Exhibit 10(a)61
OPERATING AGREEMENT
between
Southern Power Company
and
Savannah Electric and Power Company
TABLE OF CONTENTS
ARTICLE 1 Definitions..............................................2
-----------
1.1 "Fuel Services".................................2
1.2 "Generation Facility"...........................2
1.3 "Governmental Authority"........................3
1.4 "Legal Requirements"............................3
1.5 "New Investment Projects".......................3
1.6 "New Investment Services".......................4
1.7 "Operating Services"............................4
1.8 "Operation and Maintenance Services"............4
1.9 "Prudent Utility Practice"......................4
ARTICLE 2 Operator's Authority and Responsibility with
---------------------------------------------
Respect to Operation of the Generation
---------------------------------------
Facilities...............................................5
----------
2.1 Responsibility of Operator......................5
2.2 Authorization of Operator.......................6
2.2.1. Plant Operation and
Maintenance............................6
(a) Staff and
Personnel......................6
(b) Licenses and
Permits for
Generation
Facilities.....................7
(c) Reductions in
Capacity and
Outages at Each
Plant..........................7
(d) Events About
Which Owner is
to be Notified.................8
(e) No Changes to
Transmission or
Distribution
Facilities.....................8
(f) Operation in
Accordance with
Operating Plan.................8
(g) Point of
Interconnection................9
2.2.2. New Investment
Services...............................9
2.2.3. Fuel Services..........................9
2.3 Removal or Addition of
Generating Facilities..........................10
2.3.1 Removal...............................10
2.3.2 Addition..............................10
2.4 Authority to Act as Agent for
Owner and Right of Third
Parties to Rely on Agency......................10
2.5 Assignment of Contracts;
Liability and Allocation of Risks
...............................................11
2.5.1 Contracts with Third
Parties...............................11
2.5.2 Acceptance of Contract
Provisions............................11
2.5.3 Enforcement of Rights
Under Contracts.......................12
2.6 Cooperation of Owner...........................12
2.7 Operator Interface Procedure...................13
2.8 Plans and Budgets..............................13
2.8.1 Strategic Plan...........................14
(a) Five-year
Operating and
Planned Outage
Schedule......................14
(b) Availability and
Performance
Goals.........................14
(c) Planned
Mandatory
Projects......................15
(d) Planned
Improvement
Projects......................15
(e) Authorized Level
of Staffing...................15
2.8.2 Fuel Plan.............................16
2.8.3 Operating Budget......................16
2.8.4 Capital Budget........................16
2.8.5 Fuel Budget...........................16
2.8.6 Material Contracts....................16
2.9 Information and Reports........................17
2.9.1 Generation Facility Data..............17
2.9.2 Generation Facility
Budget Reports........................17
2.9.3 Generation Facility
Strategic Plan Reports................17
2.9.4 Audit Reports.........................17
2.9.5 Correspondence to and
from Regulatory
Agencies..............................17
2.9.6 Responses to Owner
Inquiries.............................18
2.10 Plant Tours....................................18
2.11 Management Audit...............................18
ARTICLE 3 Entitlement to Output...................................18
---------------------
3.1 Entitlement to Output..........................18
3.2 Determination of
Output-Responsibility for Station
Service and Losses.............................19
ARTICLE 4 Costs, Billing, Accounting and Audit............................19
------------------------------------
4.1 Cost of Operation and
Maintenance....................................19
4.2 New Investment Costs...........................20
4.3 Fuel Costs.....................................20
4.4 Other Costs Required by Legal
Requirements...................................20
4.5 Revision.......................................20
4.6 Billing........................................21
4.7 Payment........................................21
4.8 General Accounting Matters.....................21
4.9 Right to Inspect Records.......................21
4.10 Disputed Invoice...............................22
ARTICLE 5 Advancement of Funds....................................22
--------------------
5.1 Advancement of Funds...........................22
ARTICLE 6 Taxes...................................................23
-----
6.1 Taxes..........................................23
ARTICLE 7 Compliance with Provisions of Permits
and Requirements of Governmental
Agencies................................................23
- --------------------------
7.1 Compliance with Provisions of
Permits and Requirements of
Governmental Agencies..........................23
ARTICLE 8 Confidentiality of Information..........................23
------------------------------
ARTICLE 9 Damage to Persons or Property; Penalties; Fines.........24
-----------------------------------------------
9.1 Applicability of Article.......................24
9.2 Absence of Warranty............................24
9.3 Liabilities to Third Parties and Owner.........24
9.4 Willful Misconduct.............................26
9.5 Limitation of Liability........................26
9.6 Severability...................................27
ARTICLE 10 Insurance...............................................27
---------
10.1 Parties Obligations Generally..................27
10.2 Commercial Liability Insurance.................28
10.3 Workmen's Compensation Insurance...............28
10.4 Additional Insurance...........................29
10.5 Waiver of Subrogation - Allocation
and Payment of Premium.........................29
ARTICLE 11 Term....................................................29
----
11.1 Term...........................................29
ARTICLE 12 Remedies................................................30
--------
12.1 Termination....................................30
ARTICLE 13 Miscellaneous...........................................32
-------------
13.1 No Partnership or Joint Venture................32
13.2 Owner's Designated
Representatives................................32
13.3 Operator's Designated
Representative.................................32
13.4 Depreciation...................................33
13.5 Holidays, Business Days........................33
13.6 Owner's Services to be
Furnished at Cost..............................33
13.7 Entire Agreement...............................33
13.8 Amendments.....................................33
13.9 Notices........................................33
13.10 Captions.......................................34
13.11 Counterparts...................................34
13.12 No Waiver......................................34
13.13 Singular and Plural............................34
13.14 Third Party Beneficiaries......................35
13.15 Severability...................................35
ARTICLE 14 Successors and Assigns..................................35
----------------------
14.1 Successors and Assigns.........................35
ARTICLE 15 Governing Law..................................................35
-------------
15.1 Governing Law..................................35
OPERATING AGREEMENT
between
Southern Power Company
and
Savannah Electric and Power Company
THIS OPERATING AGREEMENT (this "Agreement") is made and entered into
this 7th day of May, 2003, to be effective as January 1, 2003 (the "Effective
Date"), by and between Savannah Electric and Power Company ("Operator") and
Southern Power Company ("Owner").
W I T N E S S E T H:
-------------------
WHEREAS, Operator and Owner are each a wholly-owned subsidiary of The
Southern Company ("Southern"), a registered holding company under the Public
Utility Holding Company Act of 1935 (the "1935 Act"); and
WHEREAS, Owner owns certain generation stations, plants and other
generation-related facilities within the service territory of Operator and may
construct or acquire additional facilities in the future; and
WHEREAS, Owner intends to sell on the wholesale market the electric
power generated by such facilities; and
WHEREAS, Operator owns and operates generation stations, plants and
other related generation facilities and has developed the expertise and
experience to efficiently and economically operate such facilities; and
WHEREAS, Owner believes that in order to more efficiently and
economically provide for the operation, maintenance, repair, and rehabilitation
of its generating stations, plants and other generation-related facilities, such
activities should be conducted and coordinated by Operator; and
WHEREAS, Owner and Operator desire to set forth in this Agreement their
understandings and agreements regarding the operation, maintenance, repair and
rehabilitation of Owner's generating stations, plants and other
generation-related facilities.
