EXHIBIT 10.39.05
MEMORANDUM OF UNDERSTANDING
BY AND BETWEEN CANAL ELECTRIC COMPANY
AND MONTAUP ELECTRIC COMPANY
MEMORANDUM OF UNDERSTANDING dated this 23rd day of September, 1993 by and
between Canal Electric Company, a Massachusetts corporation with a principal
place of business at One Main Street, Cambridge, Massachusetts 02142 (referred
to herein as 'Canal'), and Montaup Electric Company, a Massachusetts
corporation with a principal place of business at 1606 Riverside Avenue,
Somerset, MA 02726, (referred to herein as 'Montaup').
WHEREAS, Canal and Montaup are joint owners, pursuant to the terms of the
'Agreement for Joint Ownership' executed by Canal and Montaup dated October
27, 1970 (referred to herein as 'the Agreement'), of the electric generating
property known as 'Unit 2' at the Canal Plant facility located on Freezer
Road, in Sandwich, Massachusetts (referred to herein as 'the Unit'); and
WHEREAS, the parties are evaluating options for fuel for the Unit, in order
that the Unit may continue to be operated in a cost-effective manner and
consistent with all government laws, regulations, orders, permits, and all
terms and conditions of the Agreement; and
WHEREAS, in furtherance of the goals referenced in the immediately preceding
paragraph, the parties desire to install facilities for the utilization of
natural gas as fuel for the Unit; and
WHEREAS, there presently exist no facilities for the transportation of natural
gas to the Unit, nor for the burning of natural gas as fuel for the Unit; and
WHEREAS, certain regulatory and market circumstances indicate that there
presently exist opportunities for securing the supply and transportation of
natural gas for the Unit; and
WHEREAS, Canal has conducted preliminary discussions with certain potential
gas suppliers in order to evaluate such opportunities; and
WHEREAS, discussions have also been conducted with Algonquin Gas Transmission
Company (referred to herein as 'Algonquin') concerning the provision of gas
service to the plant by Algonquin and certain of its affiliated entities, and
concerning the construction of a pipeline by Algonquin which would serve the
Unit from existing Algonquin facilities to facilities which would be
constructed on behalf of Canal and Montaup;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Canal and Montaup agree as follows:
1. GAS TRANSPORTATION AGREEMENTS
Canal and Montaup shall enter into the following agreements: (i) with
Algonquin for the siting (including acquisition of necessary real
property rights), construction and operation of new facilities and the
improvement of existing facilities, for the transportation of natural gas
supplies to the Unit; (ii) with Algonquin and certain of its affiliated
entities for the transportation of gas to the Unit by Algonquin and
certain of its affiliated entities; and (iii) with parties other than
Algonquin and its affiliated entities for the transportation of gas to
the Unit (collectively referred to herein as the 'Gas Transportation
Agreements').
2. UNIT MODIFICATION AGREEMENTS
Canal and Montaup shall further enter into agreements for: (i) the siting
and construction of pipeline facilities for transporting natural gas from
the Algonquin facilities to the Unit; and (ii) the performance of certain
modifications to the Unit to enable the burning of natural gas as fuel
for the Unit (referred to herein as the 'Unit Modification Agreements').
Such agreements shall include (i) a project plan with provisions for an
oversight team to monitor the progress of construction, (ii) a schedule
of significant milestones, and (iii) a provision for distribution to both
parties of all correspondence, reports and studies related to
construction. The oversight team shall consist of at least one
representative each from Canal and Montaup. In the event that the
construction risks or costs associated with this project significantly
exceed initial expectations, then the parties shall meet to determine the
appropriate course of action. If the parties cannot agree with respect
to such course of action then either party may seek to invoke arbitration
in accordance with the provisions of paragraph "15. Arbitration."
3. GAS PURCHASE AGREEMENTS
Canal and Montaup shall enter into certain agreements with suppliers of
natural gas for the purchase of natural gas as fuel for the Unit
(referred to herein as the 'Gas Purchase Agreements').
4. GOVERNMENTAL AUTHORIZATIONS
Canal and Montaup further agree that an evaluation of the following
issues will be conducted on their behalf: (i) the federal, state and
local regulatory issues, and Canadian regulatory issues, associated with
procurement of natural gas for the Unit; (ii) the federal, state and
local regulatory issues associated with the transportation of natural gas
to the Unit, including without limitation, such issues relating to the
construction of new pipeline facilities and/or improvement of existing
facilities; and (iii) the federal, state and local regulatory issues, and
Canadian regulatory issues, associated with the utilization of natural
gas as fuel for the Unit, including without limitation, air emissions and
other environmental issues associated with modifications to the Unit.
