AGREEMENT BETWEEN
NEW YORK STATE ELECTRIC & GAS CORPORATION
AND
SARANAC ENERGY COMPANY, INC.
Dated as of April 27, 1990
TABLE OF CONTENTS
Article Page
I. Representations, Warranties and Covenants 2
II. Term 7
III. Delivery and Purchase 8
IV. Payment 9
V. Price For Electricity Sold To Buyer 11
VI. Interest 11
VII. Metering and Telemetry 12
VIII. Procedures for Interconnection and Installation of
Interconnection Facilities 17
IX. Rearrangement, Relocation, Retirement or
Abandonment of Buyer's Facilities 22
X. Suspension of Buyer's Obligations and Disconnection
of Plant from Buyer's System 25
XI. Coordination of Plant and System Maintenance 28
XII. Purchase of Plant; Extension of Agreement 30
XIII. Breach; Cure; Dispute Resolution 31
XIV. Indemnification and Insurance 42
XV. Access to Seller's Property 44
XVI. Force Majeure 45
XVII. Assignment or Transfer 48
XVIII.Approval of Agreement 49
XIX. Amendments, Approval of Amendments 50
XX. Applicable Avoided Cost Payments Upon Termination 52
XXI. Miscellaneous Provisions 53
Exhibit A -Site Plan, Project Description, and Wheeling Charge
Exhibit B -Rates and Related Provisions
Exhibit C -Assignment and Assumption Agreement
Exhibit D -Assignee Opinion of Counsel
Exhibit E -Parent Guarantee
Exhibit F -Opinion of Seller's Counsel
Exhibit G -Opinion of Buyer's Counsel
Exhibit H -Calculation of Avoided Cost
AGREEMENT
WHEREAS, New York State Electric & Gas Corporation
("Buyer"), is a corporation organized under the Transportation
Corporations Law of the State of New York and is authorized by
its Certificate of Incorporation and by the State of New York to
engage in the production, transmission, sale and distribution of
electricity for heat, light and power to the public; and
WHEREAS, Saranac Energy Company, Inc., (or its Assignee
pursuant to Article XVII of this Agreement) ("Seller"), proposes
to construct, own, and operate a natural gas fired cogeneration
plant and appurtenant facilities located in Clinton County, New
York as more specifically defined in Exhibit A "site plan" (the
"Plant"), which is designed to generate nominally 75 MW but not
to exceed 79.99 MW of capacity (net of station uses) and to
generate approximately 657,000 MWH of electric energy annually
(individually and collectively referred to as "electricity") for
delivery to the electric system of Buyer with which the Plant
will be physically interconnected to the extent committed under
Article III of this Agreement; and
WHEREAS, the Plant will be a qualifying facility under
the Public Utility Regulatory Policies Act of 1978 ("PURPA"), as
defined as of the date of this Agreement in 16 U.S.C. Section
796, and will be a "co-generation facility," as defined as of the
date of this Agreement in Section 2, subdivision 2-a of the New
York Public Service Law; and
WHEREAS, Seller desires to sell electricity generated
by the Plant to Buyer; and
WHEREAS, Buyer agrees to purchase electricity generated
by the Plant on the terms and conditions set forth herein and
therefore is willing to enter into this Agreement with Seller;
NOW, THEREFORE, in consideration of the promises and
other good and valuable consideration given one party to the
other, the sufficiency of which each party acknowledges, Buyer
and Seller agree as follows:
Article I. Representations, Warranties and Covenants
1.1 Seller makes the following representations,
warranties and covenants as the basis for the benefits and
obligations contained in this Agreement:
(a) Seller represents and warrants that it is a
corporation, duly organized, validly existing and in good
standing under the laws of the State of Texas and qualified to do
business under the laws of the State of New York, and has the
corporate power and authority to own, lease or otherwise have a
possessory interest in its properties, to carry on its business
as now being conducted and to enter into this Agreement and carry
out the transactions contemplated hereby and to perform and carry
out all covenants and obligations on its part to be performed
under and pursuant to this Agreement.
(b) Seller represents, covenants and warrants that if
the Plant is constructed, Seller shall own and operate the Plant
during the term of this Agreement and that the Plant will have a
nominal rated capacity of 75 MW and in no event will exceed 79.99
MW of capacity net of station uses (independent of any
consideration of the Plant's Status as a "co-generation facility"
as defined in Section 2, subdivision 2-a of the New York Public
Service Law) and is projected to generate approximately 657,000
MWH of electric energy annually, and that this Agreement shall be
binding for the term hereof on Seller. Seller represents and
further warrants that at the time of the Commercial Operation
Date (as herein defined) of the Plant and at all times thereafter
during the term of this Agreement, (i) the Plant will be a
qualifying facility under the Federal Power Act, as amended by
PURPA and the Regulations promulgated thereunder; and the Plant
will be a "co-generation facility" as defined in Section 2,
subdivision 2-a of the New York Public Service Law, as in effect
on the date of this Agreement, except that the Plant shall be
required to comply with amendments to those laws and regulations
specifically made retroactive to the Plant.
(c) Seller represents, covenants and warrants that, to
the best of Seller's knowledge, information and belief then
available at the time of commencement of commercial operation of
the Plant, Seller will be in material compliance with, or will
have acted in good faith to be in compliance with, all laws,
judicial and administrative orders, rules and regulations, with
respect to the ownership and operation of the Plant, including
but not limited to the following: all requirements to obtain and
comply with the conditions of any applicable certificates,
licenses, permits, governmental approvals; the filing of all
applicable environmental impact analyses; and, if applicable and
required by law, the mitigation of demonstrable environmental
impacts.