NOW THEREFORE, in consideration of these premises, the parties,
intending to be legally bound, do hereby agree as follows:
ARTICLE 1
Definitions
As used herein, the following terms and phrases shall have,
respectively, the following meanings: 1.1 "Fuel Services" shall mean work
related to supplying and managing all necessary fuels for the Generation
Facilities, including, without limitation, planning, procurement, contract
administration, fuel quality assurance, administration of payables and
receivables, and all activities relating to procurement, transportation,
installation, monitoring, repairing, storage, reprocessing and disposal of fuel
for the Generation Facilities, related materials and waste products.
1.2 "Generation Facility" shall mean, and refer to,
respectively, each of the fossil fuel, hydro-electric and pumped
storage generation stations, plants and other generation-related
facilities owned by Owner, located within the service territory of
Operator and identified on Schedule 1 attached hereto and incorporated
herein; provided, however, that should activities concerning a
Generation Facility be undertaken with respect to one unit of such
station, plant or facility, the phrase "Generation Facility" shall mean
and refer to that unit and related common facilities. Generation
stations, plants and other generation-related facilities may be removed
from or added to the definition of "Generation Facilities" as
contemplated in Section 2.3.
1.3 "Governmental Authority" shall mean any local, state,
regional or federal legislative, regulatory, administrative, legal,
judicial or executive agency, commission, department or other entity
and any person acting on behalf of any such entity.
1.4 "Legal Requirements" shall mean all laws, codes,
ordinances, orders, judgments, decrees, injunctions, licenses, rules,
permits, approvals, written agreements, regulations and requirements of
or issued by every Governmental Authority having jurisdiction over the
matter in question, whether federal, regional, state or local, which
may be applicable to Operator, or to Owner, or to any Generation
Facility or any of the real or personal property comprising the
Generation Facilities, or to services to be provided to Owner
hereunder, or the use, occupancy, possession, operation, maintenance,
construction, acquisition, installation, alteration, replacement, or
reconstruction of any one or more of the Generation Facilities or any
part thereof.
1.5 "New Investment Projects" shall mean projects for the
Generation Facilities relating to the planning, design, licensing,
acquisition, construction, completion, renewal, improvement, addition,
repair, replacement or enlargement of any Unit of Property (as
described in the Federal Energy Regulatory Commission's "Units of
Property for Use in Accounting for Additions and Retirements of
Electric Plants"), under circumstances where expenditures on or for
such projects are to be capitalized in accordance with the Electric
Plant Instructions of the Uniform System of Accounts prescribed for
Class A and B utilities by the Federal Energy Regulatory Commission.
1.6 "New Investment Services" shall mean work on or for any
New Investment Project, including, but not limited to, any planning,
design, engineering, labor, procurement of materials and supplies,
materials management, quality assurance, training, security, and
environmental protection, together with maintaining or obtaining
licenses and regulatory approvals related thereto, governmental affairs
or regulatory relationships, administration of payables and
receivables, and all other activity required for the safe and reliable
operation of the New Investment Project and/or the relevant Generation
Facility or that may be required to comply with Legal Requirements.
1.7 "Operating Services" shall mean Fuel Services, New
Investment Services, and Operation and Maintenance Services.
1.8 "Operation and Maintenance Services" shall mean work for
Owner relating to the possession, management, control, start-up,
operation, availability, production of energy, maintenance,
improvement, renewal, and replacement, including, but not limited to,
any planning, design, engineering, labor, procurement of materials and
supplies, materials management, quality assurance, training, security,
and environmental protection, together with maintaining or obtaining
licenses and regulatory approvals related thereto, governmental affairs
or regulatory relationships, administration of payables and
receivables, and all other activity required for the safe and reliable
operation of the Generation Facilities or that may be required to
comply with Legal Requirements.
1.9 "Prudent Utility Practice" shall mean at a particular time
any of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry prior to such
time, or any of the practices, methods and acts which, in the exercise
of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. "Prudent Utility
Practice" is not intended to be limited to the optimum practice, method
or act to the exclusion of all others, but rather to be a spectrum of
possible practices, methods or acts having due regard for, among other
things, manufacturers' warranties and the requirements of governmental
agencies of competent jurisdiction.
ARTICLE 2
Operator's Authority and Responsibility with Respect to Operation
of the Generation Facilities
2.1......Responsibility of Operator. Operator, consistent with such
written guidelines as may be jointly developed with Owner, shall provide and be
responsible for (i) the operation and maintenance of the Generation Facilities
in a safe and reliable manner in accordance with all Legal Requirements and with
Prudent Utility Practice, (ii) the generation of power and energy at the
Generation Facilities to the credit of and for the benefit of the Owner as
economically as is reasonably practicable, (iii) the repair and rehabilitation
of the Generation Facilities as may, from time to time, be necessary,
appropriate or reasonably practicable and advisable and (iv) as and to the
extent deemed by Owner to be necessary or appropriate, the construction of new
or additional non-nuclear generation facilities for Owner. Operator also shall
make such further changes and additions to the Generation Facilities in its
service territory as shall be consistent with such operation, maintenance,
repair and rehabilitation. Such services and construction may be provided by
Operator through its own personnel or, in part, by others, including without
limitation affiliate personnel, under contractual or other arrangements,
including the use of Owner's personnel under the direction and supervision of
Operator.
2.2......Authorization of Operator. In furtherance of the foregoing,
Owner authorizes Operator, and Operator agrees to provide, Operation and
Maintenance Services and Fuel Services for the Generation Facilities and, as
authorized herein, New Investment Services. Owner hereby authorizes Operator to
take all actions that, in the discretion and judgment of Operator consistent
with Prudent Utility Practice, are deemed necessary or advisable in providing
these Operating Services. Owner hereby authorizes Operator, as operator, to take
any and all action necessary to comply with all Legal Requirements and to take
all action necessary to fulfill any requirements for the safe and reliable
operation of the Generation Facilities. The authority vested in Operator shall
include, but not be limited to, the authority to incur costs, liabilities, and
obligations, to purchase equipment, materials and supplies, to perform and
arrange for performance of work, to select and retain contractors, engineers,
consultants, architect-engineers, attorneys, accountants and other firms or
persons, and to take all actions in connection with the Generation Facilities
that are within the scope set forth above. Without limiting the foregoing, the
authority vested in Operator shall include the following:
2.2.1. Plant Operation and Maintenance. Operator shall have
the authority to possess, operate and maintain the Generation
Facilities in accordance with policies and decisions established and
made by Owner. Subject to the provisions of this Agreement, Operator
shall in accordance with Prudent Utility Practice endeavor to achieve
reliable performance of each Generation Facility, to maximize the
capacity and availability factors and minimize forced outage rates and
durations at each Generation Facility and to produce busbar costs as
low as reasonably possible.
