Exhibit 10.3
POWER PURCHASE AGREEMENT
Dated May 21, 1998
By and Between
LSP ENERGY LIMITED PARTNERSHIP,
as Seller
and
AQUILA POWER CORPORATION
and
UTILICORP UNITED INC.,
as Purchaser
TABLE OF CONTENTS
Page
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SECTION I - DEFINITIONS
1.1 Defined Terms.................................................. 1
1.2 Interpretation.................................................13
1.3 Technical Meanings.............................................14
SECTION II TERM; CONDITION PRECEDENT
2.1 Initial Term...................................................14
2.2 Extension of Term..............................................14
2.3 Conditions Precedent...........................................14
SECTION III - COMMENCEMENT OF OPERATION
3.1 Delivery Start Date............................................15
3.2 Consequences of Delays.........................................15
SECTION IV - SALE AND PURCHASE OBLIGATION
4.1 Sale and Purchase of Energy and Capacity.......................16
4.2 Replacement Power..............................................16
4.3 Measurement and Quality of Electricity.........................17
SECTION V - CONSTRUCTION AND OPERATION OF THE FACILITY
5.1 Construction of the Facility...................................17
5.2 Operation and Maintenance of the Facility......................17
5.3 Relationship to Other Purchasers...............................18
5.4 Scheduled Maintenance..........................................18
5.5 Access to Facility and Facility Site...........................19
5.6 Permits; Compliance with Laws..................................19
SECTION VI - SCHEDULING, DISPATCH AND DELIVERY
6.1 Dispatchable Facility..........................................20
6.2 Dispatch; Scheduling for Delivery..............................20
6.3 Emergency Conditions...........................................22
6.4 Forced Outages.................................................22
SECTION VII - INTERCONNECTION; OTHER SERVICES
7.1 Interconnection Facilities.....................................24
7.2 Interconnection Points.........................................24
7.3 Title and Risk of Loss.........................................25
7.4 Supply of Other Services.......................................25
7.5 Interconnection Agreements.....................................25
SECTION VIII - FUEL ARRANGEMENTS
8.1 Pipeline Interconnection Facilities............................27
8.2 Fuel for Operations; Delivery and Acceptance...................28
8.3 Title and Risk of Loss.........................................29
8.4 Gas Imbalances.................................................29
8.5 Measurement and Quality of Fuel................................29
SECTION IX - METERING
9.1 Metering Devices for Electricity...............................30
9.2 Metering Devices for Fuel......................................30
9.3 Inspection of Metering Devices.................................31
9.4 Adjustments for Inaccurate Measurements........................31
9.5 Remote Access to Metering Devices............................. 32
SECTION X - PAYMENTS
10.1 Reservation Payments...........................................33
10.2 Adjustment to Reservation Payment for Commercial Operation
Delay Period...................................................34
10.3 Adjustment to Reservation Payment after the Delivery Start
Date...........................................................36
10.4 Energy Payments................................................38
10.5 Replacement Power Fuel Payments................................38
10.6 Excess Start-Up Payments.......................................38
10.7 Tracking Account...............................................38
10.8 System Upgrade Credit..........................................38
SECTION XI - COMMISSIONING AND TESTING
11.1 Performance Tests..............................................39
11.2 Sale of Test Energy............................................41
SECTION XII - GUARANTEES DURING OPERATIONS
12.1 Guaranteed Heat Rate...........................................41
12.2 Guaranteed Start-Up Time.......................................42
12.3 Guaranteed Ramp Rate...........................................42
SECTION XIII - BILLING AND PAYMENT
13.1 Billing and Payment............................................42
13.2 Other Payments.................................................43
13.3 Currency and Timing of Payment.................................43
13.4 Records........................................................44
13.5 Default Interest...............................................44
13.6 Credit Support.................................................44
SECTION XIV - REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of Seller.......................45
14.2 Representations and Warranties of Aquila.......................46
14.3 Representations and Warranties of UtiliCorp....................48
14.4 Certificates...................................................49
14.5 Books and Records; Information.................................49
SECTION XV - TAXES
15.1 Taxes and Fees.................................................49
15.2 General........................................................50
SECTION XVI - INSURANCE
16.1 Insurance Required.............................................50
16.2 Evidence and Scope of Insurance................................50
16.3 Term and Modification of Insurance.............................51
16.4 Application of Proceeds........................................51
SECTION XVII - FORCE MAJEURE EVENT
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17.1 Force Majeure Event Defined....................................51
17.2 Applicability of Force Majeure Event...........................52
17.3 Other Effects of Force Majeure Events..........................53
17.4 Delivery Excuse................................................54
SECTION XVIII - TERMINATION AND DEFAULT
18.1 Event of Default...............................................55
18.2 Remedies for Default...........................................57
SECTION XIX - INDEMNIFICATION AND LIABILITY
19.1 Indemnification................................................57
19.2 Fines..........................................................57
19.3 Limitations of Liability, Remedies and Damages.................58
19.4 UCC............................................................58
SECTION XX - DISPUTE RESOLUTION
20.1 Senior Officers................................................60
20.2 Arbitration....................................................61
SECTION XXI - APPOINTMENT OF AQUILA AS AGENT
21.1 Appointment....................................................63
21.2 Presumption of Authority.......................................63
SECTION XXII - MISCELLANEOUS
22.1 Prudent Industry Practices.....................................63
22.2 Change in Prudent Industry Practices...........................63
22.3 Assignment.....................................................64
22.4 Notices........................................................64
22.5 Choice of Law..................................................65
22.6 Entire Agreement...............................................65
22.7 Further Assurances.............................................65
22.8 Waiver.........................................................66
22.9 Modification or Amendment......................................66
22.10 Severability...................................................66
22.11 Counterparts...................................................66
22.12 Confidential Information.......................................66
22.13 Independent Contractors........................................67
22.14 Third Parties..................................................67
22.15 Headings.......................................................67
APPENDIX A - TESTING PROCEDURES FOR CONTRACT CAPACITY
APPENDIX B - METERING EQUIPMENT
APPENDIX C - DESIGN LIMITS
APPENDIX D - FUEL SPECIFICATIONS
APPENDIX E - ELECTRICITY SPECIFICATION
APPENDIX F - REPLACEMENT POWER
APPENDIX G - GUARANTEED HEAT RATES
APPENDIX H - MINIMUM INSURANCE REQUIREMENTS
APPENDIX I - CRITERIA FOR ELECTRIC AND GAS INTERCONNECTION AGREEMENTS
POWER PURCHASE AGREEMENT
This POWER PURCHASE AGREEMENT (this "Agreement"), dated May 21,
1998, is entered into by and between LSP Energy Limited Partnership, a Delaware
limited partnership ("Seller"), and Aquila Power Corporation, a Delaware
corporation ("Aquila"), and UtiliCorp United Inc., a Delaware corporation
("UtiliCorp") (Aquila and UtiliCorp collectively, "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, schedule and take from Seller, electrical capacity,
associated energy, and other services 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.
"AAA" means the American Arbitration Association or any successor
organization.
"Agreement" means this Power Purchase Agreement.
"Annual Availability Adjustment" has the meaning assigned to such
term in Section 10.3.
"ANR" means ANR Pipeline Company.
"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.
"Availability Adjustment Factor" or "AAF" means the actual
availability factor calculated in accordance with the provisions of Section
10.3.
"Billing Period" means each Month used for billing purposes pursuant
to Section XIII.
"Btu" means British thermal unit.
"Business Day" means any Day except Saturday, Sunday or a weekday
that is observed by the NERC as a holiday, as amended from time to time by NERC.
As of the date of this Agreement, such Days observed by NERC as holidays are New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
"Capacity Shortfall" has the meaning assigned to such term in
Section 11.1(d).
"Central Prevailing Time" means Central Daylight Saving Time when
such time is applicable and otherwise means Central Standard Time.
"Change-in-Law" means the adoption, imposition, promulgation or
modification, or change in interpretation or application of any Law or
regulation to which this Agreement or a Party is subject, after the Effective
Date.
"Change-in-Law Taxes" means any new Tax imposed by the federal
(either nationally or regionally) or state government, which is broadly
applicable to the production of energy or the provision of electric generation
capacity, imposed on or measured by the volume or amount of consumption of Fuel,
or gross revenue, gross receipts or comparable measure, and whether
characterized as a sales, gross receipts, Btu, or other similar taxes; provided,
that such Change-in-Law Taxes shall only be applicable to the purchase, sale,
delivery or receipt of energy, capacity, or Fuel under this Agreement.
Change-in-Law Taxes shall not include: (i) any increase in any Tax which exists
as of the Effective Date, (ii) any Tax on Seller's income, or (iii) any Tax on
Seller's real or personal property.
"Commercial Operation Date" means the date on which the Dedicated
Unit is certified pursuant to Section 11.1 to begin commercial operations.
"Commercial Operation Delay Period" is the period of time between
the Delivery Start Date and the Commercial Operation Date, if the Commercial
Operation Date occurs after the Delivery Start Date.
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"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 and the risk to the Party required to take such
action.
"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 Unit.
"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) adequate reserves have been established
with respect thereto in accordance with GAAP, and (ii) neither Party could
reasonably be expected to incur criminal or civil liability with respect
thereto.
"Contract Capacity" means the sum of the Standard Capacity and the
Supplemental Capacity as determined in accordance with Section 11.1. For
purposes of the Reservation Payment, Contract Capacity shall be adjusted to 95
degrees Fahrenheit and 60% relative humidity. This definition shall not restrict
Purchaser's right to take all available capacity and associated energy of the
Dedicated Unit at the ambient conditions at the time.
"Contract Interest Rate" has the meaning assigned to such term in
Section 13.5.
"Contract Year" means the twelve (12)-Month period commencing on the
Delivery Start Date and each twelve(12)-Month period thereafter; provided,
however, that the final Contract Year shall be the period from the first Day of
such Contract Year through the Term of this Agreement.
"Control Center" means the generation control centers of TVA,
Entergy or any other control center, as may be designated in writing by
Purchaser from time to time as being the primary control center for the
Dedicated Unit; provided that such designation shall be reasonably acceptable to
Seller.
"Credit Support" means any of the following in form and substance
reasonably acceptable to the Party receiving such
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document: (a) one or more letters of credit issued by one or more domestic or
foreign banks whose rating is Investment Grade or (b) a guaranty or several
guaranties issued by one or more Persons whose rating is Investment Grade.
"Day" means the 24-hour period beginning and ending at 12:00
midnight (Central Prevailing Time).
"Debt Service" means all fees (including commitment fees) of the
Financing Parties, interest (including net payments under interest rate hedging
agreements), principal and any other amounts due in connection with the
repayment, prepayment or failure to borrow, repay or prepay rate loans or the
prepayment, unwinding or breakage of interest rate hedging transactions, payable
to the Financing Parties under the Financing Documents.
"Debt Service Coverage Ratio" means for any period, (i) Operating
Cash Available For Debt Service for such period divided by (ii) Debt Service for
such period. The Parties acknowledge and agree that it is their intent that the
Debt Service Coverage Ratio calculated under this Contract be the same as the
"Debt Service Coverage Ratio" calculated under the Financing Documents and that
the definitions of Debt Service and Operating Cash Available for Debt Service
hereunder are intended to be the same as the definitions of such terms under the
Financing Documents.
"Dedicated Unit" means the designated Unit of the Facility, the
Contract Capacity and Net Electrical Output of which is dedicated to Purchaser
pursuant to this Agreement.
"Delivered Cost of Fuel" means, for the purposes of this Agreement,
the estimated price for Fuel delivered to the Dedicated Unit for the hour in
Dollars per MMBtu, based on the most recent actual delivered cost of Fuel
including variable supply costs, Fuel transportation costs, Fuel-related taxes,
and other Fuel-related charges.
"Delivery Delay Adjustment" has the meaning assigned to such term in
Section 10.2.
"Delivery Excuse" has the meaning assigned to such term in Section
17.4(b).
"Delivery Start Date" has the meaning assigned to such term in
Section 3.1.
"Diagnostic Period" has the meaning assigned to such term in Section
6.4(a).
"Design Limits" means the parameters set forth in Appendix C.
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"Dispatch" means the ability of the Purchaser to schedule and to
control the electrical output of the Dedicated Unit, through submittal of
schedules, in accordance with this Agreement.
"Dollars" or "$" means the lawful currency of the United States of
America.
"DSCR Certificates" means those certificates provided by Seller to
Purchaser pursuant to Section 13.6(a).
"Early Termination Date" has the meaning assigned to such term in
Section 18.2.
"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, which condition or situation meets the
criteria set forth in Section 6.3 herein.
"Energy Payment" means, for each Billing Period, the payment to be
made by Purchaser to Seller for the Net Electrical Output or energy supplied as
Replacement Power delivered by Seller to Purchaser in accordance with Section
10.4.
"Entergy" means the Entergy Corporation and any of its subsidiaries
including Entergy Mississippi, Inc. and Entergy Services.
"Entergy Interconnection Agreement" means the Interconnection
Agreement to be 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.
"Estimated Standard Capacity" has the meaning assigned to such term
in Section 11.1(d).
"Estimated Supplemental Capacity" has the meaning assigned to such
term in Section 11.1(d).
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"Excess Start-Up Payment" has the meaning assigned to such term in
Section 10.6.
"Extended Outage Period" has the meaning assigned to such term in
Section 6.4(a).
"Extended Term" has the meaning assigned to such term in Section
2.2.
"Extension Notice" has the meaning assigned to such term in Section
2.2.
"Facility" means the natural gas fueled combined cycle electrical
generation plant consisting of three (3) combined cycle Units and having a total
output of approximately 800 MW, to be located in Batesville, Mississippi,
together with any additional facilities and materials, 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 or subsequent
Government Agencies with regulatory jurisdiction.
"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) amounts
become available for borrowing from the Financing Parties.
"Financing Documents" means the loan agreements (including
agreements for any subordinated debt), lease agreements, notes, bonds,
indentures, security agreements, interest rate swap agreements and any other
interest rate hedging agreements and any other documents 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 or any
other credit enhancement to Seller for the acquisition, construction, ownership,
operation, maintenance or leasing of the Facility.
"Force Majeure Event" means an event, condition or circumstance
described in Section 17.1.
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"Forced Outage" means a cessation of operation or reduction in
available capacity of the Dedicated Unit that is not the result of (a) a
Scheduled Maintenance Outage, (b) a Force Majeure Event, (c) a Delivery Excuse,
or (d) steady-state operation outside of the deviation band limits in accordance
with Section 6.2(d); provided that, for the purposes of this Agreement, a
period of cessation of operation or reduction in available capacity of the
Dedicated Unit shall not be deemed to be a Forced Outage to the extent Seller is
responsible for Replacement Power during such period and Seller delivers and/or
pays for such Replacement Power in accordance with this Agreement.
"Forced Outage Hours" means the actual hours of Forced Outage per
Month, prorated based on the ratio of the capacity available to the Contract
Capacity for partial outages; provided that to the extent Seller has undertaken
any Scheduled Maintenance Outage that does not conform to the requirements of
Section 5.4 but is necessary in Seller's reasonable judgment, the hours of such
Scheduled Maintenance Outage shall be counted as Forced Outage Hours except to
the extent Seller delivers and/or pays for Replacement Power in accordance with
this Agreement.
"Fuel" means natural gas, which is the fuel used by the Facility.
"Fuel Metering Points" means the delivery locations specified in
Appendix B.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"GDP-IPD Index" means the ratio of the Gross Domestic Product
Implicit Price Deflator published in the National Income and Product Account by
the U. S. Department of Commerce on the date of determination relative to the
value of 110.95 on January 1, 1997.
"Government Agency" means any federal, state, local, territorial or
municipal government, governmental department, commission, board, bureau,
agency, instrumentality, judicial or administrative body (or any agency,
instrumentality or political subdivision thereof).
"Governmental Approval" means any authorization, consent, approval,
license, lease, ruling, permit, exemption, filing, variance, order, judgment,
decree, publication, notice to, declarations of or with or regulation by or with
any Government Agency relating to the acquisition, ownership, occupation,
construction, start-up, testing, operation or maintenance of the Dedicated Unit
and Common Facilities or to the execution, delivery or performance of this
Agreement.
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"Guaranteed Heat Rate" means the Guaranteed Heat Rate as determined
in accordance with Appendix G.
"Guaranteed Ramp Rate" has the meaning assigned to such term in
Appendix C.