(d) Seller represents and warrants that it is not
prohibited from entering into this Agreement and discharging and
performing all covenants and obligations on its part to be
performed under and pursuant to this Agreement, and the execution
and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and
compliance with the provisions of this Agreement will not
materially conflict with or constitute a material breach of or a
material default under, any of the terms, conditions or
provisions of any law, any order of any court or other agency of
government, any certificate of incorporation or by-laws of the
Seller or any contractual limitation, corporate restriction or
outstanding trust indenture, deed of trust, mortgage, loan
agreement, other evidence of indebtedness or any other agreement
or instrument to which the Seller is a party or by which it or
any of its property is bound, or result in a material breach of
or a material default under any of the foregoing, and this
Agreement is the legal, valid and binding obligation of the
Seller enforceable in accordance with its terms, except as it may
be rendered unenforceable by reason of bankruptcy or other
similar laws affecting creditors' rights.
(e) Seller represents and warrants that all corporate
consents and authorizations required for Seller to execute and
deliver this Agreement have been obtained.
1.2 Buyer makes the following representations,
warranties and covenants as the basis for the benefits and
obligations contained in this Agreement:
(a) Buyer represents and warrants that it is a
corporation duly organized, validly existing and qualified to do
business under the laws of the State of New York, is in good
standing under its certificate of incorporation and the laws of
the State of New York, has the corporate power and authority to
own its properties, to carry on its electric utility business as
now being conducted and to enter into this Agreement and the
transactions contemplated hereby and perform and carry out all
covenants and obligations on its part to be performed under and
pursuant to this Agreement.
(b) Buyer represents and warrants that it is not
prohibited from entering into this Agreement and discharging and
performing all covenants and obligations on its part to be
performed under and pursuant to this Agreement, and the execution
and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and
compliance with the provisions of this Agreement will not
materially conflict with or constitute a material breach of or a
material default under, any of the terms, conditions, or
provisions of any law, any order of any court or other agency of
government, the certificate of incorporation or By-laws of Buyer,
or any contractual limitation, corporate restriction or
outstanding trust indenture, deed of trust, mortgage, loan
agreement, other evidence of indebtedness or any other agreement
or instrument to which Buyer is a party or by which it or any of
its property is bound or result in a material breach of or
material default under any of the foregoing, and this Agreement
is the legal, valid and binding obligation of Buyer enforceable
in accordance with its terms, except as it may be rendered
unenforceable by reason of bankruptcy or other similar laws
affecting creditors' rights.
(c) Buyer represents and warrants that it has adequate
means and net worth to self-insure for the purposes of Article
XIV of this Agreement.
(d) Buyer represents and warrants that all corporate
action required on its part to execute and deliver this Agreement
has been completed.
1.3 Contemporaneously with the delivery of this
Agreement, each party shall furnish the other a favorable opinion
of its counsel, in the form of Exhibits F and G hereto,
respecting certain representations made by the party furnishing
the opinion.
Article II. Term
This Agreement shall become effective when approved by
the New York State Public Service Commission ("Commission")
pursuant to the provisions of Article XVIII and shall remain in
full force and effect for a period of fifteen (15) years
determined from the Commercial Operation Date (as defined below),
subject to termination as provided herein. For purposes of this
Agreement, the Commencement Date will occur when the Plant is
synchronized to Buyer's electrical system and electricity is
first delivered to Buyer; and the Commercial Operation Date will
occur when the Seller so declares, but not more than 120 days
after the Commencement Date. Notwithstanding the above, neither
the Commencement Date nor the Commercial Operation Date shall
occur until Seller shall provide Buyer with at least ten (10)
days' prior written notice of each date. Applicable provisions
of this Agreement shall continue in effect after termination to
the extent necessary to provide for final billings and
adjustments related to the period prior to termination. Buyer
shall pay Seller the energy portion of its filed buyback tariff
for electric energy delivered to Buyer during the period between
the Commencement Date and the Commercial Operation Date, if
applicable.
Article III. Delivery and Purchase
During the term of this Agreement, Seller shall deliver
and sell to Buyer and Buyer shall accept and purchase from
Seller, subject to the terms and conditions of this Agreement,
all of the electricity produced by the Plant, net of that
electricity used, from time to time, to operate the Plant.
No change in the amount of capacity committed hereunder
shall be permitted without the written consent of Buyer and
Seller; provided, however, that all the dependable maximum net
capability ("DMNC") of the Plant determined by a capability test
conducted, following the Commercial Operation Date of the Plant,
in the manner and according to the standards provided in the
performance guarantee made part of Exhibit B herein to determine
the DMNC of the Plant, will constitute the amount of capacity
committed to Buyer pursuant to this Article without the consent
of the parties to this Agreement; except, that if there is a
failure of equipment to operate during any test, the test will be
disregarded for purposes of this paragraph, provided that Seller
shall provide Buyer with written documentation of such failure
within two weeks of the occurrence. Within four (4) months of
the initial completed test, Seller may conduct an additional
capability test and may designate the result as the DMNC.
For purposes of this Agreement, "deliver" shall mean to
make available for sale to Buyer at the delivery point, which for
purposes of this Agreement shall be the point at which Buyer's
and Seller's electric facilities are interconnected. Electricity
delivered to Buyer shall be of a type known as three-phase
alternating current with a nominal frequency of sixty (60) hertz
and a nominal voltage of 115 kV volts phase to phase.
