EXHIBIT 10.23-02
CONTRACT FOR THE PURCHASE, SALE OR
EXCHANGE OF ECONOMY ENERGY
BETWEEN
COMISION FEDERAL DE ELECTRICIDAD
AND
EL PASO ELECTRIC COMPANY
LEGEND: PORTIONS OF THIS DOCUMENT HAVE
BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT AND SUCH OMITTED
MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
Pag. 1 de 19
CONTRACT FOR THE PURCHASE OF FIRM CAPACITY AND ASSOCIATED POWER ENTERED INTO BY
COMISION FEDERAL DE ELECTRICIDAD, HEREINAFTER REFERRED TO AS "CFE", REPRESENTED
BY LIC. XXXX X. XXXXXXX XXXXX AND BY ING. XXXXXXXX XXXXXX MILAN IN THEIR
CAPACITY AS PROGRAMMING SUBDIRECTOR; AND TRANSMISSION, TRANSFORMATION AND
CONTROL SUBDIRECTOR RESPECTIVELY AND BY "EL PASO ELECTRIC COMPANY", HEREINAFTER
REFERRED TO AS "EPE", REPRESENTED BY XXXX X. XXXXX, IN HIS CAPACITY AS VICE
PRESIDENT-POWER GENERATION, PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES.
R E C I T A L S
I. CFE STATES THAT:
I.1 It is a decentralized organization of the Federal Public Administration of
the United Mexican States, possessing its own legal personality and assets,
and regulated by the Electric Power Public Service Law, published in the
Official Federal Daily Journal on December 22, 1975.
I.2 Part of its objective is the import of electric power, exclusively for the
provision of public service.
I.3 Its objective also includes the execution of agreements or contracts with
private entities, to carry out acts related to the provision of public
service of electric power, as well as to carry out the acts and execute the
contracts necessary for the fulfillment of its objective.
I.4 It is currently authorized by the Federal Department of Energy to import
*SEE LEGEND ON FIRST PAGE OF EXHIBIT* electric power monthly from the
United States of America. Copies of the permits are included as Attachment
I.
I.5 Award of the present CONTRACT was the result of competition through direct
invitation, as for by Constitutional article 134th; 9th,
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Section III of the Electric Power Public Service Law, and Article 7th of
the Regulation of said law. A copy of the decision of the competition
held, appears in Attachment I-BIS.
I.6 This CONTRACT is not subject to the dispositions of the North American Free
Trade Agreement, insofar as it refers to acts that lead to the provision of
electric power public service, pursuant to the provisions contained in
appendix 1001.1B-2, section B Mexico list, section 2, and in official
document No. 202'94'90 dated June 29, 1994 by the General Direction of
International Institutions Headquarters of the Federal Department of
Commerce and Industrial Promotion.
I.7 It possesses the necessary funds, authorized by the Federal Department of
the Treasury, to effect the disbursements arising from this CONTRACT.
I.8 Lic. Xxxx Xxxxxxx and Ing. Xxxxxxxx Xxxxxx Milan have the necessary
authority to represent it in this act, same as has not been revoked to
date.
I.9 It is domiciled at Xxx Xxxxxxxxx No. 32, Col. Xxxxxx xx xxx Xxxxxx 00000
Xxxxxx, D.F. Mexico, being this the same given for all legal purposes
pertaining to this CONTRACT.
II. EPE STATES THAT:
II.1 It is a company constituted and existing pursuant to the laws of the State
of Texas of the United States of North America as evidenced by the legal
documents added to the present CONTRACT as Attachment II.
II.2 Its purpose consists of the generation, purchase, sale and transmission of
electric power in the United States of America, in accordance with that
established in Attachment II.
II.3 It received the direct invitation sent to it by CFE to participate in the
competition for the purchase of FIRM CAPACITY and ASSOCIATED
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POWER, agreeing to participate in the competition, for which reason it
submitted its offer.
II.4 It has the legal status to contract, and meets the technical and economic
conditions to obligate itself pursuant to the terms of the present
CONTRACT.
II.5 It is familiar with the contents of the Electric Power Public Service Law
and its Regulations.
II.6 Its representative Xx. Xxxx X. Xxxxx verifies his capacity and authority to
appear at this act by means of a certified copy of the protocolized power
granted him, which is added to this CONTRACT as Attachment III.
II.4 It is domiciled at 000 Xxxx Xxxxx, Xx Xxxx, Xxxxx 00000-0000 being this the
same given for all legal purposes pertaining to this CONTRACT.
