EXHIBIT 10.28
POWER SUPPLY AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
WISVEST-CONNECTICUT, LLC
DATED APRIL 16, 1999
TABLE OF CONTENTS
Page
ARTICLE 1. Definitions 5
ARTICLE 2. Term 10
ARTICLE 3. Required Approvals and Conditions Precedent 11
ARTICLE 4. Obligations and Responsibilities 11
ARTICLE 5. Price 13
ARTICLE 6. Delivery of Electricity 13
ARTICLE 7. Billing and Payments 16
ARTICLE 8. Security Guaranty 18
ARTICLE 9. Termination 18
ARTICLE 10. Force Majeure 19
ARTICLE 11. Assignment 20
ARTICLE 12. Successors and Assigns 21
ARTICLE 13. Default and Termination 21
ARTICLE 14. Indemnification, Limitation of Damages and Liability 24
ARTICLE 15. Resolution of Disputes 28
ARTICLE 16. Interpretation 31
ARTICLE 17. Severability 32
ARTICLE 18. Auditing of Accounts and Records 32
ARTICLE 19. Regulation 32
ARTICLE 20. Notices 33
ARTICLE 21. Miscellaneous 34
POWER SUPPLY AGREEMENT
This POWER SUPPLY AGREEMENT (the "Agreement") is made and entered into
as of the 16th day of April, 1999, by and between The United Illuminating
Company ("UI" or the "Company"), a Connecticut Corporation, and
Wisvest-Connecticut, LLC, a Connecticut limited liability company ("Supplier"),
(hereinafter sometimes referred to individually as a "Party" and collectively as
"Parties").
WHEREAS, the Company owns electric facilities and is engaged in the
generation, purchase, transmission, distribution and sale of electric energy in
the State of Connecticut; and
WHEREAS, the State of Connecticut enacted an electric industry
restructuring statute entitled "An Act Concerning Electric Restructuring" on
April 29, 1998 (the "Act"), which Act provides that after December 31, 1999, up
to thirty-five percent (35%) of the Company's retail customers residing within
UI's service territory in a "distressed municipality" as defined by the Act may
choose to purchase electricity from other suppliers, and that after June 30,
2000, all of the Company's retail customers may choose to purchase electricity
from other suppliers, or such customers may, instead, purchase Standard Offer
Service from the Company after December 31, 1999; and
WHEREAS, the Company is required by the Act to provide firm
all-requirements electric service to all retail customers in its service
territory through December 31, 1999, and thereafter until December 31, 2003, to
any retail customer that is eligible for and is taking electric service under
UI's Standard Offer Service Tariff filed with and approved by the CDPUC or such
other similar Company tariff approved by the CDPUC for those Customers that have
not chosen an alternate supplier of electricity; and
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WHEREAS, the Act encourages Connecticut electric companies to sell or
otherwise divest their electric generating assets to other entities; and
WHEREAS, the Company and Supplier have entered into a Purchase and Sale
Agreement dated October 2, 1998, pursuant to which Supplier has acquired certain
generation assets (the "Assets") from the Company, as further defined and
described in Section 2.1 of the Purchase and Sale Agreement; and
WHEREAS, the Company and Supplier desire that Supplier shall supply
electric capacity, energy and other generation-related products required by the
Restated NEPOOL Agreement, the NEPOOL Tariff and the ISO to the Company to
enable the Company to fulfill its obligation to provide Retail Service to retail
customers in its service territory through December 31, 1999; and
WHEREAS, the Company and Supplier desire that Supplier shall supply
electric capacity, energy and other generation-related products required by the
Restated NEPOOL Agreement, the NEPOOL Tariff and the ISO to the Company to
enable the Company to fulfill its obligation to provide Standard Offer Service
to retail customers in its service territory for the period January 1 through
June 30, 2000; and
WHEREAS, by entering into this Agreement, Supplier agrees to deliver
and sell and the Company agrees to receive and pay for electric capacity, energy
and other generation-related products required by the Restated NEPOOL Agreement,
the NEPOOL Tariff and by the ISO provided in accordance with the terms and
conditions of this Agreement and the Appendices.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the
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receipt and sufficiency of which are hereby acknowledged by the Parties, the
Company and Supplier agree as follows:
ARTICLE 1. Definitions
-----------
Whenever used in this Agreement, the following words and terms with
initial letters capitalized shall have the following meanings:
"Act" means the Connecticut electric industry restructuring statute
---
entitled "An Act Concerning Electric Restructuring," enacted April 29, 1998, as
amended from time to time.
"Agreement" means this Power Supply Agreement, including its
---------
Appendices, as amended from time to time.
"Assets" has the meaning set forth in Section 2.1 of the Purchase and Sale
------
Agreement.
"Business Day" means a day other than Saturday, Sunday or a day on which:
------------
(i) banks are legally closed for business in the State of New York; or (ii) UI
is closed for business.
"Closing" has the meaning set forth in Section 2.4 of the Purchase and Sale
-------
Agreement.
"Closing Date" has the meaning set forth in Section 2.4 of the Purchase and
------------
Sale Agreement.
"Company's Transmission System" means the electrical transmission system of
-----------------------------
UI, but not including UI's PTF.
"CDPUC" means the Connecticut Department of Public Utility Control, or its
-----
successor.
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"Delivered Energy" means the kilowatt-hours delivered to the meters of
----------------
those retail customers for whom the Company is responsible for providing Retail
Service or Standard Offer Service through Company's purchase of Wholesale
Transition Service from Supplier.
"Delivery Point" means the point or points of interconnection between
--------------
the Company's Transmission System and the transmission system owned by Northeast
Utilities as of the effective date of this Agreement.
"Estimation Process" means the process described in Appendix A of this
-------------------
Agreement for estimating the portion of Retail Service or Standard Offer Service
provided by Supplier.
"FERC" means the Federal Energy Regulatory Commission or its successor.
