace or are in
lieu of the Dedicated Units) on or before June 1, 2010 on the Facility Site
without first offering to Purchaser the opportunity to produce or take capacity
and Net Electrical Output of such generation units on the terms of this
Agreement. For the purposes of the foregoing covenant, a sale, lease or other
transfer of the Dedicated Units or such other replacement or alternative
generation units to another Person who has any legal or equitable ownership
interest in Seller or who is an affiliate of Seller shall be a violation of the
foregoing covenant if such Person operates the Dedicated Units or such other
replacement or alternative generation units on or before June 1, 2010 on the
Facility Site without first offering to Purchaser the opportunity to produce or
take capacity and Net Electrical Output of such generation units on the terms of
this Agreement.
SECTION IV
SALE AND PURCHASE OBLIGATIONS
Section 4.1 SALE AND PURCHASE OF ENERGY.
(a) On or prior to the Financial Closing Date, Seller shall
designate to Purchaser which Units of the Facility shall be the Dedicated Units.
(b) Subject to the terms and conditions of this Agreement, Seller
shall sell and deliver, and Purchaser shall purchase and accept, (i) on and
after the Commercial Operation Date of a Dedicated Unit and for the Term of this
Agreement, the Net Electrical Output of each Dedicated Unit as Dispatched in
accordance with the Agreement and (ii) on or after the Delivery Start Date
Replacement Energy provided by Seller in accordance with Appendix G.
Section 4.2 SALE AND PURCHASE OF CAPACITY. Subject to the terms
and conditions of this Agreement, Seller shall sell and make available, and
Purchaser shall purchase and accept,
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(a) on or after the Commercial Operation Date of a Dedicated Unit and for the
Term of this Agreement, the Actual Contract Capacity or Replacement Capacity
provided in accordance with Appendix G and (b) on and after the Delivery Start
Date and until the Commercial Operation Date of a Dedicated Unit, Replacement
Capacity with respect to such Dedicated Unit provided by Seller in accordance
with Appendix G.
Section 4.3 SALE OF POWER TO THIRD PARTIES. Seller shall have the
right to sell to third parties electrical energy generated from any Unit other
than the Dedicated Units.
Section 4.4 MEASUREMENT AND QUALITY OF ELECTRICITY.
(a) All Net Electrical Output shall be measured at the Electricity
Metering Points and shall meet the specifications set forth in Appendix F.
(b) In the event that electricity delivered by Seller hereunder
fails to conform to the specifications set forth in Appendix F ("NON-CONFORMING
POWER"), and upon notice of such non-conformance by the Control Center, TVA,
Entergy or Purchaser, Seller immediately shall exercise such Commercially
Reasonable Efforts as are necessary to correct such non-conformity and shall
provide to Purchaser an estimate of the duration and extent of such failure to
conform. Seller shall pay any costs incurred under the Interconnection
Agreements as a result of Seller delivering Non-Conforming Power, and shall
reimburse Purchaser in accordance with Section 13.2 for the actual additional
direct cost of any ancillary services charged to Purchaser pursuant to the
agreements described in Section 7.4(b) as a result of Seller delivering
NonConforming Power.
SECTION V
OPERATION OF THE FACILITY
Section 5.1 OPERATION AND MAINTENANCE OF FACILITY.
(a) Seller shall operate and maintain all the Dedicated Units and
Common Facilities in accordance with Prudent Industry Practices and otherwise in
accordance with this Agreement.
(b) Seller shall inform Purchaser on a daily basis by 7:30 a.m.
(Eastern Prevailing Time) of the generation capability of each Dedicated Unit
and any limitations, restrictions, deratings or outages affecting such Dedicated
Unit for the next Day and shall update Seller's notice to the extent of any
material changes in this information.
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(c) Seller shall, during the Term, only employ appropriately
qualified (determined in Seller's reasonable opinion) personnel for the purposes
of operating and maintaining the Dedicated Units and coordinating operations
with the Entergy System and the TVA System.
Section 5.2 SCHEDULED MAINTENANCE.
(a) At least 30 Days prior to the anticipated Commercial Operation
Date of a Dedicated Unit and thereafter prior to June 1 of each calendar year
subsequent to the calendar year in which the Commercial Operation Date of such
Dedicated Unit occurs, Purchaser shall provide to Seller a non-binding proposed
schedule of Capacity Factor and Start-Ups for such Dedicated Unit for each Month
(i) in the case of the notice delivered prior to the Commercial Operation Date
for such Dedicated Unit, occurring after the Commercial Operation Date through
and including the following calendar year, and (ii) in the case of each
subsequent notice, of the following calendar year. Within 60 Days of receiving
Purchaser's proposed schedule for such Dedicated Unit, Seller shall submit to
Purchaser a proposed schedule for Scheduled Maintenance Outages for the period
covered by, and which shall be based on, Purchaser's projected Dispatch
schedule, subject to Section 5.2(b). In no event, without Purchaser's consent,
shall such schedule provide for a Scheduled Maintenance Outage during a Peak
Period. Once Seller has provided to Purchaser the proposed schedule for
Scheduled Maintenance Outages, Purchaser may request Seller to re-schedule any
such Scheduled Maintenance Outage and Seller shall exercise Commercially
Reasonable Efforts to effectuate such change in schedule.
(b) The years in which a combustor inspection, a hot gas
inspection or a major inspection shall occur with respect to a Dedicated Unit
shall be determined in accordance with manufacturers' recommendations; PROVIDED
that for purposes of this Section 5.2(b), the manufacturers' recommendations
shall be determined in accordance with the formulae provided by the relevant
equipment manufacturers and shall be consistent with the formulae provided by
such equipment manufacturers to customers other than Seller for similar
equipment, which formulae may be revised from time to time by such
manufacturers. Days of Scheduled Maintenance Outages shall be, as to a Dedicated
Unit, as follows: (i) in years in which a combustor inspection is to occur, 14
Days; (ii) in years in which a hot gas inspection is to occur, 21 Days; and
(iii) in years in which a major inspection is to occur, 28 Days. In scheduling
the Days of Scheduled Maintenance Outages in accordance with Section 5.2(a),
Seller may bifurcate the permitted number of Days into two periods, one of which
shall be no longer than five Days. Notwithstanding the foregoing or any
provision herein, Seller shall use Commercially Reasonable Efforts to complete
any Scheduled Maintenance Outage in less than the time periods scheduled and
place the affected Dedicated Unit back into full operation as soon as possible.
The Scheduled Maintenance Outage periods shall apply to each Dedicated Unit.
Days of Scheduled Maintenance Outages shall be prorated based on the ratio of
the capacity available for a
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Dedicated Unit to the Contract Capacity of such Dedicated Unit during the
Scheduled Maintenance Outage in the case of partial Scheduled Maintenance
Outages.
(c) In addition to the Scheduled Maintenance Outages provided for
in Section 5.2(b), Seller shall also be entitled to perform up to 120 hours per
year of additional Scheduled Maintenance Outages during Off Peak Hours with one
Day's prior written notice to Purchaser of each such additional Scheduled
Maintenance Outage period. Seller shall exercise Commercially Reasonable Efforts
to minimize the period of any additional Scheduled Maintenance Outage. Purchaser
may request changes to such schedules as long as such changes do not create a
condition which places the safety and reliability of the Dedicated Units in
question. If Purchaser requests any such schedule changes, then, to the extent
that no additional costs would result from such schedule changes, Seller shall
abide by Purchaser's requested changes. If, however, additional costs would
result from Purchaser's requested changes, Seller shall notify Purchaser of such
additional costs. Upon receipt of such notification from Seller, if Purchaser
wishes for Seller to proceed with such changed schedule, Purchaser shall so
notify Seller and shall reimburse Seller for such additional costs as were
described in Seller's notice to Purchaser. If Purchaser does not notify Seller
of its decision within five Business Days, then Seller shall proceed with its
own schedule.
Section 5.3 ACCESS AND INFORMATION.
(a) Seller shall provide to Purchaser from time to time the
following information with respect to the Dedicated Units, the Common Facilities
and the Lateral Pipeline:
(i) The notice to proceed for Commencement of Construction
and Monthly reports on the status of construction through the final
Commercial Operation Date;
(ii) The manufacturers' guidelines and recommendations for
maintenance of the Facility equipment;
(iii) A report summarizing the results of maintenance
performed during each Scheduled Maintenance Outage and any Forced Outage,
and upon request of Purchaser any of the technical data obtained in
connection with such maintenance; and
(iv) The agreements to which Seller is a party with respect
to the ownership and operation of the Lateral Pipeline and any material
amendments to such agreements.
(b) In connection with the exercise of Purchaser's option to
extend the Term in accordance with Section 2.2 or to Purchaser's Option to Buy
pursuant to Section 2.3, Seller shall provide to Purchaser (or provide Purchaser
with reasonable access to) the operating and
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maintenance logs and records, insurance claims, and any other records in the
possession of Seller and material to the condition of the Dedicated Units, the
Common Facilities or the Lateral Pipeline. Such information or access shall be
provided upon receipt by Seller of the notice from Purchaser of its intent to
exercise the options under Sections 2.2 or 2.3, as appropriate.
(c) Upon reasonable prior notice (in light of the circumstances)
and subject to the safety rules and regulations of Seller, Seller shall provide
Purchaser and its authorized agents, employees and inspectors with reasonable
access to the Facility Site, the Dedicated Units, the Common Facilities and the
Lateral Pipeline (to the extent that Seller shall have access rights thereto):
(i) in connection with the exercise of Purchaser's option to extend the Term in
accordance with Section 2.2 or to purchase the Dedicated Units in accordance
with Section 2.3, (ii) for the purpose of reading or testing metering equipment
in accordance with Section IX, (iii) as necessary to witness tests of Contract
Capacity in accordance with Section XI, and (iv) in connection with the
operation and maintenance of the Interconnection Facilities.
(d) With five Business Days' prior written notice from Purchaser
to Seller, and subject to the safety rules and regulations of Seller, Seller
shall provide Purchaser and its authorized agents, employees and inspectors with
reasonable access to the Facility Site, the Dedicated Units and the Common
Facilities for the purpose of Purchaser assessing the general maintenance of the
Facility Site, such Dedicated Units and the Common Facilities; PROVIDED that for
purposes of this Section 5.3(d), Purchaser's access shall be limited to twice
per calendar year. Purchaser acknowledges that such access does not create any
right for Purchaser to direct or modify the operation of the Dedicated Units in
any way.
Section 5.4 PERMITS; COMPLIANCE WITH LAWS.
(a) Subject to the right of Contest, Seller shall, at its expense,
acquire and maintain in effect, from any and all Governmental Agencies with
jurisdiction over Seller and/or the Facility, all Governmental Approvals, in
each case necessary (i) for the construction, operation and maintenance of the
Facility in accordance with this Agreement and to permit each Dedicated Unit to
operate on natural gas at its Committed Capacity for all hours of the year less
hours allowed for Scheduled Maintenance Outages pursuant to Section 5.2, and
(ii) for Seller to perform its obligations under this Agreement.
(b) Subject to the right of Contest, Seller shall, at all times,
comply with all Laws and Governmental Approvals applicable to it and/or to the
Facility, including (i) all environmental laws in effect at any time during the
Term, and (ii) all such Laws relating to fuel security, storage or back-up or
otherwise concerning any type of facility used for the generation of electric
power.
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(c) Subject to the right of Contest, Purchaser shall, at all
times, comply with all Laws necessary for Purchaser to perform its obligations
under this Agreement.
Section 5.5 OPERATING PROCEDURES. Purchaser and Seller shall
develop written interface operating procedures no later than 90 Days before
synchronization with the TVA System and Entergy System. The operating procedures
shall establish the protocol under which the Parties shall perform their
respective responsibilities under this Agreement and shall include, but shall
not necessarily be limited to, method of Day-to-Day communications, key
personnel lists for Seller and Purchaser, Forced Outage and Scheduled
Maintenance Outage reporting, daily capacity level and energy reports, start-up
curves, coordinating Fuel arrangements and the operating procedures for the
Lateral Pipelines, the resolution of disputes and the allocation of Fuel
delivered to the Lateral Pipelines to the Facility.
Section 5.6 RELATIONSHIP TO OTHER PURCHASERS.
(a) During periods when only a portion of the output of the
Facility is disconnected or curtailed from the Entergy System or the TVA System,
such disconnection or curtailment shall be apportioned to each Unit on a
non-discriminatory basis and pro-rata based on the level of dispatch of each
Unit at the time, unless otherwise agreed in writing by all affected purchasers.
(b) No other purchaser of output of any Unit other than a
Dedicated Unit shall have superior rights than Purchaser to any Common Facility.
During periods where the output or capacity of Common Facilities, including the
Lateral Pipeline, is restricted (for a reason other than the failure of any
Person to deliver Fuel), such available output or capacity shall be apportioned
to each Unit on a non-discriminatory basis and pro-rata based on the level of
dispatch of each Unit at the time, unless otherwise agreed in writing by all
affected purchasers.
SECTION VI
SCHEDULING, DISPATCH AND DELIVERY
Section 6.1 AUTOMATIC GENERATION CONTROL. Each Dedicated Unit
shall be fully Dispatchable by and capable of automatic generation control
within the Design Limits and shall operate on such control if so directed by
Purchaser or the Control Center on behalf of Purchaser. Purchaser, or the
Control Center on behalf of Purchaser, shall have the sole discretion to
Dispatch the Net Electrical Output from each Dedicated Unit up to the Actual
Contract Capacity of such Dedicated Unit; PROVIDED that Dispatch shall be
consistent with the Design Limits and (to the extent not inconsistent with the
Design Limits) Prudent Industry Practices and manufacturers' guidelines and
recommendations generally applicable to such equipment;
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XXXXXXXX, XXXXXXX, that to the extent that any Dedicated Unit, as constructed,
can utilize a higher ramp rate than the ramp rate included in the Design Limits,
Seller shall allow such Dedicated Unit to operate with such higher ramp rate.
Section 6.2 DISPATCH; SCHEDULING FOR DELIVERY.
(a) After the Commercial Operation Date, Purchaser (or the Control
Center on behalf of Purchaser) may Dispatch each Dedicated Unit up to its Actual
Contract Capacity and, if on the Delivery Start Date, the Commercial Operation
Date for such Dedicated Unit has not occurred, Purchaser may request Replacement
Power in accordance with Appendix G.
(b) Prior to the first Day of each Month, Purchaser shall provide
to Seller good faith projections of the amounts of energy to be scheduled by
Purchaser from each Dedicated Units for each hour of such Month.
(c) Purchaser or the Control Center on behalf of Purchaser shall
inform Seller on a daily basis before 12:00 noon (Eastern Prevailing Time) of
the projected schedule for Dispatch for each Dedicated Unit for each hour of the
following Day. Purchaser or the Control Center on behalf of Purchaser shall be
entitled to change such schedule after 12:00 noon (Eastern Prevailing Time)
subject to the Design Limits and, to the extent not inconsistent with the Design
Limits, Prudent Industry Practices and manufacturers' guidelines and
recommendations generally applicable to such equipment.
(d) Consistent with the Design Limits and, to the extent not
inconsistent with the Design Limits, Prudent Industry Practices and
manufacturers' guidelines and recommendations generally applicable to similar
equipment of a Dedicated Unit, each Dedicated Unit shall promptly comply with
the Dispatch by Purchaser or the Control Center on behalf of Purchaser. The
Dedicated Units shall generate energy within deviation band limits of the
scheduled amount of energy provided by Purchaser (+/-1.5% integrated hourly)
for steady-state operation (operation between Minimum Load and the Actual
Contract Capacity). If a Dedicated Unit's energy generation deviates outside
of such band limits during steady-state operation, Seller shall reimburse
Purchaser for one-half of any energy imbalance charges or penalties charged
by Entergy or TVA pursuant to the applicable tariff upon Purchaser. Any
operation of any Dedicated Unit outside of the deviation band limits for
which Seller has reimbursed Purchaser in accordance with the preceding
sentence for a portion of any imbalance charge or penalty imposed under a
tariff by Entergy or TVA shall not count as a Forced Outage. If Entergy or
TVA charge Seller or Purchaser imbalance charges or penalties for operation
within the range of +/-1.5% of scheduled operation integrated hourly,
Purchaser shall be responsible for such charges or penalties. If the
Dedicated Units are operating in accordance with automatic generation control
signals provided by Purchaser or its designee, or if the Dedicated Units
generate energy outside of the deviation band limits during Start-Up, shut
down, or due to a Forced Outage, Force
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Majeure Event or Delivery Excuse, then Purchaser shall be responsible for such
energy imbalance charges or penalties charged by Entergy or TVA pursuant to the
applicable tariff upon either Purchaser or Seller. For purposes of this Section
6.2(d), there shall be deemed to be a Forced Outage only if Seller has provided
notice to Purchaser of such Forced Outage and such Forced Outage lasts for
longer than one hour. Purchaser shall, at any time, have the option of
terminating the provisions of this Section 6.2(d) with five Business Day's prior
written notice to Seller. Upon such termination, Seller shall no longer be
responsible for any imbalance charges or penalties. Purchaser's notice of
termination of this Section 6.2(d) shall be irrevocable and the provisions of
this Section 6.2(d) may not be reinstated once terminated by Purchaser in
accordance with this Section 6.2(d).
(e) In the event that the steam turbine of a Dedicated Unit is not
available, Purchaser shall have the right to Dispatch the gas turbine of such
Dedicated Unit; PROVIDED that: (i) such Dispatch shall be consistent with
manufacturers' guidelines, Governmental Approvals and Prudent Industry
Practices, (ii) Section XII shall not be applicable with respect to operation in
such mode, (iii) Purchaser shall reimburse Seller for any additional costs
associated with the Dispatch of the gas turbine in this mode instead of the
combined cycle mode on the basis of actual cost but shall not exceed 110% of
Seller's estimate of such additional costs, PROVIDED that Seller shall notify
Purchaser of the estimated amount of any such additional costs prior to any such
Dispatch by Purchaser, and (iv) such Dispatch shall be limited only to
extraordinary circumstances and shall not, in any event exceed 40 hours per
Contract Year.
Section 6.3 [NOT USED]
Section 6.4 FORCED OUTAGES. After the Commercial Operations Date,
Forced Outages shall be treated in accordance with Sections 4 and 5 of Appendix
G.
Section 6.5 ELECTRONIC COMMUNICATIONS.
(a) Seller shall provide telemetering equipment and facilities
capable of transmitting the following information with respect to each Dedicated
Unit to Purchaser and to the Control Center and shall operate such equipment
when requested by Purchaser:
(i) Standard Capacity;
(ii) Actual Contract Capacity;
(iii) Minimum Load;
(iv) Actual temperature and relative humidity (to be taken at
the gas turbine inlet but before the evaporator coolers),
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(v) Other information that shall be necessary for proper
operation on automatic generation control and
(vi) Instantaneous output at the Electricity Metering Points.
(b) Seller shall install a dedicated direct pick-up (automatic
ringdown) line to Purchaser and to the Control Center in the Facility's control
room or such other communication equipment as the Parties may agree.
(c) Seller shall install a facsimile machine in the Facility's
control room.
SECTION VII
INTERCONNECTION; ANCILLARY SERVICES; ETC.
Section 7.1 INTERCONNECTION FACILITIES. Seller shall operate,
maintain and control during the Term at its sole cost and expense all
Interconnection Facilities located on the Facility Site up to, but not
including, the Interconnection Points. Purchaser shall be responsible to secure
any transmission rights past the Interconnection Points, and the effectiveness
of this Agreement shall not be contingent upon Purchaser's securing transmission
service with TVA, Entergy or any other transmitting utility or upon the
availability of transmission capacity at specific delivery or receipt points
selected by Purchaser downstream of the Interconnection Points.