(a) Staff and Personnel. Subject to the provisions of
Section 2.8.1 respecting Strategic Plans and approval of Owner
or Owner's designated representative, Operator shall have the
authority to select, hire, compensate, control and discharge
(when deemed appropriate by Operator) those persons, firms or
corporations which are required to satisfy its obligations
under this Agreement. Operator shall keep Owner informed of
any plans to change either the Operator officer responsible
for any of Owner's Generation Facilities or the Operator
manager of such Generation Facility. Any input from Owner on
such plans will be considered by Operator, but Operator's
decisions on personnel matters shall be final. Operator shall
also consider any positive or negative comments from Owner
regarding the performance of any of Operator's officers or
managers, but management decisions on whether to take
personnel or salary administration actions shall be made
solely by Operator.
(b) Licenses and Permits for Generation Facilities.
Operator is authorized to obtain and maintain compliance with
all licenses, approvals and permits for each Generation
Facility from Governmental Authorities required for operation
and maintenance of the Generation Facility. Upon mutual
agreement of Operator and Owner, or as required by Legal
Requirements, Operator will be designated in such licenses,
approvals and permits as having operating responsibility for
the Generation Facilities.
(c) Reductions in Capacity and Outages at Each Plant.
Owner recognizes that, in the course of operating the
Generation Facilities, it may be necessary to decide whether
to operate the Generation Facilities at less than full power
or to terminate or suspend such operations altogether in light
of technical, legal, regulatory, safety, economic, power
system, testing, or other considerations. Operator recognizes
the need to minimize periods of reduced capacity or outages at
the Generation Facilities that could have an adverse effect on
Owner's power supply system or its cost of providing reliable
electric service. Operator will endeavor to consult with Owner
concerning any operating conditions which are expected to
result in capacity reductions of fifty percent (50%) or more
at a Generation Facility or outages at a unit of any
Generation Facility, and Operator will only take those actions
when they determine they are prudent and necessary from an
operating standpoint.
(d) Events About Which Owner is to be Notified. In
the event of an occurrence at a Generation Facility of any
unplanned outage, any significant extension of a planned
outage, any unplanned reduction in the capacity of a unit for
an extended period, or any event at a Generation Facility or
any regulatory action which is likely to attract substantial
media attention or to affect substantially the operation of
the Generation Facility, Operator shall inform Owner as soon
as practical, or in accordance with guidelines acceptable to
Owner, after the occurrence of such event.
(e) No Changes to Transmission or Distribution
Facilities. In order that the safe operation of the Generation
Facilities is assured, Owner shall not effect any operating or
physical changes to its transmission and distribution
facilities which may adversely affect the safe operation of
the Generation Facilities without prior consultation with and
the concurrence of Operator.
(f) Operation in Accordance with Operating Plan. Each
Generation Facility shall be operated in accordance with
Prudent Utility Practice and pursuant to an operating plan
developed and updated regularly by Operator and Owner and in
accordance with Owner's obligations, if any, under any
interconnection agreements, power pooling arrangements or
other applicable arrangements, as such obligations may
presently exist or may hereafter be modified from time to
time, including the obligations, if any, of Owner to maintain
the design integrity of each Generation Facility under the
requirements of the Southeast Electric Reliability Council and
the National Electric Reliability Council.
(g) Point of Interconnection. The point of
interconnection between any Generation Facility and Operator's
or a third party's transmission system and the extent of
Operator's operational responsibility therefor shall be
determined from time to time by Owner and Operator.
2.2.2. New Investment Services. Operator shall have
responsibility for all New Investment Services. Operator is authorized
to enter into such arrangements as it deems appropriate for the
Generation Facilities and to make all decisions regarding the
completion of New Investment Projects that were contemplated in the
construction budgets for the Generation Facilities as of this
acquisition by Owner or that have been approved and provided for in an
Operating Budget or Capital Budget under the procedures contemplated in
Section 2.8 and as applicable Section 2.3.2. All equipment, materials
and supplies included in such New Investment Projects for each
Generation Facility shall be acquired in the name of Owner and shall be
the property of Owner.
2.2.3. Fuel Services. Operator shall have responsibility for
Fuel Services. Operator is authorized to enter into such arrangements
as it deems appropriate and to make all decisions regarding fuel and
fuel services.
2.3......Removal or Addition of Generating Facilities. Owner shall
retain the exclusive authority to remove a particular generation station, plant
or other generation-related Facility from the provisions of this Agreement and
to arrange for other means for its operation and maintenance. Owner and Operator
may agree to add new generation stations, plants or other generation-related
facilities of Owner within Operator's service territory to this Agreement.
2.3.1 Removal. Upon Owner informing Operator of any removal of
a Generation Facility from this Agreement, Operator shall take such
action as may be necessary to transfer operational control of such
Generation Facility, and to comply with the provisions of Sections
12.1.2 and 12.1.3, which shall also apply. Upon the transfer of
operational control of a Generation Facility as contemplated above and
in Sections 12.1.2 and 12.1.3, such generation station, plant or other
generation-related facility shall cease to be a "Generation Facility."
2.3.2 Addition. Upon Owner and Operator agreeing to the
addition of a generation station, plant or other generation-related
facility to this Agreement, such generation station, plant or other
generation-related facility shall be a "Generation Facility" and shall
be subject to all of the provisions of this Agreement.
2.4......Authority to Act as Agent for Owner and Right of Third Parties
to Rely on Agency. In the conduct of the authority vested in Operator in
Sections 2.1 and 2.2 above, Owner hereby designates and authorizes Operator to
act as its attorney-in-fact and agent for such purposes, including, without
limitation, authority to enter into and administer contracts on behalf of Owner
for procurement of material, equipment or services and authority to administer
contracts entered into by Owner with respect to the Generation Facilities. As
relates to all third parties, the designation of Operator as agent shall be
binding on Owner. Operator accepts such appointment as agent of Owner. Upon
request from Operator, Owner shall provide written confirmation of this agency
relationship to third parties.
2.5......Assignment of Contracts; Liability and Allocation of Risks.
2.5.1 Contracts with Third Parties. Upon mutual agreement of
Operator and Owner, Owner shall assign and transfer to Operator those
contracts with third parties relating to the operation of each
Generation Facility. Prior to assignment and transfer of such
contracts, Operator may request Owner to appoint Operator as agent for
administration of any such contracts. After receipt of any such
assignment, transfer or authorization to administer, Operator shall
have the exclusive responsibility for the administration and
enforcement thereof in accordance with the terms thereof.
2.5.2 Acceptance of Contract Provisions. To the extent
permitted pursuant to Section 2.8, Operator in such contracts with
third parties may agree to such matters as limitations on the liability
of contractors for work performed or materials furnished, restrictions
on warranties, agreements to indemnify the contractors from liability,
requirements that Owner be bound by financial protection provisions,
waivers, releases, indemnifications, limitations of liability and
further transfers or assignments under such contracts, and other
similar provisions (each contract with a third party that contains any
of the provisions, terms or other effects described in this sentence,
shall be referred to as a "Material Contract"). Owner waives any claims
against Operator for entering into Material Contracts approved pursuant
to the process provided in Section 2.8. Owner also agrees to be bound
by the requirements for financial protection, waivers, releases,
indemnification, limitation of liability and further transfers or
assignments that bind Operator as they now exist in existing Material
Contracts or as they may exist in the future with respect to Material
Contracts approved or entered into pursuant to such process provided in
Section 2.8.