Each Gas Transportation Agreement and Gas Purchase Agreement shall
contain conditions precedent which include a requirement for the
acquisition of all governmental and regulatory authorizations or
exemptions prior to the incurrence of charges by or on behalf of the
purchaser(s) thereunder. Further, Canal and Montaup agree that
construction of any of the facilities described herein shall not commence
unless all governmental and regulatory authorizations or exemptions
pertaining to such construction have first been obtained.
5. PRE-CONSTRUCTION ACTIVITIES
The parties agree that the following activities will be performed (or
will continue to be performed) on their behalf, with results satisfactory
to Canal and Montaup, and prior to the construction of any of the
facilities described herein or acquisition of property as referenced
herein:
a. A further evaluation of the natural gas supplies in the United
States and Canada (including offshore supplies) which may be potentially
available for use as fuel for the Unit. This evaluation may include
direct contact with and the solicitation of proposals from natural gas
suppliers, pipelines, and local (gas) distribution companies.
b. A further evaluation of any transportation requirements, including
consideration of the construction of new facilities and the improvement
of existing facilities, for the transportation of natural gas supplies to
the Unit. This evaluation may include direct contact with and the
solicitation of proposals from natural gas pipeline companies (and
potentially local distribution companies).
c. An analysis of the property rights which would have to be obtained
in order to transport gas to the Unit.
d. The preparation of an environmental report, in a form which would
satisfy the requirements of applicable federal, state and local laws,
regulations, ordinances and bylaws, for the siting, construction,
improvement and operation of pipeline facilities associated with the
transportation of natural gas to the Unit, and for the utilization of
natural gas as fuel for the Unit.
6. AUTHORITY TO EXECUTE AGREEMENTS, ISSUE REPORTS, ETC.
The parties agree that all agreements and reports referenced herein shall
be in a form acceptable to Montaup and Canal. Notwithstanding anything
set forth herein to the contrary, Canal and Montaup may elect to
designate an agent (which may be either of them) to represent their
interests in the matters referenced herein. Such (agency) delegation may
include authority to execute agreements on behalf of either or both of
the parties with respect to the matters reference herein. In the event
of such delegation, and provided a party has granted its approval of such
agreements as set forth above, that shall be fully bound by the terms of
each such agreement to the same extent as if that party had executed such
agreement as a party thereto. In the event of such delegation and upon
request, Canal and Montaup each agree to provide written evidence of such
delegation of authority. Provided; however, despite such delegation of
authority, to the extent a party to such agreements requires Canal and
Montaup's execution of such agreements, Canal and Montaup agree to sign
such documents provided the same are in a form acceptable to each of
them.
7. WAIVER AND RELEASE - PARTY ACTING AS AGENT
In the event either party hereto is designated to act as agent (the
"party-agent") for the other party hereto pursuant to the immediately
preceding paragraph, provided the party-agent satisfies its obligation to
present any and all agreements to the other party for the other party's
approval as specified above, the other party agrees to waive and release
any claim, suit, loss, damage, expense or cause of action of every nature
it may have against the party-agent which arise from or relating to any
act or omission by the party-agent in the party-agent's good faith
performance of its duties as party-agent.
8. PROPERTY RIGHTS
The parties agree that each party shall own as a tenant in common an
undivided one-half interest in any and all real property rights acquired
for the location of the facilities which will be constructed by Canal to
connect with the Algonquin facilities referenced in paragraph 1 hereof,
as well as any and all pipeline facilities and improvements to the Unit
as referenced in paragraph 2 hereof. None of said real property rights
or pipeline facilities and improvements constructed by Canal, or the gas
transported to the Unit, shall be used to serve any other generating
unit, now in existence or to be constructed, without the written, mutual
consent of the parties hereto. The parties agree that each party shall
own as a tenant in common an undivided one-half interest in any and all
information, documents and data arising from or relating to the
performance of the tasks referenced in paragraph 5 hereof. The parties
further agree that each party shall own one-half of all air emissions
allowances and credits that may be available for or through the operation
of the Unit and that each owner may at its sole option retain, sell, or
otherwise use its one-half share of any such emissions allowances or
credits that are not needed for the operation of the Unit.
9. JOINT OWNERSHIP AGREEMENT
Except as otherwise provided herein, the parties agree their respective
rights and obligations (including without limitation responsibility for
costs incurred pursuant to the various agreements referenced herein)
pertaining to the subject matter of this Memorandum shall be determined
according to the terms of the "Agreement For Joint Ownership" between the
parties dated October 27, 1970.