Section 7.2 INTERCONNECTION POINTS. Seller shall deliver Net
Electrical Output Dispatched hereunder to Purchaser at the Interconnection
Points. Seller shall deliver all Replacement Energy to the Replacement Power
Delivery Points. Seller shall have the responsibility, at its expense, to
deliver the Net Electrical Output from the Electricity Metering Points to the
Interconnection Points.
Section 7.3 [NOT USED]
Section 7.4 ADDITIONAL AGREEMENTS.
(a) Seller shall exercise Commercially Reasonable Efforts to
execute the Interconnection Agreements on or before January 1, 1999 (PROVIDED
that such date shall be extended on a Day-to-Day basis for any delay that
results from a Force Majeure Event or a Delivery Excuse). Each Interconnection
Agreement shall include provisions with respect to (i) the interconnection of
the Facility in a timely manner with the transmission system of the utility that
is party thereto, including the upgrade of such transmission system as necessary
(in the reasonable judgment of the utility party to such Interconnection
Agreement) to receive power at
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the relevant Interconnection Points and excluding any transmission system
upgrades that may be required as a result of any transmission path designated by
Purchaser and (ii) communications and control interfaces between the Facility
and the control center of the utility party thereto. Seller shall not be
required to incur obligations that are inconsistent with the terms of any other
Related Agreement. Seller shall provide Purchaser with the interim and final
drafts of each Interconnection Agreements for Purchaser's review. Purchaser
shall reasonably cooperate with Seller and provide information as reasonably
requested by Seller in connection with the negotiation and performance of each
Interconnection Agreement. Purchaser may terminate this Agreement in the event
that Seller does not execute both Interconnection Agreements on or before
January 1, 1999 (PROVIDED that such date shall be extended on a Day-to-Day basis
for any delay that results from a Force Majeure Event or a Delivery Excuse). In
order to exercise this termination right, Purchaser must provide written notice
of termination to Seller within 10 Days after January 1, 1999 or the date to
which such date is extended as a result of a Force Majeure Event or Delivery
Excuse. In addition to the foregoing, Seller shall exercise good faith efforts
to make Purchaser a third party beneficiary of the Interconnection Agreements.
Seller agrees that Purchaser shall either be an express third party beneficiary
of such Interconnection Agreements or, if permitted under such agreement, shall
be assigned rights thereunder by Seller, such assignment to be subject to any
required consent of third parties. In the event of termination of this Agreement
by Purchaser, then at Purchaser's election, Seller shall assign such
Interconnection Agreements to Purchaser, subject to any required consent of
third parties and Purchaser shall pay to Seller an amount equal to the fair
market value of such Interconnection Agreements at the time of such assignment.
(b) Purchaser shall be responsible for obtaining and paying for
the provision of transmission services and any ancillary or control area
services required by the FERC, Entergy, TVA, the ISO or any other transmission
utility with respect to the delivery and transmission of electric energy past
the Interconnection Points. Purchaser may obtain such services pursuant to
tariffs filed with the FERC by the relevant Person or by separately contracting
with such Person. Upon request by Seller, Purchaser shall provide to Seller for
Seller's review all drafts and final versions of agreements with TVA or Entergy
for transmission services or ancillary or control area services that have a term
of longer than one year. All such agreements (whether or not such agreements
have a term of longer than one year) shall be consistent with the terms of the
Related Agreements. Seller shall reasonably cooperate with Purchaser and provide
information as reasonably requested by Purchaser in connection with the
negotiation and performance of each agreement for the provision of transmission
services and ancillary or control area services. In addition, Purchaser shall
exercise good faith efforts to make Seller a third party beneficiary of any such
agreements having a term of longer than one year. Purchaser agrees that Seller
shall either be an express third party beneficiary of such agreements having a
term of longer than one year or, if permitted under such agreements, shall be
assigned rights thereunder by Purchaser, such assignment to be subject to any
required consent of third parties. In the event of termination of this Agreement
by Seller or if Purchaser does not extend
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the Initial Term pursuant to Section 2.2, then at Seller's election, Purchaser
shall assign such agreements to Seller, subject to any required consent of third
parties and Seller shall pay to Purchaser an amount equal to the fair market
value of such agreements at the time of such assignment.
SECTION VIII
FUEL ARRANGEMENTS
Section 8.1 LATERAL PIPELINE.
(a) At no cost to Purchaser, Seller shall (i) obtain, or cause to
be obtained, all Governmental Approvals for the ownership, construction,
operation and maintenance of the Lateral Pipeline; (ii) construct, or cause to
be constructed, the Lateral Pipeline in a timely manner, in accordance with
applicable Law, Government Approvals and prudent operating practices and with a
capacity sufficient to deliver Fuel to operate the entire Facility at its hourly
maximum output level in accordance with this Agreement and applicable
Governmental Approvals; and (iii) operate and maintain, or cause to be operated
and maintained, the Lateral Pipeline in accordance with applicable Law,
Government Approvals and prudent operating practices generally applied to
similar facilities.
(b) Purchaser agrees that the Lateral Pipeline may be owned by a
third party that shall directly contract with one or more other Persons for the
construction, operation and maintenance of the Lateral Pipeline.
(c) Seller shall reserve transportation rights (either through
ownership or through contract with a third party owner) on the Lateral Pipeline
sufficient for the delivery of Fuel to operate the entire Facility at its hourly
maximum output level in accordance with this Agreement and applicable
Governmental Approvals, with no Person having a right to transport fuel on the
Lateral Pipeline superior to Seller except as may be required by applicable Law
or Government Approvals.
Section 8.2 FUEL FOR COMMISSIONING AND TESTING PRIOR TO THE
COMMERCIAL OPERATION DATE. Seller shall have the right, but not the obligation,
to require that Purchaser provide Fuel to Seller during the commissioning of
each Dedicated Unit. Seller shall notify Purchaser no later than 10 Days prior
to the date on which the Contract Capacity of a Dedicated Unit is scheduled to
be determined of its request for Fuel and shall provide to Purchaser details of
the amount of Fuel to be delivered, the time of delivery and the Fuel Metering
Point to which such Fuel shall be delivered. Upon receipt of such notice from
Seller, Purchaser shall deliver Fuel as specified in Seller's notice. Seller
shall reimburse Purchaser for the Delivered Cost of
-31-
any Fuel delivered by Purchaser and used by Seller during commissioning of such
Dedicated Unit. Seller also shall reimburse Purchaser for any penalties
(including those resulting from imbalances) actually incurred by Purchaser
during commissioning of such Dedicated Unit. The Parties shall exercise
Commercially Reasonable Efforts to minimize any imbalance or other penalties or
charges from Fuel suppliers and transporters resulting from the provisions of
Fuel by Purchaser pursuant to this Section 8.2.
Section 8.3 FUEL FOR OPERATIONS; DELIVERY AND ACCEPTANCE.
(a) With respect to agreements for the supply of Fuel with
Interstate Pipelines having a term of longer than one year, Purchaser shall
exercise good faith efforts to negotiate such agreements to contain the
following provisions (but only to the extent that the inclusion of such
provisions does not result in increased costs to Purchaser): (i) conform to the
quality of gas supplied or transported as much as possible to the gas quality
specification applicable in the performance warranty obtained from the
manufacturer of the gas turbines included in each Dedicated Unit, (ii) the right
to reject Non-Conforming Fuel, (iii) the gas transporter shall indemnify Seller
for any damages incurred from the use of Non-Conforming Fuel and (iv) Seller to
be a third party beneficiary of such agreements. Purchaser agrees that Seller
shall either be an express third party beneficiary of such agreements or if
permitted under such agreement, shall be assigned rights thereunder by
Purchaser, such assignment to be subject to any required consent of third
parties. In the event of termination of this Agreement by Seller or if Purchaser
does not extend the Initial Term pursuant to Section 2.2, then at Seller's
election, Purchaser shall assign such agreements to Seller, subject to any
required consent of third parties and Seller shall pay to Purchaser an amount
equal to the fair market value of such agreements at the time of such
assignment.
(b) On and after the Commercial Operation Date of a Dedicated
Unit, Purchaser shall at all times arrange, procure, supply, nominate, balance,
transport and deliver to the Lateral Pipeline, the amount of Fuel necessary for
such Dedicated Unit to generate its Net Electrical Output as produced pursuant
to the Dispatch of such Dedicated Unit. All Fuel required to be delivered under
this Agreement shall be delivered by Purchaser at the Fuel Metering Points.
Subject to Section 8.5(b) and PROVIDED that the Dedicated Unit as to which Fuel
is delivered is being Dispatched and is not subject to a Forced Outage, a
Scheduled Maintenance Outage, a Force Majeure Event or a Delivery Excuse, on and
after the Commercial Operation Date of such Dedicated Unit, Seller shall accept
all Fuel required by such Dedicated Unit delivered by Purchaser at the Fuel
Metering Points pursuant to the terms of this Agreement. After the Commercial
Operation Date of a Dedicated Unit, Purchaser shall be responsible for the cost
of Fuel and all other costs associated with the supply and transportation
accepted by Seller at the Fuel Metering Points. Seller shall be responsible for
coordinating the use of the Lateral Pipeline by Purchaser, any Person purchasing
energy from Units other than the Dedicated Units, if any, the City of Batesville
and any other applicable Person.
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Section 8.4 RISK OF LOSS. As between the Parties, Purchaser shall
be deemed to be in exclusive control (and responsible for any property damages
or injuries to persons caused thereby) of the Fuel prior to the Fuel Metering
Points and Seller shall be deemed to be in exclusive control (and responsible
for any property damages or injuries to persons caused thereby) of the Fuel at
and from the Fuel Metering Points. Risk of loss related to the Fuel shall
transfer from Purchaser to Seller at the Fuel Metering Points. In any Month, if
(i) the quantity of Fuel delivered and measured at the Fuel Metering Points for
such Month that is allocated to Purchaser exceeds (ii) the quantity of Fuel
burned in all the Dedicated Units during such Month, Seller shall either obtain
additional Fuel equal to the difference between (i) and (ii) at its expense or
reimburse Purchaser for such difference at the average Delivered Cost of Fuel
for such Month.
Section 8.5 MEASUREMENT AND QUALITY OF FUEL.
(a) All Fuel to be supplied by Purchaser pursuant to the terms of
this Agreement shall be measured at the Fuel Metering Points and shall meet the
specifications for gas delivered to the relevant Interstate Pipeline as such
specifications may be amended in accordance with Section 8.3(a). Purchaser shall
use good faith efforts to ensure that all Fuel delivered hereunder meets such
specifications.
(b) Seller shall notify Purchaser if any Fuel made available by
Purchaser to Seller under this Agreement is Non-Conforming Fuel. Seller may
refuse to accept delivery of such Non-Conforming Fuel and such Non-Conforming
Fuel shall, for purposes of this Agreement, be deemed not to have been provided
by Purchaser.
Section 8.6 FUEL OIL ALTERNATIVE. If, after the Effective Date,
the operation of the Facility becomes economically infeasible due to the cost or
availability of Fuel, but operation of the Facility on fuel oil would present an
economically viable alternative, then Purchaser shall have the option to require
Seller to construct the necessary modifications to the Facility to facilitate
operation of the Dedicated Units on fuel oil; PROVIDED that in such a case,
Purchaser shall hold Seller harmless from all capital and incremental operation
and maintenance costs and performance impacts resulting from such modifications;
and PROVIDED, FURTHER, that any such modifications shall be made in accordance
with, and subject to, (i) Prudent Industry Practices, (ii) Governmental
Approvals and (iii) manufacturers' warranties and recommendations.
Notwithstanding the foregoing, Seller shall not be required to incorporate the
capability for fuel oil operation in the original design or construction of the
Facility. Seller shall designate and set aside an appropriate area within the
Facility Site for fuel oil storage unloading and handling sufficient to operate
each Dedicated Unit at the Committed Capacity for no less than 24 hours;
PROVIDED that Seller shall attempt to designate such area in such a way as to
maximize Seller's capacity to store fuel oil at the Facility Site.
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SECTION IX
METERING
Section 9.1 METERING DEVICES FOR ELECTRICITY.
(a) The Net Electrical Output shall be measured by Seller's
electricity metering devices located at the high side of the Dedicated Units'
step-up transformer on Seller's side of the Interconnection Points (the
"ELECTRICITY METERING POINTS"). Seller shall be responsible for the ownership,
operation, maintenance and control of all of Seller's electricity metering
equipment at its sole cost and expense.
(b) The number and general location of Seller's electricity
metering devices shall be as set forth in Appendix C. All of Seller's
electricity metering devices shall be sealed, and the seal shall be broken only
when representatives of both Parties are present for the purpose of inspecting,
testing and adjusting such electricity metering devices in accordance with
Sections 9.3 and 9.4.
(c) Subject to the approval of Seller, not to be unreasonably
withheld, Purchaser may install and maintain, at its own cost and expense, as
part of the Facility, Purchaser's back-up electricity metering devices, using
the same current and potential transformers as those used for Seller's
electricity metering devices.
(d) All meters required pursuant to this Agreement to measure Net
Electrical Output shall be equipped and capable of telemetering data to
Purchaser.
Section 9.2 METERING DEVICES FOR FUEL.
(a) The Fuel delivered by Purchaser in accordance with the terms
of this Agreement shall be measured by Seller's metering devices at the Fuel
Metering Points. Seller shall be responsible for the ownership, operation,
maintenance and control of all of Seller's Fuel metering equipment at its sole
cost and expense.
(b) The number and general location of Seller's Fuel metering
devices shall be as set forth in Appendix C. All of Seller's Fuel metering
devices shall be sealed, and the seal shall be broken only when representatives
of both Parties are present for the purpose of inspecting, testing and adjusting
such metering devices.
(d) All meters required pursuant to this Agreement to measure Fuel
shall be capable of telemetering data to Purchaser.
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Section 9.3 INSPECTION OF METERING DEVICES
(a) Seller shall inspect, test and adjust all of Seller's metering
devices at its own expense on an annual basis at a time mutually convenient to
Purchaser and Seller. Seller shall provide Purchaser with reasonable advance
notice of, and permit a representative of Purchaser to witness and verify, such
inspections, tests and adjustments, and shall test any adjustments to be made
thereto in accordance with Sections 9.3(c) and 9.4.
(b) In addition to the other inspections and tests required under
Section 9.3(a), upon two weeks' prior written notice by Purchaser, Seller shall
perform additional inspections or tests of any of Seller's metering devices and
Seller's back-up metering devices. Seller and Purchaser shall agree on a
mutually convenient time for such inspections or tests, and Seller shall permit
a qualified representative of Purchaser to inspect or witness such testing of
any of Seller's metering devices and Seller's back-up metering devices. The
actual expense of any such requested additional inspection or testing shall be
borne by Purchaser unless, upon such inspection or testing, Seller's metering
devices are found to register inaccurately by more than +/-0.5% in the case of
electricity meters and +/-2% in the case of gas meters, in which event the
expense of the requested additional inspection or testing shall be borne by
Seller.
(c) If any of Seller's metering devices or Seller's back-up
metering devices are found to be defective or inaccurate by more than +/-0.5%
in the case of electricity meters and +/-2% in the case of gas meters, such
meter shall immediately be adjusted, repaired, replaced and/or re-calibrated.
Section 9.4 ADJUSTMENTS FOR INACCURATE MEASUREMENTS. If any of
Seller's metering devices fail to register, or if the measurements made by any
of such metering devices are found upon testing to be inaccurate by more than
+/-0.5% in the case of electricity meters and +/-2% in the case of gas meters,
an adjustment to previous xxxxxxxx shall be made correcting all measurements by
the inaccurate or defective metering device for billing purposes, for both the
amount of the inaccuracy and the period of the inaccuracy, in the following
manner:
(a) In the event that the Parties cannot agree on the amount of
the adjustment necessary to correct the measurements made by any of Seller's
metering devices which are inaccurate or defective, the Parties shall use
Purchaser's back-up metering devices (if installed) to determine the amount of
such inaccuracy, PROVIDED that in the event that Purchaser's back-up metering
devices are also found, upon testing, to be inaccurate by more than the
allowable limits applicable to Seller's metering devices under this Section 9.4,
and the Parties cannot agree on the amount of the adjustment necessary to
correct the measurements made by such inaccurate or defective Purchaser's
back-up metering devices, the Parties shall, as soon as practicable and on the
basis of procedures to be mutually agreed by the Parties, estimate the amount of
the necessary adjustment on the basis of deliveries of the Net Electrical Output
of the Dedicated
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Units to the Entergy System and the TVA System during periods of similar
operating conditions (e.g., based on the Fuel use records for the Dedicated
Units) when Seller's metering devices were registering accurately;
(b) In the event that the Parties cannot agree on the actual
period during which the inaccurate measurements were made, the period during
which the measurements are to be adjusted shall be the shorter of (i) one half
of the period from the last test of the relevant metering devices, and (ii) the
180 Days immediately preceding the test that found the relevant metering devices
to be defective or inaccurate; and
(c) To the extent that the adjustment period covers a period of
deliveries for which payment has already been made by Purchaser, Seller shall
use the corrected measurements as determined in accordance with this Section 9.4
to re-compute the amount due for the period of the inaccuracy and shall subtract
the previous payments by Purchaser for such period from such re-computed amount.
If the difference is a positive number, such difference shall be paid by
Purchaser to Seller and if the difference is a negative number, such difference
shall be paid by Seller to Purchaser. Payment of such difference shall be made
by means of a credit or an additional charge on the next statement rendered
pursuant to Section 13.1(a).
(d) For Fuel, the adjustment will be based on gas quantities
specified on statements from ANR and/or Tennessee Gas.
SECTION X
PAYMENTS
Section 10.1 RESERVATION PAYMENTS.
(a) Except as otherwise expressly provided herein, for each
Billing Period commencing on the earlier of the Commercial Operation Date and
the Delivery Start Date, Purchaser shall pay Seller a Reservation Payment for
the Contract Capacity of each Dedicated Unit made available to Purchaser, for
Replacement Capacity made available to Purchaser by Seller pursuant to Section 2
of Appendix G, or for Replacement Capacity provided in accordance with Section 4
of Appendix G, during such Billing Period; PROVIDED that if the Commercial
Operation Date or the Delivery Start Date (as applicable) occurs on a date that
does not fall on the first Day of a Month, then the Reservation Payment for that
Month shall be prorated by the number of actual Days in such Month.
(b) The Reservation Payment for each Dedicated Unit (or
Replacement Capacity provided in lieu of Contract Capacity) for each Billing
Period shall be calculated in accordance with the following formula:
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RP = [(ST x RCST) + (SU x RCSU)] x AAF
Where:
RP = the Reservation Payment expressed in Dollars for
such Billing Period
ST = the Summer Condition Standard Capacity expressed
in KW
RCST = the Standard Capacity Reservation Charge expressed
in Dollars per KW per Month for the applicable Contract Year, as set out in the
table in Section 10.2
SU = the Summer Condition Supplemental Capacity
expressed in KW
RCSU = the Supplemental Capacity Reservation Charge
expressed in Dollars for the applicable Contract Year, as set out in the table
in Section 10.2
AAF = the Availability Adjustment Factor.
