EX-10.aa
PEAKING CAPACITY AGREEMENT
between
BLACK HILLS POWER AND LIGHT COMPANY
and
SUNFLOWER ELECTRIC POWER CORPORATION
This Firm Peaking Capacity Agreement ("Agreement") made and entered
into this 11th day of October, 1993, by and between Sunflower Electric
Power Corporation ("SEPC"), a Kansas Corporation, and Black Hills Power and
Light Company ("BHP"), a South Dakota Corporation; with SEPC and BHP being
sometimes hereinafter referred to as "Parties" collectively or as a "Party"
singularly.
WHEREAS, the Parties to this Agreement are engaged in the business of
generation, transmission, and sale of electric power and energy and either
own, or have available for their use, and operate and maintain electric
generation and transmission facilities; and
WHEREAS, BHP requires firm peaking capacity to meet its public
obligation to serve its customers, and desires to purchase such peaking
capacity and associated energy;
WHEREAS, SEPC and Western Area Power Administration ("WAPA") are
entering into Contract No. 93-LAO-722 ("the SEPC-WAPA Contract") for firm
transmission service to effect deliveries of peaking energy to BHP;
WHEREAS, SEPC owns peaking capacity and associated energy that it
desires to sell to BHP; and
WHEREAS, the Parties desire to enter into this Agreement for the sale
by SEPC and the purchase by BHP of firm peaking power and energy and the
delivery of such power and energy to BHP as provided herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the Parties agree as follows:
ARTICLE I - DEFINITIONS
As used herein:
1.1 "Contract Rate of Delivery" shall mean Contract Rate of Delivery as
such is defined in Section 2.1 hereof.
1.2 "Contract Year" shall mean the period of twelve consecutive calendar
months commencing at 12:01 a.m. on October 1, 1993, and at 12:01 a.m.
on October 1 of each year thereafter during the term of this
Agreement.
1.3 "Peaking Energy" shall mean energy provided by SEPC under the SEPC-
WAPA Contract and delivered to BHP by WAPA. Such Peaking Energy shall
not exceed a monthly load factor of 15%.
1.4 "Phase I" shall mean Phase I as defined in Title IV of the Clean Air
Act Amendments of 1990, commencing January 1, 1995, and extending
through December 31, 1999, and as applicable to power and energy
generation facilities.
1.5 "Prudent Utility Practice" shall mean any of the practices, methods
and acts at a particular time, which, in the exercise of reasonable
judgment in the light of the facts, including but not limited to the
practices, methods and acts engaged in or approved by a significant
portion of the electric utility industry prior thereto, known at the
time the decision was made, would have been expected to accomplish the
desired result at the lowest reasonable cost consistent with
reliability, safety and expediency. In applying the standard of
Prudent Utility Practice to any matter under this Agreement, equitable
consideration should be given to the circumstances, requirements and
obligations of each of the Parties. It is recognized that Prudent
Utility Practice is not intended to be limited to a single best
practice, method or act to the exclusion of all others, but rather can
be within a spectrum of possible practices, methods or acts which
could reasonably have been expected to accomplish the desired result.
1.6 "SEPC Peaking Resources" shall mean the SEPC-owned generating capacity
associated with combustion turbine units No. 4 ("S4") and No. 5 ("S5")
at SEPC's generation complex location in Garden City, Kansas.
ARTICLE II - PEAKING CAPACITY SALE BY SEPC
2.1 Except as otherwise provided in this Agreement, SEPC shall supply from
its system and BHP shall purchase and receive up to 50 MW of seasonal
firm peaking capacity and associated energy, as such peaking capacity
is more specifically set forth in the initial Exhibit A ("Contract
Rate of Delivery") attached hereto and made a part hereof; provided,
however, that SPEC shall not be obligated to supply capacity in excess
of the seasonal amounts reserved by BHP in accordance with the
provisions and limitations of this Agreement. Exhibit A may be
modified on or before July 1 of each year in accordance with Section
2.4 below. SEPC's obligation to supply seasonal capacity and
associated energy is from its system and is not conditioned on the
operation of SEPC Peaking Resources.