2.5.3 Enforcement of Rights Under Contracts. Owner covenants
that, Owner will notify Operator in writing in advance if Owner intends
to threaten suit or bring suit against third parties or otherwise make
any claim under any contract or arrangement relating to any of the
Generation Facilities or Operating Services being provided by Operator.
If Owner desires for Operator to threaten or bring suit or otherwise to
make any claim, or desires that such action contemplated by Operator
shall not be taken, Owner shall, by written notice to Operator, request
it so to act or refrain from acting. Upon Operator's receipt of a
notice under one of the previous two sentences, Owner and Operator
shall arrange for consultation within ten (10) working days thereafter
on the questions raised, or such lesser period of time as Operator or
Owner shall specify in the light of circumstances requiring a more
expeditious determination. Neither Operator nor Owner shall make its
final determination whether it will or will not bring any such suit or
make any such claim until after such consultation; however, the
determination by Operator regarding the action that it will or will not
take, shall be final and binding (irrespective of what Owner decides to
do), and the decision of Owner regarding the action that it will or
will not take will also be final and binding (irrespective of what
Operator decides to do).
2.6......Cooperation of Owner. Subject to the requirements and
procedures of Sections 2.5.2 and 2.8, and in the case of New Investment Services
Section 2.2.2 and as applicable Section 2.3.2, Owner agrees that it will take
all necessary action in a prompt manner to execute any agreements with respect
to the provision of Operation and Maintenance Services and Fuel Services for the
Generation Facilities, and New Investment Services, as and when requested by
Operator to permit Operator to carry out its authority and responsibilities
pursuant to this Article 2. Operator may request Owner to furnish services or
assistance, materials, supplies, licenses, offices and real property rights
including, without limitation, power supply services, transmission and
distribution system repair, replacement, construction and maintenance,
accounting services, maintenance personnel, security services, and other
personnel, services or assistance as Operator may require with respect to any
one or more Generation Facilities. Any such items which Owner agrees to furnish
to Operator shall be provided at cost.
2.7......Operator Interface Procedure. Operator and Owner will jointly
establish and maintain an Operator Interface Procedure to govern the working
relationships between the two companies. The Operator Interface Procedure shall
contain procedures by which Owner can maintain an overview of Generation
Facility operations, procedures for administering this Operating Agreement
through designated executive points of contact, and procedures to define
interfaces for support services and assistance provided by Owner pursuant to
Section 2.6 hereof.
2.8......Plans and Budgets. Strategic Plans, Fuel Plans, Operating
Budgets, Capital Budgets, Fuel Budgets and Material Contracts shall be submitted
to Owner by Operator as provided in Paragraphs 2.8.1 through 2.8.5 below. The
contents of these plans, budgets and Material Contracts shall conform to the
requirements and guidelines established pursuant to the Operator Interface
Procedure. Owner shall approve or disapprove each such plan, budget or Material
Contract within thirty (30) days after its submittal. In the event Owner
disapproves a plan, budget or Material Contract, Owner shall inform Operator of
the basis for such disapproval. Operator shall then modify such plan, budget or
Material Contracts as required to make it acceptable to Owner and shall resubmit
it for approval; provided, however, that in no event shall Operator be required
to submit plans, budgets or Material Contracts which would cause Operator to
operate a Generation Facility in violation of any Legal Requirements or in a
manner that fails to provide reasonable assurance of health and safety to
employees. Operator shall attempt to provide Operating Services in accordance
with such approved plans and within the aggregate annual amount of such budgets.
Notwithstanding the foregoing, Operator makes no representation, warranty or
promise of any kind as to accuracy of any such plan or budget, or that any
attempt referred to in the preceding sentence will be successful, and in no
event shall Owner be relieved of its responsibility to pay costs incurred by
Operator as required in Article 4 hereof.
2.8.1 Strategic Plan. A Strategic Plan for each Generating
Facility shall be submitted to Owner by Operator no later than July 1
of each year. Owner may separately approve or disapprove individual
projects which are classified as planned improvement projects pursuant
to Paragraph (d) below, but shall otherwise approve or disapprove each
Strategic Plan in its entirety. Strategic Plans may cover one or more
Generation Facilities. Each Strategic Plan shall identify key
assumptions to be used in the preparation of budgets and forecasts,
including:
(a) Five-year Operating and Planned Outage Schedule.
This section shall identify the scheduled operating cycles and
planned outages for maintenance and other work during the
succeeding five years. The schedule shall describe in
reasonable detail the time and duration of each planned outage
and the maintenance and other work planned to be performed
during such outage.
(b) Availability and Performance Goals. This section
shall contain overall performance goals which have been
established by Operator for the Generation Facility for the
current year.
(c) Planned Mandatory Projects. A mandatory project
is any project with a total estimated cost in excess of one
million dollars ($1,000,000) or such other amount as Owner may
establish, including but not limited to any upgrade,
replacement, addition or program, which is needed in order to
support normal operations in accordance with Prudent Utility
Practice or in order to comply with regulatory or safety
requirements. The associated schedule and estimated annual
funding requirements shall be included.
(d) Planned Improvement Projects. An improvement
project is any project with a total estimated cost in excess
of one million dollars ($1,000,000) or such other amount as
Owner may establish, including but not limited to any upgrade,
replacement, addition, or program, which is not mandatory as
defined in (c) above. Examples of such projects include
efforts to improve performance of a Generation Facility or
conditions, such as improved Generation Facility capacity or
efficiency, enhanced working conditions, and appearance. The
associated schedule and estimated annual funding requirements
shall be included.
(e) Authorized Level of Staffing. This section shall
provide the current authorized number of permanent staff
positions which are assigned to the Generation Facility and
its offsite support. Such number of positions shall be broken
down by functional areas (e.g., operations, maintenance,
administrative, technical, corporate support), shall include
positions which are located either on-site or off-site, and
shall include all positions regardless of the actual employer.
This section shall also show any estimates of planned changes
in such authorized number of positions over the succeeding
five years.
2.8.2 Fuel Plan. A five-year Fuel Plan for each Generation
Facility shall be submitted to Owner by September 15 of each year.
Owner shall approve or disapprove each Fuel Plan within thirty days
after submittal. Each Fuel Plan shall describe in reasonable detail
plans for procurement and utilization of fuel for the Generation
Facility and information on disposal of waste products. A Fuel Plan may
cover one or more Generation Facilities.
2.8.3 Operating Budget. By September 1 of each year, Operator
shall submit to Owner a written Operating Budget showing the estimated
costs of operating and maintaining Owner's Generation Facilities during
the next calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.4 Capital Budget. By September 1 of each year, Operator
shall submit to Owner a written Capital Budget estimate of capital
expenditures for each of Owner's Generation Facilities for the next
calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.5 Fuel Budget. By September 15 of each year, Operator
shall submit to Owner a written Fuel Budget estimate of fuel
expenditures for each of Owner's Generation Facilities for the next
calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Each budget shall be supported by
detail reasonably adequate for the purpose of review by Owner.
2.8.6 Material Contracts. Reasonably in advance of the time it
plans to enter into a Material Contract with a third party, Operator
shall submit to Owner a draft of such Material Contract. Each draft
Material Contract will be supported with all attachments and sufficient
information for Owner to evaluate the provisions that render such draft
a Material Contract.
