THIRD RESTATED ELECTRIC POWER AND ENERGY
SUPPLY AND TRANSMISSION AGREEMENT
between
THE CITY OF GILLETTE, WYOMING
and
BLACK HILLS POWER AND LIGHT COMPANY
Date: January 1, 1998
TABLE OF CONTENTS
Page
1. RECITALS AND DEFINITIONS. . . . . . . . . . . . . . . .1
1.1 Recitals . . . . . . . . . . . . . . . . . . . .1
1.2 Definitions. . . . . . . . . . . . . . . . . . .2
2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . .3
3. SALE OF CAPACITY AND ENERGY . . . . . . . . . . . . . .4
3.1 Base Load Capacity Obligation. . . . . . . . . .4
3.2 Base Load Energy Obligation. . . . . . . . . . .4
3.3 Backup Supply Service. . . . . . . . . . . . . .4
3.4 Capacity and Energy Technicalities . . . . . . .5
3.5 Metering. . . . . . . . . . . . . . . . . . . .5
3.6 Coal Agreements. . . . . . . . . . . . . . . . .5
4. POWER AND ENERGY RATE SCHEDULES AND REGULATION. . . . .6
5. OTHER SOURCES OF CAPACITY AND ENERGY. . . . . . . . . 12
6. POINT OF DELIVERY, INTERCONNECTION, FACILITIES, AND METERS12
6.1 Point of Metering. . . . . . . . . . . . . . . 12
6.2 Point of Interconnection and Delivery. . . . . 12
6.3 Calibrate Meters . . . . . . . . . . . . . . . 12
6.4 Rights of Way. . . . . . . . . . . . . . . . . 13
6.5 Facilities to be Provided by Gillette. . . . . 13
7. NETWORK INTEGRATION TRANSMISSION SERVICE AGREEMENT. . 14
8. CONTRACT REFORMATION. . . . . . . . . . . . . . . . . 14
8.1 Contract Reformation Charge. . . . . . . . . . 14
8.2 Conditional Contract Reformation Charge. . . . 15
9. IMPOSSIBILITY OF PERFORMANCE. . . . . . . . . . . . . 16
10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 16
11. FILING WITH FERC. . . . . . . . . . . . . . . . . . . 17
12. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . 17
13. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 18
14. COMPLETE AGREEMENT. . . . . . . . . . . . . . . . . . 18
THIRD RESTATED ELECTRIC POWER AND ENERGY SUPPLY
AND TRANSMISSION AGREEMENT
This Third Restated Electric Power and Energy Supply and Transmission
Agreement, dated as of January 1, 1998 ("Agreement"), is entered into between
the City of Gillette, a municipal corporation of Gillette, Wyoming ("Gillette"),
and Black Hills Power and Light Company, an assumed business name of Black Hills
Corporation, a South Dakota corporation ("Black Hills"), as a restatement of the
Second Restated Electric Power and Energy Supply and Transmission Agreement,
dated as of February 28, 1995 ("Second Restated Agreement"), which agreement
superseded the Restated Electric Power and Energy Supply and Transmission
Agreement, dated as of December 21, 1987 ("First Restated Agreement"), which
Agreement superseded the Electric Power and Energy Supply and Transmission
Agreement, dated as of August 6, 1985 ("Original Agreement").
1.RECITALS AND DEFINITIONS.
1.1 Recitals. Gillette operates a municipal electric system within its
city and therefore requires electric current for its own uses and for resale to
operate that system. Black Hills is engaged in the business of generation,
transmission, distribution and sale of electric capacity and energy at retail
and wholesale for resale. Black Hills furnishes electric transmission
services and electric capacity and energy service to Gillette for its own use
and to be resold in the operation of its municipal electric system pursuant
to the terms and provisions of the Second Restated Agreement, which was accepted
for filing with the Federal Energy Regulatory Commission.
The purpose of this Agreement is to restate the Second Restated Agreement.
At such time regulatory requirements are satisfied as set forth in Section 11,
this Agreement supersedes and replaces the Second Restated Agreement.
1.2 Definitions. The terms "capacity" and "energy" used in this Agreement
refer to electric capacity and electric energy, respectively.
