Exhibit 10.7
[Composite Conformed Copy]
POWER CONTRACT, dated as of May 20, 1968, between MAINE YANKEE ATOMIC
POWER COMPANY ("Maine Yankee"), a Maine corporation, and
(The names of the Purchasers appear in the attached Appendix)
(the "Purchaser").
It is agreed as follows:
1. Basic Understandings
Maine Yankee has been organized to provide for the supply of power to
its eleven sponsoring utility companies (including the Purchaser). Late in
1966 and early in 1967, it entered into contracts for the manufacture of the
major components and the services of an architect-engineer for the
construction of a nuclear electric generating unit of the pressurized water
type, designed to have a capability of approximately 800 megawatts electric,
at a site on tidewater in the Town of Wiscasset, Maine (such unit being
herein, together with the site and all related facilities to be owned by
Maine Yankee, referred to as the "Unit"). Construction of the Unit is now
being carried out under contracts with Combustion Engineering, Inc. and
Westinghouse Electric Corporation for certain major systems of equipment and
Stone and Webster Engineering Corporation as Architect-Engineer.
The Unit is to be operated to supply power to each of the eleven
sponsoring utilities (the "sponsors"), each of which has contemporaneously
agreed to purchase a stated percentage of the capacity and output of the Unit
and a like percentage of Maine Yankee's stock. The names of the sponsors and
their respective percentages ("entitlement percentages") of the capacity and
output of the Unit are as follows:
Entitlement
Sponsors Percentage
Central Maine Power Company 38.0%
New England Power Company 20.0%
The Connecticut Light and Power Company 8.0%
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%
The Hartford Electric Light Company 4.0%
Western Massachusetts Electric Company 3.0%
Central Vermont Public Service Corporation 2.0%
Maine Yankee and its other sponsors are contemporaneously 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 Maine Yankee has entered into power contracts, as contemplated by
Section 1 above, with each of the 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,
1973, or (ii) the date on which the Unit is placed in commercial operation,
as determined by Maine Yankee (the "commercial operation date").
3. Construction of the Unit
Maine 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 May 1, 1972 within present cost estimates, and will
keep the Purchaser reasonably informed as to the progress of construction,
material modifications in cost estimates, and the expected plant completion
date.
4. 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 Atomic Energy Act of 1954, as amended, 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.
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 800 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 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. 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 prior to the plant completion
date, the Purchaser will pay Maine Yankee at the rate of 3.75 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 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) Maine 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 last
day of the previous month. "Composite percentage" as of a computation date
shall be the sum of (i) nine and eight-tenths percent (9.8%) 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.
"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
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.
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 burnup 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 nine and eight-tenths
percent (9.8%) 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.
Maine Yankee's "operating expenses" shall include all amounts properly
chargeable to operating expense 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; provided, however, that for the
purposes of this contract, the accrual of depreciation and amortization of
the Unit as an operating expense shall commence on the plant completion date.
The amount of depreciation and amortization for each period shall be at a
rate at least sufficient to fully amortize the then non-salvable plant
investment balance in equal amounts over the periods remaining until May 1,
2002.
The "net Unit investment" shall consist, in each case with respect to
the Unit, of 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); plus (ii) the
amount of any unamortized property losses; less (iii) the amount of any
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 plant completion
date and thereafter as of the commencement of each calendar year, or if Maine
Yankee elects, at more frequent intervals.
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. 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 Maine 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 Maine
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
Maine Yankee. In the event of such cancellation, all continuing obligations
of the parties, including the Purchaser's obligations to continue payments,
shall cease forthwith.
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 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
nondelivery.
10. Insurance
Prior to the first shipment of fuel to the plant site, Maine 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 Maine 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. Maine 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.
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" 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 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.
11. Additional Units
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.
12. Audit
Maine 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 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.
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 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.
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
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.
17. Interpretation
The interpretation and performance of this contract shall be in
accordance with and controlled by the law of the State of Maine.
18. 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 upon the lapse of 48 hours from mailing 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 18.
19. 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.
20. 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.
MAINE YANKEE ATOMIC POWER COMPANY
By William H. Dunham
President
9 Green Street
Augusta, Maine 04330
[Purchaser]
By
(Officer & Title)
(Address)
APPENDIX
Separate Power Contracts were entered into, identical in form with the
foregoing except as to the execution thereof and except that on page 1 the
names of the respective Purchasers were inserted.
The Power Contracts were executed by the respective parties thereto, as
follows:
MAINE YANKEE ATOMIC POWER COMPANY
By W. H. Dunham,
President
9 Green Street
Augusta, Maine 04330
CENTRAL MAINE POWER COMPANY
By S. Giddings
Executive Vice President
9 Green Street
Augusta, Maine
NEW ENGLAND POWER COMPANY
By Robert F. Krause
President
441 Stuart Street
Boston, Massachusetts
THE CONNECTICUT LIGHT AND POWER COMPANY
By Sherman R. Knapp
Chairman
P.O. Box 2010
Hartford, Connecticut 06101
BANGOR HYDRO-ELECTRIC COMPANY
By R. N. Haskell
President
33 State Street
Bangor, Maine 04401
MAINE PUBLIC SERVICE COMPANY
By C. H. Stetson
Chairman
209 State Street
Presque Isle, Maine 04769
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
By W. C. Tallman
President
1087 Elm Street
Manchester, New Hampshire 03105
CAMBRIDGE ELECTRIC LIGHT COMPANY
By John F. Rich
President
130 Austin Street
Cambridge, Massachusetts 02139
MONTAUP ELECTRIC COMPANY
By Guido R. Perera
President
P.O. Box 2333
Boston, Massachusetts 02107
THE HARTFORD ELECTRIC LIGHT COMPANY
By C. L. Derrick
Chairman
P.O. Box 2370
Hartford, Connecticut 06101
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By Robert E. Barrett, Jr.
President
174 Brush Hill Avenue
West Springfield, Massachusetts 01089
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
By L. Douglas Meredith
President
77 Grove Street
Rutland, Vermont 05701