POWER AGREEMENT
BETWEEN
ORMET CORPORATION
AND
OHIO POWER COMPANY
------------------------
Dated: November 16, 1966
------------------------
POWER AGREEMENT
POWER AGREEMENT dated November 16, 1966, between ORMET
CORPORATION (Ormet), a Delaware corporation, and OHIO POWER COMPANY
(Ohio), an Ohio corporation.
As of June 1st, 1957, the parties hereto and certain other
parties, entered into a series of agreements, relating (a) to the
construction, ownership, fueling and operation of Kammer Generating
Station, a generating station, presently consisting of three
nominally rated 225 megawatt generating units and appurtenant
general facilities, (b) to the transformation and transmission of
certain power therein generated by Ormet Generating Corporation
(Generating), a Delaware corporation wholly owned by Ormet, to
facilities for the production of aluminum adjoining the Ohio River
near Hannibal, Ohio and (c) to back-up of such power. Kammer
Generating Station is partly owned by Ohio and partly owned by
Generating, said ownership being delineated in an agreement
entitled "Station Agreement" between Ohio and Generating, being one
of the agreements of June 1, 1957, hereinbefore referred to.
An expansion of said aluminum production facilities is
presently being undertaken which will result in a power requirement
in excess of Generating's generating capacity at Kammer Generating
Station. In order to facilitate the obtaining of such expanded
power requirements, Ormet and Ohio have entered into arrangements
under a Master Agreement of even date herewith among Ormet and Ohio
and the other parties named therein pursuant to which Generating
will transfer to Ohio all of Generating's right, title and interest
in Kammer Generating Station on the agreement that Ohio shall
furnish the power requirements to such facilities for the
production of aluminum on the terms and conditions of an Interim
Agreement (Exhibit C to the Master Agreement) until the Effective
Date of this agreement, as defined herein, and thereafter as
provided in this agreement; and the agreements as of June 1,1957
among the various parties will be terminated or modified as in the
Master Agreement provided.
NOW THEREFORE, the parties set forth their agreement as
follows:
ARTICLE ONE
DEFINITIONS
1.01. The following terms when used herein shall have the
meanings specified:
American Electric Power System means as of any time the then
holding company system of American Electric Power Company, Inc., a
New York corporation, as the term "holding company system" is
defined in the Public Utility Holding Company Act of 1935.
Average Production Cost Per Kilowatthour at Ohio's Major
Generating Stations means for any month the average production
expenses computed in the following manner:
(a) The net monthly generation of the Ohio's Major Generating
Stations shall be determined by cumulating the amounts of net
kilowatthour generation recorded for such month for each of Ohio's
Major Generating Stations in the Report of Manufacture, Form S-68,
prepared by Ohio for each such station; and
(b) the adjusted production expenses incurred at the Ohio's
Major Generating Stations for such month shall be determined by
taking the sum of the total monthly production expenses recorded
for such month for each of the Ohio's Major Generating Stations in
said Form S-68, and adding to the sum so obtained an amount in
dollars determined by multiplying the total dollars of payroll cost
at Ohio's Major Generating Stations for such month as recorded in
said Form S-68 by the ratio of (i) Total Labor Overheads for Ohio
for such month to (ii) total dollars of payroll for Ohio for such
month, and
(c) the average adjusted production expenses for Ohio's Major
Generating Stations shall be determined by dividing the total
dollar amount determined pursuant to (b) above by the total net
kilowatt-hours determined by (a) above; and
(d) the Average Production Cost per Kilowatthour at Ohio's
Major Generating Stations for such month shall be the average
production expenses determined pursuant to (c) above adjusted for
average transmission losses of Ohio for such month.
Contract Capability means in respect of any Initial Kammer
Unit 227,500 kilowatts; and in respect of Kammer Unit No. 4 or the
Revised Measurement Unit means the maximum permissible continuous
loading of the respective unit in kilowatts, measured as of the
high-voltage station busses to which such unit is electrically
connected, under average normal operating conditions and with all
regularly operated equipment in service, which is consistent with
good and safe operating practice. The Contract Capability of the
Kammer Unit No. 4 or the Revised Measurement Unit, as the case may
be, shall be taken to be the nominal capacity rating thereof during
the first twelve calendar months following the Date of Commercial
Operation thereof, and shall thereafter be the greater of (i) such
amount in kilowatts as shall be specified therefor from time to
time by the Engineering Department of the American Electric Power
Service Corporation, an Ohio Associate, and (ii) the nominal
capacity rating thereof.
Date of Commercial Operation means for any unit that date
which immediately follows a period of preliminary operation of such
unit during which major items of equipment are tested to determine
their efficiency, performance and design capability; and during
which adjustments and/or alterations are made to the equipment to
insure its safe and dependable operation. Ohio shall promptly
inform Ormet in writing when it or Ohio Associate, as the case may
be, deems that an applicable unit is ready for commercial
operation, and the date so specified shall be the Date of
Commercial Operation of such unit.
Delivery Facilities means the two double circuit 138-Kv steel
tower lines extending from the high-voltage busses at the Kammer
Substation Facilities to the Point of Delivery at the Ormet
Substation, which lines are owned in part by Ohio and in part by
Wheeling Electric Company (an Ohio Associate).
Delivery Facilities Investment means as of the end of each
calendar month, for purposes of the computations to be made
pursuant to this Agreement, the total dollars of actual gross
investment at original cost of the portion or portions of the
Delivery Facilities then owned by Ohio and Wheeling Electric
Company (an Ohio Associate) as recorded in the books of Ohio and
Wheeling Electric Company under Accounts 350, 351 and Accounts 352
through 359 (adjusted from time to time for retirements,
replacements and/or additions made in respect thereof).
Delivery Service Charge Rate for any month means .011667
during any month when the combined normal tax rate and surtax rate
(effective tax rate) of the corporate federal income tax rate in
effect is 48% or lower, .011775 when such effective tax rate is 50%
or higher, and shall be determined by interpolation for any
effective tax rate between 48% and 50%.
Effective Capability for any unit means, as of any time during
the term hereof, the total net capability as of its generating
station's high-voltage busses of such generating unit adjusted for
conditions of circulating water temperature, fuel quality,
equipment outages, etc., prevailing during such period.
Effective Date means the date on which Ormet Additional
Reduction Facilities shall have commenced operation.
Energy Generated for Ormet (EGO) means for any period the
total kilowatt-hours generated and metered for Ormet in such period
as recorded by the Metering Facilities, without adjustment for
kilowatthour transmission losses between the Metering Point and the
Point of Delivery.
Gross Plant Investment Value (GIV) means for the respective
below named facilities, as of the close of each calendar month,
amounts in dollars determined as follows:
(a) for Kammer Units No. 1 and No. 2 (GIV-a), 105.2% of
the net value thereof plus the net value of the undivided
two-thirds interest of Generating in the Kammer Station General
Facilities after depreciation in each case as shown on the books of
Generating as of December 31, 1966;
(b) for Kammer Unit No. 3 (GIV-b), 105.2% of the original
cost thereof plus the original cost of the undivided one-third
interest of Ohio in the Kammer Station General Facilities as shown
on the books of Ohio as of December 31, 1966;
(c) for Kammer Unit No. 4 (GIV-c), or the Revised
Measurement Unit (GIV-d), as the case may be, 105.2% of the total
dollars of actual gross investment at original cost (net of any
investment credit benefit) as shown in Accounts 310 through 316,
391 and 392 of the books of account of Ohio, or Ohio Associate,
less any Major Spare Parts included therein, at the close of the
earlier of (i) such month and 12 months after the close of the
month in which the Date of Commercial Operation of such unit
occurs.
(d) If at any time during the RMU Period, Kammer Unit No.
4 shall be in Commercial Operation and any portion of the Kammer
Station General Facilities shall be necessary to the operation of
Kammer Unit No. 4, the Gross Plant Investment Value of Kammer Units
No. 1 and No. 2 shall be reduced by an amount equal to the
difference between (a) the net value after depreciation of an
undivided two-thirds interest in such portion as shown on the books
of Generating on December 31, 1966, and (b) the net value after
depreciation on December 31, 1966 of the same undivided fractional
interest in such portion as the ratio of the aggregate Contract
Capability of Kammer Units No. 1 and No. 2 to the aggregate
Contract Capability of Kammer Units No. 1, No. 2, No. 3 and No. 4;
in addition, the Gross Plant Investment Value of Kammer Unit No. 3
shall be reduced by an amount equal to the difference between (a)
the original cost of an undivided one-third interest in such
portion as shown on the books of Ohio as of December 31, 1966, and
(b) the original cost as of December 31, 1966 of the same undivided
fractional interest therein as the ratio of the Contract Capability
of Kammer Unit No. 3 to the aggregate Contract Capability of Kammer
Units No. 1, No. 2, No. 3 and No. 4.
In the event that any Pollution Control Facilities shall be
added to any of the Initial Kammer Units, Kammer Unit No. 4 or the
Revised Measurement Unit, as the case may be, there shall be added
to the Gross Plant Investment Value of the applicable unit as of
the Date of Commercial Operation of such Pollution Control
Facilities the Pollution Control Investment in respect thereof.
Incremental Power Ratio (IPR) means for any month the ratio
that is obtained by dividing (a) the difference between (i) the
Ormet Total Contract Demand then in effect and (ii) 455,000
kilowatts by (b) the sum of (i) 227,500 kilowatts and (ii) after
the Modification Date the Contract Capability of Kammer Unit No. 4
except during the RMU Period the Contract Capability of the Revised
Measurement Unit.
Initial Kammer Units means the three nominally rated
225,000-Kw steam-electric generating units presently in commercial
operation at Kammer Generating Station, plus such additions and
replacements as may hereafter be added thereto and less such
retirements as may be deleted therefrom. The Initial Kammer Units
comprise all items of property, exclusive of Major Spare Parts,
presently at Kammer Generating Station (plus additions and
replacements and less retirements) other than Kammer Station
General Facilities and Kammer Station Substation Facilities. The
Initial Kammer Units are sometimes more specifically referred to
herein in the singular, as Kammer Unit No. 1, Kammer Unit No. 2 and
Kammer Unit No. 3, Kammer Unit No. 1 being the unit nearest the
Ohio River and Kammer Unit No. 3 being the unit farthest from the
Ohio River.
Kammer Fuel Expense means for any month the actual expenses
associated with the purchase, testing, measuring, unloading,
storing and handling of all fuel utilized for the generation of
electric power and energy at Kammer Generating Station during such
month (less net amounts received from the sale of residuals) as
recorded for such month in the books of Ohio under Account 501 of
the Uniform System of Accounts.
Kammer Generating Station means the steam-electric generating
station owned by Ohio on the Effective Date adjoining the Ohio
River near Moundsville, West Virginia and consisting of (a) the
Initial Kammer Units, (b) Kammer Station General Facilities, (c)
Kammer Substation Facilities and (d) a future steam-electric
generating unit (Kammer Unit No. 4) which Ohio may elect to install
subsequent to the Effective Date hereof. Kammer Generating Station
is located on a generating station site of approximately 145 acres
of land which is completely allocated among the Initial Kammer
Units, Kammer Station General Facilities and Kammer Substation
Facilities, and a part of which may be later allocated to Kammer
Unit No. 4.
Kammer Insurance Cost means from the Effective Date until the
Modification Date the net insurance costs of Ohio (after deduction
of dividends) allocable in respect of the Initial Kammer Units,
Kammer Substation Facilities and Kammer Station General Facilities
in order to insure such facilities against fire and other hazards
to the extent and against which the American Electric Power System
insures such kinds of facilities. After the Date of Commercial
Operation of Kammer Unit No. 4 such cost shall be diminished by any
amount thereof in respect of Kammer Station General Facilities
allocable to Kammer Unit No. 4.
From the Modification Date, except during the RMU Period, if
any, Kammer Insurance Cost means Ohio's net cost of such insurance
in respect of the Initial Kammer Units, Kammer Unit No. 4, Kammer
Substation Facilities and Kammer Station General Facilities.