"Guaranteed Start-Up Time" has the meaning assigned to such term in
Appendix C.
"Heat Rate" means the number of Btu's used to produce one KWh of
energy at the Facility.
"Hour Ending" or "HE" means a consecutive sixty minute period ending
at :00. For example, HE 7 means the period from 6:01 am Central Prevailing Time
("CPT") through 7:00 am CPT.
"Incremental Replacement Power Cost" has the meaning assigned to
such term in Appendix F.
"Initial Term" has the meaning assigned to such term in Section 2.2.
"Interconnection Agreements" means the TVA Interconnection Agreement
and the Entergy Interconnection Agreement.
"Interconnection Facilities" means the interconnection facilities
that will 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 and Section 7.2, or such other
points as the Parties may agree.
"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 neither entity is then rating such debt of such Person) for such
Person's long-term unsecured debt obligations.
"KW" means kilowatt.
"KWh" means kilowatt-hour.
"Law" means any statute, law, rule or regulation, whether now or at
any time in the future in effect.
"Lien" means, with respect to any property of any Person, any
mortgage, lien, pledge, charge, lease, easement,
8
servitude, right of others or security interest or encumbrance of any kind in
respect of such property of such Person.
"Major Inspection" means, with respect to the combustion turbine of
the Dedicated Unit, inspection of the combustor baskets, transitions, Fuel
nozzles, transition seals, removal of the turbine cover and inspection of the
turbine vanes and blades, removal of the compressor cover, inspection of the
rotor, inspection of compressor diaphragms, and other such maintenance performed
in accordance with manufacturer's recommendations.
"MMBtu" means million Btu.
"Month" means a period of Days beginning at Hour Ending 0100
(Central Prevailing Time) on the first Day of a calendar month and ending at
Hour Ending 2400 (Central Prevailing Time) on the last Day of the same calendar
month. If used in connection with a calendar year, a "Month" shall be a calendar
month.
"Monthly Availability Adjustment" has the meaning assigned to such
term in Section 10.3(a).
"Moody's" means Xxxxx'x Investors Service, Inc.
"MVAR" means megavolt-ampere reactive.
"MW" means megawatt.
"MWh" means megawatt-hour.
"Net Electrical Output" means, for any period, the net electric
energy output (measured in MWhs), and other services as described in Section
7.4, of the Dedicated Unit delivered to Purchaser at the Interconnection Points
pursuant to Purchaser's Dispatch of the Dedicated Unit.
"NERC" means the North American Electric Reliability Council or any
such succeeding entity.
"Non-Conforming Fuel" has the meaning assigned to such term in
Section 8.5(b).
"Off-Peak Hour" means any hour that is not a Peak Hour.
"Operating Cash Available For Debt Service" means, for any calendar
quarter (i) all payments from the sale of electricity (including energy and
capacity) generated or distributed by the Facility, net payments receivable by
Seller under interest rate hedging agreements, proceeds of business interruption
insurance, and investment income on amounts in reserve accounts (but only to the
extent not retained in such
9
reserve accounts), minus (ii) (A) all operation and maintenance costs which
shall not include (1) major maintenance costs paid from the major maintenance
reserve account, (2) emission offset costs paid from the emission offset reserve
account, (3) depreciation, (4) payments for repair or restoration of the
Facility made from insurance proceeds and other amounts in the loss proceeds
account, (5) the subordinated portion of the fee payable to the Facility
operator, (6) any subordinated debt amounts, (7) distributions of any kind to
Seller and (8) capital expenditures other than those included in and approved as
part of Seller's annual operating budget, and (B) deposits into the major
maintenance reserve account, the emissions offsets reserve account and the
expense accrual subaccount established under the Financing Documents, all as
more particularly described in the Financing Documents.
"Part Load Adjustment Factor" has the meaning assigned to such term
in Appendix G.
"Peak Hour" means any hour from Hour Ending 7 (Central Prevailing
Time) through Hour Ending 22 (Central Prevailing Time) on any Day, unless
otherwise revised in accordance with Section 22.2.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or Government Agency.
"Pipeline Interconnection Facilities" means the pipelines to be
constructed and installed by Seller pursuant to Section 8.1 to connect the
Facility with Tennessee Gas Pipeline, ANR Pipeline and any other pipeline
interconnection facilities as the Parties may agree.
"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.
"Replacement Power" means electric generation capacity and energy
provided by Seller from time to time to Purchaser from
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sources other than the Dedicated Unit pursuant to the Replacement Power
Arrangements, or provided by Purchaser with Seller compensating Purchaser for
any Incremental Replacement Power Costs each in accordance with the provisions
of this Agreement and the requirements of Appendix F.
"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 that Seller is to provide and/or pay for as
delivered to the Replacement Power Delivery Point.
"Replacement Power Delivery Point" means either the Interconnection
Point or one or more points designated by Purchaser for the receipt of
Replacement Power. Designation of an alternative Replacement Power Delivery
Point by Purchaser shall be reasonably acceptable to Seller and shall become
effective on the later of (i) thirty (30) Days after notice of such change and
acceptance by seller or (ii) the expiration of any Replacement Power
Arrangements in place at the time of the notice, unless otherwise agreed by both
Parties to be effective at an earlier time. Seller may request that Purchaser
designate an alternative Replacement Power Delivery Point.
"Replacement Power Fuel Payment" has the meaning assigned to such
term in Section 10.5.
"Reservation Charge" has the meaning assigned to such term in
Section 10.2(a).
"Reservation Payment" means, for each Billing Period, the payment to
be made by Purchaser to Seller for the Contract Capacity available to Purchaser
from the Dedicated Unit or Replacement Power delivered by Seller to Purchaser
during such Billing Period, in accordance with Section 10.1(b) subject to the
other terms of this Agreement. The Reservation Payment includes all of Seller's
fixed costs associated with the Dedicated Unit and the Common Facilities,
including, but not limited to, fixed operating and maintenance costs and
property taxes.
"S&P" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
"Scheduled Maintenance Hours" or "SMH" means the actual number of
hours during which the Dedicated Unit is shut down during a Scheduled
Maintenance Outage.
"Scheduled Maintenance Outage" means a time period during which the
Dedicated Unit (or any Common Facilities affecting the output of the Dedicated
Unit) is shut down for Facility maintenance in accordance with Section 5.4 or as
otherwise agreed upon by the Parties.
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"Seasonal Standard Heat Rate" means the average Heat Rate at full
Standard Capacity as specified in Appendix G.
"Standard Capacity" means the generating capacity of the Dedicated
Unit at full combustion turbine output without duct firing or steam injection.
The Standard Capacity shall be determined in accordance with Section 11.1 and
Appendix A. The Standard Capacity shall adjust with ambient conditions in
accordance with the actual capability of the Dedicated Unit.
"Start-Up" means the successful ignition of the Dedicated Unit
pursuant to a Dispatch order from Purchaser and the operation of the Dedicated
Unit up to its minimum load in accordance with the Design Limits.
"Supplemental Capacity" means any capacity of the Dedicated Unit in
excess of the Standard Capacity. Supplemental Capacity shall be determined in
accordance with Section 11.1 and Appendix A. Supplemental Capacity shall adjust
with ambient conditions in accordance with the actual capability of the
Dedicated Unit.
"Surplus Reservation Charge" has the meaning assigned to such term
in Section 10.1(b).
"Surplus Supplemental Capacity" has the meaning assigned to such
term in Section 10.1(b).
"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 sales, 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
12.1(a).
"Trunkline Gas" means Trunkline Gas Company.
"TVA" means Tennessee Valley Authority, a Federal generation and
transmission utility.
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"TVA Interconnection Agreement" means the Interconnection Agreement
to be 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.
"UCC" has the meaning assigned to such term in Section 19.4.
"Unit" means any of the three (3) gas fueled combined cycle electric
generating trains located at the Facility.
"Unit Electricity Meter" has the meaning assigned to such term in
Appendix B.
"Unit Fuel Meter" has the meaning assigned to such term in Appendix
B.
"Utility Meters" has the meaning assigned to such term in Appendix
B.
"Value Factor" means, for any Month, the factor set forth opposite
such Month in the tables in Section 10.2.
Section 1.2 Interpretation. Unless the context otherwise requires:
(a) Words singular and plural in number will be deemed to include
the other and pronouns having masculine or feminine gender will be deemed to
include the other.
(b) Any reference in this Agreement to any Person includes its
permitted 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.
(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.
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(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 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 or Day on which banks are closed in New York, New
York, then such payment, act, matter or thing shall, unless otherwise expressly
provided for herein, occur on the next succeeding 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; CONDITION PRECEDENT
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 fifteen (15) years and seven (7) Months 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 shall be
extended for five (5) years (or such longer period as mutually agreed by the
Parties) (the "Extended Term""), provided that Purchaser notifies Seller in
writing of an extension of this Agreement (an "Extension Notice") by the later
of July 31, 2013 or twenty-nine (29) Months prior to the expiration of the
Initial Term.
Section 2.3 Condition Precedent. The continued effectiveness of this
Agreement is contingent upon the occurrence of the Financial Closing Date by no
later than November 15, 1998, unless otherwise mutually agreed in writing.
Unless such condition is satisfied or waived by such date this Agreement shall
terminate on such date and neither Party shall have any further liability to the
other Party under this Agreement.
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SECTION III
COMMENCEMENT OF OPERATION
Section 3.1 Delivery Start Date. The Delivery Start Date shall be
June 1, 2000, or such later date that shall reflect a day-for-day extension for
each Day that the Commercial Operation Date is delayed due to (i) a Force
Majeure Event; or (ii) a Delivery Excuse.
Section 3.2 Consequences of Delays.
(a) If Seller does not reasonably expect to achieve the Commercial
Operation Date by the Delivery Start Date, Seller shall provide prompt written
notice thereof not later than ninety (90) Days prior to the Delivery Start Date,
(a "Commercial Operation Delay Notice") to Purchaser of such expectation, the
expected period of delay and the cause of the delay. Seller's estimate of the
expected period of delay shall be based on the best information obtained by
Seller, and Seller shall promptly notify Purchaser of any expected changes in
such period. Seller shall provide Purchaser with written notice not later than
eighty (80) Days prior to the Delivery Start Date as to whether Seller will
either (i) elect to be responsible for Replacement Power for the duration of the
Commercial Operation Delay Period in accordance with Section 3.2(b), or (ii)
elect to incur a Delivery Delay Adjustment for the duration of the Commercial
Operation Delay Period in accordance with Section 10.2(a).
(b) If Seller elects to be responsible for Replacement Power, then
within five (5) Business Days of the second notice given in Section 3.2(a), the
Seller shall provide written notice to Purchaser indicating whether (i) Seller
elects to provide Replacement Power, or (ii) Seller elects to have Purchaser
provide Replacement Power in which case Seller shall compensate Purchaser for
Incremental Replacement Power Costs for the duration of the Commercial Operation
Delay Period in accordance with Appendix F.
(c) If Seller has not provided the Commercial Operation Delay Notice
by the date specified in Section 3.2(a), but in any case has not provided at
least ninety (90) Days notice of any delay in the Commercial Operations Date,
then Replacement Power shall be provided by the Purchaser and Seller shall
compensate Purchaser for the Incremental Replacement Power Costs for the
duration of the Commercial Operation Delay Period in accordance with Appendix F.
(d) Notwithstanding any provision in this Agreement to the contrary,
the Seller shall not be responsible for delays and any associated requirement
for Replacement Power attributable to a Force Majeure Event or Delivery Excuse.
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(e) Notwithstanding any provision in this Agreement to the contrary,
Purchaser may terminate this Agreement if the Commercial Operation Date is not
achieved by June 1, 2001; provided that if: (i) the delay in achieving the
Commercial Operation Date is due to a Force Majeure Event or a Delivery Excuse,
and (ii) the Delivery Start Date has occurred prior to June 1, 2001, then the
Commercial Operation Date shall be extended one Day for each Day of the delay,
however such date shall be no later than June 1, 2002.
SECTION IV
SALE AND PURCHASE OBLIGATIONS
Section 4.1 Sale and Purchase of Energy and Capacity. Subject to the
terms and conditions of this Agreement, Seller shall sell, make available, and
deliver, and Purchaser shall purchase and accept, (a) on and after the later to
occur of (i) the Delivery Start Date or (ii) the Commercial Operation Date, and
for the Term of this Agreement, the Contract Capacity, Net Electrical Output,
and other services as described in Section 7.4 as Dispatched by Purchaser in
accordance with Section 6.2; and (b) on and after the Delivery Start Date,
Replacement Power provided by Seller pursuant to Section 3.2 or Section 6.4.
Section 4.2 Replacement Power. When Seller is delivering Replacement
Power to Purchaser, Seller shall be obligated to deliver the amount of capacity
and energy and other services (with other services at no cost to Seller, except
to the extent required to deliver Replacement Power to the Replacement Power
Delivery Point) scheduled by Purchaser, up to the Contract Capacity, which, for
the purposes of this Section 4.2 for the Months of June, July, August and
September, shall be no less than the Contract Capacity at 95 degrees Fahrenheit
and 60 percent relative humidity and for all other Months, no less than the
Contract Capacity at 59 degrees Fahrenheit and 60 percent relative humidity.
Seller shall make appropriate power purchase and transmission arrangements to
provide capacity and energy to Purchaser which is of the same level of firmness
(e. g. unit contingent with minimum availability of 96%) or higher level of
firmness (e.g., system firm, firm with liquidated damages, or as firm as utility
native load) as the Contract Capacity hereunder. Replacement Power procured by
Purchaser with Seller compensating Purchaser may be of a lower level of firmness
during a Diagnostic Period and Extended Outage Period.
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Section 4.3 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 E.
(b) In the event that electricity delivered by Seller hereunder
fails to conform to the specifications set forth in Appendix E, Seller shall (as
soon as reasonably practicable after becoming aware thereof) notify Purchaser of
the same and of its best good faith estimate of the duration and extent of such
failure to conform, and Seller shall make Commercially Reasonable Efforts to
cure such failure as soon as reasonably practicable thereafter. If Seller is
unable to deliver electricity to Purchaser due to such failure to conform to
specifications, such inability to deliver shall be considered a Forced Outage.
SECTION V
CONSTRUCTION AND OPERATION OF THE FACILITY
Section 5.1 Construction of the Facility
(a) Prior to the Financial Closing Date, Seller shall designate to
Purchaser which Unit to be constructed at the Facility is Purchaser's Dedicated
Unit.
(b) Starting sixty (60) Days after the Effective Date, Seller shall
report to Purchaser, each Month, on the construction status and completion
schedule for the Dedicated Unit and the Common Facilities. Such report shall, at
a minimum, provide a schedule showing items completed and to be completed, the
expected Commercial Operation Date, and the estimated percent complete.
Section 5.2 Operation and Maintenance of Facility.
(a) Seller shall operate and maintain the Dedicated Unit 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 of the expected
operating schedule and generation capacity of the Dedicated Unit on that Day and
any limitations, restrictions, deratings or outages affecting the Dedicated
Unit.
(c) Seller shall, during the Term, only employ appropriately
qualified (determined in Seller's reasonable opinion consistent with applicable
industry standards) personnel for the purposes of operating and maintaining the
Dedicated Xxxx
00
and Common Facilities, and coordinating operations with the Entergy System and
the TVA System.
Section 5.3 Relationship to Other Purchasers.
(a) No other purchaser of output of any Unit other than the
Dedicated Unit shall have superior rights than Purchaser to any Common Facility.
(b) During periods where the output or capacity of Common
Facilities, including Pipeline Interconnection Facilities, is restricted, such
available output or capacity shall be apportioned to each unit on a pro-rata
basis consistent with Prudent Industry Practice, unless otherwise agreed in
writing by all affected purchasers.
Section 5.4 Scheduled Maintenance.
(a) At least thirty (30) Days prior to the Commercial Operation Date
and thereafter prior to June 1 of each subsequent calendar year, Purchaser shall
provide to Seller a non-binding proposed schedule of its projected Dispatch for,
in the case of the first such schedule, the nineteen (19)-Month period beginning
on the Commercial Operation Date, and thereafter for the twelve (12)-Month
period beginning on January 1st of the following calendar year.