Article IV. Payment
Buyer shall pay Seller via wire transfer or such other
agreed upon payment method to Seller's account at such bank as
Seller may from time to time designate in writing on or before
the twenty-fifth (25th) day of each month for the electricity
delivered to Buyer during the preceding calendar month, applying
the price terms set forth in Article V; provided that Seller
shall notify Buyer in writing, at least thirty (30) days in
advance of a required payment hereunder, of any change in the
account to which such payment is to be directed. Along with this
payment, Buyer shall enclose a statement explaining how the
payment amount was calculated.
Upon receipt of each payment, Seller shall examine the
accompanying statement to ensure that it has been calculated
correctly, and shall promptly notify Buyer of any errors therein
which Seller in good faith believes have been made along with the
facts providing the basis for such belief. Buyer will promptly
review Seller's complaint.
If the parties are unable to agree upon a settlement of
the contested portion of any statement after the parties have
availed themselves of their rights to meter testing as provided
in Article VII and after Seller has had an opportunity to review
Buyer's records bearing on the disputed matter, the dispute shall
be settled in accordance with the procedures of the Public
Service Commission similar to those set forth in 16 NYCRR Part
12, for the resolution of disputes, subject to judicial review.
Article V. Price For Electricity Sold To Buyer
Buyer will pay Seller for each kilowatt hour of
electricity delivered the prices specified in the rate schedule
contained in Exhibit B of this Agreement, subject to the security
provisions and performance guarantee made part of Exhibit B to
this Agreement.
Article VI. Interest
If either party shall fail to make any payment required
by this Agreement when due, including contested portions of bills
as provided under Article IV, or if either party makes an
overpayment requiring a refund by the other party, the amount due
shall bear interest at the rate prescribed for late payment
charges in Buyer's retail tariff on the unpaid balance until date
of payment, provided that in the event of such an overpayment,
interest shall accrue on the overpayment from the date that such
overpayment was made. Remittance received by mail, when
permitted, will be accepted without interest charges if such
payment was mailed on or before the due date. If the due date of
any payment falls on a Sunday or holiday, the next business day
shall be the last day on which payment can be mailed or paid
without interest charges being assessed.
Article VII. Metering and Telemetry
Except as may be otherwise specifically provided for
herein, electricity delivered by Seller to Buyer will be measured
by electric meters and associated equipment of a type approved by
the Commission, which meters and equipment shall be installed on
Seller's premises and owned, installed, operated and maintained
by Buyer at Seller's expense. Seller shall, at its own expense,
furnish, install and maintain mounting facilities for such meters
and associated devices.
The metering equipment shall be sealed by Buyer and the
seals shall be broken only upon occasions when the meters are to
be inspected, tested or adjusted, and representatives of Seller
shall be afforded reasonable opportunity to be present upon such
occasions. Periodic tests of such metering equipment, at
intervals not to exceed those prescribed by the Commission's
regulations for comparable meters will be made by Buyer at
Seller's expense, and additional tests will be made at any
reasonable time upon request therefor by Seller at Seller's
expense. If, as a result of such tests, the metering equipment
is found to be defective or inaccurate, it will be restored to a
condition of accuracy or replaced at Seller's expense. If a test
of the metering equipment is made at the request of Seller with
the result that said metering equipment is found to be
registering correctly or within two percent (2%) plus or minus of
one hundred percent (100%), Seller shall bear the expense of such
test; provided that if such test shows an error greater than two
percent (2%) plus or minus of one hundred percent (100%), then
Buyer shall bear the expense of such test. All meters shall be
adjusted as close as practical to one hundred percent (100%) at
time of installation and testing.
If any of the metering equipment tests provided for
herein disclose that the error for such equipment exceeds two
percent (2%) Plus or minus of one hundred percent (100%), then
the actual meter readings for the second, or more recent, half of
the period between the date of the last test on such equipment
and the date of the correction of the malfunction will be
adjusted, either upward or downward, to correct for such error,
unless there is verifiable information upon which an accurate
adjustment can be made for part or all of the period, including
readings from Seller-installed meters. Any correction in billing
resulting from such correction in meter records shall be made
with interest at the rate specified in Article VI in the next
monthly payment made by Buyer after the inaccuracy is verified,
and such correction when made shall, in the absence of bad faith,
fraud, or intentional wrongdoing, constitute a complete and final
settlement of any claim arising between the parties hereto out of
such inaccuracy of the metering equipment.
Seller shall have the right to install its own meters
and shall maintain them according to standards prescribed by Part
92 of the Commission's regulations. Should any metering
equipment installed by Buyer fail to register the electricity
delivered during any period of time, or if Seller and Buyer agree
that the meter registration is invalid, the amount of electricity
delivered during such period will be estimated by the parties
according to the amounts previously delivered during similar
periods under substantially similar conditions, unless meter
readings are available from Seller-installed meter equipment,
subject to a test of its accuracy conducted in accordance with
the procedure provided in this Article. In the event Seller's
meters are used and said metering point is on the low-voltage
side of the main transformer, an adjustment for transmission and
transformation losses will be made to such meter readings.
At Seller's expense, Seller shall, prior to the
Commencement Date, install to specifications, procedures, and/or
instructions relating to the installation of telemetry equipment,
adequate metering and communication equipment ("Telemetering
Equipment") to transmit information to Buyer to monitor Seller's
generation of electricity. The specifications, procedures,
and/or instructions to be provided by Buyer pursuant to this
paragraph shall be in such detail as is reasonably necessary for
Seller to develop final cost estimates for the telemetry
equipment and shall be furnished on or before the later of (a)
December 1, 1990, (b) two (2) months after Buyer receives all
single line drawings required from Seller under this Agreement,
or (c) such other time as is mutually agreed upon by both parties
in writing. Seller may, within thirty (30) days of the later of
such dates, petition the Commission for a determination that such
telemetry should not be required. Telemetry of information
required for operation of Buyer's system, including but not
limited to real power, shall be provided to Buyer continuously
(every two (2) seconds). The required installation shall include
such communication channel or channels required to transmit this
data to Buyer's Power Supply Department. Buyer shall install and
Seller shall pay for receiving equipment at Buyer's end of the
required communication channel(s). Seller shall pay the monthly
charges associated with said communication channel(s). The
procedures for establishing schedules and time deadlines for the
telemetry arrangements including, without exclusion, Buyer's
acceptance of Seller's design and construction of such
facilities, shall be governed by Article VIII.