2.9......Information and Reports. Operator shall furnish to Owner the
following information and reports:
2.9.1 Generation Facility Data. At the time of submittal of
each Strategic Plan, Operator shall also furnish a comparison of the
performance of each Generation Facility with other generating
facilities using performance indicators in common use in the electric
utility industry or as may be specified by Owner.
2.9.2 Generation Facility Budget Reports. Operator shall
furnish monthly data showing actual costs for operation and
maintenance, capital expenditures, and direct fuel expenditures with
comparisons to the respective budgets. This report will normally be
provided by the end of the succeeding month.
2.9.3 Generation Facility Strategic Plan Reports. At least
quarterly, Operator shall furnish data showing actual performance for
each unit at each Generation Facility compared to goals contained in
the Strategic Plan for the Generation Facility.
2.9.4 Audit Reports. Operator shall make available for review
by Owner copies of financial or accounting reports concerning Owner's
Generation Facilities containing the results of audits by or for
Southern Company Services, Inc., or any affiliate or subsidiary of The
Southern Company, or by any regulatory agency.
2.9.5 Correspondence to and from Regulatory Agencies. At the
request of Owner, Operator shall furnish to Owner copies of
correspondence to and from regulatory agencies concerning one or more
of Owner's Generation Facilities.
2.9.6 Responses to Owner Inquiries. In addition to the
obligation of Operator to provide the information as explicitly
required herein, Operator shall respond to reasonable written or verbal
requests from Owner for information not otherwise specifically provided
for herein.
2.10.....Plant Tours. Owner shall have the right to have its
representatives and guests visit its Generation Facilities, to tour the
facilities, and observe activities at the Generation Facilities; provided that
such visits or tours will not interfere with the operation of the Generation
Facilities, or the security or safety of such facilities. Owner shall assure
that its representatives and guests comply with all applicable rules and
regulations in effect at a Generation Facility whether imposed by Governmental
Authority or by Operator.
2.11.....Management Audit. Owner shall have the right to conduct a
management audit, at its own cost, of Operator's performance hereunder either by
Owner officers and employees or through their duly authorized agents or
representatives. Operator shall cooperate with Owner in the conducting of such
audit and, subject to applicable Legal Requirements and the requirements of
vendors, give Owner reasonable access to all contracts, records and other
documents relating to the Generating Facilities. Following any such management
audit, Operator shall respond to the findings of such audit if requested to do
so by Owner. Management audits by Owner shall be scheduled so as to minimize the
number of audits required and so as to not to exceed one management audit in any
consecutive twelve-month period.
ARTICLE 3
Entitlement to Output
3.1......Entitlement to Output. Owner shall be entitled to all of the
output from its Generation Facilities at the time generation in such units
occurs. Subject to Operator's primary responsibility for safe operation of the
Generation Facilities, Owner shall have the right to schedule and dispatch the
capacity and energy needed from the facilities, and Operator shall use its best
efforts to honor such schedule.
3.2......Determination of Output-Responsibility for Station Service and
Losses. Output of each Generation Facility shall be the gross generation of the
facility, less station service requirements, and less adjustments for losses
experienced. Owner shall be responsible for providing all off-site electric
power required at the Generation Facility whenever the station service and
losses exceed the gross generation of the Generation Facility.
ARTICLE 4
Costs, Billing, Accounting and Audit
4.1......Cost of Operation and Maintenance. Owner shall pay to Operator
all direct costs incurred by Operator relating to Operation and Maintenance
Services for the Generation Facilities (including all costs identified in
Section 9.3 and any costs incurred by Operator as a consequence of termination
hereunder). Such costs shall include all payments made to Operator employees
(including payment of wages, salaries, workmen's compensation and other
benefits) relating to work performed by such employees while on the premises of
any of the Generation Facilities. Operator and Owner acknowledge that all such
payments made to Operator employees, relating to work performed by such
employees while on Generation Facility premises, are effectively made by Owner,
since Owner is responsible for such payments and they are made from funds placed
on deposit by Owner for those purposes. Owner shall also pay to Operator the
Generation Facility allocated share of other of Operator's costs. Allocation of
costs to Operation and Maintenance Services shall be performed in accordance
with the methodology agreed-upon from time to time by Owner and Operator.
4.2......New Investment Costs. Owner shall pay to Operator all costs
incurred by Operator relating to New Investment Services for the Generation
Facilities, including obligations incurred to third parties, direct costs of
Operator associated with such New Investment Services and the Generation
Facilities' allocated share of Operator's other costs associated with such
activities. Allocation of costs to New Investment Services shall be performed in
accordance with the methodology agreed-upon from time to time by Owner and
Operator pursuant to Section 4.1 hereof.
4.3......Fuel Costs. Owner shall pay to Operator all direct costs
incurred by Operator relating to Fuel Services for the Generation Facilities and
the Generation Facilities allocated share of other of Operator's costs.
Allocation of costs to Fuel Costs shall be performed in accordance with the
methodology agreed-upon from time to time by Owner and Operator pursuant to
Section 4.1 hereof.
4.4......Other Costs Required by Legal Requirements. Owner shall pay to
Operator all direct costs incurred by Operator and the Generation Facilities'
allocated share of other of Operator's costs associated with any other
activities of Operator relative to the Generation Facilities that are required
to meet Legal Requirements.
4.5......Revision. Should Operator undertake to perform services for
any other affiliated company or for any non-affiliated company where the cost to
Operator of providing such services affects the cost of Operator to provide
Operating Services pursuant to this Agreement, Operator shall discuss the matter
and reach agreement with Owner respecting the need for or the terms of any
amendment of this Section 4 as may be appropriate to assure the continued
fairness of the determination of the responsibility for costs payable to
Operator hereunder.
4.6......Billing. Operator shall render to Owner a monthly billing
statement, with detailed data in a computer readable form as reasonably
requested by Owner, no later than the fifth (5th) day of each month detailing
costs incurred for Operation and Maintenance Services during the preceding month
pursuant to Section 4.1; costs incurred for New Investment Services during the
preceding month pursuant to Section 4.2; costs incurred for Fuel Services during
the preceding month pursuant to Section 4.3; and the other costs incurred during
the preceding month pursuant to Section 4.4.
4.7......Payment. The obligation to make payments as specified herein
shall continue notwithstanding the capability (or lack of capability) of the
Generation Facilities to produce power for any reason.
4.8......General Accounting Matters. Determinations by Operator on all
accounting matters related to the transactions contemplated by this Agreement
will be in accordance with Generally Accepted Accounting Principles and the
Securities and Exchange Commission's Uniform System of Accounts for Mutual and
Subsidiary Service Companies, utilizing the accrual method of accounting, unless
otherwise specifically provided in this Agreement or mutually agreed by Operator
and Owner or as prescribed by other regulatory agencies having jurisdiction, as
in effect from time to time.