During the RMU Period, if any, Kammer Insurance Cost means
Ohio's net cost of such insurance in respect of the Initial Kammer
Units, Kammer Substation Facilities other than Kammer Substation
Facilities attributable to Kammer Unit No. 4, and Kammer Station
General Facilities other than any interest in Kammer Station
General Facilities attributable to Kammer Unit No. 4.
Kammer Operation Expense means for any month the actual
expenses associated with the operation of all facilities at the
Kammer Generating Station (other than substation facilities not
part of Kammer Substation Facilities) during such month and shall
specifically mean for such month the dollar amount equal to the sum
of:
(a) the total net production operation expenses for
operations at Kammer Generating Station as recorded for such month
in the books of Ohio under Accounts 500 through 507, less Account
501, of the Uniform System of Accounts;
(b) the total actual expenses for operation of the
control facilities at Kammer Generating Station as recorded for
such month in the books of Ohio under Account 556 of the Uniform
System of Accounts;
(c) the total actual expenses for operation of Kammer
Substation Facilities as recorded for such month in the books of
Ohio under Accounts 561 and 562, and Accounts 566 and 567, of the
Uniform System of Accounts;
(d) an amount for operating labor overheads equal to the
product of (i) that portion of the total payroll of Kammer
Generating Station included in items (a) through (c) above, and
(ii) the ratio of (x) the Total Labor Overheads of Kammer
Generating Station to (y) the total Kammer Generating Station
payroll, such ratio being computed for such month or for a
representative prior period to be mutually agreed upon;
(e) an amount equal to the credits, if any, included in
items (a) through (c) above to Kammer Generating Station from
carrying charges for Major Spare Parts;
and less the sum of
(f) the amounts, if any, included in items (a) through
(c) above for property insurance and/or property taxes; and
(g) an amount equal to the charges, if any, included in
items (a) through (c) above to Kammer Generating Station for
carrying charges for Major Spare Parts.
Kammer Generating Station will bear its share of Ohio's
engineering costs on the basis of the allocation principles
presently in effect provided, however, that in the event that any
regulatory agency having jurisdiction in the premises shall require
a change in such principles, then Kammer Generating Station shall
bear its share of such expense in accordance with such changed
principles.
Kammer Maintenance Expense means for any month the actual
expenses associated with the maintenance of all facilities at the
Kammer Generating Station during such month and shall specifically
mean for such month the dollar amount equal to the sum of:
(a) the total actual production maintenance expenses
(including costs relating to repairing, handling and shipping of
Major Spare Parts on the same basis as in use throughout the
American Electric Power System) at Kammer Generating Station equal
to the sum of the dollar amounts recorded for such month in the
books of Ohio under Accounts 510 through 514 and 932 of the Uniform
System of Accounts;
(b) the total actual Kammer Substation Facilities
maintenance expenses equal to the sum of the dollar amounts
recorded for such month in the books of Ohio under Accounts 568
through 570 of the Uniform System of Accounts;
(c) an amount for maintenance labor overheads equal to
the product of (i) the portion of the total labor payroll of Kammer
Generating Station included in items (a) through (b) above and (ii)
the ratio of (x) Total Labor Overheads of Kammer Generating Station
to (y) total Kammer Generating Station payroll, such ratio being
computed for such month or for a representative prior period to be
mutually agreed upon.
Kammer Substation Accrual Credit means (a) for any month prior
to the Modification Date and during the RMU Period, if any, the
product of (i) $6,126,196, (ii) the number of months from March 31,
1959 to such month, and (z) 1/144th of one per cent (1/14400), and
(b) for any month after the Modification Date when there is no RMU
Period, the sum of (i) the product of (x) $6,126,196, (y) the
number of months from March 31, 1959 to the Modification Date, and
(z) 1/144th of one percent (1/14400), and (ii) the product of (x)
the sum of $6,126,196 and the Kammer Substation Facilities
Investment as of the later of the Modification Date and the Date of
Commercial Operation of Kammer Unit No. 4 for facilities not deemed
to be Kammer Substation Facilities prior to the Modification Date
and during the RMU Period, if any, pursuant to the second paragraph
of the definition thereof in this Agreement, (y) the number of
months from the later of the Modification Date and the Date of
Commercial Operation of Kammer Unit No. 4 to such month, and (z)
1/144th of one per cent (1/14400).
Kammer Station General Facilities means all items of property
(exclusive of Major Spare Parts and any items classified under
Accounts 350 through 359 and Account 397 of the Uniform System of
Accounts) at Kammer Generating Station which are useful and/or
necessary for operation or maintenance of Kammer Generating Station
and which cannot be properly associated specifically with any one
of the Initial Kammer Units or with Kammer Unit No. 4. The Kammer
Station General Facilities shall initially be all items of property
at Kammer Generating Station defined as General Facilities under
the Station Agreement plus any additions and replacements thereto
and less any re therefrom, and shall include after the Date of
Commercial Operation of Kammer Unit No. 4 similarly determined
items of property which were provided and/or installed with Kammer
Unit No. 4 plus any additions or replacements thereto and less any
retirements therefrom.
Kammer Substation Facilities means all items of property
associated with the Initial Kammer Units and Kammer Unit No. 4 such
as generator transformers, auto-transformers, oil circuit breakers,
disconnect switches, lightning arrestors, conductors, meters,
relays and protective devices, fire protection system, 138-Kv
busses, 345-Kv busses, 765-Kv busses, substation and/or switchyard
structures, etc. (less Major Spare parts, if any), which are
located on the generating station site and which are properly
classifiable under Accounts 350 through 359 and Account 397 of the
Uniform System of Accounts. Anything herein to the contrary
notwithstanding, transmission lines owned by Ohio, or an Ohio
Associate, which are used electrically to connect the Kammer
Substation Facilities with any facilities not located on the site
of Kammer Generating Station shall not be a part of Kammer
Substation Facilities even though parts of such transmission lines
may be located on said generating station site.
To the extent that any facilities are hereafter used or
installed at the Kammer Substation Facilities for the express
purpose of electrically connecting Kammer Unit No. 4 with the
high-voltage busses of Kammer Generating Station, such facilities
shall not be deemed Kammer Substation Facilities prior to the
Modification Date and during the RMU Period, if any.
To the extent that any additions are hereafter made to the
Kammer Substation Facilities, not necessary for the express purpose
of electrically connecting Kammer Unit No. 4 with the high-voltage
busses of Kammer Generating Station, different in function or
purpose from any of the existing (as of the date of this Agreement)
Kammer Substation Facilities, such additions shall not be deemed
Kammer Substation Facilities without Ormet's consent; provided,
however, that Ormet's consent shall not be unreasonably withheld.
To the extent that any additions to the Kammer Substation
Facilities are made by Ohio for the purpose of providing stub-line
electric service to a customer of Ohio other than Ormet, Olin or
Revere, such additions shall not be included in the Kammer
Substation Facilities until such date, if any, when such facilities
may be used for purposes other than the purpose of providing
stub-like electric service to said customer and or another customer
than Ormet, Olin and/or Revere.
Kammer Substation Facilities Investment means, as of the close
of each month, the total dollars of actual gross investment at
original cost (net of any investment tax credit benefit) of all
parts of the Kammer Substation Facilities, including land, as shown
by Accounts 350 through 359 and Account 397 on Ohio's books as of
the close of such month.
Kammer Unit No. 4 means a steam-electric generating unit, with
all necessary appurtenant equipment, which Ohio may install at
Kammer Generating Station.
Major Spare Parts means the following pool of Major Spare
Parts interchangeable with the equivalent items of the Initial
Kammer Units:
1 -- Spare High Pressure Turbine Rotor,
1 -- Spare High Pressure Generator Rotor,
1 -- Spare Low Pressure Turbine Rotor-Turbine End,
1 -- Spare Low Pressure Turbine Rotor-Generator End,
1 -- Spare Low Pressure Generator Rotor,
1 -- 1/2 Set Spare High Pressure Stator Bars,
1 -- 1/2 Set Spare Low Pressure Stator Bars,
1 -- Spare High Pressure Exciter Armature,
1 -- Spare Low Pressure Exciter Armature,
1 -- Spare Boiler Feed Pump Rotor-Turbine End,
1 -- Special Rotor Carriage,
1 -- Spare 700-HP Motor for Coal Crusher,
1 -- Spare 5000-HP Motor for Forced Draft Fan,
1 -- Spare High Pressure Turbine Nozzle 9th Stage
Appurtenant Accessories such as wedges, clips and shims
for any of the above.
Major Spare Parts shall also include spare parts which Ohio
and Ormet hereafter agree be added to the above list. Ormet will
not unreasonably withhold such agreement.
After the Modification Date, the pool of Major Spare Parts
will be expanded to include items of equipment (such as, but not
limited to, turbine rotors, generator rotors, generator exciter
rotors, stator coil sets, motors and transformers) useable on
Kammer Unit No. 4, or the Revised Measurement Unit during the RMU
Period, and other similar generating units on the American Electric
Power System.
Major Spare Parts Ratio means for any month the ratio of the
number of items of any equipment at Kammer Generating Station but
prior to the Modification Date and during the RMU Period, if any,
not relating to Kammer Unit No. 4, and during the RMU Period
relating to the Revised Measurement Unit (but less any Major Spare
Parts, at Kammer Generating Station relating to Kammer Unit No. 4)
which can be interchanged with a particular item of equipment of
Major Spare Parts to the total number of the items of equipment at
the generating stations of the American Electric Power System which
can be interchanged with the same particular item of equipment of
Major Spare Parts. A Major Spare Parts Ratio is applicable for
each and every item of Major Spare Parts.
Metering Facilities means a 138-Kv metering installation owned
by Ohio and located at and being a part of the Kammer Substation
Facilities, equipped with all the necessary metering transformers,
meters, and instruments in order accurately to meter and record all
the necessary electrical quantities with respect to the delivery of
and accounting for power and energy hereunder.
Metering Point means the location of the Metering Facilities
located at the Kammer Substation Facilities.
Modification Date means the earlier of (i) the Date of
Commercial Operation of Kammer Unit No. 4, if Kammer No. 4 has a
nominal rating of 800,000 kilowatts or greater, and (ii) January 1,
1972.
In the event that Ormet shall advise Ohio on or prior to
January 1, 1972, in writing, that there shall be no Modification
Date, there shall be no Modification Date under this Agreement and
all the terms and conditions of this Agreement, as provided prior
to the Modification Date, shall continue in effect after what would
otherwise have been the Modification Date until the termination of
this Agreement.
Normalized Kammer Maintenance Expense means for any month the
Kammer Maintenance Expense normalized for the calendar year in
which such month falls on the basis of forecasts made by Ohio prior
to the beginning of each such calendar year, and as may be
subsequently adjusted during such year so that the total amounts so
charged will be equal to the aggregate of the monthly Kammer
Maintenance Expense for such calendar year.
Ohio Associate means any company other than Ohio in the
American Electric Power System.
Ohio's Major Generating Stations means Ohio's presently
operating Muskingum River Station, Tidd Station, Philo Station and
Kammer Generating Station, and the portion of Cardinal Station and
Sporn Station owned by Ohio. When any such station ceases to be a
major generating station, it shall be deleted. Future additions
made to the major generating capacity of Ohio, whether at existing
stations or new stations, will be included as Ohio's Major
Generating Stations as of the first day of the month following the
month in which the Date of Commercial Operation of such new
generating capacity shall occur; provided, however, that new
generating capacity installed by Ohio which is substantially
different in design and operating characteristics or which shall
have been installed by Ohio as a result of unusual circumstances
shall not be included as part of Ohio's Major Generating Stations
for purposes of this Agreement except by mutual agreement of the
parties.
Omal Facilities means the aggregate facilities of Ormet, Olin
Mathieson Chemical Corporation (Olin) and Revere Copper and Brass
Incorporated (Revere) for the reduction of aluminum and for the
rolling and/or fabrication of aluminum, adjoining the Ohio River
near Hannibal, Ohio.
Ormet Additional Reduction Facilities means the sixth potline
of approximately 40,000 tons annual capacity at the aluminum
reduction plant near Hannibal, Ohio.