Section 10.2 RESERVATION CHARGES. Reservation Charges for Standard
Capacity and Supplemental Capacity (or Replacement Capacity provided in lieu of
Contract Capacity) for each Contract Year specified below shall be as follows
(PROVIDED that if the Commercial Operation Date of a Dedicated Unit occurs prior
to the Delivery Start Date, the Reservation Charge for such Dedicated Unit until
the Delivery Start Date shall be $4.00/KW per Month for Standard Capacity and
$0.0 for Supplemental Capacity; and PROVIDED, FURTHER, that Reservation Charges
after the Initial Term shall only be applicable if Purchaser elects to extend
the Term in accordance with Section 2.2):
CONTRACT YEAR STANDARD CAPACITY SUPPLEMENTAL CAPACITY
RESERVATION CHARGE RESERVATION CHARGE
($/KW-MONTH) ($/KW-MONTH)
1 - 5 5.00 3.25
6 - 10 6.00 3.50
11 - 25 4.50 3.00
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Section 10.3 ENERGY PAYMENTS. Except as expressly provided herein,
for each Billing Period commencing on the Commercial Operation Date, Purchaser
shall pay to Seller an Energy Payment for Net Electrical Output and for
Replacement Energy delivered by Seller to Purchaser, in an amount equal to $1.00
per MWh, escalated by three percent (3%) per year for each calendar year
thereafter (prorated for the partial year in which the Commercial Operation Date
occurs).
Section 10.4 START PAYMENTS. In the event the number of Starts for
any Dedicated Unit exceeds 250 per Contract Year, Purchaser shall pay Seller a
payment equal to $5,000 per Start for such Dedicated Unit, multiplied by the
number of Starts for such Dedicated Unit over 250 (a "START PAYMENT"); PROVIDED
that such payment for additional Starts shall be made by Purchaser on a Monthly
basis for all such additional Starts occurring in a Billing Period. Starts of a
Dedicated Unit not meeting the definition of a Start and starts for Seller
requested tests shall not count toward the 250 Starts allowed without cost to
Purchaser set forth in this Section 10.4 and shall not result in any payment
obligation to Purchaser.
Section 10.5 SYSTEM UPGRADE CREDIT. For each Billing Period,
commencing on the Commercial Operation Date, Purchaser shall pay to Seller a
System Upgrade Credit determined in accordance with this Section 10.5. The
System Upgrade Credit for any period shall be equal to the amount of payment,
credit or discount received by Purchaser under its transmission service
agreements with Entergy and TVA (or their respective successors), to the extent
attributable to Seller's payment for system upgrades under its Entergy
Interconnection Agreement or TVA Interconnection Agreement, as applicable. The
Parties shall cooperate to insure that the payment, credit or discount for
Seller's system upgrade is separately stated in any invoice or statement
provided to Purchaser under its applicable transmission service agreements with
Entergy and TVA. The provisions of this Section 10.5 shall apply only to the
extent that the payment, credit or discount received by Purchaser under its
applicable transmission service agreements results from a "true" discount under
such transmission service agreements as compared with the transmission service
tariff otherwise applicable to Purchaser.
Section 10.6 START-UP PAYMENTS. If any Dedicated Unit does not, in
respect of a Dispatch order, achieve Start-Up, or achieves Start-Up but then
trips and requires an additional Start-Up to carry out the Dispatch order
(unless delivery of energy is delayed, terminated or reduced by Purchaser, a
Dispatch order, a Force Majeure Event or a Delivery Excuse), then Seller shall
be responsible for the cost of Fuel associated with such additional or failed
Start-Up, as the case may be.
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SECTION XI
COMMISSIONING AND TESTING
Section 11.1 PERFORMANCE TESTS.
(a) Prior to or on the Commercial Operation Date of a Dedicated
Unit, Seller shall establish the Contract Capacity for such Dedicated Unit in
accordance with the procedures set forth in Appendix B. Each Dedicated Unit
shall thereafter be tested during each Contract Year in accordance with the
procedures set forth in Appendix B to demonstrate its Contract Capacity. Seller
shall provide Purchaser with reasonable notice of, and opportunity to, attend
each test of Contract Capacity. Seller shall bear the costs and expenses of such
annual tests, PROVIDED that Purchaser shall be responsible for any costs or
expenses incurred by it in connection with monitoring or witnessing such tests.
(b) No more than four times in any calendar year, Seller shall
have the right to redetermine the Contract Capacity of a Dedicated Unit at any
time upon 24 hours' prior written notice to Purchaser if Seller reasonably
believes that the Contract Capacity for such Dedicated Unit is materially
different from the results of the most recent test of Contract Capacity. The
Contract Capacity redetermined in the manner set forth in Appendix B shall
automatically and immediately become the new Contract Capacity. Seller shall
bear the costs and expenses of any test required under this Section 11.1(b);
PROVIDED that Purchaser shall be responsible for any costs and expenses incurred
by it in connection with monitoring or witnessing such test.
(c) After the Commercial Operation Date, Purchaser or the Control
Center's Dispatch of a Dedicated Unit may interrupt or prohibit any testing of
such Dedicated Unit; PROVIDED that, in the event of a test of Contract Capacity
that is interrupted or prohibited by Dispatch, Seller may retest the Dedicated
Unit within 10 Days thereafter and the Contract Capacity, as determined by such
subsequent test, shall apply from the date when the interrupted or prohibited
test would have been completed but for the Dispatch interruption. The Facility
shall be operated using normal operating procedures during all tests and all
test results shall be adjusted to 95 degrees Fahrenheit and 60% relative
humidity pursuant to Appendix B.
(d) No more than once in any Peak Season, Purchaser shall have the
right to require a redetermination of the Contract Capacity of a Dedicated Unit
upon five Business Days' prior written notice to Seller if Purchaser reasonably
believes that the Contract Capacity for such Dedicated Unit is materially
different from the results of the most recent test of Contract Capacity. The
Contract Capacity redetermined in the manner set forth in Appendix B shall
automatically and immediately become the new Contract Capacity subject to this
Section 11.1. Purchaser shall be responsible for any costs and expenses incurred
by it in connection with
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monitoring or witnessing any tests required by it under this Section 11.1(d).
Notwithstanding any provision of this Agreement to the contrary, (i) Purchaser
shall (1) provide the Fuel necessary to conduct the tests required by Purchaser
under this Section 11.1(d) and (2) accept the electricity generated as a result
of such tests and (ii) neither Party shall have any obligations under Section
11.2 with respect to such test energy.
(e) All tests shall be conducted in accordance with Appendix B.
Section 11.2 SALE OF TEST ENERGY. Subject to Section 11.1(d),
Purchaser shall act as Seller's agent for the purpose of marketing and selling
energy which may be produced as a result of the initial testing of a Dedicated
Unit or during performance testing in accordance with Section 11.1 ("TEST
ENERGY"). Should Purchaser market and sell Test Energy, Purchaser shall (i)
provide and pay for Fuel to generate such Test Energy in accordance with Section
8; PROVIDED that Seller shall reimburse Purchaser for the Delivered Cost of such
Fuel and (ii) pay Seller any amount received by Purchaser from its sale of Test
Energy, net of any reasonable costs directly related to the sale of Test Energy
and a marketing fee of $1.00/MWh of Test Energy sold. Purchaser shall use
Commercially Reasonable Efforts to maximize the revenue obtained from marketing
and selling test energy pursuant to this Section 11.2.
SECTION XII
HEAT RATE GUARANTEE
Section 12.1 GUARANTEED HEAT RATE. The fuel consumed for each
Dedicated Unit shall be measured against the Guaranteed Heat Rate pursuant to
Appendix H.
Section 12.2 TRACKING ACCOUNT.
(a) A tracking account (the "TRACKING ACCOUNT") shall be
maintained by Seller to track, for each Dedicated Unit for each Day: (i) the
actual amount of Fuel required to produce the Net Electrical Output when such
Dedicated Unit is Dispatched at or above Minimum Load and delivered by Seller
for that Day and (ii) the amount of Fuel expected to be required to produce the
Net Electrical Output when such Dedicated Unit is Dispatched at or above Minimum
Load and delivered by Seller for that Day based on the Guaranteed Heat Rate. If
the actual amount of Fuel required to produce such Net Electrical Output for
such Day varies from the expected amount of Fuel required to produce such Net
Electrical Output based on the Guaranteed Heat Rate (using the Guaranteed Heat
Rate value associated with the Dispatch level), then a balance shall accrue in
the Tracking Account for such Day in the following manner:
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(i) If the actual amount of Fuel required to produce such Net
Electrical Output for such Dedicated Unit on such Day is greater than the
expected amount required based on the Guaranteed Heat Rate (using the
Guaranteed Heat Rate value associated with the Dispatch level), then a
positive amount equal to the differential Fuel (expressed in MMBTU),
multiplied by the Delivered Cost of Fuel (expressed in $/MMBTU), for such
Day shall accrue to the Tracking Account for such Day.
(ii) If the actual amount of Fuel required to produce such
Net Electrical Output for such Dedicated Unit on such Day is less than the
expected amount required based on the Guaranteed Heat Rate (using the
Guaranteed Heat Rate value associated with the Dispatch level), then a
negative amount equal to the differential Fuel (expressed in MMBTU)
multiplied by the Delivered Cost of Fuel (expressed in $/MMBTU) for such Day
shall accrue to the Tracking Account for such Day.
(b) At the end of each Month, the Tracking Account for each
Dedicated Unit shall be cleared and (i) if the Tracking Account balance is
positive, Seller shall pay Purchaser such amount, whereas (ii) if the Tracking
Account balance is negative, Purchaser shall pay Seller such amount.
(c) There shall be no tracking account adjustment for the Net
Electrical Output of a Dedicated Unit operating below Minimum Load during a
successful Start-Up or shut down.
SECTION XIII
BILLING AND PAYMENT
Section 13.1 BILLING AND PAYMENT.
(a) Seller shall read Seller's metering equipment at the
Interconnection Points at midnight (24:00 hours) (Eastern Prevailing Time) on
the last Day of each Month, unless otherwise mutually agreed by the Parties.
Seller shall prepare and render to Purchaser within five Business Days after the
end of each Billing Period a statement detailing the meter reading (in half-hour
readings) and Seller's calculation of the payments due to Seller for such
Billing Period; PROVIDED that Purchaser, at its own cost and expense, shall have
the right to monitor and witness such readings.
(b) Payment for the Reservation Payment, Energy Payment, Start
Payment and any Tracking Account balance owed by Purchaser for each Billing
Period shall be made by wire transfer of funds immediately available in an
account designated by Seller within 10 Days
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from the date of delivery of a statement for such Billing Period. Payment for
any Tracking Account Balance owed by Seller to Purchaser for each Billing Period
shall be made by wire transfer of funds immediately available in an account
designated by Purchaser within 10 Days from the date of delivery of a statement
for such Billing Period.
(c) If either Party disputes the accuracy of a xxxx, the
Parties shall use their best efforts to resolve the dispute in accordance with
Section 20.1. Any adjustments which the Parties may subsequently agree to make
with respect to any such billing dispute shall be made by a credit or additional
charge on the next xxxx rendered. If the Parties are unable to resolve the
dispute in this manner, any amounts disputed on subsequent bills for the same
reason may thereafter be withheld pending final resolution of the dispute in
accordance with Section 20.2, PROVIDED that any undisputed amount shall be
promptly paid; and PROVIDED, FURTHER, that amounts paid as a result of the
settlement of a dispute shall be paid with interest thereon at the Default Rate.
Section 13.2 OTHER PAYMENTS. Subject to the Parties' right to
review payments made hereunder, any amounts, other than those specified in
Sections 13.1, due to either Party under this Agreement shall be paid or
objected to within 10 Days following receipt by the other Party of an itemized
invoice from the Party to whom such amounts are due setting forth, in reasonable
detail, the basis for such payment. Payments made hereunder shall, for a period
of not longer than one year, remain subject to adjustment based on billing
adjustments by third parties which would affect payment obligations of either
Party.
Section 13.3 [NOT USED]
Section 13.4 CURRENCY AND TIMING OF PAYMENT. Notwithstanding
anything contained in this Agreement, (i) all payments to be made by either
Party under this Agreement shall be made in Dollars by wire transfer of funds
immediately available in an account of the Party making such payment and (ii)
any payment that becomes due and payable on a Day that is other than a Business
Day shall be paid in accordance with Section 1.2(i).
Section 13.5 RECORDS. Either Party shall have the right, upon
reasonable prior written notice to the other Party, to examine and/or make
copies of the records and data of the other Party relating to this Agreement
(including all records and data relating to or substantiating any charges paid
by or to either Party and including without limitation metering records of Fuel
delivered at the Fuel Metering Points, Fuel consumed, Delivered Cost of Fuel,
and MWh's generated) at any time during normal business hours during the period
such records and data are required to be maintained. All such records and data
shall be maintained for a minimum of seven years after the creation of such
record or data and for any additional time period required under applicable law
or by regulatory agencies having jurisdiction over the Parties.
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Section 13.6 DEFAULT INTEREST. If any payment due from either
Party under this Agreement shall not be paid when due there shall be due and
payable to the other Party compensation thereon, calculated at a rate equal to
two percent (2%) over the prime rate at The Chase Manhattan Bank or its
successor (the "DEFAULT RATE"), as it changes from time to time from the date on
which such payment became overdue to and until such payment is paid in full.
SECTION XIV
REPRESENTATIONS AND WARRANTIES;
ADDITIONAL COVENANTS OF SELLER AND PURCHASER
Section 14.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Purchaser as of the Effective Date as follows:
(a) Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the state of Delaware and is
qualified and in good standing in each other jurisdiction where the failure so
to qualify would have a material adverse effect upon the business or financial
condition of Seller or the Facility, and Seller has all requisite power and
authority to conduct its business, to own its properties and to execute, deliver
and perform its obligations under this Agreement.
(b) The execution, delivery, and performance of its obligations
under this Agreement by Seller have been duly authorized by all necessary
partnership action, and do not and shall not:
(i) as to execution and delivery but not performance, require
any consent or approval of Seller's partners which has not been obtained and
each such consent and approval that has been obtained is in full force and
effect,
(ii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination, or award having
applicability to Seller or any provision of the partnership documents of
Seller, the violation of which could reasonably be expected to have a
material adverse effect on the ability of Seller to perform its obligations
under this Agreement;
(iii) result in a breach of or constitute a default under any
provision of the partnership documents of Seller,
(iv) result in a breach of or constitute a default under any
agreement relating to the management or affairs of Seller or any indenture
or loan or credit agreement or
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any other agreement, lease, or instrument to which Seller is a party or by
which Seller or its properties or assets may be bound or affected, the
breach or default of which could reasonably be expected to have an adverse
effect on the ability of Seller to perform its obligations under this
Agreement, or
(v) results in, or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature (other than as may be contemplated by this
Agreement) upon or with respect to any of the assets or properties of Seller
now owned or hereafter acquired, the creation or imposition of which could
reasonably be expected to have a material adverse effect on the ability of
Seller to perform its obligations under this Agreement.
(c) This Agreement constitutes a legal, valid and binding
obligation of Seller and is enforceable against Seller in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of this Agreement is
subject to the application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
(d) There is no pending or, to the best of Seller's knowledge,
threatened action or proceeding affecting Seller before any court, Governmental
Agency or arbitrator that could reasonably be expected to materially and
adversely affect the financial condition or operations of Seller or the ability
of Seller to perform its obligations hereunder, or that purports to affect the
legality, validity or enforceability of this Agreement.
Section 14.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as of the Effective Date as follows:
(a) Purchaser is a public service corporation duly organized and
validly existing under the laws of Virginia and has the full legal right, power
and authority to conduct its business, to own its properties and to execute,
deliver and perform its obligations under this Agreement.
(b) The execution, delivery, and performance of its obligations
under this Agreement by Purchaser have been duly authorized by all necessary
corporate action, and do not and shall not:
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(i) as to execution and delivery, but not performance,
require any consent or approval of Purchaser's board of directors or any
Purchaser member which has not been obtained and each such consent and
approval that has been obtained is in full force and effect,
(ii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination, or award having
applicability to Purchaser, the violation of which could reasonably be
expected to have a material adverse effect on the ability of Purchaser to
perform its obligations under this Agreement,
(iii) result in a breach of or constitute a default under any
provision of the articles of incorporation or by-laws of Purchaser,
(iv) result in a breach of or constitute a default under any
agreement relating to the management or affairs of Purchaser or any
indenture or loan or credit agreement or any other agreement, lease, or
instrument to which Purchaser is a party or by which Purchaser or its
properties or assets may be bound or affected, the breach or default of
which could reasonably be expected to have a material adverse effect on the
ability of Purchaser to perform its obligations under this Agreement, or
(v) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature (other than as may be contemplated by this
Agreement) upon or with respect to any of the assets or properties of
Purchaser now owned or hereafter acquired, the creation or imposition of
which could reasonably be expected to have a material adverse effect on the
ability of Purchaser to perform its obligations under this Agreement.
(c) This Agreement constitutes a legal, valid and binding
obligation of Purchaser and is enforceable against Purchaser in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of this Agreement is
subject to the application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
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(d) There is no pending or, to the best of Purchaser's knowledge,
threatened action or proceeding affecting Purchaser before any court,
Governmental Agency or arbitrator that could reasonably be expected to
materially and adversely affect the financial condition or operations of
Purchaser or the ability of Purchaser to perform its obligations hereunder, or
that purports to affect the legality, validity or enforceability of this
Agreement.
Section 14.3 CERTIFICATES. Each of Purchaser and Seller shall,
upon the request of the other Party, deliver or cause to be delivered from time
to time to the other Party certifications of its officers, accountants,
engineers or agents as to such matters as either Party may reasonably request in
connection with such Parties' obligations under this Agreement.
Section 14.4 BOOKS AND RECORDS; INFORMATION. Each of Purchaser and
Seller shall keep proper books of record and account, in which full and correct
entries shall be made of all dealings or transactions of or in relation to its
business and affairs in accordance with generally accepted accounting principles
consistently applied.
SECTION XV
TAXES
Section 15.1 TAXES AND FEES.
(a) Seller shall be responsible for the payment of, and the
Reservation Payments, Energy Payments and other amounts payable by Purchaser to
Seller hereunder shall not be subject to adjustment for, Taxes (other than
Change-in-Law Taxes) imposed on Seller and its property. Purchaser shall be
responsible for the payment of, and no amount payable by Seller to Purchaser
shall be subject to adjustment for, Taxes imposed on Purchaser and its property.
In addition, Purchaser shall be responsible for the payment of any Change-in-Law
Taxes imposed on Seller. Seller shall determine for any Billing Period the
adjustment to any payment under Section 13.1 resulting from the application of a
Change-in-Law Tax for such period, and shall provide to Purchaser a certificate
setting forth in reasonable detail the basis and calculation of such adjustment.
In the case of any Change-in-Law Taxes imposed on Seller for which Purchaser is
responsible, Purchaser shall pay Seller the amount of such Taxes within 10 Days
of Seller notifying Purchaser of the imposition of such Change-in-Law Taxes and
providing Purchaser with a certificate in reasonable detail of the amount of
such Change-in-Law Taxes. If, after the imposition of Change-in-Law Taxes in
respect of which Purchaser has made a payment to Seller under this Section
15.1(a), a subsequent Change-in-Law results in a reduction of such Change-in-Law
Taxes, then the obligation of Purchaser to pay for Change-in-Law Taxes shall be
reduced to such extent, and if such Change-in-Law affects Change-in-Law Taxes as
to which
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Purchaser has already made such payments under this Section 15.1(a), Seller
shall reimburse Purchaser an amount equal to such reduction in Taxes.
(b) Seller shall provide Purchaser with written notice, as soon as
reasonably practicable, but in no event less than 10 Days prior to the date on
which Change-in-Law Taxes imposed on Seller would become applicable, of such
Change-in-Law Taxes. Purchaser shall have the right to Contest, in the name of
either or both Parties, as required, the imposition of any Change-in-Law Taxes,
and Purchaser shall make any payments to Seller in respect of such Change-in-Law
Taxes when required under this Agreement, but subject to refund in the event
that Purchaser prevails in such Contest; PROVIDED that Purchaser shall notify
Seller in writing of its decision to Contest; and PROVIDED, FURTHER, that
Purchaser shall be responsible for any costs and expenses (including the costs
and expenses of Seller) relating to such Contest.