4.9......Right to Inspect Records. During normal business hours and
subject to conditions consistent with the conduct by Operator of its regular
business affairs and responsibilities, Operator will provide Owner or any
auditor utilized by Owner and reasonably acceptable to Operator, or any
nationally recognized accounting firm retained by Owner, access to Operator's
books, records, and other documents directly related to the performance of
Operator's obligations under this Agreement and, upon request, copies thereof,
which pertain to (a) costs applicable to Operation and Maintenance Services, New
Investment Services, Fuel Services, and Other Costs for Owner's Generation
Facilities to the extent necessary to enable Owner to verify the costs which
have been billed to Owner pursuant to the provisions of this Agreement; (b)
compliance with all environmental Legal Requirements; and (c) matters relating
to the design, construction and operation of Owner's Generation Facilities in
proceedings before any Governmental Authority.
4.10.....Disputed Invoice. In the event Owner shall question any
statement rendered by Operator in accordance with the provisions of Section 4.1
hereof, Owner shall nevertheless promptly pay amounts called for by Operator
under Section 4.1 hereof but such payment shall not be deemed to prevent Owner
from claiming an adjustment of any statement rendered.
ARTICLE 5
Advancement of Funds
5.1...... Operator shall prepare forecasts, in such frequency, form and
detail as Owner shall direct, of the funds required to pay Operator's
anticipated costs of the services to be provided to Owner and the dates on which
payment of such costs shall become due. Owner shall advance funds to Operator in
such amounts and at such times determined on the basis of such forecasts, to
enable Operator to pay its costs of services on or before payment of such costs
shall be due. Such advances shall be made by deposits or bank transfers to
accounts of Operator with such financial institutions as Operator shall
designate. Any excess funds in such accounts shall be invested by Operator in
accordance with prudent cash management practices and all investment income and
appreciation received on such funds shall be credited against the cost of
service provided to Owner.
ARTICLE 6
Taxes
6.1...... Owner shall report, file returns with respect to, be
responsible for and pay all real property, franchise, business or other taxes,
except payroll and sales or use taxes, arising out of or relating to its
ownership of the Generation Facilities.
ARTICLE 7
Compliance with Provisions of Permits
and Requirements of Governmental Agencies
7.1...... Owner and Operator shall cooperate in taking whatever action
may be necessary to comply with the terms and provisions of all permits and
licenses for the Generation Facilities and with all applicable lawful
requirements of any federal, state or local agency or regulatory body having
jurisdiction in or over the Generation Facilities.
ARTICLE 8
Confidentiality of Information
8.1......Each party to this Agreement may, from time to time, come into
possession of information of the other parties that is either confidential or
proprietary. Any party having any such information which is known to be
considered by any other party as either confidential or proprietary will not
reproduce, copy, use or disclose (except when required by a Governmental
Authority) any such information in whole or in part for any purpose without the
written consent of the other party. In disclosing confidential or proprietary
information to a Governmental Authority, the disclosing party shall cooperate
with the other party in minimizing the amount of such information furnished. At
the specific request of the other party, the disclosing party will endeavor to
secure the agreement of such Governmental Authority to maintain specified
portions of such information in confidence. Public dissemination of information
by the furnishing party before or after it is furnished shall constitute a
termination of the confidentiality requirement as to that specific information.
ARTICLE 9
Damage to Persons or Property; Penalties; Fines
9.1......Applicability of Article. Since Operator is undertaking its
responsibilities hereunder (i) at cost and (ii) in order to assist Owner in
meeting its responsibilities with respect to its Generation Facilities, the
following provisions shall be applicable to loss or damage to the property of
any or all of the parties hereto (including Generation Facilities property) or
of third parties, or injuries to or loss of life by any person, including
employees of the parties hereto, and to penalties or fines assessed with respect
to the Generation Facilities:
9.2......Absence of Warranty. Operator does not warrant that its
performance of Operating Services will meet the standards set forth in Sections
2.1 and 2.2 hereof, and its sole obligation if it fails to meet such standards
is to reperform at the request of Owner the deficient work at cost payable by
Owner in a manner that complies with such standards. Owner acknowledges that
such services are not subject to any warranty of any nature, express or implied,
including, without limitation, any warranty of merchantability or fitness for a
particular purpose.
9.3......Liabilities to Third Parties and Owner. (a) To the fullest
extent provided by law, all liability to third parties other than liability for
Operator's Willful Misconduct (as defined in 9.4 below), fraud or gross
negligence whether arising in contract (including breach of warranty), tort
(including negligence, product liability, breach of fiduciary duty or any other
theory of tort liability), under the laws of real property or otherwise, or as a
result of fines or other penalties imposed by any Governmental Authority, that
results from or is in any way connected with the provision of Operation and
Maintenance Services, New Investment Services, or Fuel Services for the
Generation Facilities shall be borne by Owner in their entirety. Owner shall
indemnify and hold harmless Operator, its agents servants, directors, employees
and affiliates (the "Indemnified Parties") from and against any and all claims,
losses, damages, expenses and costs of any kind, including without limitation
attorneys fees, costs of investigation and court costs, other than those
attributable to Willful Misconduct, fraud or gross negligence of Operator,
whether direct or indirect, on account of or by reason of bodily injuries
(including death) to any person or persons or property damage arising out of or
occurring in connection with the provision of Operation and Maintenance
Services, New Investment Services, or Fuel Services for the Generation
Facilities, whether or not such claims, losses, damages, expenses or costs were
caused by or alleged to have been caused by or contributed to by the active,
passive, affirmative, sole or concurrent negligence or by breach of any
statutory or other duty (whether non-delegable or otherwise) of any of the
Indemnified Parties.
Except for consequences of Operator's Willful Misconduct or fraud,
Owner and its affiliates, servants, employees, agents and insurers hereby
release, acquit and forever discharge the Indemnified Parties, to the fullest
extent permitted by applicable law, from any and all damages, claims, causes of
action, damage to property of Owner or expenses of whatever kind or nature, that
are in any manner connected with the provision of any Operating Services or the
performance and prosecution of any project or work by any of the Indemnified
Parties for or on behalf of Owner for its Generation Facilities, whether arising
in tort (including negligence, strict liability, breach of fiduciary duty or any
other theory of tort liability), contract (including breach of warranty), under
the laws of real property or otherwise, or as a result of any fine or other
penalty imposed by any Governmental Authority. This release shall be effective
whether or not such claims, causes of action, damages, or expenses were caused
or alleged to have been caused by or contributed to by the active, passive,
affirmative, sole or concurrent negligence or by breach of any statutory or
other duty (whether non-delegable or otherwise) of any of the Indemnified
Parties.
9.4......Willful Misconduct. As used in this Agreement, the term
"Willful Misconduct" shall mean any act or omission by any of the Indemnified
Parties that is performed or omitted consciously with actual knowledge that such
conduct is likely to result in damage or injury to persons or property;
provided, however, that any such act or omission, if performed or omitted by an
Indemnified Party, shall not be deemed Willful Misconduct unless an officer or
employee of Operator at or above the officer level of Vice President or the
employee level of plant manager shall have expressly authorized such act or
omission. Operator shall exercise reasonable and customary supervision or
control over the activities of its agents, servants and employees, and its
affiliates, so as to minimize the potential for adverse willful actions by such
agents, servants or employees or affiliates; provided, however, that failure of
Operator to prevent such adverse willful actions shall not itself be considered
Willful Misconduct. Liability attributable to Operator's Willful Misconduct,
fraud or gross negligence shall be borne by Operator, subject to the limitations
of liability in Section 9.5 below and the last paragraph of Section 9.3 above in
the case of liability to Owner.
