Exhibit 10.1
AMENDMENT TO
JOINT POWER SUPPLY AGREEMENT
This Amendment Agreement dated _________ ___, 2000 by and among
Wisconsin Power and Light Company, a Wisconsin corporation ("Power Company"),
Wisconsin Public Service Corporation, a Wisconsin corporation ("Service
Company"), and Madison Gas and Electric Company ("Electric Company") amends
the Joint Power Supply Agreement dated February 2, 1967, and as amended from
time to time to date, by and among Power Company, Service Company and
Electric Company ("Joint Agreement") as follows:
1. The Joint Agreement hereby is supplemented and amended by adding the
following Section 3.001:
Section 3.001. Companies Defined. As used in this
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Article III, "Companies" shall mean Power Company and
Service Company.
2. The Joint Agreement hereby is supplemented and amended by adding the
following Section 3.002:
Section 3.002. Effective Date. The effective date of
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this Amendment Agreement is the date of the closing of
the transactions contemplated by the Settlement and
Ownership Transfer Agreement between Service Company and
Electric Company attached as Attachment 1.
3. The Joint Agreement hereby is amended by deleting Section 3.01 in its
entirety and replacing it as follows:
Section 3.01. Ownership Share. The Companies hereby
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provide for the construction and operation of a nuclear
energy plant ("Nuclear Plant") of approximately 527,000
KW name-plate capacity, to be located in northeastern
Wisconsin, and to be owned by the Companies as tenants in
common with undivided ownership interests as follows (in
this Article III referred to as their respective
"Ownership Share"):
%
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Wisconsin Power and Light Company 41.0
Wisconsin Public Service Corporation 59.0
4. The Joint Agreement hereby is amended by deleting Section 3.09 in its
entirety and replacing it as follows:
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Section 3.09. Default. During any period that a Company
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is in default in whole or in part in performing any of
its obligations under this Article III, such Company
shall be obligated to pay any damages (including
reasonable attorneys' fees and costs associated with,
among other things, any dispute associated with resolving
or determining such default) to the non-defaulting
Company resulting from the default, and in case of a
payment default under this Article III which is not cured
within 90 days of an arbitrated or agreed determination
that such a default exists (a) the defaulting Company
shall be entitled to no energy from the Nuclear Plant
following the 90 day cure period until the payment is
made and (b) the non-defaulting Company shall be entitled
to all of the energy from the Nuclear Plant until the
default is cured. No such default shall affect any
Company's ownership interest, or any Company's
obligations under Sections 3.07 or 3.08.
5. The Joint Agreement hereby is amended by deleting the following
paragraph of Section 3.10 in its entirety and replacing it as follows:
Delete:
Section 3.10. Operation and Maintenance. The Companies
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shall establish an Operating Committee for the purpose of
establishing general policies for the operation and
maintenance of the Nuclear Plant. All of the Companies
shall be represented on the Operating Committee and the
voting power of the representatives of each company shall
be in proportion to the Ownership Share of such company.
The vote of the representatives of the Companies having
Ownership Shares aggregating more than 50% shall be
controlling on any question to be determined by the
Operating Committee. The Operating Committee shall meet
at the call of any member.
Replace with:
Section 3.10. Operation and Maintenance. The Companies
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shall establish an Operating Committee for the purpose of
establishing general policies for the operation and
maintenance of the Nuclear Plant. The Operating
Committee shall meet at the call of any member. The
Companies shall be represented on the Operating Committee
and the voting power of the representatives of each
company shall be in proportion to the Ownership Share of
such company. The vote of the representatives of the
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company or companies having an Ownership Share(s)
aggregating more than 50% shall be controlling generally
on any question to be determined by the Operating
Committee; provided, however, that unanimous consent
shall be required to: (1) reduce the planned operational
capacity of the Nuclear Plant by 52,700 KW or more; (2)
relicense the Nuclear Plant with the federal Nuclear
Regulatory Commission; or (3) decommission the Nuclear
Plant (except as provided in Sections 6.06 to 6.069
below).