(c) Each Party shall provide the other Party upon written request
a certificate of exemption or other reasonably satisfactory evidence of
exemption if any exemption from or reduction of any Tax is applicable. Each
Party shall exercise Commercially Reasonable Efforts to obtain and to cooperate
in obtaining any exemption from or reduction of any Tax. Each Party shall notify
the other Party of any proposal to implement a Change-in-Law Tax.
SECTION XVI
INSURANCE
Section 16.1 INSURANCE REQUIRED. Seller shall, carry and maintain
or cause to be carried and maintained no less than the insurance coverages
listed in Appendix I, applicable to all operations undertaken by Seller and
Seller's personnel in the minimum amounts (limits) indicated in Appendix I. Such
minimum limits may be satisfied either by primary insurance or by any
combination of primary and excess/umbrella insurance. Except as provided in
Appendix I, the required insurance coverages shall be in effect on or prior to
the commencement of construction of the Facility and shall be maintained in
effect throughout the Term of this Agreement.
Section 16.2 EVIDENCE AND SCOPE OF INSURANCE.
(a) Seller shall annually cause each insurer or authorized agent
to provide Purchaser with two original copies of insurance certificates
reasonably acceptable to Purchaser evidencing the effectiveness of the insurance
coverages required to be maintained. A complete copy of each policy shall be
provided to Purchaser upon request.
(b) All such insurance policies shall:
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(i) name Purchaser as an additional insured (except in the
case worker's compensation insurance);
(ii) provide that Purchaser shall receive from each insurer
30 Days' prior written notice of non-renewal, cancellation of, or
significant modification to, any of such policies (except that such notice
period shall be 10 Days in case of non-payment of premiums); and
(iii) provide a waiver of any rights of subrogation against
Purchaser, its affiliated entities and their officers, directors, agents,
subcontractors, and employees.
The insurance certificates shall indicate that the insurance
policies have been endorsed as described above.
(c) All policies shall be written by one or more nationally
reputable insurance companies authorized to do business in Mississippi and be
rated B+VII or higher by A.M. Best Company or Lloyds Companies or other insurers
reasonably acceptable to Purchaser.
(d) Purchaser shall receive certificates for items 1, 3, 4, 5 and
6 in Appendix I, prior to the start of construction of the Facility and for item
2 in Appendix I, prior to the Commercial Operation Date.
(e) All policies shall be written on an occurrence basis unless
procured from AEGIS on a claims made basis. Policies shall contain an
endorsement that Seller's policy shall be primary as respects construction and
operations of the Facility regardless of like coverages, if any, carried by
Purchaser.
Section 16.3 TERM AND MODIFICATION OF INSURANCE.
(a) In the event that (i) the third party liability insurance
required pursuant to item 3 of Appendix I or (ii) the Excess/Umbrella Liability
insurance required pursuant to item 6 of Appendix I, is on a "claims made" basis
and not on an occurrence basis, such insurance shall provide for a retroactive
date and continuing "tail" coverage not later than the Effective Date and such
insurance shall be maintained by Seller, with a retroactive date not later than
the retroactive date required above, for a minimum of five years after the Term.
(b) If the designated coverage, or relatively comparable coverage,
are unavailable on reasonable commercial terms, Seller shall provide to
Purchaser detailed information as to the maximum amount of available coverage
that it is able to purchase and shall be required to obtain Purchaser's consent
as to the adequacy of said coverage under the
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circumstances prevailing at the time, which consent Purchaser shall not
unreasonably withhold or delay.
Section 16.4 APPLICATION OF PROCEEDS. For the Term of this
Agreement, and subject to the requirements of the Financing Documents and the
rights or remedies of the Financing Parties thereunder, Seller shall apply the
proceeds of any such casualty insurance policies received for damages to the
Facility to the repair of the Facility.
SECTION XVII
FORCE MAJEURE EVENT
Section 17.1 FORCE MAJEURE EVENT DEFINED.
(a) As used in this Agreement, "FORCE MAJEURE EVENT" shall mean
causes or events that are beyond the reasonable control of, and without the
fault or negligence of, the Party claiming such Force Majeure Event, including,
without limitation, acts of God; unusually severe actions of the elements such
as floods, hurricanes, or tornadoes; sabotage; terrorism; war; riots or public
disorders; Emergency Conditions; Seller's refusal to accept delivery of
Non-Conforming Fuel in accordance with Section 8.5(b); and actions or failures
to act of any Governmental Agency (including expropriation, requisition,
Change-in-Law) to the extent preventing or delaying performance.
(b) Force Majeure Event shall not include: (i) causes or events
affecting the performance of third-party suppliers of goods or services except
to the extent caused by an event that otherwise is a Force Majeure Event as
described above, (ii) after the Commercial Operation Date, causes or events
resulting from ambient temperatures (i.e., hot or cold weather) affecting
Seller's performance hereunder, (iii) any failure of, or delay in performance,
or any full or partial curtailment in the electric output of the Facility that
is caused by, or arises from any labor dispute or strike by Seller's employees
or the employees of any contractor or subcontractor employed at the Facility
(except to the extent arising out of a strike or labor action by employees or
labor organizational members not employed at the Facility or, prior to the
Commercial Operation Date, a national strike, any of which shall be a Force
Majeure Event), (iv) the unavailability of equipment which could reasonably have
been avoided by compliance with Prudent Industry Practices, (v) changes in
market conditions that affect the price of energy or capacity, (vi) the failure
timely to apply for or to obtain Governmental Approvals required on the
Effective Date for the construction or operation of the Facility, or (vii) any
Delivery Excuse.
Section 17.2 APPLICABILITY OF FORCE MAJEURE EVENT. Neither Party
shall be in breach or liable for any delay or failure in its performance under
this Agreement to the extent such performance is prevented or delayed due to a
Force Majeure Event, PROVIDED that:
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(a) the non-performing Party shall give the other Party written
notice within 48 hours of the commencement of the Force Majeure Event, with
details to be supplied within 10 Days after the commencement of the Force
Majeure Event further describing the particulars of the occurrence of the Force
Majeure Event;
(b) the delay in performance shall be of no greater scope and of
no longer duration than is directly caused by the Force Majeure Event;
(c) the Party whose performance is delayed or prevented shall
proceed with Commercially Reasonable Efforts to overcome the events or
circumstances preventing or delaying performance and shall provide weekly
written progress reports to the other Party during the period that performance
is delayed or prevented describing actions taken and to be taken to remedy the
consequences of the Force Majeure Event, the schedule for such actions and the
expected date by which performance shall no longer be affected by the Force
Majeure Event; and
(d) when the performance of the Party claiming the Force Majeure
event is no longer being delayed or prevented, that Party shall give the other
Party written notice to that effect.
Section 17.3 OTHER EFFECTS OF FORCE MAJEURE EVENTS.
(a) To the extent that Seller's achievement of a Milestone is
delayed as a result of a Force Majeure Event (other than a Governmental Approval
Force Majeure Event) in accordance with Section 17.2, the related Milestone Date
or the Delivery Start Date shall be extended, in each case by the period of such
Force Majeure Event. To the extent that, after the Commercial Operation Date of
a Dedicated Unit, Seller is prevented or delayed in delivering Actual Contract
Capacity or Net Electrical Output from such Dedicated Unit by a Force Majeure
Event in accordance with Section 17.2, then the Term as to such Dedicated Unit
shall be extended by the period of such Force Majeure Event (which extension
shall include, for each Day that a portion of the Reservation Payment is not
paid pursuant to Section 17.3(c), a portion of such Day equal to the portion of
the Reservation Payment not paid in relation to the total amount of the
Reservation Payment).
(b) If any Force Majeure Event claimed by a Party shall continue
for more than twelve Months from the date of notice provided by such Party in
Section 17.2(a), then the other Party may, at any time following the end of such
period, terminate this Agreement upon written notice to the affected Party,
without further obligation by the terminating Party, except as to payment of any
costs and liabilities incurred prior to the effective date of such termination;
PROVIDED, such notice of termination must be given during the period that
performance continues to be delayed or prevented by the Force Majeure Event.
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(c) To the extent that Seller is unable to deliver all or part of
the Actual Contract Capacity of a Dedicated Unit as a result of a Force Majeure
Event in accordance with Section 17.2, Purchaser shall not be obligated to pay
the Reservation Payment as to that Dedicated Unit to the extent that the Actual
Contract Capacity is not available as a result of such Force Majeure Event;
PROVIDED that the foregoing shall not affect the obligation of Purchaser to pay
Seller the Reservation Payment for Replacement Power or any other payment
obligation of Purchaser.
Section 17.4 DELIVERY EXCUSE
(a) As used in this Agreement, "DELIVERY EXCUSE" shall mean: (i)
any Event of Default of Purchaser under this Agreement; (ii) any delay or
failure by Purchaser in giving any approval within the times required under this
Agreement; (iii) any delay or failure by Purchaser in performing any obligation
under this Agreement; (iv) any delay or failure of Purchaser to deliver Fuel or
to accept Actual Contract Capacity or Net Electrical Output as required under
this Agreement, or (v) any failure of Purchaser to maintain adequate
transmission rights to take delivery of the Net Electric Output of a Dedicated
Unit or Replacement Power in accordance with the Agreement; or (vi) any
Emergency Condition directly resulting from the act or omission of Purchaser.
(b) Seller shall not be liable for or deemed in breach of this
Agreement to the extent the performance of its obligations under this Agreement
is delayed or prevented by a condition of Delivery Excuse; PROVIDED that if
Seller determines that its performance is or has been affected by a condition of
Delivery Excuse:
(i) Seller shall give Purchaser written notice within 48
hours after commencement of such condition, with details to be supplied
within 10 Days after commencement of the condition affecting performance
further describing the particulars of the occurrence;
(ii) any delay in performance shall be of no greater scope
and of no longer duration than is directly caused by the Delivery Excuse;
and
(iii) Seller shall promptly notify Purchaser when the
condition of Delivery Excuse is no longer delaying or preventing Seller's
performance.
(c) To the extent that Seller's achievement of a Milestone for a
Dedicated Unit is delayed as a result of a Delivery Excuse in accordance with
Section 17.4(b), then the related Milestone Date or the Delivery Start Date
shall be extended, in each case by the period of such Delivery Excuse. To the
extent that Seller is unable to achieve the Commercial Operation Date by the
Delivery Start Date or, after the Commercial Operation Date of a Dedicated Unit,
Seller is
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prevented or delayed in delivering Actual Contract Capacity or Net Electrical
Output from such Dedicated Unit as a result of a Delivery Excuse in accordance
with Section 17.4(b), then (i) the Term as to such Dedicated Unit shall be
extended by the period of such Delivery Excuse and (ii) Seller shall have no
obligation to provide Replacement Power to Purchaser with respect to such
failure of delivery, and Purchaser shall remain obligated to pay the Reservation
Payment pursuant to Section 10.1 during the period of such Delivery Excuse.
SECTION XVIII
TERMINATION AND DEFAULT
Section 18.1 EVENT OF DEFAULT.
(a) The occurrence of any one of the following shall constitute an
Event of Default with respect to Seller:
(i) Seller shall fail to make payments for undisputed amounts
due under this Agreement to Purchaser within 30 Days after notice from
Purchaser that such payment is due;
(ii) Seller shall fail to comply with any material provision
of this Agreement (other than the obligation to pay money when due), and
such failure shall continue uncured for 30 Days after notice thereof by
Purchaser, PROVIDED that if such failure is not capable of being cured
within such period of 30 Days with the exercise of reasonable diligence,
then such cure period shall be extended for an additional reasonable period
of time (not to exceed 90 Days) so long as Seller is exercising reasonable
diligence to cure such failure;
(iii) Seller shall: (a) admit in writing its inability to pay
its debts as such debts become due; (b) make a general assignment or an
arrangement or composition with or for the benefit of its creditors; (c)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against such Party under any bankruptcy or
similar law; (d) take any action for the purpose of effecting any of the
foregoing;
(iv) A proceeding or case shall be commenced, without the
application or consent of Seller, in any court of competent jurisdiction,
seeking: (a) its liquidation, reorganization of its debts, dissolution or
winding-up, or the composition or readjustment of its debts; (b) the
appointment of a receiver, custodian, liquidator or the like of Seller or of
all or any substantial part of its assets; or (c) similar relief in respect
of Seller under any law relating to bankruptcy, insolvency, reorganization
of its debts, winding-up, composition or adjustment of debt, and such
proceeding shall remain in effect, for a period of 90 Days;
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(v) Seller shall fail to provide the Completion Security as
required by Section 3.3 within 30 Days after notice by Purchaser, or if
after providing such Completion Security, Seller shall fail to maintain such
Completion Security as required by Section 3.3 within 10 Days after notice
by Purchaser to restore such Completion Security;
(vi) Seller shall fail to comply with Section 21.2;
(vii) Any representation made by Seller under Section XIV
shall be false in any material respect;
(viii) Seller shall willingly and knowingly provide or sell
capacity or energy from the Dedicated Units to a Person other than
Purchaser;
(ix) Seller shall willingly and knowingly tamper with the
metering equipment for the purpose of defrauding Purchaser; or
(x) an Event of Abandonment shall occur.
(b) The occurrence of any one of the following shall constitute an
Event of Default with respect to Purchaser:
(i) Purchaser shall fail to make payments for undisputed
amounts due under this Agreement to Seller within 30 Days after notice from
Seller that such payment is due;
(ii) Purchaser shall fail to comply with any material
provision of this Agreement (other than the obligation to pay money when
due), and such failure shall continue uncured for 30 Days after notice
thereof by Seller, PROVIDED that if such failure is not capable of being
cured within such period of 30 Days with the exercise of reasonable
diligence, then such cure period shall be extended for an additional
reasonable period of time (not to exceed 90 Days) so long as Purchaser is
exercising reasonable diligence to cure such failure;
(iii) Purchaser shall: (a) admit in writing its inability to
pay its debts as such debts become due; (b) make a general assignment or an
arrangement or composition with or for the benefit of its creditors; (c)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against such Party under any bankruptcy or
similar law; (d) take any action for the purpose of effecting any of the
foregoing;
(iv) A proceeding or case shall be commenced, without the
application or consent of Purchaser, in any court of competent jurisdiction,
seeking: (a) its liquidation, reorganization of its debt, dissolution or
winding up, or composition or readjustment of its debt; (b) the appointment
of a receiver, custodian, liquidator or the like of Purchaser or of all or
any
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substantial part of its assets; or (c) similar relief in respect of Purchaser
under any law relating to bankruptcy, insolvency, reorganization of its debts,
winding-up, composition or adjustment of debts, and such proceeding shall remain
in effect, for a period of 90 Days;
(v) Purchaser shall fail to comply with Section 21.2; or
(vi) Any representation made by Purchaser under Section XIV
shall be false in any material respect.
Section 18.2 REMEDIES FOR DEFAULT. If an Event of Default occurs
with respect to a defaulting Party at any time during the Term, the
non-defaulting Party may, for so long as the Event of Default is continuing, (i)
establish a date (which date shall be between five and 10 Business Days after
the Non-Defaulting Party delivers notice) (the "EARLY TERMINATION DATE") on
which this Agreement shall be canceled if the Event of Default has not been
cured, (ii) withhold any payments due in respect of this Agreement and (iii)
pursue any other remedies available at law or in equity.
SECTION XIX
INDEMNIFICATION AND LIABILITY
Section 19.1 INDEMNIFICATION.
Each Party shall indemnify and hold the other Party and its
officers, directors, affiliates, agents, employees, contractors and
subcontractors, harmless from and against any and all Claims, to the extent
caused by any act or omission of the indemnifying Party or the indemnifying
Party's own officers, directors, affiliates, agents, employees, contractors or
subcontractors or to the extent such Claims arise out of or are in any manner
connected with the performance of this Agreement by such indemnifying Party. In
addition, each Party shall each indemnify, defend and hold harmless the other
Party from any Claims arising from the Fuel or the Net Electrical Output that
occur when risk of loss of the Fuel or Net Electrical Output is vested in the
indemnifying Party (it being understood that (a) the risk of loss with respect
to such Claims related to Net Electric Output shall transfer from Seller to
Purchaser at the Interconnection Points or the Replacement Power Delivery Points
(as applicable) and (b) the risk of loss with respect to such Claims related to
Fuel shall transfer from Purchaser to Seller at the Fuel Metering Points (as
more fully described in Section 8.4)).
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Section 19.2 FINES.
(a) Any fines, penalties or other costs incurred by either Party
or such Party's agents, employees or subcontractors for non-compliance by such
Party, its agents, employees or subcontractors with the requirements of any Laws
or Governmental Approvals shall not be reimbursed by the other Party but shall
be the sole responsibility of such non-complying Party.
(b) If such fines, penalties or other costs are assessed against
Purchaser by any Governmental Agency or court of competent jurisdiction due to
the non-compliance by Seller with any Laws or Governmental Approvals, Seller
shall indemnify and hold harmless Purchaser against any and all losses,
liabilities, damages and claims suffered or incurred because of the failure of
Seller to comply therewith. Seller shall also reimburse Purchaser for any and
all legal or other expenses (including attorneys' fees) reasonably incurred by
Purchaser in connection with such losses, liabilities, damages and claims.
(c) If such fines, penalties or other costs are assessed against
Seller by any Governmental Agency or court of competent jurisdiction due to the
non-compliance by Purchaser with any Laws or Governmental Approvals, Purchaser
shall indemnify and hold harmless Seller against any and all losses,
liabilities, damages and claims suffered or incurred because of the failure of
Purchaser to comply therewith. Purchaser shall also reimburse Seller for any and
all legal or other expenses (including attorneys' fees) reasonably incurred by
Seller in connection with such losses, liabilities, damages and claims.
Section 19.3 LIMITATIONS OF LIABILITY, REMEDIES AND DAMAGES.
(a) Each Party acknowledges and agrees that in no event shall any
partner, shareholder, owner, officer, director, employee, or affiliate of either
Party be personally liable to the other Party for any payments, obligations, or
performance due under this Agreement or any breach or failure of performance of
either Party and the sole recourse for payment or performance of the obligations
under this Agreement shall be against Seller or Purchaser and each of their
respective assets and not against any other Person, except for such liability as
expressly assumed by an assignee pursuant to an assignment of this Agreement in
accordance with the terms hereof.
(b) Notwithstanding any provision of this Agreement to the
contrary, prior to the Commercial Operation Date of a Dedicated Unit, the
liability of Seller to Purchaser with respect to such Dedicated Unit pursuant to
this Agreement (other than (i) pursuant to Section 19.1, (ii) to the extent of a
willful sale of Net Electrical Output or Actual Contract Capacity of such
Dedicated Unit to a third party or (iii) for failure to comply with Section
3.3(f), in which event this limitation of liability shall not apply) shall be
limited to the amount of the Completion Security required to be provided under
this Agreement for such Dedicated Unit on the earlier of
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(1) the termination of this Agreement and (2) the delivery by Seller of a notice
stating Seller's intention to terminate the development of the Facility.