Buyer, at Seller's expense, shall maintain the
telemetry equipment and repair same in the event of a failure of
said equipment. From the time Seller or Buyer first becomes
aware of such failure and until operations can be restored,
Seller shall (absent a waiver in whole or part by Buyer) provide
Buyer by telephone or facsimile information concerning current
and expected unit output every half hour; concerning changes in
unit output (plus or minus) of five (5) MW from the last reported
output or more as they occur: and concerning changes in the
status of equipment as they occur or as soon thereafter as they
are recognized by Seller. If the Seller fails to provide the
data required by this Article VII, Buyer may direct that the
generating facility of the Plant be disconnected from Buyer's
system. Buyer shall give advance notice, as circumstances
permit, of the need for such disconnection to employees of Seller
designated from time to time by Seller to receive such notice
directing such disconnection. Upon receipt of notice directing
such disconnection, Seller shall carry out the required action
without undue delay. Where circumstances do not reasonably
permit such advance notice to Seller or Seller's employees,
including but not limited to circumstances in which Seller's
facility is unstaffed, Buyer may disconnect the generating
facility of the Plant from Buyer's system until Seller provides
the required data to Buyer.
Article VIII. Procedures for Interconnection and Installation of
Interconnection Facilities
Interconnection of the Seller's facilities with Buyer's
electric system shall be governed by the requirements and
conditions contained in Buyer's New York State Electric & Gas
Corporation Bulletin 86-01 Guide to NYSEG's Requirement For Any
Independent Power Producer, Revised March 1989 ("Bulletin") which
is incorporated herein by reference and with which terms and
conditions the parties hereby agree to be bound. Such Bulletin
shall at a minimum specify procedures for the establishment of
schedules and time deadlines. In the event of conflict between
this Agreement and the Buyer's Bulletin, this Agreement is
controlling.
If Seller and Buyer are unable to agree on application
procedures, information requirements, schedules and deadlines, or
interconnection costs, equipment or procedures, or compliance
with the foregoing, either party may petition the Commission to
resolve the dispute, subject to judicial review.
Seller shall, at its cost and expense, construct and
install the interconnection facilities set forth in Exhibit A-1
(as it may be amended from time by mutual agreement of the
parties), as required for Buyer to receive electricity from
Seller's facilities, including telemetry equipment. All such
interconnection facilities after construction and installation by
Seller shall thereupon become the property of and shall be owned
and maintained by Buyer at Buyer's expense, except for those
items listed in Exhibit A-2 (as it may be amended from time by
mutual agreement of the parties), which shall be operated and
maintained by Buyer at Seller's expense, subject to the
provisions of Article VII. In the event it is necessary for
Buyer, in its sole discretion subject to the dispute resolution
procedure in Article XIII(c), to continue facilities in service
that were scheduled to be retired, or to install additional
facilities or to extend or reinforce or modify its system, in
each case for the receipt of electricity under this Agreement
(hereinafter referred to as "Dedicated Facilities"), Buyer shall
provide Seller with as much advance notice as reasonably
practicable and Seller shall reimburse Buyer for the incremental
costs and expenses incurred in connection with the continuation
in service, installation, extension or reinforcement of the
Dedicated Facilities. Such payment to Buyer respecting Dedicated
Facilities shall include any taxes due on account of such
reimbursement appropriately reduced by the present value of
depreciation deductions and any other tax benefits applicable to
the Dedicated Facilities over their tax life. All Dedicated
Facilities shall remain the property of Buyer, and Buyer shall be
responsible for any taxes due on account of its ownership and use
of the Dedicated Facilities after termination of this Agreement,
whether such taxes arise out of Seller's prior reimbursement or
otherwise. To the extent that the capital costs or expenses of
the Dedicated Facilities are recovered or are to be recovered
from other rates or charges assessed by Buyer, including charges
for facilities employed by Buyer to sell electricity to Seller,
and to the extent that the capital costs of the Dedicated
Faci1ities were previously paid by Seller, such costs and
expenses shall not be included in any of the payments due under
this Article.
Buyer, at the expiration of the term of this Agreement
and at the request of Seller, agrees to execute a new agreement
concerning the Dedicated Facilities and containing the same
provisions set out herein if use of such Dedicated Facilities is
necessary or desirable to Seller in order to carry out a
successor transaction for sale of the output of the Plant to
Buyer or someone other than Buyer, whether by contract, tariff,
or otherwise (subject, however, to the provisions in this
Agreement concerning the requirement to continue the
interconnection based on the suitability of such facilities for
such use); and this obligation shall survive the expiration of
this Agreement for all other purposes. Nothing contained in this
Agreement with respect to the continuing availability of the
Dedicated Facilities for the receipt of the Plant's electric
output obligates or requires the Buyer to offer to provide and/or
arrange for general transmission services utilizing facilities
other than the Dedicated Facilities to facilitate such a
successor transaction involving a sale to someone other than the
Buyer; and, to the extent that the Dedicated Facilities are
utilized to carry out a successor transaction for sale of the
output of the Plant to someone other than Buyer, Buyer may charge
Seller for some or all of the cost of operating and maintaining
the Dedicated Facilities, as appropriate under the circumstances,
as well as a return on and of any investment made for the
replacement or improvement of the Dedicated Facilities to the
extent necessary for the continued acceptance of Seller's Power.
