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EXHIBIT 1
AGREEMENT entered into this first day of September, 1983 by and between
Commonwealth Electric Company, a Massachusetts corporation with offices
located at 2421 Cranberry Highway, Wareham, Massachusetts 02571 ("Company")
and Pioneer Hydropower, Incorporated, ("Pioneer") a Massachusetts corporation
with offices located at 148 State Street, Boston, Massachusetts 02109 ("Sell-
er").
Seller owns and operates a hydro-electric generating facility (the
"Plant"), at its site in Ware, Massachusetts. Seller wishes to sell and the
Company wishes to buy electric energy from the Plant, all pursuant to the
terms and conditions as set forth in this Agreement.
THEREFORE, the parties, each in consideration of the agreements of the
other, hereby agree as follows:
ARTICLE I. Sale of Power by Seller.
(a) Seller agrees to sell and deliver to New England Power Company
("NEPCO"), and the Company agrees to purchase and accept delivery from NEPCO
of all electric energy produced by the Plant during the term of this Agree-
ment, except that the Seller shall have the option not to sell and deliver
such electric energy as may be needed from time to time to satisfy Plant
requirements ("Net Plant Output").
(b) The Company shall not be obligated to purchase or take delivery of
electric energy from the Plant unless, in the reasonable judgment of the
Company, the Plant is staffed, operated and maintained in a manner consistent
with the standards applicable to generating facilities owned and operated by
participants in the New England Power Pool ("NEPOOL"), as such standards may
be in effect from time to time during the term of this Agreement. The Plant
must be made available for NEPOOL dispatch in accordance with the provisions
of Section 12.2 of the NEPOOL Agreement dated September 1, 1971 as amended
("NEPOOL Agreement").
(c) Without limiting the generality of Article 1(b) hereof, Seller shall
be obligated hereby to undergo periodic capability audits pursuant to the
terms of Section 8.13 of the NEPOOL Agreement. In the event that the Plant
demonstrates a Capability (as defined at Section 15.6 of the NEPOOL Agreement)
that is less than the "Qualified Capacity" of such Plant ("Capacity Deficien-
cy"), the Company may assess Seller a charge equal to the Capability Respon-
sibility Adjustment Charge established from time to time by NEPOOL pursuant to
the provisions of Section 9.4 of the NEPOOL Agreement multiplied by such
Capacity Deficiency. The Qualified Capacity of the Plant shall be determined
by a capability audit conducted, under the general supervision of the adminis-
trative committee established by Article X(f) of this Agreement, during the
first winter period following the effective date of this Agreement. Such
Qualified Capacity shall be the winter period Net Capability of the Plant (as
computed pursuant to said capability audit) which shall be the same as the
Capability of the Plant calculated pursuant to Section 15.6 of the NEPOOL
Agreement. Notwithstanding the foregoing, if such winter period Net Capability
of the plant is less than thirteen hundred ten (1310) kilowatts, the Qualified
Capacity of the Plant shall be thirteen hundred ten (1310) kilowatts.
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(d) The Company reserves the right to impose reasonable conditions
consistent with the NEPOOL standards that are in effect from time to time
during the term of this Agreement in substitution for the foregoing NEPOOL
standards if NEPOOL ceases to establish such standards or if the Company
should cease its participation in NEPOOL during the life of this Agreement.
ARTICLE II. Effective Date and Term.
(a) This Agreement shall become effective upon the date that electric
energy is first delivered to Company by NEPCO, and unless sooner terminated in
accordance with any applicable provision of this Agreement, shall remain in
full force and effect for an initial term of thirty (30) years.
Seller agrees to notify the Company at the end of the twenty ninth (29)
year of its rights and intention to continue operation of the Plant beyond the
initial term. In the event that Seller has the right to continue operation of
the Plant and sell power to the Company beyond the initial term, this Agree-
ment shall be renewed or extended at the Company's sole option by the giving
of written notice to Seller within six (6) months following receipt of notice
from Seller of such continued operation, said renewal to be for a term of
fifteen (15) years.
Seller agrees to use all reasonable efforts to continue operation of the
Plant beyond the initial term.
ARTICLE III. Purchase Price.