(c) Notwithstanding any provision of this Agreement to the
contrary, after the Commercial Operation Date of a Dedicated Unit, Seller shall
have no obligation to deliver Replacement Power with respect to such Dedicated
Unit to Purchaser, and Seller shall not be liable for any claims, damages or
liabilities of any kind resulting from a Forced Outage or other failure to
deliver Actual Contract Capacity or Net Electrical Output from such Dedicated
Unit to Purchaser or for such Dedicated Unit to operate within the Design Limits
(other than (i) as reflected in the calculation of Availability Adjustment
Factor, (ii) Seller's obligation to reimburse Purchaser for Replacement Power
requested by Seller to be provided pursuant to Sections 3.2, 6.4, Appendix G or
pursuant to Section 12.2, (iii) to pay imbalance charges or penalties pursuant
to Section 6.2(d), (iv) pursuant to Section 19.1, or (v) to the extent of a
willful sale of Net Electrical Output or Actual Contract Capacity of such
Dedicated Unit to a third party (PROVIDED that this sub-clause (v) shall not
apply during the continuance of a default by Purchaser under this Agreement or
following a termination of this Agreement), in which event this limitation of
liability shall not apply); PROVIDED that the foregoing shall not limit the
liability of Seller upon cancellation of this Agreement upon an Event of Default
of Seller, PROVIDED FURTHER that the liability of Seller to Purchaser pursuant
to this Agreement shall not exceed:
(i) during the Initial Term, $20 million multiplied by the
number of Dedicated Units;
(ii) from the end of the Initial Term until December 31 of
Contract Year 17, $35 million multiplied by the number of Dedicated Units;
and
(iii) from January 1 of Contract Year 17 until the end of the
Extend Term, $50 million multiplied by the number of Dedicated Units.
(d) THE EXPRESS REMEDY OR MEASURE OF DAMAGES SET FORTH IN SECTIONS
3.2, 3.3, 6.2, 6.4 AND 12.2 SHALL BE THE SOLE AND EXCLUSIVE REMEDY WITH RESPECT
TO SUCH SECTIONS (UNLESS THE ACTION OR OMISSION DESCRIBED IN SUCH SECTIONS SHALL
CONSTITUTE AN EVENT OF ABANDONMENT, IN WHICH CASE SECTIONS 18.1(a)(x) AND
19.3(c) SHALL BE APPLICABLE). EACH PARTY'S LIABILITY SHALL BE LIMITED AS SET
FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED. UNLESS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR
INDIRECT DAMAGES SUFFERED BY THAT PARTY OR BY ANY CUSTOMER OR ANY PURCHASER OF
THAT PARTY, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN
TORT
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OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE; PROVIDED THAT THE
FOREGOING SHALL NOT LIMIT DAMAGES FOR BREACH BY SELLER BASED ON THE DIFFERENCE,
IF ANY, BETWEEN PURCHASER'S COST OF OBTAINING REPLACEMENT POWER FROM ANOTHER
SOURCE (WHETHER OR NOT SUCH REPLACEMENT POWER IS ACTUALLY PURCHASED BY
PURCHASER) AND THE AMOUNT PAYABLE BY PURCHASER UNDER THIS AGREEMENT. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE
MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY
DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE
THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING
AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED DAMAGES CONSTITUTE A
REASONABLE APPROXIMATION OF THE HARM OR LOSS.
(e) The provisions of this Section XIX shall survive the
termination of this Agreement.
SECTION XX
DISPUTE RESOLUTION
Section 20.1 SENIOR OFFICERS.
(a) Each of Seller and Purchaser shall designate in writing to the
other Party a representative who shall be authorized to resolve any dispute
arising under this Agreement in an equitable manner and, unless otherwise
expressly provided herein, to exercise the authority of such Party to make
decisions by mutual agreement.
(b) If such designated representatives are unable to resolve a
dispute under this Agreement, such dispute shall be referred by each Party's
representatives, respectively, to a senior officer designated by Seller and a
senior officer designated by Purchaser for resolution upon five Days' written
notice from either Party.
(c) The Parties hereto agree (i) to attempt to resolve all
disputes arising hereunder promptly, equitably and in a good faith manner; and
(ii) to provide each other with reasonable access during normal business hours
to any and all non-privileged records, information and data pertaining to any
such dispute.
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Section 20.2 LITIGATION. In the event that any dispute between the
Parties is unable to be resolved pursuant to Section 20.1 within 30 Days of the
written notice described in Section 20.1(b), then either Party may commence a
proceeding with respect to such dispute in accordance with Section 21.4.
SECTION XXI
MISCELLANEOUS
Section 21.1 PRUDENT INDUSTRY PRACTICES. All actions required or
taken by either Party under this Agreement shall be consistent with Prudent
Industry Practices.
Section 21.2 ASSIGNMENT.
(a) Subject to Section 21.2(b) and Section 21.2(c), neither this
Agreement, nor any of the rights or obligations hereunder, may be assigned,
transferred or delegated by either Party without the express prior written
consent of the other Party.
(b) Purchaser agrees that (i) Seller may assign, mortgage,
hypothecate, pledge or otherwise encumber all or any portion of Seller's
interest in and to this Agreement in favor of any Financing Party and its
successors and assigns and (ii) any such Financing Party may assign such
interest in and to this Agreement to any subsequent assignee in connection with
the sale, transfer or exchange of its rights under this Agreement or for the
purpose of operating the Facility pursuant to such assignment upon and after the
exercise of its rights and enforcement of its remedies against the Facility
under any deed of trust or other security instrument creating a Lien in its
favor. Each of the Parties agrees to execute such documents as reasonably may be
requested by any such Financing Party or subsequent assignee to evidence and
acknowledge its consent and the effectiveness of any such assignment or Lien to
the extent such documents do not reduce its rights or increase its obligations
hereunder.
(c) Purchaser may assign this Agreement to Dominion Resources or
any wholly-owned subsidiary of Dominion Resources (the "PURCHASER ASSIGNEE"), if
(i) Purchaser Assignee shall have at the time of assignment, a long term debt
credit rating which is at or above the lower of: (1) A- by S&P, (2) Baa1 from
Xxxxx'x and (3) the long term debt credit rating of Purchaser at the time of
assignment; PROVIDED that Purchaser may, subject to the approval of Seller and
the Financing Parties (not to be unreasonably withheld), assign this Agreement
to a Purchaser Assignee having a long term debt credit rating that is lower than
the credit rating set forth in this Section 21.2(c) if such Purchaser Assignee
provides credit enhancement satisfactory to Seller and the Financing Entities
(PROVIDED that Seller and Purchaser shall exercise good faith efforts to
minimize the required amount of such credit enhancement) and (ii) the assignee
shall
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assume all of the obligations of Purchaser under this Agreement and any Related
Agreement to which Purchaser is a party pursuant to an assignment and assumption
agreement reasonably satisfactory to Seller.
(d) Nothing in this Agreement shall restrict the transferability
of shares, partnership interests, member interests or other interests in
Purchaser or Seller, or the issuance by Purchaser or Seller of additional
interests in such Party.
Section 21.3 NOTICES. Except as otherwise specified in this
Agreement, any notice, demand for information or documents required or
authorized by this Agreement to be given to a Party shall be given in writing
and shall be sufficiently given if delivered by overnight mail, overnight
courier or hand delivered against written receipt, or if transmitted and
received by facsimile transmission addressed as set forth below, or if sent to
such Party by overnight mail, overnight courier or hand delivery to such other
address as such Party may designate for itself by notice given in accordance
with this Section 21.3. Any such notice shall be effective only upon actual
delivery or receipt thereof. All notices given by telex or facsimile shall be
confirmed in writing, delivered or sent as aforesaid, but the failure to so
confirm shall not vitiate the original notice. The address for the delivery of
notices and bills to each Party and the respective telephone and facsimile
numbers are as follows:
(a) For Seller:
LSP Energy Limited Partnership
000 Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
LSP Energy Limited Partnership
0 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(b) For Purchaser:
Virginia Electric and Power Company
0000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 21.4 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, exclusive of conflicts of
laws provisions.
(b) THE PARTIES HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
Section 21.5 ENTIRE AGREEMENT. This Agreement constitutes the
entire understanding between the Parties and supersedes any and all previous
understandings or agreements between the Parties with respect to the subject
matter hereof. This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and assigns.
Section 21.6 WAIVER. Any term or condition of this Agreement may
be waived at any time by the Party hereto that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the Party waiving such term or
condition. The failure or delay of either Party to require performance by
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the other Party of any provision of this Agreement shall not affect its right to
require performance of such provision unless and until such performance has been
waived by such Party in writing in accordance with the terms hereof. No waiver
by either Party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
Section 21.7 MODIFICATION OR AMENDMENT. No modification, amendment
or waiver of any provision of this Agreement shall be valid unless it is in
writing and signed by both Parties.
Section 21.8 SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any Person or circumstance is held to be
illegal, invalid or unenforceable under any present or future Law or by any
Governmental Agency, (a) such term or provision shall be fully severable, (b)
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom.
Section 21.9 [NOT USED]
Section 21.10 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall constitute one agreement binding on both
Parties hereto and shall have the same force and effect as an original
instrument, notwithstanding that both Parties may not be signatories to the same
original or the same counterpart.
Section 21.11 CONFIDENTIAL INFORMATION. Any information provided
by either Party to the other Party pursuant to this Agreement and labeled
"CONFIDENTIAL" shall be utilized by the receiving Party solely in connection
with the purposes of this Agreement and shall not be disclosed by the receiving
Party to any third party, except with the providing Party's consent, and upon
request of the providing Party shall be returned thereto. Notwithstanding the
above, the Parties acknowledge and agree that such information may be disclosed
to actual and prospective Financing Parties, suppliers and potential suppliers
of major equipment to the Facility and other third parties as may be necessary
for Purchaser and Seller to perform their obligations under this Agreement and
the Financing Documents. To the extent that such disclosures are necessary, the
Parties also agree that they shall endeavor in disclosing such information to
seek to preserve the confidentiality of such disclosures. This provision shall
not prevent either Party from providing any confidential information received
from the other Party to any court in accordance with a proper discovery request
or in response to the reasonable request of any Governmental Agency charged with
regulating the disclosing Party's affairs, PROVIDED that, if feasible, the
disclosing Party shall give prior notice to the other Party of such disclosure
and, if so requested by such other Party, shall have used all reasonable efforts
to oppose or resist
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the requested disclosure, as appropriate under the circumstances, or to
otherwise make such disclosure pursuant to a protective order or other similar
arrangement for confidentiality.
Section 21.12 INDEPENDENT CONTRACTORS. The Parties are independent
contractors. Nothing contained herein shall be deemed to create an association,
joint venture, partnership or principal/agent relationship between the Parties
hereto or to impose any partnership obligation or liability on either Party.
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.
Section 21.13 THIRD PARTIES. This Agreement is intended solely for
the benefit of the Parties. Nothing in this Agreement shall be construed to
create any duty or liability to, or standard of care with reference to, any
other Person.
Section 21.14 HEADINGS. The headings contained in this Agreement
are solely for the convenience of the Parties and should not be used or relied
upon in any manner in the construction or interpretation of this Agreement.
Section 21.15 INITIAL DESIGN. Seller shall require the initial
design of each Dedicated Unit to have an expected Summer Condition Standard
Capacity of no less than 230 MW.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the first date above
written.
LSP ENERGY LIMITED PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Executive Vice President
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
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APPENDIX A
OPTION TO BUY TERM SHEET
1. PARTIES:
- LSP Energy Limited Partnership or its successor in interest in
accordance with Section 21.2 of the Agreement ("SELLER"); and
- Virginia Electric and Power Company or its successor in interest in
accordance with Section 21.2 of the Agreement ("PURCHASER").
2. STRUCTURE:
The transaction shall be structured as an acquisition of assets, not of
shares. Purchaser shall acquire: (a) each Dedicated Unit which has not been
terminated in accordance with Section XVIII of the Agreement and (b) an
undivided interest in the Common Facilities, the complete list of which shall be
agreed upon between the Parties at such time as Purchaser provides Seller with
its notice to exercise the Option to Buy (collectively, the "ASSETS").
Seller shall also transfer or execute such documents as are necessary
to transfer to Purchaser: (a) an undivided interest in (i) the portion of the
Facility Site on which the Dedicated Units are located and (ii) all other assets
and property (whether real or otherwise) of Seller necessary to own, control and
operate the Dedicated Units; (b) to the extent permitted by Law and subject to
any required consents, all Governmental Approvals necessary to own, control and
operate the Dedicated Units (provided Seller shall exercise Commercially
Reasonable Efforts to obtain such consents, if any); and (c) to the extent
permitted thereunder and by Law and subject to any required consents, all
agreements to which Seller is a party relating to the Assets and necessary to
own, control and operate the Dedicated Units (provided Seller shall exercise
Commercially Reasonable Efforts to obtain such consents, if any). To the extent
that Purchaser's Option to Buy is not exercised with respect to all of the
Units, then Purchaser shall enter into a joint operating agreement relating to
the Common Facilities and other relevant assets relating to the Facility with
Persons who own, control and operate Units other than the Dedicated Units.
Appendix A to PPA
A-1
Notwithstanding any provision in this Term Sheet to the contrary, if
Purchaser exercises its Option To Buy in respect of all of the Units, then the
Assets shall include (a) all such Units, (b) the Facility Site, (c) all
Governmental Approvals (to the extent permitted by Law and subject to any
required consents) and agreements to which Seller is a party in relation to the
Assets (to the extent permitted thereunder and by Law and subject to any
required consents); and (d) all other assets and property (whether real or
otherwise) of Seller necessary to own, control and operate the Facility. Seller
shall use Commercially Reasonable Efforts to effectuate such transfer and obtain
such consents (if any) and such transfer shall subject to Prudent Industry
Practices.
3. EXERCISE OF OPTION:
Purchaser shall have the right to exercise its Option to Buy only if
Purchaser exercised the option to extend the Initial Term pursuant to Section
2.2 thereof. No sooner than 30 Months prior to the end of the Extended Term,
Purchaser shall have the right to exercise due diligence on the Facility in
accordance with Paragraph 5 below. If, based on the results of such due
diligence, Purchaser wishes to exercise its Option to Buy, then, no sooner than
27 Months, and no later than 24 Months, prior to the expiration of the Extended
Term, Purchaser shall notify Seller of its decision to exercise the Option to
Buy ("NOTICE OF EXERCISE OF OPTION"). The Notice of Exercise of Option shall be
irrevocable. The date of transfer of the Assets (the "TRANSFER DATE") shall be
the last day of the Extended Term or such other date as the Parties shall agree.
4. DUE DILIGENCE:
During the period of due diligence set forth in Paragraph 4 above,
Seller shall provide Purchaser, its agents, employees and representatives with
such information and access to the Facility as set forth in Section 5.3 of the
Agreement. Purchaser shall conduct its due diligence utilizing Prudent Industry
Practices.
5. ALLOCATION OF LIABILITIES:
The Assets shall be transferred from Seller to Buyer on an "AS IS,
WHERE IS" basis with all express or implied warranties disclaimed. Seller shall
be responsible for any liabilities existing as of the Transfer Date that relate
to or arise out of Seller's ownership or operation of the Assets up to the
Transfer Date. Purchaser shall be responsible for any liabilities that relate to
or arise out of the ownership or operation of the Assets after the Transfer
Date. Any liability attributable both to a period before and a period after the
Transfer Date shall be prorated between Purchaser and Seller.
Appendix A to PPA
A-2
6. PURCHASE PRICE:
(a) The purchase price of the Assets shall be an amount equal to $150
per KW based on the average Contract Capacity of all the Dedicated Units over
the 24-Month period immediately preceding the Transfer Date (the "ASSET PURCHASE
PRICE").
(b) The Asset Purchase Price shall be payable in three equal
installments on each of the following dates: (i) the Transfer Date; (ii) the
first anniversary of the Transfer Date; and (iii) the second anniversary of the
Transfer Date. Beginning on the Transfer Date, Purchaser shall provide Seller
with Credit Support in the amount of any unpaid balance of the Asset Purchase
Price.
(c) If the Asset Purchase Price is not yet determined on the Transfer
Date, then pending such final determination, the Parties shall make a good faith
estimate of the amount of the Asset Purchase Price on the basis of available
information. Purchaser shall then pay the first installment of the Asset
Purchase Price on the basis of such estimate and the amount of the second and
third installments shall be adjusted to reflect the adjusted amount. If, upon
final determination of the Asset Purchase Price, it is determined that the
Credit Support provided by Purchase in accordance with sub-paragraph (b) above
was not sufficient to cover the unpaid balance of such adjusted Asset Purchase
Price, then Purchaser shall provide additional Credit Support to reflect such
higher amount. If the amount of Credit Support posted was higher than required,
then the amount of such Credit Support shall be adjusted to reflect the unpaid
balance of the Asset Purchase Price.
7. CONTRACT:
If Seller receives a timely Notice of Exercise of Option, Seller and
Purchaser shall execute one or more agreements (the "TRANSFER DOCUMENTS") which:
(a) shall effectuate the transfer of rights contemplated by Paragraph 3
above to Purchaser as of the Transfer Date;
(b) shall require Seller to use Commercially Reasonable Efforts to
subrogate or assign, or otherwise shall make available to Purchaser, all
unexpired warranties with respect to the Assets and to obtain all required
consents necessary to subrogate or assign such unexpired warranties; PROVIDED
that any such subrogation or assignment relating to the Common Facilities shall
be made on a non-exclusive basis;
Appendix A to PPA
A-3
(c) shall contain the following representations:
- the Assets and the Site are transferred with good title, free and
clear of liabilities, liens, claims, etc.; and
- all corporate authorizations necessary for each party to complete
the transfer have occurred.
(d) shall contain standard indemnities by both Parties for transactions
of this type.
(e) the effectiveness of which shall be conditioned upon the execution
of a joint operating agreement (to the extent required in accordance with the
provisions of Paragraph 3 above).
8. CONDITIONS TO TRANSFER:
The transfer of the Assets and the interest in the Facility Site (as
set forth in Paragraph 3. above) shall be subject to there being no legal
prohibitions or challenges to such transfer on the Transfer Date.
9. COSTS AND EXPENSES:
Each Party shall be responsible for its own costs and expenses
(including legal fees and Taxes or duties) in connection with the transfer
contemplated by this Term Sheet; PROVIDED that Purchaser shall, at its own cost,
obtain or effect all Governmental Approvals and take such other actions as may
be necessary for the transfer contemplated hereby.
Appendix A to PPA
A-4
APPENDIX B
CAPACITY TESTING PROCEDURES
This Appendix defines the method for determining Contract Capacity,
Summer Condition Standard Capacity, Summer Condition Supplemental Capacity,
Actual Contract Capacity, Standard Capacity and Supplemental Capacity tendered
to Purchaser pursuant to the terms of this Agreement.
A test shall be conducted prior to the Commercial Operation Date to
determine the Contract Capacity. The test shall be conducted in accordance with
a test procedure to be developed by the Facility contractor, provided however
that such procedure shall incorporate all of the requirements contained in this
Appendix. This test procedure will be used as the basis for conducting all
subsequent tests to determine the Contract Capacity.
The Facility contractor shall also develop a formula for adjusting the
tested values to ambient conditions of 95 degrees Fahrenheit and 60 percent
relative humidity for the purposes of determining the Contract Capacity, Summer
Condition Standard Capacity and Summer Condition Supplemental Capacity and such
formula shall be consistent with formula provided by such contractor to
customers other than Seller for similar equipment. This same formula shall also
be used to compute the Standard Capacity, Supplemental Capacity and Actual
Contract Capacity for the various ambient conditions (in increments of 1 degree
Fahrenheit and 1 percent relative humidity) rounded to the nearest whole
megawatt, using the most recent tested values for Summer Condition Standard
Capacity and Summer Condition Supplemental Capacity; PROVIDED that after the
Commercial Operation Date Seller shall be allowed to make refinements to the
formula to improve its accuracy based upon reasonable satisfactory evidence to
Purchaser that the model does not accurately predict actual plant performance at
various ambient conditions. Once the formula described in this paragraph is
developed by the Facility contractor, such formula shall automatically become an
Appendix of this Agreement.