Based on Purchaser's projected Dispatch schedule and subject to
Section 5.4(b), Seller shall provide Purchaser with its proposed maintenance
schedule for such twelve (12)-Month period within ten (10) Days following
receipt of Purchaser's projected Dispatch schedule. Purchaser and Seller shall
agree on the expected timing of the Scheduled Maintenance Outages for such
twelve (12)-Month period with no Scheduled Maintenance Outages to occur during
the period from June 15 to September 15. Scheduled Maintenance Outages may be
taken in any number of non-contiguous periods, provided number of Scheduled
Maintenance Hours does not exceed the amounts specified in Section 5.4(b).
Seller shall coordinate all Scheduled Maintenance Outages with Purchaser by
giving Purchaser written notice at least ten (10) Days prior to a Scheduled
Maintenance Outage such notice to include the scheduled start date, time, and
duration of such Scheduled Maintenance Outage. Unless otherwise agreed by the
Parties, acting reasonably, the start date of a Scheduled Maintenance Outage
shall occur within one (1) Day of the date the Parties agreed to schedule such
Scheduled Maintenance Outage as set forth above. To the extent the start of a
Scheduled Maintenance Outage deviates by more than one (1) Day from the schedule
that had been agreed to, such deviation shall count towards the 120 hours
available to Seller pursuant to Section 5.4(c).
(b) Scheduled Maintenance Outages shall be determined in accordance
with manufacturer's recommendations in accordance
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with formulae provided by relevant equipment manufacturers. The number of
Scheduled Maintenance Hours shall be further limited to 336 hours each calendar
year in which a minor inspection (e.g. combustion inspection) occurs, 480 hours
each calendar year in which a hot gas path inspection occurs, and 840 hours each
calendar year in which a Major Inspection occurs. Subject to Purchaser not
exceeding 200 Start-Ups per year, the Scheduled Maintenance Outage frequency
shall be no greater than annually for a minor inspection, every three (3) years
for a hot gas path inspection, and every five (5) years for a Major Inspection;
provided, however, that such maintenance frequencies shall be further subject to
changes in the manufacturer's recommendations. To the extent Purchaser exceeds
200 Start-Ups in a calendar year, and to the extent manufacturer's
recommendations require a greater frequency of maintenance than that described
herein, the frequency of such maintenance shall be adjusted in accordance with
such manufacturer's recommendations.
(c) If required in accordance with Prudent Industry Practices or
manufacturers' recommendations, Seller may utilize up to 120 Scheduled
Maintenance Hours per calendar year to perform maintenance repairs at a
different time than designated pursuant to Section 5.4(a). Seller shall provide
Purchaser with no less than two (2) Business Days prior notice of such
requirement; provided that Seller shall not be entitled to make such
re-allocation of Scheduled Maintenance Hours during the period from June 15
through September 15 without the prior consent of Purchaser. Seller shall use
its best efforts to schedule such Scheduled Maintenance Outages in a manner that
allows Scheduled Maintenance Outages of less than eight (8) contiguous hours to
occur during Off-Peak Hours.
Section 5.5 Access to Facility and Facility Site. Seller authorizes
Purchaser and its authorized agents, employees and inspectors to have access to
the Facility and the Facility Site, upon reasonable prior notice (in light of
the circumstances) and subject to the safety rules and regulations of Seller,
(i) in connection with the operation and maintenance of the Entergy System or
the TVA System (including for the purpose of conducting such operating tests and
inspections as are reasonably deemed necessary to ascertain that the intertie
equipment related to the Interconnection Facilities is functioning properly),
(ii) solely for the purpose of reading and maintaining metering equipment, or
examining, repairing or removing any of Purchaser's property, or (iii) to
witness scheduled maintenance.
Section 5.6 Permits; Compliance with Laws.
(a) 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
operation and
19
maintenance of the Facility and (ii) for Seller to perform its obligations under
this Agreement. Notwithstanding the foregoing, Seller shall not be deemed in
default of this obligation to the extent Seller is Contesting the application,
interpretation, order, or other legal direction or Governmental Approval of any
such Governmental Agency in good faith and with due diligence through
appropriate proceedings or to the extent non-compliance does not have a material
adverse effect on Seller's performance.
(b) 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. Notwithstanding the
foregoing, Seller shall not be deemed in default of this obligation to the
extent Seller is Contesting the application, interpretation, order, or other
legal direction of any such Governmental Agency in good faith and with due
diligence through appropriate proceedings or to the extent non-compliance does
not have a material adverse effect on Seller's performance.
(c) Purchaser shall, at all times, comply with all Laws necessary
for Purchaser to perform its obligations under this Agreement. Notwithstanding
the foregoing, Purchaser shall not be deemed in default of this obligation to
the extent Purchaser is Contesting the application, interpretation, order, or
other legal direction or Governmental Approval of any such Governmental Agency
in good faith and with due diligence through appropriate proceedings or to the
extent non-compliance does not have a material adverse effect on Purchaser's
performance.
SECTION VI
SCHEDULING, DISPATCH AND DELIVERY
Section 6.1 Dispatchable Facility. The Facility shall be fully
dispatchable by Purchaser within the Design Limits specified in Appendix C. The
Purchaser shall have the discretion to Dispatch the Net Electrical Output from
the Dedicated Unit consistent with Prudent Industry Practices and the Design
Limits.
Section 6.2 Dispatch; Scheduling for Delivery.
(a) Purchaser may Dispatch the Dedicated Unit commencing on later to
occur of (i) the Delivery Start Date or (ii) the Commercial Operation Date.
(b) Prior to the first Day of each Month, Purchaser shall provide to
Seller good faith estimates of the amounts of
20
energy to be scheduled by Purchaser from the Dedicated Unit for each hour of
such Month.
(c) Purchaser shall inform Seller on a daily basis of the projected
schedule for Dispatch for each hour of the following Day. Such daily schedule
will be provided to the Seller prior to the deadline for submission to the
applicable Control Center. Purchaser shall inform Seller of confirmation of the
schedule by the Control Center. Purchaser shall be entitled to subsequently
change such schedule subject to the Design Limits, other technical
specifications of the Facility, and the terms of this Agreement. Notification of
same-day schedule changes shall be by telephone and shall be recorded on
Purchaser's log sheets.
(d) Consistent with Prudent Industry Practices and the Design
Limits, Seller shall operate the Dedicated Unit to promptly comply with the
Dispatch by the Purchaser. Such operation shall include generating energy within
applicable deviation band limits of the schedule provided by Purchaser. The
Parties recognize that at present, TVA and Entergy do not have deviation band
limits in place for generation such as the Dedicated Unit. Until such time as
limits are specified in applicable tariffs, the Parties shall use the deviation
band limits as specified in the Energy Imbalance Service Schedules of the
Entergy and TVA open-access transmission service tariffs as in effect from time
to time (currently +/- 1.5% for Entergy with a minimum of 1 MW integrated
hourly, and +/- 1.5% for TVA with a minimum of 2 MW) for steady-state operation
(operation between 70% of Standard Capacity and the Contract Capacity). When and
to the extent Entergy and/or TVA place other limits into effect, said new limits
shall similarly apply. If the Dedicated Unit generates energy outside of such
deviation band limits during steady-state operation, Seller shall be responsible
for any energy imbalance charges or penalties imposed under such tariffs by
Entergy or TVA upon Purchaser; provided, however, if Purchaser is exercising
automatic generation control over the Dedicated Unit, then such imbalance
charges or penalties shall be the responsibility of Purchaser. If the Dedicated
Unit generates energy outside of such deviation band limits during Start-Up or
shut down, no energy imbalance charges or penalties shall be the responsibility
of Seller and any such imbalance charges or penalties shall be paid by
Purchaser. If the Dedicated Unit generates energy outside of such deviation band
limits due to a Forced Outage, Force Majeure Event, or Delivery Excuse, Seller
shall provide prompt notice to the Control Center of the revised schedule
necessary to take into account the Forced Outage, Force Majeure Event, or
Delivery Excuse. In such event, if Seller does not provide prompt notice to the
Control Center, then Seller shall be responsible for any energy imbalance
charges or penalties actually imposed under such tariffs by Entergy or TVA upon
Purchaser, otherwise, Seller shall not be responsible for any energy imbalance
21
charges or penalties and any such imbalance charges or penalties shall be paid
by Purchaser. Any operation of any Dedicated Unit outside of the deviation band
limits for which Seller is responsible for a portion of any imbalance charge or
penalty imposed under a tariff by Entergy or TVA shall not count as a Forced
Outage, and Seller shall not be responsible to supply or reimburse Purchaser for
Replacement Power during such time.
Section 6.3 Emergency Conditions. The Facility may be disconnected
or curtailed from the Entergy System and/or the TVA System if:
(a) an Emergency Condition occurs on the portion of the Entergy
System or the TVA System that is interconnected with the Facility and there are
no means of delivering Net Electrical Output from the Dedicated Unit to the
Entergy System or the TVA System, as the case may be;
(b) such disconnection or curtailment is required to permit repairs
to the Entergy System and/or the TVA System or the connection of other lines,
customers, or producers of capacity and energy by TVA or Entergy;
(c) such disconnection or curtailment is required for equipment
maintenance on the Entergy System or the TVA System, as applicable, or to
facilitate restoration of line outages; or
(d) such disconnection or curtailment is necessary for the operation
of the Entergy System and/or the TVA System consistent with Prudent Industry
Practice, other than for economic reasons;
(e) any other event for disconnection or curtailment as outlined in
the Entergy Interconnection Agreement or the TVA Interconnection Agreement; and
(f) Seller has been directed by Entergy and/or TVA to disconnect or
curtail the Facility as set forth above.
Section 6.4 Forced Outages.
(a) Seller shall immediately notify Purchaser after discovering that
the Dedicated Unit is unable to deliver all or part of the Net Electrical
Output. Each such period shall be divided into two distinct, contiguous periods:
(i) the period beginning at the time of the occurrence of the outage until the
end of the hour starting at 11:00 p.m. (Central Prevailing Time) of the second
following Day (the "Diagnostic Period") and (ii) the period from the end of the
Diagnostic Period until resumption of the delivery of the full Net Electrical
Output pursuant to the Dispatch schedule provided by Purchaser (the "Extended
Outage Period").
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(b) As soon as practicable, but in any event not later than
forty-eight (48) hours after the beginning of the Diagnostic Period, Seller
shall notify Purchaser of:
(i) the cause (or if not known, Seller's best estimate) of the
Forced Outage;
(ii) the proposed corrective action;
(iii) Seller's best estimate of the expected duration of the
Diagnostic Period and Extended Outage Period;
(iv) Seller's election regarding Replacement Power in the
Diagnostic Period which may be either (1) that Seller shall
compensate Purchaser for Incremental Replacement Power Costs
in accordance with Appendix F or (2) that Seller shall not be
responsible for Replacement Power during the Diagnostic Period
with such hours included as Forced Outage Hours in any
Availability Adjustment Factor calculations; and
(v) Seller's election regarding Replacement Power in any Extended
Outage Period which may be either (1) that Seller shall supply
Replacement Power, (2) that Purchaser shall provide
Replacement Power and Seller shall compensate Purchaser for
Incremental Replacement Power Costs in accordance with
Appendix F or (3) that Seller shall not be responsible for
Replacement Power during the Extended Outage with such hours
included as Forced Outage Hours in any Availability Adjustment
Factor calculations.
(c) Seller's estimate of the duration of the outage shall be based
on the best information obtained by Seller and Seller shall promptly notify
Purchaser of any expected changes in such period. During any Extended Outage
Period in which Seller is supplying Replacement Power, Purchaser shall continue
to schedule energy as described in Section VI.
(d) Upon notice from Seller to Purchaser of the ability of
resumption of delivery of the Net Electrical Output, and expiration of any
Replacement Power Arrangements in effect, any Diagnostic Period or Extended
Outage Period then in effect shall end and Dispatch shall continue as described
in Section VI. If Seller is able to resume delivery of the Net Electrical Output
prior to the expiration of any Replacement Power Arrangements where Seller has
elected to provide Replacement Power, Seller shall resume delivery of the Net
Electrical Output and liquidate its Replacement Power Arrangements, in which
case, any gain or
23
loss realized by Seller shall be for the Seller's own account. If Seller is able
to resume delivery of the Net Electrical Output prior to the expiration of any
Replacement Power Arrangements where Purchaser is procuring Replacement Power,
Seller shall resume delivery of the Net Electrical Output and Purchaser shall
liquidate such Replacement Power Arrangements, in which case, any gain or loss
realized by Purchaser shall be for the Purchaser's own account.
(e) Consistent with Prudent Industry Practices, but without limiting
Purchaser's remedies available under Sections 6.4(b) or 10.3 of this Agreement,
Seller shall use Commercially Reasonable Efforts to avoid Forced Outages and to
minimize the length of any Forced Outages.
SECTION VII
INTERCONNECTION; OTHER SERVICES
Section 7.1 Interconnection Facilities. Seller shall own, 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. The Parties agree that, notwithstanding
any provision of this Agreement to the contrary, the effectiveness of this
Agreement shall not be contingent upon Purchaser's ability to secure
transmission service agreements with any transmitting utilities 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 to Purchaser to Entergy and TVA at the Interconnection Points
for receipt by Purchaser pursuant to Purchaser's transmission service agreements
and the Interconnection Agreements in accordance with the terms of Appendix I.
The interconnection voltage shall be at 161 kV for TVA and 161 kV or 230 kV for
Entergy; provided, that if the voltage of the interconnection to Entergy is 161
kV, it shall be immediately stepped up to 230 kV at no cost to Purchaser. Seller
shall pay all costs associated with interconnecting the Dedicated Unit to the
TVA System and to the Entergy System, including any facilities upgrades required
by TVA and/or Entergy. Seller shall use Commercially Reasonable Efforts to
execute the Entergy Interconnection Agreement and the TVA Interconnection
Agreement by February 28, 1999 (provided that such date shall be extended on a
Day-to-Day basis for and delay caused by a Force Majeure Event or Delivery
Excuse). Seller shall provide Purchaser with final drafts of the Entergy
Interconnection Agreement and the TVA Interconnection Agreement and any
amendments thereto for Purchaser's review. Purchaser may terminate this
Agreement with
24
written notice to Seller within ten (10) Days after February 28, 1999 (or such
later date due to a Force Majeure Event or Delivery Excuse) if by such date
Seller has not executed the Entergy Interconnection Agreement and the TVA
Interconnection Agreement or other agreements or if such Interconnection
Agreements or other agreements with TVA and Entergy do not meet all of the
electric interconnection agreement criteria specified in Appendix I.
Section 7.3 Title and Risk of Loss. As between the Parties, Seller
shall be deemed to be in exclusive control (and responsible for any damages or
injury caused thereby) of the Net Electrical Output prior to and at the
Interconnection Points and Purchaser shall be deemed to be in exclusive control
(and responsible for any damages or injury caused thereby) of the Net Electrical
Output from the Interconnection Points. Title to and risk of loss related to the
Net Electrical Output shall transfer from Seller to Purchaser at the
Interconnection Points. Without limiting the foregoing, Seller shall not be
responsible for any failure of Entergy or TVA to accept delivery of Net
Electrical Output at the applicable Interconnection Point unless attributable to
a default of Seller under the Entergy Interconnection Agreement or TVA
Interconnection Agreement, as applicable. Each Party shall reimburse the other
Party from any cost of lost Net Electrical Output when title to the Net
Electrical Output is vested in such other Party.
Section 7.4 Supply of Other Services. Purchaser shall be responsible
for obtaining and paying for transmission services and any ancillary or control
area services required by FERC, Entergy, TVA, or any independent system operator
or other transmission utility with respect to the delivery and transmission of
Net Electrical Output past the Interconnection Points. Purchaser may Dispatch
the Dedicated Unit with the objective to avoid the need for energy imbalance
service from a control area service provider, and to provide reactive power,
load following (consistent with the scheduling), voltage control, and frequency
response, provided that such services do not cause the Facility or the Dedicated
Unit to operate outside of the Design Limits, and do not impose any additional
costs or liabilities on Seller, including, but not limited to the installation
of automatic generation control equipment. Seller shall provide such services,
including but not limited to automatic generation control, to the extent that
Purchaser has agreed to be responsible for any incremental costs incurred by
Seller to provide such services subject to mutual agreement of the Parties
working in good faith to arrive at an equitable arrangement.
Section 7.5 Interconnection Agreements.
(a) Purchaser may select the initial applicable control area for the
Unit and Seller shall use Purchaser's selection when
25
selecting the initial control area in accordance with the Interconnections
Agreements. Purchaser shall also have the right to request that the Dedicated
Unit be transferred from the Entergy or TVA control area to the other control
area, on a no more than annual frequency, provided, that such transfer shall be
at Purchaser's sole cost.
