MAINE YANKEE ATOMIC POWER COMPANY
1997 AMENDATORY AGREEMENT
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This 1997 Amendatory Agreement, dated as of August 6, 1997, is entered
into by and between MAINE YANKEE ATOMIC POWER COMPANY, a Maine corporation
("Maine Yankee" or "Seller"), and NEW ENGLAND POWER COMPANY ("Purchaser").
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as follows:
1. Basic Understandings
Maine Yankee was organized in 1966 to provide a 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 830 megawatts electric (the "Unit") at a site
on tidewater in the Town of Wiscasset, Maine. On June 27, 1973, Maine Yankee
was issued a full-term, Facility Operating License for the Unit by the Atomic
Energy Commission (predecessor to the Nuclear Regulatory Commission which,
together with any successor agencies, is hereafter called the "NRC"), which
license is now stated to expire on October 21, 2008. The Unit has been in
commercial operation since January 1, 1973.
The Unit was conceived to supply economic power on a cost of service
formula basis to the Purchasers. Maine Yankee and the Purchaser are parties
to a Power Contract dated as of May 20, 1968 (as herefore amended, the "Power
Contract"). Pursuant to the Power Contract and other identical contracts
(collectively, the "Power Contracts") between Maine Yankee and the other
Purchasers, Maine 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 1, 1973.
Maine Yankee and the Purchaser are also parties to an Additional Power
Contract, dated as of February 1, 1984 ("Additional Power Contract"). The
Additional Power Contract and other similar contracts (collectively, the
"Additional Power Contracts") between Maine Yankee and the other Purchasers
provide for an operative term stated to commence on January 2, 2003 (when the
Power Contracts terminate) and extending until a date which is the later to
occur of (i) 30 days after the date on which the last of the financial
obligations of Maine Yankee which constitute elements of the purchase price
thereunder has been extinguished by Maine Yankee or (ii) 30 days after the
date on which Maine Yankee is finally relieved of any obligations under the
last of the licenses (operating and/or possessory) which it 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").
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 is obligated to pay therefor monthly its entitlement percentage of
Maine Yankee's cost of service, including decommissioning costs, whether or
not the Unit is operated or whether or not net electrical output is delivered.
The Power Contracts and 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.
On August 6, 1997, the board of directors of Maine 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 Maine Yankee and the
Purchasers, determined that the Unit should be permanently shut down effective
August 6, 1997. The Purchaser concurs in that decision.
As a consequence of the shutdown decision, Maine Yankee and the
Purchaser propose at this time to amend the 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
Maine 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.
Maine 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
Maine 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, Maine 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 in compliance with the regulations of
the NRC and other agencies having jurisdiction, 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 the Power Contract and
Additional Power Contract to pay its entitlement percentage of Maine Yankee's
costs as deferred payment in connection with the capacity and net electrical
output of the Unit previously delivered by Maine 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 Power Contract or
Section 10 of the Additional Power Contract.
Except as expressly modified by this Agreement, the provisions of the
Power Contract and the Additional 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 Provisions of the Power Contract and the Additional Power
Contract
A. Section 2 of the Additional Power Contract is hereby amended to
delete the first two paragraphs thereof and to insert in lieu thereof the
following:
This contract shall become effective on such date as may be
authorized by the FERC after receipt by the Purchaser of notice
that Maine Yankee has entered into Additional Power Contracts, as
contemplated by Section 1 above, with each of the other sponsors.
The operative term of this contract shall commence on the earlier
of (a) the termination, cancellation or expiration of the Power
Contract or (b) January 2, 2003, notwithstanding the fact that the
useful service life of the Unit terminated prior to that date 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 Maine Yankee which constitute
elements of the purchase price calculated pursuant to Section 7 of
this contract has been satisfied in its entirety by Maine Yankee,
or (ii) 30 days after the date on which Maine Yankee is finally
relieved of any 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 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 Maine Yankee as further deferred payment for the capacity
and output of the Unit provided to the Purchaser by Maine Yankee
prior to the permanent shutdown of the Unit on August 6, 1997, an
amount equal to the Purchaser's entitlement percentage of the sum
of (a) Maine Yankee's total fuel costs for the month with respect
to the Unit, (b) the Total Decommissioning Costs for the month
with respect to the Unit, plus (c) Maine Yankee's total operating
expenses (as hereinafter defined) for the month with respect to
the Unit, plus (d) an amount equal to one-twelfth of the composite
percentage for such month of the net Unit investment as most
recently determined in accordance with this Section 7.
