This Agreement, dated as of the 4th day of December,
1996, is entered into by and between Connecticut Yankee Atomic
Power Company ("Connecticut Yankee" or "Seller") and Montaup
Electric Company ("Purchaser").
For good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed as follows:
1. Basic Understandings
Connecticut Yankee was organized in 1952 to provide for the
supply of power to its sponsoring utility companies, including
the Purchaser (collectively the "Purchasers"). It constructed a
nuclear electric generating unit, having a net capability of
approximately 582 megawatts electric (the "Unit") at a site in
Haddam Neck, Connecticut. Connecticut Yankee was issued a full-
term, Facility Operating License for the Unit by the Nuclear
Regulatory Commission (which, together with any successor
agencies, is hereafter called the "NRC"), which license is now
stated to expire on June 29, 2007. The Unit has been in
commercial operation since January 1, 1968.
The Unit was conceived to supply economic power on a cost of
service formula basis to the Purchasers. Connecticut Yankee and
the Purchaser are parties to a power Contract dated as of July 1,
1964 ("Initial Power Contract"). Pursuant to the Initial Power
Contract and other similar contracts (collectively, the "Initial
Power Contracts") between Connecticut Yankee and the other
Purchasers, Connecticut Yankee contracted to supply to the
Purchasers all of the capacity and electric energy available from
the Unit for a term of thirty (30) years following January l,
1968.
Connecticut Yankee and the Purchaser are also parties to an
Additional Power Contract, dated as of April 30, 1984
("Additional Power Contract"). The Additional Power Contract and
other similar contracts (collectively, the "Additional Power
Contracts") between Connecticut Yankee and the other Purchasers
provide for an operative term stated to commence on January 1,
1998 (when the Initial Power Contracts terminate) and extending
until a date (the "End of Term Date") which is 30 days after the
later of the date on which the last of the financial obligations
of Connecticut Yankee has been extinguished or the date on which
Connecticut Yankee is finally relieved of any obligations under
the last of the licenses (operating or possessory) which it
holds, or hereafter receives, from the NRC with respect to the
Unit. The Additional Power Contracts also provide, in the event
of their earlier cancellation, for the survival of the
decommissioning cost obligation and for the applicable provisions
thereof to remain in effect to permit final billings of costs
incurred prior to such cancellation.
Pursuant to the Power Contract and the Additional Power
Contract, the Purchaser is entitled and obligated to take its
entitlement percentage of the capacity and net electrical output
of the Unit during the service life of the Unit and obligated
to pay therefor monthly its entitlement percentage of Connecticut
Yankee's cost of service, including decommissioning costs,
whether or not the Unit is operated.
Connecticut Yankee and the Purchaser are also parties to a
1987 Supplementary Power Contract, dated as of April l, 1987
("1987 Supplementary Power Contract"). The 1987 Supplementary
Power Contract and other similar contracts (collectively, the
"1987 Supplementary Power Contracts") between Connecticut Yankee
and the other Purchasers restate and supersede earlier
Supplementary Power Contracts and Agreements Amending
Supplementary Power Contracts between Connecticut Yankee and the
Purchasers. Pursuant to the 1987 Supplementary Power Contracts,
the Purchasers make monthly certain supplementary payments to
Connecticut Yankee during the terms of the Initial Power
Contracts and Additional Power Contracts.
On December 4, 1996, the board of directors of Connecticut
Yankee, after conducting a thorough review of the economics of
continued operation of the Unit for the remainder of the term of
the Facility Operating License for the Unit in light of other
alternatives available to Connecticut Yankee and the Purchasers,
determined that the Unit should be permanently shut down
effective December 4, 1996. The Purchaser concurs in that
decision.
As a consequence of the shutdown decision, Connecticut
Yankee and the Purchaser propose at this time to amend the 1987
Supplementary Power Contract and the Additional Power Contract in
various respects in order to clarify and confirm provisions for
the recovery under said contracts of the full costs previously
incurred by Connecticut Yankee in providing power from the Unit
during its useful life and of all costs of decommissioning the
Unit, including the costs of maintaining the Unit in a safe
condition following the shutdown and prior to its decontamination
and dismantlement.
Connecticut Yankee and each of the other Purchasers are
entering into agreements which are identical to this Agreement
except for necessary changes in the names of the parties.
2. Parties' Contractual Commitments
Connecticut Yankee reconfirms its existing contractual
obligations to protect the Unit, to maintain in effect certain
insurance and to prepare for and implement the decommissioning of
the Unit in accordance with applicable laws and regulations.