2.2 BHP shall pay SEPC monthly for the Contract Rate of Delivery purchased
hereunder pursuant to the capacity rates provided in Exhibit A.
2.3 BHP may submit written requests for changes to the amounts of peaking
capacity purchased as deemed necessary or desirable by BHP. SEPC's
authorized representative, as identified in Section 16.2 will act upon
each such request and furnish a written determination within 90 days
after receipt of such request of SEPC's ability to accommodate said
changes. If the request is approved by SEPC, Exhibit A shall be
amended to reflect the new amounts of peaking capacity purchased by
BHP.
2.4 On or before July 1 of each year following the execution of this
Agreement, BHP shall inform SEPC, in writing, of the estimated future
winter season (October through March) and summer season (April through
September) peaking requirements, in megawatts, at the point of
delivery that BHP desires SEPC to provide as set forth in Exhibit A
hereunder for the next four years (October 1 through September 30),
beginning on October 1 following the aforesaid July 1 and ending on
September 30, four years later. Within ninety days after receipt of
said request, SEPC shall inform BHP, in writing, whether or not SPEC
can provide such capacity at the designated point of delivery. If a
request is denied, supporting documentation will be provided by SEPC
upon receipt of a written request by BHP. If SEPC approves BHP's
request, Exhibit A will be revised to reflect the new capacity
reservations. Notwithstanding that the Parties may subsequently agree
to a new Exhibit A under this Section 2.4 that may extend beyond
September 30, 1996, each party reserves the right to terminate this
Agreement at the times as provided in Section 9.1 unless the Parties
agree otherwise in writing.
ARTICLE III - PURCHASE OF ENERGY
3.1 BHP may purchase energy associated with firm peaking capacity up to
such seasonal amounts identified in Exhibit A. Such energy shall be
limited to a maximum of 15% load factor each month.
3.2 The price of energy purchased hereunder by BHP shall be determined by
the application of the following energy pricing formula:
E = (Fuel + VOM) * 1.2
Where:
E = SEPC's energy price per MWH
Fuel = SEPC Peaking Resources equivalent fuel cost
VOM = SEPC's variable operation and maintenance cost per
MWH shall be $1.00 per MWH beginning in 1993 and shall
escalate annually on January 1 at the rate of 5%.
ARTICLE IV - POINT OF DELIVERY
4.1 The point of delivery for power and energy sold to BHP under this
Agreement shall be BHP's point of interconnection with WAPA at the
western bus of the Stegall substation, or such other point as the
Parties may agree upon and identified in Exhibit A.
ARTICLE V - AVAILABILITY AND SCHEDULING
5.1 The firm peaking capacity supplied to BHP at the Contract Rate of
Delivery as provided in Exhibit A shall be available for scheduling
during each Contract Year.
5.2 BHP system operators shall communicate with WAPA's system operators to
facilitate daily scheduling of energy from SEPC to BHP under this
Agreement. BHP shall normally furnish WAPA with a schedule for such
energy by the hour ending 1400 MST of the day prior to the beginning
of such schedule. Schedules for Saturday, Sunday, and Monday shall be
provided by the hour ending 1400 on the preceding Friday.
ARTICLE VI - OPERATION AND MAINTENANCE
6.1 BHP and SEPC shall operate and maintain their electric systems in
accordance with Prudent Utility Practice. Each Party shall perform
such maintenance at such time as it deems necessary, in its sole
discretion, but shall use its best efforts to schedule such
maintenance in such a manner as to limit the overall inconvenience to
the parties such that no Party is unduly penalized.
ARTICLE VII - BOOKS AND RECORDS
7.1 The Parties shall maintain such books and records as are required for
the administration of this Agreement and shall provide each other
access to such books and records as well as reasonable access to each
other's electric systems to permit audits or confirmation of
compliance with the provisions of this Agreement.