(b) Seller shall use Commercially Reasonable Efforts to define
scheduling procedures with Entergy and TVA which specify that deliveries of
energy and capacity at the Interconnection Points will be based on delivery
schedules provided by purchaser. Seller shall use its best efforts to ensure:
(i) that development of inadvertent accounting procedures with TVA and Entergy
are coordinated among all affected parties; and (ii) that the Parties, TVA and
Entergy cooperate to negotiate ramping procedures to address the physical ramp
rate capabilities of the Dedicated Unit.
(c) Seller shall use reasonable efforts to cause the Interconnection
Agreements to recognize Purchaser as a third party beneficiary of such
agreements. Purchaser agrees that any exercise of its right as a third party
beneficiary under the Interconnection Agreements, including without limitation,
any right to demand performance, initiate arbitration, judicial or
administrative action, file or settle claims or take any other action by right
of the Interconnection Agreements (collectively, any "Beneficiary Action") shall
be subject to the provisions of this Section 7.5(c). Purchaser shall not take or
request the right to take any Beneficiary Action unless (i) it reasonably
determines that its rights or benefits under this Agreement are being adversely
affected by a failure of performance by Entergy or TVA under the applicable
Interconnection Agreement, (ii) Purchaser has notified Seller of such failure
and adverse effect, and (iii) for a period of at least twenty (20) Days
following such notice, Seller has failed to act or continue to act with
reasonable diligence to enforce the terms of the applicable Interconnection
Agreement to the extent required to correct the failure of performance causing
such adverse effect on Purchaser. Notwithstanding the satisfaction of the above
conditions, prior to taking any Beneficiary Action, Purchaser shall provide
Seller with at least twenty (20) Days prior notice of the action proposed, a
reasonable explanation of the basis for the action, an agreement, in form and
substance reasonably satisfactory to Seller, indemnifying and holder Seller and
any third party purchasing power from the Facility harmless from any adverse
effects arising out of Purchaser's Beneficiary Actions. Purchaser shall
cooperate reasonably with Seller in any Beneficiary Action and agrees that
Seller and any third party purchasing power from the Facility shall have the
right to join or intervene in any litigation, arbitration or administrative
proceeding related to such Beneficiary Action.
26
SECTION VIII
FUEL ARRANGEMENTS
Section 8.1 Pipeline Interconnection Facilities.
(a) Seller shall be responsible for constructing, operating and
maintaining the Pipeline Interconnection Facilities (including obtaining all
Governmental Approvals) at no cost to Purchaser; provided that the Pipeline
Interconnection Facilities may be owned and/or operated by a third party, in
which case Seller shall be responsible for securing and paying for all rights
necessary to allow Seller and Purchaser to use such facilities as provided in
this Agreement. Seller shall also be responsible for the cost of any
interconnects with ANR Pipeline and Tennessee Gas Pipeline; provided, however,
that Seller shall not be required to pay for any upgrades or expansions of such
pipeline companies' facilities upstream of their interconnects with the Pipeline
Interconnect Facilities, and provided, further, Seller shall have the right to
negotiate with such pipelines to have them pay for their interconnect facilities
with the Pipeline Interconnection Facilities as long as such arrangements do not
require Purchaser to flow a minimum quantity of Fuel through such pipeline(s),
and do not increase the costs of transportation for Purchaser on such
pipeline(s). To the extent such arrangements increases Purchaser's costs of Fuel
transportation, Seller shall reimburse Purchaser for such increased costs.
Purchaser shall have the right to review all of Seller's agreements for the
construction, operation and maintenance of the Pipeline Interconnection
Facilities, and any interconnection agreements with the pipelines prior to the
execution of such agreements. Purchaser may terminate this Agreement with
written notice within ten (10) Days after January 1, 1999 (or such later date
due to a Force Majeure Event or Delivery Excuse) if, by such date, Seller has
not executed agreements for the construction of the Pipeline Interconnection
Facilities, or if such agreements do not contain all of the provisions which
meet the criteria for gas interconnection agreements specified in Appendix I.
Seller shall provide access to transportation through Trunkline Gas provided
such arrangements do not impose any costs on Seller and do not adversely affect
Seller's schedule for the Facility.
(b) Seller shall cause each pipeline connection to the Pipeline
Interconnection Facilities to have available sufficient capacity to deliver
sufficient Fuel at sufficient delivery pressure to operate the entire Facility
at full load, with no Person having a right to use such Pipeline Interconnection
Facilities superior to the Purchaser for the delivery of Fuel pursuant to this
Agreement.
27
(c) The Parties shall cooperate to (i) facilitate the timely
construction and installation of the Pipeline Interconnection Facilities and
(ii) facilitate an arrangement whereby one or more of such interstate pipeline
companies or other third parties shall operate and maintain the Pipeline
Interconnection Facilities.
(d) Seller shall use reasonable efforts to cause the gas
interconnection agreements to recognize Purchaser as a third party beneficiary
of such agreements. Purchaser agrees that any exercise of the right as a third
party beneficiary under the gas interconnection agreements (including any action
comparable to the definition of a Beneficiary Action under Section 7.5(c)) shall
be subject to the same conditions and restrictions as applicable to the taking
of a Beneficiary Action with respect to the Interconnection Agreements under
Section 7.5(c).
Section 8.2 Fuel for Operations; Delivery and Acceptance.
(a) On and after the Commercial Operation Date, Purchaser shall at
all times arrange, procure, supply, nominate, balance, transport and deliver to
the Fuel Metering Points, all Fuel necessary for the Dedicated Unit to generate
the Net Electrical Output as dispatched pursuant to Section 6.2.
(b) All Fuel required to be delivered under this Agreement shall be
delivered by Purchaser to the Fuel Metering Points. Subject to Section 8.1,
Purchaser shall have the right to supply Fuel utilizing any or all of the
interstate pipelines connected to the Pipeline Interconnection Facilities, and
shall have the right to change the quantities nominated and received from each
pipeline on a daily basis, or more frequently, to the extent permitted by ANR
Pipeline, Tennessee Gas Pipeline or Trunkline Gas.
(c) Subject to Section 8.5(c), on and after the Commercial Operation
Date, Seller shall accept all Fuel delivered by Purchaser pursuant to the terms
of this Agreement.
(d) After the later of the Commercial Operation Date or the Delivery
Start Date, and subject to Section 8.4, Purchaser shall be responsible for the
cost of Fuel and all other costs associated with the supply and transportation
of all Fuel necessary to generate the Net Electrical Output as Dispatched
pursuant to Section 6.2; provided, however, Purchaser shall not be responsible
for any transportation costs or other costs associated with the Pipeline
Interconnection Facilities or the interconnects with the interstate pipelines.
(e) Purchaser shall pay for Fuel required during Start-Up to reach
the minimum load of each Unit; provided that
28
energy produced during Start-Up shall be delivered to Purchaser at the
Interconnection Points.
Section 8.3 Title and Risk of Loss. As between the Parties,
Purchaser shall be deemed to be in exclusive control (and responsible for any
damages or injury 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
damages or injury caused thereby) of the Fuel at and after the Fuel Metering
Points. Title to and risk of loss related to the Fuel shall transfer from
Purchaser to Seller at the Fuel Metering Points. Each Party shall reimburse the
other Party for the cost of lost Fuel when title to the Fuel is vested in such
other Party.
Section 8.4 Gas Imbalances. Imbalances associated with Fuel
transportation and any balancing penalties or costs resulting from failure to
timely communicate nominations or to make delivery or accept delivery of the
confirmed quantity of Fuel shall be the responsibility of the Purchaser or other
persons utilizing the Pipeline Interconnection Facilities, unless such penalty
or cost is attributable to a Forced Outage (or Seller's failure to comply with
Dispatch) of the Dedicated Unit in which case such penalties or costs shall be
the responsibility of Seller. Such imbalances shall be allocated first to the
responsible party, then on a pro-rated basis among all parties utilizing the
Pipeline Interconnection Facilities in accordance with their utilization if no
party is responsible. Without limiting the responsibility and liability imposed
by this Section 8.4, however, both Parties shall use Commercially Reasonable
Efforts to avoid imbalances and to correct any imbalances which may occur.
Payment for any balancing penalties or costs shall be in accordance with the
procedures set forth in Section XIII. If a Fuel imbalance is the responsibility
of either Party, the responsible Party shall be liable to the other Party for
direct actual damages incurred by such Party as a result thereof.
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
quality specifications of ANR, Tennessee Gas or Trunkline Gas, as the case may
be and the minimum pressure specified in the Pipeline Interconnection
Agreements.
(b) In the event that Fuel delivered by Purchaser hereunder fails to
conform to the quality and pressure requirements of ANR, Tennessee Gas or other
pipeline, as the case may be ("Non-Conforming Fuel"), Purchaser shall use
Commercially Reasonable Efforts to cure such failure as soon as reasonably
practicable after learning of such non-conformity.
29
(c) If Fuel made available by Purchaser to Seller under this
Agreement is Non-Conforming Fuel, then 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. Purchaser
shall be liable for all reasonable costs and expenses for which Seller is
directly liable in respect of cleaning or clearing the Facility or any Dedicated
Unit or in respect of measures which may be taken by Seller which are reasonably
required to rectify the consequences of such failure and Seller shall be
relieved and held harmless from any liability for failure of the Dedicated Unit
to (i) achieve the Guaranteed Heat Rates or Contract Capacity (ii) perform in
accordance with the Design Limits which is caused as a direct result of the
delivery of Non-Conforming Fuel by Purchaser. Seller shall exercise Commercially
Reasonable Efforts to mitigate the effects of using Non-Conforming Fuel.
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 Dedicated Unit on Seller's side of
the Interconnection Points ("Electricity Metering Points"). Seller shall own,
operate, maintain and control all of Seller's electricity metering equipment at
its sole cost and expense.
(b) The number, type and general location of Seller's electricity
metering devices shall be as set forth in Appendix B. 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 requirements set forth in Appendix B, Purchaser
may install and maintain, at its own cost and expense, as part of the Facility,
Purchaser's electricity metering devices, using the same current and potential
transformers as those used for Seller's electricity metering devices.
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 the Seller's metering devices at the Fuel
Metering Points. Seller shall be
30
responsible for, operate, maintain and control all of Seller's Fuel metering
equipment at its sole cost and expense.
(b) The number, type and general location of Seller's Fuel metering
devices shall be as set forth in Appendix B. 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.
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 at least 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 (2) weeks' prior written notice by Purchaser, Seller
shall perform additional inspections or tests of any of Seller's 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. 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 +/- 2.0% in the case of Fuel 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 are found to be defective or
inaccurate by more than +/- 0.5% in the case of electricity meters and +/- 2.0%
in the case of Fuel meters, it shall be adjusted, repaired, replaced and/or
re-calibrated to bring the metering device to within the specifications provided
for herein. If any of Seller's metering devices are not found to be defective or
inaccurate by more than the variances stated herein, then such meters shall not
be re-calibrated unless the Parties otherwise agree.
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 +/- 2.0% in the case of Fuel
meters, an adjustment shall be made correcting all measurements by the
inaccurate or defective metering device for billing purposes, for
31
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 metering devices (if installed) to determine the amount of such
inaccuracy, provided that in the event that Purchaser's 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 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 to the Entergy System
and the TVA System during periods of similar operating conditions (e.g., based
on the Facility's Fuel use records) 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 or (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).
Section 9.5 Remote Access to Metering Devices. Purchaser desires to
have remote access to devices wired to Seller's Distributed Control System
("DCS") related to the Dedicated Unit. Seller shall provide a communications
port from the DCS in order for Purchaser to have remote (read-only) access to
these DCS data points. Any costs for remote access shall be at Purchaser's
expense.
32
SECTION X
PAYMENTS
Section 10.1 Reservation Payments.
(a) Except as otherwise expressly provided herein, for each Billing
Period commencing on the Delivery Start Date, Purchaser shall pay Seller a
Reservation Payment for the Contract Capacity made available to Purchaser from
the Dedicated Unit, or for Replacement Power made available to Purchaser by
Seller pursuant to Section 3.2 or 6.4 or procured by Purchaser with Seller
compensating Purchaser in accordance with Appendix F, during such Billing
Period.
(b) The Reservation Payment for each Billing Period shall be
calculated in accordance with the following formula:
RP = CC x RC + SSC x SRC
Where:
RP = the Reservation Payment expressed in Dollars for such
Billing Period
CC = the Contract Capacity, expressed in KW, rounded down
to the nearest whole MW, up to 267 MW, adjusted to a dry
bulb temperature of 95 degrees Fahrenheit and a relative
humidity of 60%.
RC = the Reservation Charge expressed in Dollars per KW per
Month. The Reservation Charge during the Initial Term
shall be: (i) $4.90 per KW per Month for the first sixty
(60) Months following the Delivery Start Date, and (ii)
$5.00 per KW per Month for the remainder of the Initial
Term. The Reservation Charge for the Extended Term shall
be $5.00 per KW per Month.
SSC = the Surplus Supplemental Capacity, defined as the
amount of Supplemental Capacity greater than the
difference of 267 MW minus the amount of Standard
Capacity, all adjusted to a dry bulb temperature of 95
degrees Fahrenheit and a relative humidity of 60%.
33
SRC = the Surplus Reservation Charge expressed in Dollars
per KW per Month. The Surplus Reservation Charge shall
be $2.50 per KW per Month.
Section 10.2 Adjustment to Reservation Payment for Commercial
Operation Delay Period.
(a) In accordance with Section 3.2(a), the Reservation Payment for
each Month during any Commercial Operation Delay Period may be reduced pro rata
based on a Delivery Delay Adjustment. Any Delivery Delay Adjustment shall be
credited to the Reservation Payment and any remaining amounts of a Delivery
Delay Adjustment owing from Seller to Purchaser shall be credited against future
Reservation Payments. The "Delivery Delay Adjustment" shall be calculated as:
DDA = CC x RCA
where DDA is the Delivery Delay Adjustment in Dollars for such
Billing Period;
CC is the Contract Capacity, expressed in kW, adjusted to a
dry bulb temperature of 95 degrees Fahrenheit
(95(Degree)F) and a relative humidity of 60%. For the
purpose of this Section 10.2(a), the Contract Capacity
shall be deemed to be 267 MW; and
RCA is the Reservation Charge adjustment equal to RC x MO x
VF x DD / DMO;
where RC is the Reservation Charge in Dollars per
kW-Month;
MO is seven (7) Months during the year
2000 or twelve (12) Months during the
year 2001, as applicable;
VF is the Value Factor for the Month
(expressed as a decimal);
DD is the number of Days of delay in
the Month of determination; and
DMO is the number of Days in the Month.
34
================================================================================
Month during the Year 2000 Value Factor
================================================================================
June 14.4%
--------------------------------------------------------------------------------
July 26.3%
--------------------------------------------------------------------------------
August 24.2%
--------------------------------------------------------------------------------
September 10.2%
--------------------------------------------------------------------------------
October 9.4%
--------------------------------------------------------------------------------
November 7.7%
--------------------------------------------------------------------------------
December 7.8%
--------------------------------------------------------------------------------
================================================================================
Month during Years after 2000 Value Factor
================================================================================
January 8.3%
--------------------------------------------------------------------------------
February 7.1%
--------------------------------------------------------------------------------
March 4.5%
--------------------------------------------------------------------------------
April 3.9%
--------------------------------------------------------------------------------
May 6.2%
--------------------------------------------------------------------------------
June 10.0%
--------------------------------------------------------------------------------
July 18.3%
--------------------------------------------------------------------------------
August 17.2%
--------------------------------------------------------------------------------
September 7.3%
--------------------------------------------------------------------------------
October 6.1%
--------------------------------------------------------------------------------
November 5.6%
--------------------------------------------------------------------------------
December 5.5%
--------------------------------------------------------------------------------
================================================================================
Month during Last Partial Year Value Factor
================================================================================
January 27.8%
--------------------------------------------------------------------------------
February 23.6%
--------------------------------------------------------------------------------
March 14.9%
--------------------------------------------------------------------------------
April 13.1%
--------------------------------------------------------------------------------
May 20.6%
--------------------------------------------------------------------------------
35
10.3 Adjustment to Reservation Payment After Delivery Start Date.
The Reservation Payment each Month after the Delivery Start Date
shall be credited based on a Monthly Availability Adjustment which shall be
calculated in Section 10.3(a) below and an Annual Availability Adjustment for
each Contract Year which shall be calculated in Section 10.3(b) below. For each
Contract Year, the larger of the sum of the credits calculated under Sections
10.3(a) for all the Months in said year, or the credit calculated in Section
10.3(b), shall apply. Any amounts owing from Seller to Purchaser shall accrue to
future Months to be credited against future Reservation Payments.