The Operating Company shall prepare and present an annual
non-fuel Operating and Maintenance Budget and an annual
Capital Budget ("Capital Budget" for purposes of this
Amendment Agreement means the non-fuel capital budget
prepared on a cash flow basis consistent with existing
practice) for the Nuclear Plant to the Operating
Committee. Such annual Budgets shall be issued by
November 15 of the year prior to that covered by the
Budgets (subject to any changes which may be necessitated
by the Board of Directors of Service Company in its
annual review of such Budgets, which shall occur by
December 31 of that same year). The Companies shall use
good faith efforts to agree on such Budgets. Power
Company shall notify Service Company in writing within 30
days after a Budget is initially issued if Power Company
objects to or disagrees with a Budget (Power Company
shall also have 30 days to object to Budget changes made
by the Board of Directors of Service Company in its
review of such Budgets). Any such notice must describe
the basis for the objection or disagreement in reasonable
detail. If Power Company's disagreement with a Budget
satisfies the criteria in Section 6.063(b) below, then it
shall be dealt with as provided in that section; if it
does not, then the disagreement shall be resolved
pursuant to majority vote of the Operating Committee, as
described above. In addition to providing the required
annual Budgets, each year Service Company shall at the
same time prepare and present nonbinding forecast
non-fuel Operating & Maintenance and Capital Budgets for
the year following that covered by the actual Budgets.
6. The Joint Agreement hereby is amended by deleting Section 6.02 in its
entirety and replacing it as follows:
Section 6.02. Restrictions on Transfer - General. Each
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company agrees that, during the term of this Agreement
and except as specifically permitted under Sections 6.03,
6.04, and 6.06, neither its interest in this Agreement
nor its interest in any of the Subject Properties shall
be assigned, transferred or otherwise disposed of or
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permitted or required to be partitioned, or shall be
permitted to be subject to any lien or encumbrance of any
character, without the written consent of the other
company.
7. The Joint Agreement hereby is supplemented and amended by adding Section
6.06 as follows:
Section 6.06. Put and Call Options. Subject to and as
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described in Sections 6.06 through 6.069 hereof, Service
Company and Power Company (either, the "Transferring
Company") shall each have the right and option (the "Put
Option") to require the other party (the "Receiving
Company") to purchase all of the Transferring Company's
right, title and interest in and to all of its Ownership
Share in the Nuclear Plant. In addition, each party
shall have an option to purchase (the "Call Option") all
the other party's right, title and interest in and to all
of its Ownership Share as described in Section 6.068
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below.
Section 6.061. Trigger Events for Put Option. The Put
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Option shall be exercisable only upon the occurrence of
one of the following three events (each, a "Trigger
Event"): (1) the Adjusted Book Value of the Transferring
Company's Ownership Share is at or below the level set in
Section 6.062 below (the "Valuation Trigger"); (2) the
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Transferring Company has "cause" as described in Section
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6.063 below (the "Cause Trigger"); or (3) the
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Transferring Company decides to sell its Ownership Share
without cause, as described in Section 6.064 below (the
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"Without Cause Trigger").
Section 6.062. Valuation Trigger for Put Option. A
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Company may exercise its Put Option pursuant to this
Trigger Event only if the Adjusted Book Value of its
Ownership Share in the Nuclear Plant (excluding for this
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purpose the capitalized book value of Nuclear Plant
capital investments made subsequent to completion of
Steam Generator Replacement) will be at or below Five
Million Dollars ($5,000,000) on the date the proposed
transfer closes. The "Adjusted Book Value" of a
Company's Ownership Share means the book value of the
Company's undivided ownership interest in the Nuclear
Plant as reflected on its books utilized for PSCW
regulatory purposes.
