AGREEMENT FOR ELECTRIC SERVICE
BETWEEN
THE MONTANA POWER COMPANY
AND
STILLWATER MINING COMPANY
INDEX TO AGREEMENT PROVISIONS
Section 1: SERVICE TO BE PROVIDED
Section 2: INSTALLATION AND REMOVAL OF FACILITIES
Section 3: METERING FACILITIES
Section 4: PAYMENT
Section 5: REGULATORY JURISDICTION
Section 6: AGREEMENT TERM, MINIMUM XXXX AND EXIT FEES
Section 7: INDEMNITY
Section 8: FORCE MAJEURE
Section 9: CUSTOMER REVENUE OBLIGATION
Section 10: ASSIGNMENT
Section 11: NOTICE
Section 12: EFFECT OF TITLES
Section 13: APPLICABLE LAW
Section 14: INTEGRATION
AGREEMENT FOR ELECTRIC SERVICE
This Agreement for Electric Service ("Agreement"), effective on the 1st day of
June, 1996 ("Effective Date"), is entered into by and between STILLWATER MINING
COMPANY, a Delaware corporation whose address is XX 00, Xxx 000, Xxx, Xxxxxxx
00000, and THE MONTANA POWER COMPANY, a Montana corporation whose address is 00
Xxxx Xxxxxxxx, Xxxxx, Xxxxxxx 00000.
RECITALS
WHEREAS, Stillwater Mining Company ("Customer") has received from The
Montana Power Company ("Company") and the Company has provided to the Customer,
electric utility service subject to the jurisdiction of the Montana Public
Service Commission ("Commission"); and
WHEREAS, Customer is changing facilities which is increasing its usage
of electric energy warranting a special contract for electric service and the
Company has heretofore indicated that it will provide such electric utility
service; and
WHEREAS, the parties desire to continue their relationship as seller
and buyer of electric energy under the terms of a new agreement;
NOW THEREFORE, the parties agree as follows:
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Section 1: SERVICE TO BE PROVIDED
----------------------
1.1 Subject to the terms and conditions of this Agreement, the Company
will supply, on a firm basis, and the Customer will take and pay for, electric
power (demand and energy) required for the operation of Customer's mining and
milling operation located near Nye, Montana ("Electric Service").
1.2 The Company is not obligated to provide, and the Customer agrees
not to take in excess of 15,000 kilowatts of demand, which then becomes the
effective Contract Demand. Demand measured in excess of the Contract Demand
limitation, if served, will be billed and paid for at a rate equal to five times
the applicable demand rate.
1.3 Should Customer desire to increase its Contract Demand, Customer
may request such increase in writing to the Company specifying the amount of
increase requested, the date Customer wishes the increase to become effective
and its duration. The Company shall, within 90 days of such written request,
respond in writing to what extent Company has the electric power available to
satisfy the requested increase. If such request is authorized, the newly
established demand shall become the Contract Demand specified in Subsection 1.2.
If Company is unable or does not agree to make such increase available, Customer
may acquire such electric power from another provider, and Company shall
negotiate terms and conditions in good faith for delivery of such power at a
reasonable price.
1.4 The Electric Service provided shall be three-phase, sixty-hertz,
alternating current at approximately 13.2 kilovolts, four (4) wire, grounded
center wye.
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1.5 The point of delivery of the electric service shall be at the
terminals of the Company's 13.2 kV disconnect switch in the substation.
Section 2: INSTALLATION AND REMOVAL OF FACILITIES
--------------------------------------
2.1 The location of power lines and substations shall be designated by
mutual agreement of the Customer and the Company, with every effort made to
locate them outside the area of present or probable mining operations and where
they will not be interfered with or affected by the mining or other activities
of the Customer. In the event the Company is required to alter, relocate or
remove such electric lines, equipment or substations, the Customer will pay 100
percent of the removal costs and new installation costs incurred, less the
salvage value of the electric plant removed, unless such alterations, relocation
or removal is made necessary by the negligence of the Company, its officers,
agents or employees, in which case Company shall bear such costs. However, if
the Company, for its own purposes, chooses to alter, relocate or remove such
electric lines, equipment or substations, the Company will pay 100 percent of
the costs incurred.