"Backup Supply Service"refers to Black Hills providing Gillette
capacity which Black Hills is not otherwise obligated to provide
per this Agreement, the Network Integration Transmission Service
Agreement, or any other agreement between Black Hills and Gillette.
"Base Load Capacity" is Black Hills' obligation to furnish Gillette
capacity as set forth in Section 3.1.
"Base Load Energy" is Black Hills' obligation to furnish Gillette
energy as set forth in Section 3.2.
"Black Hills' Transmission System" is the facilities owned, controlled
or operated by Black Hills as defined in the Transmission Tariff.
"Conditional Contract Reformation Charge" is the payment due from
Gillette to Black Hills consistent with Section 8.2.
"Contract Reformation Charge" is the payment due from Gillette to
Black Hills consistent with Section 8.1.
"Gillette's Requirements" refers to Gillette's entire electric capacity
and energy requirements needed for local distribution for resale
purposes and for its own use and shall include Gillette's Successors
and Assigns' entire electric capacity and energy requirements for
distribution within the city limits of Gillette as those limits exist
from time to time; provided, however, that if Gillette annexes
territory, Gillette's requirements will not include any electric
capacity and energy requirements until such time as Gillette (or its
Successors and Assigns) serves such requirements.
"Gillette's Successors and Assigns" are those persons, corporations,
cooperatives or any other entities to whom Gillette sells or leases
any portion or all of its municipal electric system or with whom
Gillette contracts, the effect of which allows those persons,
corporations or entities to sell capacity and energy to customers
for consumption within the city limits of Gillette as those limits
exist from time to time.
"Good Utility Practice" is any of the practices, methods and acts
engaged in or approved by a significant portion of the electric
utility industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method, or act to the exclusion of
all others, but rather to be acceptable practices, methods, or acts
generally accepted in the region.
"Network Integration Transmission Service Agreement" is the agreement
under which transmission services are provided to Gillette by Black
Hills.
"Total Demand" is the total of Gillette's and Gillette's Successors and
Assigns' highest average demand measured in kilowatts to satisfy
Gillette's Requirements. For the purpose of determining any Backup
Supply Service under Exhibit A, measurement shall be based on fifteen-
minute intervals.
"Transmission Tariff" is Black Hills' FERC pro forma Open Access Tariff
on file with the FERC as Black Hills Power and Light Company Open
Access Transmission Tariff, Original Volume No. 2, as the same may be
amended or replaced from time to time.
Other defined terms and phrases used in this Agreement are set forth
throughout this Agreement where such terms and phrases are first used.
2. TERM.
The term ("Term") of this Agreement shall comprise an initial period from
the date of this Agreement until and including June 30, 2012, and shall
continue thereafter until and unless terminated by either party giving to
the other party notice in writing not less than seven years prior to the
termination of said initial period or of any succeeding Contract Year,
unless the parties agree in writing to a shorter notice period. For the
purposes of this Agreement, a "Contract Year" of this Agreement ends the
thirtieth day of every June of the Term.
3. SALE OF CAPACITY AND ENERGY.
3.1 Base Load Capacity Obligation. Black Hills shall sell and Gillette
shall purchase Base Load Capacity in the amount of 23,000 KW during each month
of the Term.
3.2 Base Load Energy Obligation. Black Hills shall sell and Gillette
shall purchase all energy needs of Gillette measured in kilowatt hours
associated with all kilowatts of Base Load Capacity as if those kilowatts were
the first kilowatts needed from day to day for Gillette's Requirements.
3.3 Backup Supply Service. Black Hills shall have no obligation to supply
firm capacity and energy to Gillette beyond that capacity and energy required
under Sections 3.1 and 3.2. In the event that Black Hills furnishes Gillette
capacity to meet a portion of Gillette's Requirements beyond the capacity
required to be provided by Black Hills under Section 3.1 of this Agreement,
the Network Integration Transmission Service Agreement or any other agreement
entered into between Black Hills and Gillette, Black Hills shall charge and
Gillette shall pay, on a monthly basis, the Backup Supply Service charge
provided for in Exhibit A of this Agreement. No charge for Backup Supply
Service shall be payable unless the entity responsible for scheduling a
Gillette-supplied resource fails to meet scheduled energy deliveries
as arranged between Black Hills and the entity responsible for such scheduling.