(a) The Monthly Availability Adjustment for each Month shall be:
(SIGMA)RPm x VFm x (1 - AAFm)
where (SIGMA)RPm is the sum of the unadjusted Reservation Payments
for each Month of the Calendar Year in which the Monthly
Availability Adjustment is being computed (June through
December of 2000, January through December of 2001 through
2014 (or 2019 if the Term is extended in accordance with
Section 2.2, and January through the last Month during the
last Calendar Year that this Agreement is in effect (2015 or
2020 or otherwise));
VFm is the Value Factor for each Month as shown in the tables in
Section 10.2 above (expressed as a decimal); and
AAFm is the lesser of the Availability Adjustment Factor for the
Month, as computed below, or 1.00.
AAF = (EAF + PMAF)/ 0.96
where EAF is the equivalent availability factor computed as:
EAF=(AH - (EUDH + EPDH))/PH
where: AH is the number of available hours during the period
(the total number of hours the Unit was
electrically connected to the transmission system
and reserve shutdown hours, excluding Scheduled
Maintenance Hours as defined below);
36
EUDH is the number of equivalent unplanned derate hours
calculated as the sum, for each unplanned derate,
of the product of the number of hours of full or
partial derate hours times the size of the
reduction divided by the Contract Capacity for the
period. For the purposes of this calculation, an
unplanned derate includes Forced Outages, forced
derates, shortages relative to the Guaranteed
Start-Up Time, shortages relative to the
Guaranteed Ramp Rates, and other times when the
Net Electrical Output of the Dedicated Unit is
less than the amount of energy Dispatched by
Purchaser, excluding hours when Seller is
responsible for Replacement Power, and excluding
unavailability due to Force Majeure Events and
Delivery Excuse;
EPDH is the number of equivalent planned derate hours,
excluding SMH (Scheduled Maintenance Hours) as
defined below, calculated as the sum, for each
planned derate, of the product of the number hours
of full or partial derate hours times the size of
the reduction, divided by the available capacity
for the period. For the purposes of this
calculation, a planned derate excludes hours when
Seller is responsible for Replacement Power, and
excluding unavailability due to Force Majeure
Events and Delivery Excuse;
PH is the number of period hours excluding hours of
Force Majeure Events and Delivery Excuse;
PMAF is the planned maintenance adjustment factor computed as:
PMAF = SMH / PH
where SMH is the number of Scheduled Maintenance Hours
during the period.
(b) Within fifteen (15) Days of the end of a calendar year, an
Annual Availability Adjustment Factor for the calendar year shall be calculated.
The Annual Availability Adjustment shall be calculated as follows:
37
(SIGMA)RPm x 1.00 x (1 - AAFa)
where: (SIGMA)RPm is computed as provided in Section 10.3(a) above,
AAFa is the lesser of the Availability Adjustment Factor for
the year, as computed below, or 1.00.
AAFa = (EAF + PMAF)/ 0.97
The Annual Availability Adjustment shall be calculated using a
single period for each calendar year, based on the actual
number of hours in the calendar year. Each parameter in the
AAF formulas shall use a single period (as described in the
preceding sentence) to compute the Annual Availability
Adjustment.
Section 10.4 Energy Payments. Except as expressly provided herein,
for each Billing Period commencing on June 1, 2000, Purchaser shall pay to
Seller an Energy Payment for Net Electrical Output and for energy supplied as
Replacement Power delivered by Seller to Purchaser, in an amount equal to
$1.00/MWh times the GDP-IPD Index.
Section 10.5 Replacement Power Fuel Payment. Purchaser shall pay to
Seller a Replacement Power Fuel Payment for energy supplied as Replacement Power
delivered by Seller to Purchaser in an amount per MWh equal to the product of
the Delivered Cost of Fuel in Dollars per MMBtu times the Guaranteed Heat Rate
in MMBtu/MWh.
Section 10.6 Excess Start-Up Payments. In the event the number of
Start-Ups for the Dedicated Unit exceeds 200 per Contract Year, Purchaser shall
pay Seller a payment equal to $5,000 per Start-Up for the Dedicated Unit,
multiplied by the number of Start-Ups for the Dedicated Unit over 200 ("Excess
Start-Up Payment"). Any Excess Start-Up Payments shall be made by Purchaser on a
Monthly basis for all such additional Start-Ups occurring in a Billing Period.
Section 10.7 Tracking Account. Except as expressly provided herein,
for each Monthly Billing Period commencing on June 1, 2000, Seller or Purchaser,
as applicable, shall make to the other Party a payment in an amount equal to the
balance of the Tracking Account, as set out in Section 12.1.
Section 10.8 System Upgrade Credit. For each Billing Period,
commencing on the Commercial Operations Date, Purchaser shall pay Seller a
System Upgrade Credit, determined as provided in this Section 10.8. The System
Upgrade Credit for any period
38
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 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 payment is separately
stated in any invoice or statement provided Purchaser under its applicable
transmission service agreements with Entergy and TVA. If not separately stated
in Purchaser's transmission service invoice or statement, no credit or discount
will be deemed attributable to Seller's system upgrades.
SECTION XI
COMMISSIONING AND TESTING
Section 11.1 Performance Tests.
(a) Prior to or on the Commercial Operation Date, Seller shall
establish the Contract Capacity in accordance with the procedures set forth in
Appendix A. The Dedicated Unit shall thereafter be tested during each Contract
Year in accordance with the procedures set forth in Appendix A to demonstrate
the 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 of its own costs or expenses incurred by it in connection
with monitoring or witnessing such tests.
(b) Seller shall have the right to re-determine the Contract
Capacity (including Standard Capacity and Supplemental Capacity) at any time
upon forty-eight (48) hours' prior written notice to Purchaser. The Contract
Capacity re-determined in the manner set forth in Appendix A shall automatically
and immediately become the new Contract Capacity following such testing. 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 of its own costs
and expenses incurred by it in connection with monitoring or witnessing such
test.
(c) Purchaser shall have the right to re-determine the Contract
Capacity (including Standard Capacity and Supplemental Capacity) at any time
upon five (5) Days' prior written notice to Seller if Purchaser believes that
the actual Contract Capacity has been greater than ten (10) MW different than
the results of the most recent tests for a period of longer than ninety (90)
Days. The Contract Capacity re-determined in the manner set
39
forth in Appendix A will automatically and immediately become the new Contract
Capacity following such testing. Purchaser shall bear the costs and expenses of
any test required under this Section 11.1(c), provided that Seller shall be
responsible for any of its own costs and expenses incurred by it in connection
with monitoring or witnessing such test.
(d)(i) Within sixty (60) Days of the Effective Date, Seller shall
provide Purchaser with the Estimated Standard Capacity of the Dedicated Unit at
95 degrees Fahrenheit and 60 percent relative humidity and the Estimated
Supplemental Capacity of the Dedicated Unit at 95 degrees Fahrenheit and 60
percent relative humidity. The Estimated Standard Capacity at 95 degrees
Fahrenheit and 60 percent relative humidity shall be no less than 235 MW and no
greater than 260 MW. The Estimated Supplemental Capacity at 95 degrees
Fahrenheit and 60 percent relative humidity shall be no less than 20 MW and no
greater than 30 MW. The Parties agree that the actual Standard Capacity at 95
degrees Fahrenheit and 60 percent relative humidity shall be no less than 235 MW
and no greater than 260 MW, and that the actual Supplemental Capacity at 95
degrees Fahrenheit and 60 percent relative humidity shall be no less than 20 MW
and no greater than 30 MW. The Contract Capacity shall be measured in increments
of 1 MW, rounded down to the nearest MW. Subject to Section 11.1(d)(ii),
Purchaser's sole remedy in the event the Contract Capacity is less than 235 MW
at 95 degrees Fahrenheit and 60% relative humidity but greater than 210 MW at 95
degrees Fahrenheit and 60% relative humidity shall be a reduction in the
Contract Capacity and a corresponding reduction in the Reservation Payment.
(ii) In the event the Contract Capacity determined pursuant to
Section 11.1 is less than or equal to 210 MW at 95 degrees Fahrenheit and 60%
relative humidity, subject to Section XVII (a "Capacity Shortfall"), Seller
shall have thirty (30) Days from the date of such test to remedy the Capacity
Shortfall. Seller shall have additional time beyond such thirty (30) Day period
to remedy such Capacity Shortfall in accordance with the procedures set forth
below. Within fifteen (15) Days of a Capacity Shortfall, Seller shall provide
Purchaser notice of its election that (1) Seller shall supply Replacement Power
beginning thirty (30) Days after the Capacity Shortfall for the duration of the
Capacity Shortfall or (2) that Purchaser shall procure Replacement Power and
Seller shall compensate Purchaser for Incremental Replacement Power Costs in
accordance with Appendix F beginning thirty (30) Days after the Capacity
Shortfall for the duration of the Capacity Shortfall. Provided that Seller is
responsible for providing or for paying for Replacement Power for the amount of
the Capacity Shortfall, Seller shall have an additional one hundred fifty (150)
Days to remedy the Capacity Shortfall and the Contract Capacity, for the
purposes of payments under Section X, shall be equal to 210 MW. If at the end
such one hundred fifty (150) Day period, the Capacity Shortfall has
40
not been remedied, Purchaser may declare that Seller is in default of the
Agreement. If Seller remedies such Capacity Shortfall prior to the end of sixty
(60) Days following Purchaser's notice of default, and Seller has provided or
paid for Replacement Power for the amount of the Capacity Shortfall for the
period between Purchaser's notice of default and the date on which the Capacity
Shortfall was remedied, such notice of default shall be void; otherwise,
Purchaser may pursue remedies available under Section 18.2 of this Agreement.
Section 11.2 Sale of Test Energy. Seller shall have the option to
require Purchaser to act as Seller's agent for the purpose of marketing and
selling energy which may be produced as a result of the initial commissioning of
the Dedicated Unit or re-commissioning of any Dedicated Unit after a Scheduled
Maintenance Outage or during performance testing in accordance with Section 11.1
("Test Energy"). Should Seller require Purchaser to market and sell Test Energy,
Purchaser shall (i) provide Fuel to generate such Test Energy; provided that
Seller shall reimburse Purchaser for such Fuel at Purchaser's actual cost, plus
$0.03 per MMBtu and (ii) pay Seller any amount received by Purchaser from its
sale of Test Energy, net of any costs (as applicable) for transmission service,
transmission losses, scheduling fees, Independent System Operator fees,
ancillary services charges and a marketing fee of $0.25/MWh of Test Energy sold.
SECTION XII
GUARANTEES DURING OPERATIONS
Section 12.1 Guaranteed Heat Rate Tracking Account.
(a) A tracking account (the "Tracking Account") shall be maintained
by Seller to track, for each hour: (i) the actual amount of Fuel required to
produce the Net Electrical Output delivered by Seller for that hour and (ii) the
amount of Fuel required to produce the Net Electrical Output delivered by Seller
for that hour based on the Guaranteed Heat Rate. If the actual amount of Fuel
required to produce the Net Electrical Output for such hour varies from the
amount of Fuel which would be required to produce such Net Electrical Output
based on the Guaranteed Heat Rate, then a balance shall accrue in the Tracking
Account for such hour in the following manner:
(1) If the actual amount of Fuel required to produce such
Net Electrical Output on such hour is greater than the
amount which would be required based on the Guaranteed
Heat Rate then a positive amount equal to the
differential Fuel (expressed in MMBtu),
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multiplied by the Delivered Cost of Fuel (expressed in
$/MMBtu), for such hour shall accrue to the Tracking
Account for such hour.
(2) If the actual amount of Fuel required to produce such
Net Electrical Output on such hour is less than the
amount which would be required based on the Guaranteed
Heat Rate, then a negative amount equal to the
differential Fuel (expressed in MMBtu) multiplied by the
Delivered Cost of Fuel (expressed in $/MMBtu) for such
hour shall accrue to the Tracking Account for such hour.
(b) At the end of each Month, the Tracking Account 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.
Section 12.2 Guaranteed Start-Up Time. Seller shall notify Purchaser
as soon as practicable after discovering that the Guaranteed Start-Up Time has
not been satisfied and whether Seller elects to be responsible for Incremental
Replacement Power Costs in accordance with Appendix F. If Seller does not elect
to be responsible for Incremental Replacement Power Costs, such unplanned derate
hours shall be included in any Availability Adjustment Factor calculation.
Section 12.3 Guaranteed Ramp Rate. Seller shall notify Purchaser as
soon as practicable after discovering that the Guaranteed Ramp Rate has not been
satisfied and whether Seller elects to be responsible for Incremental
Replacement Power Costs in accordance with Appendix F. If Seller does not elect
to be responsible for Incremental Replacement Power Costs, such unplanned derate
hours will be included in any Availability Adjustment Factor calculation.
SECTION XIII
BILLING AND PAYMENT
Section 13.1 Billing and Payment.
(a) Seller shall read the Seller's metering equipment at the
Dedicated Unit at midnight (24:00 hours) Central 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 (5) Business Days after the end of
each Billing Period a statement detailing the meter reading and Seller's
calculation of the payments due to Seller for such
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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, Replacement
Power Fuel Payment, Start-Up Payment and any Tracking Account balance or any
other amount owed by Purchaser for each Billing Period shall be made by wire
transfer of funds immediately available in an account of Seller designated in
accordance with Section 22.4 on or before the later of the fifteenth (15th) Day
following receipt by Purchaser of Seller's invoice or the first Business Day
following the nineteenth (19th) Day of the Month. Payment for any Tracking
Account Balance or any other amount owed by Seller to Purchaser for each Billing
Period shall be made by wire transfer of funds immediately available in an
account of Purchaser designated in accordance with Section 22.4 on or before the
later of the fifteenth (15th) Day following receipt by Purchaser of Seller's
invoice or the first Business Day following the nineteenth (19th) Day of the
Month.
(c) If either Party in good faith 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. In the event the disputed amount is in excess of
$500,000, the Party owing such amount shall (i) provide for the benefit of the
other Party Credit Support with terms reasonably satisfactory to the other Party
in the amount of such disputed payment or (ii) deposit the full amount of such
disputed payment in an escrow account on terms acceptable to such other Party.
Upon resolution of the dispute in accordance with this Agreement, any amounts
held in escrow shall be paid to the Party in whose favor the dispute was
resolved.
Section 13.2 Other Payments. Any amounts, other than those specified
in Sections 13.1, due to either Party under this Agreement shall be paid or
objected to in good faith within fifteen (15) 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.
Section 13.3 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
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payment that becomes due and payable on a Day that is other than a Business Day
or Day on which banks are closed in New York, New York shall be paid on the next
succeeding Business Day.
Section 13.4 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 Seller) 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 maximum of three (3) years after the creation of such record
or data and for any additional time period required under applicable Law or by
Governmental Agencies having jurisdiction over the Parties.
Section 13.5 Default Interest. If any payment due from either Party
under this Agreement shall not be paid when due (including any undisputed
payments or disputed payment withheld and found to be due the Party from whom
payment was withheld under Section 13.2), 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 published in the "Money Rates" section of the Wall Street
Journal, as of the Day payment became overdue (the "Contract Interest Rate"),
from the date on which such payment became overdue to and until such payment is
paid in full.
Section 13.6 Credit Support.
(a) Within thirty (30) Days of the end of each calendar quarter
during the Term of this Agreement, Seller shall provide Purchaser with
certificates or other documents ("DCSR Certificates") showing the calculation of
the Debt Service Coverage Ratio provided by Seller to the Financing Parties
pursuant to the Financing Documents. If, as of the end of any calendar quarter,
the Debt Service Coverage Ratio for each of the previous four (4) consecutive
calendar quarters is less than 1.25 to 1.00, Seller shall provide to Purchaser
upon Purchaser's request, reasonable security for its obligations hereunder, in
the form of cash, a surety bond, or Credit Support. The type of security to be
provided shall be determined by Seller, but the form and substance of any surety
bond, or Credit Support shall be reasonably acceptable to Purchaser. Such
security shall be in an amount equal to $5.00 per kW of Contract Capacity.
