Exhibit 10.7.4
FORM OF
ADDITIONAL POWER CONTRACT, dated as of February 1, 1984, between MAINE
YANKEE ATOMIC POWER COMPANY ("Maine Yankee"), a Maine corporation, and
(the "Purchaser").
It is agreed as follows:
1. Basic Understandings
Maine Yankee was organized in 1966 to provide for the supply of power
to its eleven sponsoring utility companies (including the Purchaser), which
utilities are hereinafter called the "sponsors". It constructed a nuclear
electric generating unit of the pressurized water type, having a maximum
net capability of approximately 830 megawatts electric, on Bailey Point in
Wiscasset, Maine (said unit being herein, together with the site and all
related facilities owned or to be owned by Maine Yankee, referred to as the
"Unit"). On June 27, 1973 Maine Yankee was issued a full-term, operating
license for the Unit from the Atomic Energy Commission (now the Nuclear
Regulatory Commission which, together with any successor agency or
agencies, is hereafter called the "NRC"), which license expires on
October 21, 2008, and the Unit commenced commercial operation on January 1,
1973.
The Unit is operated to supply power to Maine Yankee's sponsors, each
of which by a Power Contract dated as of May 20, 1968, as amended and as
may be further amended from time to time (collectively the "Initial Power
Contracts"), has undertaken to purchase a fixed percentage of the capacity
and output of the Unit for a term extending through January 1, 2003. The
names of the sponsors and their respective percentages ("entitlement
percentages") of the capacity and output of the Unit are as follows:
Entitlement
Sponsor Percentage
Central Maine Power Company 38.0%
New England Power Company 20.0%
The Connecticut Light and Power Company 12.0%
Bangor Hydro-Electric Company 7.0%
Maine Public Service Company 5.0%
Public Service Company of New Hampshire 5.0%
Cambridge Electric Light Company 4.0%
Montaup Electric Company 4.0%
Western Massachusetts Electric Company 3.0%
Central Vermont Public Service Corporation 2.0%
100.0%
The sponsors have resold portions of their entitlement percentages of
capacity and output of the Unit under the Initial Power Contracts to other
utilities (the "secondary purchasers") on terms and conditions
substantially equivalent to those in the Initial Power Contracts: in 1972,
the three Maine sponsors resold an aggregate of .7158% of the Unit's
capacity and output to other utilities in Maine and, also in 1972, the non-
Maine sponsors resold an aggregate of 5.5689% of the Unit's capacity and
output to other New England utilities outside of Maine (collectively the
"Resale Contracts"). In 1983 the Initial Power Contracts were amended to
incorporate provisions for collection of funds to defray the ultimate cost
of decommissioning the Unit, which costs are being borne pro rata by the
secondary purchasers under the Resale Contracts.
Maine Yankee and its sponsors desire to provide for the orderly
continuation of the sale and purchase of the capacity and output of the
Unit during the useful life of the Unit to the extent it continues beyond
the termination date of the Initial Power Contracts, and to provide
appropriate provisions for the collection of funds for and the payment of
decommissioning and any other costs with respect thereto both during and
after the useful life of the Unit. Maine Yankee and its other sponsors are
entering into Additional Power Contracts which are identical to this
contract except for necessary changes in the names of the parties.
2. Effective Date, Term and Waiver
This contract shall become effective upon receipt by the Purchaser of
notice that Maine Yankee has entered into Additional Power Contracts, as
contemplated by Section 1 above, with each of its other sponsors. The
operative term of this contract shall commence on January 2, 2003,
notwithstanding the fact that the useful service life of the Unit may have
been terminated prior to that date, and shall terminate upon 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 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 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").
Maine Yankee and the Purchaser acknowledge that if the useful service
life of the Unit is terminated prior to January 2, 2003, then only the
provisions of this contract applicable to decommissioning of the Unit will
apply during the operative term of this contract.
The Purchaser hereby irrevocably waives its right to extend the
contract term of its Initial Power Contract pursuant to subsections (a) or
(b) of Section 8 thereof.
3. Operation and Maintenance of the Unit
Maine Yankee will operate and maintain the Unit in accordance with
good utility practice under the circumstances and all applicable law,
including the applicable provisions of the Act and of any licenses issued
thereunder to Maine Yankee. Within the limits imposed by good utility
practice under the circumstances and applicable law, the Unit will be
operated at its maximum capability and on a long hour use basis.
