EXHIBIT 10.02
SHERCO 3 OUTLET
TRANSMISSION AGREEMENT BETWEEN
NORTHERN STATES POWER COMPANY
AND
SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY
AGREEMENT, made this 27 day of April, 1982, by and between the
NORTHERN STATES POWER COMPANY, a Minnesota corporation, hereinafter
called "NSP", and SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, a municipal
corporation of the State of Minnesota, hereinafter called "SMMPA", such
parties being herein referred to individually as "Party" or collectively
as "Parties".
WITNESSETH:
WHEREAS, NSP is engaged in the business of generating,
transmitting and distributing electric power and energy in the States
of Minnesota, North Dakota, and South Dakota; and
WHEREAS, SMMPA is a public body corporate and politic and
instrumentality of the State of Minnesota and is empowered to engage in
the business of generating and transmitting electric power and energy
to its members; and
WHEREAS, the Parties are signatories to the Sherburne County
Generating Unit No. 3 Ownership and Operating Agreement dated March 11,
1982 (Ownership Agreement) providing for joint ownership and operation
of Unit 3 at the Sherco Plant Site; and
WHEREAS, SMMPA's share of the electrical output of Sherco 3 will
be delivered to the switching substation located on the Sherco Plant
Site; and
WHEREAS, the Parties are signatories to the Shared Transmission
Agreement ("STS Agreement") dated November 18, 1981, providing for
certain transmission services for SMMPA members on NSP s system; and
WHEREAS, in addition to the SMMPA members connected to the NSP
system, all other SMMPA members are interconnected with systems of
either the Dairyland Power Cooperative ("DPC") or Interstate Power
Company ("ISP"); and
WHEREAS, SMMPA is responsible to deliver a portion of its share
of the Sherco 3 output to its members interconnected to DPC's and ISP's
transmission systems; and
WHEREAS, SMMPA has entered or will enter into shared transmission
agreements with DPC and ISP for the joint use and development of
transmission systems to deliver electricity to its members and
customers; and
WHEREAS, NSP and DPC and NSP and ISP are signatories to certain
Interconnection and Interchange Agreements which establish
interconnections between said signatory parties; and
WHEREAS, NSP is willing to deliver a portion of SMMPA's power and
energy from Sherco 3 to ISP and DPC points of interconnection with NSP
pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, the Parties hereto agree to the following:
ARTICLE I
NSP's Transmission Obligation
1.01 SMMPA will be delivering to NSP a certain amount of its
Sherco 3 power and energy at the 345 Kv switching station at the Sherco
Plant Site. The maximum amount of power and energy to be delivered by
SMMPA to NSP shall be determined by subtracting SMMPA's estimated peak
load delivery under the STS Agreement from SMMPA's 300 MW ownership in
Sherco 3. Such amount shall be considered NSP's maximum transmission
obligation and when determined shall be stated in an amendment to this
Section. NSP agrees to deliver an equivalent amount of power and
energy, less losses in accordance with Section 4.03 hereof, to ISP and
DPC points of interconnection with NSP.
1.02 If SMMPA pays the total transmission obligation determined
pursuant to Article II hereof prior to Sherco 3 commercial operation,
NSP agrees to deliver power and energy purchased by SMMPA from other
sources and delivered to NSP to points of inter-connection with DPC and
ISP, providing NSP has transmission capacity available as determined by
NSP. NSP's obligation shall not exceed the maximum transmission
obligation determined in Section 1.01 hereof. Line losses shall be
mutually agreed to at the time.
ARTICLE II
SMMPA's Transmission Obligation
2.01 For the transmission services provided by NSP in Article
I hereof, SMMPA shall construct new transmission facilities in NSP's
transmission system and/or purchase existing NSP transmission facilities
of 345 Kv and above, which are no more than 10 years old at date of this
Agreement, at NSP's original cost depreciated, as determined by NSP,
equal to an investment of 73.00/Kw in 1981 dollars multiplied by NSP's
maximum transmission obligation pursuant to Section 1.01 hereof and
adjusted thereafter in accordance with Section 2.02 hereof. SMMPA shall
make its best effort to fulfill such transmission investment obligation
by the commercial operation of Sherco 3. In the event the SMMPA
transmission investment has not been fulfilled by the commercial
operation date of Sherco 3, SMMPA shall pay NSP for transmission service
for the balance owed NSP based on the following formula:
Monthly Charge = X x Y x T
-- -
12 Z
Where:
T = Maximum transmission obligation pursuant to Section
1.01, hereof.
X = NSP's annual firm power wheeling rate as accepted
for filing by the Federal Energy Regulatory
Commission expressed in $/Kw.
Y = SMMPA's remaining investment obligation owed NSP.
Z = SMMPA's total investment obligation pursuant to
Article II, hereof.
2.02 SMMPA's investment obligation stated in Section 2.01
shall be adjusted by the smaller of the following:
(a) The proportionate change between January 1, 1981 and the date
of SMMPA's investment based on the Handy-Whitman Total
Transmission Plant Index in the North Central Region, or
(b) 6% per annum increase from January 1, 1981 and the date of
SMMPA's investment.