In addition, Buyer may charge its conventional rates for services
involving facilities other than the Dedicated Facilities.
For Dedicated Facilities estimated to cost less than
$10,000, the estimated incremental costs and expenses to be
incurred by Buyer in connection with the continuation in service,
installation, extension or reinforcement of the Dedicated
Facilities shall be paid in a lump sum amount to Buyer prior to
ordering or constructing such facilities. For Dedicated
Facilities estimated to cost $10,000 or more, Seller shall prepay
to Buyer the cost of any such facilities that Buyer must order
and shall make payments in advance each month for all other
estimated costs and expenses scheduled to be incurred by Buyer
during the next succeeding month in connection with the
continuation in service, installation, extension or reinforcement
of the Dedicated Facilities, less ten percent (10%) retainage
until completion of the Dedicated Facilities. Upon completion of
the Dedicated Facilities, the actual and estimated costs and
expenses incurred in connection with the Dedicated Facilities
shall be compared and the difference between them shall be
promptly paid by or reimbursed to Seller as appropriate.
Each month during the term of this Agreement, Seller
shall reimburse Buyer for expenses incurred by Buyer for the
operation and Maintenance of the Dedicated Facilities listed in
Exhibit A-2 at one-twelfth (1/12) of the annual rate specified in
Buyer's applicable tariff. An explanation of such expenses shall
accompany each bill submitted by Buyer. Said reimbursable
expenses shall include but are not limited to the cost for time
spent by Buyer's in-house engineers on matters arising under
Articles VIII and IX. Either party may petition the Commission
to resolve disputes relating to said bills, subject to judicial
review. Bills for sums due under this Article VIII shall be
rendered monthly. All bills shall be due and payable within
thirty (30) days after the date thereof.
The question of the allocation of responsibility for
payment of wheeling charges that may be incurred in connection
with the operation of this Agreement is before the Commission.
Exhibit A-3 sets out the terms of the resolution of this issue.
Article IX. Rearrangement, Relocation, Retirement or Abandonment
of Buyer's Facilities
If, at some future time, Buyer determines it is
necessary to relocate or rearrange its system to which the Plant
is connected, Buyer shall advise Seller one (1) year in advance
in writing, explaining the proposed relocation or rearrangement
of Buyer's system, or as promptly as possible after Buyer becomes
aware of such need if such relocation or rearrangement will occur
less than one (1) year from such awareness. If such relocation
or rearrangement is ordered or required by governmental
authority, Buyer shall give prior notice to Seller equal in time
to the notice given Buyer by such governmental authority, to the
extent possible. Buyer will indicate the investment required for
new facilities proposed to reestablish the connection which the
utility would not have incurred but for Seller's connection to
Buyer's electric system. Seller will have the option of
reimbursing Buyer for the cost of these new facilities (which
shall be Dedicated Facilities) or of providing its own reasonable
alternative interconnection to Buyer's system, provided that such
alternative interconnection is subject to Buyer's approval, which
approval shall not be withheld unreasonably. The procedure for
submission and approval of such alternative interconnection plans
shall be set forth in Buyer's Bulletin described in Article VIII.
In the event that Seller demonstrates to Buyer's
satisfaction that both of the aforesaid options would render
operation of the Plant uneconomic for the balance of this
Agreement, then Seller may elect to terminate this Agreement upon
sixty (60) days' prior written notice to Buyer, provided that
Seller either (a) has returned any payments made by Buyer in
excess of the Commission's 1988 estimate of Buyer's long-run
avoided cost, in Case 28962, has paid all other amounts due Buyer
under this Agreement, or (b) agrees to reimburse Buyer monthly
the amount by which Buyer's actual reasonably incurred cost for
replacement electricity exceeds the amount that Buyer would have
paid to Seller under this Agreement for such electricity,
adequately secures such reimbursement payments for the remaining
term of this Agreement in a reasonable and mutually satisfactory
manner, and has paid all other amounts due to Buyer under this
Agreement.
If at some future time, Buyer determines it is
necessary to retire or abandon any facilities to which the Plant
is connected, and which are necessary to accommodate the output
of the Plant in a manner consistent with prudent utility
practices, Buyer shall advise Seller, at least one year in
advance, in writing, indicating Buyer's annual cost of facilities
required exclusively to accommodate the output of the Plant.
Seller shall then have the option of paying Buyer for these
annual costs or of providing alternate interconnection to Buyer's
system acceptable to Buyer. Such an alternative may be the
purchase by Seller of Buyer's existing facilities, which would
have been retired in place, at the fair market value negotiated
by the parties, taking into consideration without excluding other
factors, Buyer's desire to retire or abandon the facilities less
any amount previously paid by Seller for the purchase,
construction or improvement of such facilities. In the event
Seller elects to pay Buyer the annual charges associated with
these facilities, said charges shall be recomputed as of January
lst of every year.
In the event the interconnection shall be discontinued
or abandoned due to causes beyond the control of Buyer, Buyer
will not be liable therefor.
Article X. Suspension of Buyer's Obligations and Disconnection of
Plant from Buyer's System
Buyer, recognizing Seller's representation that
electric sales to Buyer over the interconnection represent
Seller's primary source of revenues, shall at all times during
the term of this Agreement, or any extension or renewal thereof,
endeavor to maintain the interconnection between the Plant and
Buyer's facilities, consistent with its obligations to its
customers and with prudent utility practices. In the event this
interconnection shall be interrupted or defective or shall fail
from causes beyond the control of Buyer or because of the
ordinary negligence of Buyer, its officers, agents and employees,
Buyer will not be liable therefor.