Section 6.063. Cause Trigger for Put Option. A Company
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has "cause" and may exercise its Put Option pursuant to
this Trigger Event only upon the occurrence of any one or
more of the following:
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a. The Operating Company has materially failed to
meet the operation and maintenance standards set forth in
the Joint Agreement, and has not cured such material
failure after receiving 90 days' written notice thereof
from Power Company, with such failure and cure as
determined by mutual agreement of Service Company and
Power Company, or in the absence of such agreement as
determined in accordance with Article VIII of this
Agreement, in which case Power Company shall have "cause";
b. The Companies in good faith cannot agree on an
annual non-fuel Operating and Maintenance Budget, and the
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dispute concerns a difference in proposed annual
expenditures for the Budget Year exceeding Five Million
Dollars ($5,000,000) (in 1998 dollars), and the party
---
proposing the lower expenditures can demonstrate that
such lower expenditures will allow the Nuclear Plant to
continue to operate in accordance with the operation and
maintenance standards set forth in the Joint Agreement,
and the party that proposed the higher expenditure fails
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to reduce the non-fuel Operating and Maintenance Budget
to reflect such lower expenditures; in which case the
party proposing the lower expenditures shall have "cause";
c. The Companies in good faith cannot agree on an
annual Capital Budget (excluding Steam Generator
Replacement expenses), and the dispute concerns a
---
difference in such proposed budget exceeding Eleven
Million Dollars ($11 million) (in 1998 dollars), in which
case the party proposing the lower expenditures shall
have "cause";
d. There is an arithmetic average annual actual
expenditure deviation exceeding Five Million Dollars
($5,000,000) (in 1998 dollars) (such arithmetic average
to be calculated as follows: the sum of the actual
budget differential (positive or negative) (subject year)
plus actual budget differential (positive or negative)
(calendar year preceding subject year) plus actual budget
differential (positive or negative) (second calendar year
preceding subject year) divided by three) over the most
recent consecutive three (3) calendar year period from
either (but not in combination) the applicable (i) annual
non-fuel Operating and Maintenance Budgets or (ii) annual
Capital Budgets (excluding Steam Generator Replacement
expenses) for such three (3) year period, in which case
Power Company shall have "cause"; or
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e. As described in Section 6.068 below, with
respect to Power Company if Service Company objects to a
proposed transfer of Nuclear Plant assets to a nuclear
operating, management or generating company.
The parties must agree in writing that "cause" exists.
If there is no such agreement, then "cause" must be
established in arbitration under Article VIII, which
arbitration shall proceed as promptly as practicable.
The Cause Trigger shall not be deemed to have occurred
until such an agreed or arbitrated determination of cause
has been made.
1998 dollars for a given year shall be determined by
adjusting the amounts in question to reflect the change
since 1998 in the following price indexes: (a) for
capital expenditures the adjustment factor shall be 65%
of the change in the Producers Price Index plus 35% of
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the change in Consumer Price Index; and (b) for operating
and maintenance expenditures the adjustment factor shall
be 35% of the change in the Producers Price Index plus
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65% of the change in Consumers Price Index. These
adjustment factors are expressed in the following
formulas:
AFCB = ((.65 x PPI) + (.35 x CPI))
AFO&M=((.35 x PPI) + (.65 x CPI))
AFCB means adjustment factor for capital budget
figures in 1998 dollars.
AFO&M means adjustment factor for operations
and maintenance budget figures in 1998 dollars.
PPI means the percentage change in the
Producers Price Index between December 31, 1998
and the effective date of the calculation.
CPI means the percentage change in the
Consumers Price Index between December 31, 1998
and the effective date of the calculation.
6.064 Without Cause Trigger for Put Option. Either
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party may decide to transfer its Ownership Share to the
other party without cause and give notice thereof under
Section 6.066 below. If both parties decide to transfer
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their respective Ownership Shares to the other Without
Cause (and give notice thereof under Section 6.066 below)
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then Service Company, subject to its right of election
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under Section 6.067, shall purchase Power Company's
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Ownership Share.