Seller shall maintain such security in full force and effect until the earlier
of (x) ten (10) Days after delivery by Seller to Purchaser of certificates or
other documents showing that Seller has achieved a Debt Service Coverage Ratio
for four (4) consecutive quarters of 1.25 to 1.00 or greater as of the end of a
calendar quarter, or (y) the termination of this Agreement; provided, however,
that if this Agreement is terminated, Seller shall maintain such security in
place until all amounts owed by Seller to Purchaser
44
under this Agreement arising prior to such termination have been paid in full.
Purchaser shall cancel or return to Seller, as Seller may direct, any such
security provided by Seller within ten (10) Days after Seller is no longer
required hereunder to provide or maintain such security.
(b) Any cancellation or return of the security provided by Seller
pursuant to Section 13.6(a) shall not preclude Purchaser from subsequently again
demanding security for Seller's performance, subject to the same parameters set
forth in Section 13.6(a).
(c) In the event Seller has not provided security to Purchaser in
accordance with Section 13.6(a), Purchaser may, at its discretion, offset any
amounts owed by Seller to Purchaser under this Agreement including the amount of
the security not provided by Seller against amounts owing from Purchaser to
Seller. Purchaser's ability to request security in accordance with Section
13.6(a) and to offset against amounts otherwise due hereunder shall be without
prejudice to Purchaser's right to exercise any other remedy available to
Purchaser to collect any amounts due Purchaser under this Agreement.
SECTION XIV
REPRESENTATIONS AND WARRANTIES
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 will not:
(i) as to execution and delivery, 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,
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(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 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 a
material adverse effect on the ability of Seller 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 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.
(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 Aquila. Aquila
represents and warrants to Seller as of the Effective Date as follows:
(a) Aquila is a corporation duly organized and validly existing
under the Laws of Delaware 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.
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(b) The execution, delivery, and performance of its obligations
under this Agreement by Aquila have been duly authorized by all necessary
corporate action, and do not and will not:
(i) as to execution and delivery, require any consent or
approval of Aquila's board of directors 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 Aquila, the violation of which could reasonably be expected to
have a material adverse effect on the ability of Aquila 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 Aquila,
(iv) result in a breach of or constitute a default under any
agreement relating to the management or affairs of Aquila or any indenture or
loan or credit agreement or any other agreement, lease, or instrument to which
Aquila is a party or by which Aquila 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 Aquila 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 Aquila 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 Aquila to perform
its obligations under this Agreement.
(c) This Agreement constitutes a legal, valid and binding obligation
of Aquila and is enforceable against Aquila in accordance with its terms.
(d) There is no pending or, to the best of Aquila's knowledge,
threatened action or proceeding affecting Aquila before any court, Governmental
Agency or arbitrator that could reasonably be expected to materially and
adversely affect the financial condition or operations of Aquila or the ability
of Aquila to perform its obligations hereunder, or that purports to affect the
legality, validity or enforceability of this
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Agreement.
Section 14.3 Representations and Warranties of UtiliCorp. UtiliCorp
represents and warrants to Seller as of the Effective Date as follows:
(a) UtiliCorp is a corporation duly organized and validly existing
under the Laws of Delaware 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 UtiliCorp have been duly authorized by all necessary
corporate action, and do not and will not:
(i) as to execution and delivery, require any consent or
approval of UtiliCorp's board of directors 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 UtiliCorp, the violation of which could reasonably be expected
to have a material adverse effect on the ability of UtiliCorp 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 UtiliCorp,
(iv) result in a breach of or constitute a default under any
agreement relating to the management or affairs of UtiliCorp or any indenture or
loan or credit agreement or any other agreement, lease, or instrument to which
UtiliCorp is a party or by which UtiliCorp 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 UtiliCorp 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 UtiliCorp 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 UtiliCorp to
perform its obligations under this Agreement.
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(c) This Agreement constitutes a legal, valid and binding obligation
of Aquila and is enforceable against UtiliCorp in accordance with its terms.
(d) There is no pending or, to the best of UtiliCorp's knowledge,
threatened action or proceeding affecting UtiliCorp before any court,
Governmental Agency or arbitrator that could reasonably be expected to
materially and adversely affect the financial condition or operations of
UtiliCorp or the ability of UtiliCorp to perform its obligations hereunder, or
that purports to affect the legality, validity or enforceability of this
Agreement.
Section 14.4 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 14.5 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 GAAP.
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 imposed on Seller
and Seller's 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.
(b) The Reservation Payment or Energy Payment under this Agreement
shall be adjusted prospectively by any Change-in-Law Taxes. Seller shall provide
Purchaser with written notice of any Change-in-Law Taxes imposed on Seller.
Seller shall use Commercially Reasonable Efforts to Contest the imposition of
any Change-in-Law Taxes and Purchaser shall have the right to Contest the
imposition of any Change-in-Law Taxes provided that such Contest does not result
in any material imposition on or cost to Seller, 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
49
prevails in such Contest. Seller shall determine for any Billing Period the
adjustment to the Reservation Payment or Energy Payment resulting from the
application of a Change-in-Law Tax for such period, and shall provide to
Purchase a certificate setting forth in reasonable detail the basis and
calculation of such adjustment.
(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 in a timely manner of any proposal to implement a Change-in-Law Tax.
Section 15.2 General. Each Party shall each use reasonable efforts
to implement the provisions of, and to administer, this Agreement in accordance
with their intent to minimize taxes, so long as neither Party is materially
adversely affected by such efforts. Either Party, upon written request of the
other Party, shall provide a certificate of exemption or other reasonably
satisfactory evidence of exemption if either Party is exempt from taxes, and
shall use reasonable efforts to obtain and cooperate with obtaining any
exemption from or reduction of tax. Either Party with knowledge of a Tax on the
purchase or sale of energy, that may be applicable to the Fuel provided or
energy sold hereunder shall notify the other Party, in advance, of the
applicability of such Tax and shall also notify the other Party of any proposal
to implement a new Tax or apply an existing Tax to the purchase, sale, delivery,
or receipt of Fuel or energy hereunder.
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 H, applicable to all operations undertaken by Seller and Seller's
personnel in the minimum amounts (limits) indicated in Appendix H. 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 H, 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. Seller shall annually
cause each insurer or authorized agent to provide
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Purchaser with two (2) 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.
Section 16.3 Term and Modification of Insurance.
(a) In the event that any insurance as required in this Agreement 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 (5) 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 circumstances prevailing at the
time, which consent Purchaser shall not unreasonably withhold or delay.
(c) With Purchaser's approval, not to be unreasonably withheld, if
Seller has sufficient net worth to self-insure for purposes of this Section XVI,
Seller shall have the right to self-insure or provide reserves or other security
reasonably acceptable to Purchaser for all or any portion of the foregoing
coverages so long as, in the case of self-insurance, there is no material
decrease in Seller's net worth or means that renders the same insufficient for
purposes of self-insurance, and in the case of provision of reserves or
security, the reserves and security shall be available and used only for the
payment of obligations that otherwise would be covered by insurance policies
required under this Section XVI and Appendix H and for no other purpose.
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 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.
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(a) As used in this Agreement, "Force Majeure Event" shall mean
causes or events 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; fire; and actions or failures to act of any Governmental Agency
(including expropriation, requisition, Change-in-Law or change in any
Governmental Approval or environmental constraints lawfully imposed by any
Governmental Agency) preventing, delaying, or otherwise adversely affecting
performance of a Party hereto.
(b) Force Majeure Event shall not include (i) changes in market
conditions that affect the cost or availability of supply of goods or services
(ii) 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), (iii) the unavailability of equipment, except to the extent
directly caused by an event fitting the definition of Force Majeure Event set
forth above, which could reasonably have been avoided by compliance with Prudent
Industry Practices, (iv) changes in market conditions that affect the price of
energy or capacity, (v) the failure to timely apply for or to obtain
Governmental Approvals required on the Effective Date for the construction or
operation of the Facility, and (vi) any Delivery Excuse.
Section 17.2 Applicability of Force Majeure Event. Neither Party
shall be responsible or liable for any delay or failure in its performance under
this Agreement if such delay or failure is due to a Force Majeure Event,
provided that:
(a) the non-performing Party shall give the other Party prompt,
written notice of such Force Majeure Event as soon as practicable after
discovery of such event, but in any event, no later than forty-eight (48) hours
following discovery of such event, with details to be supplied within five (5)
Days further describing the particulars of the occurrence of the Force Majeure
Event;
(b) the suspension of performance shall be of no greater scope and
of no longer duration than is directly caused by the Force Majeure Event;
(c) the non-performing Party shall proceed with Commercially
Reasonable Efforts to remedy its inability to perform and shall provide progress
reports to the other Party as
52
requested but at least weekly, describing actions taken to remedy the
consequences of the Force Majeure Event; and
(d) when the non-performing Party is able to resume performance of
its obligations under this Agreement, that Party shall give the other Party
prompt, written notice to that effect.
Section 17.3 Other Effects of Force Majeure Events.
(a) Subject to Section 3.2, If Seller shall suspend performance
prior to the Delivery Start Date as a result of a Force Majeure Event then the
Delivery Start Date shall be extended by the period of the Force Majeure Event.
If Seller shall suspend performance as a result of a Force Majeure Event and
Purchaser suspends payment of the Reservation payment pursuant to Section
17.3(c), then the Initial Term and the Extended Term shall be extended, in each
case, by the period of the Force Majeure Event.
(b) If any Force Majeure Event shall be claimed by a Party and shall
suspend performance by such Party for more than eighteen (18) Months from the
date of notice provided by such Party in Section 17.2(a), then the performing
Party may, at any time following the end of such eighteen (18)-Month period but
for only so long as such Force Majeure Event is still claimed, 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. The non-affected Party
may, but shall not be obligated to, extend such period for such additional time
as it deems appropriate in its sole discretion, if the affected Party is
exercising due diligence in its efforts to cure the Force Majeure Event.
(c) If Seller is unable to achieve the Commercial Operation Date by
the Delivery Start Date or after the Commercial Operation Date is unable to
deliver the Contract Capacity or the Net Electrical Output as a result of a
Force Majeure Event affecting Seller, Purchaser shall pay the Reservation
Payments, Energy Payments, and Replacement Power Fuel Payments commencing on the
Delivery Start Date to the extent that Seller is providing Replacement Power to
Purchaser in accordance with Section 3.2 or Section 6.4 until termination of
this Agreement, but otherwise shall be relieved of the obligation to pay the
Reservation Payment, Energy Payment or the Replacement Power Fuel Payment, as
appropriate. If Purchaser shall be unable to accept the Contract Capacity or the
Net Electrical Output as a result of a Force Majeure Event affecting Purchaser,
Purchaser shall remain obligated to pay the Reservation Payment to Seller
pursuant to Section 10.1 for the period of such Force Majeure Event until
termination of this Agreement except to the extent that during the period of
such Force Majeure Event, Seller is prevented or is
53
unable to deliver the Contract Capacity or Net Electrical Output by reason of a
Force Majeure Event affecting Seller.
(d) In the event a Force Majeure Event is claimed by Seller as a
result of the negligence of either TVA or Entergy or the default of TVA under
the TVA Interconnection Agreement or by Entergy under the Entergy
Interconnection Agreement, and Seller receives any compensation from TVA or
Entergy by virtue of such negligence or default, Seller shall pay Purchaser a
pro-rata amount of such compensation based on the Contract Capacity of the
Dedicated Unit compared to all Units, up to the amount of any losses incurred by
Purchaser as a result of such Force Majeure Event.
Section 17.4 Delivery Excuse.
(a) In no event shall Seller be responsible or liable for or deemed
in breach of this Agreement for any delay or failure of performance of its
obligations under this Agreement to the extent such delay or failure of
performance is directly caused by a condition of Delivery Excuse.
(b) As used in this Agreement, "Delivery Excuse" shall mean: (i) any
Event of Default of Purchaser under this Agreement; (ii) the unreasonable delay
or failure by Purchaser in giving an approval within the times required under
this Agreement; (iii) the delay or failure by Purchaser in performing amaterial
obligation under this Agreement; (iv) the delay or failure of Purchaser to
deliver Fuel or to accept Contract Capacity or Net Electrical Output as required
under this Agreement, which failure does not arise in each case as a result of
Seller's non-performance under this Agreement; or (v) any event described in
Section 6.3.
(c) If Seller determines that its performance is or has been
affected by a condition of Delivery Excuse:
(i) Seller shall give Purchaser prompt, written notice of the
event which caused such Delivery Excuse as soon as practicable after discovery
of such event, but in any event, no later than forty-eight (48) hours after
discovery of such event, with details to be supplied within five (5) Days
further describing the particulars of the occurrence;
(ii) the suspension of performance shall be of no greater
scope or longer duration than is attributable to the condition of Delivery
Excuse; and
(iii) Seller shall promptly notify Purchaser when the effects
of the condition of Delivery Excuse have been removed and Seller is able to
resume its performance.
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(d) If Seller is unable to achieve the Commercial Operation Date by
the Delivery Start Date or, after the Commercial Operation Date, is unable to
deliver Contract Capacity or Net Electrical Output as a result of a Delivery
Excuse, 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 thirty (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 thirty (30) Days after notice thereof by
Purchaser, provided that if such failure is not capable of being cured within
such period of thirty (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 ninety (90) Days) so long as Seller is exercising Commercially
Reasonable Efforts 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, and shall fail to
cure any of the actions or failures within sixty (60) Days;
(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
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respect of Seller under any Law relating to bankruptcy, insolvency,
reorganization of its debts, winding-up, composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of ninety (90) Days;
(v) Seller shall assign this Agreement or any of its rights
hereunder other than in compliance with Section 22.3, and such failure shall not
be cured within thirty (30) Days after notice thereof by Purchaser;
(vi) Any representation made by Seller under Section XIV shall
be false in any material respect and such failure shall not be cured within
thirty (30) Days after notice thereof by Purchaser; or
(vii) Seller's failure to remedy a Capacity Shortfall in
accordance with Section 11.1(d)
(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 thirty (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 thirty (30) Days after notice
thereof by Seller, provided that if such failure is not capable of being cured
within such period of thirty (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 ninety (90) Days) so long as Purchaser is
exercising Commercially Reasonable Efforts 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, and shall fail to
cure any of the actions or failures within sixty (60) Days;
(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 debts, dissolution or
winding-up, or the
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composition or readjustment of its debts; (b) the appointment of a receiver,
custodian, liquidator or the like of Purchaser or of all or any 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 or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
ninety (90) Days;
(v) Purchaser shall assign this Agreement or any of its rights
hereunder other than in compliance with Section 22.3 and such failure shall not
be cured within thirty (30) Days after notice thereof by Seller; or
(vi) Any representation made by Purchaser under Section XIV
shall be false in any material respect and such failure shall not be cured
within thirty (30) Days after notice thereof by Seller.
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 thirty (30) Days after the Non-Defaulting
Party delivers notice) (the "Early Termination Date") on which this Agreement
shall terminate, (ii) withhold any payments due in respect of this Agreement and
(iii) pursue any other remedies available at Law or in equity, except to the
extent such remedies are expressly limited by this Agreement.
SECTION XIX
INDEMNIFICATION AND LIABILITY
Section 19.1 Indemnification.
(a) Except as otherwise specifically provided in this Agreement, or
unless the damage or injury arises out of, results from, or is caused by, the
breach of this Agreement by a Party or by the negligence or misconduct of a
Party's own officers, directors, employees, agents, contractors or
subcontractors, neither Party shall be liable to the other for any claims,
judgments, liabilities, losses, costs, expenses or damages of any kind or
character (including loss of use of property) in connection with damages or
destruction of property or personal injury (including death) arising out of the
performance of this Agreement, including the design, construction, maintenance
or operation of property, facilities or equipment owned or used by the other
Party, or the use of, misuse of or contact with the electrical energy delivered
hereunder.
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(b) 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, judgments, losses,
liabilities, costs, expenses (including reasonable attorneys' fees) and damages
of any nature whatsoever for personal injury, death or property damage (except
workers' compensation claims) caused by any act or omission of the indemnifying
Party or the indemnifying Party's own officers, directors, affiliates, agents,
employees, contractors or subcontractors that arises out of or are in any manner
connected with the performance of this Agreement, except to the extent such
injury, death or damage is attributable to the negligence or misconduct of, or
breach of this Agreement by, the Party seeking indemnification hereunder.
