Exhibit 10.10
POWER CONTRACT, dated as of February 1, 1968, between VERMONT YANKEE
NUCLEAR ATOMIC POWER CORPORATION ("Vermont Yankee"), a Vermont corporation,
and (the "Purchaser").
It is agreed as follows:
1. Basic Understandings
Vermont Yankee has been organized to provide for the supply of power to
its ten sponsoring utility companies (including the Purchaser), which
utilities are hereinafter called the "sponsors." In the spring of 1967, it
commenced the construction of a nuclear electric generating unit of the
boiling water type, which is being designed to have a maximum net capability
of approximately 540 megawatts electric, at a site adjacent to the
Connecticut River at Vernon, Vermont (the unit being herein, together with
the site and all related facilities to be owned by Vermont Yankee, referred
to as the "Unit"). Construction of the Unit is being carried out under
contracts with General Electric Company and Ebasco Services Incorporated. It
is presently estimated that construction costs and working capital will
aggregate approximately $115,000,000, exclusive of fuel.
The Unit is to be operated to supply power to Vermont Yankee's sponsors,
each of which is undertaking to purchase a fixed percentage of the capacity
and output of the Unit. 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 6.0%
Central Maine Power Company 4.0%
Public Service Company of New Hampshire 4.0%
The Hartford Electric Light Company 3.5%
Western Massachusetts Electric Company 2.5%
Montaup Electric Company 2.5%
Cambridge Electric Light Company 2.5%
Vermont Yankee and its other sponsors are entering into power contracts
which are identical to this contract except for necessary changes in the
names of the parties.
2. Effective Date and Term
This contract shall become effective upon receipt by the Purchaser of
notice that Vermont Yankee has entered into power contracts, as contemplated
by Section 1 above, with each of its other sponsors. The term of this
contract shall expire 30 years after the plant completion date.
The "plant completion date" shall be the earlier of (i) December 31,
1972, or (ii) the date on which the Unit is placed in commercial operation,
as determined by Vermont Yankee (the "commercial operation date").
3. Construction of the Unit
Vermont Yankee will proceed with due diligence with construction of the
Unit, and will exercise its best efforts to complete and place it in
commercial operation by July 1, 1971, on the presently estimated schedule
therefor and within present cost estimates, and will keep the Purchaser
reasonably informed as to the progress of construction, material
modifications in cost estimates, and expected plant completion date.
4. 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 Atomic Energy Act of 1954, as
amended, 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
longhour 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.
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 prior to the plant completion
date, the Purchaser will pay Vermont Yankee at the rate of 4 mills per
kilowatt-hour, for the Purchaser's entitlement percentage of the net
electrical output (if any) of the Unit during the particular month.
With respect to each month commencing on or after the plant completion
date, 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) Vermont Yankee's
total operating expenses for the month with respect to the Unit, plus (c) 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 plant completion date
and as of the last day of each month thereafter (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) eight and one-half percent (81/2%) 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 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 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 Federal Power Commission for Class A and Class B Public Utilities and
Licensees as in effect on the date of this contract and as said System may be
hereafter amended to take account of private ownership of special nuclear
material.
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
obligations incurred in connection with such fuel assemblies and components,
including nuclear materials, for the Unit.
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; provided, however, that for
purposes of this contract, the accrual of depreciation as an operating
expense shall commence on the plant completion date at the rate of 3.846% per
annum, whether or not the Unit is then in operation, and during each of the
first 26 years after the plant completion date, the amount included in
operating expenses on account of depreciation accruals (and amortization, if
any, of property losses) shall in no event be less than 3.846% of the excess
of:
(a) the amount properly chargeable at the plant completion date in
accordance with the Uniform System to electric plant accounts (including
construction work in progress) with respect to the depreciable portion of the
Unit (or, if the plant completion date is prior to the commercial operation
date and the amount so chargeable with respect to the depreciable portion of
the Unit on the commercial operation date is greater than it was on the plant
completion date, then such greater amount),
over
(b) the amount of net available cash.