(a) From and after the date of initial commencement of deliveries of
electric energy from the Plant ("Start Date"), the Company shall pay Seller
each month an amount equal to the greatest of:
(1) the Energy Purchase Price as determined in accordance with
Appendix A to this Agreement multiplied times the quantity of electric energy
delivered to the Company by NEPCO hereunder, or
(2) eighty-four mills ($0.084) per kilowatt-hour ("Floor Energy
Price") multiplied times the quantity of electric energy delivered to the
Company by NEPCO hereunder, or
(3) beginning January 1, 1992 and ending at the close of the
fifteenth (15th) year following the Start Date, the Floor Energy Price per
kilowatthour ("Adjusted Floor Energy Price") shall be determined by the
following formula:
Adjusted Floor Energy Price = 84 mills
+ PGNP-2 x [9.1 + PGNP-1 (14.1)]
Where: PGNP-1 is the cumulative percentage change in the
Gross National Product Implicit Price Deflator
("PGNP") published by the United States Department of
Commerce between the Start Date and December 31, 1991,
and PGNP-2 is the cumulative percentage change in the
PGNPafter January 1, 1992, multiplied times the quan-
tity of electric energy delivered to the Company by
NEPCO hereunder.
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In the event the United States Department of Commerce should cease to publish
the PGNP, the Company and Seller shall mutually agree upon a satisfactory
replacement therefor or, failing to so agree, shall submit matter to arbitra-
tion in accordance with the appropriate provisions of this Agreement.
The Company has entered an agreement of even date herewith and similar hereto
with Swift River Company relative to a hydro electric facility known as
Chicopee. The amount of the Floor Energy Price of eighty-four mills ($0.084)
per kilowatthour shown in Article III(a)(2) and (3) above is contingent upon
Chicopee entering commercial operation no later than December 31, 1984. In the
event that Chicopee does not enter commercial operation by December 31, 1984,
the Floor Energy Price shall be reduced to eighty-two mills ($0.082) per
kilowatthour and any payments made to Seller using such Floor Energy Price
from the Start Date to December 31, 1984 shall be re-calculated and adjusted
to reflect such reduction.
(b) For the purpose of implementing Article III(a) of this Agreement,
the Company shall pay Seller each month an amount determined in accordance
with paragraph (1) thereof. Amounts payable to Seller pursuant to Article
III(a)(1) shall be determined for each billing period on an estimated basis
and paid monthly in accordance with Article VII hereof, subject to a final
determination and reconciliation at the end of each such billing period
established pursuant to Appendix A hereof. For purposes of such monthly
payments, an estimated Energy Purchase Price for each rating period (as
defined in Appendix A hereof) shall be determined as set forth in such
Appendix A by setting Factor 0-2 equal to Factor 0-1. Such estimated Energy
Purchase Price for each rating period shall be multiplied by the quantity of
electric energy (measured in kilowatt-hours) delivered to the Company by
Seller during such rating period during such month. Following the close of
each such billing period, the Company will promptly determine its actual
Energy Purchase Price for each rating period. Any difference between the
forecast and actual Energy Purchase Price for the same billing period shall be
subject to reconciling adjustment during the first month of the next subse-
quent billing period.
(c) If the Company determines that the Energy Purchase Price, computed
with Factor R set equal to one-hundred percent (100%), exceeds the Company's
avoided energy costs (as hereinafter defined), the Company may propose a
change to Appendix A by giving Seller written notice thereof. Such proposed
change shall be limited to the methodology for determining or calculating the
Company's avoided energy costs and shall not deviate from the principle that
the average decremental cost shall at least approximate the most costly ten
percent (10%) of the load placed upon the Company's system by its firm-service
customers during the relevant billing period. In the event that Seller fails
to accept said proposed change and Seller and Company are unable to agree in
writing upon a mutually satisfactory revised Appendix A within sixty (60) days
of the giving of such notice, either the Seller or the Company may submit the
matter to arbitration pursuant to the provisions of Article X(g) and (h)
below. During the period of time in which said matter is in arbitration, the
proposed revised Appendix A originally offered by the Company shall govern the
computation of the Energy Purchase Price. Within thirty (30) days following
resolution of said dispute by arbitration, the Company shall recompute, in
accordance with said resolution, all amounts paid to, Seller during the
pendency of such dispute and debit or credit Seller's account as appropriate.
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(d) Avoided energy cost as used herein shall mean the incremental cost
to the Company of electric energy which the Company would have generated or
purchased but for the purchase of electric energy from Seller.
(e) Any taxes on the production or sale of electric energy furnished by
the Seller to the Company under this Agreement shall be the obligation of and
paid by the Seller as and when due.