TESTING PROCEDURE REQUIREMENTS
All tests for a Dedicated Unit shall be conducted based upon the
following:
- The Contract Capacity test shall be a seven hour test made up of the
following three parts:
Appendix B to PPA
B-1
(1) The first three hours shall be a test to determine the Summer
Condition Standard Capacity ("STANDARD CAPACITY TEST").
(2) There shall be a one hour period commencing upon the end of
the three hour Standard Capacity Test in (1) above during which time
the duct burners and steam injection may be placed in service.
(3) The three hour period following the one hour period in (2)
above shall be used to determine the Summer Condition Supplemental
Capacity ("SUPPLEMENTAL CAPACITY TEST").
The difference between the results of the Supplemental Capacity Test
and the Standard Capacity Test (both tests corrected to 95 Degrees
Fahrenheit and 60 percent relative humidity) shall be the Summer
Condition Supplemental Capacity (for that Dedicated Unit). In no event
shall the Summer Condition Supplemental Capacity be greater than 20% of
the Summer Condition Standard Capacity.
- Test data shall be collected with plant instrumentation. Determination
of Net Electrical Output shall be with the metering devices located at
the Electrical Metering Points indicated in Section 9.1(a).
- There shall be one hour between the Standard Capacity Test and the
Supplemental Capacity Test during which time the duct burners and steam
injection may be placed in service. During the Supplemental Capacity
Test the duct burners shall be operated at no higher fuel flow then
they would be operated at during normal operation and the steam
injection flow rate shall be no higher then would be used during normal
operation.
- During all tests all appropriate auxiliary equipment associated with
the Dedicated Unit shall be in service similar to how it would be
operated under normal non-test conditions. The auxiliary equipment
should include but not be limited to normal station service electrical
usage equipment, evaporative coolers, etc.
- During all tests the same control algorithm used during normal Dispatch
conditions shall be used. This shall include normal inlet guide vane
angle, compressor discharge pressure, exhaust gas temperature and
coefficient for exhaust gas temperature.
Appendix B to PPA
B-2
- During the Standard Capacity Test, duct firing shall not be in service
and the combustion turbine shall be operated at its base load rating
without steam injection.
- During the Supplemental Capacity Test, duct firing and steam injection
should be in service and the combustion turbine shall be operated at
its base load rating.
- The compressor inlet temperature, compressor discharge pressure,
exhaust gas temperature, duct burner fuel flow and steam injection flow
shall be recorded for each of the test hours. This information shall be
either integrated average over each hour or recorded by the distributed
control system at least every 5 minutes and averaged for each hour. The
compressor inlet temperature shall be measured in the inlet ductwork
before the evaporative coolers. This information shall be provided to
Purchaser.
- The Net Electrical Output shall be recorded for each hour. This
information shall be provided to Purchaser.
- The Net Electrical Output for each test hour shall be corrected from
the corresponding average hour compressor inlet temperature to 95
Degrees Fahrenheit and 60 percent relative humidity using the
correction formula described above. The average of the three-test
hour's corrected Net Electrical Output for the Summer Condition
Standard Capacity shall be the new Summer Condition Standard Capacity.
The average of the three-test hour's corrected Net Electrical Output
for the Supplemental Capacity Test shall be that test's results.
- The new Summer Condition Supplemental Capacity shall be the
Supplemental Capacity Test result minus the Standard Capacity Test
results. The new Summer Condition Standard Capacity and Summer
Condition Supplemental Capacity shall be effective on the next Day.
- All measurement and recording devices associated with the Net
Electrical Output, compressor inlet temperature, compressor discharge
pressure, exhaust gas temperature, duct burner fuel flow and steam
injection flow shall be checked and calibrated at least annually and
whenever there is a reasonable belief that they are out of calibration.
Copies of the test and calibration data shall be provided to Purchaser.
- Coordination of the testing shall be finalized in the Operating
Procedure.
Appendix B to PPA
B-3
APPENDIX C
METERING EQUIPMENT
1. ELECTRICITY METERING.
(a) LOCATION OF METERS. The Net Electrical Output for each Unit shall
be measured by Seller's electricity metering devices located at the Electricity
Metering Points ("UNIT METERS - ELECTRICITY"). The general location of the
Electricity Metering Points is shown on Figure AC-1. The Unit Meters -
Electricity will be owned and operated in accordance with the Agreement.
Metering devices will also be located on Entergy's and TVA's side of
the Interconnection Points in the approximate location shown on Figure AC-1 to
measure energy delivered by Seller at the Interconnection Points ("UTILITY
METERS"). The Utility Meters will be owned and operated by Entergy and TVA.
(b) DESCRIPTION OF METERS. All electricity metering devices shall be
designed, installed and maintained in accordance with Prudent Industry Practices
and shall consist of meters, metering accuracy current and voltage transformers
and associated equipment required to determine the amounts and time of delivery
of energy by Seller to Purchaser.
(c) METER OUTPUTS/DATA RECORDING/TELEMETERING. The Unit Meters
Electricity will be capable of measuring MWs, MVARs and MWhs of each Dedicated
Unit in accordance with appropriate NERC criteria and Prudent Industry
Practices. The output of the meters will be recorded in electronic format and
stored on-site. The necessary telemetering equipment and associated facilities
will be installed on-site to facilitate transmittal of the instantaneous MW and
MVAR information to Purchaser and the Control Center.
(d) RECONCILIATION OF METERS. The sum of the Net Electrical Output
measured by the Unit Meters - Electricity shall equal the sum of the net
measured values from the Utility Meters within the range of applicable meter
accuracy tolerances. In the event this is not the case, any such discrepancies
shall be treated in accordance with Section 9.4 of the Agreement and other
applicable terms of the Agreement. Seller shall facilitate determination of
which metering devices caused such inaccuracy and shall allocate any such
inaccuracy appropriately among the Units.
Appendix C to PPA
C-1
2. FUEL METERING.
(a) LOCATION OF METERS. Purchaser shall deliver Fuel to the Fuel
Metering Points in accordance with the terms of the Agreement. The fuel metering
devices shall be located at the Fuel Metering Points as shown on Figure AC-2.
Fuel metering devices shall also be located at each Unit at the
approximate location shown on Figure AC-2 to measure the Fuel used by each Unit
to produce the Net Electrical Output ("UNIT METERS - FUEL"). All fuel metering
devices shall be owned and operated in accordance with the terms of the
Agreement.
(b) DESCRIPTION OF METERS. All fuel metering devices shall be designed,
installed and maintained in accordance with Prudent Industry Practices and shall
consist of meters and associated equipment required to determine the amounts and
time of delivery of Fuel by Purchaser to Seller.
(c) METER OUTPUTS/DATA RECORDING/TELEMETERING. The fuel metering
devices shall measure Fuel in volumetric units and converted to MMBtu in
accordance with Prudent Industry Practices and the tariffs of the Interstate
Pipelines. The output of the meters will be recorded in electronic format and
stored on-site. The necessary telemetering equipment and associated facilities
will be installed to facilitate transmittal of the real time Fuel flow
information from the Unit Meters - Fuel to Purchaser.
(d) RECONCILIATION OF METERS. The sum of the Fuel measured by the Unit
Meters - Fuel shall equal the sum of the measured values from the meters located
at the Fuel Metering Points minus any Fuel not used at the Facility within the
range of applicable meter accuracy tolerances. In the event this is not the
case, any such discrepancies shall be treated in accordance with Section 9.4 of
the Agreement and other applicable terms of the Agreement. Seller shall
facilitate determination of which metering devices caused such inaccuracy and
shall allocate any such inaccuracy appropriately among the Units.
Appendix C to PPA
C-2
APPENDIX D
DESIGN LIMITS
The design limits ("DESIGN LIMITS") for each Dedicated Unit shall be the
following:
(a) The maximum Dispatch level for each Dedicated Unit shall be the
Actual Contract Capacity;
(b) The minimum Dispatch level for each Dedicated Unit shall be equal
to seventy percent (70%) of the Standard Capacity;
(c) For the Standard Capacity, the capability to ramp up from 70% of
the Standard Capacity to 100% of the Standard Capacity shall be at the rate of
no less than five MW per minute and to ramp down from 100% of the Standard
Capacity to 70% of the Standard Capacity shall be at the rate of no less than
five MW per minute. For Supplemental Capacity the maximum time allowed to ramp
up from 100% of the Standard Capacity to 100% of the Actual Contract Capacity
shall be thirty minutes and to ramp down from 100% of the Actual Contract
Capacity to 100% of the Standard Capacity shall be thirty minutes;
(d) There shall be one Start-Up per Day per Dedicated Unit, except that
Purchaser shall have the right to request two Start-Ups per Day per Dedicated
Unit for no more than forty five (45) Days per calendar year; PROVIDED that in
no event shall a Start-Up of a Dedicated Unit be required to occur less than
four hours from the completion of shut down for such Dedicated Unit. Such four
hour period shall be measured from breaker opened to breaker closed; and
PROVIDED, FURTHER, that if Purchaser schedules two Start-Ups for a Day but later
cancels one such Start-Up, such Day shall nonetheless count against the forty
five (45)-Day limit of this paragraph unless the run time pursuant to such
Start-Up lasts for at least eight hours from breaker closed to breaker open, in
which case such Start-Up shall not count against the above forty-five day limit;
(e) There shall be a minimum run time of eight hours (from breaker
closed to breaker open) per Dedicated Unit, except that the minimum run time
shall be six hours (breaker closed to breaker open)for any Dedicated Unit on
Days on which Purchaser requests two Start-Ups of such Dedicated Unit (whether
the second Start-Up in fact occurs); and
Appendix D to PPA
D-1
(f) The maximum time from Purchaser's Dispatch notice of Start-Up to
70% of Standard Capacity shall be as follows:
(i) if a Dedicated Unit has been out of operation for less
than 48 hours from breaker open, it shall achieve 70% of the Standard Capacity
within 130 minutes following Purchaser's notice to Start-Up; and
(ii) if a Dedicated Unit has been out of operation for more
than 48 hours from breaker open, it shall achieve 70% of the Standard Capacity
within 210 minutes following Purchaser's notice to Start-Up.
Appendix D to PPA
D-2
APPENDIX E
[NOT USED]
Appendix E to PPA
E-1
APPENDIX F
ELECTRICITY SPECIFICATIONS
The specifications for the Net Electrical Output shall be defined as applicable
ranges for acceptable voltage, frequency and power factor contained in the
Entergy Interconnection Agreement and the TVA Interconnection Agreement.
Appendix F to PPA
F-1
APPENDIX G
REPLACEMENT POWER
1. DEFINITION OF REPLACEMENT POWER.
Replacement Power will consist of either or both Replacement Capacity
and Replacement Energy and will be provided by Seller or Purchaser under various
conditions set forth more particularly in the Agreement when the total output
available for Dispatch is below that of the Committed Capacity before Commercial
Operations is achieved for a Dedicated Unit or below that of the Actual Contract
Capacity after Commercial Operations is achieved for a Dedicated Unit.
All Replacement Power will have characteristics substantially similar
to those listed in the Design Limits in Appendix D. All Replacement Power must
be 60 cycle, alternating current, and deliverable to the Replacement Power
Delivery Point , without constraints and within the delivery parameters required
by the applicable Replacement Power Delivery Point. Replacement Power must be
made available at the Committed Capacity level prior to the Commercial
Operations Date and in the amount of unavailable capacity up to the Actual
Contract Capacity level during the Post-Commercial Operations Date period.
Replacement Power shall be delivered in a manner substantially similar to the
Design Limits with respect to notice to start, ramp rates, minimum run time, and
notice to shut down. Should the Replacement Power provided by Seller be
curtailed for any reason (other than a Delivery Excuse or a Force Majeure),
Purchaser will have the right to replace the curtailed portion of the
Replacement Power, using Commercially Reasonable Efforts, with Seller being
responsible for all additional costs (if any) incurred by Purchaser as a result
of such curtailment of Replacement Power. Purchaser will have the right to
review and approve all Replacement Power Arrangements, such approval not to be
unreasonably withheld. Purchaser shall have the right to accept or reject any
Replacement Power that does not materially conform to the Design Limits and the
applicable delivery parameters. Seller will provide Purchaser with copies of all
contracts related to the purchase of Replacement Power and such contracts shall
be assignable to Purchaser, upon Purchaser's request, without restriction.
In each period that Replacement Power is provided, Purchaser and Seller
shall cooperate to designate one or more Replacement Power Delivery Points with
the objectives of minimizing the net incremental costs of purchasing and
delivering Replacement Power, while avoiding any unreasonable administrative
burden on Purchaser associated with the delivery of Replacement Power.
Appendix G to PPA
G-1
2. PRE-COMMERCIAL OPERATIONS DATE.
Seller shall provide Replacement Power during the period prior to
achieving Commercial Operations for the Dedicated Units only if (1) the
Commercial Operations Date occurs after the Delivery Start Date as the result of
an event or events that do not constitute a Force Majeure Event (other than a
Government Approval Force Majeure Event) or Delivery Excuse under the Agreement
and (2) Purchaser's Replacement Power Notice (as defined below) to Seller
directs Seller to provide Replacement Power. With respect to a Dedicated Unit,
within five Business Days of Seller's failure to achieve a Milestone on or
before its associated Milestone Date, Seller shall notify Purchaser of such
event and the expected duration of the resulting delay ("NOTICE OF DELAY").
Seller shall thereafter provide periodic updates to Purchaser of the expected
duration of delay until the Commercial Operations Date has been achieved. If
Seller has provided Purchaser with a Notice of Delay (and the most recent
periodic update indicates a delay in achieving the Commercial Operation Date),
Purchaser shall no sooner than 5 Months prior to the Delivery Start Date and no
later than 3 Months prior to the Delivery Start Date provide Seller with a
notice detailing the extent to which Seller shall be required to provide
Replacement Power during the expected delay ("REPLACEMENT POWER NOTICE");
provided however that in the event of an Extraordinary Rising Market (as defined
below), Purchaser shall be allowed to provide the Replacement Power Notice as
soon as 9 Months prior to the Delivery Start Date. If Purchaser relieves Seller
of its obligation to provide Replacement Power, neither Seller nor Purchaser
shall have any obligations to make any payments under this Agreement for the
duration of the delay. Within 10 Business Days of receipt of Purchaser's
Replacement Power Notice, Seller shall cause all Replacement Power arrangements
to be in place or direct Purchaser to obtain the Replacement Power specified in
Purchaser's Replacement Power Notice. Additionally, Seller shall provide
additional Completion Security in accordance with Section 3.3 of the Agreement
in an amount equal to the estimated Incremental Replacement Power Costs, if such
costs are a positive value, (i) in the case where Seller makes Replacement Power
arrangements, within 20 Business Days after receipt of Purchaser's Replacement
Power Notice, or (ii) in the case where Seller directs Purchaser to obtain
Replacement Power arrangements, within 10 Business Days after Seller provides
such direction to Purchaser. If Seller directs Purchaser to provide the
Replacement Power, Purchaser shall use Commercially Reasonable Efforts in
obtaining the Replacement Power and minimizing the Incremental Replacement Power
Costs , with due recognition of the timing of when Replacement Power
Arrangements are made relevant to the timing of when Replacement Power may be
used. An Extraordinary Rising Market shall mean a situation in which the market
price of power during the expected delay period is experiencing an unusually
high increasing trend based upon the most reliable information available (such
as futures prices).
Appendix G to PPA
G-2
For a Dedicated Unit, for the period between the Delivery Start Date
and the Commercial Operation Date, Incremental Replacement Power Costs shall be
computed as the difference between the Replacement Power Cost for Replacement
Power provided pursuant to Purchaser's Replacement Power Notice and the Contract
Power Cost, accounting for differences in transmission costs for delivery of
power to the Replacement Power Delivery Point instead of the Interconnection
Point and differences in costs associated with the characteristics of the
Replacement Power (for example scheduling notice time) compared with the Design
Limits. Contract Power Cost shall be computed utilizing the Committed Capacity,
the rates contained in Sections 10.2, 10.3 and 10.4, the Guaranteed Heat Rate,
the estimated fuel for start up and shut down, the Gas Index and the Expected
Economic Dispatch Schedule.
For a Dedicated Unit, if Replacement Power is being provided pursuant
to Purchaser's Replacement Power Notice, then Seller shall be responsible for
paying the total Incremental Replacement Power Cost over the entire period
between the Delivery Start Date and the expected Commercial Operation Date, if
such Incremental Replacement Power Cost is a positive value, subject to a
maximum amount of $20/KW of the Committed Capacity of such Dedicated Unit. If
Seller is providing Replacement Power, then on a Monthly basis Seller may direct
Purchaser to release an amount of Completion Security equal to the amount of
Incremental Replacement Power Cost (if a positive value) for such Month. If
Purchaser is providing Replacement Power, then on a Monthly basis Seller may
direct Purchaser to draw an amount of Completion Security equal to the amount of
Incremental Replacement Power Cost (if a positive value) for such Month. Any
Month for which the Incremental Replacement Power Cost is a negative value, such
value shall be carried forward to apply as a credit for subsequent Months
Incremental Replacement Power Costs and ultimately shall be considered in the
computation of the total Incremental Replacement Power Cost for the entire
period between the Delivery Start Date and the Commercial Operation Date. Seller
shall have no obligation to restore any amount of Completion Security released
or drawn prior to the Commercial Operation Date, at which xxxx Xxxxxx shall
restore the amount of Completion Security to an amount equal to $10/KW of the
Committed Capacity of such Dedicated Unit. Upon achieving the Commercial
Operation Date, actual Incremental Replacement Power Cost shall be computed over
the period between the Delivery Start Date and the Commercial Operation Date and
any amount of over or under payment shall be reconciled between Purchaser and
Seller, subject to the $20/KW of the Committed Capacity for such Dedicated Unit
limitation of Seller's responsibility for Incremental Replacement Power Costs.
Appendix G to PPA
G-3
3. PERMITTING FAILURE.
In the event that Seller experiences a delay in achieving the
Commercial Operations Date on or before the Delivery Start Date because of
Seller's inability to obtain a Government Approval necessary for the operation
of the Facility or Seller's performance under the Agreement (including but not
limited to a Government Approval Force Majeure Event) (a "PERMITTING FAILURE"),
Seller will be required to provide Replacement Power under the same provisions
as above, except that Seller's maximum responsibility for Incremental
Replacement Power Costs shall be capped at $10/KW of the Committed Capacity.
4. POST-COMMERCIAL OPERATIONS DATE.
After the Commercial Operations Date for a Dedicated Unit, Seller may
elect to utilize Replacement Power during (1) Forced Outages that result in a
reduction of 50 MW or more of the Actual Contract Capacity of any or all of the
Dedicated Units (a "REPLACEMENT POWER OUTAGE") and (2) Long-Term Minor De-rates
(as defined below). Each Replacement Power Outage shall be divided into two
distinct periods: (1) the period beginning at the time of the occurrence of the
outage through midnight of the second Day after the start of the outage (the
"INITIAL OUTAGE PERIOD") and (2) the period from the end of the Initial Outage
Period until the Dedicated Units recover from the outage (the "EXTENDED OUTAGE
PERIOD").