2.03 NSP shall have the unrestricted right to use the
transmission facilities provided by SMMPA as set forth in Section 2.01
hereof.
ARTICLE III
Transmission Buy Back
3.01 At the time Sherco 3 is retired by the Parties pursuant
to the Ownership Agreement, NSP shall purchase the transmission
facilities owned by SMMPA pursuant to Article II hereof for SMMPA's
original costs, less depreciation at 2.7% per year.
3.02 If Sherco 3 does not reach commercial operation, by
January 1, 1991, NSP shall be obligated to purchase the transmission
facilities owned by SMMPA pursuant to Article II hereof for SMMPA's
original costs plus interest from the date of SMMPA's investment to
NSP's purchase. The interest rate shall be the average of: 1) cost of
capital for NSP approved in the most recent Minnesota jurisdiction
electric rate case and 2) the average interest rate of SMMPA's
outstanding revenue bond issues.
ARTICLE IV
Operation
4.01 Operation and Maintenance
NSP shall assume full responsibility for the operation, and
SMMPA shall assume full responsibility for the proper maintenance and
replacement of the transmission facilities to be constructed or
purchased by SMMPA pursuant to Article II hereof. SMMPA shall pay NSP
for operation of these facilities at NSP's average operating costs per
mile for the same voltage class. The cost of maintenance and
replacement of equipment and facilities, shall be borne by the Party
providing such equipment and facilities unless such maintenance was
occasioned by the negligence of the other Party, in which event such
cost shall be borne by the negligent Party. Through mutual agreement,
one Party may accept the maintenance responsibility for all or a portion
of the other Party s facilities on a continuous or temporary basis. In
such instances, the owning Party shall pay the Party performing the
maintenance for the cost incurred. In the event the owning Party
requests the other Party to perform maintenance work on facilities for
which mutual agreement for performing the maintenance has not been
obtained, or in the event of an emergency requiring repair or
replacement, the other Party may perform the necessary work on the
owning Party's facility, and within fifteen (15) days of the billing
therefore, the owning Party shall reimburse the other Party for the cost
thereof, which shall include the actual cost of labor, materials,
transportation and applicable overheads. Late payments shall bear
interest at the average daily prime rates published in the "Money Rates"
section of the Wall Street Journal for each day from the date due to
date of payment.
4.02 SMMPA shall pay NSP for SMMPA's share of NSP's cost of
providing control of the transmission system for delivery of SMMPA's
Sherco 3 power and energy to DPC and ISP points of inter-connection with
NSP in accordance with Exhibit A, attached hereto and made a part
hereof.
4.03 Delivery and Losses
When SMMPA schedules generation from Sherco 3 for delivery to
the DPC or ISP systems, the power and energy scheduled shall be
delivered to such system less losses. Such losses shall be determined
from time to time by the Parties; and, initially, the losses shall be
3% of the power and energy to be delivered.
4.04 Continuity of Service
The Parties shall use all reasonable care to provide
continuous delivery of electric energy unless they are prevented from
doing so for the following reasons:
a. Interruptions or reductions due to uncontrollable forces
which, by exercise of due diligence and foresight, could not
reasonably have been avoided. The term "uncontrollable
forces" shall be deemed to mean any cause beyond the control
of the Party affected, including, but not limited to, failures
of facilities, flood, earthquake, storm, fire, lightning,
epidemic, war, riots, civil disturbance, labor disturbance,
sabotage, and restraint by court or public authority. The
Party rendered unable to fulfill any obligation by reason of
uncontrollable forces shall exercise due diligence to remove
such inability with all reasonable dispatch.
b. Interruptions or reductions due to operation of devices
installed for electric system protection.
c. Temporary interruptions or reductions which are necessary or
desirable for the purposes of maintenance, repairs,
replacements, installation of equipment, or investigation and
inspection. Each Party shall give the other Party reasonable
advance notice of such interruptions or reductions, except in
case of an emergency as determined by the Party creating the
interruption or reduction, and shall remove the cause thereof
with all reasonable dispatch.
ARTICLE V
General
5.01 Liability
Each Party shall be responsible for its own facilities and
personnel used in the performance of this Agreement and neither Party
shall be responsible to the other for damage to or loss of property,
wherever located, unless this damage or loss is occasioned by its own
negligence or by the negligence of its employees or agents.
Notwithstanding any language to the contrary herein, NSP and SMMPA shall
have no liability to each other for any loss of use, cost of purchased
or replacement power, interest charges or cost of capital, or claims of
customers or for any other indirect, special, consequential, loss of
revenue or loss of profit damages of any type from any cause howsoever
arising.
Furthermore, nothing in this Agreement shall be construed to be nor
shall in fact give any third party beneficiary or related rights to any
customers, members or other third party dealing with either NSP or
SMMPA.
5.02 Waivers
A waiver by either Party of the other Party's default shall
not be deemed a waiver of any other or subsequent defaults.
