EXHIBIT 10.41
EXECUTION COPY
RECIPROCAL SUPPORT AGREEMENT AMONG
NORTHEAST NUCLEAR ENERGY COMPANY,
NORTH ATLANTIC ENERGY SERVICE CORPORATION,
CONNECTICUT YANKEE ATOMIC POWER COMPANY,
YANKEE ATOMIC ELECTRIC COMPANY AND
NORTHEAST UTILITIES SERVICE COMPANY
This Reciprocal Support Agreement is made as of January 1, 1996, by and
among Northeast Nuclear Energy Company ("NNECO"), a Connecticut corporation,
North Atlantic Energy Service Corporation ("NAESCO"), a New Hampshire
corporation, Connecticut Yankee Atomic Power Company ("CYAPC"), a Connecticut
corporation, Yankee Atomic Electric Company ("YAEC"), a Massachusetts
corporation, acting by and through its Nuclear Services Division ("NSD"), and
Northeast Utilities Service Company ("NUSCO"), a Connecticut corporation.
WHEREAS, NNECO is a wholly owned service company subsidiary of Northeast
Utilities ("NU") that operates and manages Millstone Units 1, 2, and 3
(individually a "Millstone Unit" and collectively the "Millstone Units"); and
WHEREAS, NAESCO is a wholly owned service company subsidiary of NU that
operates and manages Seabrook Station (Seabrook); and
WHEREAS, CYAPC is an electric utility affiliate of NU and New England
Electric System ("NEES") that owns and operates the Connecticut Yankee Atomic
Power Plant ("Connecticut Yankee"); and
WHEREAS, YAEC is an electric utility affiliate of NU and NEES that owns
the Yankee Nuclear Power Station ("Yankee Nuclear Power Station") and, acting
through NSD, provides technical services to Yankee Nuclear Power Station and
other nuclear facilities (each of the Millstone Units, Seabrook, Connecticut
Yankee and Yankee Nuclear Power Station being referred to herein as a
"Nuclear Plant" and collectively as the "Nuclear Plants"); and
WHEREAS, NUSCO is a wholly owned service company subsidiary of NU that
provides legal, accounting and other administrative services to companies in
the NU system; and
WHEREAS, NNECO, NAESCO, CYAPC AND YAEC (each an "Operator" and
collectively the "Operators") each has employees with specialized knowledge
and expertise regarding nuclear plant procurement, engineering, licensing,
construction, operations, maintenance, decommissioning, design, inspection,
testing, planning and other relevant and related skills that they wish to
make available to each other in a mutually cooperative fashion; and
WHEREAS, each of the Operators has certain equipment, tools, and
components that are used in connection with plant operation or maintenance
(excluding specifically equipment, spare parts and consumables held in
inventory) (collectively "Equipment"), on hand for use in its Nuclear Plant
that may be required by another Operator from time to time in the course of
operating and maintaining its Nuclear Plant, and the Operators are willing to
make Equipment available to each other in a mutually cooperative fashion to
meet their respective needs; and
WHEREAS, increased economies and efficiencies and improved plant
reliability will result from the sharing of expertise, technical resources,
personnel and Equipment by and among the Operators;
NOW THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Operators and NUSCO (each a "party" and
collectively the "Parties") agree as follows:
ARTICLE I - SERVICES AND EQUIPMENT
Section 1.1 - Any Operator may request another Operator to make
available, on a temporary basis, specified personnel, or personnel having
specified expertise, to assist the requesting Operator in any aspect of the
requesting Operator's procurement, engineering, licensing, construction,
operation, maintenance, decommissioning, design, inspection, testing or
planning activities or other relevant and related skills (collectively
"Operator Services"). Additionally, any Operator may request another
Operator to furnish, for temporary use and not for permanent transfer or
installation, a specified article, kind, or quality of Equipment to meet the
requesting Operator's needs. It is not intended that this Agreement be used
as a vehicle for the permanent acquisition or use of Equipment by any Nuclear
Plant. Prior to making a request for Operator Services or Equipment, an
Operator shall give appropriate consideration to whether it would be more
advantageous to obtain such services or equipment from a third party vendor
(instead of from another Operator) in light of relevant factors, such as
cost, delivery schedule, design, quality, warranty protection and assurance
of supply.
Section 1.2 - Any Operator receiving a request for Operator Services or
Equipment shall make reasonable efforts to accommodate such request, subject
to the receiving Operator's own needs and requirements and the availability
of appropriate personnel or Equipment, as the case may be. No Operator shall
be required to comply with a request for Operator Services or Equipment, but
each Operator shall cooperate in good faith with the other Operators to
maximize the potential benefits of this Agreement to all Operators by making
requested personnel available on a temporary basis or providing available
Equipment on a temporary basis when it is reasonably possible to do so. All
Operator Services and Equipment will be furnished on a mutually agreeable
schedule pursuant to a master purchase order or service request issued by the
Operator requesting the Operator Services or Equipment that refers to this
Agreement and incorporates its terms by reference. A copy of such master
purchase order or service request shall be sent to NUSCO at the time Operator
Services are requested. Any Equipment that is furnished in a decontaminated
condition shall be returned to the furnishing Operator in the same condition.