Buyer's acceptance of and obligation to pay for
electricity generated by the Plant shall be suspended for any
periods of time during which Buyer's system is physically unable
to accept such electricity for reasons of repair, connection of
other customers or generators of electricity, system emergency,
safety, temporary outage of facilities, and/or actions taken
pursuant to Article IX; provided, however, that Buyer shall use
all reasonable efforts to coordinate any scheduled outage under
this paragraph with Seller.
In such circumstances, Buyer shall notify Seller of
such suspension and of the reason therefore as soon as is
reasonably possible under the circumstances (whether before or
after the suspension), and shall thereafter keep Seller apprised
of the estimated duration of the suspension, as such estimate may
change from time to time. During any period of suspension, Buyer
and Seller shall endeavor to end the suspension as promptly as is
reasonably possible. Buyer's acceptance of and obligation to pay
for electricity generated by the Plant shall also be suspended
for any period of time during which Seller fails to maintain the
insurance policies required by this Agreement; provided, however,
that electricity accepted by Buyer shall be paid for at the rate
specified in Exhibit B to this Agreement.
If necessary, and solely for reasons set forth above,
Buyer may direct that the generating facility of the Plant be
disconnected from Buyer's system. Buyer shall give advance
notice, as circumstances permit, of the need for such
disconnection to employees of Seller designated from time to time
by Seller to receive such notice. Upon receipt of notice
directing disconnection, Seller shall carry out the required
action without undue delay. Where circumstances do not permit
such advance notice to Seller or Seller's employees, including
but not limited to circumstances in which Seller's facility is
unstaffed, Buyer may disconnect the generating facility of the
Plant from Buyer's system. In such circumstances, Buyer shall
notify Seller of such disconnection and of the reason therefor as
soon as is reasonably possible following the disconnection, and
shall thereafter keep Seller apprised of the estimated duration
of the disconnection, as such estimate may change from time to
time.
During any period of disconnection, Buyer and Seller
shall endeavor to restore the interconnection as promptly as is
reasonably possible.
Seller shall bear any extraordinary cost reasonably
incurred by Buyer as a result of any such disconnection or re-
connection, except that Buyer shall bear such costs with respect
to facilities it owns or controls if the disconnection is due to
its negligence. An extraordinary cost is a cost that would not
be incurred by Buyer absent the existence of the Plant; provided,
however, that such extraordinary cost shall not include any
incremental expenses incurred by Buyer for the operation and
maintenance of Dedicated Facilities which are reimbursed by
Seller pursuant to Article VIII.
It is further agreed that Buyer, subject to any law or
regulatory or governmental order requiring otherwise, upon notice
to the Seller sufficient to allow Seller to cease deliveries of
electricity, shall not be obligated to purchase electricity from
the Seller during any period during which, due to operational
circumstances, purchases from Seller would result in costs
greater than those which Buyer would incur if it did not make
such purchases but instead generated an equivalent amount of
energy itself (the term "operational circumstances" to be defined
for the purposes set forth in this paragraph in the manner
described in the FERC's rules and regulations in effect on the
date of this Agreement, as further clarified in the Commission's
discussion in its Order Rejecting Curtailment Clauses, issued
June 27, 1989, and its Order Denying Rehearing and Clarifying
Prior Order, issued December 12, 1989, both in Case 88E-081)
("the Curtailment Orders"). The Buyer's claim that such a period
has occurred, is occurring, or will occur is subject to such
verification by the Commission as it determines necessary or
appropriate before, during, or after the occurrence in accordance
with the Curtailment Orders and the procedures set out therein.
Article XI. Coordination of Plant and System Maintenance
Other than unscheduled maintenance, Seller shall use
best efforts to coordinate with Buyer the maintenance of the
Plant required in order to ensure the sound operation of the
Plant and Buyer's system. Except in cases of emergency or
repairs that cannot be deferred, maintenance shall not be
scheduled or performed during the months of November through
march inclusive without the prior written consent of Buyer, which
consent shall not unreasonably be withheld.
Buyer shall endeavor to coordinate with Seller the
scheduling of any planned maintenance or repair outages of
facilities to which the Plant is interconnected by scheduling
such outages during times when Seller has scheduled maintenance
of the Plant, by giving advance notice to Seller, or by other
reasonable means of coordination.
Seller shall use its best efforts to provide, prior to
commercial operation, a schedule of maintenance outages for the
Plant's first twelve months of commercial operation. After the
first twelve months of commercial operation, Seller shall provide
a schedule of expected maintenance outage periods, including the
expected duration and desired time, on or before September 1 of
each year for the three (3) succeeding calendar years. The
schedule for the first such succeeding year shall not be changed
without the consent of Buyer, which consent shall not be
unreasonably withheld. In addition, Seller shall provide the
expected duration of a forced outage within forty-eight (48)
hours after the start of the outage.
Article XII. Purchase of Plant; Extension of Agreement
In the event Seller proposes to sell, or receives an
acceptable offer to purchase, the Plant or any part thereof
during the term of this Agreement, or during any extension
thereof, Seller shall first notify Buyer, in writing, of its
intention to sell (which sale will be subject to the condition
established in Article XVII of this Agreement that the purchaser
shall assume this Agreement) and of the proposed price.
Following receipt of such notice, Buyer shall have, for a sixty
(60) day period, the option to purchase the Plant or such part
thereof, together will all improvements, lands, and rights
associate therewith, at such price. If Buyer does not exercise
its option to purchase within sixty days, then Seller may sell
the plant or such part thereof to a third party at the same or a
higher price. This provision shall not apply to any transfer or
assignment by Seller for the sole purpose of financing the Plant.