Outages for inspection, maintenance, refueling and repairs and
replacements will be scheduled in accordance with good utility practice and
insofar as practicable shall be mutually agreed upon by Maine Yankee and
the Purchaser. In the event of an outage, Maine Yankee will use its best
efforts to restore the Unit to service as promptly as practicable.
4. Decommissioning
After commercial operation of the Unit permanently ceases, Maine
Yankee will decommission the Unit in a manner authorized by Maine Yankee's
board of directors and approved by the NRC in accordance with the Act and
the rules and regulations thereunder then in effect and by any agency
having jurisdiction over decommissioning of the Unit.
It is understood that, pursuant to the Initial Power Contracts and the
Resale Contracts, the sponsors and secondary purchasers are currently being
billed for Total Decommissioning Costs which, as of the date of this
contract, are being accumulated in a separate trust fund (the "Maine Yankee
Trust") which was established for the purpose of reimbursing Maine Yankee
for Decommissioning Expenses incurred in the process of decommissioning the
Unit and that such billings are subject to change in accordance with the
provisions of the Initial Power Contracts, subject to the jurisdiction of
the Federal Energy Regulatory Commission ("FERC"), formerly the Federal
Power Commission. It is contemplated that sufficient funds will be
accumulated pursuant to those contracts and paragraph 7 hereof to reimburse
Maine Yankee for the full cost of decommissioning the Unit.
5. Purchaser's Entitlement
The Purchaser will, throughout the term of this contract, be entitled
and obligated to take its entitlement percentage of the capacity and net
electrical output of the Unit, at whatever level the Unit is operated or
operable, whether more or less than 830 megawatts electric.
6. Deliveries and Metering
The Purchaser's entitlement percentage of the output of the Unit will
be delivered to and accepted by it at the step-up substation at the site.
All deliveries will be made in the form of 3-phase, 60 cycle, alternating
current at a nominal voltage of 345,000 volts. The Purchaser will make its
own arrangements for the transmission of its entitlement percentage of the
output of the Unit.
Maine Yankee will supply and maintain all necessary metering equipment
for determining the quality and conditions of supply of deliveries under
this contract, will make appropriate tests of such equipment in accordance
with good utility practice and as reasonably requested by the Purchaser,
and will maintain the accuracy of such equipment within reasonable limits.
Maine Yankee will furnish the Purchaser with such summaries of meter
readings as the Purchaser may reasonably request.
7. Payment
With respect to each month commencing on or after January 1, 2003, the
Purchaser will pay Maine Yankee 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, plus (b) the Total Decommissioning
Costs for the month with respect to the Unit, plus (c) Maine Yankee's total
operating expenses 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.
"Composite percentage" shall be computed as of the last day of each
month during the term hereof (the "computation date") and for any month the
composite percentage shall be that computed as of the last day of the
previous month. "Composite percentage" as of a computation date shall be
the sum of (i) the equity percentage as of such date multiplied by the
percentage which equity investment with respect to the Unit (other than
equity investment for the financing of fuel inventory, including nuclear
materials and the cost of fabrication thereof, for the Unit) as of such
date is of the total capital as of such date; plus (ii) the "effective
interest rate" per annum of each principal amount of indebtedness
outstanding on such date for money borrowed with respect to the Unit (other
than for money borrowed for the financing of fuel inventory, including
nuclear materials and the cost of fabrication thereof, for the Unit),
multiplied by the percentage which such principal amount is of total
capital as of such date. The "effective interest rate" of each principal
amount of indebtedness referred to in clause (ii) of the next preceding
sentence will reflect the annual interest requirements and to the extent
applicable, amortization of issue expenses, discounts and premiums, sinking
fund call premiums, expenses and discounts, refunding and retirement
expenses, discounts and premiums, and all other expenses applicable to the
issue.
"Equity investment" as of any date shall consist of the sum of (i) all
amounts theretofore paid to Maine Yankee for all capital stock theretofore
issued, plus all capital contributions, less the sum of any amounts paid by
Maine Yankee in the form of stock retirements, repurchases or redemptions
or return of capital; plus (ii) any credit balance in the capital surplus
account not included under (i) and in the earned surplus account on the
books of Maine Yankee as of such date.
"Equity percentage" as of any date after commencement of the operative
term hereof shall be that percentage which was the "equity percentage" in
effect on the last day of the term of the Initial Power Contracts or such
other percentage as may from time to time thereafter be approved by FERC.