Consistent with public safety, Connecticut Yankee shall use its
best efforts to accomplish the shutdown of the Unit, the
protection and any necessary maintenance of the Unit after
shutdown and the decommissioning of the Unit in a cost-effective
manner and shall use its best efforts to ensure that any required
storage and disposal of the nuclear fuel remaining in the reactor
at shutdown and all spent nuclear fuel or other radioactive
materials resulting from operating of the Unit are accomplished
consistent with public health and safety considerations and at
the lowest practicable cost. The Purchaser reconfirms its
obligations under its Initial Power Contract, Additional Power
Contract and 1987 Supplementary Power Contract to pay its
entitlement percentage of Connecticut Yankee's costs as deferred
payment in connection with the capacity and net electrical output
of the Unit previously delivered by Connecticut Yankee and agrees
that the decision to shut down the Unit described in Section 1
hereof does not give rise to any cancellation right under Section
9 of the Initial Power Contract or Section 10 of the Additional
Power Contract.
Except as expressly modified by this Agreement, the
provisions of the Additional Power Contract and the 1987
Supplementary Power Contract remain in full force and effect,
recognizing that the mutually accepted decision to shut down the
Unit renders moot those provisions which by their terms relate
solely to continuing operation of the Unit.
3. Amendment of Payment Provisions of Additional Power Contract
and 1987 Supplementary Power Contract
A. Section 2 of the Additional Power Contract is hereby
amended by deleting the first two paragraphs thereof and by
inserting in lieu thereof the following:
This contract shall become effective upon
receipt by the Purchaser of notice that Connecticut
Yankee has entered into Additional Power Contracts, as
contemplated by Section 1 above, with each of the other
Purchasers. The operative term of this contract shall
commence on such date as may be authorized by the FERC
and shall terminate on the date (the "End of Term
Date") which is the later to occur of (i) 30 days after
the date on which the last of the financial obligations
of Connecticut Yankee which constitute elements of the
payment calculated pursuant to Section 7 of this
contract has been extinguished by Connecticut Yankee,
or (ii) 30 days after the date on which Connecticut
Yankee is finally relieved of all obligations under the
last of any licenses (operating and/or possessory)
which it now holds from, or which may hereafter be
issued to it by, the NRC with respect to the Unit under
applicable provisions of the Atomic Energy Act of 1954,
as amended from time to time (the "Act").
B. The second paragraph of Section 4 of the Additional
Power Contract is amended by deleting the phrase "Second
Supplementary Power Contracts" wherever it appears and inserting
in lieu thereof the phrase "1987 Supplementary Power Contracts".
C. The first paragraph of Section 7 of the Additional Power
Contract is amended to read as follows:
With respect to each month commencing on or after the
commencement of the operative term of this contract,
whether or not this contract continues fully or
partially in effect, the Purchaser will pay Connecticut
Yankee as deferred payment for the capacity and output
of the Unit provided to the Purchaser by Connecticut
Yankee prior to the permanent shutdown of the Unit on
December 4, 1996, to the extent not otherwise paid in
accordance with the Power Contract, but without
duplication:
D. The eighth paragraph of Section 7 of the Additional
Power Contract is amended by changing the period at the end to a
comma and inserting:
, but including for purposes of this contract:
(i) with respect to each month until the commencement
of decommissioning of the Unit, the Purchaser's
entitlement percentage of all expenses related to
the storage or disposal of nuclear fuel or other
radioactive materials, and all expenses related to
protection and maintenance of the Unit during such
period, including to the extent applicable all of the
various sorts of expenses included in the
definition of "Decommissioning Expenses", to the
extent incurred during the period prior to the
commencement of decommissioning;
(ii) with respect to each month until expenses
associated with disposal of pre-April 7, 1983
spent nuclear fuel have been fully covered by
amounts which have been collected from Purchasers
and paid to a segregated fund as contemplated by
Section 8 of the 1987 Supplementary Power
Contract, dated as of April 1, 1987, between
Connecticut Yankee and the Purchaser, as amended
(the "1987 Contract"), the Purchaser's entitlement
percentage of previously uncollected expenses
associated with disposal of such prior spent
nuclear fuel, as determined in accordance with
Section 10 of the 1987 Contract; and
(iii) with respect to each month until End of License
Term, the Purchaser's entitlement percentage of
monthly amortization of (a) the amount of any
unamortized deferred expenses, as permitted from
time to time by the Federal Energy Regulatory
Commission or its successor agency, plus (b) the
remaining unamortized amount of Connecticut
Yankee's investment in plant, nuclear fuel and
materials and supplies and other assets. Such
amortization shall be accrued at a rate sufficient
to amortize fully such unamortized deferred
expenses and Connecticut Yankee's investments in
plant, nuclear fuel and materials and supplies or
other assets over a period extending to June 29,
2007, provided, that if during any calendar month
ending on or before December 3, 2000 either of
the following events shall occur: (a) Connecticut
Yankee shall become insolvent or (b) Connecticut
Yankee shall be unable, from available cash or
other sources, to meet when due during such month
its obligations to pay principal, interest,
premium (if any) or other fees with respect to any
of its indebtedness of money borrowed, then
Connecticut Yankee may adjust upward the accrual
for amortization of the unrecovered investment for
such month to an amount not exceeding the
applicable maximum level specified in Appendix A
hereto, provided that concurrently therewith the
net Unit investment shall be reduced by an amount
equal to the amount of such adjustment.