ARTICLE IV. Energy Purchase Bank.
(a) The Company will establish an account within its records, to be
known as the Energy Purchase Bank, which shall be maintained separately from
all other accounts therein. The Energy Purchase Bank shall be solely used to
record such periodic energy purchase (and related) transactions and associated
account balances as are specified within this Agreement as affecting such
Energy Purchase Bank.
(b) During the term of this Agreement, the difference between any
amounts paid to Seller pursuant to the Floor Energy Price or the Adjusted
Floor Energy Price and the amount that would have been paid to Seller under
the Energy Purchase Price, computed with Factor R set equal to one-hundred
percent (100%), shall be debited to the Energy Purchase Bank.
(c) During any billing period for which the Energy Purchase Bank
contains a debit balance and for which the Energy Purchase Price, computed
with Factor R set equal to one hundred percent (100%), exceeds the Floor
Energy Price or the Adjusted Floor Energy Price, the Energy Purchase Bank
shall be credited as follows:
(1) if the Energy Purchase Price with Factor R set at 100% exceeds the
Floor or Adjusted Floor Energy Price, then one-half of said difference
multiplied by the number of kilowatt hours purchased from Seller during
such billing period shall be credited to the Energy Purchase Bank and
one-half of said difference multiplied as specified above shall be paid
to Seller.
(2) provided nevertheless, that for the purpose of this subarticle, if
the actual avoided energy cost exceeds the projections attached hereto
as Appendix B, then all of the difference between said actual avoided
costs for the year in question and those shown on Appendix B shall be
credited to the Energy Purchase Bank until the debit balance in said
Bank reaches zero, at which time the payment to Seller shall be calcu-
lated according to Appendix A, using actual avoided cost figures. Said
procedure shall continue throughout the term of this Agreement until any
debit balance in the Energy Purchase Bank is reduced to zero. Any debit
balance of the Energy Purchase Bank shall bear interest at a rate per
annum which shall be at all times equal to the Base Rate of The First
National Bank of Boston (or its successors) which shall mean the rate of
interest designated by such Bank as its Base Rate and usually charged by
it to substantial and responsible borrowers, as in effect from time to
time. Each change in the said Base Rate shall be effective at the
beginning of the business day on which such change occurs.
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ARTICLE V. Delivery by Seller.
Electric energy generated by the Seller at the Plant shall be delivered
by NEPCO (pursuant to a Service Agreement between the Company and NEPCO of
even date herewith) to the Company at the 345,000 volt bus located in the
Canal Electric Company switchyard at Sandwich, Massachusetts ("point of
delivery") in the form of three-phase, sixty hertz alternating current at
approximately 345,000 volts nominal. All electric energy produced by Seller
and delivered to NEPCO for transmission to the Company shall be adjusted for
any transmission losses on NEPCO's system and any payments made by Company to
Seller pursuant to Article III above shall be determined based on the net
kilowatthours of electric energy delivered by NEPCO to Company at the point of
delivery. It is understood that any payments by the Company to Seller made in
accordance with Article III above shall be net of payments made by the Company
to NEPCO for the transmission of such electric energy generated by Seller.
Seller shall obtain and continuously maintain insurance, bond, or other
debt instrument in form and amount satisfactory to the Company sufficient to
reimburse the Company in full for any obligation it may incur with NEPCO under
the above-mentioned Service Agreement for any period during which Seller is
not producing electric energy under this Agreement. The Company shall be the
specified beneficiary under the insurance, bond or debt instrument and
evidence of the effectiveness of such insurance, bond, or debt instrument must
be filed with the Company at all times during the term of this Agreement or
the Company shall have the right to withhold payment hereunder.
ARTICLE VI. Meters and Metering.
(a) The Company shall have the right to review and approve the metering
installations required to record the quantities of electricity purchased from
the Seller. Such metering equipment will be capable, inter alia, of providing
data required to determine kilowatt-hours per hour purchased during each hour
of each rating period established by Appendix A hereto as well as total
electric energy purchased per rating period under the terms of this Agreement.
Seller shall install, own, operate and maintain such metering equipment, which
equipment shall be located at Seller's bus (or buses). If, for any reason, it
is impractical to install meters at such bus (or buses), appropriate adjust-
ments shall be made to reflect the actual amount of electric energy which
would have been recorded by meters located at such bus (or buses).