ARTICLE VIII - BILLING AND PAYMENTS
8.1 As soon as practicable after the end of each calendar month, SEPC
shall determine and report to BHP the schedules of power and energy
delivered to BHP under this Agreement during said month. For billing
purposes, the amount of energy delivered by SEPC to BHP under this
Agreement shall be the amount of energy scheduled by BHP during said
month.
8.2 SEPC shall bill BHP monthly, in sufficient detail, for the preceding
calendar month's services rendered hereunder. Bills for services
provided hereunder shall be due within 15 days of the billing date.
BHP shall submit payment to SEPC via wire transfer to an SEPC account,
which account number shall be specified in writing to BHP prior to the
commencement of each Contract Year.
8.3 Bills shall be rendered by facsimile transmission unless otherwise
agreed to by the Parties in writing. Said bills shall be deemed
rendered upon receipt by BHP, and BHP shall immediately confirm such
receipt by return facsimile to SEPC. If the due date of any bill
falls on Saturday, Sunday or a holiday observed by BHP, the bill shall
be due on the next following BHP work date. Bills shall be deemed
paid upon verification of receipt of funds by SEPC pursuant to Section
8.2 herein. Interest on any unpaid bill shall accrue from the date
due and shall be compounded daily until the date payment is made.
Such interest rate shall be established by the Federal Energy
Regulatory Commission ("FERC") for refunds as set forth in 18 C.F.R.
Section 35.19a or successor sections and shall be computed on the
basis of actual days and a 365 day calendar year.
8.4 In the event BHP wishes to dispute all or any part of the charges
submitted by SEPC, it shall nevertheless pay in full the amount of the
charges when due and shall, within 60 days after the billing due date,
give written notice stating the specific grounds on which the charges
are disputed and the amount in dispute. This 60-day period shall not
apply to any disputed amounts that could not, through reasonable
diligence, have been identified during the 60-day period including any
disputed amounts identified pursuant to an inspection of records under
Section 7.1. BHP will not be entitled to any adjustment on account of
any disputed charges which are not brought to the attention of SEPC
within the time and in the manner herein specified. If settlement of
the dispute results in a refund to BHP, interest shall accrue from the
date of BHP's payment and be compounded daily until the date upon
which the refund is made. Such interest rate shall be established by
the FERC for refunds as set forth in 18 C.F.R. Section 35.19a or
successor sections and shall be computed on the basis of actual days
and a 365 day calendar year.
ARTICLE IX - TERM OF AGREEMENT
9.1 The term of this Agreement shall be from the date of its execution,
which date shall be inscribed in the first paragraph hereof, through
September 30, 1996, and from year-to-year thereafter unless terminated
by either Party giving at least 90 days written notice prior to the
end of the then current Contract Year. Neither Party may give such
notice of termination prior to July 1, 1996.
ARTICLE X - TERMINATION
10.1 No termination of this Agreement shall release either Party from its
obligation to pay for any charges incurred prior to the effective date
of such termination, and for any sale or exchange of power and energy
made pursuant to any Exhibit as may be signed by the Parties hereto
and attached to this Agreement, or any legally binding arrangements
related thereto, until the satisfaction and discharge of such
obligations or as otherwise mutually agreed by the Parties hereto.
10.2 This Agreement is coterminous with the SEPC-WAPA Contract for
transmission service. If the SEPC-WAPA Contract is terminated by
WAPA, SEPC shall notify BHP within 30 days of receipt of notice of
such termination and, unless the Parties mutually agree otherwise,
this Agreement shall terminate on the same date of termination as the
SEPC-WAPA Contract. SEPC shall use reasonable efforts to keep the
SEPC-WAPA Contract in full force and effect.