Energy accompanying such additional capacity will be billed consistent with
Exhibit A.
3.4 Capacity and Energy Technicalities. All capacity and energy delivered
under this Section 3 shall be three phase, alternating current, approximately
60 hertz, at a nominal voltage of 69,000 volts or such higher voltage as may be
agreed to by the parties.
3.5 Metering. Black Hills shall provide one 69 kV meter and associated
equipment. Gillette shall furnish all other meters and associated equipment
required to measure the portion of the Total Demand and the portion of the
capacity and energy furnished from sources other than from Black Hills.
Gillette shall provide telemetering equipment so as to allow Black Hills to
monitor demand and energy from Gillette's Total Demand. All equipment
furnished by Gillette and its installation shall be subject to Black Hills'
approval.
3.6 Coal Agreements. Coal prices to be paid by Black Hills to its
affiliated coal supplier, Wyodak Resources Development Corp. ("Wyodak
Resources"), for the coal supply for Black Hills' interest in existing coal-
fired power plants shall be determined by the Coal Supply Agreement for Neil
Simpson Unit #2, dated as of February 12, 1993 ("Coal Agreement"),
a copy of which is attached hereto as Exhibit B. The parties agree that, for
purposes of Black Hills' charges to Gillette, the methodology set forth in
Exhibit B to determine the coal prices for the affiliated transactions between
Black Hills and Wyodak Resources will be deemed to result in just and
reasonable prices, will be deemed to yield a fair return to Wyodak Resources
for such sales to its affiliate and will be deemed to result in charges to
Gillette under this Agreement that are not unreasonable or unjust.
4.POWER AND ENERGY RATE SCHEDULES AND REGULATION.
Gillette shall pay Black Hills monthly upon invoices submitted for all
electric capacity and energy supplied hereunder pursuant to the rates, charges,
terms and conditions set forth in Exhibit A attached hereto and made a part of
this Agreement as if specifically set forth herein and upon all other terms and
conditions in this Agreement. It is understood and agreed that this Agreement
and the rates charged hereunder are subject to the regulatory jurisdiction of
FERC, a regulatory commission of the United States, pursuant to the Federal
Power Act (16 U.S.C. Section 791a et seq.) and all rules and regulations
pertaining thereto, all as amended from time to time.
(a) Black Hills and Gillette agree that, except as provided in Section
4(b) below and as authorized in Exhibit A, the provisions of this
Agreement and the rate schedules attached as Exhibit A will not be
changed unless Black Hills and Gillette agree to such a change in
writing. The parties have bargained at arm's length in good faith
and on equal terms for economic benefits to each party which are
closely interrelated and which produce an overall result which is
considered by the parties to be just and reasonable. Therefore,
the parties agree that, except as provided in Section 4(b) below,
in any, proceeding, however initiated, whether under Section 206
of the Federal Power Act or under any law or regulation which
now is or may hereafter be applicable, relating to any attempt to
alter, change or amend the rates, charges, penalty provision,
terms and conditions set forth in this Agreement (including
Exhibit A), the standards which relate to the burden of proof
required for FERC or any regulatory body to alter the terms of a
contract without agreement of the parties thereto as expressed
in FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and
United Gas Pipe Line Co. v. Mobile-Gas Service Corp., 350 U.S.
332 (1956), (commonly referred to as the Sierra-Mobile doctrine
in subsequent case holdings) shall apply with respect to the
parties. However, such standards shall not prevent FERC from
using a "just and reasonable" standard either sua sponte or
pursuant to a complaint from persons or entities who are not a
party to this Agreement at such times and under such circumstances
as FERC deems appropriate in order to protect the interests of
nonparties. Each of the parties to this Agreement covenants that
it will not encourage any nonparty through monetary assistance
or otherwise to institute any legal proceeding, including a
complaint under Section 206 of the Federal Power Act to cause this
Agreement to be applied and administered in any way that would
result in any modification of the charges to be made hereunder.