III. THE PARTIES STATE THAT:
III.1 Hereinafter, CFE and EPE may also be individually called "PARTY" or
jointly called "PARTIES".
The foregoing having been declared, the PARTIES execute the following:
CLAUSES
FIRST.- SUBJECT MATTER OF THE CONTRACT
The subject matter of the present CONTRACT is to establish the terms and
conditions pursuant to which EPE commits to sell and deliver to CFE, and the
latter commits to purchase and receive FIRM, CAPACITY and ASSOCIATED POWER, as
provided for in this CONTRACT.
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SECOND.- DEFINITIONS
For the purpose of the present CONTRACT the PARTIES agree to establish
the following conventional definitions, which shall be used with no
distinction in singular or plural. The terms defined shall be written
in bold type and upper case letters.
2.1 CONTRACTED CAPACITY
The amount of FIRM CAPACITY in MW, that EPE commits to have at
the disposal of CFE at the POINT OF DELIVERY.
Period Demand (MW)
------ -----------
98/01/01 - 98/03/31 *SEE
98/04/01 - 98/04/30 LEGEND
98/05/01 - 98/08/31 ON FIRST
98/09/01 - 98/12/31 PAGE OF EXHIBIT*
2.2 CAPACITY CHARGE
The monthly charge in dollars of the United States of America
for each kW with CONTRACT CAPACITY, specified in the Fifth
Clause of this CONTRACT.
2.3 TRANSMISSION CHARGE
The monthly charge in dollars of the United States of America
for each of CONTRACT CAPACITY associated with the use of the
transmission system of EPE or with third parties and specified
in the Fifth Clause of this CONTRACT.
2.4 ASSOCIATED POWER CHARGE
The charge in dollars of the United States of America for each
kW of ASSOCIATED POWER, specified in the Fifth Clause of this
CONTRACT.
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2.5 FORTUITOUS CASES AND FORCE MAJEURE CAUSES
As established in the Twelfth Clause, section 12.3
2.6 CFE-XXXXXX
Is the electric system property of CFE which supplies the
northern part of the state of Chihuahua and adjoins the border
of the United States of America, and interconnects with the rest
of the SINAL at the Xxxxxxxxx Substation.
2.7 EMERGENCY
The loss or interruption of generating capacity or TRANSMISSION
CAPACITY in the system of either of the PARTIES, which degrades
system safety to the point of placing service in risk to its
native users or the integrity of the system, as a result of any
other cause other than:
(1) scheduled maintenance or;
(2) an expected shortage in the fuel supply.
2.8 ASSOCIATED POWER
The energy delivery to CFE expressed in kWh, associated with
CONTRACTED CAPACITY.
2.9 POINT OF DELIVERY.
Point at which the electric power transmission lines which
connect the Xxxxxxxx and Diablo Substations, property of EPE,
with the Riverena and Insurgentes Substations, property of CFE,
cross the international border of the United States of America
and the United Mexican States.
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2.10 SERVICE RESTRICTIONS
Partial or total interruption of the supply of electric power to
CFE.
2.11 NATIONAL INTERCONNECTED SYSTEM (SINAL)
CFE'S principal electric power system, of which CFE-JUAREZ is a
part.
2.12 WESTERN SYSTEMS COORDINATING COUNCIL (WSCC)
Is an organization made up of different interconnected electric
power companies, located in the western part of the United
States of America and Canada, and of which EPE is a member.
THIRD.- TERM
This CONTRACT shall take effect on the date on which it is signed by
the PARTIES; the services to be provided pursuant to same shall
commence on January 1st of 1998 and conclude on December the 31st of
1998.
The present CONTRACT shall take effect under the condition that CFE
obtains the budgetary authorization mentioned in statement 1.7.
FOURTH.- TECHNICAL ASPECTS
4.1 INTERCONNECTION
The INTERCONNECTION between the CFE-XXXXXX and EPE systems is by
means of two 115 kV connections in the border which connect the
Riverena and Insurgentes substations, property of CFE, with the
Xxxxxxxx and Diablo substations, property of EPE. CFE shall
receive the power of EPE via these lines at the POINT OF
DELIVERY
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Transmission of power up to the POINT OF DELIVERY will be the
exclusive responsibility of EPE.
4.2 TRANSFERRED LOAD
Both PARTIES acknowledge that the reception of energy is not
practical or convenient during the time the CFE-XXXXXX is
interconnected to the SINAL of CFE.