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 or an affiliate thereof
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(other than LSP-Energy, Inc. in its capacity as a general partner of Seller) 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, the liability of Seller to Purchaser
pursuant to this Agreement (other than pursuant to Sections 19.1 and 19.2) shall
be limited to the amount of Incremental Replacement Power Costs through the
termination date of this Agreement.
(c) Notwithstanding any provision of this Agreement to the contrary,
after the Commercial Operation Date, Seller shall have no obligation to deliver
Replacement Power to Purchaser and Seller shall not be liable for, and shall be
held harmless against, any claims, damages or liabilities of any kind resulting
from a Forced Outage or other failure to deliver Contract Capacity or Net
Electrical Output to Purchaser other than as reflected in the calculation of
Availability Adjustment Factor or pursuant to Section 10.3 or remedies available
under clauses (i) and (ii) of Section 18.2.
(d) Notwithstanding any provision of this Agreement to the contrary,
after the Commercial Operation Date, Purchaser shall not be obligated to
purchase and receive any minimum quantity of Net Electrical Output from the
Dedicated Unit, or make any payments with respect thereto other than as set
forth in Section X. Any liability of Purchaser to Seller pursuant to this
Agreement (other than pursuant to Sections 19.1 and 19.2) shall be limited to
the amount of the Reservation Payment through the Term of this Agreement.
(e) THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF
DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR
BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY. 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. IF
NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, EACH PARTY'S
LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL
DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES
AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY
OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
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STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. 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.
Section 19.4 UCC. Except as otherwise provided for in this
Agreement, the provisions of the Uniform Commercial Code (the "UCC") of the
state whose Laws shall govern this Agreement shall be deemed to apply to this
Agreement and energy shall be deemed to be a "good" for purposes of the UCC.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE SELLING PARTY EXPRESSLY NEGATES ANY
OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.
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 (5) Days'
written notice from either Party. Any dispute that may arise in connection with
this Agreement which can not be resolved within thirty (30) Days following
submission to senior officers shall be settled by arbitration in accordance with
Section 20.2.
(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 Arbitration.
(a) After the expiration of the thirty (30) Day period described in
Section 20.1 (b), either Party may submit any matter in dispute concerning the
provisions of this Agreement to arbitration by providing the other Party a
written notice of arbitration, specifying the matter to be arbitrated.
(b) Within twenty (20) Days of the notice given in Section 20.2 (a),
the Parties shall select three (3) AAA approved commercial arbitrators, unless
the Parties otherwise agree in writing to select the arbitrators from another
source. To select these arbitrators, the Parties shall alternately strike names
from a list of commercial arbitrators knowledgeable or experienced in the
industry with no financial interest in any Party or any affiliate of any Party
obtained from the AAA or other agreed upon source, with the Party furnishing the
Notice of Arbitration striking first, until three (3) Persons' names remain on
such list. Such Persons shall become the arbitrators of the matter. In the event
any Person selected to be an arbitrator is unable or unwilling to serve, the
process shall be repeated until three (3) arbitrators have been selected and
have agreed to hear and resolve the dispute.
(c) The arbitrators shall permit each Party to conduct reasonable
discovery as promptly and expeditiously as possible (and both Parties shall
cooperate to this end). Discovery shall be limited to requests for the
production of documents and examination upon deposition. Each Party's requests
for, and responses to discovery including examination upon deposition shall be
completed within sixty (60) Days of the arbitrators' selection. The Parties may
modify the period for discovery by mutual agreement. The arbitrators shall
resolve any discovery disputes between the Parties that, after using their best
efforts, the Parties cannot resolve themselves.
(d) The hearing shall be initiated as promptly and expeditiously as
possible (and the Parties shall cooperate to this end) and, in no event more
than thirty (30) Days after the conclusion of the discovery period. The rules of
evidence of AAA shall apply to the presentation of evidence. Each Party shall
file written direct testimony with the arbitrators and serve a copy on the other
Party. The written testimony must be received by the arbitrators and the other
Party no later than ten (10) Days prior to the commencement of the hearing. Each
Party shall be permitted to make opening statements with the Party demanding
arbitration presenting its opening statement first. Immediately after opening
statements, the Party demanding arbitration shall then present evidence in
support of its position. The other Party then shall present evidence in support
of its position. All witnesses must testify under oath, and a stenographic
record and transcript of the hearing shall be made. Each Party shall
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have an opportunity to cross-examine the other Party's witnesses, including the
witnesses that file written direct testimony. The Parties shall be permitted to
make closing statements. The Party demanding arbitration shall present its
statement first. The arbitrators shall conclude the hearing within thirty (30)
calendar days of its commencement. The period for concluding the hearing may be
modified by mutual agreement of the Parties.
(e) The Parties shall submit briefs and/or proposed orders following
the completion of the hearing unless otherwise agreed by the Parties and
approved by the arbitrators. Initial briefs or proposed orders shall be served
on other Parties. The initial briefs or proposed orders must be received by the
arbitrators and the other Party no later than fifteen (15) Days after completion
of the hearing. Reply briefs shall be submitted to the arbitrators and served on
the other Party within ten (10) Days of receipt by the arbitrators and the other
Party of the initial briefs or proposed orders. The briefing schedule provided
herein may be modified by mutual agreement of the Parties with the approval of
the arbitrators.
(f) The determination and/or award of the arbitrators, whichever is
appropriate, shall be made no later than thirty (30) Days from the date of the
completion of the hearing or, if applicable, the date the last required briefs
and/or proposed orders were received by the arbitrators and the Parties. Such
determination and/or award shall be conclusive, final, and binding, subject only
to the outcome of confirmation or vacation proceedings, if any, under applicable
Law. To the extent that an award includes an amount of money, such award shall
include interest at the Contract Interest Rate, and such interest shall accrue
from the date(s) on which such money should have been paid to the prevailing
Party or was incorrectly paid by that Party.
(g) Unless the Parties otherwise agree in writing, arbitration under
this Agreement shall be conducted in Chicago, Illinois.
(h) Arbitration under this Agreement shall be governed by the AAA
Commercial Arbitration Rules (or any successor thereto) in effect at the time of
arbitration, unless the Parties mutually agree to another set of rules or body
of Law, provided that if any specific provision of this Section conflicts with
the then effective AAA Commercial Arbitration Rules, or other set of rules or
body of Law mutually agreed to by the parties, then the provisions of this
Section shall govern.
(i) The costs of the arbitration proceedings, other than the
Parties' own expenses, shall be shared equally by the Parties.
(j) The arbitrators shall have no power to amend or add to this
Agreement, but shall have the authority to interpret
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the language of such agreements and make findings of fact, order specific
performance and provide injunctive relief as if the arbitrators were a court.
Subject to such limitation, the decision of the arbitrators shall be final and
binding. Judgment on an award may be enforced in any court of competent
jurisdiction. Upon request of either Party, the arbitrators may issue such
orders for interim relief as may be deemed necessary to safeguard the property
that is the subject of arbitration or otherwise avoid irreparable harm to a
Party, without prejudice to the rights of the Parties to the final determination
of the dispute. Either Party may, without inconsistency with this Agreement,
seek from any court of competent jurisdiction any interim or provisional relief
that may be necessary to protect the rights or property of that Party, pending
the establishment of the arbitration tribunal.
SECTION XXI
APPOINTMENT OF AQUILA AS AGENT
Section 21.1 Appointment. UtiliCorp hereby appoints Aquila as its
true and lawful agent and attorney-in-fact, with full power and authority in its
name and on its behalf, to execute, acknowledge and deliver such documents and
instruments as may be necessary or appropriate to carry out the provisions of
this Agreement, including, without limitation, any notices, consents, elections,
waivers, correspondence, agreements, instruments or claims which Xxxxxx xxxxx
appropriate; provided, however, that Aquila may not agree to amend this
Agreement on behalf of UtiliCorp. UtiliCorp may terminate this appointment upon
written notice to Seller.
Section 21.2 Presumption of Authority. Seller may conclusively
presume and rely upon the fact that to the extent specified in Section 21.1, any
instrument executed by Aquila acting as Purchaser or agent or attorney-in-fact
for UtiliCorp is authorized, regular, and binding upon UtiliCorp, without
further need for inquiry.
SECTION XXII
MISCELLANEOUS
Section 22.1 Prudent Industry Practices. All actions required or
taken by either Party under this Agreement shall be consistent with Prudent
Industry Practices.
Section 22.2 Change in Prudent Industry Practices. The Parties
recognize that this Agreement was prepared based on
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use of Prudent Industry Practices commonly used in the electric power and
natural gas industries. To the extent such practices change over time (i.e.,
change in scheduling practices), the Parties agree to negotiate in good faith to
incorporate such changes into implementation of this Agreement.
Section 22.3 Assignment.
(a) Subject to Section 22.3(b) and 22.3(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, which consent shall not be unreasonably withheld. It shall not be
reasonable to withhold consent of assignment to an entity of equal or better
credit rating.
(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;
provided, however, that at the request of Purchaser, such consent shall contain
a provision whereby the Financing Party agrees to assume all of the Seller's
obligations under this Agreement in connection with any exercise of remedies
pursuant to which the Financing Party or its designee succeeds to all of the
Seller's rights in the Facility where such exercise of remedies arises due to
the default by any purchaser of the output of any Unit other than the Dedicated
Unit.
(c) Aquila may assign its rights and responsibilities under this
Agreement to any affiliate of UtiliCorp without the express prior written
consent of Seller, provided that UtiliCorp shall remain a party to this
Agreement and remain jointly and severally liable for Purchaser's obligations
hereunder.
Section 22.4 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 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
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such other address as such Party may designate for itself by notice given in
accordance with this Section 22.4. 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, unless revised by either Party, 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
Wire Transfer: To be provided.
(b) For Purchaser:
Aquila Power Corporation
00000 Xxxx 000 Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Vice President
Telephone: 000-000-0000
Facsimile: 000-000-0000
Wire Transfer: To be provided.
Section 22.5 Choice of Law. 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.
Section 22.6 Entire Agreement. This Agreement constitutes the entire
understanding between the Parties and supersedes any and all previous
understandings 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 22.7 Further Assurances. If either Party determines in its
reasonable discretion that any further instruments, assurances or other things
are necessary or
65
desirable to carry out the terms of this Agreement, the other Party shall
execute and deliver all such instruments and assurances and do all things
reasonably necessary or desirable to carry out the terms of this Agreement.
Section 22.8 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 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 22.9 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 22.10 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 22.11 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 22.12 Confidential Information. Any information provided by
either Party to the other Party pursuant to this Agreement or which is otherwise
derived as a result of a Party's performance under this Agreement 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 written consent, and upon request of the
providing Party shall be returned thereto or destroyed. Notwithstanding the
above, the
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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 reasonably 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 or Governmental Agency as may be required by
such court or Governmental Agency, provided that, if feasible, the disclosing
Party shall have given prior notice to the other Party of such required
disclosure and, if so requested by such other Party, shall have used all
reasonable efforts to oppose 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. The timing and content
of any press releases associated with this Agreement shall be agreed to by the
Parties prior to any public distribution.
Section 22.13 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 22.14 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 22.15 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.
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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 date first above
written.
LSP ENERGY LIMITED PARTNERSHIP
By: /s/ LSP Energy, Inc.
---------------------------
General Partner
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Executive Vice President
AQUILA POWER CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
UTILICORP UNITED INC.
By: /s/ Xxxxxx Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: President & COO
68
Appendix A
Testing Procedures for Contract Capacity
This Appendix A defines the method for determining Contract Capacity at
reference conditions of 95 degrees Fahrenheit and sixty percent (60%) relative
humidity (summer conditions) and 59 degrees Fahrenheit and sixty percent (60%)
relative humidity (winter conditions) tendered to the Purchaser pursuant to the
terms of this Agreement.
A. Requirement for Capability Test Procedure
A test shall be conducted prior to commercial operation to determine the
Contract Capacity. The test shall be conducted in accordance with a test
procedure to be developed by the Facility contractor, which shall incorporate
all of the test criteria and requirements specified in this Appendix A. This
test procedure shall be used as the basis for conducting all subsequent tests to
determine the Contract Capacity, subject to the provisions of Section 22.2.
B. Development of Test Procedure
This procedure shall include, but not be limited to, the following
subjects: arrangement and form of the test, log sheets, duration, readings to be
taken, instrumentation, and method of data recording. Development of the test
procedure shall generally follow the guidelines contained in ASME PTC 46,
"Overall Plant Performance". The annual Capability Test is to be conducted at an
ambient temperature within 10 degrees Fahrenheit of rating dry-bulb temperature.
Retests shall be conducted at ambient conditions as close to rating conditions
as practicable.
The following general guidelines shall be included in the development of
the test procedure for the Dedicated Unit:
(a) The combustion turbine shall be subjected to a full compressor
and/or turbine cleaning prior to conducting the test.
(b) All appropriate auxiliary equipment associated with the Dedicated
Unit shall be in service.
(c) Test data shall be collected with plant instruments, except that
Seller shall be allowed to substitute test instrumentation for plant
instrumentation, provided that the test instrumentation is of
greater accuracy. Determination of Net Electrical Output shall be
with the metering devices located at the
69
Electricity Metering Points indicated in Appendix B. Ambient
conditions at the time of running capability tests shall be recorded
so that appropriate adjustments can be made when establishing
seasonal capabilities. Conditions to be recorded are: dry-bulb
temperature, wet-bulb temperature, barometric pressure, and
condenser cooling water inlet temperature.
(d) For determination of Standard Capacity, duct firing shall not be in
service and the combustion turbine shall be operated at its base
load rating, without steam injection.
(e) For determination of Supplemental Capacity, duct firing shall be in
service and the combustion turbine shall be operated at its base
load rating, with steam injection.
(f) For determination of both Standard Capacity and Supplemental
Capacity, the combustion turbine evaporative cooler shall be in
service.
(g) The results of the tests shall be adjusted to the Standard Capacity
and Supplemental Capacity reference conditions of 95 degrees
Fahrenheit and sixty percent (60%) relative humidity.
(h) Once steady state conditions have been established, a two (2) hour
performance test shall be conducted divided into four (4) one-half
hour test periods, with the test results being the average of the
four test periods.
(i) Parameters affecting performance should be held at steady state
conditions during each of the test periods.
(j) When the total output of the Facilities is reduced due to
restrictions placed upon the output of individual Units through the
operation of the Clean Air Act or similar legislation, then the
total of the individual Unit ratings shall not exceed the modified
Facilities capacity.
(k) The Fuel used during testing shall be the general type expected to
be used during peak load conditions.
(l) The Contract Capacity, Standard Capacity and Supplemental Capacity
shall each be determined separately for each Unit at the Facility,
except
2
that in the event multiple Unit capability at the Facility is
limited by Fuel limitations, transmission limitations or other
auxiliary devices or equipment that is considered a Common Facility,
each Unit shall be tested simultaneously and shall equally share in
the limitation.
3
Appendix B
Metering Equipment
A. 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 Electricity Meter"). The general location of the
Electricity Metering Points is shown on Figure B-1. The Unit Electricity Meter
shall be owned and operated in accordance with the Agreement.
Metering devices shall also be located on Entergy's and TVA's side of the
Interconnection Points in the approximate location shown on Figure B-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 in accordance with Prudent Industry Practices and shall consist of
meters, metering 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 Electricity Meter
shall be capable of measuring MWs, MVARs and MWhs of each Dedicated Unit in
accordance with appropriate NERC criteria and Prudent Industry Practices, and
shall have the capability to totalize such data hourly. The output of the meters
shall be recorded in electronic format and stored on-site. The necessary
telemetering equipment and associated facilities shall 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 Electricity Meter shall equal the sum of the 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 this Appendix B, 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.
B. 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 B-2.
Fuel metering devices shall also be located at each Unit at the
approximate location shown on Figure B-2 to measure the Fuel used by each Unit
to produce the Net Electrical Output ("Unit Fuel Meter"). 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 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, and shall have the capability to totalize such data
hourly.
(c) Meter Outputs/Data Recording/Telemetering. The Fuel metering devices
shall measure Fuel in units of MMBtu in accordance with Prudent Industry
Practices and the tariffs of the interstate pipelines. The output of the meters
shall be recorded in electronic format and stored on-site. The necessary
telemetering equipment and associated facilities shall be installed to
facilitate transmittal of the real time Fuel flow information from the Unit Fuel
Meter to Purchaser.
(d) Reconciliation of Meters. The sum of the Fuel measured by the Unit
Fuel Meters 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, all 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 this Appendix
B, 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 Xxxxx.