Ormet Energy Ratio (OER) means for any month the ratio that is
obtained by dividing (a) the Energy Generated for Ormet for such
month diminished by the cumulative Premium Kilowatthours for such
month by (b) the sum of (i) the Total Net Generation for such month
of Kammer Generating Station diminished prior to the Modification
Date by the Total Net Generation of Kammer Unit No. 4, if any, plus
(ii) during the RMU Period the Total Net Generation for such month
of the Revised Measurement Unit, diminished by the Total Net
Generation of Kammer Unit No. 4, if any.
Ormet Firm Power Reservation means for any month the highest
demand in kilowatts previously specified by Ormet for any month
prior to and including such month that Ohio is obligated to
provide, subject to the terms and conditions of this Agreement, at
the Metering Point, except as otherwise specifically provided for
in Section 2.02.
Ormet Metering Point Demand means for any period the highest
simultaneous integrated load in kilowatts measured by the Metering
Facilities at the Metering Point, without adjustment for
transmission losses between the Metering Point and the Point of
Delivery, during any thirty-minute period starting on the clock
hour or half-hour in the period under consideration.
Ormet Power Ratio (OPR) means for any month the ratio that is
obtained by dividing (a) the Ormet Total Contract Demand then in
effect by (b) the sum of (i) the Contract Capability of the Initial
Kammer Units (Kammer Units No. 1, No. 2 and No. 3) and after the
Modification Date (ii) the Contract Capability of Kammer Unit No.
4 except during the RMU Period the Contract Capability of the
Revised Measurement Unit.
Ormet Substation means the facilities now or hereafter owned
by Ormet and located at the Omal Facilities, including 138-Kv line
terminal positions with circuit breakers and all necessary related
equipment for switching, for protection and operation of the
Delivery Facilities.
Ormet Total Contract Demand means for any month the sum of (i)
the Ormet Firm Power Reservation in effect for such month and (ii)
fifteen percent (15%) of the Ormet Firm Power Reservation.
Point of Delivery means the point of connection of the
Delivery Facilities with the Ormet Substation.
Pollution Control Facilities means for any Initial Kammer
Unit, Kammer Unit No. 4 or Revised Measurement Unit, as the case
may be, any facilities, other than facilities put into service on
the Date of Commercial Operation of such unit, including any stack
alterations, replacements or additions, provided and installed by
Ohio or Ohio Associate, as the case may be, in compliance with
requirements of governmental authority having jurisdiction in the
premises, relating to atmospheric and water pollution abatement or
control.
Pollution Control Investment means, as of the close of each
calendar month, for any Initial Kammer Unit, Kammer Unit No. 4 or
Revised Measurement Unit, as the case may be, 105.2% of the total
dollars of actual gross investment at original cost made by Ohio or
Ohio Associate for Pollution Control Facilities associated with
such unit, at the close of the earlier of (i) such month and (ii)
12 months after the close of the month in which the Date of
Commercial Operation of such Pollution Control Facilities occurs.
Power Demand Rate for any month means .0091667 during any
month when the combined normal tax rate and surtax rate (effective
tax rate) of the corporate federal income tax rate in effect is 48%
or lower, .0093750 when such effective tax rate is 50% or higher,
and shall be determined by interpolation for any effective tax rate
between 48% and 50%.
Premium Kilowatthours for any hour means the following:
(a) prior to the Modification Date the number of kilowatthours
by which the Energy Generated for Ormet for such hour exceeds the
Total Net Generation of the Initial Kammer Units for such hour.
(b) during the RMU Period, if any, the number of kilowatthours
by which the Energy Generated for Ormet for such hour exceeds the
Total Net Generation of the Initial Kammer Units and the Revised
Measurement Unit for such hour.
(c) after the Modification Date and except during the RMU
Period the number of kilowatthours by which the Energy Generated
for Ormet for such hour exceeds the Total Net Generation of Kammer
Generating Station for such hour.
Property Unit means either (i) a unit of property as such
units are defined in the Property Unit List, or (ii) an item of
property, the investment in which at the time of commercial
operation thereof is in excess of $25,000, unless Ormet and Ohio
shall mutually agree that such item of property shall not be a
Property Unit.
Property Unit List means the publication entitled "List of
Property Units" kept by Ohio in accordance with Order No. 45 of the
Federal Power Commission adopted January 13, 1937 and heretofore
delivered to Ormet by Ohio. Upon any revision of the Property Unit
List, the revised Property Unit List shall be substituted for the
Property Unit List then in effect unless Ormet shall, within twenty
(20) days after delivery to it of notice of such revision, advise
Ohio that it objects thereto.
Revised Measurement Unit means the most recently installed (as
of January 1, 1972) fossil fuel burning steam-electric generating
unit nominally rated at 800,000 Kw., or higher, other than Kammer
Unit No. 4, owned and commercially operated by Ohio or an Ohio
Associate, either directly or indirectly, provided, however, that
if at such date there shall be no such unit, Ormet may designate
the then highest nominally rated fossil fuel burning steam-electric
unit so owned as the Revised Measurement Unit. The Revised
Measurement Unit shall consist of all items of property
attributable to such unit up to the generator terminals
classifiable under Accounts 310 through 316, 391 and 392 of the
Uniform System of Accounts, including such interest in the general
facilities of any multi-unit generating station of which such unit
forms a part as are used for the operation of more than one unit at
such station, including the Revised Measurement Unit, and cannot be
properly associated with any individual unit thereof, in the
proportion which the nominally rated capacity of the Revised
Measurement Unit bears to the aggregate nominal rating of all units
at such station to which such part is applicable.
RMU Fuel Expense means for any month the actual expenses
associated with the purchase, testing, measuring, storing and
handling of all fuel utilized for the generation of electrical
energy (less net amounts received from sales of residuals) by the
Revised Measurement Unit as entered for such month on the books of
Ohio or Ohio Associate, as the case may be, under Account 501 of
the Uniform System of Accounts.
RMU Maintenance Expense means for any month the actual
expenses associated with the maintenance of the Revised Measurement
Unit and of the RMU Substation Facilities during such month and
shall include the dollar amounts recorded for such month on the
books of Ohio or Ohio Associate, as the case may be, in respect of
such unit under Accounts 510 through 514, 568 through 570, and 932,
plus an amount for labor overheads equal to the portion of the
payroll of the generating station at which the Revised Measurement
Unit is located applicable to such maintenance expense multiplied
by the ratio of Total Labor Overheads of Ohio or of Ohio Associate,
as the case may be, to the total payroll of Ohio or of Ohio
Associate, for a representative period to be mutually agreed upon.
In the event that the Revised Measurement Unit forms a unit in
a power station consisting of steam-electric units, all of which
were constructed after the date of this Agreement and all of which
are of substantially the same or of more nominal capacity than the
Revised Measurement Unit, the RMU Maintenance Expense shall be
determined by computing the maintenance expense of the entire
station as recorded in Accounts 510 through 514, 568 through 570,
and 932, plus applicable labor overheads and allocating such
expense to the Revised Measurement Unit and RMU Substation
Facilities in the ratio of its total net generation to the
station's total net generation.
RMU Operation Expense means for any month the actual expenses
associated with the operation of the Revised Measurement Unit and
RMU Substation Facilities during such month and shall include the
dollar amounts recorded for such month on the books of Ohio or Ohio
Associate, as the case may be, in respect of such unit under
Accounts 500 through 507, other than Account 501 (fuel), Accounts
556, 561, 562, 566 and 567, plus an amount for labor overheads
equal to the portion of the payroll of the generating station at
which the Revised Measurement Unit is located applicable to such
operation expense multiplied by the ratio of Total Labor Overheads
of Ohio or of Ohio Associate, as the case may be, to the total
payroll of Ohio or of Ohio Associate, for a representative period
to be mutually agreed upon. There shall be added to the above an
amount equal to any credits relating to carrying charges for Major
Spare Parts, and there shall be deleted from the above an amount
equal to the amounts, if any, included for property insurance and
for property taxes and an amount equal to any carrying charges for
Major Spare Parts.
In the event that the Revised Measurement Unit forms a unit in
a power station consisting of steam-electric units, all of which
were constructed after the date of this Agreement and all of which
are substantially the same or of more nominal capacity than the
Revised Measurement Unit, the RMU Operation Expense shall be
determined by computing the operation expense of the entire station
and allocating such expenses to the Revised Measurement Unit and
RMU Substation Facilities in the ratio of its Contract Capability
to the aggregate Contract Capability of the entire station.
RMU Period means a period commencing on the Modification Date,
if the Date of Commercial Operation of an 800,000-kilowatt or
higher Kammer Unit No. 4 has not then occurred, and ending on the
Date of Commercial Operation of such a Kammer Unit No. 4 if such
date is prior to June 30, 1972, or if such Date of Commercial
Operation of such a Kammer Unit No. 4 does not take place on or
before June 30, 1972, then on the Date of Commercial Operation of
Kammer Unit No. 4, provided that Ormet shall have agreed in writing
to the termination of the RMU Period effective as of the Date of
Commercial Operation of Kammer Unit No. 4 not later than ninety
(90) days after the date on which Ohio's board of directors shall
have unconditionally authorized the immediate construction of
Kammer Unit No. 4. If Ormet does not so agree, the RMU Period
shall continue for the balance of this Agreement and any extension
or renewal thereof. In the event that Kammer Unit No. 4 is other
than a fossil fuel burning steam-electric generating unit the RMU
Period shall not in any event terminate on the Date of Commercial
Operation of Kammer Unit No. 4 unless Ormet and Ohio shall have
agreed prior thereto upon the methods for allocation of capital
costs and production expenses in respect thereof.
RMU Substation Facilities means all items of property related
to the transformation of electrical energy from the generator
terminals to the transmission lines associated with the Revised
Measurement Unit such as generator transformers, auto-transformers,
oil circuit breakers, disconnect switches, lightning arrestors,
conductors, meters, relay and protective devices, fire protection
system, 138-Kv busses, 345-Kv busses, 765-Kv busses, substation
and/or switchyard structures, etc., which are classifiable under
Accounts 350 through 359 and Account 397 of the Uniform System of
Accounts. In the event that such facilities are useful for two or
more units an allocation shall be deemed made in proportion to the
nominal ratings of the two or more units. Anything herein to the
contrary notwithstanding, transmission lines owned by Ohio or an
Ohio Associate which are used to electrically connect the RMU
Substation Facilities with any facilities not located on the
generating station site at which the Revised Measurement Unit is
installed shall not be a part of the RMU Substation Facilities even
though parts of such transmission lines may be located on such
generating station site.
Anything in the foregoing to the contrary notwithstanding, the
RMU Substation Facilities shall not include any item which would
not have been necessary as a substation facility had the Revised
Measurement Unit been built as the fourth steam-electric generating
unit at Kammer Generating Station.
RMU Substation Facilities Investment means as of the close of
each month, 103.5% of the total dollars of actual gross investment
at original cost (net of any investment tax credit benefit) of the
RMU Substation Facilities, including land, as shown by Accounts 350
through 359 and Account 397 on the books of Ohio or Ohio Associate,
as the case may be, at the close of the earlier of (i) such month
and (ii) 12 months after the month in which the Date of Commercial
Operation of the Revised Measurement Unit occurs.
Total Gross Investment in any Major Spare Part means the
aggregate purchase price including freight and excise taxes.
Total Labor Overheads means the cost of labor overheads such
as group retirement annuities, group life insurance and
hospitalization insurance, Workmen's Compensation insurance, state
and federal unemployment and federal social security taxes, public
liability insurance, safety programs, recreation programs and
employee publications which are not accounted for and reported as
a direct part of the production expenses of the generating station.
Total Net Generation, in connection with any generating unit
or combination of generating units in a generating plant, means,
during the period being considered, the electrical output of the
generator, or generators of such unit or units, as the case may be,
measured in kilowatt hours reduced by (a) the energy used by
auxiliaries for the unit, or units, during such period, and (b) the
transformation losses between the generator terminals of such unit
or units and the high-voltage busses of the generating station
involved. Transformation losses will be measured by suitable
instruments, or by any alternative method agreed upon by Ohio and
Ormet.
Uniform System of Accounts means the uniform system of
accounts prescribed for Ohio by the Public Utilities Commission of
Ohio as in effect on the date of this Agreement.
