Exhibit 10.10.9
FORM OF
ADDITIONAL POWER CONTRACT, dated as of February 1, 1984, between
VERMONT YANKEE NUCLEAR POWER CORPORATION ("Vermont Yankee"), a Vermont
corporation, and (the "Purchaser").
It is agreed as follows:
1. Basic Understandings
Vermont Yankee was organized in 1966 to provide for the supply of
power to its sponsoring utility companies (including the Purchaser), which
utilities are hereinafter called the "sponsors". It constructed a nuclear
electric generating unit of the boiling water type, having a maximum net
capability of approximately 540 megawatts electric, at a site adjacent to
the Connecticut River at Vernon, Vermont (said unit being herein, together
with the site and all related facilities owned or to be owned by Vermont
Yankee, referred to as the "Unit"). On February 28, 1973 Vermont 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 December 11, 2007, and the Unit commenced
commercial operation on November 30, 1972.
The Unit is operated to supply power to Vermont Yankee's sponsors,
each of which by a Power Contract dated as of February 1, 1968, as amended
(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 November 30, 2002. 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 Vermont Public Service Corporation 35.0%
Green Mountain Power Corporation 20.0%
New England Power Company 20.0%
The Connecticut Light and Power Company 9.5%
Central Maine Power Company 4.0%
Public Service Company of New Hampshire 4.0%
Western Massachusetts Electric Company 2.5%
Montaup Electric Company 2.5%
Cambridge Electric Light Company 2.5%
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 1969,
the two Vermont sponsors resold an aggregate of 7.426% of the Unit's
capacity and output to other utilities in Vermont; and in 1970 the non-
Vermont sponsors resold an aggregate of 4.5451% of the Unit's capacity and
output to other New England utilities outside of Vermont (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 said
secondary purchasers under the Resale Contracts.
Vermont 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. Vermont 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 Vermont 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 December 1, 2002
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 Vermont Yankee which constitute elements of the purchase
price calculated pursuant to Section 7 of this contract has been
extinguished by Vermont Yankee or (ii) 30 days after the date on which
Vermont 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").
Vermont Yankee and the Purchaser acknowledge that, if the useful
service life of the Unit is terminated prior to December 1, 2002, 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
Vermont 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 Vermont 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 Vermont Yankee and
the Purchaser. In the event of an outage, Vermont 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, Vermont
Yankee will decommission the Unit in a manner authorized by Vermont
Yankee's board of directors and approve 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 fund which was established
for the purpose of reimbursing Vermont 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 FERC. It is contemplated
that sufficient funds will be accumulated pursuant to those contracts and
paragraph 7 hereof to reimburse Vermont 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 540 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.
Vermont Yankee will supply and maintain all necessary metering
equipment for determining the quantity 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. Vermont 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 December 1, 2002,
the Purchaser will pay Vermont Yankee an amount equal to the Purchaser's
entitlement percentage of the sum of (a) Vermont 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) Vermont 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 most recent
computation date. "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 as of such date is of the total capital
as of such date; plus (ii) the stated interest rate per annum of each
principal amount of indebtedness bearing a particular rate of interest
outstanding on such date for money borrowed from other than sponsors
multiplied by the percentage which such principal amount is of total
capital as of such date.
"Equity percentage" as of any date after the 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 the Federal Energy Regulatory Commission or any successor
agency thereto ("FERC").
"Common stock equity investment" as of any date shall consist of
equity investment as of such date less the aggregate par value of all
issues of preferred stock outstanding on such date.
"Equity investment" as of any date shall consist of not less than the
sum of (i) all amounts theretofore paid to Vermont Yankee for all capital
stock theretofore issued (taken at the total par value thereof plus the
total of all amounts in excess of such par value paid thereon); plus all
capital contributions, loans and advances theretofore made to Vermont
Yankee by its sponsors, less the sum of any amounts distributed by Vermont
Yankee to its sponsors or stockholders in the form of stock repurchases or
redemptions, return of capital or repayments of loans and advances; plus
(ii) any credit balance in the capital surplus account (not included under
(i)) and in the earned surplus account on the books of Vermont Yankee as of
such date.
"Total capital" as of any date shall be the equity investment plus the
total of all indebtedness then outstanding for money borrowed from other
than Vermont Yankee's sponsors.
"Uniform System" shall mean the Uniform System of Accounts prescribed
by the FERC for Class A and Class B Public Utilities and Licensees as from
time to time in effect.
Vermont 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) to the extent not so
chargeable, all payments (or accruals therefor) with respect to lease or
other financing obligations incurred in connection with such fuel
assemblies and components. Including nuclear materials, for the Unit
(provided such fuel assemblies and components are not included in net Unit
investment), and with the temporary or permanent storage or disposal
thereof.
Vermont Yankee's "operating expenses" shall include all amounts
properly chargeable to operating expense accounts (other than such amounts
which are included in Vermont 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
(i) depreciation accrual at a rate at least sufficient to fully amortize
the non-salvageable plant investment over the estimated remaining useful
life of the plant; and (ii) obligations incurred in connection with the
leasing of plant facilities.