0
Xxxxxxxx X
Design Limits
The Design Limits for the Dedicated Unit shall be the following:
(a) The maximum load for the Dedicated Unit shall be equal to the
maximum Net Electrical Output allowed pursuant to
manufacturers' warranties and recommendations and the
Governmental Approvals relating to the Facility;
(b) The minimum load for the Dedicated Unit shall be equal to
seventy percent (70%) of Standard Capacity;
(c) The capacity to ramp in the range of operations from minimum
load to the maximum Standard Capacity at an average rate shall
be equal to no less than five (5) MW per minute ("Guaranteed
Ramp Rate");
(d) There shall be no more than one Start-Up per Day, unless
otherwise agreed by Seller;
(e) There shall be a minimum run time of eight (8) consecutive
hours;
(f) The maximum time from Purchaser's notice of Start-Up to
minimum load shall be as follows ("Guaranteed Start-Up Time"):
(i) If a Dedicated Unit has been out of operation for less
than forty-eight (48) hours, it shall achieve minimum
load within one hundred and thirty (130) minutes
following Purchaser's notice of Start-Up; and
(ii) If a Dedicated Unit has been out of operation for more
than forty-eight (48) hours, it shall achieve minimum
load within two hundred and ten (210) minutes following
Purchaser's notice of Start-Up; and
(g) The power factor of Net Electrical Output from the Dedicated
Unit shall be in the range from 0.90 lagging to 0.95 leading.
Appendix D
Fuel Specifications
All Fuel delivered to the Facility by Purchaser shall meet the following
minimum requirements for receipt on each of the following applicable pipelines:
ANR Pipeline Company, FERC Gas Tariff, Second Revised Volume No. 1,
Section 13 - Quality and subsections 13.1 through 13.4 (sheets 129 through
132), as amended.
Trunkline Gas Company, FERC Gas Tariff, First Revised Volume No. 1,
Section 13 - Quality and subsections 13.1 through 13.6 (Sub First Revised
Sheet No. 204 and First Revised Sheet No. 205), as amended
Tennessee Gas Pipeline FERC Gas Tariff, Article II - Quality, Sections 1
through 9 (Fourth Revised Sheet No. 305, Second Revised Sheet No. 306,
Original Sheet No. 307 and Second Revised Sheet No. 308), as amended.
Appendix E
Electricity Specifications
Electricity generated by the Dedicated Unit and delivered to Purchaser shall be
three (3) phase, 60 cycle, shall be at 161 kV when delivered to Seller's
interconnection with the TVA System and shall be at 161 kV or 230 kV when
delivered to the Entergy System as appropriate, and shall be in accordance with
the Entergy Interconnection Agreement and the TVA Interconnection Agreement,
unless otherwise agreed by the Parties.
Appendix F
Replacement Power
When Seller elects or is otherwise obligated to obtain Replacement Power
delivered to Purchaser, pursuant to this Agreement, and chooses to have
Purchaser obtain such Replacement Power, Seller shall reimburse Purchaser for
the Incremental Replacement Power Cost ("IRPC") incurred by Purchaser. IRPC
shall be defined as follows, with all parameters described below denominated in
Dollars:
IRPC = RPC - EP + ETS + GTS + FR + FM
Where;
RPC = the actual cost at which Purchaser obtains Replacement Power from
a third party or parties, using Commercially Reasonable Efforts,
EP = the Energy Payment that would otherwise have been paid by
Purchaser to Seller for the quantities of energy which Seller failed
to deliver, plus Purchaser's cost of gas delivered to the Dedicated
Unit that would otherwise have been incurred, calculated as the
product of the Replacement Energy provided times the Delivered Cost
of Fuel times the Guaranteed Heat Rate,
ETS = all incremental power and energy transmission service costs
incurred through Commercially Reasonable Efforts to the Entergy/TVA
border, including, but not limited to, any incremental transmission
and ancillary services charges incurred in obtaining Replacement
Power and any applicable charges for reserved and
unutilized\transmission service, and less revenues received from
remarketing such transmission service,
GTS = all incremental transportation costs incurred through Commercially
Reasonable Efforts in remarketing the Fuel, including but not
limited to, any incremental Fuel transmission charges incurred.
FR = $0.03 per MMBtu Fuel remarketing fee for all Fuel obtained by
Purchaser for use in the Dedicated Unit and which had to be
remarketed.
FM = The difference between Purchaser's cost of gas delivered to the
Dedicated Unit that would
otherwise have been incurred and the actual Fuel resale price.
When Purchaser is purchasing Replacement Power pursuant to this Agreement or
remarketing Fuel which was not used in generating electricity for delivery by
Seller to Purchaser, Purchaser shall use Commercially Reasonable Efforts to
mitigate the Incremental Replacement Power Cost. The provisions of Section 13.4
of this Agreement shall apply to Incremental Replacement Power Costs.
2
Appendix G
Guaranteed Heat Rates
A. The average Guaranteed Heat Rate during any hour in which the Energy
dispatched is less than or equal to the Standard Capacity shall be the product
of the Seasonal Standard Heat Rate and the Part Load Adjustment Factor. The Part
Load Adjustment Factor shall be read from Column B of Table 1 based on the
energy dispatched from the Dedicated Unit during the hour divided by the
Standard Capacity.
Table 1 - Part Load Adjustment Factor
----------------------------------------------------------
Column B
Column A Part Load
Energy Dispatched as a Percent of Adjustment
Standard Capacity Factor
----------------------------------------------------------
70% 1.11
----------------------------------------------------------
71% 1.10
----------------------------------------------------------
72% 1.10
----------------------------------------------------------
73% 1.09
----------------------------------------------------------
74% 1.09
----------------------------------------------------------
75% 1.08
----------------------------------------------------------
76% 1.08
----------------------------------------------------------
77% 1.08
----------------------------------------------------------
78% 1.07
----------------------------------------------------------
79% 1.07
----------------------------------------------------------
80% 1.07
----------------------------------------------------------
81% 1.06
----------------------------------------------------------
82% 1.06
----------------------------------------------------------
83% 1.06
----------------------------------------------------------
84% 1.05
----------------------------------------------------------
85% 1.05
----------------------------------------------------------
86% 1.05
----------------------------------------------------------
87% 1.04
----------------------------------------------------------
88% 1.04
----------------------------------------------------------
89% 1.04
----------------------------------------------------------
90% 1.03
----------------------------------------------------------
91% 1.03
----------------------------------------------------------
92% 1.03
----------------------------------------------------------
93% 1.03
----------------------------------------------------------
94% 1.02
----------------------------------------------------------
Table 1 - Part Load Adjustment Factor
----------------------------------------------------------
Column B
Column A Part Load
Energy Dispatched as a Percent of Adjustment
Standard Capacity Factor
----------------------------------------------------------
95% 1.02
----------------------------------------------------------
96% 1.02
----------------------------------------------------------
97% 1.01
----------------------------------------------------------
98% 1.01
----------------------------------------------------------
99% 1.01
----------------------------------------------------------
100% 1.00
----------------------------------------------------------
B. The average Guaranteed Heat Rate during any hour in which the energy
dispatched is greater than the Standard Capacity shall be determined from the
following formula:
Guaranteed Heat Rate = (ESC*SSHR + ESU*9.500 MMBtu/MWh) / (ESC + ESU)
where: ESC is the amount of energy in MWh dispatched up to the Standard
Capacity during the hour;
SSHR is the Seasonal Standard Heat Rate at Standard Capacity, which
shall be 7.000 MMBtu/MWh (higher heating value) for the Months
of June, July, August, and September and 6.900 MMBtu/MWh
(higher heating value) for all other Months; and
ESU is the amount of energy in MWh dispatched above the Standard
Capacity during such hour.
C. If the Dedicated Unit trips or is otherwise taken off line during an hour,
the Part Load Adjustment Factor shall be determined for that hour based on the
Energy dispatched and the time the Dedicated Unit was on line during that hour
(for example, if the Dedicated was on line at 80% of Standard Capacity for 30
minutes and tripped off line, the Part Load Adjustment Factor would be 1.07.)
2
Appendix H
Minimum Insurance Requirements
The 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 as
commercially available placed with brokers, insurers, and reinsursers of
recognized responsibility.
A. 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 and 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.
B. 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 $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.
C. 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 $1,000,000.00. Deductibles shall not exceed
$50,000.00 per occurrence.
D. Workers' Compensation/Employer's Liability. Seller shall maintain workers'
compensation insurance and employer's liability insurance which comply with
statutory Laws of Mississippi.
E. Automobile Liability. Seller shall maintain automobile liability insurance
with a limit of not less than $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.
F. 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 $10,000,000.00 on a follow form
basis.
2
Appendix I
Criteria for Electric and Gas Interconnection Agreements
This Appendix I defines the approval criteria for the Entergy
Interconnection Agreement and the TVA Interconnection Agreement and the pipeline
interconnection agreements, in accordance with the provisions of Sections 7.2
and 8.1.
A. Electric Interconnection Agreements
1. No charges to Purchaser for delivering power and energy from the Dedicated
Unit to the Facility interconnections with TVA and/or Entergy shall apply
under the Interconnection Agreements.
2. Seller shall have the right to select the initial applicable control area
for the Dedicated Unit under the Interconnection Agreements.
3. Seller shall have the right to transfer the Dedicated Unit from the
Entergy or TVA control area to the other control area, on a no more than
annual frequency.
4. The Interconnection Agreements shall not provide for parallel flow
compensation for deliveries of power and energy to TVA and/or to Entergy
from the Dedicated Unit, absent filing(s) by TVA or Entergy with the
applicable regulator.
5. The Interconnection Agreements shall require TVA and Entergy to complete
any facilities upgrades required by Entergy and/or TVA using due diligence
in accordance with Section 7.2 by June 1, 2000 subject to force majeure in
accordance with this Agreement.
6. The transmission system upgrades identified by TVA and Entergy shall be
adequate (using the same standard for upgrades that the relevant utility
would apply to any comparable generation unit interconnected to its
system) to receive the entire output of the Facility for delivery into TVA
or Entergy as applicable for delivery and receipt pursuant to such
utility's transmission tariffs. This standard means that (i) if, subject
to the terms and conditions of the applicable Interconnection Agreement,
Net Electrical Output from the Facility is delivered to the applicable
Interconnection Point and Purchaser has arranged or caused to be arranged
transmission service for the Net Electrical Output with the applicable
utility designating the Interconnection Point as a transmission point of
receipt, the Net Electrical Output will be delivered to the transmission
point of delivery pursuant to the terms of the applicable transmission
service agreement, and (ii) the applicable Interconnection Point is
available as a transmission point of receipt pursuant to the terms of the
applicable utilities transmission tariff.
7. The Interconnection Agreements shall have no obligation for Purchaser to
provide reactive power or other ancillary services to Entergy and/or TVA
without agreement by Purchaser with each applicable utility on acceptable
compensation.
8. Seller shall have the right to metering data at the Interconnection Points
to the extent necessary to determine imbalances to the extent necessary to
determine imbalances.
9. The term of the TVA Interconnection Agreement and the Entergy
Interconnection Agreement shall equal or exceed the Term of this
Agreement.
10. Emergency conditions as used in the Interconnection Agreement shall be
defined in accordance with Good Utility Practice in a manner not
inconsistent with FERC's open access transmission policy.
12. Purchaser shall have the right to witness all metering testing by the
Seller and (for the Interconnection Points) TVA or Entergy.
B. Pipeline Interconnection Agreements
1. The maximum flow capacities of the Pipeline Interconnection Facilities
shall match the absolute maximum flow requirements of the Facility plus
any third party supply requirements (e.g., Batesville, MS).
2. The pipeline interconnection agreements shall not contain any commitment
for Purchaser to purchase or transport any minimum flow of Fuel.
3. Seller shall at all times have full metering capability with respect to
receipts and deliveries of Fuel.
4. The contractual equivalent of a direct Trunkline interconnection via ANR
shall be available in accordance with Section 8.1(a) of this Agreement.
5. The Pipeline Interconnection Agreements shall not contain limits on gas
transportation routes.
2
6. Purchaser shall have the right to witness all metering testing by both the
Seller and the pipelines of the meters located at the Fuel Metering
Points.
7. The Pipelines shall provide Fuel at a pressure no lower than that required
to operate all the Units in accordance with this Agreement and other
agreements by Seller with other Purchasers.
8. Purchaser shall be a third party beneficiary under the interconnection
agreements, provided such third-party beneficiary status is subordinate to
the rights of the Financing Parties.
3
LS POWER, LLC
000 Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
(000) 000-0000 o Fax: (000) 000-0000
Xxxxxxxx X. Xxxxxx
Executive Vice President
July 16, 1998
By Fax and U.S. Mail
Xx. Xxx Xxxxxxx
Aquila Power Corporation
00000 Xxxx 000 Xxxxxxx
Xxxxxx Xxxx, XX 00000
Dear Xx. Xxxxxxx:
Reference is made to the Power Purchase Agreement between LSP Energy
Limited Partnership and Aquila Power Corporation ("Aquila") and Utilicorp
United Inc. dated as of May 21, 1998 (the "PPA"). Pursuant to Section
11.1(d)(i), Seller hereby provides that the Estimated Standard Capacity of
the Dedicated Unit at 95 degrees Fahrenheit and 60 percent relative
humidity is 243 MW and that the Estimated Supplemental Capacity is 36 MW.
Notwithstanding Section 11.1(d)(i), Seller requests that Purchaser
acknowledge that Supplemental Capacity greater that 30 MW up to 36 MW
shall be purchased under the terms of the PPA at the Surplus Reservation
Charge.
Sincerely,
/s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Agreed to and accepted:
Aquila Power Corporation
By: /s/ X.X. Xxxxxx
------------------------
Name: XX Xxxxxx
Title: GM and SVP Power Marketing & Sales
cc: Vice President, Aquila Power Corporation
July 14, 1998
Xx. Xxxxxxxx X. Xxxxxxx, Project Manager
LS Power, LLC
000 Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Dear Xxxxxxxx:
This letter responds to certain items concerning the Power Purchase Agreement
dated May 21, 1998 ("PPA") between Aquila Power and LSP Energy Limited
Partnership for the LSP generating project in Batesville, Mississippi:
1) POWER FACTOR. Appendix C, Item (g) specifies the power factor range for
the Net Electrical Output. In Section 1.1, Net Electric Output is defined
with respect to the Interconnection Points. Per your request, please be
advised that measurement of power factor for the Dedicated Unit at the
generator terminals of said unit is acceptable to Aquila.
2) ENTERGY INTERCONNECTION AGREEMENT. This letter will document that the
Entergy Interconnection Agreement, transmitted to us by fax dated May 19,
1998, is consistent with the requirements of the PPA with the following
exceptions:
a) The Entergy Interconnection Agreement does not contain the third party
beneficiary requirement in Section 7.5(c). In connection with this
requirement, please provide Aquila with a description of the efforts
made by LSP with Entergy to have such language included in the Entergy
Interconnection Agreement.
b) The Entergy Interconnection Agreement appears to comply with
requirement A.S. of Appendix I to the PPA, PROVIDED, that LSP meets all
of the applicable deadlines as set forth in Section 3.2(d) of the
Entergy Interconnection Agreement.
Should you have any questions, please do not hesitate to call.
Very truly yours,
/s/ XXX XXXXXXX
------------------
Xxx Xxxxxxx
Xx. Xxxxxxxx X. Xxxxxxx, Project Manager
July 14, 1998
Page 2
cc: Xxxxx Xxxxxxxxx
Xxx Xxxxx
Xxxxx Xxxxxx
August 27, 1998
Xx. Xxxxxxxx X. Xxxxxxx
Project Manager
LS Power, LLC
000 Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Dear Xxxxxxxx:
UtiliCorp United Inc. ("UtiliCorp"), as Purchaser under the Power Purchase
Agreement date May 21, 1998 between LSP Energy Limited Partnership, as Seller,
and Aquila Power Corporation ("Aquila") and UtiliCorp, as Purchaser,
acknowledges that it has reviewed the Letter Agreements dated July 14, 1998 and
July 16, 1998 between Aquila and Seller and accepts the terms thereof as if
UtiliCorp were a signatory thereto.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx /s/ X.X. Xxxxxx
Xxxxxx X. Xxxxxxx X.X. Xxxxxx
Senior Vice President Senior Vice President
and General Manager and General Manager
UtiliCorp Energy Group Aquila Power
cc: Xxx Xxxxx
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