(a) INITIAL OUTAGE PERIOD
Within four hours of the time of the occurrence of a
Replacement Power Outage, Seller must provide Purchaser with notice of whether
it elects to require Purchaser to provide Replacement Power for the Initial
Outage Period. If such notice is not provided or Seller elects not to require
Purchaser to provide Replacement Power for the Initial Outage Period, then
Forced Outage Hours will accrue for the Initial Outage Period. If Seller elects
to require that Purchaser provide the Replacement Power, Purchaser will secure
this power, using Commercially Reasonable Efforts, and Seller will pay Purchaser
the positive difference (if any) between the Replacement Power Costs and the
Contract Energy Costs. Contract Energy Costs shall be computed by utilizing the
rates contained in Sections 10.3 and 10.4, the Guaranteed Heat Rate, the
estimated fuel for start up and shut down, the Gas Index and the Expected
Economic Dispatch Schedule.
Appendix G to PPA
G-4
(b) EXTENDED OUTAGE PERIOD
By 10:00 am Eastern Prevailing Time of the second Day after
the Day in which the outage began, Seller shall provide Purchaser with a notice
which shall include (1) a statement as to whether Seller elects to accumulate
Forced Outage Hours, provide Replacement Power, or to require Purchaser to
provide Replacement Power for the entire Extended Outage Period, (2) a good
faith estimate of the cause of the outage, the expected restoration date, and an
indication of Seller's confidence level of meeting the restoration date. In the
event that the Forced Outage subsequently is expected by Seller to continue for
a period longer than previously estimated, Seller shall promptly provide a
notice to Purchaser of the revised expected restoration date. If Seller elects
to provide Replacement Power, it must be available at midnight of that Day
(I.E., 14 hours after the deadline for Seller's Extended Outage Period notice).
If Seller elects to require Purchaser to provide Replacement Power on its
behalf, Purchaser will secure this power, using Commercially Reasonable Efforts,
and Seller will pay Purchaser the positive difference (if any) between the
Replacement Power Costs and the Contract Energy Costs. If Seller has elected to
provide Replacement Power and there is a default in performance as to such
Replacement Power Arrangements, then Purchaser shall provide Replacement Power
for the remainder of the Extended Outage Period. The Extended Outage Period will
end once the Dedicated Unit is capable of operation at the Actual Contract
Capacity level and the delivery of the Net Electrical Output has resumed at the
Dispatched level.
(c) CALCULATION OF FORCED OUTAGE HOURS
If Seller elects to accumulate Forced Outage Hours, then such
Forced Outage Hours will accrue at a rate that assumes the Dedicated Units were
dispatched using reasonable economic decisions. For each day of the outage,
Purchaser will evaluate market price information; available indices (E.G.,
XxXxxx- Xxxx'x Power Market's Weekly), logs of hourly prices, and Dispatch
Schedules on days of similar conditions and develop an ("EXPECTED ECONOMIC
DISPATCH SCHEDULE"), which is defined as the Dispatch Schedule that Purchaser
would have followed under normal circumstances. This Expected Economic Dispatch
Schedule will be developed and provided to Seller within two Business Days
following the conclusion of any Replacement Power Outage, and this schedule will
be used to calculate Forced Outage Hours during the Initial Outage Period and
the Extended Outage Period.
(d) LONG-TERM MINOR DE-RATE
If the Dedicated Units experience a reduction of less than 50
MW in the Actual Contract Capacity that lasts for a continuous period of 10 Days
or longer (a
Appendix G to PPA
G-5
"LONG-TERM MINOR DE-RATE"), then Seller may elect to provide Replacement Power
instead of accruing Forced Outage Hours for the period in which the de-rate
exceeds 10 Days by providing Purchaser with notice by 10:00 am Eastern
Prevailing Time of the Day after the tenth Day following the Day in which the
de-rate began of its election to provide or require Purchaser to provide
Replacement Power and provide such Replacement Power in accordance with the
procedure set forth above for Extended Outage Periods.
5. REPLACEMENT POWER COST.
The Replacement Power Cost will be calculated using the Expected
Economic Dispatch Schedule and the delivered cost of Replacement Power under the
Replacement Power arrangements or relevant market prices as applicable,
accounting for differences in transmission costs for delivery of power to the
Replacement Power Delivery Point instead of the Interconnection Point and
differences in costs associated with the characteristics of the Replacement
Power (for example scheduling notice time) compared with the Design Limits.
Appendix G to PPA
G-6
APPENDIX H
GUARANTEED HEAT RATE
1. GUARANTEED HEAT RATE.
The Guaranteed Heat Rate for each Dedicated Unit during each hour of
the Month shall be determined according to this Appendix H based upon the energy
requested pursuant to a Dispatch order and not the actual output of such
Dedicated Unit.
(a) The Guaranteed Heat Rate for each Dedicated Unit during any
hour when the energy Dispatched from such Dedicated Unit is
less than or equal to the Standard Capacity of such Dedicated
Unit during the hour shall be taken from Table 1. The
Guaranteed Heat Rate shall be read from Column B based on the
energy Dispatched from such Dedicated Unit during the hour
divided by the Standard Capacity of such Dedicated Unit during
the hour.
Table 1 - Guaranteed Heat Rate
Column A Column B
Energy Dispatched as a Percent of Standard Guaranteed Heat
Capacity Rate (BTU/KWh
HHV)
--------------------------------------------------------------------------------
70% 7770
71% 7740
72% 7700
73% 7670
74% 7630
75% 7600
76% 7560
77% 7530
78% 7490
79% 7460
80% 7420
81% 7400
--------------------------------------------------------------------------------
Appendix H to PPA
H-1
Table 1 - Guaranteed Heat Rate
Column A Column B
Energy Dispatched as a Percent of Standard Guaranteed Heat
Capacity Rate (BTU/KWh
HHV)
--------------------------------------------------------------------------------
82% 7380
83% 7360
84% 7340
85% 7320
86% 7290
87% 7270
88% 7250
89% 7230
90% 7210
91% 7190
92% 7170
93% 7150
94% 7130
95% 7110
96% 7080
97% 7060
98% 7040
99% 7020
100% 7000
--------------------------------------------------------------------------------
(b) The Guaranteed Heat Rate for each Dedicated Unit during any
hour when the energy Dispatched from such Dedicated Unit is
greater than the Standard Capacity of such Dedicated Unit
shall be determined from the following formula:
Guaranteed Heat Rate = (EFL*7,000 BTU/KWh + EAFL*9,500 BTU/KWh) / (EFL
+ EAFL)
Appendix H to PPA
H-2
where:
EFL is the amount of energy in KWh Dispatched up to the
Standard Capacity of a Dedicated Unit during the
hour; and
EAFL is the amount of energy in KWh Dispatched above the
Standard Capacity of the Dedicated Unit during the
hour.
Appendix H to PPA
H-3
APPENDIX I
INSURANCE
Seller shall at all times carry and maintain or cause to be carried and
maintained at its expense such insurance as is customarily maintained by owners
and operators of generating facilities and in all events shall carry and
maintain at least the minimum insurance coverage set forth in this section
placed with brokers, insurers, and reinsursers of recognized responsibility.
1. ALL RISK BUILDERS RISK.
Through the commercial operations date Seller shall maintain All Risk
Builders Risk covering the Facility against physical loss or damage to property
of every kind and description to be used in the fabrication, assembly,
installation, erection or alteration of the contract works, including Boiler &
Machinery and Testing Coverage. Deductibles shall not exceed $1,000,000.00 for a
combustion turbine, $750,000.00 for a steam turbine, generator, or heat recovery
steam generator, and $250,000.00 for all other losses. As an extension of All
Risk Builders Risk Coverage, Seller shall maintain Delay in Start-Up insurance
in an amount equal to six (6) months projected non-operating cash flow
requirements. Such extension may be subject to deductibles not to exceed sixty
(60) days.
2. ALL RISK PROPERTY INSURANCE.
Commencing on the Commercial Operations Date, Seller shall maintain all
risk property insurance covering the Facility against physical loss or damage,
including, comprehensive boiler and machinery coverage (including electrical
malfunction and mechanical breakdown). Deductibles shall not exceed US
$1,000,000.00 for a combustion turbine, $750,000.00 for a steam turbine,
generator, or heat recovery steam generator, and $250,000,00 for all other
losses. As an extension of All Risk Coverage Seller shall maintain Business
Interruption insurance in an amount equal to six (6) months projected
non-operating cash flow requirements. Such extension may be subject to
deductibles not to exceed sixty (60 ) days.
Appendix I to PPA
I-1
3. COMMERCIAL OR COMPREHENSIVE GENERAL LIABILITY.
Seller shall maintain third party liability insurance written on an
occurrence basis (claims made if covered by Aegis) with a limit not less than US
$1,000,000.00. Deductibles shall not exceed $50,000.00 per occurrence.
4. WORKERS' COMPENSATION/EMPLOYER'S LIABILITY.
Seller shall maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Applicable Laws statutory to Mississippi.
5. AUTOMOBILE LIABILITY.
Seller shall maintain Automobile Liability Insurance with a limit of
not less than US $1,000,000.00, including coverage for owned, not-owned and
hired automobiles for both bodily injury (including death) and property damage,
uninsured/underinsured motorist protection endorsements.
6. EXCESS/UMBRELLA LIABILITY.
Seller shall maintain Excess/Umbrella Liability insurance written on an
occurrence basis (claims made if covered by Aegis) and providing coverage limits
in excess of the primary limits. The limit of such excess/umbrella coverage
shall not be less than US $10,000,000.00 on a follow form basis.
Appendix I to PPA
I-2
APPENDIX J
FORM OF LETTER OF CREDIT
STANDARD FORMAT
LETTER OF CREDIT
(ISSUED ON ISSUING BANK LETTERHEAD WHICH INCLUDES FULL NAME
AND ADDRESS)
DATE AND PLACE OF ISSUE: (E.G. MAY 0, 0000, XXXXX, XXXXX)
APPLICANT
Name (I.E., OPERATOR COMPANY)
Address (I.E., STREET ADDRESS)
(I.E., CITY, STATE ZIP--)
ADVISING AND NEGOTIATING BANK
[For Purchaser:
Crestar Bank
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000]
[For Seller:
[INSERT NAME AND ADDRESS OF BANK]
BENEFICIARY
[For Purchaser:
Virginia Electric and Power Company OR (For Hand Delivery)
P. O. Box 26666 000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
Appendix J to PPA
J-1
Attention: Manager Capacity Acquisition
[For Seller:
LSP Energy Limited Partnership
[INSERT ADDRESS]
We hereby issue our documentary credit as follows:
TYPE OF CREDIT:
Irrevocable
LETTER OF CREDIT NUMBER:
(I.E., 123456789)
DATE AND PLACE OF EXPIRY:
Date - (I.E., JULY 1, 1995)
Place - [For Purchaser: AT CRESTAR BANK'S COUNTER; RICHMOND, VIRGINIA]
[For Seller: AT [NAME OF BANK, CITY, STATE]
AMOUNT:
(FIGURES, I.E., US $45,000)
(WORDS, I.E., FORTY FIVE THOUSAND DOLLARS)
Credit Available with: [For Purchaser: Crestar Bank, Richmond, Virginia] [For
Seller: [NAME OF BANK]], by negotiation against
presentation of the documents detailed herein and of
your draft(s) at sight drawn on Issuing Bank
Accompanied by a certificate signed on your behalf by a person
describing himself therein as your duly authorized officer stating that:
A. "This drawing in the amount of USD (AMOUNT ___________) is being made
pursuant to the POWER PURCHASE AGREEMENT dated as of May 18, 1998 (the
"PPA") between (APPLICANT ________________) [If Purchaser:
("Purchaser")] [If Seller: ("Seller")] and (BENEFICIARY
________________) [If Purchaser: ("Purchaser")] [If Seller: ("Seller")]
because(1):
--------
(1) Select one of the following options.
Appendix J to PPA
J-2
[Purchaser has failed to pay the full amount of the Deferred Extension
Fee Amount (as defined in the PPA) as required in Section 2.2 of the
PPA]
OR
[Purchaser has failed to pay an installment of the Deferred Extension
Fee Amount (as defined in the PPA) as required in Section 2.2 of the
PPA]
OR
[Pursuant to Section 13.1(c), a dispute as to an amount owed under the
PPA by [Seller/Purchaser] to [Seller/Purchaser] has been resolved in
favor of [Seller/Purchaser]]
OR
[Pursuant to Section 3.3(e) of the PPA, Seller must pay to Purchaser
Incremental Replacement Power Costs (as defined in the PPA) in
accordance with Appendix G to the PPA]
OR
[Seller has failed to pay undisputed amounts owed to Purchaser under
the PPA]."
B. "[Seller/Purchaser] is making a drawing in the full available amount of
(ISSUING BANK) Letter of Credit No. ____________ because the term of
such letter of credit will expire within five business days of the date
of this certificate and [Seller/Purchaser] has failed to deliver a
replacement or renewal Letter of Credit acceptable to
[Seller/Purchaser] and security is still required under Section
[2.2/3.3/13.1] of the PPA."
Presentation of any of the above certificates and all communications in
writing with respect to this Letter of Credit shall be addressed to us at
(ISSUING BANK AND ADDRESS) referencing Letter of Credit No. ___________,
Attention: _______________; or at [If Purchaser: Crestar Bank, 000 Xxxx Xxxx
Xxxxxx; Xxxxxxxx, Xxxxxxxx 00000] [If Seller: [NAME OF BANK, ADDRESS AND
ATTENTION], referencing Letter of Credit No. ______________, Attention:
______________.
This Letter of Credit sets forth in full the terms of our undertaking
and this undertaking shall not in any way be modified, amended, limited or
amplified by reference
Appendix J to PPA
J-3
to any document, instrument or agreement referred to herein, except only the
certificates and draft referred to herein; and any such reference shall not be
deemed to incorporation herein by reference any document, instrument, or
agreement except for such certificates.
This Letter of Credit is transferable. Transfer may only be effected by
Issuing Bank upon our receipt of an acceptable application for transfer
accompanied by the original Letter of Credit and payment of our transfer
commission in effect at the time of transfer.
Partial drawings are allowed.
Tested telex reimbursement is allowed.
All bank charges will be to the account of Applicant.
Drafts drawn under this Letter of Credit must bear the clause:
"Drawn under (ISSUING BANK) Letter of Credit No. ____________ Dated
_____________."
It is a condition of this Letter of Credit that it shall be
automatically extended for an additional period of one year from the present and
each future expiration date, unless, ninety days (90) days prior to such
expiration date, we notify you by registered mail that this Letter of Credit
will not be renewed for any such additional period.
We hereby engage with you that drafts drawn strictly in compliance with
the terms of this credit and amendments shall meet with due honor upon
presentation. This credit is subject to "Uniform Customs and Practice for
Documentary Credits" (1993 Revision), International Chamber of Commerce,
Publication No. 500.
--------------------------------
Authorized Signature
--------------------------------
Authorized Signature
Appendix J to PPA
J-4
APPENDIX K
FORM OF GUARANTY
This GUARANTY (this "Guaranty") is dated and effective as of
[______________], by and between [_______________], a [______________]
corporation (the "Guarantor") and [____________________], a[ _________________]
corporation (the "Beneficiary").
WHEREAS, [LSP Energy Limited Partnership] and [Virginia Electric and
Power Company] are parties to a Power Purchase Agreement dated as of May 18,
1998 (as amended from time to time, the "Power Purchase Agreement") under which
[LSP Energy Limited Partnership] has undertaken to develop, finance, construct,
own, operate and maintain a power plant located in Batesville, Mississippi and
sell a certain amount of capacity and energy to [Virginia Electric and Power
Company]; and
WHEREAS, under Section [___] of the Power Purchase Agreement, it is a
condition for the Beneficiary that the Guarantor shall have executed and
delivered this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Guarantor hereby agrees with the Beneficiary as
follows:
1. Capitalized terms used but not otherwise defined in this Guaranty shall
have the respective meanings given to such terms in the Power Purchase
Agreement. The rules of interpretation set out in Section 1.2 of the
Power Purchase Agreement shall apply in this Guaranty as if fully set
forth in this Guaranty.
2. (a) [Subject to Section 2(b) below,] the Guarantor does hereby
absolutely, irrevocably and unconditionally guarantee and
undertake and assure to the Beneficiary, its successors and
assigns, the full, prompt and complete payment by [NAME OF
PARTY UNDER POWER PURCHASE AGREEMENT], its successors and
assigns of the [DESCRIPTION (e.g, Purchase Price, Extension
Fee, etc.)] under Section [___] of the Power Purchase
Agreement (the "Obligations"), which undertaking and
assurance are unconditional and absolute. The Guarantor
agrees that the undertaking and assurance as set forth herein
are and shall be primary obligations of, and fully and
completely enforceable against, the Guarantor and shall
Appendix K to PPA
K-1
constitute a continuing guaranty of payment and not a
guaranty of collection only and shall remain in full force
and effect until the Obligations are paid in full. The
Guarantor acknowledges the receipt and adequacy of the
consideration hereinabove recited and agrees that such
consideration fully supports this Guaranty.
[(b) The maximum amount payable under this Guaranty shall be
$[__________].]
2. (a) The obligations of the Guarantor hereunder are primary,
unconditional and absolute, and shall be valid and
enforceable regardless of:
(i) the genuineness, validity, regularity, or any
future amendment of, or change in, this Guaranty,
the Power Purchase Agreement or any other
agreement, document or instrument related to the
transactions contemplated hereby or thereby
(including, without limitation, any amendment
extending the manner, place or terms of payment,
renewal, or alteration of all or any portion of the
obligations thereunder), or the enforceability of
the Power Purchase Agreement or any other
agreement, document, or instrument related to the
transactions contemplated thereby;
(ii) any action taken or failed to be taken to enforce
this Guaranty or the Power Purchase Agreement or
any other Credit Support, or the waiver or consent
by the Beneficiary with respect to any of the
provisions thereof;
(iii) any law, regulation or decree now or hereafter in
effect which might in any manner affect any of the
terms or provisions of this Guaranty;
(iv) whether or not Beneficiary takes steps to mitigate
damages;
(v) any bankruptcy, insolvency, reorganization,
arrangement, adjustment, composition, liquidation
or the like of [NAME OF PARTY ON WHOSE BEHALF THE
GUARANTY IS BEING PROVIDED] or the Guarantor;
Appendix K to PPA
K-2
(vi) any merger or consolidation of [NAME OF PARTY ON
WHOSE BEHALF THE GUARANTY IS BEING PROVIDED] or the
Guarantor into or with any other Person, or any
sale, lease or transfer of any or all of the assets
of [NAME OF PARTY ON WHOSE BEHALF THE GUARANTY IS
BEING PROVIDED] or the Guarantor to any other
Person;
(vii) any circumstance other than indefeasible payment
and performance which might constitute a defense
available to, or a discharge of the Guarantor, or
any other surety;
[(viii) any sale, transfer or other disposition by the
Guarantor of any direct or indirect interest it may
have in [NAME OF PARTY ON WHOSE BEHALF THE GUARANTY
IS BEING PROVIDED]];
(ix) absence of any notice to, or knowledge by, the
Guarantor of the existence or occurrence of any of
the matters of events set forth in the foregoing
subdivisions (i) through (vi); or
(x) any other circumstance whatsoever; it being agreed
by the Guarantor that its obligations under this
Guaranty shall not be discharged until all
Obligations have been paid or performed in full [or
the full amount of this Guaranty ($[__________])
has been paid in full].