----
"Force Majeure" means any cause, event, condition or circumstance
--------------
beyond a Party's reasonable control, including, without limitation, storm,
flood, lightning, drought, earthquake, fire, explosion, civil disturbance, labor
dispute, act of God or the public enemy, or action of a court or public
authority; provided, that a cause, event, condition or circumstance shall be
deemed to constitute a Force Majeure only to the extent that the cause, event,
condition or circumstance (i) directly adversely affects the availability of the
transmission or distribution facility of NEPOOL or the Company such that said
facilities are not available for delivery by the Supplier of some or all
Wholesale Transition Service or Retail Assets Requirements to the Company or
(ii) directly adversely affects the delivery of Retail Service or Standard Offer
Service by the Company to some or all of the Company's customers. A cause,
event, condition or circumstance
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affecting the availability of, or cost of generating electricity at, any
particular electric generating facility shall not be considered to be a Force
Majeure for purposes of this Agreement. A cause, event, condition or
circumstance that merely causes an economic hardship to either Party shall not
be deemed a Force Majeure.
"Good Utility Practices" means any of the practices, methods and acts
-----------------------
engaged in or approved by a significant portion of the electric utility industry
in the geographic region covered by the North American Electric Reliability
Council (or any successor entity) during the relevant time period, or any of the
practices, methods or acts that, 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 a reasonable cost consistent with good
business practices, reliability, safety and expedition. Good Utility Practices
is not intended to be limited to the optimum practice, method or act to the
exclusion of all others, but rather to be acceptable practices, methods or acts
generally accepted in the region.
"ISO" means ISO New England, Inc., the independent system operator
---
established in accordance with the Restated NEPOOL Agreement, or its designees
or successor.
"ISO Tariff" means the tariff filed by the ISO with FERC pertaining to
----------
recovery of administrative, operating and maintenance, and other costs, as
amended from time to time, on file at FERC and in effect at the time the action
in question is taken.
"NEPOOL" means the New England Power Pool, or its successor.
------
"NEPOOL Tariff" means the NEPOOL Open Access Transmission Tariff, as
-------------
amended from time to time, on file at the FERC and in effect at the time the
action in question is taken.
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"NEPOOL Transmission System" means the PTF, i.e., Pool Transmission
----------------------------
Facilities.
"Parties" means the Company and Supplier collectively, and their respective
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successors and assigns.
"Party" means either the Company or Supplier as the context requires,
-----
and their respective successors and assigns.
"Price" means the amount per kilowatt-hour to be paid for Delivered
-----
Energy set forth in Article 5.
"PTF" means the facilities categorized as Pool Transmission Facilities
---
as defined in the Restated NEPOOL Agreement.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement
-----------------------------
dated October 2, 1998, between UI and Supplier governing the sale and transfer
of the Assets from UI to Supplier.
"Restated NEPOOL Agreement" means the New England Power Pool Agreement
--------------------------
dated December 31, 1996, as amended from time to time, on file at FERC and in
effect at the time the action in question is taken.
"Retail Service" means firm, all-requirements electric service to the
--------------
Company's retail customers currently taking service under UI's retail service
tariffs, as presently in effect and as amended from time to time. Under the Act,
the Company currently is obligated to provide Retail Service until January 1,
2000.
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"Retained Assets" shall mean the Company's ownership interests in
----------------
Seabrook Station, Seabrook, New Hampshire, Millstone Station Unit No. 3,
Waterford, Connecticut, and its purchased power agreements with the Bridgeport
RESCO, Shelton Landfill and Derby Hydroelectric independent power producers and
with Hydro-Quebec.
"Retained Assets Requirements" means the provision of the installed
------------------------------
capability, operable capability, 10-minute spinning reserve, 10-minute
non-spinning reserve, 30-minute operating reserve, automatic generation control
and any other generation-related requirements and products defined in the
Restated NEPOOL Agreement or NEPOOL Tariff or otherwise necessary to fulfill
NEPOOL or ISO obligations, now or in the future, and any costs or losses
relating thereto, associated with the amount of Retail Service or Standard Offer
Service that the Company will provide using its Retained Assets, to the extent
that such requirements and products are not provided by the Retained Assets.
Retained Assets Requirements shall not include any energy associated with the
operable capability of the Retained Assets.
"Standard Offer Service" means firm, all-requirements electric service
----------------------
to the Company's retail customers taking service under UI's Standard Offer
Service Tariff. Under the Act, the Company currently will be obligated to
provide Standard Offer Service beginning on January 1, 2000.
"Standard Offer Service Tariff" refers to the "standard offer" to be
-------------------------------
determined by the CDPUC pursuant to Section 20 of the Act under which UI will
offer service to its retail customers beginning January 1, 2000, and terminating
on January 1, 2004.
"UI Tariff" means UI's Open Access Transmission Tariff, as amended from
---------
time to time, on file at the FERC and in effect at the time the action in
question is taken.
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"Wholesale Transition Service" means wholesale firm, all-requirements
-----------------------------
electric service (i.e., capacity, energy and ancillary services including,
---
without limitation: installed capability, operable capability, energy, 10-minute
spinning reserve, 10-minute non-spinning reserve, 30-minute operating reserve,
automatic generation control and associated losses necessary to fulfill all
NEPOOL and ISO obligations) required by the Company to meet the needs of its
retail customers taking Retail Service prior to January 1, 2000, and taking
Standard Offer Service from January 1, through June 30, 2000, in excess of the
amount of Retail Service and Standard Offer Service to be supplied by the
Company from its Retained Assets or by other means. Supplier, as a supplier of
Wholesale Transition Service, shall, subject to the provisions of the Restated
NEPOOL Agreement, NEPOOL Tariff and related ISO requirements, be responsible for
all ongoing requirements and associated costs for all the generation-related
requirements and products defined in the Restated NEPOOL Agreement, NEPOOL
Tariff and related ISO requirements and for such future additional
generation-related requirements and products associated with the Wholesale
Transition Service, and associated costs resulting from changes in the Restated
NEPOOL Agreement, the NEPOOL Tariff and related ISO requirements, from time to
time. To the extent that any NEPOOL, ISO or any successor entity's expenses or
costs are allocated to wholesale or retail suppliers, the portion of such costs
associated with Supplier's supply of Wholesale Transition Service will also be
the responsibility of Supplier.