ARTICLE XI - TAXES, FEES, AND ALLOWANCES
11.1 Should any fee be charged to SEPC by any public authority having
jurisdiction over the transaction hereunder, or any federal, state or
local tax be levied upon the electric power or energy to be sold
hereunder or upon SEPC measured by or directly related to the power or
energy sold or the revenue therefrom, such tax or fee shall be added
to the bill rendered to BHP as determined under the appropriate rates
and billing procedures, unless said Parties agree otherwise. SEPC
shall, within 30 days of receipt of notification concerning any tax or
fee not imposed as of the date of execution of this Agreement, notify
BHP of the conditions being imposed upon SEPC's sale of power and
energy hereunder.
11.2 The Parties recognize that Congress has enacted the Clean Air Act
Amendments of 1990, and that during the term of this Agreement,
legislatures, regulatory bodies or courts may enact or issue other
laws, regulations or orders relating to the environment that may
affect the generation, sale, purchase or use of power and energy under
this Agreement.
11.3 BHP represents and warrants that this Agreement and any capacity or
energy purchased by BHP under this Agreement are not intended to be
used, and will not be used, as part of a strategy or plan, by BHP or
any other utility, to comply with Phase I emission limitations by
compensating for the reduced generation or under-utilization of any
such Phase I unit(s) owned or operated by BHP or any other utility.
BHP shall defend and save harmless SEPC from any costs, penalties,
losses and liabilities resulting in any manner or degree from BHP's
breach of the representations and warranties covered in this Section
11.3.
11.4 If any tax, fee or requirement of allowances and costs referenced in
this Article XI increases the price being paid for firm peaking
capacity and associated energy hereunder by 30% or more, BHP may,
prior to July 1 of each year, notify SEPC of its intent to terminate
this Agreement on the following October 1.
ARTICLE XII - FORCE MAJEURE
12.1 No Party shall be considered to be in default with respect to any
obligation hereunder if prevented or delayed in whole or in part from
fulfilling such obligation by reason of the occurrence of a Force
Majeure, provided that the provisions of this Section shall not apply
to the obligation to make payments when due for services actually
rendered under this Agreement. The term "Force Majeure" shall mean
storm, flood, lightning, earthquake, fire, explosion, failure of
facilities not due to lack of proper care or maintenance, civil
disturbance, labor disturbance, sabotage, war, national emergency,
restraint by court or act of a Public Authority, or other causes
beyond the control of the Party affected, which such Party could not
reasonably have been expected to have avoided by exercise of due
diligence and foresight and by provision of facilities in accordance
with Prudent Utility Practice. Any Party unable to fulfill any of its
obligations by reason of Force Majeure will exercise its best efforts
to remove such disability with reasonable dispatch, provided that no
Party shall be required to settle or resolve labor disturbances or
strikes or to accept or agree to governmental or regulatory orders or
conditions without objection or contest on any basis not acceptable to
such Party in its sole discretion. Notice of the occurrence of a
Force Majeure shall be given by the Party affected as soon as
reasonably possible, but in no event later than 48 hours after
learning of such Force Majeure.
ARTICLE XIII - APPROVALS
13.1 This Agreement and any subsequent amendment(s) hereto shall be subject
to the authority of any regulatory body or approving authority having
jurisdiction hereof.
ARTICLE XIV - ASSIGNMENT
14.1 This Agreement shall be binding upon and inure to the benefit of the
permitted successors and assigns of the Parties hereto.
14.2 SEPC, without the approval of BHP, may assign, transfer, mortgage or
pledge this Agreement to create a security interest for the benefit of
the United States of America, acting through the Administrator of the
Rural Electrification Administration (the "Administrator").
Thereafter, the Administrator, without the approval of BHP, may (a)
cause this Agreement to be sold, assigned, transferred or otherwise
disposed of to a third Party pursuant to the terms governing such
security interest, or (b) if the Administrator first acquires this
Agreement pursuant to 7 U.S.C. Section 907, sell, assign, transfer or
otherwise dispose of this Agreement to a third Party; provided,
however, that in either case (i) SEPC is in default of its obligations
to the Administrator that are secured by such security interest and
the Administrator has given BHP notice of such default; and (ii) the
Administrator has given BHP thirty days' prior notice of its intention
to sell, assign, transfer or otherwise dispose of this Agreement
indicating the identify of the intended third-Party assignee or
purchaser. No permitted sale, assignment, transfer or other
disposition shall release or discharge SEPC from its obligations under
this Agreement.