Section 3: METERING FACILITIES
-------------------
3.1 The Electric Service shall be metered for billing purposes by
equipment recording the kilowatt-hours consumed and the maximum combined
fifteen-minute interval kilowatt demand at the delivery voltage. The metering
equipment will be installed at the point of delivery and owned and maintained by
the Company.
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3.2 METERING AND MEASUREMENT. Company will meter the electrical power
(demand and energy) delivered to Customer at the point of delivery. In addition,
the parties agree to the following testing and corrective procedures:
3.2.1 CUSTOMER'S METER - Customer may install, operate
and maintain, at its sole expense, equipment for the purpose of
measuring the amount of electric energy delivered over any measurement
period (Customer meter), provided the equipment shall not interfere
with such delivery or with the Company's metering equipment. Under no
circumstances shall Customer be allowed access to the Company's
secondary metering circuits.
3.2.2 ALTERNATIVE MEANS OF MEASUREMENT - In the event
the Company's metering equipment is out of service or registers
inaccurately, measurement shall be determined in the following sequence
by:
a. Using back-up metering installed by
Company, if installed; or
b. Using the reading of the Customer's
meter, if installed and accurately registering, in which
case, Customer will promptly provide data from its meter as
requested by Company. Customer's meter shall not be
considered accurate unless it has been tested in accordance
with the testing intervals and procedures in Subsection
3.2.3; or
c. To the extent the methods described
above cannot be utilized, performing a mathematical
calculation or estimating by reference to Customer's
operating records for the period in question.
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3.2.3 TESTING - At no greater than sixty (60) month
intervals, the Company's meters shall be replaced with meters that have
been recently tested and calibrated in the Customer's presence, if
Customer so desires. These meters shall have an accuracy at time of
test of plus or minus 1/2 of 1 percent (0.5%) at both 10 percent (10%)
and 100 percent (100%) of the rated Test Amperes (T.A.) of the
Watt-hour Meter at 100 percent (100%) of nameplate voltage, rated
frequency, and ambient temperature of 23(Degree)C +/- 5(Degree)C. When
the replacement meter is installed, the meter being replaced shall be
tested under the same procedure as the new meter. If the meter is
inaccurate by more than plus or minus 1/2 of 1 percent (0.5%),
adjustments to prior meter readings and resulting bills will be made as
outlined in Subsection 3.2.5 CORRECTIONS OF METERING ERRORS. In the
event that either party notifies the other that it desires a test of
the accuracy of its own or of the other party's metering equipment, the
parties shall cooperate to secure a prompt verification of the accuracy
of such equipment. Notice shall be addressed to the electrical
engineering contact at Customer's mining and milling operation or to
Company's Manager of Industrial Services in Butte, Montana and shall be
in writing at least fourteen days in advance of said testing.
3.2.4 COST OF TESTING - Company shall bear the cost of
normally scheduled testing and any required adjustment of the Company's
meter. In the event that Customer requests a testing of Company's meter
at other than normal intervals, Customer shall bear the cost of the
testing, including meter removal and replacement, unless such equipment
is found to be inaccurate by greater than 1/2 of 1 percent (0.5%)
(either high or low).
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3.2.5 CORRECTIONS OF METERING ERRORS - If, upon
testing, the Company's meter removed from service is found to be
inaccurate by less than or equal to 1/2 of 1 percent (0.5%) (either
high or low), previous recordings of such equipment shall be considered
accurate in computing deliveries of electrical energy hereunder. If,
upon testing, Company's meter shall be found to be inaccurate by
greater than 1/2 of 1 percent (0.5%) (either high or low), any previous
recordings by such Company meter shall be corrected to zero error, to
the extent possible, and Company shall promptly send to Customer a
report based on such corrected recordings. If no reliable information
exists as to when the Company meter became inaccurate, it shall be
assumed for correction purposes hereunder that such inaccuracy began at
the point in time midway between the testing date and the last previous
date on which the Company meter was tested and found to be accurate or
adjusted to be accurate, with the adjustment period not to exceed six
(6) months.
a. The provisions of Subsection 1.2
pertaining to billing Customer five times the applicable
demand rate for demand exceeding the Contract Demand will
not apply in the event that metering inaccuracies prevent
Customer from having knowledge of such potential exposure.