ARTICLE 2. Term
----
The term of this Agreement shall commence at 12:01 a.m. on April 16,
1999, or such other date or time as is mutually agreed upon by the Parties, and
shall continue thereafter until the hour ending 2400 Eastern Prevailing Time on
June 30, 2000. Applicable provisions of this Agreement shall continue in effect
after termination of the Agreement to the extent necessary to provide for final
billings, billing adjustments, confidentiality of records and payments
pertaining to
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liability and indemnification obligations arising from acts or events that
occurred while this Agreement was in effect.
ARTICLE 3. Required Approvals and Conditions Precedent
-------------------------------------------
The commencement of the Parties' obligations under this Agreement are
subject to the receipt of all federal, state or local regulatory approvals or
permits necessary for the sale and purchase of the Wholesale Transition Service
to enable the Company to provide the Retail Service or Standard Offer Service
and to enable Supplier to provide Wholesale Transition Service contemplated
under this Agreement, including, without limitation, the approval of this
Agreement by the FERC and the CDPUC, all such approvals to be final and no
longer subject to rehearing, reconsideration or appeal; provided, however, that
Supplier's continuing obligations hereunder shall not be subject to the receipt
of any regulatory approvals or permits necessary for the operation of any
electric generating facility. Each Party shall use reasonable, good faith
efforts to acquire all regulatory approvals or permits and to assist the other
Party in acquiring such approvals or permits, including, without limitation,
FERC approval of this Agreement, prior to the Closing Date and to maintain
thereafter such regulatory approvals or permits.
ARTICLE 4. Obligations and Responsibilities.
--------------------------------
4.1 Purchase and Sale.
-----------------
Supplier shall sell and deliver Wholesale Transition Service and the
Company shall purchase and receive that service at the Delivery Point(s).
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4.2 Supplier's Obligation Unconditional.
-----------------------------------
Supplier's obligation hereunder to sell and deliver Wholesale
Transition Service to the Company shall be unconditional except for reasons of
Force Majeure and shall not be conditioned upon the availability of any
particular electric generating facilities, whether owned by the Supplier or
third parties, and the Supplier's obligations hereunder shall not be excused by
the unavailability of any such particular generating facilities for any reason.
Supplier is responsible for deliveries of Wholesale Transition Service to
accommodate changes in customer demand for Retail Service and Standard Offer
Service for any reason, including, but not limited to, seasonal factors, daily
load fluctuations, increased or decreased usage, demand-side management
activities, extreme weather and other similar events.
4.3 Retained Assets Requirements.
----------------------------
During the Term of this Agreement, Supplier shall have the obligation
to provide the Company's Retained Assets Requirements at no cost to the Company.
4.4 Supplier Responsibilities
-------------------------
Supplier shall be a member in good standing of NEPOOL and maintain an
own-load dispatch or settlement account established in accordance with the rules
and criteria established by the ISO throughout the term of this Agreement. In
addition, Supplier must satisfy any applicable registration and licensing
requirements, as the case may be, required by Connecticut law or CDPUC
regulations.
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4.5 Company's Responsibilities.
--------------------------
Company's obligation hereunder to purchase and receive Wholesale
transition Service from Seller shall be unconditional except for reasons of
Force Majeure.
The Company shall operate its respective transmission and distribution
systems in accordance with Good Utility Practices and in a manner which does not
discriminate against Supplier's deliveries of Wholesale Transition Service in
favor of any party or entity.
ARTICLE 5. Price
-----
For each kilowatt hour of Delivered Energy in each month during
calendar year 1999, as determined in accordance with Article 6, the Company
shall pay the Supplier 4.2 cents. For each kilowatt hour of Delivered Energy in
each month during calendar year 2000, as determined in accordance with Article
6, the Company shall pay the Supplier 3.4 cents. For the quantity of Delivered
Energy in each month, as determined in accordance with Article 6, the Company
shall make an additional payment to the Supplier equal to said quantity
multiplied by 0.054 multiplied by 3.0 cents.
ARTICLE 6. Delivery of Electricity
-----------------------
6.1 Delivery
--------
All electric energy associated with Wholesale Transition Service shall be
delivered to the Company in the form of three-phase, sixty-hertz alternating
current at the Delivery Point(s). Title to the electric energy and any other
associated services provided under Wholesale Transition Service shall pass to
the Company at the Delivery Point(s), and Supplier shall incur no expense or
risk beyond the Delivery Point(s) other than as provided for in this Article 6.
If the NEPOOL control area experiences congestion, Supplier will be responsible
for
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any congestion costs incurred by the Company in delivering Wholesale Transition
Service across the NEPOOL Transmission System to the extent such costs are
imposed by NEPOOL or the ISO on the Company. The Company may deduct congestion
costs from amounts the Company owes Supplier pursuant to Article 5 and this
Article 6. Supplier shall be responsible for all transmission and distribution
costs associated with the use of transmission systems outside of NEPOOL and for
any charges for local transmission service and for distribution service outside
of the Company's service territory needed to deliver Wholesale Transition
Service to the Delivery Points.
6.2 Losses.
------
Supplier shall be responsible for all transmission and distribution
losses incurred in delivering electric energy to the meters of the Company's
customers receiving Retail Service or Standard Offer Service. Supplier shall
provide any additional amounts of Wholesale Transition Service to the Company at
the Delivery Point(s) necessary to compensate for such losses at no additional
cost to the Company. The quantities required for this purpose in each hour of a
billing period shall be determined in accordance with NEPOOL's and the Company's
established and customary procedures for loss determination.