Any Equipment that is furnished in a contaminated condition may be returned
to the furnishing Operator in the same condition.
Section 1.3 - Personnel of an Operator who are made available to another
Operator to provide Operator Services shall at all times remain the employees
of the Operator who makes them available and shall not become employees of
the requesting Operator, but such personnel shall be subject to the
supervision and control of the requesting Operator while Operator Services
are being provided at the requesting Operator's Nuclear Plant. Except as
explicitly provided in this Agreement, no Operator who receives Operator
Services shall become responsible for any wages, salary, benefits, expenses
or other costs associated with the personnel providing such Operator
Services, all of which shall remain the responsibility of the Operator who is
furnishing such Operator Services.
ARTICLE II - PAYMENT FOR SERVICES
Section 2.1 - Any Operator that furnishes Operator Services or Equipment
to another Operator shall provide a report to NUSCO or through the Northeast
Utilities financial system (currently the "Management Information and
Budgeting System") (with a copy to the Operator who received the Operator
Services or the Equipment) no later than the twentieth (20th) day after the
end of each calendar month in which Operator Services or Equipment are
provided containing a statement of cost reflecting the following factors or
information for such calendar month: (A) in the case of Operator Services,
(1) the name and cost control center of each employee who furnished Operator
Services; (2) a description of the Operator Services furnished by each
employee; (3) the direct labor costs for the period; and (4) a statement of
any out-of-pocket costs reasonably incurred at each cost control center; and
(B) in the case of Equipment, (1) a description of the Equipment furnished;
(2) the operating cost of such equipment; and (3) the cost of any shipping,
handling, insurance, storage or other operating costs associated with its
delivery to the requesting Operator.
Section 2.2 - Within ten (10) days after receipt of such report, the
Operator who received such Operator Services or Equipment will be invoiced by
the furnishing Operator or through the Northeast Utilities financial system
for all direct costs reflected in such report (including, but not limited to,
wages, salaries and out-of-pocket costs in the case of Operator Services, and
operating costs, plus the cost of shipping, handling, insurance and other
costs in the case of Equipment), which will be payable directly to the
Operator who furnished the Operator Services or Equipment within 30 days
after receipt of such invoice. NUSCO may take such actions as it deems
appropriate to verify the information contained in any cost report or invoice
furnished hereunder.
Section 2.3 - All amounts invoiced for Operator Services or Equipment
provided under this Agreement shall be billed "at cost", as defined in the
Public Utility Holding Company Act of 1935 (the "Act") and the rules and
regulations promulgated thereunder. The indirect and overhead costs
associated with Operator Services (including without limitation costs of
capital) shall be calculated and allocated on a reasonable and equitable
basis in accordance with the requirements of the Act, and shall be invoiced
periodically by the Operator furnishing such Operator Services or Equipment,
by NUSCO or through the Northeast Utilities financial system to each Operator
who received Operator Services hereunder, but in no event later than January
31 of each calendar year for the preceding calendar year. All such invoices
shall be payable in the amounts and to the Operators specified therein within
thirty (30) days after receipt.
Section 2.4 - It is the intention of the Parties that NUSCO's role under
this Agreement shall be limited to the billing, accounting and facilitating
activities specifically described herein ("NUSCO Services"), and NUSCO shall
not provide any other services, unless NUSCO is requested to provide Operator
Services by another Operator. Furthermore, to the extent possible, all NUSCO
Services shall be accomplished automatically through the NU financial system.
All NUSCO Services provided hereunder and not otherwise provided under any
other agreement shall be billed "at cost" to the Operators who receive
Operator Services or Equipment hereunder during each calendar year. Direct
charges will be made for NUSCO Services where a direct assignment of cost is
possible. Charges for NUSCO Services not directly assignable (including
without limitation costs of capital) shall be calculated and allocated on a
periodic basis (but no less frequently than annually) by NUSCO on a
reasonable and equitable basis in accordance with the requirements of the
Act. NUSCO shall allocate costs for NUSCO Services not directly assignable
among the Operators in proportion to the direct charges made for NUSCO
Services received by each Operator during the relevant period. Each Operator
that received Operator Services or Equipment during a calendar year shall be
invoiced for the cost of NUSCO Services no later than January 31 of the
following year, and all such invoices shall be payable within thirty (30)
days after receipt.