For the above stated, in order for an exchange of electric power
to take place between the PARTIES, they agree to separate a part
of the CFE-XXXXXX system, and to continue applying the
procedures established, between the PARTIES, for that purpose.
4.3 DELIVERY CONDITIONS
EPE may not interrupt the delivery of ASSOCIATED POWER, except
under EMERGENCY conditions, FORTUITOUS CASES or FORCE MAJEURE
CAUSES.
4.4 OPERATING PROCEDURES
Both PARTIES agree to continue operating, during the term of
this CONTRACT, according to *SEE LEGEND ON FIRST PAGE OF
EXHIBIT*
4.5 MEASUREMENTS
For billing purposes, the measurements of energy demand and
supply by EPE to CFE will be taken by the Xxxxxxxx and Diablo
Substations, property of EPE, according to the operating
procedures established for that purpose between the PARTIES.
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FIFTH.- BASIS FOR THE DETERMINATION OF BENEFITS
5.1 PRICES
EPE shall supply the CONTRACTED CAPACITY and ASSOCIATED POWER to
CFE which shall pay to EPE in dollars of the United States of
America, during the term this CONTRACT is in effect, the prices
offered by EPE in the bidding process, and which are stated as
follows:
*SEE LEGEND ON FIRST PAGE OF EXHIBIT*
5.2 BILLING
Monthly billing for the services will be the sum of the Billing
for CONTRACTED CAPACITY, Billing for Transmission, plus the
Billing for ASSOCIATED POWER, and the Billing for Other Charges,
as stated below:
*SEE LEGEND ON FIRST PAGE OF EXHIBIT*
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5.3 PRICE CHARACTERISTICS
The prices established in Section 5.1 of this Clause, represent
the total payment required from CFE, up to the POINT OF
DELIVERY, and include all taxes, duties and other fiscal
contributions or payments, arising in the United States of
America, consequently, EPE may not claim, for any reason,
greater benefits other than those agreed and described in
Section 5.1
CFE shall be responsible for the payment of all taxes, duties
and other fiscal contributions, arising in the United Mexican
States arising by the import of electric power.
SIXTH.- BILLING AND PAYMENT
6.1 INVOICE
The invoice which EPE presents to CFE *SEE LEGEND ON FIRST PAGE
OF EXHIBIT*.
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6.2 PERIOD FOR BILLING
EPE shall present CFE within 10 calendar days subsequent to the
end of each month, the invoices to be charged, in dollars of the
United States of America, for the sales made pursuant to this
CONTRACT, for the months in which such sales take place. The
monthly invoices presented shall be paid by CFE to EPE, within
the 20 calendar days subsequent to the date the invoice was
received.
6.3 BILLING DISCREPANCIES
In the event of a discrepancy between the PARTIES, regarding the
amount stated in an invoice, the invoice must be paid entirely
within the period agreed, in the understanding that the amount
subject to dispute between the PARTIES, is being paid under
protest. If it is determined that any part of the protested
amount charged is incorrect, EPE must reimburse CFE the amount
of the overcharge, including a 1% monthly interest, calculated
as of the day on which the overcharge was paid until the amount
and its interest are reimbursed.
6.4 ACCOUNTS FOR PAYMENTS
All payments made by CFE to EPE shall be made in dollars of the
United States of America, by electronic means, in a Banking
Institution outside the United Mexican States, designated by
EPE.
SEVENTH.- TAXES AND DUTIES
The taxes and duties legally arising as a consequence of this CONTRACT
in the United States of America and in the United Mexican States,
shall be paid respectively by EPE and CFE, as set forth in their
respective fiscal regulations.
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EIGHT.- REPRESENTATION
Within thirty calendar days commencing as of the date on which the
present CONTRACT is executed, each PARTY shall designate a
representative and an alternate, and shall notify the other PARTY in
writing, within the same period, their names and duties.
The representatives of the PARTIES shall basically have the function
of contributing to the satisfactory performance of the operational
aspects arising out of this CONTRACT, as well as to serve as a liaison
between the PARTIES, in order to achieve an adequate implementation of
it.
The PARTIES may change their representatives at any time, subject to
prior notification there of by one PARTY to the other.
All decisions taken by the representatives of the PARTIES must be
recorded in minutes which must be signed by them. The representatives,
however, are not authorized to modify what has been agreed to in this
CONTRACT.