9.5......Limitation of Liability. Notwithstanding Sections 9.3 and 9.4
hereof, Owner agrees that in no event shall any of the Indemnified Parties be
liable to Owner for any indirect, special, punitive, incidental or consequential
damages including, without limitation, (1) loss of profits or revenues, (2)
damages suffered as a result of the loss of the use of Owner's power system,
Generation Facilities or equipment, (3) cost of purchase of replacement power
(including any differential in fuel or power costs), or (4) cost of capital with
respect to any claim based on or in any way connected with this Agreement
whether arising in contract (including breach of warranty), tort (including
negligence, strict liability, breach of fiduciary duty or any other theory of
tort liability), under the laws of real property or any other legal or equitable
theory of law, or as a result of any fine or other penalty imposed by any
Governmental Authority. Owner shall release, acquit, forever discharge,
indemnify, and hold harmless the Indemnified Parties from and against any claim
by any customer of Owner, or any other third party, for any direct, indirect,
special, punitive, incidental or consequential damages arising out of any
performance or failure to perform under this Agreement. The provisions of this
Section 9.5 shall apply to the fullest extent permitted by law.
9.6......Severability. In the event that any particular application of
any of the limitations of liability contained in this Article 9 should be
finally adjudicated to be void as a violation of the public policy of the State
of Georgia then such limitation of liability shall not apply with respect to
such application to the extent (but only to the extent) required in order for
such limitation of liability not to be void as a violation of such public
policy, and such limitations of liability shall remain in full force and effect
with respect to all other applications to the fullest extent permitted by law.
ARTICLE 10
Insurance
10.1.....Parties' Obligations Generally. During the term of this
Agreement, Owner and Operator shall make reasonable efforts to procure and
maintain in force such physical damage and loss, public liability, worker's
compensation, officers' liability and other insurance as Owner may deem
appropriate with respect to all losses, damages, liability and claims arising
out of Owner's ownership of its Generation Facilities and Operator's operation
thereof and the provision of Operating Services hereunder. All such insurance
policies shall identify Operator and Owner as additional insureds thereunder as
their interests may appear, and shall contain a waiver of subrogation clause in
favor of Operator and Owner to the extent of the applicable limits of such
policies. The aggregate cost of all insurance, applicable to each Generation
Facility and procured by Operator pursuant to this Agreement, and any payment by
Operator of any deductible, self-insured retention, or co-payment in connection
with any policy claim arising out of Operator's performance of this Agreement
shall be included in the costs of Operating Services. Operator will take steps
to meet the requirements of such insurance policies and cooperate with Owner to
furnish information, establish procedures, erect or change physical facilities
and otherwise meet the requirements of the insurers to maintain coverage in
effect and to collect claims that may be made under such insurance. In the event
that any of the insurance described in this Article 10 is canceled by a party,
that party shall give written notice of such cancellation to the other party at
least sixty (60) days prior to the effective date of such cancellation.
10.2.....Commercial Liability Insurance. Operator will carry insurance
to cover the legal obligations to pay damages because of bodily injury or
property damage. The limits and deductibles of such coverage shall be as
mutually agreed by Operator and Owner.
10.3.....Workmen's Compensation Insurance. Operator shall qualify as a
self-insurer in Georgia and with the U.S. Department of Labor for purposes of
the U.S. Longshoreman's and Harbor Worker's Act, but will provide an umbrella
policy to cover benefits in excess of its assumed liability for workmen's
compensation, the Longshoreman's and Harbor Worker's Act, and employers
liability. Owner and Operator acknowledge that, pursuant to the terms of this
Agreement, all premiums for Operator's workmen's compensation insurance and all
payments to Operator employees, including workmen's compensation benefits,
relating to work performed by such employees while on the premises of a
Generation Facility, are effectively made by the Owner, since such premiums and
payments constitute direct charges incurred by Operator in relation to the
performance of Operating Services for such Generation Facility. It is the intent
of Owner and Operator that for purposes of workmen's compensation Owner not be
exposed to greater liability by virtue of this Agreement than Owner would have
if Owner had utilized Owner employees to perform Operating Services. If Operator
and Owner agree, as an alternative, the parties can purchase any such insurance.
10.4.....Additional Insurance. In the event Owner at any time or from
time to time shall have elected to participate in supplemental insurance
programs to cover other risks arising from the ownership and operation of a
Generation Facility, including the extra costs of replacement power, the costs
of such protection shall be borne by Owner.
10.5.....Waiver of Subrogation - Allocation and Payment of Premium.
Each insurance policy obtained by a party hereto shall contain waivers of
subrogation against the other party, if obtainable from the insurer. The
aggregate cost of all insurance, applicable to the Generation Facilities and
procured by Operator pursuant to this Agreement, shall be considered an
operating cost subject to reimbursement under Section 4.1. In the event that any
of the foregoing insurance policies is canceled by a party, that party shall
give written notice of such cancellation to the other party sixty (60) days
prior to the effective date of such cancellation.
ARTICLE 11
Term
11.1.....Term. The term of this Agreement shall commence on the
Effective Date, subject nevertheless to any applicable rules, regulations or
approvals of any regulatory authority whose approval is required. This Agreement
shall expire (i) upon termination pursuant to Section 12.1; or (ii) upon mutual
agreement of the parties. Owner's obligation to make payments to Operator under
this Agreement that have not been satisfied prior to the expiration of the term
of this Agreement shall survive such expiration of the term.
11.1.1 It is recognized in the case of expiration under
Section 11.1(ii), however, that this Agreement shall not expire, unless
all necessary regulatory approvals, if any, have been obtained to
transfer the operating responsibility for all Generation Facilities to
Owner or Owner's designee. Until the date on which such transfer of
operating responsibility is accomplished, or as Owner may otherwise
notify Operator in writing, Operator agrees to continue to provide
Operating Services for the Generation Facilities.
ARTICLE 12
Remedies
12.1.....Termination. In the event Owner determines that it is in its
interest to do so, or Operator determines that it is in Operator's interest to
do so, either Operator or Owner may at will terminate this Agreement as provided
below. Except as may be otherwise provided in Section 11.1, this Section 12.1
and Article 9 hereof, this right of termination shall be Owner's sole and
exclusive remedy, legal or equitable, for any failure by Operator at any time to
perform its duties, responsibilities, obligations, or functions under this
Agreement, or for any other breach by Operator of this Agreement. The procedure
for exercise of this right of termination shall be as follows:
12.1.1 Owner shall give written notice to Operator of Owner's
determination to terminate this Agreement or Operator shall give
written notice to Owner of its determination to terminate this
Agreement.
12.1.2 Following the giving of such notice, the parties agree
to cooperate, in good faith, to accomplish the transfer of operating
responsibility in a prompt manner, including without limitation
assigning contracts, transferring employees, and modifying licenses,
approvals and permits as necessary to reflect such change (including,
if required to effectuate transfer to Owner for regulatory purposes of
the operating responsibility for the Generation Facilities).
12.1.3 It is recognized that no termination shall be
accomplished until all necessary regulatory approvals, if any, have
been obtained to transfer the operating responsibility for all
Generation Facilities to Owner or Owner's designee. During the period
between the giving of the notice of determination to terminate, and the
date on which such transfer of operating responsibility is
accomplished, Operator agrees to continue the provision of Operating
Services for the Generation Facilities.