As used herein, "End of License Term" means June 29,
2007 or such later date as may be fixed, by amendment
to the NRC Facility Operating License for the Unit, as
the end of the term of the Facility Operating License.
E. The definitions in Section 7 of the Additional Power
Contract and in Section 3 of the 1987 Supplementary Power
Contract of "Total Decommissioning Costs" and "Decommissioning
Expenses" are hereby amended to read as follows:
"Total Decommissioning Costs" for any month shall mean
the sum of (x) an amount equal to all accruals in such
month to any reserve, as from time to time established
by Connecticut Yankee and approved by its board of
directors, to provide for the ultimate payment of the
Decommissioning Expenses of the Unit, plus (y), during
the Decommissioning Period, the Decommissioning
Expenses for the month, to the extent such
Decommissioning Expenses are not paid with funds from
such reserve, plus (z) Decommissioning Tax Liability
for such month. It is understood (i) that funds
received pursuant to clause (x) may be held by
Connecticut Yankee or by an independent trust or other
separate fund, as determined by said board of
directors, (ii) that, upon compliance with applicable
regulatory requirements, the amount, custody and/or
timing of such accruals may from time to time during
the term hereof be modified by said board of directors
in its discretion or to comply with applicable
statutory or regulatory requirements or to reflect
changes in the amount, custody or timing of anticipated
Decommissioning Expenses, and (iii) that the use of the
term "to decommission" herein encompasses compliance
with all requirements of the NRC for permanent
cessation of operation of a nuclear facility and any
other activities reasonably related thereto, including
provision for the interim storage of spent nuclear
fuel.
"Decommissioning Expenses" shall include all expenses
of decommissioning the Unit, and all expenses relating
to ownership and protection of the Unit during the
Decommissioning Period, and shall also include the
following:
(1) All costs and expenses of any NRC-approved
method of removing the Unit from service,
including without limitation: dismantling,
moth balling and entombment of the Unit;
removing nuclear fuel and other radioactive
material to temporary and/or permanent
storage sites; construction, operation,
maintenance and dismantling of a spent fuel
storage facility; decontaminating, restoring
and supervising the site; and any costs and
expenses incurred in connection with
proceedings before governmental authorities
relating to any authorization to decommission
the Unit or remove the Unit from service;
(2) All costs of labor and services, whether
directly or indirectly incurred, including
without limitation, services of foremen,
inspectors, supervisors, surveyors,
engineers, security personnel, counsel and
accountants, performed or rendered in
connection with the decommissioning of the
Unit and the removal of the Unit from
service, and all costs of materials,
supplies, machinery, construction equipment
and apparatus acquired or used (including
rental charges for machinery, equipment or
apparatus hired) for or in connection with
the decommissioning of the Unit and the
removal of the Unit from service, and all
administrative costs, including services of
counsel and financial advisers of any
applicable independent trust or other
separate fund; it being understood that any
amount, exclusive of proceeds of insurance,
realized by Connecticut Yankee as salvage on
any machinery, construction equipment and
apparatus, the cost of which was charged to
Decommissioning Expense, shall be treated as
a reduction of the amounts otherwise
chargeable on account of the costs of
decommissioning of the Unit; and
(3) All overhead costs applicable to the Unit
during the Decommissioning Period, or accrued
during such period, including without
limiting the generality of the foregoing,
taxes (other than taxes on or in respect of
income), charges, license fees, excises and
assessments, casualties, health care costs,
pension benefits and other employee benefits,
surety bond premiums and insurance premiums.
F. Section 7 of the Additional Power Contract and
Section 3 of the 1987 Supplementary Power Contract are each
hereby amended by adding the following new paragraph after the
definition of "Decommissioning Tax Liability":
"Decommissioning Period" shall mean the period
commencing with the notification by Connecticut Yankee
to the NRC of a decision of the board of directors of
Connecticut Yankee to cease permanently the operation
of the Unit for the purpose of producing electric
energy and ending with the date when Connecticut Yankee
has completed the decommissioning of the Unit and the
restoration of the site and has been relieved of all
its obligations under the last of any licenses issued
to it by the NRC.
G. The first sentence of Section 8 of the Additional Power
Contract is hereby amended to read as follows:
Connecticut Yankee will bill the Purchaser, no later
than ten (10) days after the end of any month, for all
amounts payable by the Purchaser with respect to such
particular month pursuant to Section 7 hereof.