3.2.6 MAINTENANCE - Each party shall have the right to
be present whenever the other party changes or tests its meter. Each
party shall give timely notice to the other party in advance of taking
any such actions. Notice shall be addressed to the electrical
engineering contact at Customer's mining and milling operation or to
Company's Manager of Industrial Services in Butte, Montana. Each party
shall give at least 24 hours notice to the other party prior to
undertaking the above described activity.
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3.3 BILLING ADJUSTMENTS -
a. If meter tests as described above indicate that meter
has been more than 1/2 of 1 percent (0.5%) high, correct billing will
be determined according to Subsection 3.2.2 and the Customer will be
credited for the difference.
b. If meter tests as described above indicate that
meter has been more than 1/2 of 1 percent (0.5%) low, correct billing
will be determined according to Subsection 3.2.2 and the Customer will
be billed for the difference.
Section 4: PAYMENT
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4.1 The Customer shall pay the Company for the Electric Service in
accordance with the terms of the applicable rate schedule for such service in
effect from time to time. The applicable rate in effect at the time of execution
of this Agreement is GS-2 which is attached as Exhibit A and by this reference
made a part hereof. The Company will propose to implement other forms of
electric rates in the near future (i.e., Real Time Pricing, Time Of Use) which
will be included in tariffs and will be available for the Customer if approved
by the Commission.
4.2 All rate adjustments to the applicable rate schedule, whether
temporary, interim or final authorized by the Commission or its successor with
respect to the Electric Service rendered under this Agreement, shall be deemed
amendments to this Agreement.
4.3 Statements for amounts due under this Section 4 shall be rendered
monthly and shall be due and payable in immediately available funds at the
general offices of the Company in Butte, Montana fifteen (15) days after the
receipt of invoice.
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4.4 If payments are not made in full within the fifteen (15) days
following the receipt of such statements, the Company may, upon fifteen (15)
days written notice and without incurring any liabilities to Customer,
discontinue in full, or in part, Electric Service hereunder until such payments
are made in full, unless the Customer informs the Company in writing of a bona
fide dispute with respect to an amount due and pays the undisputed portion. A
discontinuance of service under this section shall not be deemed a termination
of this Agreement. Amounts due but not paid hereunder shall bear interest from
the due date at an annual rate equal to the Prime Rate established by the Xxxxxx
Guaranty Trust Company of New York in effect at the time these amounts become
due and payable.
Section 5: REGULATORY JURISDICTION
-----------------------
5.1 All Electric Service provided by the Company is subject to the
jurisdiction of the Commission or its successor.
Section 6: AGREEMENT TERM, MINIMUM XXXX AND EXIT FEES
------------------------------------------
6.1 This Agreement shall be effective for Electric Service provided by
Company to Customer from and after its Effective Date and shall continue in
effect for a period of five (5) years unless extended for a specific term by
mutual agreement of the parties before the termination date. No "exit fees" or
"stranded costs" are provided for by this Agreement; however, the parties agree
that such exclusion should not be construed either to prohibit or to support the
imposition of such fees by law. Customer shall have no obligation to take its
energy requirements from Company and Company shall have no obligation to provide
Customer its energy requirements after termination of this Agreement, provided
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both parties have acceptable options which are allowed by law. If the Company is
required to provide Electric Service at the end of the initial term because of
lack of market access by the Customer, the Company shall provide Electric
Service to Customer at prices to then be determined by tariff or contract, as
may be appropriate.
6.2 Customer and Company recognize that significant changes may occur
in the availability and cost of electric power generation, in wholesale power
purchase opportunities, and in retail electric service caused by changes in fuel
costs, electric power markets, and transmission regulation. With the potential
for such changes and their impact on the Agreement and if a signed offer as
specified in Section 6.2.1 below is presented, the parties agree to renegotiate
this Agreement after March 1, 1999, not more often than once during any
consecutive twelve-month period.