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 sum of (x) the
aggregate minimum amount required by this Section 7 to be included in
operating expenses from the plant completion date to the date in question on
account of depreciation accruals (and amortization, if any, of property
losses) reduced by the aggregate of all amounts charged during such period
against the accumulated provision for depreciation plus (y) the amount of net
available cash; 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. However, for purposes of this contract, the net amount included at
any date after the plant completion date in net Unit investment under clause
(i) of the immediately preceding sentence shall in no event be less than the
excess of:
(a) the amount properly chargeable at the plant completion date in
accordance with the Uniform System to electric plant accounts (including
construction work in progress) with respect to the Unit (or, if the plant
completion date is prior to the commercial operation date and the amount so
chargeable with respect to the Unit on the commercial operation date is
greater than it was on the plant completion date, then such greater amount),
over
(b) the sum of (x) the aggregate minimum amount required by this
Section 7 to be included in operating expenses from the plant completion date
to the date in question on account of depreciation accruals (and
amortization, if any, of property losses) plus (y) the amount of net
available cash.
The net Unit investment shall be determined as of the plant completion date
and thereafter as of the commencement of each calendar year, or if Vermont
Yankee elects, at more frequent intervals.
"Net available cash" means, at any date as of which the amount thereof
is to be determined, the excess of (a) the aggregate amount received by
Vermont Yankee after the plant completion date and prior to two years before
the determination date as insurance proceeds on account of loss or damage to
the Unit or as the proceeds of a sale or condemnation of a portion of the
Unit, over (b) the aggregate amount expended after the plant completion date
and prior to the determination date on account of rebuilding, repairs,
replacements and additions to the Unit, provided that insurance proceeds
received with respect to a particular loss shall be taken into account for
purposes of the foregoing computation only if the amount received with
respect to the loss exceeds $150,000.
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. 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.
8. Make-up Term and Option Term
(a) The Purchaser may elect to extend the contract term by written
notice to Vermont Yankee upon the following conditions and for the following
period or periods:
(i) In the event that the Unit is not in commercial operation on the
plant completion date, the contract term may be extended for a period equal
to the number of consecutive days by which commercial operation is delayed
beyond the plant completion date; and
(ii) if at any time after the commencement of commercial operation no
deliveries are made under this contract for a period of at least 120
consecutive days, the contract may be extended for a period equal to the
aggregate of such periods during which no deliveries were made.
If the term of the contract is extended pursuant to the provisions of this
subsection (a), all of the contract provisions shall remain in effect for the
extended term.
(b) Upon expiration of the initial term of this contract or upon
expiration of the term as extended in accordance with subsection (a) of this
Section 8, the Purchaser shall continue to be entitled, at its option, to its
entitlement percentage of the capacity and output of the Unit upon terms at
least as favorable as those obtained by any other person.
9. 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 this contract. 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, including the Purchaser's obligations to continue
payments, shall cease forthwith. 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 12.
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 9. 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
nondelivery.
10. Insurance
Prior to the first shipment of fuel to the plant site, Vermont Yankee
will obtain, and thereafter will at all times maintain, insurance to cover
its "public liability" for personal injury and property damage resulting from
a "nuclear incident" (as those terms are defined in the Atomic Energy Act of
1954 as amended), with limits not less than Vermont Yankee may be required to
maintain to qualify for governmental indemnity under said Act and shall
execute and maintain an indemnification agreement with the Atomic Energy
Commission as provided by said Act. Vermont Yankee will also at all times
maintain such other types of liability insurance, including workmens'
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; and 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.
11. Audit
Vermont Yankee's books and records (including metering records) shall be
open to reasonable inspection and audit by the Purchaser.
12. 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.
13. 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.
14. 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.
15. 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 it against Vermont 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 Vermont
Yankee or any such claim by it against Vermont Yankee.
16. Interpretation
The interpretation and performance of this contract shall be in
accordance with and controlled by the law of the State of Vermont.
17. 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 17.
18. 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.
19. All Prior Agreements Superseded
This contract represents the entire agreement between us relating to the
subject matter hereof, 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
77 Grove Street
Rutland, Vermont 05701
PURCHASER
By
(Officer & Title)
(Address)