The "net Unit investment" shall consist, in each case with respect to
the Unit, of (i) the aggregate amount properly chargeable at the time in
accordance with the Uniform System to Vermont Yankee's electric plant
accounts (including construction work in progress) less the amount of any
accumulated provisions for depreciation thereof; plus (ii) the aggregate
amount properly chargeable at the time in accordance with the Uniform
System to accounts representing fuel assemblies and components (including
nuclear materials) and other materials and supplies, less the balance, if
any, at the time of the accumulated amortization thereof; plus (iii) such
reasonable allowances for prepaid items and cash working capital as may
from time to time be determined by Vermont Yankee. The net Unit investment
shall be determined as of the commencement of each calendar year, or, if
Vermont 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 Vermont 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 Vermont Yankee or by an
independent trust or other separate fund, as determined by said board of
directors, (ii) that, upon compliance with Section 17 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 and any other activities reasonably related thereto.
"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 site, 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 Vermont 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), charges, licenses, excises and assessments,
casualties, surety bond premiums and insurance premiums.
"Decommissioning Tax Liability" for any month shall be an amount
established by Vermont 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, 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 the FERC or any other regulatory
agency having jurisdiction.
8. Billing
Vermont 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 due and payable when
rendered and any amount remaining unpaid 10 days following the date of
issuance of bills should bear interest at an annual rate equal to 2% in
excess of the current prime rate then in effect at The First National Bank
of Boston, from the due date to the date payment is received by Vermont
Yankee.
9. Decommissioning Fund
Vermont Yankee agrees to cause an appropriate decommissioning reserve
to be maintained in accordance with applicable regulatory requirements. As
of the date hereof, FERC has required an independent trust or other
separate fund to be created which has the necessary powers to hold and
invest all funds collected for the decommissioning of the Unit and to
disburse the same to pay, or to reimburse Vermont Yankee for, such costs
when actually incurred for decommissioning of the Unit or removal of the
Unit from service. If during the term of such trust or fund federal or
state legislation or regulations are promulgated which so permit or
require, or an alternative entity is created for funding decommissioning of
the Unit, such trust has the authority, with the concurrence of Vermont
Yankee, to transfer its trust estate to such newly authorized entity for
the purpose of providing for the decommissioning of the Unit or removal of
the Unit from service.
Vermont Yankee agrees to credit to, or cause to be credited to, the
appropriate decommissioning reserve 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 consequence 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 Purchaser.
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 Vermont 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 and of costs of permanent storage or disposal of spent nuclear fuel
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 payments in connection with
power theretofore delivered by Vermont Yankee hereunder. Such cancellation
shall be effected by written notice given by the Purchaser to Vermont
Yankee. In the event of such cancellation, all continuing obligations of
the parties hereunder as to subsequently incurred costs of Vermont Yankee
other than the obligations relating to the payment and application of Total
Decommissioning Costs and of costs of permanent storage or disposal of
spent nuclear fuel to the extent excluded from such cancellation by the
second preceding sentence, but including the Purchaser's obligations to
continue payments pursuant to clause (a) (other than those related to the
costs of permanent storage or disposal of spent nuclear fuel, and clauses
(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 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 preceding paragraph of
this Section 10. Further, if for reasons beyond Vermont Yankee's
reasonable control, deliveries are not made as contemplated by this
contract, Vermont Yankee shall have no liability to the Purchaser on
account of such non-delivery.
11. Insurance
Vermont 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 Vermont 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. Vermont
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.
Vermont 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" and such other risks as electric utility
companies, similarly situated and operating like properties, usually insure
against; such insurance shall to the extent available, be carried in
amounts sufficient to prevent Vermont Yankee from becoming a co-insurer.
Vermont 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 Vermont Yankee, provide adequate
protection.
12. Audit
Vermont Yankee's books and records (including metering records) shall
be open to reasonable inspection and audit by the Purchaser.
13. Arbitration
In case any dispute shall arise as to the interpretation or
performance of this contract which cannot be settled by mutual agreement,
such dispute shall be submitted to arbitration. 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. Such decision shall be binding upon the parties, and the
expenses of the arbitration shall be borne equally by them.
14. 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.
15. 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 not 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 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 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.
16. 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
Vermont Yankee or (ii) the amount of any claim by its against Vermont
Yankee. However, the foregoing shall not affect in any other way the
Purchaser's right and remedies with respect to any such claim by it against
Vermont Yankee.
17. Amendments
Upon authorization by Vermont Yankee's board of directors of uniform
amendments to all the Additional Power Contracts with sponsors, Vermont
Yankee shall have the right to amend the provisions of Section 7 hereof 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.
18. Interpretation
The interpretation and performance of this contract shall be in
accordance with and controlled by the law of the State of Vermont.
19. 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 respective post office address of the other party shown
following the signatures of such other party hereto, or such other address
as may be designated by written notice given as provided in this
Section 19.
20. Corporate Obligations
This contract is the corporate act and obligation of the parties
hereto, and any claim hereunder against any stockholder, director or
officer of either party, as such, is expressly waived.
21. 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-December 1, 2002), 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.
VERMONT YANKEE NUCLEAR POWER CORPORATION
By
President
R.D. 5, Ferry Road, Box 169
Brattleboro, Vermont 05301
PURCHASER
By