10. LEASE OF CANAL PROPERTY
Canal agrees to execute a lease substantially in the form of the
"Agreement of Lease" between the parties dated June 1, 1972 to the extent
real property owned by Canal would be utilized for the siting of
facilities referenced herein.
11. CONFIDENTIALITY
The parties each agree to keep this agreement and any and all
information, documents and data arising from or relating to the
performance of the tasks reference above (collectively referred to herein
as 'confidential information') confidential, and not to disclose the same
to any third party without first obtaining the written permission of the
other party hereto. Further the parties each agree to limit the
disclosure of confidential information to the persons within their
respective entities on a need-to-know basis. The provisions relating to
confidential information herein shall not pertain to any information that
was already known to a party (free of any obligation regarding
confidentiality), or was or becomes publicly known through no fault of a
party. In the event that a party hereto receives a subpoena or other
request for confidential information in a judicial or administrative
process, such party shall give prompt notice of the same to the other
party, and shall comply with its legal obligations while seeking such
protective arrangements as may be available to limit as strictly as
possible the disclosure of the confidential information.
12. ASSIGNMENT
This Memorandum shall not be assignable by either party without the
advance written consent of the other. This Memorandum shall be binding
on, and inure to the benefit of, the successors and assigns (as approved)
of the parties hereto.
13. APPLICABLE LAW
This Memorandum and the construction and enforceability hereof shall be
interpreted under the laws of the Commonwealth of Massachusetts.
14. REMEDIES
In the event of default by either party in any obligation pursuant to
this Memorandum, the other party shall be free to invoke such remedies at
law or in equity as may be deemed appropriate, subject to the arbitration
provision set forth in paragraph "15. Arbitration."
Failure of a party to complain of any act or omission on the part of the
other party, no matter how long the same may continue, shall not be
deemed to be a waiver by said party of any of its rights hereunder. No
waiver at any time, express or implied, of any breach of any provision of
this Memorandum shall be deemed a waiver of a breach of any other
provision of this Memorandum or a consent to any subsequent breach of the
same or any other provision. No acceptance of any partial payment shall
constitute an accord or satisfaction, but shall only be deemed a part
payment on account.
15. ARBITRATION
Any dispute between the parties with respect to this Memorandum shall be
submitted to arbitration on the request of either party. A copy of any
such request shall be served on the other party and it shall specify the
issue or issues in dispute and summarize the party's claim with respect
thereto. Within ten (10) days after receipt of such a request,
authorized representatives of both parties shall meet and attempt to
agree upon appointment of a single arbitrator who shall be qualified in
electric utility practice. If such agreement is not accomplished within
15 days, either party may request the American Arbitration Association to
appoint an arbitrator in accordance with its Commercial Arbitration
Rules, which shall govern the conduct of the arbitration in the absence
of contrary agreement by the parties. The arbitrator shall conduct a
hearing, and within thirty (30) days thereafter, unless such time is
extended by agreement of the parties, shall notify the parties in writing
of his decision. The arbitrator shall not have power to amend or add to
this Memorandum and the arbitrator's decision shall be consistent with
the rights and obligations of the parties under this Memorandum, the Gas
Transportation Agreements, the Unit Modification Agreements, and the Gas
Purchase Agreements. Subject to such limitation, the decision of the
arbitrator shall be final and binding on the parties and shall be
enforceable in any court of competent jurisdiction. The decision of the
arbitrator shall include the determination of and specify how the
expenses of the arbitration shall be allocated between the parties.
16. SEVERABILITY
In the event that any clause or provision of this Memorandum or any part
hereof shall be declared invalid, void or unenforceable by any court
having jurisdiction, such invalidity shall not affect the validity or
enforceability of the remaining portions of this Memorandum unless the
result would be manifestly inequitable or unconscionable.
17. COMPLETE AGREEMENT
The recitals and representations appearing first above are hereby
incorporated in and made a part of this Memorandum. This Memorandum
supersedes all prior agreements, communications, or proposals of the
parties regarding the subject matter hereof. This Memorandum shall
constitute the entire agreement between and among the parties and may not
be amended, modified or superseded except by written agreement signed by
the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Memorandum of
Understanding to be executed by the authorized representatives of the parties
hereto as of the date first above-written.
CANAL ELECTRIC COMPANY MONTAUP ELECTRIC COMPANY
By: ____________________________ By: __________________________