(b) Except as limited by the provisions of Sections 4(c) and 4(d),
below, Black Hills shall have the right from time to time for the
purpose of establishing just and reasonable rates and achieving
a reasonable return to Black Hills to make application
unilaterally to FERC under Section 205 of the Federal Power Act
(16 U.S.C. Section 824d) and pursuant to FERC's rules and
regulations promulgated thereunder for a change or adjustment in
the dollar levels of the rates and charges set forth in Exhibit A
and any superseding schedule upon delivering a written notice
thereof to Gillette. Any such changes or adjustments shall
become effective on the date specified therein, subject to
suspension or other action duly taken by FERC, and without
final approval by FERC. Except as limited by Sections 4(c) and
4(d), below, Gillette has the right under Section 205 of the
Federal Power Act (16 U.S.C. Section 824d) and rules and
regulations thereunder to oppose any such change or adjustment
proposed by Black Hills and also has the right at any time to
unilaterally make application to FERC under Section 206 of the
Federal Power Act (16 U.S.C. Section 824e) and pursuant to FERC's
rules and regulations promulgated thereunder for a change or
adjustment in the dollar levels of the rates and charges set forth
in Exhibit A and any superseding schedule. The formula to be
applied in determining the Backup Supply Service charge in Exhibit
A shall not be subject to change under this Section 4(b).
(c) Other than where specifically authorized in Exhibit A, Black Hills
shall not change or adjust the dollar levels of the rate and
charges set forth on Exhibit A prior to January 1, 2002, provided,
however, Black Hills may tender with the FERC a filing prior to
January 1, 2002, that proposes an effective date of January 1,
2002; and Gillette shall not contest, the dollar levels of the
rates and charges set forth in Exhibit A prior to January 1,
2003, provided, however, Gillette may tender with the FERC a
filing prior to January 1, 2003, that proposes an effective date
of January 1, 2003, except Gillette may tender a filing with the
FERC earlier if a Black Hills filing is made prior to January 1,
2003. Notwithstanding the previous sentence, if prior to January
1, 2002, either of the following events occurs:
(i) the annualized inflation rate for any consecutive 12-month
period ending on the last day of the month after the date
of this Agreement is 8 percent or more based upon the
Producers Price Index published by the Bureau of Labor
Statistics in its monthly report entitled "Producers,
Prices, and Price Indexes" (if the publication is
discontinued, a similar publication of the Bureau
of Labor Statistics), or
(ii) any damage occurs after the date of this Agreement to Black
Hills' owned or leased generating plant which costs more
than $5,000,000 to repair.
Black Hills may file for an increase to take effect prior to
January 1, 2002, and Gillette may oppose such increase as provided
in Section 4(b).
(d) The parties hereto agree that, in consideration of the length of
this Agreement and the benefits to the parties arising therefrom,
the rates to be charged during the Term of this Agreement for the
furnishing of capacity and energy shall be based on the following
cost principles, which underlie Black Hills' capacity and energy
rates to Gillette in this Agreement, and that neither party will
propose capacity and energy rates based on conflicting cost
principles:
(i) Black Hills shall reflect the revenues received under the
contract dated September 9, 1994 ("MDU Contract") with
Montana-Dakota Utilities Co. as a revenue credit against
the Black Hills cost of service as if being equivalent to
the costs properly allocable to service under the contract.
If the MDU Contract is renegotiated by the parties thereto,
the revenues received by Black Hills from the new contract
shall be deemed to be equivalent to the costs properly
allocable to service from the new contract, providing that
the revenues received therefor are not less than that which
would have been received if the MDU Contract had not been
renegotiated.
(ii) Black Hills shall reflect the unamortized Wyodak Power
Plant and Rushmore Power Plant acquisition adjustments as a
rate base addition and shall continue to amortize such
acquisition adjustments at a rate no greater than $154,000
per year in the Black Hills cost of service until
completely amortized.
(iii) Black Hills may maintain an energy charge at a level no
lower than $0.0213 per kWh. If the energy charge is higher
than the level of appropriately allocated energy costs, the
overage will be reflected as a credit to Gillette under the
demand charge.
(iv) The Basic Service Charge will be set no lower than $5,400
per month.
(v) The cost of coal to fuel Black Hills' interest in power
plants to be included in the cost of service shall be
determined by the Coal Agreement, attached as Exhibit B to
this Agreement.
(vi) The Contract Reformation Charge shall be set not lower than
$16,000 and shall not be used to reduce Gillette's cost of
service under this Agreement.