"Total capital" as of any date shall be the equity investment with
respect to the Unit, plus the total of all other securities and
indebtedness then outstanding with respect to the Unit other than equity
investment, securities, indebtedness and other obligations issued in
connection with the financing or leasing of fuel inventory, including
nuclear materials and the cost of fabrication thereof, for the Unit.
"Uniform System" shall mean the Uniform System of Accounts prescribed
by FERC for Class A and Class B Public Utilities and Licensees as in effect
on the date of this Agreement and as said System may be hereafter amended
to take account of private ownership of special nuclear material.
Maine Yankee's "fuel costs" for any month shall include (i) amounts
chargeable in accordance with the Uniform System in such month as
amortization of costs of fuel assemblies and components and burn-up of
nuclear materials for the Unit; plus (ii) all other amounts properly
chargeable in accordance with the Uniform System to fuel costs for the Unit
less any applicable credits thereto; plus (iii) one-twelfth of the equity
percentage as of such month multiplied by the equity investment for the
financing of fuel inventory, including nuclear materials and the cost of
fabrication thereof, for the Unit; plus (iv) to the extent not provided for
in any of the foregoing, all payments (or accruals therefor or amortization
thereof) with respect to obligations incurred in connection with the
financing or leasing of fuel inventory, including nuclear materials and the
cost of fabrication thereof, for the Unit (provided that such inventory is
not included in the net Unit investment).
Maine Yankee's "operating expenses" shall include all amounts properly
chargeable to operating expenses accounts (other than such amounts which
are included in Maine Yankee's fuel costs), less any applicable credits
thereto, in accordance with the Uniform System; it being understood that
for purposes of this contract "operating expenses" shall include
depreciation accrual and amortization at a rate at least sufficient to
fully amortize the non-salvageable plant investment over the estimated
remaining useful life of the plant.
The "net Unit investment" shall consist, in each case with respect to
the Unit, the net sum of (i) the aggregate amount properly chargeable at
the time in accordance with the Uniform System to Maine Yankee's electric
plant accounts (including construction work in progress); less (ii) the
amount of any unamortized property losses; less (iii) the amount of
reserves for depreciation and for amortization of property losses; plus
(iv) such allowances for inventories, materials and supplies (other than
fuel assemblies and components), prepaid items and cash working capital as
may reasonably be determined from time to time by Maine Yankee. The net
Unit investment shall be determined as of the commencement of each calendar
year, or, if Maine Yankee elects, at more frequent intervals.
"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) Decommissioning Tax Liability for such month.
It is understood (i) that such funds may be held by Maine Yankee or by any
independent trust or other separate fund, as determined by said board of
directors, (ii) that, upon compliance with Section 18 hereof, 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 (other than those relating to
spent nuclear fuel) of the NRC for permanent cessation of operation of a
nuclear facility. "Decommissioning Expenses" shall include:
(1) All costs and expenses of removing the Unit from service,
including without limitation, dismantling, mothballing, removing
radioactive material (excluding spent nuclear fuel) to temporary
and/or permanent storage sites, decontaminating, restoring and
supervising the site, and any costs and expenses incurred in
connection with proceedings before governmental regulatory
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 its
decommissioning period, including, without limiting the
generality of the foregoing, taxes (other than taxes on or in
respect of income), licenses, excises and assessments,
casualties, surety bond premiums and insurance premiums.
"Decommissioning Tax Liability" for any month shall be an amount
established by Maine Yankee and approved by its board of directors to meet
possible income tax obligations, which amount shall not exceed: the amount
to be included in the clause (x) portion of Total Decommissioning Costs for
such month multiplied by a fraction whose numerator is equal to the
combined highest statutory Federal and state marginal income tax rate and
whose denominator is equal to one minus the combined highest statutory
Federal and state marginal income tax rate.
Without limiting the generality of the foregoing, any other amounts
expended or to be paid with respect to decommissioning of the Unit or
removal of the Unit from service shall constitute part of the
Decommissioning Expenses if they are, or when paid will be, either
(i) properly chargeable to any account related to decommissioning of a
nuclear generating unit in accordance with the Uniform System or generally
accepted accounting principles as then in effect, or (ii) properly
chargeable to decommissioning of a nuclear generating unit in accordance
with then applicable regulations of the NRC or FERC or any other regulatory
agency having jurisdiction.