If it is Seller's intention to continue to operate the
Plant after the end of the term of this Agreement, Seller shall,
no later then one (1) year before the expiration of the term of
this Agreement, initiate discussions with Buyer concerning the
terms of an extension of this Agreement. Seller and Buyer shall
negotiate such an extension in good faith, and Seller shall not
offer the Plant output to, or open negotiations with, any other
potential buyer until the earlier of (a) an impasse in such
negotiations, (b) a decision by Buyer not to continue
negotiations, or (c) five (5) months prior to the expiration of
the Agreement.
If it is Seller's intention to sell any of its
interests in the Plant at the conclusion of the term of this
Agreement, Seller shall, no later than one (1) year before the
expiration of the term of this Agreement, initiate discussions
with Buyer concerning the terms of a purchase of such interests
by Buyer. Seller and Buyer shall negotiate such a purchase and
sale in good faith, and Seller shall not offer to sell such
interests in the Plant to any other potential buyer until the
earlier of (a) an impasse in such negotiations, (b) a decision by
Buyer not to continue negotiations, or (c) five (5) months prior
to the expiration of the Agreement.
Article XIII. Breach; Cure; Dispute Resolution
This Article describes certain occurrences which can
result in a breach of the contract and the rights of the parties
in such an event. This Article does not describe all possible
events which could constitute a breach nor all the rights of the
parties in the event of a breach.
(a) The sale by Seller to a third party, or diversion
by Seller for any use, of electricity committed to Buyer, by
Seller under Article III without the written approval of Buyer,
shall constitute a breach, as a result of which breach Buyer may
in its discretion, upon sixty (60) days' written notice to Seller
specifying the reason(s) and the basis for terminating the
Agreement, treat the Agreement as terminated and all obligations
to purchase and pay for electricity (other than electricity
delivered prior to the date of termination) extinguished;
provided, however, that such notice must be sent within one (1)
year after actual discovery by Buyer of the facts giving rise to
the claim of breach; provided further, however, that during this
sixty (60) day period, if an outstanding dispute remains
concerning the breach, either party may bring such dispute to the
Commission for resolution according to the Commission's Rules of
Procedure, subject to judicial review, and this Agreement shall
not be terminated by the party claiming the breach prior to such
resolution or final disposition by the Commission and final
judicial review thereof; provided, however, that the party
claiming the breach may petition the Commission for summary
dismissal of the petition to resolve the dispute on the ground
that the dispute is not bona fide. In the event the party
alleged to be in breach does not commence a proceeding on a
dispute with the Commission within the time period described,
this Agreement may be terminated by the party alleging the
breach; provided, further, that this Agreement may be suspended
by Buyer (except those obligations of Seller relating to metering
and telemetry necessary to allow Buyer to determine if Seller is
generating and delivering electricity during the suspension
period) prior to judicial review if the Commission determines
that continued operation of the Plant or Seller's related
electric facilities, if any, presents a danger to life or
property. Such suspension shall remain in effect until such time
as the Commission determines that operation of the Plant,
including Seller's related electric facilities, if any, no longer
presents a danger to life or property. The rights of lenders to
Seller to cure such a breach and/or to forestall termination
pursuant to this paragraph are addressed in the Security exhibit
to this Agreement.
(b) Upon a determination by the Commission, on its own
motion or pursuant to a petition by a party, subject to final
judicial review, either that a material, factual representation
made in this Agreement by one party as a basis for the other
party's willingness to enter into this Agreement, or made by such
party's assignee, has been falsely made and the falsehood was
made willfully, knowingly or with a reckless disregard for its
truth or falsity, or that a material warranty given under Article
I of this Agreement has been willfully and knowingly breached,
the other party may terminate this Agreement; provided, however,
that the party seeking to terminate the Agreement must file said
petition within one (1) year after actual discovery by said party
of the facts giving rise to the claim herein. Termination of
this Agreement may not occur until final judicial review has been
completed or the time therefor has expired, but this Agreement
may be suspended by Buyer (except those obligations of Seller
relating to metering and telemetry necessary to allow Buyer to
determine if Seller is generating and delivering electricity
during the suspension period) prior to judicial review if the
Commission determines that continued operation of the Plant or
Seller's related electric facilities, if any, presents a danger
to life or property. Such suspension shall remain in effect
until such time as the Commission determines that operation of
the Plant, including Seller's related electric facilities, if
any, no longer presents a danger to life or property. The rights
of lenders to Seller to cure such a breach and/or to forestall
termination pursuant to this paragraph are addressed in the
Security exhibit to this Agreement.
(c) Under events 1-7 enumerated below, the identified
act, failure or omission by Seller or Buyer will constitute a
breach of this Agreement. Seller or Buyer shall notify the other
party in writing, which notice shall specify the nature of the
act, failure or omission and the evidence supporting the claim;
provided, however, that such notice must be sent within one (1)
year after actual discovery by the party seeking to terminate
this Agreement of the facts giving rise to the claim herein.