6.3 Determination and Reporting of Hourly Loads.
--------------------------------------------
(a) To meet NEPOOL obligations, the Retail Service or Standard Offer
Service loads for which Supplier is providing Wholesale Transition Service
pursuant to this Agreement, including losses, must be reported to NEPOOL or the
ISO. To accomplish this, the Company will estimate its total hourly Retail
Service or Standard Offer Service load based upon average load profiles
developed for each customer class, actual metered data as available and the
Company's actual total hourly load. Appendix A, attached hereto and incorporated
herein by reference, provides a general description of the estimation process
that the Company will initially employ
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(the "Estimation Process"). The Company reserves the right to modify the
Estimation Process in the future, provided that any such modification shall be
designed to improve the accuracy of its results. The Company will report to
NEPOOL or the ISO, on behalf of Supplier, the portion of Retail Service or
Standard Offer Service provided by Supplier.
(b) The Company will report to NEPOOL or the ISO the portion of the
hourly adjusted Retail Service or Standard Offer Service provided by Supplier by
12:00 noon of the second following Business Day, or at such other time as may be
required by the ISO or NEPOOL.
(c) Within ten business days after the end of each month, the Company
shall aggregate the portion of the hourly Retail Service or Standard Offer
Service provided by Supplier for the previous month as determined by the
Estimation Process. For purposes of Article 5, above, the result of the
Estimation Process will be deemed to be the quantity of Delivered Energy
associated with Wholesale Transition Service delivered by Supplier to the in the
applicable month.
(d) To refine the estimates of the portion of the monthly Retail
Service or Standard Offer Service provided by Supplier developed by the Company
using the Estimation Process, a monthly calculation will be performed by the
company to reconcile the original estimate of Supplier's Retail Service or
Standard Offer Service with actual customer usage based on meter readings. The
Company will apply any resulting billing adjustment (debit or credit) to
Supplier's account no later than the last day of the third month following the
billing month.
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ARTICLE 7. Billing and Payments
--------------------
Until reconciled with actual metered data, computations by the Company
of the charges for the purposes of billings hereunder shall be based on
estimates of Supplier's Delivered Energy in accordance with Article 6 and the
Price in accordance with Article 5. The Company shall calculate the amount
payable by the Company to the Supplier for a given month and provide the
calculation in the form of a statement to supplier on or before the twentieth
(20th) day of the following month. The calculation shall show the total amount
due and payable for the previous month. Each statement shall be subject to
adjustment for any errors in arithmetic computation, estimating, reconciliation
or otherwise only to the extent allowed by the terms of this Article 7.
On or before the last day of each month ("Due Date"), the Company shall
pay Supplier any amounts due and payable for Delivered Energy provided by
Supplier in the previous month by wire transfer in immediately available funds.
Any amount remaining unpaid after the Due Date shall bear interest at the Prime
Rate then in effect at the main office of
or such other lending institution as
agreed to by the Company and Supplier, from the Due Date to the date of payment
by the Company.
If Supplier disputes the amount set forth in any statement or payment,
Supplier shall provide written notice itemizing the basis for its dispute to the
Company within fifteen (15) days after the Due Date. Billing and payment
disputes shall be handled in accordance with the provisions of Article 15 of
this Agreement. Upon final resolution of the dispute, payment of any amount due
to a Party under the terms of the resolution shall be made within thirty (30)
days of the date of the final resolution, together with interest from and after
the original Due Date at the rate specified in this Article.
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The Company shall make retroactive adjustments to any statement for a
period of up to twelve (12) months from the date of the original statement in
order to reflect differences in charges resulting from the receipt of more
accurate data. Supplier may dispute such adjustment in writing within thirty
(30) days of receipt of the proposed adjustment and any such dispute shall be
handled in accordance with the provisions of Article 15 of this Agreement.
The Price set forth in Article 5 shall include full reimbursement to
Supplier, and Supplier shall be liable for and shall pay, or cause to be paid,
all taxes, fees and levies in effect on the Closing Date or thereafter which may
be assessed by any governmental entity upon the Wholesale Transition Service and
upon the Retained Assets Requirements prior to delivery to the Company at the
Delivery Point(s). If the Company is required to remit such tax, the amount of
such tax may be deducted from sums otherwise due to Supplier. Supplier shall
indemnify, defend and hold the Company harmless from claims for such taxes. To
the extent such taxes, fees and levies are assessed against the Company,
Supplier shall reimburse the Company therefor within 5 business days of a
written presentation by the Company to Supplier of evidence of the incurrence
payment by Company and amount thereof. The Price does not include reimbursement
for, and the Company shall be liable for and shall pay, cause to be paid, or
reimburse Supplier if Supplier has paid for, all taxes, fees and levies upon the
Retained Assets Requirements and upon the Wholesale Transition Service at and
after delivery to the Company at the Delivery Point(s) within 5 business days of
a written presentation by Supplier to Company of evidence of the incurrence,
payment by Supplier, and amount thereof. Each Party, upon written request and
where available, shall provide the other with a certificate of exemption or
other reasonably satisfactory evidence of exemption if either Party is exempt
from taxes, and shall use reasonable efforts to obtain and cooperate with
obtaining any exemption from or reduction of any tax. Each Party shall use
reasonable efforts to administer this Agreement and implement its provisions in
accordance with the intent to minimize the imposition of taxes, fees and levies.
For any new taxes, fees and levies assessed with respect to services provided
under this Agreement by Supplier after the Closing
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Date, regardless of where assessed, the Company will fully support and pursue in
good faith the recovery of such new tax, fee and levy imposed on Supplier from
the Company's Retail Service or Standard Offer Service customers. To the extent
the Company is allowed to recover such new taxes, fees and levies from its
Retail Service or Standard Offer Service customers, the Company shall reimburse
Supplier for such taxes, fees and levies paid by Supplier.
ARTICLE 8. Security Guaranty
-----------------
At the time this Agreement is made and entered into, Supplier shall enter into
an operational security guaranty (the "Security Guaranty") with UI in an
aggregate amount equal to [$5 Million Dollars ($5,000,000)] to ensure timely
performance by Supplier of its obligation to provide Delivered Energy under this
Agreement. Such Security Guaranty requirement shall be met by a corporate
guaranty from Wisvest Corporation.