The salaries and expenses of these representatives shall be borne by
the represented PARTY.
NINTH.- DEFAULT
9.1 EVENT OF DEFAULT
In the Event of Default or breach, the conforming PARTY shall
notify the other PARTY, in writing, of such event, the non
complying PARTY shall explain and remedy the non-compliance or
otherwise prove that no event of Default has occurred.
Once the PARTY has been notified of the non-compliance, if there
were such non-compliance, the PARTY in non-compliance shall
correct its fault, as soon as reasonably
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possible without exceeding three (3) calendar days commencing on
the date in which notification took place. If due to its nature
it were not possible to remedy the situation within three (3)
calendar days, the non-complying PARTY shall submit, within such
period, a schedule of activities which fully satisfies the other
PARTY, to remedy the non-compliance. If no agreement is reached
by the PARTIES, they shall submit the disputed issues to
arbitration, as established in the Fifteenth Clause of the
present CONTRACT. The PARTIES shall abide by the arbitral
verdict, which shall be definitive.
9.2 RESCISSION
The present CONTRACT may be rescinded due to serious or repeated
non-compliances of either of the PARTIES, regarding the
obligations provided in the present CONTRACT.
TENTH.- PENALTIES
When EPE fails to make the CONTRACTED CAPACITY partially or totally
available to CFE, and this not be due to an EMERGENCY, a FORTUITOUS
CASE OR FORCE MAJEURE CAUSE, or caused by CFE, EPE must pay the
positive difference, duly documented by CFE, between the cost to CFE
for the amount of energy not supplied and the contracted price with
EPE, CFE shall not pay the charge for CONTRACTED CAPACITY and the
charge for TRANSMISSION CAPACITY in proportion to the amount and time
of the non-compliance.
ELEVENTH.-RESPONSIBILITIES
Each of the PARTIES shall indemnify and hold the other PARTY harmless
from any responsibility, loss, damage or destruction of property as a
result of dolus, fault or negligence of its officers, advisors,
employees, workers and other personnel.
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Claims or indemnifications of employees or workers of either PARTY as
a result of work accidents shall be the sole liability of that PARTY.
Each PARTY shall assume responsibility to its consumers, for claims
caused by interruptions or deficiencies of service. Each PARTY agrees
to hold the other PARTY safe and harmless if a consumer of one of the
PARTIES files suit against the other PARTY.
TWELFTH.- GENERAL MATTERS
12.1 NOTIFICATIONS
Any notification, petition or request relative to this CONTRACT,
shall be deemed duly delivered to CFE, if it is sent by
certified mail with return receipt requested, by messenger
service, or by fax, obtaining confirmations of its reception by
the Jefe del Area de Control Norte at Guanacevi Xx. 000, Xxxxxx
Xxxxxxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxx. C.P. 35078, Mexico; if
the notification is to EPE, it must be sent to the Assistant
Vice President of Resource and Planning Department at 000 Xxxx
Xxxxx, Xx Xxxx, Xxxxx 00000.
The designation of the person to whom notifications shall be
sent, or the address of said person may be changed at any time
by means of written notification. Every notification and request
related to the delivery or reception of electric power or to the
operation of facilities, shall be deemed valid if it is
transmitted by telephone and recorded in the system operators
logs of both PARTIES.
12.2 SUCCESSORS AND ASSIGNEES
The present CONTRACT shall be effective in benefit of and
binding on the successors and assignees of both PARTIES; however
it shall not be transferable by either of the PARTIES without
prior written consent from the other, which shall not be denied
without just cause.
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12.3 FORTUITOUS CASE OR FORCE MAJEURE CAUSE
Neither EPE nor CFE shall be liable for default in their
obligations arising out of the present CONTRACT, when said
default is due to a FORTUITOUS CASE or FORCE MAJEURE CAUSE,
provided that the PARTY which finds itself unable to comply has
not contributed or given cause to the occurrence of said
FORTUITOUS CASE or FORCE MAJEURE CAUSE.
A FORTUITOUS CASE or FORCE MAJEURE CAUSE shall be understood to
mean any natural phenomenon or human act that is unexpected or
unavoidable, even when proceeding with due diligence, and that
prevents fulfillment of any of its obligations arising out of
this CONTRACT. Included among but not limited to FORTUITOUS
CASES or FORCE MAJEURE CAUSES are the following: Flooding,
earthquake, storm, fire, lightning, epidemic, war, revolt,
strike, not attributable to the affected PARTY, acts by
authorities not promoted or caused by the affected PARTY.