(b) The Guarantor hereby waives, and agrees that it shall not at
any time insist upon, plead or in any manner whatever claim
or take the benefit or advantage of:
(i) notices, diligence, presentment and demand (whether
for non-payment or protest or of acceptance,
maturity, extension of time, change in nature of
form of the Obligations, acceptance of security,
release of security, composition or agreement
arrived at as to the amount of, or the terms of,
the Obligations, notice of adverse change in [NAME
OF PARTY ON WHOSE BEHALF THE GUARANTY IS BEING
PROVIDED]'s financial condition or any other fact
which might materially increase
Appendix K to PPA
K-3
the risk to the Guarantor) with respect to any of
the Obligations and all other demands whatsoever
and waives the benefit of all provisions of law (to
the extent that may be waived under applicable Law)
which are or might be in conflict with the terms of
this Guaranty; or
(ii) any requirement on the part of the Beneficiary to
mitigate the damages resulting from any default by
[NAME OF PARTY ON WHOSE BEHALF THE GUARANTY IS
BEING PROVIDED] under the Power Purchase Agreement.
(c) The Guarantor shall not exercise any rights which it may have
acquired by way of subrogation under this Guaranty, by any
payment made hereunder or otherwise, or seek any
reimbursement from the Beneficiary in respect of payments
made by such the Guarantor hereunder, unless and until [the
Guarantor's share of] all of the Obligations shall have been
paid to the Beneficiary and discharged, in full, and if any
payment shall be made to the Guarantor on account of such
subrogation or reimbursement rights at any time when the
Obligations shall not have been paid and discharged in full,
each and every amount so paid shall forthwith be paid to the
Beneficiary to be credited and applied against the
Obligations, whether matured or unmatured.
(d) The Beneficiary shall be authorized and empowered to
institute any proceedings in law or equity against the
Guarantor.
3. In the event that the Beneficiary elects to take proceedings hereunder
directly against the Guarantor, it shall endeavor to notify the
Guarantor as soon after making such election as is reasonable and
practicable to the Beneficiary. The foregoing undertaking does not
impair the unconditional and absolute nature of this Guaranty and the
delivery of such notification does not constitute a condition to the
liability of the Guarantor hereunder, nor shall any failure to give
such notice constitute a defense to or otherwise discharge the
Guarantor's obligations hereunder.
4. This Guaranty shall be governed by, and construed in accordance with
the laws of the State of [__________], excluding any conflicts of laws
principles that would require reference to the laws of any other
jurisdiction.
Appendix K to PPA
K-4
5. The terms and provisions of this Guaranty shall be binding upon and
inure to the benefit of the successors, assigns and legal
representations of the parties hereto. Except as hereinafter provided,
neither party hereto may assign this Guaranty or any of its rights or
obligations hereunder without the prior written consent of the other
party.
6. The Guarantor hereby makes unconditionally the following
representations and warranties:
(a) The Guarantor is a corporation duly organized and in good
standing under the laws of the jurisdiction specified for the
Guarantor in the first paragraph of this Guaranty.
(b) The Guarantor has the corporate authority to execute, deliver
and fully perform its obligations under this Guaranty and all
resolutions, if any, of directors and shareholders required
to authorize execution and delivery of this Guaranty have
been obtained.
(c) This Guaranty constitutes a valid, legal and binding
obligation of the Guarantor enforceable in accordance with
its terms.
(d) Execution of and performance by the Guarantor under this
Guaranty does not require the consent or approval of any
Person or Governmental Agency and does not conflict with or
breach any terms or conditions of:
(i) any order, writ or decree of any court or
Governmental Agency by which the Guarantor is
bound, or
(ii) any agreement to which the Guarantor is a party or
by which it is bound.
7. Except as otherwise specified in this Guaranty, any notice, demand for
information or documents required or authorized by this Guaranty to be
given to a party shall be given in writing and shall be sufficiently
given if delivered by registered mail, courier or hand delivered
against written receipt, or if transmitted and received by facsimile
transmission addressed as set forth below, or if sent to such party by
registered mail, courier or hand delivery to such other address as such
party may designate for itself by notice given in accordance with this
Section 7. Any such notice shall be effective only upon actual delivery
or receipt thereof. All notices given by telex or facsimile shall be
confirmed in writing, delivered or
Appendix K to PPA
K-5
sent as aforesaid, but the failure to so confirm shall not vitiate the
original notice. The address for the delivery of notices to each party
and the respective telephone and facsimile numbers are as follows:
GUARANTOR: [NAME]
[ADDRESS]
Attention:
Telephone:
Telecopy:
BENEFICIARY: [NAME]
[ADDRESS]
Attention:
Telephone:
Telecopy:
8. This Guaranty constitutes the entire understanding between the
Guarantor and the Beneficiary and supersedes any and all previous
understandings between the parties with respect to the subject matter
hereof.
9. No modification, amendment or waiver of any provision of this Guaranty
shall be valid unless it is in writing and signed by both parties.
10. If any term or provision of this Guaranty or the application thereof to
any Person or circumstance is held to be illegal, invalid or
unenforceable under any present or future Law or by any Governmental
Agency, (a) such term or provision shall be fully severable, (b) this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Guaranty shall remain in full force and
effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
11. This Guaranty may be executed in counterparts, all of which shall
constitute one agreement binding on both parties hereto and shall have
the same force and effect as an original instrument, notwithstanding
that both parties may not be signatories to the same original or the
same counterpart.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
Appendix K to PPA
K-6
IN WITNESS WHEREOF, each of the Guarantor and the Beneficiary have
caused this Guaranty to be executed and delivered in their respective names and
on their behalf, as of the date first above written.
GUARANTOR:
[NAME]
By:
----------------------------
Name:
Title:
BENEFICIARY:
[NAME]
By:
----------------------------
Name:
Title:
Appendix K to PPA
K-7
FIRST AMENDMENT TO POWER PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO POWER PURCHASE AGREEMENT (this "FIRST AMENDMENT"),
dated as of July 22, 1998, is entered into between LSP Energy Limited
Partnership, a Delaware limited partnership ("SELLER") and Virginia Electric and
Power Company, a Virginia public service corporation ("PURCHASER") (each, a
"PARTY" and collectively, the "PARTIES").
RECITALS
WHEREAS, Seller and Purchaser have entered into Power Purchase Agreement
dated as of May 18, 1998 (the "POWER PURCHASE AGREEMENT"); and
WHEREAS, Seller and Purchaser desire to amend the Power Purchase Agreement
as set forth in this First Amendment;
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:
SECTION 1. DEFINITIONS. Unless the context otherwise requires,
capitalized terms used but not otherwise defined in this First Amendment shall
have the meanings given to them in the Power Purchase Agreement.
SECTION 2. AMENDMENTS TO THE POWER PURCHASE AGREEMENT. Seller and
Purchaser hereby agree to amend the Power Purchase Agreement as follows:
(a) The definition of "Contract Year" shall be amended by deleting the
date "May 31, 2025" and inserting, immediately following the words "for the
Extended Term," the following phrase: "May 31, 2025 or such earlier date on
which this Agreement is terminated pursuant to Section 2.2".
(b) The definition of "Deferred Extension Fee Amount" shall be deleted in
its entirety.
Page 1
First Amendment to Power Purchase Agreement
(c) Section 2.1 (INITIAL TERM) shall be amended by deleting the words "10
years" and inserting the words "13 years" in their place.
(d) Section 2.2 (EXTENSION OF TERM) shall be amended by deleting it in its
entirety and inserting the following in its place:
"The Term of this Agreement may be extended for all Dedicated Units
which have not been terminated pursuant to this Agreement for an
additional 12 years (the "EXTENDED TERM"), PROVIDED that Purchaser
requests in writing an extension of this Agreement (an "EXTENSION
REQUEST") not less than two years prior to the expiration of the
Initial Term. If Purchaser provides an Extension Request, Purchaser
shall have a period of 90 Days from the date of the Extension Request
to perform due diligence pursuant to Section 5.3. Purchaser shall have
the right to terminate this Agreement at any time after the Initial
Term by providing a notice of termination to Seller, such termination
to be effective not less than 18 months after the date of Seller's
receipt of such notice of termination (it being understood that
Purchaser may provide such notice of termination at any time after the
Extension Request).".
(e) Section 2.3 (PURCHASER'S OPTION TO BUY) shall be amended by inserting,
immediately following the phrase "in accordance with Section 2.2" but prior to
the comma, the following phrase: "and provided that Purchaser shall not have
exercised its right to terminate this Agreement pursuant to Section 2.2".
(f) Section 7.4(a) (ADDITIONAL AGREEMENTS) shall be amended by inserting
at the end of the last sentence of that Section, prior to the final period
("."), the following proviso: "; PROVIDED that this provision shall not apply in
the event that Purchaser terminates this Agreement pursuant to Section 2.2".
(g) Section 7.4(b) (ADDITIONAL AGREEMENTS) shall be amended by deleting
the last sentence of that Section and inserting in its place the following
sentence:
"(i) In the event of termination of this Agreement by Seller or (ii)
if Purchaser does not extend the Initial Term pursuant to Section 2.2
or (iii) if Purchaser terminates this Agreement pursuant to Section
2.2, then at Seller's election, Purchaser shall assign such agreements
to Seller, subject to any required consent of third parties and Seller
shall pay to Purchaser an amount equal to the fair market value of
such agreements at the time of such assignment.".
Page 2
First Amendment to Power Purchase Agreement
(h) Section 8.3(a) (FUEL FOR OPERATIONS; DELIVERY AND ACCEPTANCE) shall be
amended by deleting the last sentence of that Section and inserting in its place
the following sentence:
"(x) In the event of termination of this Agreement by Seller or (y) if
Purchaser does not extend the Initial Term pursuant to Section 2.2 or
(z) if Purchaser terminates this Agreement pursuant to Section 2.2,
then at Seller's election, Purchaser shall assign such agreements to
Seller, subject to any required consent of third parties and Seller
shall pay to Purchaser an amount equal to the fair market value of
such agreements at the time of such assignment.".
(i) Section 10.2 (RESERVATION CHARGES) shall be amended by: (i) deleting
the reference to "6 - 10" in the second line of the first column (CONTRACT YEAR)
of the chart and inserting "6 - 13" in its place; and (ii) deleting the
reference to "11 - 25" in the third line of the first column (CONTRACT YEAR) of
the chart and inserting "14 - 25" in its place.
(j) Section 15.1(a) (TAXES AND FEES) shall be amended by inserting, at the
end of that Section, the following provision:
"Without limiting Purchaser's right to credits, if any, under this
Section 15.1 as the result of any Change-in-Law Taxes and
notwithstanding any provision of this Agreement to the contrary, if
any Change-in-Law Taxes are imposed on Seller or Seller's property as
a result of any Law of the State of Mississippi enacted, amended or
reinterpreted after the Effective Date, the first $1,000,000 of such
Change-in-Law Taxes in any Contract Year shall not be reimbursable by
Purchaser.".
(k) Appendix A (OPTION TO BUY TERM SHEET) shall be amended by deleting the
first sentence of Section 3 of Appendix A (EXERCISE OF OPTION) and inserting the
following sentence in its place:
"Purchaser shall have the right to exercise its Option to Buy only if
Purchaser (a) has exercised its option to extend the Initial Term
pursuant to Section 2.2 of the Agreement and (b) has not exercised its
right to terminate the Agreement pursuant to Section 2.2 of the
Agreement.".
(l) Appendix G (REPLACEMENT POWER) shall be amended by:
(i) inserting, in the second paragraph of Section 2 (PRE-COMMERCIAL
OPERATIONS DATE) of Appendix G, immediately following the phrase "Incremental
Page 3
First Amendment to Power Purchase Agreement
Replacement Power Costs", the following parenthetical "(the "INCREMENTAL
REPLACEMENT POWER COSTS")"; and
(ii) inserting, at the end of the first full paragraph of Section 4
(POST-COMMERCIAL OPERATIONS DATE) of Appendix G, the following provision:
"The Parties hereby agree that no sooner than two years after the
Commercial Operations Date and at Purchaser's request, Seller and
Purchaser shall in good faith re-evaluate the terms and conditions
described in this Section 4 of Appendix G under which Seller may elect
utilize Replacement Power, with the objective of such re-evaluation
being the elimination of any undue administrative burden on either
Party.".
(m) Appendix J (FORM OF LETTER OF CREDIT) shall be amended by deleting
from paragraph A of Appendix J, i) the provision "[Purchaser has failed to pay
the full amount of the Deferred Extension Fee Amount (as defined in the PPA) as
required in Section 2.2 of the PPA] OR " and ii) the provision "[Purchaser has
failed to pay an installment of the Deferred Extension Fee Amount (as defined in
the PPA) as required in Section 2.2 of the PPA] OR".
SECTION 3. EFFECTIVENESS. This First Amendment shall be effective as of
the date first above written upon execution by Seller and Purchaser.
SECTION 4. MISCELLANEOUS.
(a) This First Amendment may be executed in more than one counterpart,
each of which shall be deemed to be an original and all of which when taken
together shall be deemed to constitute one and the same instrument. The Parties
may execute this First Amendment by signing any such counterpart and the
signature pages may be detached from multiple counterparts and attached to a
single counterpart so that all signatures are physically attached to the same
document.
(b) THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, EXCLUSIVE OF CONFLICTS OF LAWS
PROVISIONS.
(c) Except as expressly provided in this First Amendment, the Power
Purchase Agreement shall continue and remain in full force and effect in all
respects.
Page 4
First Amendment to Power Purchase Agreement
IN WITNESS WHEREOF, the Parties have caused this First Amendment to be
executed by their respective duly authorized officers as of the first date above
written.
LSP ENERGY LIMITED PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Executive Vice President
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Page 5
First Amendment to Power Purchase Agreement
SECOND AMENDMENT TO POWER PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO POWER PURCHASE AGREEMENT (this "SECOND
AMENDMENT"), dated as of August 11, 1998, is entered into between LSP Energy
Limited Partnership, a Delaware limited partnership ("SELLER") and Virginia
Electric and Power Company, a Virginia public service corporation ("PURCHASER")
(each, a "PARTY" and collectively, the "PARTIES").
RECITALS
WHEREAS, Seller and Purchaser have entered into Power Purchase
Agreement dated as of May 18, 1998, as amended by the First Amendment to Power
Purchase Agreement dated as of July 22, 1998 (the "POWER PURCHASE AGREEMENT");
and
WHEREAS, Seller and Purchaser desire to amend the Power Purchase
Agreement as set forth in this Second Amendment;
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties agree as follows:
SECTION 1. DEFINITIONS. Unless the context otherwise requires,
capitalized terms used but not otherwise defined in this Second Amendment shall
have the meanings given to them in the Power Purchase Agreement.
SECTION 2. AMENDMENTS TO THE POWER PURCHASE AGREEMENT. Seller and
Purchaser hereby agree to amend the Power Purchase Agreement as follows:
(a) The definition of "Contract Year" shall be amended by replacing
the date "May 31, 2010" with the date "May 31, 2013".
(b) Section 3.3(e) shall be amended by deleting it in its entirety
and inserting the following in its place:
"(e) The Completion Security posted by Seller may be drawn by
Purchaser (I) to the extent that (i) any Incremental Replacement Power
Costs are due by Seller in accordance with Section 2 of Appendix G,
(ii) a positive difference arises between the Replacement Power Costs
and the Contract Energy Costs due by Seller in accordance with Sections
4 and 5 of Appendix G and for which Seller has failed to pay Purchaser
in accordance with Sections 13.1 and 13.2, (iii) Seller
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Second Amendment to Power Purchase Agreement
has failed to pay Purchaser any amount disputed and found to be due
Purchaser under Section 13.1(c) within ten (10) days after Seller's
receipt of notice resolving such dispute, or (iv) Seller has failed to
pay an undisputed amount owed Purchaser when due as required under
Sections 13.1 and 13.2, or (II) as provided in Section 3.3(g) below. In
the event Incremental Replacement Power is provided by Seller in
accordance with Appendix G, Purchaser shall release the Completion
Security to Seller to the extent of the Incremental Replacement Power
Costs that are due Seller. If the Completion Security is drawn pursuant
to this Section 3.3(e) prior to the Commercial Operation Date, Seller
shall have no obligation to replenish the Completion Security, but upon
the Commercial Operation Date and thereafter, as required, Seller shall
have the obligation to replenish the Completion Security to an amount
equal to $10/KW of the Committed Capacity of each Dedicated Unit."
(c) Section 3.3 shall be amended by adding a new subsection (g) under
this section:
"(g) If the Completion Security provided by Seller as Credit Support
hereunder is terminable, or will expire, before the end of the period
for which the Completion Security is required to be available to
Purchaser, such Completion Security shall provide Purchaser the right
to draw on the Completion Security up to the full credit amount if
Seller fails to provide Purchaser a replacement or renewal Completion
Security conforming to the requirements in this Agreement more than
five (5) Business Days before the termination or expiration of such
Completion Security. Seller agrees that in the event the Completion
Security is required to continue to be available to Purchaser hereunder
and Seller fails to provide a replacement or renewal Completion
Security more than five (5) Business Days prior to the termination or
expiration of any such Completion Security then in effect, Purchaser
may draw on the Completion Security up to the full credit amount and
hold such amount in an escrow account until Seller provides a
replacement or renewal Completion Security conforming to the
requirements of this Agreement. Funds place in escrow by Purchaser
pursuant to the preceding sentence shall be drawn on by Purchaser, or
released to Seller, in accordance with this Agreement. Upon Seller's
replacement or renewal of the Completion Security, Purchaser shall
withdraw all remaining funds held by it in the escrow account described
above, and shall transfer such funds to Seller as Seller may direct."
(d) The definition of "Non-Conforming Fuel" shall be amended by
inserting after the words "Section 8.3(a)" the following phrase: "or Fuel which
would not comply with a minimum pressure of 650 psig if delivered to the Lateral
Pipeline at the Fuel
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Second Amendment to Power Purchase Agreement
Metering Point at the ANR Pipeline or a minimum pressure of 550 psig if
delivered to the Lateral Pipeline at the Fuel Metering Point at the Tennessee
Gas Pipeline".
(e) Section 21.4(a) shall be amended to add the following sentence at
the end of this section:
"By choosing to have this Agreement governed by and construed under the
law of the State of New York, the Parties hereto are in no way
submitting to or incorporating into this Agreement any New York
statute, regulation, or order, or any interpretation of any such
statute, regulation or order, that pertains, substantively or
procedurally, to persons or entities that own facilities for the
generation or transmission of electricity in the State of New York or
that engage in transactions involving the generation, sale, purchase or
transmission of electric capacity or electric energy in, or for
consumption in, the State of New York."
(f) The third paragraph of Appendix G, Section 2, Pre-Commercial
Operations Date, shall be amended by deleting the third sentence in such
paragraph and inserting the following in its place:
"If Purchaser is providing Replacement Power, then on a Monthly basis
Purchaser may draw an amount of Completion Security equal to the unpaid
amount of Incremental Replacement Power Cost (if a positive value) for
such month."
SECTION 3. EFFECTIVENESS. This Second Amendment shall be effective as
of the date first above written upon execution by Seller and Purchaser.
SECTION 4. MISCELLANEOUS.
(a) This Second Amendment may be executed in more than one
counterpart, each of which shall be deemed to be an original and all of which
when taken together shall be deemed to constitute one and the same instrument.
The Parties may execute this Second Amendment by signing any such counterpart
and the signature pages may be detached from multiple counterparts and attached
to a single counterpart so that all signatures are physically attached to the
same document.
(b) THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCLUSIVE OF CONFLICTS OF
LAWS PROVISIONS.
(c) Except as expressly provided in this Second Amendment, the Power
Purchase Agreement shall continue and remain in full force and effect in all
respects.
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Second Amendment to Power Purchase Agreement
IN WITNESS WHEREOF, the Parties have caused this Second Amendment to be
executed by their respective duly authorized officers as of the first date above
written.
LSP ENERGY LIMITED PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Executive Vice President
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ R.E. Xxxxxx
-------------------------------
Name: R.E. Xxxxxx
Title: Executive Vice President
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Second Amendment to Power Purchase Agreement