ARTICLE 9. Termination
-----------
The Company may terminate this Agreement, if:
1. The Company is prevented by any governmental or regulatory
agency of competent jurisdiction from recovering from
customers taking Retail Service or Standard Offer Service
the cost of the Wholesale Transaction Service provided by
Supplier.
2. Any governmental or regulatory agency with jurisdiction
over the Company orders, implements, requires or causes
what the Company determines to be a material modification
or amendment of Retail Service or Standard Offer Service.
The Supplier may terminate this Agreement, if
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1. Any governmental or regulatory agency with jurisdiction over
the Supplier orders, implements, requires or causes what the Supplier
determines to be a material modification or amendment of Wholesale
transition Service.
ARTICLE 10. Force Majeure
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10.1 Performance Excused by Force Majeure
------------------------------------
Except as otherwise expressly limited by other provisions of this
Agreement, and subject to the provisions of Section 10.2, below, the Parties
shall be excused from performing their respective obligations hereunder and
shall not be liable in damages or otherwise for any such failure to perform, to
the extent, but only to the extent, that such performance is prevented by a
"Force Majeure," as that term is defined in Article 1 of this Agreement.
10.2 Obligation To Diligently Cure Force Majeure
-------------------------------------------
If any Party shall rely on the occurrence of a Force Majeure as
described in Section 10.1, as a basis for being excused from performance of its
obligations under this Agreement, then the Party relying on the Force Majeure
shall:
(a) provide written notice to the other Party promptly but in no event
later than five (5) days after the occurrence of the Force Majeure, including
the nature, cause and date of the commencement of the Force Majeure and giving
an estimation of its expected scope and duration and the probable impact on the
performance of the affected Party's obligations hereunder under this Agreement;
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(b) exercise all reasonable efforts to continue to perform its obligations
under this Agreement;
(c) expeditiously take reasonable action to correct or cure the Force
Majeure or the conditions caused thereby giving rise to its excuse from
performance; provided that settlement of strikes or other labor disputes will be
within the sole discretion of the Party affected by such strike or labor
dispute;
(d) exercise all reasonable efforts to mitigate or limit damages to the
other Party; and
(e) provide prompt notice to the other Party of the cessation of the Force
Majeure or the conditions caused thereby giving rise to its excuse from
performance.
ARTICLE 11. Assignment
----------
No assignment, pledge or transfer of this Agreement or a Party's rights
or obligations under this Agreement shall be made by either Party without the
prior written consent of the other Party, which shall not be unreasonably
withheld, except that no prior written consent shall be required for assignment,
pledge or other transfer to another company in the same holding company system
as the assignor, pledgor or transferor, provided the assignee, pledgee or
transferee expressly assumes and demonstrates, to the reasonable satisfaction of
the non-assigning Party, that it can meet the obligations of the assignor,
pledgor or transferor under this Agreement.
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ARTICLE 12. Successors and Assigns
----------------------
This Agreement shall be binding upon and shall inure to the benefit of
the Parties and their successors and assignees.
ARTICLE 13. Default and Termination:
-----------------------
13.1 Events of Default:
-----------------
(a) The Company shall be deemed to be in default hereunder if:
(i) any representation or warranty made by it hereunder
shall be false in any material respect at any time during the term of this
Agreement, or it shall fail in any material respect to comply with, observe or
perform any covenant to be performed by it hereunder (unless such failure is due
to Force Majeure or is the result of Supplier's negligent or willful failure to
perform its obligations hereunder), and such failure is not remedied within the
Cure Period (as defined below); or, if such failure cannot be cured within the
Cure Period, such further period as shall reasonably be required to effect such
cure, so long as the Company initiates actions to effect a cure during the Cure
Period and at all times thereafter proceeds diligently to complete such cure as
quickly as possible. For purposes hereof, the Cure Period shall mean forty-five
(45) days following written notice from the Supplier to the Company specifying
the nature of the default in the Company's performance of its obligations
hereunder;
(ii) a custodian, receiver, liquidator or trustee for the
Company is appointed or takes possession and such appointment or possession
remains uncontested or in effect for more than sixty (60) days; or the Company
makes an assignment for the benefit of creditors or admits in writing its
inability to pay its debts as they mature; or the Company is adjudicated
bankrupt or insolvent; or an order for relief is entered under the Federal
Bankruptcy Code against the
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Company; or any material property of the Company is sequestered by court order
and the order remains in effect for more than sixty (60) days; or a petition is
filed against the Company under any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or subsequently in effect, and is not stayed or
dismissed within sixty (60) days after filing; or the Company files a petition
in voluntary bankruptcy or seeking relief under any provision of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in effect; or
the Company consents to the filing of any petition against it under any such
law; or the Company consents to the appointment or taking possession by a
custodian, receiver, trustee or liquidator of the Company or any material
portion of its property.
(b) Supplier shall be deemed to be in default hereunder if:
(i) any representation or warranty made by it hereunder
shall be false in any material respect at any time during the term of this
Agreement, or it shall fail in any material respect to comply with, observe or
perform any covenant to be performed by it under this Agreement (unless such
failure is due to Force Majeure or is the result of the Company's negligent or
willful failure to perform its obligations under this Agreement), or such
failure is not remedied within the Cure Period (as defined below); or, if such
failure cannot be cured within the Cure Period, such further period as shall
reasonably be required to effect such cure, so long as the Supplier initiates
actions to effect a cure during the Supplier's Cure Period and at all times
thereafter proceeds diligently to complete such cure as quickly as possible. For
purposes hereof, the Supplier's Cure Period shall mean forty-five (45) days
following written notice from the Company specifying the nature of the default
in the Supplier's performance of its obligations hereunder; or
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(ii) a custodian, receiver, liquidator or trustee for the
Supplier is appointed or takes possession and such appointment or possession
remains uncontested or in effect for more than sixty (60) days; or the Supplier
makes an assignment for the benefit of creditors or admits in writing its
inability to pay its debts as they mature; or the Supplier is adjudicated a
bankrupt or insolvent; or an order for relief is entered under the Federal
Bankruptcy Code against the Supplier; or any material property of the Supplier
is sequestered by court order and the order remains in effect for more than
sixty (60) days; or a petition is filed against the Supplier under any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or subsequently
in effect, and is not stayed or dismissed within sixty (60) days after filing;
or the Supplier files a petition in voluntary bankruptcy or seeking relief under
any provision of any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or subsequently in effect; or the Supplier consents to the filing of
any petition against it under any such law; or the Supplier consents to the
appointment or taking possession by a custodian, receiver, trustee or liquidator
of the Supplier or any material portion of its property.