6.065 Put Option Purchase Price. The purchase price for
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a transfer pursuant to a Put Option exercised by reason
of the Valuation Trigger or the Cause Trigger shall be
equal to the Adjusted Book Value of the Transferring
Company's Ownership Share (which for this purpose shall
include the Transferring Company's share of the net,
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depreciated capitalized book value of Nuclear Plant
capital investments made subsequent to Steam Generator
Replacement), calculated as of the transfer date. The
purchase price for any transfer by reason of the Without
Cause Trigger shall be the same as the foregoing, but
reduced by thirty percent (30%); provided, however, that
there shall be no such reduction of the purchase price if
the power generated from the Nuclear Plant is not
directly subject to retail regulation on the date that
the Transferring Party gives written notice of its intent
to transfer as described in Section 6.066 below.
Section 6.066. Exercise of Put Option. Upon the
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occurrence of a Trigger Event (but not before), the
Company entitled to exercise the Put Option, if it
decides to exercise such option, must give written notice
to the other Company not less than twelve (12) months
prior to the date of the proposed transfer (the "Notice
Period"); provided, however, that a notice of intent to
transfer pursuant to the Valuation Trigger may not be
given earlier than thirteen (13) months prior to the date
of proposed transfer. If arbitration is necessary to
determine whether "cause" exists, then the Notice Period
shall be reduced by the lesser of (a) five (5) months and
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(b) the amount of time consumed by the arbitration.
Notwithstanding anything else herein, the Receiving
Company shall have six (6) months from the date of
receipt of such notice to make an election pursuant to
Section 6.067 below.
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Section 6.067. Receiving Company Election. Upon receipt
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of the notice described in Section 6.066 above, the
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Receiving Company must elect either (at least 30 days
prior to closing) (a) to agree to purchase from the
Transferring Company its Ownership Share, or (b) to
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proceed with shut-down and decommissioning of the Nuclear
Plant (if Service Company is the Receiving Company, in
which case Power Company shall either agree to and
cooperate in such shut-down and decommissioning or shall
promptly withdraw its put option exercise) or to request
the Transferring Company to proceed with shutdown and
decommissioning of the Nuclear Plant (if Power Company is
the Receiving Company, in which case Service Company will
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either comply with such request or promptly withdraw its
Put Option exercise). If the Receiving Company elects to
proceed with the purchase, then the closing shall occur
by the end of the Notice Period, and the Receiving
Company may designate another person, company or entity
to be the transferee of the Ownership Share. If the
Receiving Company elects to proceed with or request
shut-down and decommissioning of the Nuclear Plant, the
Transferring Company may not transfer its Ownership Share
but must remain an owner of the Nuclear Plant, with all
the responsibilities and liabilities of an owner of the
Nuclear Plant through the period of decommissioning.
Section 6.068. Call Option. If either Company (the
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"Calling Party") wishes to transfer the Nuclear Plant or
the operations, license or management of the Nuclear
Plant to a nuclear operating, management or generating
company, and the Nuclear Plant is eligible for and has
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received a bona fide offer from such a nuclear operating,
management or generating company that is able to effect
such a transfer on reasonable terms and conditions, and
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the other Company ("Selling Party") objects to such a
transfer (which it must do within 30 days of receiving
written notice from the Calling Party of its intent to
effectuate such a transfer, then the Calling Party shall
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have the right to purchase the Selling Party's Ownership
Share at its Adjusted Book Value (which for this purpose
shall include the Selling Party's share of the net,
depreciated capitalized book value of Nuclear Plant
capital investments made subsequent to Steam Generator
Replacement), which purchase shall be subject to Section
6.069 and shall close as soon as possible after the
Calling Party notifies the Selling Party of its intent to
exercise the Call Option (which notice must be given
within 60 days of receipt of the Selling Party's
objection to the transfer); provided, however, that if
Power Company is the Calling Party, such an objection to
transfer by Service Company shall also constitute "cause"
for Power Company under Section 6.063 to give notice
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pursuant to Section 6.066 (provided that such notice must
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be given within 60 days of receipt of Service Company's
objection to the transfer) to Service Company of its
intent to require Service Company to purchase Power
Company's Ownership Share pursuant to the terms,
conditions and timelines for sales pursuant to the Cause
Trigger set forth above, in which case Service Company
shall have all the rights of a Receiving Company,
including the right of election pursuant to Section
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6.067.