C. The eighth paragraph of Section 7 of the Power Contract and the
eighth paragraph of Section 7 of the Additional Power Contract are each
amended by (a) inserting before the semicolon in the first sentence thereof
the following:
, 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 the amount due from
Maine Yankee to the U.S. Department of Energy ("DOE")
for disposal of pre-April 7, 1983 spent nuclear fuel
and associated high level radioactive material has
been paid in full, the Purchaser's entitlement
percentage of one-third (1/3) of the interest due to
DOE during that calendar quarter on such obligation;
and
(iii) with respect to each month until End of License Term,
the Purchaser's entitlement percentage of the 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 Maine Yankee's investment in plant, nuclear
fuel and materials and supplies and other assets, such
amortization to be accrued at a rate sufficient to
amortize fully such unamortized deferred expenses and
Maine Yankee's investments in plant, nuclear fuel and
materials and supplies or other assets (the "total
investment") over a period extending to October 21,
2008; [provided, that if during any calendar month
ending on or before May 1, 2008 either of the
following events shall occur: (a) Maine Yankee shall
become insolvent or (b) Maine 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 indebtedness for money borrowed, then Maine
Yankee may adjust upward the accrual for amortization
of unrecovered total investment for such month to an
amount not exceeding the applicable maximum level
specified in Appendix A hereto, provided that
concurrently therewith the total investment shall be
reduced by an amount equal to the amount of such
adjustment, it being understood that at the time of
such event, Maine Yankee will furnish the Purchaser
with a schedule setting forth the amount of such
adjustment;] /1/
and (b) by adding at the end thereof the following:
As used herein, "End of License Term" means October 21, 2008
or such later date as may be fixed, by amendment to the
Facility Operating License for the Unit, as the end of the
term of the Facility Operating License.
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/1/ Bracketed language would be inserted only if satisfactory work-out
is reached with lender banks and insurance companies.
D. The definitions in Section 7 of the Power Contract and in Section 7
of the Additional 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 Maine 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 Maine 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, as in effect from time to time, for permanent
cessation of operation of a nuclear facility and any other
activities reasonably related thereto, including provision for
disposal of low level waste and 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, mothballing 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 Maine 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.
E. Section 7 of the Power Contract and Section 7 of the Additional
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 Maine Yankee to the NRC of the decision of the
board of directors of Maine Yankee to cease permanently the
operation of the Unit for the purpose of producing electric energy
and ending with the date when Maine 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.
F. Section 8 of the Additional Power Contract is hereby amended to
change the figure "1%" to "2%".
G. Section 9 of the Power Contract and Section 10 of the Additional
Power Contract are each 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 hereof and the
provisions of said Section 7 and the related provisions of this
contract shall remain in full force and effect, 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 Maine Yankee under its
contractual commitments to the Purchaser. Such cancellation shall
be effected by written notice given by the Purchaser to Maine
Yankee. In the event of such cancellation, all continuing
obligations of the parties hereunder as to subsequently incurred
costs of Maine Yankee other than the obligations of the Purchaser
to continue to make the payments required by Section 7 shall cease
forthwith (it being understood that the continuing accrual of
depreciation of net Unit investment and of fees, interest and
other payments under pre-existing contracts subsequent to such
cancellation shall not be deemed to be "subsequently incurred
costs" for purposes of this sentence). Notwithstanding the
preceding sentence, 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 this contract.
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 preceding paragraph of this Section.
5. Effective Date
This 1997 Amendatory Agreement shall become effective upon receipt by
the Purchaser of notice that Maine Yankee has entered into 1997 Amendatory
Agreements, as contemplated by Section 1 hereof, with each of the other
Purchasers and receipt of requisite authorization from the FERC.
6. Interpretation
The interpretation and performance of this 1997 Amendatory Agreement
shall be in accordance with and controlled by the laws of the State of Maine.
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 1997
Amendatory 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 1997 Amendatory Agreement is the corporate act and obligation of
the parties hereto.
9. Counterparts
This 1997 Amendatory 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 1997
Amendatory 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 1997 Amendatory Agreement identical in form hereto but
having attached to it one or more signature pages.
IN WITNESS WHEREOF, the parties have executed this 1997 Amendatory
Agreement by their respective duly authorized officers as of the day and year
first named above.
MAINE YANKEE ATOMIC POWER COMPANY
By______________________________
Its
Address: 329 Bath Road
Brunswick, ME 04011
NEW ENGLAND POWER COMPANY
By______________________________
Its
Address: 25 Research Drive
Westborough, MA 01582
Appendix A to
1997 Amendatory Agreement
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MAXIMUM AMORTIZATION SCHEDULE
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If the event occurs during the calendar year: Maximum Amortization
Accrual: /1/
1998 $__________________
1999 $__________________
2000 $__________________
2001 $__________________
2002 $__________________
2003 $__________________
2004 $__________________
2005 $__________________
2006 $__________________
2007 $__________________
2008 $__________________
___________________
/1/ This column will reflect the maximum amount scheduled to be
outstanding during the applicable period, and will be completed as part of the
satisfactory work-out with lender banks and insurance companies.