8. Billing
Maine Yankee will bill the Purchaser, as soon as practicable after the
end of each month, for all amounts payable by the Purchaser with respect to
the particular month pursuant to Section 7 hereof. Such bills will be
rendered in such detail as the Purchaser may reasonably request and may be
rendered on an estimated basis subject to corrective adjustments in
subsequent billing periods. All bills shall be paid in full within 10 days
after receipt thereof by the Purchaser.
When all or any part of any bill shall remain unpaid for more than
thirty (30) days after the due date thereof, simple interest at an annual
rate which is at all times 1% in excess of the prime rate for commercial
loans in effect at The First National Bank of Boston shall accrue to Maine
Yankee from and after the thirtieth day from the due date of said bill.
9. Decommissioning Fund
Maine Yankee agrees to pay to, or cause to be paid to, the Maine
Yankee Trust or any successor trust approved by the board of directors of
Maine Yankee all funds collected hereunder for the express purpose of
decommissioning the Unit or removing the Unit from service and further
agrees that, after the tax consequences of decommissioning collections have
been resolved, any funds collected hereunder to meet Decommissioning Tax
Liability which are not used for that purpose will be refunded to the
Purchaser to the extent required by FERC.
10. Cancellation of Contract
If deliveries cannot be made to the Purchaser because 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, or
(iii) (a) the Unit cannot be used because of contamination,
or because a necessary license or other necessary public
authorization cannot be obtained or is revoked, or because the
utilization of such a license or authorization is made subject to
specified conditions which are not met, and (b) the situation
cannot be rectified to an extent which will permit Maine Yankee
to make deliveries to the Purchaser from the Unit;
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 provisions relating to the payment of Total Decommissioning
Costs shall, whether or not the Unit is operated or operable and
notwithstanding any earlier termination of the service life of the Unit,
remain in full force and effect until the expiration of the term hereof, it
being recognized that such costs represent deferred payment in connection
with power theretofore delivered by Maine Yankee hereunder. 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 (other than the obligations relating
to the payment and application of Total Decommissioning Costs to the extent
that such obligations remain in full force and effect pursuant to the
second preceding sentence, but including the Purchaser's obligations to
continue payments pursuant to clauses (a), (c) and (d) of the first
paragraph of Section 7 hereof) 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
forgoing provisions shall be referred to arbitration in accordance with the
provisions of Section 14 hereof.
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 10. Further, if for reasons beyond Maine Yankee's reasonable
control, deliveries are not made as contemplated by this contract, Maine
Yankee shall have no liability to the Purchaser on account of such non-
delivery.
11. Insurance
Maine Yankee presently has in effect, and hereafter will at all times
maintain until the expiration of the term hereof, insurance to cover its
"public liability" for personal injury and property damage resulting from a
"nuclear incident" (as those terms are defined in the Act), with limits not
less than Maine Yankee may be required to maintain to qualify for
governmental indemnity under the Act and shall execute and maintain an
indemnification agreement with the NRC as provided by the Act. Maine
Yankee will also at all times maintain such other types of liability
insurance, including workmen's compensation insurance, in such amounts as
is customary in the case of other similar electric utility companies or as
may be required by law.
Maine Yankee will at all times keep insured such portions of the Unit
(other than the fuel assemblies and components, including nuclear
materials) as are of a character usually insured by electric utility
companies similarly situated and operating like properties, against the
risk of a "nuclear incident" ad such other risks as electric utility
companies, similarly situated and operating like properties, usually insure
against; and such insurance shall to the extent available be carried in
amounts sufficient to prevent Maine Yankee from becoming a co-insurer.
Maine Yankee will at all times keep its fuel assemblies and components
(including nuclear materials) insured against such risks and in such
amounts as shall, in the opinion of Maine Yankee, provide adequate
protection.
12. Additional Units
At any time after the date hereof Maine Yankee or its nominees may
install one or more additional generating units at the Wiscasset site. The
installation of such unit or units shall not affect the terms of this
contract, but in such case if any portion of the Unit (whether such portion
constitutes land, structures or equipment) is also used with an additional
unit or units, an appropriate allocation of the cost of the Unit shall be
made and the net Unit investment shall be reduced accordingly, subject,
however, to the limitation that the aggregate amount of the reduction in
net Unit investment resulting from all such allocations shall not exceed
$5,000,000. Maine Yankee may make any other necessary allocations or any
necessary adjustments in its accounts with respect to the Unit (including
fuel assemblies and components) and any additional unit or units, and such
allocations and adjustments shall be binding on the sponsors.