(vii) The Conditional Contract Reformation Charge shall be set
not lower than $16,000 unless the conditions in Section 8.2
are satisfied and shall not be used to reduce Gillette's
cost of service under this Agreement
In the event that regulatory jurisdiction over this Agreement and/or rates
charged by Black Hills to Gillette is vested in any governmental body other than
the FERC, this provision and the rights of Black Hills and Gillette as set forth
herein shall be subject to applicable regulatory laws, regulations and rules of
such governmental body.
5. OTHER SOURCES OF CAPACITY AND ENERGY.
Except for Gillette's obligation to purchase the Base Load Capacity and the
Base Load Energy from Black Hills pursuant to Sections 3.1 and 3.2, nothing
herein prevents Gillette from self generating or contracting with others for
capacity and energy . If Gillette enters into contracts from other sources,
Gillette shall keep Black Hills currently informed of the arrangements.
6. POINT OF DELIVERY, INTERCONNECTION, FACILITIES, AND METERS.
6.1 Point of Metering. Black Hills shall meter the electric capacity and
energy to be sold by Black Hills to Gillette under this Agreement at 69,000
volts or higher to the point of metering which is the Neil Simpson No. 1 69 kV
Substation and/or at any future points of metering upon which the parties may
agree.
6.2 Point of Interconnection and Delivery. The point of interconnection
and delivery shall be where Black Hills facilities now interconnect to the
facilities of Gillette, presently located near the corner of Warlow Drive and
Gurley Avenue, City of Gillette, Wyoming, or at any future point of
interconnection and delivery upon which the parties may agree.
6.3 Calibrate Meters. Black Hills shall test and calibrate the meters and
recording devices by comparison with accurate standards at intervals of not more
than twelve (12) months, and Black Hills shall notify Gillette of its intention
to make such tests so that agents of Gillette can have the opportunity of
witnessing the tests. Black Hills shall also make special meter tests at any
time at Gillette's request. The cost of tests on each meter shall be borne by
the party furnishing that meter. Black Hills will calibrate the meters and
recording devices as closely as practicable to the condition of one hundred
percent (100%) accuracy (zero error), but, if any meter or recording device
tested is found to be more than two percent (2%) in error, either fast or
slow, proper correction shall be made of previous readings for the period of
time the meter was in service since last tested or from the time that it can be
ascertained the meter was in error, but in no case shall readings be adjusted
for a period of more than six months immediately preceding the discovery of the
error. If any meter or recording device shall fail to register for any period,
Gillette and Black Hills shall agree as to the amount of electric capacity and
energy furnished, and Black Hills shall render a bill therefor.
6.4 Rights of Way. Gillette shall provide Black Hills without cost a
suitable location and rights of way for necessary lines and equipment
immediately adjacent to the point(s) of interconnection and delivery set forth
in Section 6.2 for the purpose of fulfilling this Agreement. All equipment
installed by and at the cost of Black Hills shall remain Black Hills'
property and Black Hills shall have the right to inspect, repair or remove the
same at its discretion and at its own cost.
6.5 Facilities to be Provided by Gillette. Gillette shall install and
maintain at its own expense all other facilities on Gillette's side of the point
of interconnection and delivery with Black Hills' Transmission System which are
necessary for the proper reception of electric capacity and energy and for its
use beyond such point including all facilities for the transformation of
capacity and energy from the voltage set forth in Section 6.1. Gillette shall
provide or arrange for facilities and continuous staff in order to provide
continuous information to and from Black Hills' system control to accommodate
Gillette supplied resources. Gillette shall also provide facilities necessary
for Gillette or Black Hills to cause load curtailment on those portions of the
Gillette municipal electric system which are directly connected via Gillette's
facilities, to Black Hills' point(s) of delivery set forth in Section 6.2 as
required by Good Utility Practice. Such facilities shall meet approved
standards of construction and be of such types as will not interfere with other
service rendered by Black Hills.