Section 2.5 - In order to permit each of the Operators to make informed
decisions about possible requests for Operator Services and Equipment
hereunder, on or before November 1 of each calendar year (or in the case of
the calendar year in which this Agreement becomes effective, within thirty
(30) days after the effective date of this Agreement), each Operator and
NUSCO shall provide a written notice to each other Operator and to NUSCO of
the categories of expense that will be included in indirect and overhead
costs for the next calendar year (or for the remainder of the calendar year
in the case of the calendar year in which this Agreement becomes effective)
identified by cost control center or other appropriate means. Billings for
indirect and overhead costs during the next calendar year (or for the
remainder of the calendar year in the case of the calendar year in which this
Agreement becomes effective) shall be made in a manner consistent with such
notices. Billings for indirect and overhead costs may be based upon
reasonable estimates, subject to true-up no later than March 1 of the
following calendar year.
Section 2.6 - Each of the Operators and NUSCO shall keep complete and
accurate accounts of all receipts and expenditures hereunder in respect of
Operator Services, NUSCO Services (collectively with Operator Services, the
"Services") and Equipment in accordance with the regulations of the
Securities and Exchange Commission ("SEC") and the Uniform System of Accounts
prescribed for Public Utilities and Licensees subject to the provisions of
the Federal Power Act, as amended from time to time.
Section 2.7 - All sales, use, excise, gross receipts, franchise or other
similar taxes which may be applicable to the Services or Equipment provided
by any Party to another Party shall be borne by the recipient of such
Services or Equipment. In no event shall any Party be responsible for any
federal, state or local income tax of any other Party incurred with respect
to Services or Equipment.
Section 2.8 - Any joint owner, participant or shareholder in a Unit that
has received Operator Services or Equipment may, at its expense, perform or
cause to be performed an audit of the accounts and records of the furnishing
Operator and/or NUSCO relating solely to the performance of such Operator's
or NUSCO's obligations under this Agreement at such Operator's or NUSCO's
offices, at reasonable times, by an independent public accountant or other
representative; provided that any such audit shall not include the right to
examine any accounts or records of such Operator or NUSCO which are not
related to such Operator's or NUSCO's billings to such Nuclear Plant under
this Agreement.
ARTICLE III - STANDARD OF PERFORMANCE
Section 3.1 - Each Operator and NUSCO shall, at all times during the
term of this Agreement perform Services and furnish Equipment in accordance
with the standard of "Prudent Utility Practice." As used herein, the term
"Prudent Utility Practice" shall, at a particular time, mean any of the
practices, methods or acts which, in the exercise of reasonable judgment in
the light of the facts known to an Operator or NUSCO at the time the decision
was made, could have been expected to accomplish the desired result at a
reasonable cost and consistent with federal and state legal, licensing and
regulatory requirements, environmental considerations, reliability, safety
and expedition and taking into account the interests of all affected Parties.
In determining whether any practice, method or act is in accordance with
Prudent Utility Practice, due consideration shall be given to the fact that
the design and other aspects of the operation of nuclear electric generating
units involve the application of advancing technology and are subject to
changing regulatory and environmental limitations. Prudent Utility Practice
is not intended to be limited to the optimum practice, method or act to the
exclusion of all others but rather to encompass a spectrum of possible
practices, methods of acts, including those involving the use of new concepts
or technology.
Section 3.2 - ALL OPERATOR SERVICES AND EQUIPMENT FURNISHED HEREUNDER
SHALL BE FURNISHED "AS IS, WHERE IS" WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND WITH RESPECT TO QUALITY, MERCHANTABILITY, FITNESS FOR INTENDED
PURPOSE, ABSENCE OF DEFECTS, OR OTHERWISE. Any Operator providing Equipment
to another Operator shall assign to the receiving Operator any
manufacturer's, vendor's or supplier's warranty that is assignable and assist
the receiving Operator in the enforcement of such warranty.
ARTICLE IV - EFFECTIVE DATE, TERM AND MODIFICATIONS
Section 4.1 - The term of this Agreement shall commence as of the date
hereof, and, unless earlier terminated in accordance with the provisions of
this Article, shall continue in effect until the last to expire of the NRC
operating licenses for the Nuclear Plants. Any Party to this Agreement may
terminate its participation hereunder, with or without cause, upon written
notice given not less than ninety (90) days prior to the effective date of
such termination.
Section 4.2 - This Agreement shall also be subject to termination and
shall terminate, without any action by any Party, to the extent and from the
time that performance may conflict with the Act or with any rule, regulation
or order of the SEC adopted before or after the making hereof.
Notwithstanding the foregoing, the Parties will use reasonable efforts to
negotiate any amendments to this Agreement which are necessary for this
Agreement to comply with the Act or any rule, regulation or order thereunder.
Section 4.3 - Modifications to the terms of this Agreement may be made
at any time only by written agreement among the Parties.