13.2 Remedies Upon Occurrence of a Default:
-------------------------------------
(a) Upon the occurrence of a default by the Company under Section
13.1(a), the Supplier shall be entitled to terminate this Agreement, subject to
Section 13.2(c), and shall have such additional rights as are specified in
Section 13.2(c).
(b) Upon the occurrence of a default by Supplier under Section 13.1(b),
the Company shall be entitled to terminate this Agreement, subject to Section
13.2(c), and shall have such additional rights as are specified in Section
13.2(c).
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(c) (1) Any termination arising out of the exercise of the termination
rights specified in Sections 13.2 (a) and (b) may not take effect unless and
until an arbitrator, pursuant to Article 15, has made a ruling that the exercise
of such termination right was valid. The fact that one Party alleged to be in
material breach of this Agreement complies with the request of the other to cure
an alleged material breach shall not be considered by the arbitrator as an
admission against the Party or evidence that such Party was or was not in
material breach.
(2) Nothing in this Section 13.2 shall be construed to limit
the right of any Party to seek any remedies for a breach by the other Party of
its obligations hereunder, whether or not such breach results in a termination
of this Agreement under this Section 13.2 and whether or not such breach is
cured within the Company's Cure Period with respect to the Company or the
Supplier's Cure Period with respect to the Supplier, or during any period during
which the non- breaching party elects not to exercise its right to terminate
this Agreement. In particular, each Party shall have the right to seek a
specific performance of any of the obligations of the other Party hereunder. The
provisions of this Article 13 are intended only to provide the process through
which one Party may exercise and effectuate its right to terminate this
Agreement on the ground of material breach and default of this Agreement.
ARTICLE 14. Indemnification, Limitation of Damages and Liability
----------------------------------------------------
14.1 Indemnification by Supplier
---------------------------
Subject to the limitations of Section 14.4, Supplier shall indemnify,
defend and hold harmless the Company and their officers, directors, agents,
employees and affiliates from and against any and all claims, demands,
liabilities (including reasonable attorneys' fees), judgments, fines,
settlements and other amounts ("Damages") arising from any and all civil,
criminal, administrative or investigative proceedings ("Actions") relating to or
arising out of:
- 24 -
(a) Any material failure of Supplier to observe or perform any term or
provision of this Agreement which it is Supplier's obligation to observe or
perform; and
(b) Any failure of any representation or warranty made by Supplier
herein to be true in any material respect.
14.2 Indemnification by the Company:
------------------------------
Subject to the limitations of Section 14.4, the Company shall
indemnify, defend and hold harmless Supplier, its officers, directors, agents,
employees and affiliates from an against any and all Damages arising from any
and all Actions relating to or arising out of:
(a) Any material failure of the Company to observe or perform any term
or provision of this Agreement which it is the Company's obligation to observe
or perform; and
(b) Any failure of any representation or warranty made by the Company
herein to be true in any material respect.
14.3 Indemnification Procedures
--------------------------
If any Party intends to seek indemnification under this Article 14 from
the other Party with respect to any Damages or Actions, the Party seeking
indemnification shall give the other Party notice of such Damages or Action
within fifteen (15) days of the commencement of, or actual knowledge of, such
Damages or Action. Such party seeking indemnification shall have the right, at
its sole cost and expense, to participate in the defense of any such Damages or
Action. The
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party seeking indemnification shall not compromise or settle any such Damages or
Action without the prior consent of the other party, which consent shall not be
unreasonably withheld.
14.4 Limitation of Consequential, Incidental and Indirect Damages
------------------------------------------------------------
To the fullest extent permissible by law, neither the Company nor
Supplier, nor their respective officers, directors, agents, employees, parent or
Affiliates, successors or assigns, or their respective officers, directors,
agents or employees, successors or assigns, shall be liable to the other Party
or its parent, subsidiaries, Affiliates, officers, directors, agents, employees,
successors or assigns, for claims, suits, actions or causes or action for
incidental, indirect, special, punitive, multiple or consequential damages
(including attorneys' fees or litigation costs) connected with or resulting from
performance or non-performance of the Agreement, or any actions undertaken in
connection with or related to this Agreement, including without limitation any
such damages which are based upon causes of action for breach of contract, tort
(including negligence and misrepresentation), breach of warranty, strict
liability, statute, operation of law, or any other theory of recovery. The
provisions of this Section 14.4 shall apply regardless of fault and shall
survive termination, cancellation, suspension, completion or expiration of this
Agreement.
14.5 Scope of Liability for Load Estimating Errors
---------------------------------------------
The process of estimation of the portion of the Retail Service and
Standard Offer Service provided by Supplier may involve statistical calculations
and estimating errors. The Company shall not be responsible for any estimating
errors and shall not be liable to Supplier for any costs that are associated
with such estimating errors to the extent that the Company performs load
estimation in accordance with its applicable Estimation Process, approved by the
CDPUC and in effect from time to time.
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14.6 Liability for Direct Damages.