Working Capital Charge Rate for any month means .008658 during
any month when the combined normal tax rate and surtax rate
(effective tax rate) of the corporate federal income tax rate in
effect is 48% or lower, .0088763 when such effective tax rate is
50% or higher, and shall be determined by interpolation for any
effective tax rate between 48% and 50%.
Working Capital and Stores Requirement at any time means an
amount of dollars for each month that is equal to the net sum of
(a) one-twelfth (1/12) of the sum obtained by adding for each of
the twelve (12) preceding months the net amount of:
(i) the original cost of materials and supplies (other
than Major Spare Parts and coal) in stock at Kammer Generating
Station except that prior to the Modification Date and during the
RMU Period materials and supplies allocable to Kammer Unit No. 4,
if any, shall be deleted, and that during the RMU Period materials
and supplies allocable to the Revised Measurement Unit shall be
added; plus
(ii) any prepaid expense items other than insurance and
taxes, similarly determined as for (i) above, relating to Kammer
Generating Station and/or the Revised Measurement Unit; less
(iii) accounts payable included under (i) above; and
(b) the amount of cash in dollars reasonably required for payroll
purposes for the operation and maintenance of Kammer Generating
Station except that prior to the Modification Date and during the
RMU Period cash reasonably required for payroll allocable to Kammer
Unit No. 4, if any, shall be deleted, and that during the RMU
Period the cash reasonably required for payroll allocable to the
Revised Measurement Unit shall be added.
The Working Capital and Stores Requirement shall be
established as of the close of the month immediately preceding the
Effective Date and may be reviewed and reestablished from time to
time during the term hereof at the request of either party, and in
addition, anything hereinabove to the contrary notwithstanding,
after the Modification Date the parties shall estimate the Working
Capital and Stores Requirement for the 12-month period immediately
following the Date of Commercial Operation of Kammer Unit No. 4 to
appropriately include the increased cash requirements and increased
requirements for materials and supplies other than coal
necessitated by the operation and maintenance of Kammer Unit No. 4.
In the event that Kammer Unit No. 4 shall have not been put in
commercial operation prior to or on the Modification Date, the
Working Capital and Stores Requirement for the Revised Measurement
Unit shall be established in the same manner as hereinabove
described for Kammer Unit No. 4.
ARTICLE TWO
POWER SUPPLY
2.01. Ohio shall, subject to the provisions of Section 8.06
hereof and the other terms and conditions of this Agreement, from
and after the Effective Date, deliver or cause to be delivered to
the Point of Delivery at all times during the term hereof power and
associated energy in amounts required by Ormet up to an Ormet
Metering Point Demand equal to the Ormet Firm Power Reservation as
from time to time in effect, less delivery losses between the
Metering Point and the Point of Delivery.
2.02. Ormet shall, prior to the Effective Date, deliver to
Ohio in writing its best estimate of the Ormet Firm Power
Reservation in kilowatts, rounded to the nearest 1,000 kilowatts,
as of the Effective Date; provided, however, that such initial
Ormet Firm Power Reservation shall not be less than 465,000
kilowatts and that by twelve months from the Effective Date the
Ormet Firm Power Reservation shall not be less than 475,000
kilowatts parties understand that in the operation of a new
aluminum reduction facility the amount of power necessary for the
most advantageous operation can be determined only after a
reasonable period of operating experience. Accordingly, Ormet
shall be entitled to make a downward adjustment of its estimate
Ormet Firm Power Reservation for the second, third, fourth, fifth
and sixth months following the Effective Date, to be effective as
of the first day of such month; provided, however, (a) the Ormet
Firm Power Reservation shall in no event be adjusted to an amount
less than the 465,000 kilowatts, and (b) the Ormet Firm Power
Reservation in effect for each of the six months following the
Effective Date shall be adjusted upward as of the first day of each
month to an amount equal to the highest Ormet Metering Point Demand
metered for such month, rounded to the next 1,000 kilowatts,
regardless of the amount that was estimated by Ormet for such
month.
Subsequent to the Effective Date and prior to the Modification
Date, Ormet may increase the Ormet Firm Power Reservation to a
maximum of 575,000 kilowatts, and subsequent to the Modification
Date to a maximum of 850,000 kilowatts by (i) increases of not less
than 2,000 kilowatts and not more than 10,000 kilowatts in any
month, to become effective as of the first day of such month, on
not less than thirty (30) days notice in writing to Ohio, or by
(ii) increases over 10,000 kilowatts to not more than 50,000
kilowatts in any month, to become effective as of the first day of
such month, on not less than ninety (90) days notice in writing to
Ohio, or by (iii) an increase of more than 50,000 kilowatts but not
more than 120,000 kilowatts in any month, to become effective as of
the first day of such month, on not less than one hundred eighty
(180) days notice to Ohio; provided, however, that Ormet may not
increase the Ormet Firm Power Reservation during any twenty-four
months period by more than 120,000 kilowatts by any combination of
notices made pursuant to (i), (ii) and (iii) above except as may be
otherwise agreed to by Ohio.
Anything in the foregoing provisions of this Section 2.02 to
the contrary notwithstanding, in the event that Ormet shall by
virtue of any technological advance or advances in the art of
aluminum reduction be able with a lesser reduction plant power
demand at any time or times during the term hereof to produce at
the Omal Facilities approximately the same amount of aluminum as it
had been able to produce prior to such technological advance(s),
Ormet, from time to time, may reduce the Ormet Firm Power
Reservation then in effect by an amount equal to its estimate of
the reduction in reduction plant power demand enabled by such
technological advance(s), provided, however, that if as to any such
reduction the amount of reduction shall be less than 10,000
kilowatts the change in the Ormet Firm Power Reservation shall not
take effect until sixty days after notice thereof to Ohio, or if
such reduction shall be 10,000 kilowatts or higher, until 120 days
after such notice to Ohio provided, however, that in no event shall
the Ormet Firm Power Reservation be reduced pursuant to this
provision to less than 475,000 kilowatts or by more than 5% of the
Ormet Firm Power Reservation in effect immediately prior to such
reduction, and provided further that in the event the actual
demonstrable reduction in reduction plant power demand for
approximately such same amount of aluminum shall be less than such
estimate the Ormet Firm Power Reservation shall be increased
retroactively to the date of such reduction by the difference
between such estimate and the actual reduction.
2.03. Ohio shall load Kammer Generating Station in any
calendar year, insofar as it may be physically practicable to do so
consistent with good and safe commercial practice, so that the
annual load factor on that portion of the available generating
capability of the station which is not being required to provide
the highest Ormet Firm Power Reservation for such year will not be
less than the average annual load factor on Ohio's Major Generating
Stations other than Kammer Generating Station; provided, however,
that Ohio shall not be obligated to carry an annual load factor on
Kammer Generating Station for any such year which shall be higher
than the annual load factor of the Ormet load for such year.
Annual load factor as used herein shall mean for (a) the portion of
Kammer Generating Station's capability which is not required to
provide the highest Ormet Firm Power Reservation for any year, the
ratio obtained by dividing (i) the Total Net Generation of Kammer
Generating Station other than for Ormet for such year by (ii) the
product of (x) the amount in kilowatts equal to the average
available Contract Capability of all of the Kammer Generating
Station's generating units for such year, less the highest Ormet
Firm Power Reservation for such year, and (y) the total hours in
such year; and (b) for Ohio's Major Generating Stations other than
Kammer Generating Station, the ratio obtained by dividing (i) the
Total Net Generation of all such generating stations for such year
by (ii) the product of (x) the average aggregate net capability
rating of all such generating stations for such year as reported by
the Statistical Department of the American Electric Power Service
Corporation to the Federal Power Commission, and (y) the total
hours in such year; and for (c) the Ormet load, the ratio obtained
by dividing (i) the total aggregate Energy Generated for Ormet
during such year by (ii) the product of (x) the highest Ormet Firm
Power Reservation for such year and (y) the total hours in such
year.
2.04. All electric service provided hereunder shall be
3-phase, 60-cycle, at a nominal voltage 138-Kv. Ormet and Ohio
shall cooperate with each other to regulate the voltage at the
138-Kv busses at Ormet Substation within plus or minus 5%.
2.05. Whenever it is necessary to measure any demand relative
to the power supplied hereunder, such demand shall be taken as the
highest simultaneous integrated load in kilowatts at the point of
determination during any 30-minute period starting on the hour or
half-hour in the period under consideration.
2.06. The power factor of Ormet's total load at any time, as
of the Point of Delivery, computed from meter readings at the
Metering Point by methods mutually agreed to, shall not be less
than ninety percent (90%) lagging. The parties agree that if
Ormet's maintaining a lower power factor shall become an undue
burden upon Ohio, Ohio shall be the sole judge of the measure or
extent of the corrective action necessary.
ARTICLE THREE
DEMAND CHARGES
3.01. Subsequent to the Effective Date of this Agreement Ormet
shall pay Ohio monthly for power demand the aggregate of the
following charges:
(a) the product of (i) the Gross Plant Investment Value
for Kammer Units No. 1 and No. 2, and (ii) the Power Demand Rate
for such month;
(b) the product of (i) the Gross Plant Investment Value
for Kammer Unit No. 3, (ii) the Power Demand Rate for such month
and (iii) the Incremental Power Ratio for such month;
(c) after the Modification Date, except during the RMU
Period, the product of (i) the Gross Plant Investment Value for
Kammer Unit No. 4, (ii) the Power Demand Rate for such month; and
(iii) the Incremental Power Ratio for such month;
(d) after the Modification Date and during the RMU
Period, if any, the product of (i) the Gross Plant Investment Value
for the Revised Measurement Unit, (ii) the sum of the Power Demand
Rate for such month and .001250, and (iii) the Incremental Power
Ratio for such month;
(e) a dollar amount equal to the product of (i) the total
amount accrued by Ohio in such month for payment of Kammer
Insurance Cost, and (ii) the Ormet Power Ratio in effect for such
month; except that during the RMU Period there shall be deleted
from (i) above that portion of the Kammer Insurance Cost
attributable to the Initial Kammer Units and the Kammer Station
General Facilities, and there shall be added a dollar amount equal
to the product of such deducted Kammer Insurance Cost and the sum
of (x) 2/3 and (y) 1/3 of the Incremental Power Ratio for such
month;
(f) an amount equal to the product of (i) the Ormet Power
Ratio in effect for such month, (ii) the Power Demand Rate for such
month, and (iii) the Kammer Substation Facilities Investment as of
the close of the next preceding month diminished by the lesser of
(x) the Kammer Substation Accrual Credit for such month or (y)
Ohio's aggregate investment in all existing replacements and
additions to the Kammer Substation Facilities made subsequent to
March 31, 1959;
(g) during the RMU Period, if any, an amount equal to the
product of (i) the RMU Substation Facilities Investment as of the
close of the next preceding month, and (ii) the Ormet Power Ratio
in effect for such month, and (iii) the sum of the Power Demand
Rate for such month and .001250;
(h) an amount in dollars equal to the sums of the
products of (i) the Total Gross Investment in each Major Spare
Part, as of the close of the next preceding month, (ii) the Major
Spare Parts Ratio in effect for such Major Spare Part for such
month, and (iii) the Power Demand Rate for such month plus .001250,
and (iv) the Ormet Power Ratio for such month;
(i) an amount in dollars equal to the product of (i)
Working Capital and Stores Requirement for such month, (ii) the
Working Capital Charge Rate, and (iii) the Ormet Power Ratio for
such month, provided, however, that in lieu of such monthly amount
Ormet may make a cash advance to Ohio in an amount of dollars from
time to time to be mutually agreed upon;
(j) a dollar amount equal to the sum of (1) the product
of (i) the Delivery Facilities Investment as of the close of the
next preceding month and (ii) the Delivery Service Charge Rate for
such month, and (2) an amount in dollars equal to the payment made
by Ohio to Wheeling for the next preceding month to reimburse
Wheeling for any amount of tax, other than federal income tax or
excess profits tax, ad valorem property tax, federal social
security tax, or state unemployment tax or workmen's compensation
tax, paid or payable by Wheeling for or in connection with the use
by Ohio of Delivery Facilities owned by Wheeling to deliver power
and energy at the Point of Delivery for the Omal Facilities. If
any other type of state or local tax is substituted for the ad
valorem tax on tangible property now imposed in Ohio and/or in West
Virginia on the Delivery Facilities owned by Ohio or Wheeling in
those states, respectively, the amount otherwise payable by Ormet
to Ohio under this subsection (j) shall be reduced in an amount
equal to one-twelfth of 1.25% of the Delivery Facilities Investment
of Ohio or of Wheeling, or of both, as the case may be, at the end
of the next preceding month.
(k) except during the RMU Period, a monthly amount equal
to the product of (a) the Kammer Operation Expense for such month,
provided however that if there shall be no Modification Date the
Kammer Operation Expense for such month shall be diminished by the
portion thereof, if any, attributable to Kammer Unit No. 4, the
substation facilities attributable to it and the Kammer Station
General Facilities allocable to Kammer Unit No. 4, and (b) the
Ormet Power Ratio for such month;
(l) during the RMU Period, if any, an amount equal to the
product of (a) the Kammer Operation Expense for such month
diminished by the portion thereof, if any, applicable to Kammer
Unit No. 4, the substation facilities attributable to it and the
Kammer Station General Facilities allocable to Kammer Unit No. 4,
plus the RMU Operation Expense for such month, and (b) the Ormet
Power Ratio for such month.
3.02. In addition to the above Ormet shall pay to Ohio for
power demand amounts equal to the product of (i) all ad valorem
taxes, state and local, paid by Ohio (for which the assessment and
lien date is subsequent to the Effective Date) on the following
tangible property, exclusive of Major Spare Parts included therein,
owned by Ohio:
(a) from the Effective Date to the Modification Date;
Initial Kammer Units, Kammer Station General Facilities, and Kammer
Substation Facilities diminished after the Date of Commercial
Operation of Kammer Unit No. 4 by any Kammer Station General
Facilities allocable to it, and (ii) the average monthly Ormet
Power Ratio for the July 1-June 30 period in which such taxes are
due and payable;
(b) after the Modification Date, except during the RMU
Period; Initial Kammer Units, Kammer Unit No. 4, Kammer Station
General Facilities and Kammer Substation Facilities, and (ii) the
average monthly Ormet Power Ratio for the July 1-June 30 period in
which such taxes are due and payable;
(c) during the RMU Period; Initial Kammer Units and
Kammer Station General Facilities other than those allocable to
Kammer Unit No. 4, and (ii) the sum of (x) 2/3 and (y) one-third of
the Incremental Power Ratio for the July 1-June 30 period in which
such taxes are due and payable;
(d) during the RMU Period; the Kammer Substation
Facilities and (ii) the average Ormet Power Ratio for the July
1-June 30 period in which such taxes are due and payable.
Ormet, as successor to Generating, shall pay the ad valorem
property taxes not yet due and payable for which the assessment and
lien dates are July 1, 1965 and July 1, 1966 on property at Kammer
Generating Station owned by Generating on such dates. Ohio shall
make payments to Ormet equal to the amounts of ad valorem taxes not
yet due and payable on real property owned by Generating at Kammer
Generating Station on such dates. Ormet shall pay to Ohio for
power demand amounts equal to such real property taxes.
3.03. If any other type of state or local tax is substituted
for the ad valorem tax on tangible property now imposed in West
Virginia, and after the Modification Date and during the RMU
Period, if any, the Revised Measurement Unit is located in West
Virginia, Ohio shall credit Ormet monthly with an amount equal to
the excess of (a) one-twelfth of 1.25% of the sum of (i) the Gross
Plant Investment Value for the Revised Measurement Unit for such
month multiplied by the Incremental Power Ratio for such month and
(ii) the RMU Substation Facilities Investment at the end of the
next preceding month multiplied by the Ormet Power Ratio for such
month, over (b) the increase, if any, in tax other than ad valorem
property tax payable by Ohio or an Ohio Associate in respect of the
production or sale during the next preceding month of power and
energy hereunder resulting from such substitution of tax; or, as
the case may be, Ormet shall pay to Ohio monthly an amount equal to
the excess of such increase in tax other than ad valorem property
tax payable by Ohio or an Ohio Associate over one-twelfth of 1.25%
of the sum of (i) the Gross Plant Investment Value for the Revised
Measurement Unit for such month multiplied by the Incremental Power
Ratio for such month and (ii) the RMU Substation Facilities
Investment at the end of the next preceding month multiplied by the
Ormet Power Ratio for such month.
ARTICLE FOUR
ENERGY CHARGES
4.01. Subsequent to the Effective Date of this Agreement Ormet
shall pay to Ohio monthly for energy an amount of money equal to
the sum of:
(a) except during the RMU Period, an amount in dollars
equal to the product of (i) the Normalized Kammer Maintenance
Expense for the month, provided, however, that if there shall be no
Modification Date, such expense for such month shall be diminished
by any such attributable to Kammer Unit No. 4, if any, and the
substation facilities and Kammer Station General Facilities
allocable to Kammer Unit No. 4, and (ii) the Ormet Energy Ratio for
such month; provided, however, that a recomputation shall be made
at the end of each 12-month period ending December 31st (or a
running 12-month average basis by mutual agreement of the parties),
which will allocate the aggregate Kammer Maintenance Expense for
such 12-month period to Ormet in the ratio that (x) the Energy
Generated for Ormet during such 12-month period bears to (y) the
Total Net Generation of Kammer Generating Station during such
12-month period, less prior to the Modification Date the Total Net
Generation of Kammer Unit No. 4, if any, and an appropriate charge
or credit will be made to Ormet to adjust the aggregate of the
Kammer Maintenance charged to Ormet during such 12-month period to
conform with the allocation thereof determined by the aforesaid
recomputation.
(b) during the RMU Period, if any, an amount of dollars
equal to the product of (i) the sum of (x) the Normalized Kammer
Maintenance Expense for the month, less any such expense
attributable to Kammer Unit No. 4, if any, and substation
facilities attributable to Kammer Unit No. 4 and Kammer Station
General Facilities allocable to it, and (y) the RMU Maintenance
Expense for such month, and (ii) the Ormet Energy Ratio for such
month; provided, however, that a recomputation shall be made at the
end of each 12-month period ending December 31st (or a running
12-month average basis by mutual agreement of the parties), which
will allocate the aggregate Kammer Maintenance Expense and RMU
Maintenance Expense for such 12-month period to Ormet in the ratio
that (x) the Energy Generated for Ormet during such 12-month period
bears to (y) the aggregate Total Net Generation of Kammer
Generating Station less Kammer Unit No. 4 plus the Revised
Measurement Unit for such 12-month period, and an appropriate
charge or credit will be made to Ormet to adjust the aggregate of
the Kammer Maintenance Expense and RMU Maintenance Expense charged
to Ormet during such 12-month period to conform with the allocation
thereof determined by the aforesaid recomputation.
(c) except during the RMU Period, if any, an amount in
dollars equal to the product of (i) Kammer Fuel Expense for the
month provided, however, that if there shall be no Modification
Date such expense attributable to Kammer Unit No. 4, and (ii) the
Ormet Energy Ratio for such month.
(d) during the RMU Period, if any, an amount in dollars
equal to the product of (i) the sum of (x) the Kammer Fuel Expense
for the month diminished by any of such fuel expense attributable
to Kammer Unit No. 4 and (y) the RMU Fuel Expense for such month,
and (ii) the Ormet Energy Ratio for such month.
(e) Prior to the Modification Date, an amount in dollars
equal to the product of (i) the Average Production Cost per
Kilowatthour at Ohio's Major Generating Stations for such month and
(ii) the cumulative number of kilowatthours for such month (System
Kilowatthours) equal to the balance, if any, for each hour thereof
of Premium Kilowatthours after deducting therefrom an amount of
kilowatthours equal to the Ormet Firm Power Reservation in effect
for such hour diminished by 395,000, plus an amount in dollars
equal to the product of (i) average cost of fuel and maintenance
per kilowatthour, as shown on Form S-68, at Ohio's Major Generating
Stations, for such month, adjusted for transmission losses and (ii)
the cumulative Premium Kilowatthours for such month diminished by
the System Kilowatthours for such month.
(f) after the Modification Date, if any, an amount in
dollars equal to the product of (i) the Average Production Cost per
Kilowatthour at Ohio's Major Generating Stations for such month and
(ii) the cumulative Premium Kilowatthours for such month.
ARTICLE FIVE
RETIREMENTS
5.01. The accounting for retirements, replacements and
additions by Ohio and/or Ohio Associate in respect of the Kammer
Substation Facilities and Delivery Facilities, shall be carried out
as hereinafter prescribed.
(a) When any part of the Kammer Substation Facilities or
Delivery Facilities constituting, a Property Unit is retired from
service, the investment in such Property Unit shall, for the
purposes of all computations under this Agreement, be removed from
the applicable plant investment accounts as of the out-of-service
date of such Property Unit.
(b) When any part of the Kammer Substation Facilities or
Delivery Facilities constituting a Property Unit is placed in
service replacing a retired Property Unit, or when a part of the
Kammer Substation Facilities or Delivery Facilities constituting a
Property Unit is placed in service but not as a replacement, the
original investment in such replacement or additional Property
Unit, as the case may be, shall, for the purposes of all
computations under this Agreement, be added to the applicable plant
investment account, as the case may be, as of the in-service date
of such Property Unit. Such replacements and additions shall be
subject to Ormet's approval and if the amount of the order or
requisition ordering any such replacements or additions is $100,000
or more, Ormet's approval shall be express and in writing; and if
the amount of the order or requisition is less than $100,000,
Ormet's approval shall be deemed granted by Ormet's failure to
object in writing within fifteen (15) days after the delivery to it
of a copy of such order or requisition. In any event, Ormet's
approval shall not be unreasonably withheld.
(c) A removal, change or supplement which consists of
less than an entire Property Unit shall not be deemed to constitute
a retirement, replacement or addition of a Property Unit, and any
expense involved therein shall constitute maintenance expense.
5.02. When a retirement occurs, for the reason that any part
of the Kammer Substation Facilities or Delivery Facilities
constituting a Property Unit is worn out, obsolete, inefficient,
uneconomical, not needed, or for other similar reasons (excluding
loss or damage resulting from accidents, fortuitous events or
occurrences such as fire, lightning, inherent explosion, windstorm,
insurrection, riot, civil commotion, malicious intent, flood, enemy
attack or earthquake) and in respect to which there are no
insurance proceeds, a retirement loss in respect of such part will
be computed to be the net amount of the following:
(a) Ohio's (or Ohio Associate's) investment in the part
so retired plus
(b) the cost of removal of such part and restoration of
the site to a good and safe condition, less
(c) any net salvage value realized from such part, and
less
(d) an amount equal to the product of (i) the number of
years from the in-service date of such part to the date of its
retirement, and (ii) .03 if such part is a part of Kammer
Substation Facilities, or .025 if such part is a part of Delivery
Facilities (except that such .025 shall be increased to .03 for any
in-service period prior to January 1, 1967), as the case may be,
and (iii) Ohio's (or Ohio Associate's) investment in such retired
part (item (a) above).
At the time of retirement of any such part of the Delivery
Facilities, Ormet shall pay to Ohio an amount equal to the
retirement loss relative to such part or parts, as the case may be,
determined as hereinabove prescribed.
At the time of retirement of any such part of Kammer
Substation Facilities, Ormet shall pay to Ohio an amount equal to
the product of (i) the retirement loss relative to such part
determined as hereinabove prescribed, and (ii) the average Ormet
Power Ratio (and for the period prior to January 1, 1967 115% of
the quotient of Power User's Firm Contract Demand over Total Net
Capability as defined in the Station Agreement), weighted with
respect to time over the period of commercial operation of such
part.
When a retirement occurs for any other reason than as
hereinbefore provided, any retirement loss shall be borne entirely
by Ohio without any payment of any part thereof by Ormet and Ormet
shall not share in any of the insurance proceeds which may be
received by Ohio with respect to such retirement.
Ohio may at any time during the term of this Agreement insure
all or any part or parts of the Kammer Substation Facilities and
Delivery Facilities for protection against loss resulting from
damage or destruction by flood, enemy attack, earthquake or by any
other occurrences against which Ohio does not presently insure such
facilities, in any reasonable amount that it deems adequate, and,
provided that such additional coverage shall have been adopted by
American Electric Power System generally for such facilities, Ormet
shall pay to Ohio each month as an additional power charge an
amount equal to the sum of (i) the product of (x) the allocable
cost of such insurance of the Kammer Substation Facilities and (y)
the Ormet Power Ratio, and (ii) the cost of such insurance of the
Delivery Facilities.
ARTICLE SIX
BILLINGS AND PAYMENT
6.01. As soon as possible after the close of each month Ohio
shall render a bill to Ormet for the total amounts due hereunder
during such month. Bills rendered shall be paid by Ormet within
ten (10) days after receipt thereof, but the bills shall be subject
to such subsequent corrections as may be appropriate as a result of
audits made for the purpose of verification or otherwise. Interest
shall be charged by Ohio to Ormet at the rate of 6% per annum on
any overdue amount and by Ormet to Ohio for any overpayment, but
this shall not apply to amounts arising out of differences between
estimated and final bills pursuant to Section 6.02.
6.02. Ohio and Ormet recognize that as many as fifteen days
may be required after the close of each calendar month to assemble
all the data required to compute and render such statements.
Accordingly, Ohio may, at its option, render an estimated statement
to Ormet promptly after the close of each month, in which event any
necessary adjustments to conform such estimated statement with the
final statement shall be added or credited against the statement
for the next succeeding month.
ARTICLE SEVEN
TERM
7.01. This Agreement shall be for an initial term ending
twenty-five (25) years after the Effective Date, unless terminated
earlier in accordance with the provisions of Section 7.02 or 7.03,
or extended in accordance with the provisions of Section 7.04.
Ormet may, at its option, extend this Agreement for an additional
term of five (5) years after the expiration of the initial term
upon giving Ohio at least three (3) years' written notice prior to
the end of the initial term.
7.02. This Agreement shall remain in force for the lesser of
(a) the initial term and any extended term hereof and (b) so long
as Ohio shall be able to furnish power and energy to Ormet under
the terms of the Interim Agreement and this Agreement and at the
rates charged thereunder and hereunder. In the event that Ohio
shall cease to continue to carry out this Agreement, and to keep
its charges within the charges herein provided, for any reason not
within its control including the action of regulatory agency having
jurisdiction in the premises, but not including the termination of
this Agreement by Ormet, and provided that such cessation shall
take place within a period beginning at the date hereof and ending
at twenty-one (21) years after the death of the last survivor of
the following persons, to wit: the children of Arthur M. Borden of
215 Soundview Avenue, White Plains, New York: Erica Borden, Ross
Jeremy Borden, Mark Gideon Borden, Anthony John Maxwell Borden,
Lindsay Borden and Andrew Poe Borden; and the children of Charles
C. Wise, Jr., of Charleston, West Virginia: Laura K. Wise, Mary
Rose Wise and John C. Wise, Ormet shall have the option for a
period of six (6) months from the date of such cessation, to
purchase, upon written notice to Ohio, all of the right, title and
interest in and to Kammer Generating Station conveyed by Generating
to Ohio by special warranty deed and bill of sale dated as of
January 1, 1967 recorded in the office of the Clerk of the Court of
Marshall County, West Virginia in Deed Book , at page , (and
any additions or replacements thereto), except that as to the
Kammer Station General Facilities the undivided interest therein to
be conveyed by Ohio to Ormet pursuant to this option shall bear the
same ratio to the totality thereof as the Contract Capability of
Generating's Initial Units bears to the aggregate Contract
Capability of all of the Kammer Generating Station's generating
units then utilizing such Kammer Station General Facilities, and
the parties agree, in the event such option is exercised by Ormet
or an Ormet subsidiary, to reinstate the arrangements in effect
prior to such transfer of assets to Ohio, including the
reinstitution of the Back-Up Agreement, Excess Capacity Agreement,
Operating Agreement, Performance Agreement, Station Agreement,
Substation Facilities Agreement and Transmission Line Agreement,
all dated July 1, 1957 (except that Ormet, or at Ormet's option a
subsidiary of Ormet, may be substituted as a party for Generating).
Ohio further agrees to execute, and to cause any Ohio Associate to
execute, such confirmatory agreements and instruments of transfer
as may be necessary to confirm such arrangements, and to enter at
Ormet's election into arrangements to supply the balance of the
Ormet Firm Power Reservation under such terms and conditions as may
be mutually agreed to by the parties and which shall be acceptable
to any regulatory agency or agencies having jurisdiction therein,
or at the lowest filed tariff of Ohio then available. Ormet agrees
upon such reconveyance to it or to any Ormet subsidiary of
Generating's interest in Kammer Generating Station, as hereinabove
provided, and execution of such confirmatory agreements and
instruments of transfer, to pay to Ohio an amount equal to the
purchase price at which Ohio purchased such right, title and
interest in Kammer Generating Station from Generating less
depreciation computed at the same percentage depreciation rate that
Ohio shall have used for making book depreciation charges in
respect of such facilities from the date of acquisition thereof by
Ohio, adjusted for replacements, additions and retirements and any
reallocation of the Kammer Station General Facilities in the event
of the addition of Kammer Unit No. 4 by such time.
7.03. In the event that Ormet shall decide to permanently shut
down its aluminum reduction plant forming part of the Omal
Facilities, Ormet may terminate this Agreement at any time after it
has been in effect for not less than fifteen (15) years by (a)
giving Ohio a three-year (3) advance notice of its intent to so
terminate, and by (b) paying to Ohio on such date of termination an
amount in dollars equal to the sum of the following amounts:
(i) the product of (x) the Gross Plant Investment for
Kammer Units No. 1 and No. 2, and (y) the applicable termination
penalty factor as determined by Schedule A of this Section 7.03;
(ii) the product of (x) the Gross Plant Investment Value
for Kammer Unit No. 3, (y) the highest Incremental Power Ratio in
effect for any month during the term of this Agreement, and (z) the
applicable termination penalty factor as determined by Schedule A
of this Section 7.03;
(iii) after the Modification Date, except during the RMU
Period, the product of (x) the Gross Plant Investment Value for
Kammer Unit No. 4, (y) the highest Incremental Power Ratio in
effect for any month during the term of this Agreement and (z) the
applicable termination penalty factor as determined by Schedule A
of this Section 7.03;
(iv) after the Modification Date and during the RMU
Period, if any, the product of (x) the Gross Plant Investment Value
for the Revised Measurement Unit, (y) the highest Incremental Power
Ratio in effect for any month during the term of this Agreement,
and (z) the applicable termination penalty factor as determined by
Schedule A of this Section 7.03;
(v) the product of (x) the Kammer Substation Facilities
Investment as of the close of the next preceding month, (y) the
highest Ormet Power Ratio in effect for any month during the term
of this Agreement, and (z) the applicable termination penalty
factor as determined by Schedule A of this Section 7.03;
(vi) during the RMU Period, if any, an amount equal to
the product of (x) the RMU Substation Facilities Investment as of
the close of the next preceding month, (y) the highest Ormet Power
Ratio in effect for any month during the term of this Agreement,
the applicable termination penalty factor determined by Schedule A
of this Section 7.03;
(vii) an amount in dollars equal to the retirement loss
in respect of the Delivery Facilities Investment computed by the
method prescribed in Section 5.02 of the Agreement.
SCHEDULE A
Years Elapsed to
Termination from Applicable Termination
Effective Date Penalty Factor
---------------- ----------------------
16 ....................................... 0.125
17 ....................................... 0.110
18 ....................................... 0.090
19 ....................................... 0.060
20 ....................................... 0.035
21 or more ............................... 0.000
7.04. In order to provide for flexibility in Ormet's demand
charge obligations in the event of a temporary reduction of the
market demand for primary aluminum product, or because of Ormet's
inability to utilize its entitlements hereunder for electric power
and energy by reasons of force majeure, Ormet may, under such
circumstances, and at its option, elect to curtail the Ormet Total
Contract Demand by giving Ohio not less than one (1) month's prior
notice in writing except that during the first eight years
following the Effective Date three (3) months prior notice shall be
required for the portion of any curtailment in excess of 75,000
kilowatts; provided, however, that in such event the initial term
of this Agreement shall be extended beyond twenty-five (25) years
after the Effective Date by the aggregate amount of kilowatt-months
of such curtailments. The cumulative amount of such curtailments,
expressed in accrued kilowatt-months from the Effective Date, shall
not at any time during the term hereof exceed the following amounts
in accrued kilowatt-months from the Effective Date stated as a
percentage of the Ormet Total Contract Demand in effect:
Through year 18 after Effective Date 3% of the Ormet Total
Contract Demand in effect
for each month from the
Effective Date through
year 18.
Year 19 and thereafter 3% of the Ormet Total
Contract Demand in effect
for each month from the
Effective Date through
year 18, plus 5% of the
Ormet Total Contract
Demand in effect for each
month from the beginning
of year 19.
ARTICLE EIGHT
GENERAL PROVISIONS
8.01. Power and energy supplied hereunder shall be used by
Ormet and/or by its parent corporations, Olin Mathieson Chemical
Corporation (Olin) and Revere Copper and Brass Incorporated
(Revere) only for the production of aluminum and the fabrication of
aluminum products at or adjacent to the Omal Facilities, and shall
not be resold or otherwise furnished by Ormet, Olin or Revere to
any other party.
8.02. Ohio shall maintain the Metering Facilities and any
other metering equipment at Kammer Generating Station necessary
and/or useful to provide complete information regarding the use of
power for dispatching and billing purposes hereunder. Ormet may,
at its option and expense, install check metering. Ohio shall make
periodic tests and inspections of the metering facilities and shall
adjust the same as may be necessary to maintain the highest
practicable standard of accuracy, and will advise Ormet promptly of
the results of any such test. Ormet shall be given notice of, and
may have representatives present at, all such tests and
inspections. Ohio shall make additional tests of any of the meters
at the Metering Facilities at the request of Ormet; provided,
however, that the expense relative to any such additional test made
within three months of a scheduled periodic test shall be borne by
Ormet unless such test shows the meter or meters tested to be
inaccurate by more than 1% slow or fast. If such periodic or
additional tests do not show any such meter to be more than 1% slow
or fast no correction shall be made in the various information and
statements heretofore furnished to Ormet hereunder. If any such
tests show that any such meter is inaccurate by more than 1% slow
or fast, corrections shall be made in the information and
statements furnished to Ormet for the previous month, or from the
date of the latest test for the previous month, or from the date of
the latest test if within the previous month, and for the elapsed
period in the month during which the test was made.
8.03. Ohio may make use of fuels other than coal at Kammer
Generating Station, or in connection with the Revised Measurement
Unit, if any, if available, to the extent it is economically
advantageous to do so. Ohio shall afford Ormet the opportunity to
review and discuss with it the price, terms and conditions of any
contract proposed to be made with any suppliers of coal or other
fuel to be furnished to Ohio for consumption at Kammer Generating
Station, or in connection with a Revised Measurement Unit owned by
Ohio, if any, and Ormet shall have the right of approval in respect
of any purchases of coal or other fuel (other than spot purchases
of coal for delivery within twelve months of order within
quantities and prices previously mutually agreed upon). Ohio shall
not without Ormet's consent relinquish any of its contractual
rights to purchase coal or other fuel for Kammer Generating Station
existing as of the date hereof or hereafter. Ormet shall not
unreasonably withhold any of the consents or approvals required of
Ormet. Nothing in the foregoing shall alter the intent of the
parties that the acquisition of an adequate, dependable and
economical coal supply shall be the responsibility of Ohio.
8.04. Ohio shall keep books of record and accounts in
accordance with the Uniform System of Accounts and such other
systems as are prescribed by other governmental regulatory
authorities having jurisdiction as may be applicable. In addition,
Ohio shall keep such records and memorandum accounts as may be
required for the computation of amounts payable by Ormet hereunder.
The Uniform System of Accounts prescribed for Ohio by the Public
Utilities Commission of Ohio, as of the date of this Agreement,
shall be used for the determination of any question relative to
costs and expenses arising under this Agreement except that where
specific methods of computations of amounts are required in this
Agreement such methods shall be employed in lieu of any other
method unless specifically prohibited by any governmental
regulatory authority having jurisdiction therein.
8.05. (a) Ormet shall have the right, at such reasonable times
as appropriate during the initial term hereof and any extension
thereof and for one year thereafter, to inspect all books, records
and accounts of Ohio pertaining to information necessary for the
purposes of this Agreement for five (5) years immediately preceding
such inspection, and to make such audits thereof as Ormet may deem
necessary to protect its interests.
(b) Ormet shall have the further right at such reasonable
times as appropriate during the initial term hereof and any
extension thereof, to inspect any and all of the facilities of Ohio
and/or Ohio Associate referred to herein, and in addition, Ohio
shall arrange at Ormet's request, for such inspections by any
agents or insurance inspectors designated by Ormet.
8.06. Ohio shall not be held responsible or liable for any
loss or damage to Ormet on account of non-delivery of energy
hereunder at any time caused by Act of God, fire, flood, explosion,
strike, civil or military authority, insurrection or riot, enemy
attack, malicious mischief, act of the elements, failure of
equipment, or for any other cause beyond its control, provided,
however, that, except as otherwise provided below in this Section
8.06, non-delivery on account of any such causes shall not relieve
from its obligation to pay Ohio any charges payable hereunder.
Notwithstanding the foregoing, firm power (and associated energy)
in the amount of the Firm Capacity Reservation shall be delivered
to Ormet by Ohio without interruption or curtailment unless: (i) by
reason of any of the causes set forth above, Ohio interrupts or
curtails delivery of firm power requirements of its customers
affected by such cause, in which event Ohio may interrupt or
curtail deliveries of firm power to Ormet hereunder to the same
extent as interruptions or curtailments of firm power requirements
of such other customers, or (ii) there is a failure in delivery
facilities which makes it impossible to deliver power to Ormet.
Any interruption in service shall be remedied with utmost dispatch.
If, by reason of any governmental priority allocation or other
governmental order, Ohio is required to reduce service to Ormet,
the demand charges shall be accordingly reduced during the period
of such reduction. However, Ohio will exert every reasonable
effort to assure the continuity of supply of the Ormet Firm Power
Reservation to Ormet, and when that amount of power is not
available because of the foregoing causes, Ohio will endeavor, upon
request of Ormet, to secure the necessary power from others at just
and reasonable rates, and supply it to Ormet at the Point of
Delivery at such rates adjusted for transmission losses from the
point of purchase to the Point of Delivery.
8.07. In the event, at any time during the term of this
Agreement, Ohio should determine in its sole judgment that any
energy being generated for Ormet at Kammer Generating Station
and/or by the Revised Measurement Unit, if any, could be generated
more economically at some other generating station and savings
realized by Ohio thereby, Ohio shall so notify Ormet, and Ohio and
Ormet shall endeavor jointly to work out a mutually acceptable plan
for the fair and equitable apportionment between Ohio and Ormet of
the net operating savings realized under such a plan.
8.08. The charges to Ormet under this Agreement have taken
into account the payment by Ohio or an Ohio Associate of federal
income tax and excess profits tax, ad valorem property taxes,
federal social security taxes, state unemployment taxes, and state
workmen's compensation taxes or costs. In addition to any other
amount to be paid by Ormet hereunder, Ormet shall pay to Ohio an
amount in dollars sufficient to reimburse Ohio for any amount of
federal, state or local tax, other than tax of a type referred to
in the preceding sentence, paid or payable by Ohio in respect of
the production of energy for Ormet hereunder or of the payment of
amounts by Ormet to Ohio hereunder, so as to enable Ohio, after
provision for such taxes, to realize net the other amounts payable
by Ormet under this Agreement. Amounts payable by Ormet to Ohio
under this section shall be included in Ohio's monthly billings to
Ormet.
8.09. (a) Ohio shall, in respect of Kammer Generating Station
and/or the Revised Measurement Unit, if any, follow the same
practices with respect to replacements and to maintenance, and to
the use of overtime and, as are followed generally on the American
Electric Power System in respect of its other comparable
properties.
(b) During the term hereof and any extension or renewal, Ohio
and Ohio's Associates shall keep the various facilities referred to
in this Agreement, insured against fire and other hazards to the
extent that and against which the American Electric Power System
insures similar facilities generally.
8.10. All notices under this Agreement shall be in writing,
and if to Ohio, shall be sufficient in all respects if delivered in
person to its President or Vice President or sent by registered
mail addressed to it at its offices at 301 Cleveland Avenue, S. W.,
Canton, Ohio, or at any subsequent address of which Ohio may notify
Ormet in writing; and if to Ormet, shall be sufficient in all
respects if delivered in person to its President or Vice President
or Secretary, or sent by registered mail addressed to Ormet at 460
Park Avenue, New York, N.Y., or at any subsequent address of which
Ormet may notify Ohio in writing.
8.11. The failure of either party to insist in any one or more
instances upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and
remain in force and effect.
8.12. Any controversy, claim, counterclaim, defense, dispute,
difference or misunderstanding arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration
before three arbitrators, one of whom shall be named by Ormet, one
of which shall be named by Ohio and the third of whom shall be
named by the two arbitrators appointed by Ormet and Ohio,
respectively. In the event that the two arbitrators so appointed
shall fail to name a third arbitrator within thirty (30) days after
the date of appointment of the second of them, then any party to
the arbitration proceeding may upon written notice to the other
party or parties thereto apply to the person who is the senior
acting judge of the United States Court of Appeals for the 6th
Judicial Circuit for the appointment of a third arbitrator. Except
as above provided, the arbitration proceeding shall be conducted in
accordance with the Rules of the American Arbitration Association
then in effect, and judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction
thereof. This provision shall survive the termination of this
Agreement. The parties expressly agree that this provision shall
constitute a condition precedent to the institution of any
proceeding in any court relating to the subject matter hereof.
8.13. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns, but this Agreement may not be assigned, except to a
successor to the entire business of such party, by either party
without the written consent of the other, which consent shall not
be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ORMET CORPORATION
(SEAL)
by /s/ M. L. HERZOG
President
ATTEST:
/s/ P. H. KASKELL
Secretary
OHIO POWER COMPANY
(SEAL)
by /s/ DONALD C. COOK
President
ATTEST:
/s/ EDWARD SMITH
Assistant Secretary
STATE OF NEW YORK ) To-wit:--
COUNTY OF NEW YORK )
I, E. DOROTHY JOHNSON, a Notary Public in and for the said
county and state, do hereby certify that M. L. HERZOG, President,
who signed the writing above and hereunto annexed, bearing date the
16th day of November, 1966, for ORMET CORPORATION, a corporation as
this day in my said country, before me, acknowledged the said
writing to be the act and deed of said corporation.
Given under my hand this 18th day of November, 1966.
/s/ E. DOROTHY JOHNSON
Notary Public
[SEAL] E. DOROTHY JOHNSON
Notary Public, State of New York
No. 31-7095000
Qualified in New York County
Commission Expires March 30, 1968
STATE OF NEW YORK ) To-wit:--
COUNTY OF NEW YORK )
I, KLAUS BERGMAN, a Notary Public in and for the said county
and state, do hereby certify that DONALD C. COOK, President, who
signed the writing above and hereunto annexed, bearing date the
16th day of November, 1966, for OHIO POWER COMPANY, a corporation,
has this day in my said county, before me, acknowledged the said
writing to be the act and deed of said corporation.
Given under my hand this 18th day of November, 1966.
/s/ KLAUS BERGMAN
Notary Public
[SEAL] KLAUS BERGMAN
Notary Public, State of New York
No. 30-5284055
Qualified in Nassau County
Cert. filed in New York County
Commission Expires March 30, 1968
FIRST SUPPLEMENTAL AGREEMENT
Dated December 1, 1969
to
POWER AGREEMENT
between
ORMET CORPORATION and OHIO POWER COMPANY
Dated November 16, 1966
FIRST SUPPLEMENTAL AGREEMENT
This First Supplemental Agreement dated this 1st day of
December, 1969, between Ormet Corporation (Ormet), a Delaware
corporation, and Ohio Power Company (Ohio), an Ohio corporation;
WITNESSETH THAT:
WHEREAS, the parties entered into a Power Agreement dated
November 16, 1966 (hereinafter called "Power Agreement") providing
for the sale by Ohio of electric power and energy to Ormet to
supply the requirements of aluminum production and fabricating
facilities (hereinafter called "Omal Facilities") adjoining the
Ohio River near Hannibal, Ohio; and
WHEREAS, Ohio has been furnishing firm power to Ormet
from the effective date of the Power Agreement up to the date
hereof, and the parties deem it desirable to provide for the
furnishing of a portion of Ormet's power requirement on a non-firm
basis under terms and conditions which are beneficial for each of
them; to modify the Power Agreement in the light of the operating
experience which has developed between November 16, 1966, and the
date hereof, and pursuant to Article Eight Section 8.07 of the
Power Agreement; and to arrange for the furnishing of power by Ohio
to Ormet for test operation of Omal Facilities over limited periods
of time.
NOW, THEREFORE, in consideration of the premises and for
the purposes hereinabove recited, and in consideration of the
mutual covenants hereinafter contained, the parties agree as
follows:
1. Article One of the Power Agreement is hereby amended as
follows:
A. Delete the definitions of:
(i) AVERAGE PRODUCTION COST PER KILOWATTHOUR AT
OHIO'S MAJOR GENERATING STATIONS and
(ii) PREMIUM KILOWATTHOURS.
B. Amend the following definitions to read as follows:
KAMMER FUEL EXPENSE means for any month prior to the
Modification Date and during the RMU Period the product of (a) the
actual expenses associated with purchasing, testing, measuring,
unloading, storing and handling of all fuel utilized for the
generation of electric energy at Kammer Station during such month
(as recorded for such month in the book of Ohio under Account 501
of the Uniform System of Accounts) and (b) the lesser of (x) unity
and (y) the quotient of 9,350 divided by the actual average Initial
Kammer Units' net heat rate (in Btu's per kilowatthour) for such
month and the eleven next preceding months as reported on the
Report of Manufacture (Form S-68), diminished by any net amounts
received from the sale of residuals.
ORMET ENERGY RATIO (OER) means for any month the ratio
that is obtained by dividing (a) the Energy Generated for Ormet for
such month by (b) the sum of (i) the Total Net Generation for such
month of Kammer Generating Station plus (ii) during the RMU Period
the Total Net Generation for such month of the Revised Measurement
Unit.
ORMET TOTAL CONTRACT DEMAND means for any month the sum
of (a) the Ormet Firm Power Reservation in effect for such month
and (b) fifteen percent (15%) of the difference obtained by
subtracting (i) 72,000 kilowatts (or such larger amount of non-firm
kilowatts as the parties may have mutually agreed upon to be
applicable for such month) from (ii) the Ormet Firm Power
Reservation in effect for such month.
RMU FUEL EXPENSE means for any month during the first
sixty months following the Date of Commercial Operation of the
Revised Measurement Unit the product of (a) the actual expenses
associated with purchasing, testing, measuring, unloading, storing
and handling of all fuel utilized for the generation of electric
energy by the Revised Measurement Unit during such month (as
recorded for such month on the books of Ohio or Ohio Associate, as
the case may be, under Account 501 of the Uniform System of
Accounts) and (b) the lesser of (x) unity and (y) the quotient of
9,000 divided by the actual average Revised Measurement Unit net
heat rate for such month as reported on the Report of Operation
(Form SO-4) and for all preceding months following the Date of
Commercial Operation of the Revised Measurement Unit, diminished by
any net amounts received from the sale of residuals. For the
balance of the RMU Period, RMU Fuel Expense shall be computed as
hereinbefore provided except that there shall be substituted as "y"
the quotient of the actual average net heat rate of the Revised
Measurement Unit in Btu's per kilowatthour for the sixty months
next following the Date of Commercial Operation of the Revised
Measurement Unit (as reported on Form SO-4) divided by the actual
average net heat rate of the Revised Measurement Unit for such
month (as reported on Form SO-4) and for the eleven next preceding
months.