14.3 BHP may, without the approval of SEPC, assign, transfer, mortgage or
pledge this Agreement, to create a security interest for the benefit
of BHP's mortgage indenture trustee and the bondholders thereunder.
14.4 This Agreement shall inure to the benefit of and be binding upon the
respective successors of the Parties by merger or sale of
substantially all assets.
14.5 Except as provided in Section 14.1 through 14.4 above, neither Party
shall assign its interest in this Agreement, in whole or in part,
without the prior written consent of the other Party. Such consent
shall not be unreasonably withheld.
ARTICLE XV - INDEMNIFICATION
15.1 Each Party shall indemnify, hold harmless and defend the other Party,
its agents, servants, employees, officers and directors from any and
all costs and expenses, including but not limited to reasonable
attorneys fees, court costs and other amounts which said other Party,
its agents, servants, employees, officers and directors are or may
become obligated to pay on account of any and all demands, claims,
liabilities or losses arising or alleged to have arisen out of or in
any way connected with the negligent acts or omissions or willful or
wanton action of the indemnifying Party, its agents, servants,
employees, officers or directors whether such demands, claims,
liabilities or losses be for damages to property or injury or death of
any person.
ARTICLE XVI - GENERAL
16.1 In no event shall a Party to this Agreement be liable to the other
Party hereto for any indirect, consequential, punitive, or similar
damages arising from or in any way connected with this Agreement.
16.2 Notices to SEPC shall be sent to the Sr. Manager, Power Marketing,
P.O. Box 980, Hays, KS 67601. Notices to BHP shall be sent to the
Manager, Electric Operations, P.O. Box 1400, Rapid City, SD 57709.
Either Party may change its address or the representative to which
notices are to be sent by providing written notice of such change to
the other Party.
16.3 Any waiver at any time by a Party of its rights with respect to a
default under this Agreement, or with respect to any other matter
arising in connection with this Agreement, shall not be deemed a
waiver with respect to any other default or matter.
16.4 It is understood and agreed that all representations, understandings
and prior negotiations are merged into this Agreement and that this
Agreement constitutes the sole and entire Agreement between the
Parties and no modification hereof shall be binding unless made a part
hereof in writing executed by both Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed the day and the year first above written.
SUNFLOWER ELECTRIC POWER CORPORATION
/s/L. Christian Hauck
L. Christian Hauck, President and
Chief Executive Officer
ATTEST:
/s/L. Earl Watkins, Jr.
L. Earl Watkins, Jr., Secretary
BLACK HILLS POWER AND LIGHT COMPANY
/s/Everett E. Hoyt
Everett E. Hoyt
President
ATTEST:
/s/Roxann Basham
Roxann Basham
Peaking Capacity Agreement
Exhibit A
Schedule of Firm Peaking Capacity Commitments
1. The specifications of this Exhibit A, agreed to on this 11th day of
October, 1993, shall become effective on October 1, 1993, and shall
remain in effect unless and until this Exhibit A is amended in writing
by the Parties hereto; provided, however, this Exhibit A or any
succeeding amendments to it shall terminate upon the expiration of the
SEPC-WAPA Contract.
2. The Initial Point of Delivery will be the western bus of the Stegall
Substation at a nominal voltage of 230 KV, or such other point as the
Parties may agree. The annual firm seasonal peaking reservations in
accordance with Article II of the Agreement are as follows:
Year Summer Winter
1993 0 MW 15 MW
1994 40 MW 20 MW
1995 50 MW 30 MW
1996 20 MW 0 MW
3. The rates for firm peaking capacity are provided by year in the
following chart.
Year Rate Per KW-Month
1993 $3.20
1994 $3.78
1995 $4.41
1996 $4.63