6.2.1 To commence renegotiations after March 1, 1999, Customer
must present to Company a signed offer by a third party offering to
sell power and energy to Customer at Customer's mining and milling
operation at a total delivered price equal to or less than ninety
percent (90%) of the rates contained in the then-current applicable
rate schedule, presently Electric Tariff Schedule No. GS-2 that was
approved by the Commission for service on and after March 1, 1996. If
Customer can provide a reasonable demonstration that the offered power
and energy can be delivered at the price offered above by the third
party to the Customer's mining and milling operation, Customer shall
inform Company thereof and give Company an opportunity to make a
comparable price offer.
6.2.2 If Company does not meet the offered prices and if
existing law and/or regulation then authorizes the wheeling of
electricity for retail customers, Company shall negotiate terms and
conditions in good faith for the delivery of such offered power to the
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Customer's mining and milling operation. The Company shall execute the
necessary wheeling agreements to enable electric energy to be delivered
to the Customer's operation at wheeling rates, terms and conditions
approved by the Federal Energy Regulatory Commission or other
appropriate regulatory body and the Agreement shall then be terminated.
6.2.3 If Company does not meet the third party's offer within
thirty (30) business days of notification by Customer, the Customer's
mining and milling operation shall have no further obligation to
purchase its Electric Service from Company. If Customer elects to
contract for Electric Service from a third party, thereafter, the
Company shall have no further obligation to supply such Electric
Service, and this Agreement shall be terminated. However, Customer
shall be obligated to pay the following costs:
a. A payment of the balance of the Company's actual
investment, as defined in Subsection 9.1, less Total
Additional Revenue, as defined in Subsection 9.2, and any
associated surcharges (see Commission-authorized Rule No.
6-10) on that difference; and
b. A payment of Customer's Minimum Xxxx Obligation.
The Minimum Xxxx Obligation recovers any investment in power
supply, transmission or distribution system solely
attributable to Customer which is made by Company to serve
Customer, except the investment covered in Subsection
6.2.3(a). The Company will attempt to mitigate this amount to
the extent possible. If Customer remains on Company's system
as a transmission and/or distribution customer, investment in
transmission and/or distribution will not be included in the
Minimum Xxxx.
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Section 7: INDEMNITY
---------
7.1 Each party hereto expressly agrees to indemnify and hold harmless
and defend the other against all claims, demands, costs or expense for loss,
damage or injury to persons or property, in any manner directly or indirectly
connected with or growing out of the presence or use of electric capacity and
energy on its own side of the delivery point hereunder, unless such claim or
demand shall arise out of or result from the sole negligence or willful
misconduct of the other party, its agents, servants or employees; provided,
however, that neither party hereby assumes responsibility for damage or injury
to employees of the other party.
Section 8: FORCE MAJEURE
-------------
8.1 Company shall not be liable to Customer for failure to supply any
part of Customer's electric requirements hereunder when such failure results
from or is due to any act of God or any other cause not reasonably within the
control of the Company such as but not limited to extreme weather, lightning,
storms, floods, washouts, earthquakes, fires, explosions, breakage, failure of
or accident to appliances or equipment (specifically not including, however,
outages of equipment, appliances or facilities in connection with routine
maintenance, wear out or other foreseeable occurrences) , strikes, lockouts
(including those by Company), labor disputes, acts of the public enemy, war,
riots, insurrections, epidemics, arrests or restraints, rules, regulations or
orders of any court, commission or other governmental agency having
jurisdiction, or any other cause not reasonably within control of the Company,
whether of the kind herein enumerated or otherwise, but not including loss of
markets by Company or other economic conditions; provided, however, that Company
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shall use all reasonable diligence to remove any and all such causes and shall
resume deliveries when such cause or causes cease to be operative.