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Section 6.069. Other Transfer Requirements. The
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following provisions shall apply to any transfer of
Ownership Share pursuant to a Put or Call Option:
a. At the closing, the Receiving Company shall
make full payment, in cash, of the purchase price for the
Ownership Share transferred, and the Transferring Company
shall transfer such Ownership Share, free and clear of
all liens and encumbrances of any kind.
b. Any such transfer shall be subject to securing
the necessary regulatory approvals. The Parties shall
cooperate and use commercially reasonable best efforts to
secure all necessary regulatory approvals, including
those to be obtained under Exhibit A hereto, regarding
the handling of nuclear decommissioning trusts. If a
Party is denied a regulatory approval or receives a
regulatory approval that contains restrictions,
qualifications or conditions which will have a material
adverse consequence to such Party, then the Parties shall
use commercially reasonable best efforts to reform this
Agreement in a mutually agreeable manner, or take other
mutually agreeable actions (including, without
limitation, one party indemnifying or making whole the
other Party), which provide each Party with economic or
other benefits which are substantially equivalent to
those set forth in this Agreement.
c. The transferring Company's decommissioning
trust funds shall be dealt with as described on Exhibit A.
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d. The Transferring Company shall retain
responsibility for spent fuel disposal for spent fuel
utilized for the Transferring Company's generation from
the Nuclear Plant's opening to the closing of the
transfer and for any unpaid installment obligations to
the Uranium Enrichment Decontamination and
Decommissioning Fund under the Energy Policy Act of 1992
or any amendments thereto.
e. The parties shall execute such other documents,
including a definitive purchase agreement with customary
terms and conditions, and take such further actions, as
may be necessary to effectuate the timely closing of the
transfer.
Section 6.070. Prior Events. Events (including, without
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limitation, transfers of the Nuclear Plant, or the
operations, license or management of the Nuclear Plant)
which occur prior to the effective date (as defined in
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Section 2 above) of this Amendment shall not give rise to
any of the put or call options described above.
Section 6.080. Exchange of Funding Information. After
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the effective date (as defined in Section 2 above) of
this Amendment, the Parties shall exchange, on an annual
basis, funding information regarding their respective
Decommissioning Trusts (as defined on Exhibit A hereto).
8. The Parties agree the transfer by Electric Company of its ownership
interest in Nuclear Plant to Service Company shall have the following
effect on the Joint Agreement as amended by the Supplement No. 2 to that
Joint Agreement dated February 4, 1992, (with section references below
being to sections of that Supplement No. 2):
Effect on Section 2.01: Upon transfer of the ownership
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interest in Nuclear Plant from Electric Company to
Service Company, because Electric Company will no longer
have an ownership share in Nuclear Plant, Electric
Company will not have an output share in such Nuclear
Plant which could be transmitted pursuant to Section 2.01 to
itself or to other purchasers. When Service Company
succeeds to the interest of Electric Company in Nuclear
Plant, its output share in Nuclear Plant subject to Section
2.01 shall be increased to match its ownership interest
in Nuclear Plant.
Effect on Section 2.02: Upon transfer of the ownership share
in Nuclear Plant from Electric Company to Service
Company, the rights of Electric Company and Service
Company under Section 2.02 shall not be changed, and the rights
of Electric Company and Service Company to utilize the
joint transmission facilities for the purposes described
in Section 2.02 shall remain:
- Service Company to Electric Company: 335 MW
- Electric Company to Service Company: 95 MW
IN WITNESS WHEREOF each of the parties has caused this Amendment
Agreement to be executed by its undersigned, duly authorized officers.
WISCONSIN POWER AND LIGHT COMPANY
By: __________________________________________
President
Attest: __________________________________________
Secretary
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WISCONSIN PUBLIC SERVICE CORPORATION
By: __________________________________________
President
Attest: __________________________________________
Secretary
MADISON GAS AND ELECTRIC COMPANY
By: __________________________________________
President
Attest: __________________________________________
Secretary
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