5.03 Right of Access
Each of the Parties shall give authorized agents and employees
of the other Party the right to enter upon its transmission facilities
at all reasonable times for the purpose of constructing, testing,
repairing, renewing, exchanging or removing any or all of its equipment
which may be located on the property of the other Party or performing
any work incident to rendering service under this Agreement, provided,
however, each Party shall have the right to designate certain parts of
its premises where entry of employees or agents of the other Party is
prohibited unless such employees or agents are accompanied by an
authorized employee or agent of the Party owning such premises.
5.04 Notices
Any notices, demands or requests required or authorized by
this Agreement to be delivered by one Party to the other shall be
properly delivered if mailed, postage prepaid, to the chief executive
officer of the respective Party.
5.05 Successors and Assigns
This Agreement shall be binding upon the inure to the benefit
of the Parties, their successors and assigns.
5.06 Interpretation
The Agreement shall not be interpreted to limit the right or
either Party hereafter to design, construct, acquire or own any
facilities it deems desirable.
5.07 Limitations
This Agreement is not intended to and shall not create rights
of any character whatsoever in favor of any person, corporation,
association or entity other than the Parties of this Agreement and their
successors and assigns, and the obligations herein assumed are solely
for the use and benefit of the Parties to this Agreement and their
successors and assigns.
5.08 Term of Agreement
This Agreement shall become effective on the day, month and
year first above written and shall remain effective for a period of the
useful life of Sherco 3.
5.09 Authority
SMMPA hereby asserts and warrants it has full power and
authority to represent the member municipal political subdivisions and
to enter into this Agreement and to comply with the terms hereof. NSP
hereby asserts and warrants it has power and authority to enter into
this Agreement and to comply with the terms hereof.
5.10 No Partnership
Notwithstanding any provisions of this Agreement, NSP and
SMMPA do not intend to create hereby any joint venture, partnership,
association taxable as a corporation, or other entity for-the conduct
of any business for profit. NSP and SMMPA agree to take timely all
voluntary actions as may be necessary to be excluded from treatment as
a partnership under the Internal Revenue Code of 1954, as amended.
5.11 Governing Law
Validity, interpretation, and performance of this Agreement
and each of its provisions shall be governed by the laws of the State
of Minnesota.
5.12 Amendments
This Agreement may be amended by a written instrument duly
executed by the Parties thereto.
5.13 A Heading is Not to Affect Meaning
The description headings of the various articles and sections
of this Agreement have been inserted for convenience of reference only
and shall in no way modify or restrict any of the terms and provisions
hereof.
5.14 Regulatory Approval
This Agreement and the rights and obligations of the Parties
hereunder are subject to the prior receipt by the Parties of all
requisite governmental and regulatory approvals.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be duly executed and attested by their duly authorized officers as of
the day and year first above written.
ATTEST NORTHERN STATES POWER COMPANY
ATTEST SOUTHERN MINNESOTA MUNICIPAL
POWER AGENCY
SHERCO 3 OUTLET AGREEMENT
BETWEEN
NSP AND SMMPA
EXHIBIT A
Transmission Control
NSP shall provide control of the transmission system. The charge to
SMMPA for such service shall be based on NSP's average cost per MW.
Charge to SMMPA = A x B
_____
C
A = NSP's maximum transmission obligation pursuant to
Section
1.01 hereof.
B = NSP's total annual cost for transmission control.
C = Total maximum coincident demand on transmission
system.
SUPPLEMENT NO. 1
to the
SHERCO 3 OUTLET TRANSMISSION AGREEMENT
between
NORTHERN STATES POWER COMPANY
and
SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY
It is hereby agreed between Northern States Power Company, a
Minnesota corporation, and Southern Minnesota Municipal Power Agency,
a municipal corporation of the State of Minnesota, that
the Sherco 3 Outlet Transmission Agreement, dated April 27, 1982 between
said parties is amended as follows:
1. Exhibit A is deleted therefrom in its entirety and First
Revised Exhibit A, attached hereto, is substituted
therefor.
This Agreement is subject to the regulation of any regulatory
body having jurisdiction thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the 20 day of July, 1982.
ATTEST NORTHERN STATES POWER COMPANY
ATTEST SOUTHERN MINNESOTA MUNICIPAL
POWER AGENCY
First Revised Exhibit A
SHERCO 3 OUTLET AGREEMENT
between
NSP and SMMPA
EXHIBIT A
Transmission Control
NSP shall provide control of the transmission system. The
charge to SMMPA for such service shall be based on NSP's average cost
per MW.
Charge to SMMPA = A x B
_____
C
A = NSP's maximum transmission obligation pursuant to
Section 1.01 hereof.
B = NSP's total annual cost for transmission control.
C = Total maximum coincident demand on transmission system.
In the event that SMMPA has not fulfilled its transmission
investment obligation set forth in Article II, the above charge will be
reduced to reflect that portion of NSP's annual cost for transmission
control which is included in NSP's annual firm power wheeling rate used
to calculate the "Monthly Charge" in Section 2.01.