12.1.4 Upon receipt of all necessary governmental
authorization for transfer of operating responsibility for each
Generation Facility from Operator to Owner or Owner's designee, this
Agreement shall terminate. Except as may otherwise be provided in
Section 11.1 and this Section 12.1 and except for the consequences of
Operator's Willful Misconduct, fraud or gross negligence and the other
limitations provided in Article 9 hereof, Owner hereby agrees that from
and after such termination Owner shall indemnify and forever hold
Operator, its servants, directors, employees, affiliates and its agents
harmless from and against any and all liability, costs, expenses
(including reasonable attorneys' fees) and judgments, which may
thereafter be experienced by Operator, which are in any way related to,
arise out of or are in connection with the activities of Operator, its
agents, servants, directors, employees and affiliates under this
Agreement (whether the cause occurred before or after termination).
Except as may otherwise be provided in Section 11.1 and this Section
12.1 and except for the consequences of Operator's Willful Misconduct
or fraud and the other limitations provided in Article 9 hereof, Owner
further waives any claim Owner may have against Operator, its officers,
directors, employees, affiliates and agents for damage to property of
Owner, that arose out of or in connection with the activities of
Operator, its officers, directors, employees, affiliates and agents
under this Agreement. The indemnification and waiver contained herein
shall survive termination and shall be specifically enforceable by
Operator against Owner.
ARTICLE 13
Miscellaneous
13.1.....No Partnership or Joint Venture. Nothing in this Agreement
shall be deemed to create or constitute a partnership, joint venture or
association among the parties hereto or any of them, the sole purpose of this
Agreement being limited to providing for the orderly and efficient operation,
maintenance, repair, upgrade, rehabilitation, renewal, replacement, additions
and construction of the Generation Facilities.
13.2.....Owner's Designated Representatives. Owner hereby designates
its President as Owner's Representative, who shall receive notices and
communications from Operator under the provisions of this Agreement and who
shall send to the designated Representative of Operator all notices and
communications under the provisions of this Agreement.
13.3.....Operator's Designated Representative. Operator hereby
designates its President as the Operator Representative, who shall receive
notices and communications from Owner's Representative under the provisions of
this Agreement and who shall send to Owner's Representative all notices and
communications concerning the provisions of this Agreement.
13.4.....Depreciation. Owner shall determine the basis and method it
will use for purposes of depreciation and other matters where investment in
Generation Facilities property is relevant.
13.5.....Holidays, Business Days. Any obligations to perform under this
Agreement, including payment obligations, which shall become due on a
non-business day shall become due upon the next business day. The term "business
day" shall mean any day other than a day on which banking institutions in the
City of Atlanta, Georgia are authorized by law to close.
13.6.....Owner's Services to be Furnished at Cost. To the extent that
Owner may, from time to time, provide goods or services to Operator, Operator
shall pay for such goods and services at Owner's cost determined as herein
provided, which payments shall thereupon be treated as Generation Facilities
costs under Article 4.
13.7.....Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto, superseding any and all previous
understandings, oral or written, pertaining to the subject matter contained
herein. No party hereto has relied or will rely upon any verbal or written
representation or verbal or written information made or given to such party by
any representative of the other party or anyone on its behalf.
13.8.....Amendments. This Agreement may not be amended, modified, or
terminated, nor may any obligation hereunder be waived verbally, and no such
amendment, modification, termination or waiver shall be effective for any
purpose unless it is in writing, and signed by both parties hereto, and all
necessary regulatory approvals have been obtained.
13.9.....Notices. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given when deposited in the United States Mail, first class postage prepaid, and
addressed as follows:
If to Operator: Savannah Electric and Power Company
600 East Bay Street
Savannah, GA 31401
Attention: President
If to Owner: Southern Power Company
270 Peachtree Street, N.E.
Atlanta, GA 30303
Attention: President
Unless a different officer or address shall have been designated by the
respective party by notice in writing.
13.10....Captions. The descriptive captions of the various Articles,
Sections and Paragraphs of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms and
provisions hereof.
13.11....Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.12....No Waiver. Failure of any party to enforce any rights or to
require performance of any other party of any of the provisions of this
Agreement shall not release any party of any of its obligations under this
Agreement and shall not be deemed a waiver of any rights of the parties to
insist on performance thereof, or of any of the parties' rights or remedies
hereunder, and in no way shall affect the validity of these terms and conditions
or any part thereof, or the right of any party thereafter to enforce every
provision hereof.
13.13....Singular and Plural. Throughout this Agreement, whenever any
word in the singular number is used, it shall include the plural unless the
context otherwise requires; and whenever the plural number is used, it shall
include the singular unless the context otherwise requires.
13.14....Third Party Beneficiaries. This Agreement is for the benefit
of Owner and Operator, and no person or entity other than Owner and Operator is
or shall be entitled to bring any action to enforce any provision of this
Agreement against anyone.
13.15....Severability. Should any provision of this Agreement be held
to be invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect, provided that
deletion of the invalid or unenforceable provision does not materially affect
the agreement of the parties contained herein.
ARTICLE 14
Successors and Assigns
14.1.....This Agreement and all of the terms and conditions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of Operator's obligations hereunder shall be assignable by
Operator, in whole or in part, without the express written consent of Owner. Any
mortgage indenture trustee which shall foreclose on substantially all of the
electric generation properties of Owner may, at such trustee's own election, be
deemed to be a successor and assign of Owner under this Agreement.
ARTICLE 15
Governing Law
15.1.....This Agreement shall be construed in accordance with, and to
be governed by, the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and by their duly authorized representatives as of the day and year
first above written.
"Operator"
SAVANNAH ELECTRIC AND POWER COMPANY
By: /s/Sandra R. Miller
Sandra R. Miller
Vice-President, Power Generation
"Owner"
SOUTHERN POWER COMPANY
By: /s/Robert G. Moore
Robert G. Moore
Senior Vice-President, Power Generation
SCHEDULE 1
SOUTHERN POWER COMPANY GENERATION FACILITIES
AND NEW INVESTMENT PROJECTS
NEW INVESTMENT PROJECT LOCATION
Plant McIntosh1 Effingham County, Georgia
GENERATION FACILITIES LOCATION
Plant McIntosh2 Effingham County, Georgia
- --------
1 At all times from the Effective Date of this Agreement until the date of
commercial operation, Plant McIntosh shall be a New Investment Project. Operator
shall perform all New Investment Services, including, without limitation,
construction related services, in connection with Plant McIntosh while it is
classified as a New Investment Project in accordance with the terms and
conditions of this Agreement. In its performance of the New Investment Services
for Plant McIntosh, Operator shall also be entitled to the benefit of all
applicable provisions of this Agreement.
2 As of the date on which Plant McIntosh achieves commercial operation, it shall
be a Generation Facility. Operator shall perform all Operation and Maintenance
Services and all Fuel Services for Plant McIntosh as a Generation Facility in
accordance with the terms and conditions of this Agreement. In its performance
of the Operation and Maintenance Services and the Fuel Services, Operator shall
be entitled to the benefit of all applicable provisions of this Agreement.