H. Section 8 of the Additional Power Contract and Section 4
of the 1987 Supplementary Power Contract are each amended to
delete the name "The Connecticut Bank and Trust
Company, National Association" and substitute "Fleet National
Bank."
I. Section 5 of the 1987 Supplementary Power Contract is amended to read
as follows:
5. Decommissioning Fund:
Connecticut Yankee agrees to pay to, or cause
to be paid to, the Connecticut Yankee Trust or any
successor trust approved by the board of directors
of Connecticut Yankee all funds collected pursuant
to Section 3 under clause (x) of the definition of
"Total Decommissioning Costs".
J. Section 10 of the Additional Power Contract is amended
to read as follows:
10. Cancellation of Contract.
If either
(i) the Unit is damaged to the extent of being completely or
substantially completely destroyed, or
(ii) The Unit is taken by exercise of the
right of eminent domain or a similar right or power,
then and in any such case, the Purchaser may cancel the
provisions of this contract, except that in all cases
other than those described in clause (ii) above, the
Purchaser shall be obligated to continue to make the
payments of Total Decommissioning Costs and the other
payments required by Section 7 and the provisions of
that Section and the related provisions of this
contract shall remain in full force and effect until
the End of Term Date, it being recognized that the
costs which Purchaser is required to pay pursuant to
Section 7 represent deferred payments in connection
with power heretofore delivered by Connecticut Yankee
hereunder. Such cancellation shall be effected by
written notice given by the Purchaser to Connecticut
Yankee. In the event of such cancellation, all
continuing obligations of the parties hereunder as to
subsequently incurred costs of Connecticut Yankee other
than the obligations of the Purchaser to continue to
make the payments required by Section 7 shall cease
forthwith. Notwithstanding the foregoing, the
applicable provisions of this contract shall continue
in effect after the cancellation hereof to the extent
necessary to permit final billings and adjustments
hereunder with respect to obligations incurred through
the date of cancellation and the collection thereof.
Any dispute as to the Purchaser's right to cancel this
contract pursuant to the foregoing provisions shall be
referred to arbitration in accordance with the
provisions of Section 13.
Notwithstanding anything in this contract
elsewhere contained, the Purchaser may cancel this
contract or be relieved of its obligations to make
payments hereunder only as provided in the next
receding paragraph of this Section 10. Further, if
for reasons beyond Connecticut Yankee's reasonable
control, deliveries are not made as contemplated by
this contract, Connecticut Yankee shall have no
liability to the Purchaser on account of such non-
delivery.
K. Section 2 of the 1987 Supplementary Power Agreement is
amended to change the date in the definitions of "operating
expenses" and "M" from "May 26, 2004" to "June 29, 2007".
5. Effective Date
This Agreement shall become effective upon receipt by the
Purchaser of notice that Connecticut Yankee has entered into 1996
Amendatory Agreements, as contemplated by Section 1 hereof, with
each of the other Purchasers.
6. Interpretation
The interpretation and performance of this Agreement shall
be in accordance with and controlled by the laws of the State of
Connecticut.
7. Addresses
Except as the parties may otherwise agree, any notice,
request, bill or other communication from one party to the other
relating to this Agreement, or the rights, obligations or
performance of the parties hereunder, shall be in writing and
shall be effective upon delivery to the other party. Any such
communication shall be considered as duly delivered when mailed
to the respective post office address of the other party shown
following the signatures of such other party hereto, or such
other post office address as may be designated by written notice
given in the manner as provided in this Section.
8. Corporate Obligations
This Agreement is the corporate act and obligation of the
parties hereto.
9. Counterparts
This Agreement may be executed in any number of counterparts
and each executed counterpart shall have the same force and
effect as an original instrument and as if all the parties to all
of the counterparts had signed the same instrument. Any
signature page of this Agreement may be detached from any
counterpart without impairing the legal effect of any signatures
thereon, and may be attached to another counterpart of this
Agreement identical in form hereto but having attached to it one
or more signature pages.
IN WITNESS WHEREOF, the parties have executed this
Amendatory Agreement by their respective duly authorized officers
as of the day and year first named above.
CONNECTICUT YANKEE ATOMIC POWER
COMPANY
By: /s/ John B. Keane
John B. Keane
Its Vice President and Treasurer
Address: 107 Selden Street
Berlin, CT 06037
MONTAUP ELECTRIC COMPANY
By: /s/ Donald G. Pardus
Donald G. Pardus
Its Chairman
Address: One Liberty Square
13th Floor
Boston, MA 02107
Appendix A to
1996 Amendatory Agreement
Maximum Depreciation Schedule
If the event occurs during the twelve
months ending: Maximum Amortization Accrual:
December 31, 1997 $100,000,000.00
December 31, 1998 $ 80,000,000.00
December 31, 1999 $ 40,000,000.00
December 31, 2000 $ 20,000,000.00