(b) Seller shall maintain all metering equipment installed pursuant
hereto accurate by regular testing and calibration in comparison to recognized
standards. The metering equipment shall be sealed, and Seller will comply with
any reasonable request of the Company with regard to the presence of the
Company's representative when such seals are to be broken or when the meters
are to be inspected, tested or adjusted. The Company may request, at any time,
a test of the accuracy of any metering equipment installed pursuant hereto and
shall bear the costs thereof in the event that said requests are made more
frequently than once in each twelve months. The results of all meter calibra-
tions or tests, whether or not performed at the Company's request, shall be
open to examination by the Company at all reasonable times.
(c) Any meter tested and found to register less than or equal to
one-half of one percent (0.5%) above or below the recognized comparative
standard shall be considered correct and accurate. If as a result of such
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tests, the metering equipment is found to be defective or inaccurate, Seller
shall restore it to a condition of accuracy or replace it. In such event,
adjustment shall be made by the Company correcting all measurements made by
the defective or inaccurate meter for either (i) the actual period during
which inaccurate measurements were made, if determinable to the mutual
satisfaction of the Company and Seller or (ii) if such period is not so
determinable, for a period equal to one-half of the time elapsed since the
last prior test, but in no event greater than twelve months.
(d) Other provisions of this Article VI notwithstanding, the Company may
elect to install its own metering equipment in supplement to the Seller's
metering equipment. Should the Company so elect and should any metering
equipment installed by the Seller fail to register the amount of electric
energy delivered to the Company during any period of time, the Company's
metering equipment shall be used to determine the amount of electric energy so
delivered in lieu of the Company's estimates thereof. If the Company wishes
its metering equipment to be so used, the Company agrees to operate, maintain
and read such equipment according to the standards established by this Article
VI. The Seller agrees, upon request of the Company, to provide a suitable
location at the Plant for installation of the Company's meters at no cost to
the Company.
(e) Upon written request of the Company, Seller shall install and bear
the cost of such telemetering equipment and data circuits as the Company may
reasonably require for the transmission of various metered values to its
operations center. The design of and equipment specifications for such
telemetering equipment and data circuits shall be approved by the Company
prior to installation thereof by Seller.
(f) Seller shall read its meters daily for determination of the amount
of purchases by the Company under the terms of this Agreement and shall supply
the results of such meter readings to the Company on the morning of the next
working day.
ARTICLE VII. Payment.
(a) The Company shall determine the quantity of electric energy pur-
chased from Seller monthly based upon the metered values obtained in
accordance with the several provisions of Article VI of this Agreement
adjusted for any transmission losses as appropriate. The Company, after giving
due effect to any reconciling adjustments necessary and deducting transmission
payments made pursuant to Article V hereof ("Net Payment") shall pay to a
specially designated account established by Seller for such electric energy
monthly within thirty (30) calendar days following receipt of such metered
values from Seller for the last day in each prior calendar month and shall
show the derivation of such Net Payment in such detail as Seller may reason-
ably request from time to time.
(b) In the event that any data required for the purpose of determining
payment hereunder are unavailable when required, such unavailable data may be
estimated by the Company, subject to any required adjustment based upon actual
data in a subsequent payment month.
(c) In the event that, for any month, the quantity of electric energy
purchased from Seller is such that the Net Payment to Seller would be less
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than zero, such Net Payment shall be deemed to be a billing to Seller by the
Company. Any such billing shall be due and payable within thirty (30) calendar
days following receipt of metered values from Seller for the last day in the
prior calendar month.
ARTICLE VIII. Governmental Regulation.
(a) This Agreement shall be submitted by the Company to the Massachu-
setts Department of Public Utilities ("MDPU") in accordance with Section 94A,
Chapter 164, of the Massachusetts General Laws and applicable regulations of
the MDPU, and the Company shall use its best efforts to obtain expeditious
approval thereof in accordance with such law and regulations.
(b) It shall be the responsibility of each party hereto individually to
take all necessary actions to satisfy any regulatory requirements which may be
imposed upon such party by any federal, state or municipal statute, rule,
regulation or ordinance which may be in effect from time to time relative to
the performance of such party hereunder.
(c) This Agreement and all rights and obligations of the parties
hereunder are subject to all applicable state and federal laws and all duly
promulgated orders and duly authorized actions of governmental authorities.
(d) The interpretation and performance of this Agreement shall be in
accordance with and controlled by the laws of the Commonwealth of Massachu-
setts.
ARTICLE IX. Liability and Force Majeure.
(a) The parties hereto shall be excused from performing hereunder and
shall not be liable in damages or otherwise if and only to the extent that
they are unable to do so or are prevented from doing so by statute or regula-
tion or by action of any court or public authority having or purporting to
have jurisdiction in the premises; or by loss or impairment of the supply of
electricity; or by a break or fault in the Company's or other transmitting
company's transmission or distribution system or failure or improper operation
of transformers, switches or other equipment necessary for receipt of electric
energy from Seller; or by reason of storm, flood, fire, earthquake, explosion,
civil disturbance, labor dispute, act of God or the public enemy, failure of
any supplier to perform, restraint by a court or regulatory agency, or any
other cause, whether or not similar thereto, beyond the reasonable control of
the affected party. Each party shall have the obligation to operate in
accordance with good utility practices at all times and to use diligent effort
to remove any cause of failure to supply or receive electric energy hereunder.
Neither the Company nor Seller shall, in any event, be liable to the other or
to any third party for any consequential, indirect or special damages to
persons or property, whether arising in tort, contract or otherwise, by reason
of this Agreement or any services performed or undertaken to be performed by
the Company or Seller hereunder, except as otherwise expressly provided
herein.
(b) Whenever the Company's system or the systems with which it is
directly or indirectly interconnected experience a "System Emergency", or
whenever it is needful or desirable to aid in the restoration of service on
its system or on the systems with which it is directly or indirectly intercon-
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nected, the Company may, in its reasonable judgment, curtail or interrupt the
taking of electric energy hereunder, provided such curtailment or interruption
shall continue only for so long as is reasonably necessary. Such curtailment,
interruption, or reduction shall not be deemed to be a default by the Company
nor shall the Company be liable therefor to Seller or to any other party. A
System Emergency means a condition on a utility's system which is likely to
result in an imminent significant disruption of service or is imminently
likely to endanger life or property. Notwithstanding any other provision of
this Agreement to the contrary, in the event that the Company cannot receive
electric energy from Seller into its own system because of a System Emergency
but such System Emergency does not prevent Seller from delivering such
electric energy to another utility with which the Company is interconnected,
the Company shall pay Seller for such electric energy so delivered the exact
amount, if any, that the Company receives in payment or credit from such
utility for the delivery of such electric energy.
(c) The Company and the Seller agree that each shall be responsible for
the electricity on its respective side of the point of delivery and shall
indemnify, save harmless and defend the other against all claims, demands,
costs or expenses for loss, damage or injury to persons or property in any
manner directly or indirectly arising from, connected with or growing out of
the presence or use of electricity or the transmission of electricity over the
wires, cables, devices or appurtenances owned by it, its agents or suppliers,
saving only such loss, damage or injury as may be caused by the willful or
negligent act of the other. The Company and the Seller respectively assume
full responsibility in connection with the service rendered hereunder for
their respective wires, cables and other devices used in connection with said
service. Each party hereto shall be solely liable for all claims of its own
employees arising from any workmen's compensation laws.
(d) Neither by inspection nor non-rejection nor in any other way does
either party give any warranty, expressed or implied, as to the adequacy,
safety or other characteristics of any equipment, apparatus or devices,
installed on the premises of or used by the other party, its agents or
suppliers. Neither party shall be liable to the other for damages resulting in
any way from its taking or supplying of electric energy pursuant to the terms
of this Agreement or from the presence or operation of its apparatus, meters,
appurtenances or other equipment on the premises of the other party.
(e) Seller may from time to time withdraw the Plant from service and
cease to supply electric energy to the Company as necessary to perform
scheduled or unscheduled maintenance or repair upon the Plant. Seller shall
comply with the provisions of NEPOOL Operating Procedure No. 5 as in effect
from time to time when planning any scheduled maintenance or repair upon the
Plant. Seller shall give the Company such notice as may be practicable the
circumstances when withdrawing the Plant from service for unscheduled mainte-
nance or repair.
ARTICLE X. Miscellaneous Provisions
(a) This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof, and all previous agreements, discus-
sions, communications and correspondence with respect to the subject matter
hereof are superseded by the execution of this Agreement.
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(b) This Agreement may not be modified or amended except in writing
signed by or on behalf of both parties by their duly authorized officers.
(c) Any qualified and properly identified employee of the Company shall
have access to the Plant at all reasonable times for the purpose of reading or
inspecting meters, examining the operation of the Plant or other purposes
reasonably related to the Company's performance under the terms of this
Agreement. Such access shall not interfere with Seller's normal business
operations.
(d) This Agreement shall inure to the benefit of and bind the respective
successors and permitted assigns of the parties hereto, provided, however,
that no assignment by Seller or any successor or assignee of Seller of its
rights and obligations hereunder, except an assignment to a wholly-owned
subsidiary whose principal functions are to hold Seller's ownership interest
in and to operate the Plant, shall be made or become effective without the
prior written consent of the Company in each case obtained. The Company will
provide consent to any assignment of Seller's rights and obligations hereunder
to the extent necessary for Seller to obtain construction or permanent
financing for the Plant with an institutional lender and to assure that the
Company's right to receive the output of the Plant shall apply as against any
person or entity that might obtain title and possession of the Plant pursuant
to such financing.
(e) All notices required or permitted under this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or
deposited in the mails, postage prepaid, registered mail addressed to the
party to whom notice is being given at its address set forth above. Either
party may change its address by notice similarly given.
(f) The parties hereto agree to establish an administrative committee.
Such committee will be empowered to do all acts and things necessary to
implement the intent of the parties hereto as set forth herein and to take
such further actions as may be required in the circumstances, provided that
they are not inconsistent with this Agreement. The Company and Seller shall
have equal representation upon said committee.
(g) In the case of any dispute between the parties with respect to the
interpretation of this Agreement, or the performance of the same, or under
Article III(d) above, either party may give notice in writing to the other of
its desire to submit such questions to arbitration, and may designate an
arbitrator. Within thirty (30) days after the receipt of such notice, the
other party may, in writing, serve upon the party invoking such arbitration a
notice designating an arbitrator on its behalf. The two arbitrators so chosen
shall, within twenty (20) days after the appointment of the second arbitrator,
in writing, designate a third arbitrator. Upon the failure of the party
notified to appoint the second arbitrator within such time, the party invoking
such arbitration may proceed with the single arbitrator. If the first and
second arbitrators are unable to agree on a third arbitrator within twenty
(20) days of the appointment of the second arbitrator, the first and second
arbitrator shall invoke the services of the American Arbitration Association
to appoint a third arbitrator. Said third arbitrator shall, to the extent
practicable, have special competence and experience with respect to the
subject matter under consideration. An arbitrator so appointed shall have full
authority to act pursuant to this Article. No arbitrator, whether chosen by a
PAGE 10
party hereto or appointed, shall have the power to amend or add to this
Agreement.
(h) The party calling the arbitration shall, within twenty (20) days
after either the failure of the other party to name an arbitrator, or the
appointment of the third arbitrator, as the case may be, fix, in writing, a
time and a place of hearing, to be not less than twenty (20) days from
delivery of notice to the other party. The arbitrator or arbitrators shall,
thereupon, proceed promptly to hear and determine the controversy pursuant to
the then-current rules of the American Arbitration Association for the conduct
of commercial arbitration proceedings, except that if such rules shall
conflict with the then current provisions of the laws of the Commonwealth of
Massachusetts relating to arbitration, such conflict shall be governed by the
then current provisions of the laws of the Commonwealth of Massachusetts
relating to arbitration. Such arbitrator or arbitrators shall fix a time
within which the matter shall be submitted to him or them by either or both of
the parties, and shall make his or their decision, within ten (10) days after
the final submission to him or them unless, for good reasons to be certified
by him or them in writing, he or they shall extend such time. The decision of
the single arbitrator, or two of the three arbitrators, shall be taken as the
arbitration decision. Such decision shall be made in writing and in duplicate,
and one copy shall be delivered to each of the parties. The expense of the
arbitration shall be borne by the unsuccessful party, unless the arbitrator or
arbitrators by his or their award shall otherwise provide, except that each
party shall pay the costs of its own counsel. Each party shall accept and
abide by the decision. The award of the arbitral tribunal shall be final
except as otherwise provided by applicable law. Judgment upon such award may
be entered by the prevailing party in any court having jurisdiction thereof,
or application may be made by such party to any such court for judicial
acceptance of such award and an order of enforcement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
COMMONWEALTH ELECTRIC COMPANY
By: J. V. Donovan
Its: Executive Vice President
PIONEER HYDROPOWER, INC.