13. Audit
Maine Yankee's books and records (including metering records) shall be
open to reasonable inspection and audit by the Purchaser.
14. Arbitration
In case any dispute shall arise as to the interpretation or
performance of this contract which cannot be settled by mutual agreement
and which may be finally determined by arbitration under the law of the
State of Maine then in effect, such dispute shall be submitted to
arbitration, and arbitration of such dispute shall be a condition precedent
to any action at law or suit in equity that can be brought. The parties
shall if possible agree upon a single arbitrator. In case of failure to
agree upon an arbitrator within 15 days after the delivery by either party
to the other of a written notice requesting arbitration, either party may
request the American Arbitration Association to appoint the arbitrator.
The arbitrator, after opportunity for each of the parties to be heard,
shall consider and decide the dispute and notify the parties in writing of
his decision. The expenses of the arbitration shall be borne equally by
the parties.
15. Regulation
This contract, and all rights, obligations and performance of the
parties hereunder, are subject to all applicable state and federal law and
to all duly promulgated orders and other duly authorized action of
governmental authority having jurisdiction in the premises.
16. Assignment
This contract shall be binding upon and shall inure to the benefit of,
and may be performed by, the successors and assigns of the parties, except
that no assignment, pledge or other transfer of this contract by either
party shall operate to release the assignor, pledgor or transferor from any
of its obligations under this contract unless consent to the release is
given in writing by the other party, or, if the other party has theretofore
assigned, pledged or otherwise transferred its interest in this contract,
by the other party's assignee, pledgee or transferee, or unless such
transfer is incident to a merger or consolidation with, or transfer of all
or substantially all of the assets of the transferor to, another sponsor
which shall, as a part of such succession, assume all the obligations of
the transferor under this contract.
17. Right of Setoff
The Purchaser shall not be entitled to set off against the payments
required to be made by it under this contract (i) any amounts owed to it by
Maine Yankee or (ii) the amount of any claim by it against Maine Yankee.
However, the foregoing shall not affect in any other way the Purchaser's
right and remedies with respect to any such amounts owed to it by Maine
Yankee or any such claim by it against Maine Yankee.
18. Amendments
Upon authorization by Maine Yankee's board of directors of uniform
amendments to all the Additional Power Contracts with sponsors, Maine
Yankee shall have the right to amend the provisions of Section 7 hereof
insofar as they relate to the amounts collectible by Maine Yankee pursuant
to clause (b) of the first paragraph of Section 7 hereof or to the timing
of such collections by serving an appropriate statement of such amendment
upon the Purchaser and filing the same with FERC (or such other regulatory
agency as may have jurisdiction in the premises) in accordance with the
provisions of applicable laws and any rules and regulations thereunder, and
the amendment shall thereupon become effective on the date specified
therein, subject to any suspension order issued by such agency. All other
amendments to this contract shall be by mutual agreement, evidenced by a
written amendment signed by the parties hereto.
19. Interpretation
The interpretation and performance of this contract shall be in
accordance with and controlled by the law of the State of Maine.
20. Addresses
Except as the parties may otherwise agree, any notice, request, bill
or other communication from one party to the other, relating to this
contract, 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 delivered in person or mailed by registered or certified mail, postage
prepaid, to the post office address of the other party shown following the
signature of such other party hereto, or such other address as may be
designated by written notice given as provided in this Section 20.
21. Corporate Obligations
This contract is the corporate act and obligation of the parties
hereto, and any claim hereunder against any stockholder (other than the
Purchaser), director or officer of either party, as such, is expressly
waived.
22. All Prior Agreements Superseded
This contract represents the entire agreement between the parties
relating to the subject matter hereof during the operative term hereof
(i.e., post-January 1, 2003), and all previous agreements, discussions,
communications and correspondence with respect to the subject matter are
hereby superseded and are of no further force and effect.
IN WITNESS WHEREOF, the parties have executed this contract by their
respective officers thereunto duly authorized as of the date first above
written.
MAINE YANKEE ATOMIC POWER COMPANY
By
President
Edison Drive
Augusta, Maine 04336
PURCHASER
By