7. NETWORK INTEGRATION TRANSMISSION SERVICE AGREEMENT.
Black Hills shall provide transmission services for Gillette's Requirements
under this Agreement consistent with the Network Integration Transmission
Service Agreement. Gillette shall accept such service under the Transmission
Tariff and be responsible for all charges and expense associated with the same,
except that Gillette shall receive a credit against its bill calculated
consistent with Exhibit A for the ancillary service charges as provided for in
the Transmission Tariff excluding Energy Imbalances Services (Network
Integration Transmission Service Agreement Section 4.4) related to Gillette's
Requirements until there is a change in rates consistent with Section 4(c).
Additionally, until there is a change in rates consistent with Section
4(c), Black Hills shall be responsible for the transmission losses under the
Transmission Tariff for the Base Load Capacity and Base Load Energy.
8. CONTRACT REFORMATION.
8.1 Contract Reformation Charge. Section 8.4 of the Second Restated
Agreement obligated Gillette to make payment to Black Hills for reserved
transmission capacity. In consideration of extinguishing that obligation to
Black Hills, Gillette shall pay Black Hills monthly upon invoices the sum
identified on Exhibit A related to the Contract Reformation Charge. This
Contract Reformation Charge shall not be subject to change, modification, or
amendment as a result of any regulatory proceeding as otherwise set forth in
Section 4 and shall remain an obligation of Gillette to Black Hills through June
30, 2012.
8.2 Conditional Contract Reformation Charge. In the event that Black
Hills does not have the right under its Transmission Tariff to realize the
benefits of the revenues received under the contract dated March 12, 1975, with
Rushmore Electric Power Cooperative, Inc., and Basin Electric Power Cooperative,
as restated by the Agreement for Transmission Service and the Common Use of
Transmission Systems, dated as of January 1, 1986, among Black Hills, Rushmore
Electric Power Cooperative, Inc., Basin Electric Power Cooperative,
Tri-County Electric Association, Inc. (now known as Powder River Energy
Corporation), Black Hills Electric Cooperative, Inc., and Butte Electric
Cooperative, Inc. (collectively "Cooperatives") ("REC Contract"), as being
equivalent to the costs properly allocable to the service under the REC Contract
("Revenue Credit Methodology"), which right was otherwise set forth in the
Second Restated Agreement, Gillette shall make payment to Black Hills of a
Conditional Contract Reformation Charge as set forth on Exhibit A. This
Conditional Contract Reformation Charge shall not be subject to change,
modification, or amendment as a result of any regulatory proceeding as otherwise
set forth in Section 4 and shall remain an obligation of Gillette to Black Hills
through June 30, 2012. In the event that this Conditional Contract
Reformation Charge is otherwise mitigated as a result of having the
Cooperatives more fully pay the allocable charge as a result of application of
the REC Contract provisions, regulatory proceedings or contract modifications
associated with their use of the joint transmission system, Gillette's
obligation for this Conditional Contract Reformation Charge shall be reduced to
reflect any mitigation in this expense.
9. IMPOSSIBILITY OF PERFORMANCE.
Black Hills shall not be liable for failure of delivery of electric capacity
and energy, and Gillette shall not be liable for failure to take or receive
electric capacity and energy, where either of such failures is due to an Act of
God, governmental regulations, governmental interference, court or commission
orders, acts of the public enemy, strikes or labor difficulties on the system of
either party hereto or of others, accidents, fire, explosion, mob violence,
droughts, floods, freeze-ups, weather conditions, failure of equipment or,
without limitation of the foregoing, any other cause beyond the reasonable
control of the party in default.
10. INDEMNIFICATION.
Neither party to this Agreement shall be liable for any loss or damage to
property or injury to or death of persons, whether suffered by the other party,
its agents or employees, or by any third person, persons or corporation(s),
resulting from the location, use or operation of electrical or other equipment
located on its side of the point of delivery including the failure of
any electrical equipment caused by defects or inadequate capacity or from
electric capacity and energy present therein, and each party agrees to indemnify
and save the other party harmless from all such loss, damages, injuries or
death.
11. FILING WITH FERC.
Black Hills shall cause this Agreement to be filed with FERC as required by
the Federal Power Act and rules and regulations relating thereto. Gillette
shall sign a letter of concurrence to be filed with FERC. Both parties agree to
use best efforts to achieve the acceptance by FERC of this Agreement for filing.