ARTICLE V - LIMITATION OF LIABILITY AND SET-OFF
Section 5.1 - Notwithstanding any provision of this Agreement to the
contrary, for and in consideration of the fact that each of the Parties is
undertaking its responsibility for the Services or Equipment provided
hereunder without compensation or charge other than recovery of its costs for
those Services or Equipment, no Party, nor any shareholder or joint owner on
its behalf, shall be entitled to recover from any other Party, or the
directors, trustees, officers, employees, agents or affiliates of such other
Party (or the directors, trustees, officers, employees or agents of such
affiliates) (collectively, the "Protected Parties") any damages resulting
from the performance or non-performance of its responsibilities hereunder or
for any damage to any Nuclear Plant, any curtailment of power, or any other
damages of any kind, including direct, incidental, consequential, special,
indirect or punitive damages, whether occurring during the course of the
provision of Services or Equipment hereunder or otherwise or arising out of
the performance or non-performance of this Agreement, unless such damages
shall have resulted directly from the willful misconduct of such other Party,
or, to the extent legally attributable to such Party, directly from the
willful misconduct of a Protected Party.
Section 5.2 - Notwithstanding any provision of this Agreement to the
contrary, all provisions of this Agreement providing for limitation of, or
protection against, liability shall apply to the full extent permitted by
law, regardless of fault, and shall survive either termination pursuant to
this Agreement or expiration.
ARTICLE VI - ASSIGNMENT AND THIRD PARTY BENEFICIARIES
Section 6.1 - This Agreement shall be binding upon and inure to the
benefit of each of the Parties and their successors and permitted assigns.
None of the Parties shall assign its rights or obligations hereunder without
the prior written consent of the other Parties, and any attempted assignment
in violation of this provision shall be null and void.
Section 6.2 - The provisions of this Agreement are solely for the
benefit of the Parties and are not intended to benefit or create rights in
any third parties, except for the benefits accruing to Protected Parties
under Section 5.1.
ARTICLE VII - MISCELLANEOUS
Section 7.1 - This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut regardless of any
conflicts of laws provision to the contrary.
Section 7.2 - EXCEPT AS SET FORTH IN SECTION 3.1, NO WARRANTIES OF ANY
KIND, WHETHER STATUTORY, EXPRESS, WRITTEN, ORAL OR IMPLIED (INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF QUALITY, ABSENCE OF DEFECTS,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) SHALL APPLY TO THE
SERVICES OR EQUIPMENT FURNISHED HEREUNDER. The foregoing shall not be deemed
to affect in any manner any warranties provided by manufacturers, vendors or
suppliers.
Section 7.3 - This Agreement constitutes the entire agreement of the
Parties with respect to the furnishing of Services or Equipment hereunder.
Section 7.4 - This Agreement shall be subject to the approval of any
federal or state regulatory body whose approval is a legal prerequisite to
its execution, delivery, and performance.
Section 7.5 - Notices and other communications required or permitted to
be given or made under this Agreement shall be in writing, and shall be
deemed to have been duly made or given when delivered personally or when made
or given by telex, telegraph or telecopier, or certified or first class mail,
prepaid, at the address shown for each Party in Exhibit A hereto, or at such
other address as a Party may from time to time designate by a written notice
that complies with this Section 7.5.
Section 7.6 - In the event that any clause or provision of this
Agreement, or any part thereof, shall be declared invalid or unenforceable by
any regulatory body or court having jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining portions of this Agreement.
Section 7.7 - Any number of counterparts of this Agreement may be
executed and each shall have the same force and effect as the original.
Section 7.8 - Nothing contained herein shall evidence any intent to
effect a change in control of any of the Nuclear Plants operated by the
Parties.
Section 7.9 - Nothing contained herein shall be deemed to abrogate,
modify or amend the provision of any existing agreement by or among any of
the Parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, by their respective officers thereunto duly authorized,
all as of the day and year first above written.
NORTHEAST NUCLEAR ENERGY COMPANY
By /s/ Donald B. Miller, Jr.
Senior Vice President - Nuclear Safety and
Oversight
NORTH ATLANTIC ENERGY SERVICE CORPORATION
By /s/ Ted C. Feigenbaum
Executive Vice President and Chief
Nuclear Officer
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By /s/ Fred R. Dacimo
Vice President - Haddam Neck Station
YANKEE ATOMIC ELECTRIC COMPANY
By /s/ Andrew C. Kadak
President and Chief Executive Officer
NORTHEAST UTILITIES SERVICE COMPANY
By /s/ Eric A. DeBarba
Vice President - Nuclear Technical Services
EXHIBIT A
Northeast Nuclear Energy Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to:
North Atlantic Energy Service Corporation
P.O. Box 300
Seabrook, NH 03874
Attention:
With a copy to:
Connecticut Yankee Atomic Power Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to:
Yankee Atomic Electric Company
580 Main Street
Bolton, MA 01742
Attention:
With a copy to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to: