ELECTRIC RATE SCHEDULE F.E.R.C. No. 61, Supplement No. 1
SUPERSEDING ELECTRIC RATE SCHEDULE F.E.R.C. No. 61
Filed by:
ORANGE AND ROCKLAND UTILITIES, INC.
Other utilities receiving or rendering service:
ROCKLAND ELECTRIC COMPANY
Service to be provided:
All electricity requirements of buyer
POWER SUPPLY
AGREEMENT
Agreement made as of January 1, 1993, by and between ORANGE AND
ROCKLAND UTILITIES, INC., a New York Corporation (hereinafter called
"Seller"), and ROCKLAND ELECTRIC COMPANY, a New Jersey Corporation
(hereinafter called "Buyer").
The electric production, transmission and distribution
facilities of Seller and Buyer, together with those of Pike County
Light & Power Company a Pennsylvania Corporation, are operated as a
single integrated system whose physically interconnected facilities
are referred to hereinafter as the "System". The Seller has
interchange agreements with other utilities and owns and operates
the generating facilities and a major portion of the transmission
facilities which supply the power requirements of the System. If
there were no State lines between the territories served by the
respective companies, the operation of the System would be carried
out by one company. In consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1. Electricity to be Sold and Purchased
Seller agrees to sell and deliver and Buyer agrees to
purchase and receive Buyer's entire requirements of electricity in
quantities sufficient for Buyer's own use and for resale by Buyer in
Buyer's franchise territory located in the State of New Jersey.
ARTICLE 2. Points of Delivery
The points of delivery of electricity by Seller to
Buyer shall be at the junction of their lines crossing the boundary
between the State of New York and the State of New Jersey.
ARTICLE 3. Rate
For all electricity delivered hereunder Buyer shall
reimburse Seller for Seller's cost of rendering service, including
return on investment as defined in Section 3.21.
The payment by Buyer to Seller shall be the sum
of (i) Seller's Expense incurred in rendering service to Buyer
calculated in the manner described in Sections 3.11 to 3.15,
inclusive, below, (ii) Fixed Costs, including return on investment,
on Seller's plant used in rendering service to Buyer as calculated
and allocated in the manner described in Section 3.21 to 3.26,
inclusive, below, less (iii) Credit to Buyer for Net Power Sales
Revenue calculated in the manner described in Section 3.3, below,
less (iv) Credit to Buyer for Fixed Costs, including return on
investment, on Buyer's plant used in rendering service to Seller as
calculated and allocated in the manner described in Article 8,
below:
3.0 Definition.
Demand Ratio: The "Demand Ratio" is the percentage
relationship which the demand of the Buyer bears to the total
coincident peak demand on the Orange and Rockland System (which
includes Orange and Rockland Utilities, Inc., Rockland Electric
Company and Pike County Light & Power Company) at the time of
the Orange and Rockland System annual peak. The Demand Ratio
will be determined for each calendar year based on the inputof
electricity to the distribution system of each of the three
companies. Deliveries to other utilities shall not be
considered in the determination of the Demand Ratio.
The Demand Ratio used pursuant to Article 3 herein shall be the
ratio as determined for the calendar year next preceding the
billing month in question.
Energy Ratio: The "Energy Ratio" is the percentage
relationship which the amount of energy delivered to the
Buyer's distribution system bears to the total amount of energy
delivered to the distribution systems of Orange and Rockland
Utilities, Inc., Rockland Electric Company and Pike County
Light & Power Company.
The Energy Ratio applicable to the bills rendered pursuant to
Article 3 herein for each calendar month will be determined
based on the input of electricity to the distribution system of
each of the three companies for that calendar month.
Functional Plant Groups: All utility plant is subdivided into
the following Functional Plant Groups: Production Plant Coal
Conversion Facilities, Production-Other, Transmission Plant,
Distribution Plant and General Plant. As used herein these
terms have the meaning ascribed to them in the Federal Energy
Regulatory Commission's Uniform System of Accounts (except that
"Coal Conversion Facilities" means the total of capital
expenditures incurred in connection with the conversion of any
Orange and Rockland generating units to coal fired
generation and/or capital expenditures on modifications
made subsequent to such conversion.
Jointly Used Utility Plant: "Jointly Used Utility Plant" is
Production Plant or Transmission Plant which is used and useful
in the service of the customers of more than one company.
Utility Plant will be considered to be in joint use if, under
normal or emergency conditions, it is either in operation or
would be placed in operation to provide service to the
customers of more than one company.
In addition, General Plant (such as office furniture and
equipment) which is physically located at a jointly used
facility and which is used in connection with the operation of
said facility shall be included in Jointly Used Utility Plant.
When the magnitude of the load in a particular area of Buyer's
system is not sufficient to warrant the construction of
transmission facilities to supply that area, the distribution
facilities which are used to perform that transmission supply
function and which otherwise meet the definition of Jointly
Used Utility Plant shall be included in Jointly Used Utility
Plant.
The total original cost of each company's Jointly Used Utility
Plant shall be determined annually as of December 31, and shall
be recalculated to reflect only Major Plant Additions for each
company as of the end of each calendar month during which such
Major Plant Addition or Additions were placed in service.
The original cost of Jointly Used Utility Plant as of
December 31, until changed in accordance with the foregoing
paragraph, shall be used pursuant to Article 3 herein with
respect to all monthly bills rendered hereunder for services
subsequent to the December 31 for which such original cost of
Jointly Used Utility Plant was determined.
When the original cost of Jointly Used Utility Plant is
recalculated during the calendar year the calculation shall be
made during the month following the month in which a Major
Plant Addition was placed in service and the result thereof,
until changed, shall be used pursuant to Article 3 herein for
all monthly bills subsequently rendered hereunder.
Joint Use Ratio: The "Joint Use Ratio" is the percentage
relationship which a company's "Jointly Used Utility Plant"
bears to its total electric utility plant. Joint Use Ratios
shall be determined for each company and, separately, for each
applicable functional plant group.
Whenever the original cost of a company's Jointly Used Utility
Plant is recalculated the Joint Use Ratios applicable to that
Company's plant will also be recalculated.
The Joint Use Ratios as of December 31, until changed in
accordance with the provisions of the foregoing paragraph,
shall be used for the purpose of Article 3 herein with respect
to all monthly bills rendered for service subsequent to
December 31 for which such Joint Use Ratios were determined.
When Joint Use Ratios are recalculated during the calendar year
the calculation shall be made during the month following the
month in which a Major Plant Addition was placed in service and
the result thereof, until changed, shall be used pursuant to
Article 3 herein for all monthly bills.
Major Plant Addition: A "Major Plant Addition" is an addition
to plant which has an original cost of $25,000 or more and
which is all or part of an approved project for the
construction of utility plant.
Property Insurance Ratio: The "Property Insurance Ratio" is
the percentage relationship which a company's total property
insurance expense as charged to Account No. 924 bears to the
original cost of that company's total insurable electric
utility plant.
The Property Insurance Ratio will be calculated monthly based
on the original cost of insurable electric utility plant as of
the end of that month.
Property Tax Ratio: The "Property Tax Ratio" is the percentage
relationship which a company's total property tax expense as
charged to Account No. 408 bears to the original cost of that
company's total electric utility plant subject to property
taxes.
The Property Tax Ratio will be calculated monthly based on the
original cost of electric utility plant subject to property tax
as of the end of that month.
The terms "Power Production Expenses", "Other Power Supply
Expenses", "Transmission Expenses", "Distribution Expenses" and
"Net Utility Operating Income" as used herein have the same
meanings as those ascribed to them in the Federal Energy
Regulatory Commission's Uniform System of Accounts.
3.1 Expenses. The following of Seller's reasonable and necessary
expenses shall be billed to Buyer each month:
3.11 Seller's Power Production Expenses, including Other
Power Supply Expenses, except for gas turbine lease
payments included therein, as recorded in its books
of account for the current month, multiplied by the
Energy Ratio, plus said gas turbine lease payments
multiplied by the Demand Ratio.
3.12 Seller's Transmission Expenses as recorded in its
books of account for the current month (1) multiplied
by the Joint Use Ratio for Seller's transmission
plant and (2) multiplied by the Demand Ratio.
3.13 Seller's Distribution Expenses as recorded in its
books of account for the current month related to the
major specific plant accounts associated with joint
use plant will be determined by (1) multiplying said
expenses by the ratio of joint use distribution
facilities by plant account to the total distribution
plant included in said plant accounts and (2)
multiplied by the Demand Ratio.
3.14 Seller's workers' compensation, public liability
insurance and social security tax expense related to
Production, Transmission and Distribution Expenses,
chargeable to Buyer. This amount shall be determined
each month by multiplying (1) the labor expense
included in the charges billed for the month pursuant
to Sections 3.11, 3.12, and 3.13 herein by (2) the
currently effective rates for workmen's compensation,
public liability insurance and social security tax
expense.
3.15 Sales taxes or gross receipts taxes, if any,
applicable to revenue received hereunder.
3.2 Fixed Costs. Seller shall charge to Buyer monthly the portion
of Fixed Costs of Seller's Plant properly allocable to Buyer,
as follows:
3.21 Return on Investment. Return on Investment
chargeable to Buyer shall be computed as a percent
(rate of return, as defined in Section 3.213 hereof)
of Seller's net investment devoted to providing
service to Buyer. The net investment shall consist
of (1) the original cost less related accumulated
provision for depreciation of Seller's plant
allocable to Buyer plus (2) an allowance for working
capital minus (3) the amount of deferred taxes
allocable to Buyer.
3.211 The original cost of Seller's plant allocable to
Buyer shall be the product of Seller's current total
original cost of Jointly Used Utility Plant except
for Production - Coal Conversion Plant costs included
therein, multiplied by the Demand Ratio plus said
Production - Coal Conversion Plant costs multiplied
by the Energy Ratio.
The accumulated provision for depreciation related to
the original cost of Seller's plant allocable to
Buyer shall be determined separately by functional
category. It shall consist of Seller's total
accumulated provision for depreciation applicable to
each Functional Plant Group (1) multiplied by the
Joint Use Ratio applicable to that Functional Plant
Group and (2) multiplied by the Demand Ratio except
for Production - Coal Conversion Plant costs which
will be multiplied by the Energy Ratio. The
accumulated provision for depreciation shall be
recalculated whenever the total original cost of
Jointly Used Utility Plant is changed.
3.212 The allowance for working capital used pursuant to
Section 3.21 each month shall be the sum of (a) one-
eighth (1/8) of the total annualized amount of
operation and maintenance expense less purchased
power and fuel charged to Buyer pursuant to
Sections 3.11, 3.12, and 3.13 herein (b), the actual
cash working fund requirement associated with fuel
and purchased power costs as determined by a lead/
lag study for such costs based on the calendar year
next preceding the billing month in question, and (c)
a portion of the preceding month's total prepayments
of property taxes, insurance and interest associated
with electric operations. The portions referred to
in (c) above shall be determined by the ratio of the
original cost of the allocated portion of Jointly
Used Utility Plant to the original cost of total
electric utility plant as of the preceding
December 31st.
3.213 Rate of Return. The rate of return shall be
calculated as of December 31st of the preceding year,
based on the consolidated capital structure of the
Seller at that time. Such structure will be the
weighted cost of money for the long term debt at its
embedded cost, preferred or preference stock at their
respective embedded costs, and common equity at a
cost of 11.7%, as approved by the Federal Energy
Regulatory Commission in Docket No. ER93-328-000.
3.214 The amount of deferred taxes allocable to Buyer shall
be the product of Seller's deferred taxes which are
attributable to the use of accelerated tax
depreciation, and investment tax credits less any
amounts of said taxes deducted from AFDC base
multiplied by the ratio of (a) Jointly Used Utility
Plant allocable to Buyer divided by (b) Seller's
gross electric plant.
3.22 Federal Income Taxes. Each monthly bill rendered
by Seller to Buyer shall include a charge to provide
for Federal Income Tax allocable to Buyer, determined
as follows:
3.221 For the first eleven months of each calendar year
said charge each month shall be:
[(0.042929) (r-D/RBa) - (IA/RBa)] RBm
Where: r = The currently effective rate of return
pursuant to Section 3.21 herein
D = The portion allocable to Buyer of the total net
amount of additions and deductions made to
Seller's "Net Utility Operating Income" in order
to determine net income for Federal Income Tax
purposes for the prior calendar year, except for
those additions and deductions which can be
directly related to retail service. The
interest deduction used in the Federal income
tax calculation shall exclude the interest
component of AFDC accrued on the net of tax
method. The portion of said additions and
deductions allocable to Buyer shall be
determined by multiplying the total net amount
of such additions and deductions which are
related to the Seller's electric operations by
the percentage relationship which RBa bears to
the Seller's total twelve month average net
electric plant investment for the prior calendar
year.
IA = The portion allocable to Buyer of the total
amortization of deferred investment tax credit
(ITC) (resulting from election of Option 2 as
defined in Internal Revenue Code
Section 46(f)(2)) used to determine net income
based upon the prior calendar year. The portion
of said amortization of deferred ITC allocable
to Buyer shall be determined by multiplying the
total net amount of such amortizations which are
related to the Seller's electric operations by
one-twelfth (1/12) of the percentage
relationship which RBa bears to the Seller's
total twelve month average net electric plant
investment for the prior calendar year.
RBa = The Seller's twelve month average net plant
investment allocable to Buyer for the prior
calendar year, computed in accordance with the
provisions of Section 3.21 herein.
RBm = The Sellers net plant investment allocable to
Buyer for the current month, computed in
accordance with the provisions of Section 3.21
herein.
In the event that the Seller determines that the
ratio D - RBa and IA - RBa as estimated for the
current year will substantially differ from the
prior year's ratio, the Seller may use in the
foregoing equation its current estimate instead
of the prior year's ratio in order to avoid a
disproportionate charge during the month of
December.
In the event that the net effective rate of
Federal Income Tax changes from the present 34%,
by the imposition of a tax surcharge or
otherwise, the foregoing formula shall be
modified by substituting for the ratio of
0.042929 the product of 1/12 times the ratio T :
(1 - T), where T is the new effective rate of
Federal Income Tax. Said modification shall be
effective for service rendered after such change
in the rate of Federal Income Tax becomes
effective. Similarly, in the event such a change
in the net effective rate of Federal Income Tax
occurs, the formula contained in Section 3.22
herein shall be modified, for the bill rendered
for service during the next succeeding December,
by substituting for the ratio of 0.515152 the
ratio T - (1 - T) effective on a pro rata basis
as of the date when such change in the effective
rate of Federal Income Tax occurred.
3.222 For the month of December said charge shall be
[0.515152 (R -D)] - IA, less the sum of said charges
billed for the preceding eleven months.
Where: R = The total dollar amount of Return on
Investment billed by Seller to Buyer
pursuant to Section 3.21 herein during
current calendar year
D = The total dollar amount of net additions and
deductions allocable to Buyer as computed in
accordance with the provisions of Section 3.221
herein, except, that the computation shall be
based on the current calendar year.
IA = The total dollar amount of amortization of
deferred investment tax credit allocable to
Buyer as computed in accordance with the
provisions of Section 3.221 herein, except, that
the computation shall be based on the current
calendar year.
In the event that the information required to
finally determine the appropriate charge here-
under for the month of December is not available
at the time the bill is due said charge may be
estimated and, if it is estimated, will be
finalized by a charge or credit on a subsequent
bill when the necessary information becomes
available.
3.23 Property Insurance. Property insurance chargeable to
Buyer shall be determined each month by multiplying
that portion of the original cost of Seller's Jointly
Used Utility Plant which is insured, by (1) the
Demand Ratio, except for Production Coal Conversion
Plant costs included therein, plus said Production-
Coal Conversion Plant costs multiplied by the Energy
Ratio, and by (2) the Seller's Insurance Ratio for
the prior month.
3.24 Depreciation Expense. Depreciation Expense
chargeable to Buyer shall be determined each month as
the aggregate of amounts computed separately for each
Functional Plant Group, by multiplying Seller's book
depreciation expense for the prior month by (1) the
Joint Use Ratio applicable to that Functional Group
and by (2) the Applicable Demand Ratio or Energy
Ratio.
3.25 Amortization Expense. Amortization expense
chargeable to Buyer shall be determined each month as
the aggregate amount charged to Account 404
multiplied by the Energy Ratio.
3.26 Property Taxes. Property taxes chargeable to Buyer
shall be determined each month by multiplying that
portion of the original cost of Seller's Jointly Used
Utility Plant which is subject to property taxes by
(1) the Demand Ratio, except for Production-Coal
Conversion Plant costs included therein, plus said
Production-Coal Conversion plant costs multiplied by
the Energy Ratio, and by (2) the Seller's Property
Tax Ratio for the prior month.
3.3 Credit To Buyer for Sales to Other Utility Systems.
Buyer shall receive each month a credit for a proportionate
share of revenue credited to Seller's revenue account arising
from sales of capacity and energy under power sales agreements
between Seller and other utility systems. Such credit shall be
in amount equal to the sum of (i) the revenues from sales of
energy during that month multiplied by the Energy Ratio for
that month and (ii) the revenues from sales of capacity during
the month multiplied by the Demand Ratio.
ARTICLE 4. Facilities Provided by the Parties
Seller, subject to its securing and retaining
necessary exclusive rights and permits and to its continuing
ownership and control of its existing generating and transmission
facilities, shall furnish, maintain and operate the necessary
facilities to provide Buyer with its electric requirements.
Buyer shall provide, maintain and operate at its own
liability and expense all facilities necessary to transmit and
distribute electricity from the points of delivery to the points of
use within Buyer's territory. Buyer shall own its proportionate
share of production materials inventory as determined by the Demand
Ratio, except for fuel stock inventory as determined by the Energy
Ratio.
ARTICLE 5. Meters and Metering
Each party shall maintain suitable metering equipment
to measure demands and energy delivered to its distribution system
for use in determining the Energy Ratio and the Demand Ratio.
ARTICLE 6. Billing and Payment
6.1 Billing. Seller shall render bills monthly for all
electricity delivered hereunder. Both Seller and
Buyer shall have the right to examine the books,
records and charts of the other to the extent
necessary to verify the accuracy of any statement,
charge or computation made under or pursuant to any
of the provisions hereof.
6.2 Payment. Buyer shall pay Seller at its general
office located in Pearl River, New York, or at such
other address as Seller shall designate, on or before
the last day of the month following the month in
which service is rendered. Simple interest shall
accrue from the due date until the date of payment on
any unpaid portion at the rate of interest paid on
high grade commercial paper issued for 60 days
through dealer placement as quoted on the last day of
the month in which the bill is rendered.
ARTICLE 7. Force Majeure
Neither Seller nor Buyer shall be liable in damages
to the other for any act, omission or circumstance occasioned by or
in consequence of any acts of God, strikes, lockouts, acts of a
public enemy, wars, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, storms, floods, washouts,
arrests and restraints of rulers and peoples, civil disturbances,
explosions, breakage or accident to machinery or lines, the binding
order of any court or governmental authority which has been resisted
in good faith by all reasonable legal means, and any other cause,
whether of the kind herein enumerated or otherwise, not reasonably
within the control of the party claiming suspension and which, by
the exercise of due diligence, such party is unable to prevent or
overcome. Failure to prevent or settle any strike or strikes shall
not be considered to be a matter within the control of the party
claiming suspension.
Such causes or contingencies affecting the
performance here under by either Seller or Buyer, however, shall not
relieve it of liability in the event of its concurring negligence or
in the event of its failure to use due diligence to remedy the
situation and to remove the cause in an adequate manner and with all
reasonable dispatch, nor shall such causes or contingencies
affecting such performance relieve either party from its obligation
to make payments of amounts then due hereunder in respect of
electricity theretofore delivered.
ARTICLE 8. Reimbursement for Buyer's Jointly Used Utility Plant
Each monthly bill rendered pursuant to this contract
shall contain a credit to reimburse the Buyer for the portion of
Buyer's expenses and the Fixed Costs of Buyer's plant properly
allocable to Seller.
Such credit shall be determined pursuant to all of
the pro- visions of Article 3 herein. For the purpose of
determining such credit the words "Seller" and "Buyer" as used in
Article 3 shall be construed as referring respectively to Rockland
Electric Company and Orange and Rockland Utilities, Inc.
ARTICLE 9. Term.
This agreement shall become effective on January 1,
1993 and shall remain in effect unless cancelled by either party by
written notice given as prescribed in Article 11 hereof but not less
than six (6) months prior to the proposed date of cancellation.
ARTICLE 10. Cancellation of Prior Contracts
This agreement supersedes the Agreement between
Orange and Rockland Utilities, Inc. and Rockland Electric Company
dated March 17, 1989, and designated as Rate Schedule F.E.R.C. No.
61.
ARTICLE 11. Notices.
All notices from one party to the other shall be
given by telegram, United States mail or by the delivery of a
written notice to such offices of either company as may be agreed
upon at times or from time to time in writing by the parties, it
being initially agreed that:
Notices to Seller shall be addressed to it at
One Blue Hill Plaza
Pearl River, New York 10965
Notices to Buyer shall be addressed to it at
82 E. Allendale Avenue
Saddle River, New Jersey 07458
ARTICLE 12. Successors and Assigns
This agreement shall bind and run in favor of the
parties hereto and their respective successors, lessees and assigns
as fully as though such successors, lessees and assigns were
originally the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this agreement to be executed by their respective corporate officers
and their respective corporate seals to be hereto affixed, all as of
the day and year first above written.
Dated: March 17, 1993 ORANGE AND ROCKLAND UTILITIES, INC.
By L. M. DiValentino
Vice President and Controller
Attest:
By Victor Roque
ROCKLAND ELECTRIC COMPANY
By Victor J. Blanchet, Jr.
President and Chief Operating
Officer
Attest:
By Gerard A. Maher
Certificate of Concurrence
This is to certify that Rockland Electric Company assents to
and concurs in the rate schedule described below, which Orange and
Rockland Utilities, Inc. has filed, and hereby files this
certificate of concurrence in lieu of the filing of the rate
schedule. The filed rate schedule is a revised Power Supply
Agreement between Orange and Rockland Utilities, Inc. and Rockland
Electric Company, and is intended to supersede the currently
effective Power Supply Agreement, Rate Schedule FERC No. 61.
ROCKLAND ELECTRIC COMPANY
By Victor J. Blanchet, Jr.
Victor J. Blanchet, Jr.
President and Chief Operating
Officer