This Agreement shall not be in full force and effect nor shall any rights or
obligations of either party arise herefrom until this Agreement has been
permitted by FERC to become effective as a rate schedule without amendment under
the rules and regulations relating hereto.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. This Agreement shall not be
assignable by either party without the written consent of the other party except
(i) to a successor in the operations of its properties by reason of a merger,
consolidation, sale or foreclosure where substantially all such properties are
acquired by such a successor or (ii) to a loaning agency, entity or institution
for security purposes. Nothing herein shall prohibit Gillette from becoming a
participant in a governmental joint powers board where governmental entities
have joined together for mutual benefit, but in that event this Agreement and
Gillette's benefits and obligations therein remain with Gillette only or a
successor referred to in (i). The obligations of the parties under this
Agreement shall survive and be binding on the parties during the entire
Term notwithstanding that Gillette sells or leases its municipal electric system
or a part thereof or executes other contracts the effect of which causes
entities other than Gillette (Gillette's Successors and Assigns) to sell
capacity and energy to customers for consumption within the city
limits of Gillette. Any of Gillette's Successors and Assigns shall be
entitled to the benefits of this Agreement and shall be bound by the obligations
herein. Any creation by Gillette of Gillette's Successors and Assigns shall
not relieve Gillette from its obligations in this Agreement.
13. NOTICE.
Notice required to be given hereunder shall be deemed to have been given if
mailed, postage prepaid, to Black Hills Power and Light Company, Attention:
President, P. O. Box 1400, Rapid City, South Dakota 57709 on behalf of Black
Hills; and City of Gillette, Attention: Jon Young and Wayne Lindgren at P. O.
Box 3003, Gillette, Wyoming 82717, and Attention: Wayne Lindgren at 611
Exchange, Gillette, Wyoming 82716, on behalf of Gillette. Either party may from
time to time change its mailing address for the purpose of receiving notice
by notifying the other party in writing of such change.
14. COMPLETE AGREEMENT.
At the time that this Agreement and the Network Integration Transmission
Service Agreement have been accepted for filing and/or approved by FERC, this
Agreement and the Network Integration Transmission Service Agreement cancel and
supersede the Second Restated Electric Power and Energy Supply and Transmission
Agreement dated February 28, 1995. This Agreement and the Network Integration
Transmission Service Agreement constitute the complete and full agreements
between the parties.
This Agreement and the Network Integration Transmission Service Agreement
are executed as of the day and year recited in the first paragraph hereof and
each of the officers executing this Agreement and the Network Integration
Transmission Service Agreement represent that this Agreement and the Network
Integration Transmission Service Agreement have been approved and authorized by
their respective governing bodies as required by law applicable thereto and
that by such execution that authority to such officer has been legally
authorized and delegated by the respective governing bodies of the parties.
CITY OF GILLETTE
By
ATTEST:Its Mayor
Clerk
(OFFICIAL SEAL)
BLACK HILLS POWER AND LIGHT
COMPANY
ATTEST:By
Its President and Chief Operating
Officer
Its Secretary
(OFFICIAL SEAL)
EXHIBIT A
ELECTRIC SERVICE AGREEMENT
APPLICABLE
To the City of Gillette, Wyoming ("Gillette") for its service requirements,
provided under Agreement with Black Hills Power and Light Company ("Black
Hills"), for resale purposes and for its own uses. Capitalized terms used
herein shall have the same meaning as defined in the Agreement to which this
is attached as Exhibit A.
CHARACTER OF SERVICE
Alternating current, 60 hertz, three phase, at the voltage of Black Hills'
transmission line which is a part of Black Hills' existing interconnected
transmission system.
MONTHLY BASIS OF BILLING
(a) January 1, 1998 through December 31, 1998:
Basic Service Charge $5,400 per month
Billing Demand Charge $11.49 per kilowatt of the Billing
Demand
Billing Energy Charge 2.13 cents per kilowatt hour of Billing
Energy
Contract Reformation Charge $16,000 per month
Conditional Contract
Reformation Charge$16,000 per month
(b)January 1, 1999 through December 31, 1999:
Basic Service Charge $5,400 per month
Billing Demand Charge $10.59 per kilowatt of the Billing
Demand
Billing Energy Charge 2.13 cents per kilowatt hour of Billing
Energy
Contract Reformation Charge $16,000 per month
Conditional Contract
Reformation Charge$16,000 per month
(c) January 1, 2000 and thereafter:
Basic Service Charge$5,400 per month
Billing Demand Charge $8.77 per kilowatt of the Billing
Demand
Billing Energy Charge 2.13 cents per kilowatt hour of Billing
Energy
Contract Reformation Charge $16,000 per month
Conditional Contract
Reformation Charge$16,000 per month
The Basic Service Charge is a given charge per month to compensate
Black Hills for the costs associated with service which do not vary
depending upon the level of demand and energy provided by Black Hills.