8.2 Customer shall not be liable to Company for failure to take
electric service hereunder when such failure results from or is due to any act
of God or any other cause not reasonably within the control of the Customer such
as but not limited to failure of equipment due to extreme weather, lightning,
storms, floods, washouts, earthquakes, fires, explosions, breakage, failure of
or accident to appliances or equipment (specifically not including, however,
outages of equipment, appliances or facilities in connection with routine
maintenance, wear out or other foreseeable occurrences), acts of the public
enemy, war, riots, insurrections, epidemics, arrests or restraints, rules,
regulations or orders of any court, commission or other governmental agency
having jurisdiction, strikes, lockouts (including those by Customer), labor
disputes or any other cause not reasonably within control of the Customer,
whether of the kind herein enumerated or otherwise, but not including loss of
markets by Customer or other economic conditions.
Section 9: CUSTOMER REVENUE OBLIGATION
---------------------------
9.1 Company will upgrade its transmission line and substation
facilities to serve Customer's Stillwater Mining Complex. Company's actual
investment attributed to Customer (estimated to be $2,920,000) must be recovered
through Total Additional Revenues produced from Customer's increased load in
excess of 8,000 kW. Company shall advise Customer of its Total Additional
Revenue obligation within three (3) months of the project's completion.
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9.2 Company shall calculate Total Additional Revenues by using the
demand greater than 8,000 kW and the associated energy (kWh), based on the
monthly load factor, at the effective GS-2 rates to determine additional monthly
revenues {i.e., If a particular month's load was 12,000 kW with a load factor of
80 percent for 720 hours, the associated energy would be 2,304,000 kWh (4,000 kW
x 720 hours x .80) and the associated demand would be 4,000 kW (12,000 kW -
8,000 kW)}. If fifty percent (50%) of the accumulated Total Additional Revenues
have not met or exceeded Company's actual investment after five years from the
Effective Date, or upon termination of operations by Customer, whichever occurs
first, Customer shall pay Company the difference between (1) Company's total
investment and (2) Total Additional Revenues, along with any associated
surcharges (as specified by Commission-authorized Rule No. 6-10) on the
difference between (1) and (2), in accordance with Subsection 4.3. Customer's
obligation to the Company for Company's investment shall be relieved at any time
during the first five (5) years of this Agreement that fifty percent (50%) of
the cumulative Total Additional Revenues exceed Company's actual investment.
Section 10: ASSIGNMENT
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10.1 This Agreement shall be binding upon the parties and their
respective successors and assigns, but no assignment by either party shall be
binding upon the other party until accepted in writing by the other party.
Such written acceptance shall not be unreasonably withheld.
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Section 11: NOTICE
------
11.1 Any notice required or authorized by this Agreement shall be
sufficient if served in person or by certified mail with return receipt
requested to the other party. Notice to Customer is to be directed to:
Stillwater Mining Company
Attention: President and Chief Operating Officer
XX 00, Xxx 000
Xxx, XX 00000
Notice to the Company is to be directed to:
The Montana Power Company
Attention: Manager, Industrial Services/Economic Development
00 Xxxx Xxxxxxxx
Xxxxx, XX 00000
11.2 Receipt shall be deemed to be the date of actual delivery in
person or the date the certified mail receipt is returned, as the case may be.
Section 12: EFFECT OF TITLES
----------------
12.1 The titles or captions of the sections of this Agreement are
inserted for convenience and shall not be construed or interpreted as
expressions of intent or obligations hereunder.
Section 13: APPLICABLE LAW
---------------
13.1 This Agreement shall be construed in accordance with the laws of
the State of Montana.
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Section 14: INTEGRATION
-----------
14.1 This instrument embodies the whole Agreement of the parties. There
are no agreements, terms, conditions or obligations other than those contained
herein; and this Agreement shall supersede all previous communications,
representations or agreements, either verbal or written, between the parties
hereto. Effective June 1, 1996, this Agreement supersedes and replaces the
current Agreement for Electric Service dated July 1, 1990 pertaining to
Customer's mining operations near Nye, Montana.
IN WITNESS WHEREOF, the parties hereto have caused their corporate
names to be hereunto subscribed by their officers in their behalf duly
authorized, the day and the year first above written.
STILLWATER MINING COMPANY
By /s/ X. XXXXXXX
-----------------------------------------
President and Chief Operating Officer
THE MONTANA POWER COMPANY
By /s/ X.X. XXXX
-----------------------------------------
Vice President, Business Development
and Regulatory Affairs
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