By: Peter B. Clark
Its: President
PAGE 11
APPENDIX A
ENERGY PURCHASE PRICE
The Energy Purchase Price applicable to electric energy delivered to the
Company by Seller during any billing period will be equal to the rate, taken
to the nearest one-tenth of a mill per kilowatt-hour, determined in accordance
with the following formula, separately applied to each rating period hereinaf-
ter defined:
P = R x F (0-2/0-1)
Where: P = Energy purchase price
R = Avoided cost ratio
F = Average decremental cost of generated and/or purchased energy
0-2 = Actual cost of energy produced and/or purchased from fossil
fuels
0-1 = Estimated cost of energy produced and/or purchased from
fossil fuels
(1) Definitions
(a) Factor R. Commencing on the Start Date and continuing until December 31,
1999, Factor R shall be eighty percent (80%). Commencing January 1, 2000, and
continuing until December 31, 2010, Factor R shall be reduced from said eighty
percent (80%), one percentage point on each successive January 1. Commencing
January 1, 2011 and continuing until December 31, 2015, Factor R shall be
reduced by two percentage points on each successive January 1.
(b) Factor F. Factor F shall be the Company's estimated average decremental
cost of generated and/or purchased energy as delivered to its system, sepa-
rately determined (as set forth herein) for each billing period hereinafter
defined. Factor F shall be computed not more than sixty (60) days prior to the
beginning of such billing period.
Said average decremental cost of energy shall be defined by the following
formula, taken to the nearest one-tenth of a mill per kilowatt-hour:
F = Cost1 - Cost2
KWHl - KWH2
where: Cost1 and KWH1 represent the estimated cost and quantity (respec-
tively) of energy generated and/or purchased by the Company to
meet one-hundred percent (100%) of the load placed upon its system
by its firm-service customers during any billing period.
Cost2 and KWH2 represent the estimated cost and quantity (respec
tively) of energy generated and/or purchased by the Company to
meet ninety percent (90%) of the load placed upon its system by
its firm-service customers during the same billing period.
(c) Factors O. The two Factors O shall be the average cost of energy
generated by and/or purchased from generating units fired with fossil fuels
during any billing period, either as actually experienced by the Company
during such billing period (Factor O2) or as estimated by the Company for such
PAGE 12
billing period (Factor Ol) and as included in its computations determining the
average decremental cost of energy, all measured to the nearest one-tenth of a
mill per kilowatt-hour.
(2) Billing Period
A billing period hereunder shall be any three (3) month period beginning
January first, April first, July first and October first of any year during
the term of this Agreement.
(3) Rating Periods
There shall be two rating periods for purposes of computing the Energy
Purchase Prices. The Peak Period shall be defined as all hours in the billing
period from 9:00 A.M. to 9:00 P.M. Eastern Standard Time on weekdays (Monday
through Friday). The Off-Peak Period shall include all hours in the billing
period not included in the Peak Period. The Company reserves the right to
revise the definition of its rating periods from time to time during the term
of this Agreement upon reasonable notice to Seller.
PAGE 13
APPENDIX B
Projected Avoided Energy Cost
Year $.00/KWH
1983 4.74
1984 4.93
1985 5.32
1986 5.95
1987 6.48
1988 7.17
1989 8.20
1990 9.38
1991 10.62
1992 12.54
1993 14.36
1994 16.27
1995 12.20
1996 13.03
1997 14.27
1998 15.08
1999 17.24
2000 19.66
2001 22.23
2002 24.49
PAGE 14
SCHEDULE B
COMMONWEALTH ELECTRIC COMPANY
ENERGY PURCHASED FROM
PIONEER HYDROPOWER, INCORPORATED
TWELVE MONTHS ENDING AUGUST 31,1984
ESTIMATED KWH ESTIMATED COST
PURCHASED OF ENERGY (*)
1983SEPTEMBER 180,000 $15,120
OCTOBER 240,000 20,160
NOVEMBER 360,000 30,240
DECEMBER 540,000 45,360
1984JANUARY 600,000 50,400
FEBRUARY 600,000 50,400
MARCH 960,000 80,640
APRIL 900,000 75,600
MAY 720,000 60,480
JUNE 480,000 40,320
JULY 240,000 20,160
AUGUST 180,000 15,120
TOTAL 12 MONTHS 6,000,000 $504,000
(*) BASED UPON AN ENERGY PURCHASE PRICE OF $0.084 PER KWH, THE
MINIMUM ENERGY PURCHASE PRICE STATED AT SECTION III(A)(2) OF THE
AGREEMENT.