----------------------------
Notwithstanding the provisions of this Article 14 and
Section 14.4 limiting damages, and subject to the duty to mitigate damages as
provided under common law damages recovery, both the Company and Supplier shall
be entitled to recover their actual, direct damages (i) incurred as a result of
the other Party's breach of this Agreement, or (ii) incurred as a result of any
other claim arising out of any action undertaken in connection with or related
to this Agreement. For purposes of avoiding any disputes about the difference
between direct damages and consequential damages, the Parties agree as follows:
(a) Unless excused by Force Majeure or the Company's failure to receive
the Wholesale Transition Service, if Suppler fails to deliver all or part of the
required Wholesale Transition Service, Supplier shall pay the Company, on the
date payment would otherwise be due to Supplier, an amount equal to the product
of (i) any deficiency in the energy component of Wholesale Transition Service
delivered and (ii) the positive difference, if any, obtained by subtracting the
per unit Price from the per unit Replacement Price. "Replacement Price" means
the price at which the Company, acting in a commercially reasonable manner,
purchases substitute or replacement electric energy and generation requirements
or products for the Wholesale Transition Service not delivered by Supplier, plus
any additional transportation and handling charges incurred by the Company to
the Delivery Point(s), less any costs the Company avoids as a consequence of the
failure to perform.
(b) The Company shall be entitled to recover direct damages for a
breach of this Agreement, subject to an obligation to mitigate such damages to
the extent practicable. Such direct damages are limited to the amounts due under
Section 14.6(a) and reasonable additional administrative and legal expenses
incurred as a result of Supplier's failure to perform under this Agreement.
- 27 -
(c) Supplier shall be entitled to recover direct damages for a breach
of this Agreement, subject to an obligation to mitigate such damages to the
extent practicable. Such direct damages are limited to reasonable additional
administrative and legal expenses and the negative difference, if any, obtained
by subtracting the per unit Price from the per unit Sale Price incurred as a
result of the Company's failure to perform hereunder. "Sale Price" means the
price at which the Supplier, acting in a commercially reasonable manner, sells
available electric energy and generation requirements or products for the
Wholesale Transition Service not delivered to Company.
ARTICLE 15. Resolution of Disputes
----------------------
15.1 Administrative Committee Procedure
----------------------------------
Any and all disputes, disagreements or differences pertaining to or
arising out of this Agreement, including whether a dispute or matter is subject
to the dispute resolution procedures set forth in this Article 15, shall be
referred to representatives of each Party, who shall attempt to timely resolve
the disagreement. If such representatives can resolve the disagreement, such
resolution shall be reported in writing to and shall be binding upon the
Parties. If a party fails to appoint a representative within ten (10) days of
written notice of the existence of a disagreement, or the Parties'
representatives cannot resolve the disagreement within thirty (30) days, then
the matter shall proceed to arbitration as provided in Section 15.2.
15.2 Arbitration
-----------
If pursuant to Section 15.1, the Parties are unable to resolve any
dispute, disagreement or difference pertaining to or arising out of this
Agreement, including any disagreement regarding
- 28 -
whether a dispute or other matter is subject to the dispute resolution
procedures set forth in this Article 14, such disagreement shall be settled by
arbitration and any award issued pursuant to such arbitration may be enforced in
any court of competent jurisdiction. Either Party may commence arbitration by
serving written notice thereof on the other Party, which notice shall designate
the issue(s) to be arbitrated, the specific provisions of this Agreement under
which such issues arose, such Party's proposed resolution of such issue(s), and
the Party's arbitrator. Such arbitration will be held in New Haven, Connecticut,
and, except as otherwise provided herein, shall be conducted in accordance with
the provisions of the commercial arbitration rules of the American Arbitration
Association ("AAA") in effect on the date of such notice, in the absence of
contrary agreement by the Parties and as specifically modified herein.
If a Party requests arbitration pursuant to the preceding paragraph,
the other Party shall designate its arbitrator within fifteen (15) days. If no
arbitrator has been selected and designated within fifteen (15) days of the date
of notice, then an arbitrator shall be selected in accordance with the
commercial arbitration rules of the AAA. The two arbitrators so designated shall
designate a third arbitrator within ten (10) days thereafter. In the event that
the two arbitrators so designated cannot agree upon a third arbitrator within
such second 10-day period, the third arbitrator shall be selected in accordance
with the commercial arbitration rules of the AAA.
The three arbitrators so designated shall conduct a hearing within
thirty (30) days of completion of their selection, and within fifteen (15) days
thereafter (unless such time is extended by agreement of the Parties) shall
notify the Parties to this Agreement of their decision in writing, stating the
reasons therefor and separately listing their findings of fact, conclusions of
law and order. The arbitrators shall be bound by the provisions of this
Agreement, where applicable, and shall have no power to amend, modify or add to
this Agreement in any manner. All factual determinations made by the arbitrators
shall be conclusive and binding on the Parties and not subject to judicial
review. Any conclusions of law made by the arbitrators shall be subject to
review in any court of competent jurisdiction within the State of Connecticut;
provided, however,
- 29 -
that the order issued by the arbitrators shall be effective unless and until a
stay thereof is issued by the arbitrators or by such court, or such court
suspends the effectiveness of such order; provided further, however, that any
decisions of the arbitrators that affect matters subject to the jurisdiction of
FERC pursuant to Section 205 of the Federal Power Act must be filed with and
accepted for filing by the Commission, and a Party affected by a binding
arbitration decision may request that the Commission vacate or modify the
judgment based upon a finding that the judgment is contrary to the statutes or
regulations administered by the Commission.
15.3 Confidentiality. The existence, contents or results of any
---------------
arbitration hereunder may not be disclosed without the prior written consent of
both Parties; provided, however, either Party may make disclosures as may be
necessary to fulfill regulatory obligations to any regulatory bodies having
jurisdiction, and may inform their lenders, affiliates, auditors and insurers,
as necessary, under pledge of confidentiality and can consult with experts as
required in connection with the arbitration under pledge of confidentiality. If
any Party seeks preliminary injunctive relief from any court to preserve the
status quo or avoid irreparable harm pending mediation or arbitration, the
Parties agree to use best efforts to keep the court proceedings confidential to
the maximum extent permitted by law.
15.4 FERC Jurisdiction Over Certain Disputes.
---------------------------------------
15.4.1 Nothing in this Agreement shall preclude, or be
construed to preclude, any Party from filing a petition or complaint with the
FERC with respect to any arbitrable claim over which the FERC has jurisdiction.