When a FORTUITOUS CASE or FORCE MAJEURE CAUSE occurs, the PARTY
subjected to it must notify and confirm its existence to the
other PARTY.
The PARTY subjected to a FORTUITOUS CASE or FORCE MAJEURE CAUSE
shall indicate to the other PARTY how long it is expected to
last and the measures it is taking to resolve it.
12.4 PARTIAL INVALIDITY
The invalidity or nullity of any part of this CONTRACT, provided
said invalidity or nullity does not affect essential elements of
same, allowing it to remain in effect, shall not affect the
validity of any other provision contained herein.
12.5 DISPUTES
Any dispute arising out this CONTRACT, shall be discussed and
resolved by the representatives of the
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PARTIES, who shall make their best efforts to resolve said
dispute in a friendly and opportune manner. If they are unable
to resolve such disputes, they shall submit them for
consideration and resolution by their respective superior
executives, without prejudice to the provisions contained in the
Fifteenth Clause.
THIRTEENTH.- AUTHORIZATIONS
All authorizations required by either PARTY for the execution of this
CONTRACT, whether in their own country or any country, shall be
obtained by the PARTY and be in effect at the time of this CONTRACT is
to be signed.
FOURTEENTH.- LANGUAGE
The PARTIES signing this CONTRACT do so in two (2) originals in
Spanish and (2) two originals in English. It is agreed that the two
versions in Spanish and English of this CONTRACT are valid and
binding. In the event of any discrepancy in the interpretation of
either of these versions, the version in Spanish shall prevail.
FIFTEENTH.-ARBITRATION
In the event of disputes of a technical or economic nature related to
this CONTRACT, which the PARTIES are unable to overcome within a
period of thirty (30) calendar days, said dispute shall be resolved by
means of arbitration. The arbitration procedure shall be subject to
the Rules of Conciliation and Arbitration of the International Chamber
of Commerce of Paris. The arbitral tribunal must be comprised by three
arbiters selected according to said Rule, unless the PARTIES agree to
appoint only one arbiter. The arbitration shall take place in Mexico
City, in the Spanish language. The costs and expenses which arise by
reason of the arbitration shall be paid by the losing PARTY. The
arbitral veredict shall be unappealable and definitive. If during the
course of the arbitration
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proceeding it is determined that the dispute in question is not of a
technical or economic nature, said dispute shall be submitted to the
jurisdiction of the Federal Tribunals indicated in the Sixteenth
Clause.
SIXTEENTH.-REGULATORY LAW
The present CONTRACT shall be governed by and interpreted pursuant to
the federal laws of the United Mexican States, therefore, the PARTIES
agree that whatever disputes may arise from the present CONTRACT,
other than those indicated in clause Fifteenth, shall be of the
competency of the Federal Tribunals, and for the purpose, the PARTIES
submit to the jurisdiction of said Tribunals in Mexico City, D.F.
therefore they waive any forum which might pertain to them by reason
of their current or future address or any other reason.
This CONTRACT is executed in Mexico city, Distrito Federal in two issues in
English and two issues in Spanish on the 19th day of December of the year
1997.
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COMISION FEDERAL DE EL PASO ELECTRIC
ELECTRICIDAD COMPANY
/s/ XXXX X. XXXXXXX /s/ XXXX X. XXXXX
-------------------------------------- ---------------------------------------
Lic. Xxxx X. Xxxxxxx Xxxx X. Xxxxx
Programming Subdirector Vice President-Power Generation
/s/ XXXXXXXX XXXXXX MILAN
--------------------------------------
Ing. Xxxxxxxx Xxxxxx Milan
Transmission, Transformation and
Control Subdirector
Revised in its Legal Aspects
/s/ XXXXXX XXXXX XXXXXXX
--------------------------------------
Lic. Xxxxxx Xxxxx Xxxxxxx
Legal Business Department Manager
The above signatures correspond to the Contract for the Purchase of Firm
Capacity and Associated Power entered into by Comision Federal de Electricidad
and El Paso Electric Company.
I, Xxxxxxxx Xxxx Xxxxxx Interpreter and Translator, duly certified by the
Superior Court of Justice of the State of Baja California, do herby certify that
the foregoing text is a true and correct translation from Spanish into English.
Mexicali, B.C. December 16, 1997
/s/ XXXXXXXX XXXX XXXXXX
Xxxxxxxx Xxxx Xxxxxx.
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