BILLING DEMAND
The Billing Demand shall be 23,000 KW for the balance of the Term.
Power Factor - The power factor of Gillette's load at the point of delivery
shall not be less than 95% lagging or 95% leading at the time of the City's
maximum demand during the month. If the power factor of the City's load at
the point of delivery is found to be below 95% lagging or 95% leading at the
time of the maximum demand, the City shall install power factor corrective
equipment on its system so as to raise the power factor of its load at that
point to at least 95% lagging or 95% leading.
In the event the City fails to maintain a power factor of not less than 95%
lagging and does not install corrective equipment to raise its power factor
as stipulated above, the monthly billing demand will be increased by
multiplying by 95% and dividing by the power factor expressed in per cent.
This adjustment shall not apply for demonstrated power factors above 95%
lagging.
BILLING ENERGY
Billing Energy shall be measured in kilowatt hours as provided in Section
3.2 of the Agreement.
BACKUP SUPPLY SERVICE
Backup Supply Service occurs when Black Hills furnishes Gillette capacity
beyond Black Hills' obligations under this Agreement, the Network
Integration Transmission Service Agreement or any other agreements between
Black Hills and Gillette.
When Black Hills provides capacity to Gillette beyond Black Hills'
obligation under this Agreement, the Network Integration Transmission
Service Agreement or any other agreements between Black Hills and Gillette,
Gillette shall pay to Black Hills 3 times the monthly Billing Demand Charge
for the capacity for such Backup Supply Service and the Billing Energy
Charge identified in this Exhibit A.
INCOME TAX ADJUSTMENT
At any time prior to January 1, 2002 that Black Hills incurs the burden of
any state income tax or the federal corporate income tax rates applicable to
Black Hills are changed from the current rate of 35 percent, the Energy
Charge shall be adjusted to reflect the increase or the decrease in the tax
costs as properly allocated to Gillette under the same allocation factors as
used to determine the Energy Charge; provided, no bills or rates will be
increased by this tax adjustment without filing with the Federal Energy
Regulation Commission under laws, rules and regulations relating thereto.
In consideration of the moratorium at Section 4(c) and this Agreement,
Gillette agrees that such adjustments shall be made and shall not object to
or oppose such adjustments. Any income tax changes effective after December
31, 2001 shall be taken into account in determining just and
reasonable rates under Section 4(b).
GOVERNMENT IMPOSITION ADJUSTMENT
At any time prior to January 1, 2002, that Black Hills incurs the burden of
any new federal, state, or local governmental impositions and governmental
charges of general applicability to electric utilities, including but not
limited their generating fuel source and purchase power obligations,
including but not limited to charges imposed upon energy and emissions,
environmental externalities, and reclamation requirements imposed after
January 1, 1998, which project to cause Black Hills at least a 5 percent
increase in costs of service, the Energy Charge shall be adjusted
to reflect the increase associated with such charges; provided, no bills or
rates will be increased by this governmental imposition and charge
adjustment without filing with the Federal Energy Regulatory Commission
under laws, rules, and regulations related thereto. In consideration of the
moratorium at Section 4(c) of this Agreement, Gillette agrees that any such
adjustment shall be made and shall not object to or oppose such adjustments.
Any governmental imposition to be effective after December 31, 2001, shall
be taken into account in determining just and reasonable rates under Section
4(b).
RIGHTS FOR CHANGE IN RATES
The rights and limitations for changes in rates are set forth in Section 4
of the Agreement.
PAYMENT
Bills will be rendered monthly, due upon presentation, and paid by wire
transfer (or similar method providing Black Hills readily available dollars
on the date paid) within fifteen (15) days after the bill is received by
Gillette.