In such case, the other Party may request that the FERC reject or waive
jurisdiction. If the FERC rejects or waives jurisdiction, with respect to all or
a portion of the claim, the portion of the claim not so accepted by the FERC
shall be resolved through arbitration, as provided in this Agreement. To the
extent that the FERC asserts or accepts jurisdiction over the claim, the
decision, finding of fact or order of the FERC shall be final and binding,
subject to judicial review under the Federal Power Act, and any arbitration
- 30 -
proceedings that may have commenced prior to the assertion or acceptance of
jurisdiction by the FERC shall be stayed, pending the outcome of the FERC
proceedings.
15.4.2 The arbitration panels shall have no authority to
modify, and shall be conclusively bound by, any decision, finding of fact or
order of the FERC. However, to the extent that a decision, finding of fact or
order of the FERC does not provide a final or complete remedy to the Party
seeking relief, such Party may proceed to arbitration under this Article 15 to
secure such remedy, subject to the FERC decision, finding or order.
15.5 Preliminary Injunctive Relief. Nothing in this Article 15 shall
-------------------------------
preclude, or be construed to preclude, the resort by either Party to a court of
competent jurisdiction solely for the purposes of securing a temporary or
preliminary injunction to preserve the status quo or avoid irreparable harm
pending arbitration pursuant to this Article 15.
15.6 Expense
-------
The expense of arbitration shall be borne equally by both parties,
unless the arbitrators determine that a different allocation is warranted by the
facts and circumstances.
ARTICLE 16. Interpretation
--------------
The interpretation and performance of this Agreement shall be in
accordance with and shall be controlled by the laws of the State of Connecticut
without regard to Connecticut conflict of law principles.
- 31 -
ARTICLE 17. Severability
------------
If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
ARTICLE 18. Auditing of Accounts and Records
--------------------------------
Within two (2) years following a calendar year, during normal business
hours, Supplier and Company shall have the right to audit each other's accounts
and records pertaining to transactions under this Agreement during the calendar
year at the offices where such accounts and records are maintained; provided
that appropriate notice shall be given prior to any audit, and provided that the
audit shall be limited to those portions of such accounts and records that
relate to services provided to the other Party under this Agreement for said
calendar year. The Party being audited will be entitled to review the audit
report and any supporting materials. To the extent that audited information
includes confidential information, the auditing Party shall designate an
independent auditor to perform such audit.
ARTICLE 19: Regulation
----------
(a) This Agreement and all rights, obligations and performances of the
Parties hereunder, are subject to all applicable state and federal laws, and to
all duly promulgated orders and other duly authorized actions of governmental
authority having jurisdiction; provided, however, that Supplier and Company
agree that neither Party will seek to change or amend this Agreement in any way
through making application to the FERC under Sections 205 and 206 of the Federal
Power Act, and that this Agreement shall not be subject to change through
unilateral application by either Party under Sections 205 and 206 of the Federal
Power Act.
- 32 -
(b) This Agreement must comply with all NEPOOL rules, criteria and
standards applicable now or in the future ("Rule(s)"). If, during the term of
this Agreement, the Restated NEPOOL Agreement is terminated or amended in a
manner that would eliminate or materially alter a Rule affecting a right or
obligation of a Party hereunder; or if such a Rule is eliminated or materially
altered by NEPOOL or the ISO, the Parties agree to negotiate in good faith in an
attempt to amend this Agreement to incorporate such changes as they deem
necessary to reflect the elimination or alteration of such Rule. The intent of
the Parties is that any such amendment reflect, as closely as possible, the
intent and substance of the Rule being replaced as was in effect prior to such
termination or amendment of the Restated NEPOOL Agreement or elimination or
alteration of the Rule. If the Parties are unable to reach agreement on such an
amendment, the Parties agree to submit the matter to arbitration under the terms
of Article 15 of this Agreement, and to seek a resolution of the matter
consistent with the above stated intent.
ARTICLE 20. Notices
-------
Any notice, demand or request permitted or required under this
Agreement shall be delivered in person or mailed by certified mail, postage
prepaid, return receipt requested or otherwise confirmed receipt, to a Party at
the applicable address set forth below:
To Supplier:
-----------
Derek Price
Wisvest-Connecticut, LLC
157 Chruch Street
New Haven, CT 06510
- 33 -
To Company:
----------
Anthony J. Vallillo
Group Vice President - Client Services
The United Illuminating Company
157 Church Street
New Haven, CT 06506
Such addresses may be changed from time to time by written notice by
either Party to the other Party.
ARTICLE 21. Miscellaneous
-------------
(a) Each Party shall prepare, execute and deliver to the other Party
any documents reasonably required to implement any provision of this Agreement.
(b) Each Party represents to the other Party that this Agreement and
such Party's performance thereof are within the corporate powers of such Party
and have been duly authorized by proper corporate action on the part of such
Party.
(c) Any number of counterparts to this Agreement may be executed and
each shall have the same force and effect as the original.
(d) This Agreement shall constitute the entire understanding between
the Parties and shall supersede all prior correspondence and understandings
pertaining to the subject matter of this Agreement.
(e) Failure of either Party to enforce any provision of this Agreement
or to require performance by the other Party of any of the provisions hereof
shall not be construed as a waiver
- 34 -
of such provisions or affect the validity of this Agreement, any part hereof, or
the right of either Party to thereafter enforce each and every provision.
(f) Article and Section headings used throughout this
Agreement are for the convenience of the Parties only and are not
to be construed as part of this Agreement.
IN WITNESS WHEREOF, Supplier and the Company have caused this Agreement
to be signed by their respective duly authorized representatives as of the date
first above written.
On Behalf of the Supplier WISVEST CORPORATION, SOLE MEMBER OF
WISVEST-CONNECTICUT, LLC
By /s/Francis Brzezinski
---------------------------------------
Francis Brzezinski
President
On Behalf of the Comapany THE UNITED ILLUMINATING COMPANY
By /s/Robert L. Fiscus
---------------------------------------
Robert L. Fiscus
Vice Chairman of the Board of Directors
And Chief Financial Officer
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