C. Add the following new definitions:
ORMET MAINTENANCE RATIO means for any month prior to the
Modification Date the lesser of (a) unity and (b) the quotient of
(x) the Energy Generated for Ormet during such month and the eleven
months next preceding such month divided by (y) the larger of (i)
the Total Net Generation of the Initial Kammer Units during such
twelve month period and (ii) the sum of (p) the Energy Generated
for Ormet during such period and (q) the product of (e) the
difference between the Average Available Contract Capability of the
Initial Kammer Units during such twelve month period and the
weighted average Ormet Firm Power Reservation during such twelve
month period (f) .68 and (g) the total number of hours in such
twelve month period.
ORMET MAINTENANCE RATIO means for any month during the
RMU Period the lesser of (a) unity and (b) the quotient of (x) the
Energy Generated for Ormet during such month and the eleven months
next preceding such month (y) the larger of (i) the Total Net
Generation of the Initial Kammer Units and the Revised Measurement
Unit during such twelve month period and (ii) the sum of (p) the
Energy Generated for Ormet during such twelve month period and (q)
the product of (e) the difference between the Average Available
Contract Capability of the Initial Kammer Units and the Revised
Measurement Unit during such twelve month period and the weighted
average Ormet Firm Power Reservation during such twelve month
period (f) .68 and (g) the total number of hours in such twelve
month period.
AVERAGE AVAILABLE CONTRACT CAPABILITY of the Initial
Kammer Units or of the Initial Kammer Units and the Revised
Measurement Unit, as the case may be, means for any month an amount
of kilowatts equal to the sum obtained by adding the amounts of
Average Available Contract Capability for each such generating unit
each of which is separately determined by multiplying (a) the
Contract Capability of each such unit during such month and the
eleven months next preceding, by (b) the ratio obtained by dividing
(i) the sum of (x) the number of hours in such twelve month period,
as recorded for each month in the Report of Operation (Form SO-4)
prepared by Ohio, when each such unit was operated connected to
load and (y) the number of hours in such twelve month period, as
recorded for each month in the Report of Operation (Form SO-4)
prepared by Ohio, when each such unit was not operated connected to
load but was available for operation if needed, by (ii) the total
number of hours in such twelve month period.
2. Article Two of the Power Agreement is hereby amended by
deleting therefrom the single paragraph under Section 2.01 and
substituting in place thereof the following four (4) paragraphs.
Ohio shall, subject to the provisions of Section 8.06
hereof and the other terms and conditions of this Agreement, from
and after the Effective Date, deliver or cause to be delivered to
the Point of Delivery at all times, except as otherwise hereinafter
provided in this Section 2.01 and Section 2.02, during the term
hereof power and associated energy in amounts required by Ormet up
to an Ormet Metering Point Demand equal to the Ormet Firm Power
Reservation as from time to time in effect, less delivery losses
between the Metering Point and the Point of Delivery.
Ormet shall promptly adjust its power requirements at the
Point of Delivery, whenever Ohio gives notice to the Omal
Facilities by telephone, or otherwise, requesting a reduction
thereof by reason that an emergency condition has occurred in
respect of the generating capability of the American Electric Power
System, to an amount in kilowatts, which when adjusted for delivery
losses between the Metering Point and the Point of Delivery shall
establish an Ormet Metering Point Demand not larger than the
reduced amount thereof specified by Ohio, during any hour or
combination of hours between 8:00 A.M. and 10:00 P.M. specified by
Ohio; provided, however, that (i) any reduced amount so specified
by Ohio shall not be less than the Ormet Firm Power Reservation
then in effect minus 72,000 kilowatts (or such larger amount of
kilowatts as the parties may have mutually agree upon), (ii) the
total aggregate time of such reduction or reductions shall not
exceed nine (9) hours, whether consecutive or not, during any one
period from 8:00 A.M. to 10:00 P.M. and thirty (30) hours during
any calendar week, (iii) Ohio shall use its best efforts to
eliminate such limitation of supply to Ormet with utmost dispatch
and Ohio will not discriminate against Ormet in favor of any other
non-firm capacity customer. An emergency condition in respect of
the generating capability of the American Electric Power System
shall be deemed to have occurred for purposes of this paragraph
whenever the System Operating Department of the American Electric
Power System reasonably finds that the firm power commitments of
the American Electric Power System cannot be supplied by (x) the
full utilization of all available spinning reserves and the extra
loading of capabilities of the System's available generating units
and by (y) curtailments to the extent permissible of the
interruptible power customers of the American Electric Power
System, and to the extent permissible and practicable of the
non-critical generating station auxiliaries, captive coal mining
operations, lighting and air conditioning loads of Ohio and Ohio
Associates, and (z) by reasonable voltage reduction. It is
understood that the System Operating Department of the American
Electric Power System will expeditiously use its best efforts to
obtain power from other systems with which the American Electric
Power System is interconnected prior to reducing the Ormet load
and/or in order to limit any curtailment of the Ormet load subject
to this paragraph.
In the event that Ormet is required to reduce its power
requirement pursuant to the provisions of the second paragraph of
this Section 2.01 during any 8:00 A.M. to 10:00 P.M. period, Ohio
shall notify the Omal Facilities by telephone, or otherwise, as
soon after the end of such period as Ohio in its sole judgment
deems practicable, in which hours, if any, of the immediately
following twenty-four (24) hour period, and to what extent in
kilowatts, Ormet may establish, at its option, an Ormet Metering
Point Demand that is larger than the Ormet Firm Power Reservation
then in effect. The amount in kilowatts by which the Ormet
Metering Point Demand for any hour so designated by Ohio may exceed
the Ormet Firm Power Reservation then in effect shall not be more
than the smaller of (i) the amount in kilowatts specified by Ohio
as herein-above provided, and (ii) an amount in kilowatts equal to
ten percent (10%) of the Ormet Firm Power Reservation then in
effect, and the Ormet Metering Point Demand so established shall
not be used for the purpose of any billing computations made
hereunder.
Ormet may, at any time during the term of this Agreement and
during any extensions thereof, elect to terminate the provisions of
the second paragraph of this Section 2.01 in the manner and on the
terms and notice as hereinafter prescribed:
(a) Ormet shall notify Ohio in writing of its
election to terminate the provisions of the second paragraph of
Section 2.01, and such provisions shall be of no further force and
effect beginning with the date which falls thirty (30) days after
the delivery of such written notice to Ohio, and
(b) Upon such termination of the provisions of said
second paragraph, Article One shall be amended by deleting
therefrom the definition of Ormet Total Contract Demand as
established pursuant to this First Supplemental Agreement dated
December 1, 1969, and replacing therein the definition of Ormet
Total Contract Demand as it appeared in the Power Agreement prior
to December 1, 1969, and
(c) In the event that Ormet elects to terminate the
provisions of the second paragraph of Section 2.01 pursuant to the
terms and conditions of this fourth paragraph Ormet may
subsequently elect to reinstate the provisions of said second
paragraph by written notice of such election delivered to Ohio not
less than two (2) years prior to the effective date of such
reinstatement, unless the requirement for such notice is waived in
writing by Ohio.
3. Article Two of the Power Agreement is hereby amended by
deleting the last two sentences from the first paragraph of Section
2.02 and substituting in place thereof the following three
sentences:
The parties recognize and agree that in the operation of
aluminum reduction and fabricating facilities, which are served
from a common electric power source, the amount of power necessary
for the most advantageous operation of the combined facilities can
sometimes be determined only after a reasonable period of
experimental or test operation. Accordingly, Ormet shall have the
right to exceed the Ormet Firm Power Reservation in effect for any
calendar month by an amount not in excess or 6,000 kilowatts during
any test period of not more than six months duration mutually
agreed upon by the parties at least thirty (30) days prior to the
beginning thereof; provided, however, that Ohio shall by its sole
judgment determine if and when such test period can be arranged.
The maximum Ormet Metering Point Demand established by Ormet in any
month of such mutually agreed upon test period (up to the Ormet
Firm Power Reservation for such month plus 6,000 kilowatts) shall
be used in place of the Ormet Firm Power Reservation for purposes
of all computations under this Agreement for such month; provided,
however, that no such demand so used shall be less than the Ormet
Firm Power Reservation in effect for any such month.
4. Article Two of the Power Agreement is hereby amended by
deleting Section 2.03.
5. Article Four of the Power Agreement is hereby amended to
read as follows:
4.01 Ormet shall pay to Ohio monthly for energy an amount
of money equal to the sum of:
(a) prior to the Modification Date an amount in
dollars equal to the product of (i) the Normalized Kammer
Maintenance Expense for such month and (ii) the Ormet Maintenance
Ratio for such month; provided, however, that a recomputation shall
be made at the end of each twelve month period ending December 31st
(or a running twelve month average basis by mutual agreement of the
parties), which will allocate the aggregate Kammer Maintenance
Expense for such twelve month period to Ormet on the basis of the
weighted Ormet Maintenance Ratio over the said twelve month period
and an appropriate charge or credit will be made to Ormet to adjust
the aggregate of the Kammer Maintenance Expense charged to Ormet
during such twelve month period to conform with the allocation
thereof determined by the aforesaid recomputation;
(b) during the RMU Period, an amount in dollars
equal to the product of (i) the sum of (x) the Normalized Kammer
Maintenance Expense for the month and (ii) the Ormet Maintenance
Ratio; provided, however, that a recomputation shall be made at the
end of each twelve month period ending December 31st (or a running
twelve month average basis by mutual agreement of the parties),
which will allocate the aggregate Kammer Maintenance Expense and
RMU Maintenance Expense for such twelve month period to Ormet on
the basis of the weighted Ormet Maintenance Ratio over the said
twelve month period and an appropriate charge or credit will be
made to Ormet to adjust the aggregate of the Kammer Maintenance
Expense and RMU Maintenance Expense charged to Ormet during such
twelve month period to conform with the allocation thereof
determined by the aforesaid recomputation;
(c) except during the RMU Period, if any, an amount
in dollars equal to the product of (i) the Kammer Fuel Expense for
the month and (ii) the Ormet Energy Ratio for such month;
(d) during the RMU Period, if any, an amount in
dollars equal to the product of (i) the sum of (x) the Kammer Fuel
Expense for the month and (y) the RMU Fuel Expense for such month
and (ii) the Ormet Energy Ratio for such month.
6. Article Six of the Power Agreement is hereby amended by
deleting the words "ten (10) days" from the third line of Section
6.01 and substituting in place thereof the words "fifteen (15)
days."
7. Article Eight of the Power Agreement is hereby amended by
deleting from Section 8.06 thereof the first twenty-nine (29) words
of the second sentence and substituting in place thereof the
following part sentence:
Notwithstanding the foregoing, firm power (and associated
energy) in the amount of the Ormet Firm Power Reservation shall be
delivered to Ormet by Ohio without interruption or curtailment,
except in such amounts and under conditions as provided for in the
second paragraph of Section 2.01 hereof, unless:
8. Article Eight of the Power Agreement is hereby amended by
adding a new Subsection 8.09(c) as follows:
(c) Ohio shall, whenever a breakdown occurs in any
unit of Kammer Generating Station or in the Revised Measurement
Unit, repair and restore such unit to commercial operation with all
reasonable promptness.
9. This First Supplemental Agreement has been written on the
basis that Kammer Unit No. 4 will not be constructed and that there
will be a Revised Measurement Unit, it being understood that if
Kammer Unit No. 4 is in fact constructed this Agreement will be
modified to take into account the construction of Kammer Unit No.
4.
10. This First Supplemental Agreement shall become effective
on the later of (a) the date on which it is executed, and (b) such
date when all necessary approvals by regulatory agencies having
jurisdiction in the premises have been received.
11. This First Supplemental Agreement shall continue in force
until the end of the term of the Power Agreement, including any
extensions thereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.
ORMET CORPORATION
BY /s/ M.D. Chandler
PRESIDENT
ATTEST: /s/ P.H. Kaskell
SECRETARY
OHIO POWER COMPANY
BY /s/ Donald C. Cook
PRESIDENT
ATTEST: /s/ D.M. Tinge
ASSISTANT TREASURER