Following such notice, the other party and, in the case of breach
by Seller, Seller's secured lenders shall have a sixty (60) day
period in which to cure the act, failure or omission, or, if the
breach cannot be cured through diligent action within the sixty
(60) day period, begin diligently to work to cure the breach. In
the latter event, the breaching party shall notify the party
alleging the breach of the additional period necessary to cure
the breach, and the party alleging the breach shall either agree
or disagree in writing with the additional necessary period,
within seven (7) working days of receipt of notice from the party
alleged to be in breach; during the initial sixty (60) days
following notice of the alleged breach, if an outstanding dispute
remains concerning the breach, the cure, or the additional time
necessary for the cure, either party may bring such dispute to
the Commission for resolution according to the Commission's Rules
of Procedure, subject to judicial review, and this Agreement
shall not be terminated by the party claiming the breach prior to
such resolution or final disposition by the Commission and final
judicial review thereof; provided, however, that the party
claiming the breach may petition the Commission for summary
dismissal of the petition to resolve the dispute on the ground
that the dispute is not bona fide. In the event the party
alleged to be in breach fails to care and a proceeding on a bona
fide dispute has not been brought to the Commission within sixty
(60) days, or in the event of a breach that cannot be cured
within sixty (60) days, within seven (7) working days of receipt
by the party alleged to be in breach of notice from the non-
breaching party that the non-breaching party does not accept the
extension of the cured period claimed to be necessary by the
party alleged to be in breach, this Agreement may be terminated
by the party alleging the breach. Upon such termination, all
further obligations of the non-breaching party (other than the
obligations to pay any amounts previously owed to the other
party) shall be extinguished:
1. An assignment of this Agreement or any rights
created by it is made in violation of the provisions of Article
XVII;
2. A failure to comply with any material provision of
either Article XI or the Buyer's Bulletin described in Article
VIII.
3. A failure to grant or obtain rights-of-way or
easements or to execute documents as required by this Agreement.
4. A failure by one party to make payments when due,
when such payments due reach a level which cannot be offset by
any payments due and owing that party by the other party for
services rendered, equipment supplied or electricity purchased in
any one month.
5. A failure to maintain, or an intentional or
knowing material impairment of, any security which is provided to
secure payments for electricity, including but not limited to any
refusal to surrender possession of the Plant pursuant to a
security provision granting Buyer a right to possession.
6. A failure by Seller for a Period of sixty (60)
days to use good faith efforts to resume the delivery of
electricity pursuant to this Agreement after the Plant has ceased
operating.
7. A failure by Seller to deliver to Buyer an
accurately executed "Independent Power Producer Generator
Notice," Buyer's Form NB 232, within ninety (90) days from the
date of execution of the Agreement.
The rights of lenders to Seller to cure such a breach
and/or to forestall termination pursuant to this paragraph (c)
are addressed in the Security exhibit to this Agreement.
(d) In the event that the Plant loses its status as a
qualifying facility under PURPA, pursuant to regulations in
effect on the date of the execution of this Agreement and as may
be amended to have retroactive effect to this facility, this
Agreement may at the option of Buyer be terminated immediately
without liability of any description, kind or nature whatsoever
by Buyer to Seller. Upon such termination, all further
obligations of both parties (other than the obligations to pay
any amounts previously owed to the other party) shall be
extinguished.
(e)(i) In the event that and for so long as the Plant
fails to meet the New York Pub. Serv. Law Section 2-a definition
of a "co-generation facility" as in effect on the date of
execution of this Agreement, or (ii) in the event that the Plant
loses such status by virtue of the electric output from the Plant
having exceeded 80 megawatts for any quarter hour period two (2)
times within any five (5) year period, Seller shall receive the
following revised pricing: (1) for such remaining portion of
Period A during which six (6) cents exceeds the 1988 long-run
avoided costs, Buyer's current short-run avoided costs; (2) for
the remainder of Period A, the 1988 long-run avoided costs per
kilowatt hour less amounts (the "reductions") sufficient to repay
the Buyer the difference between six cents and the 1988 long-run
avoided costs for the period from the Commercial Operation Date
until the loss of status as a "co-generation facility", adjusted
for the value of money over time at the rate of eleven-twelfths
(11/12) of a percent per month ("the front-load") (the reductions
to be calculated as a uniform monthly payment that will
completely amortize the front-load at the end of Period A); and
(3) for Period B, the prices set out in Exhibit B without
alteration.
The pricing shall revert to the original pricing (with
the adjustment described in the next paragraph if either the
Plant again meets the definition of a "co-generation facility" as
described in (e)(i) of this Article or, within ninety (90) days
of the institution of revised pricing, Seller provides firm
security in cash or a letter of credit in an amount that will
equal the product of (A) the Plant's DMNC, (B) ninety percent
(.90), (C) the number of hours remaining in the calendar year at
the time revised pricing was instituted, and (D) any positive
difference between the price established by the contract for
electricity delivered during that calendar year and the
Commission's most recent estimate of Buyer's long-run avoided
costs for such year. When such security is posted, Buyer shall
pay Seller the difference between the contract price and the
revised pricing for the period the Seller received the revised
pricing. Thereafter, unless the Plant again meets the definition
of a "co-generation facility" as described in e(i) of this
Article, such firm security shall be posted no later than
January 1 each year in an amount that, together with such value,
if any, as the Commission shall accord to the subordinated
mortgage held by Buyer, will equal any positive number resulting
from the following calculations: (1)(A) total payments received
by Seller to date from Buyer for electricity provided from the
time of the loss of "co-generation facility" status pursuant to
this Agreement until December 31 of the preceding year (allowing
for the use of estimates for the month of December) less (B) the
total payments that Seller would have received over the same
period for such electricity at rates equal to Buyer's short-run
avoided costs adjusted for the value of money over time (at the
rate of eleven (11) percent per annum); plus, (2) for the year
beginning on such January 1, the product of (A) the Plant's DMNC,
(B) ninety percent (.90), (C) 8760, and (D) any positive
difference between the price established by the contract for
electricity delivered during the next year and the Commission's
most recent estimate of Buyer's long-run avoided costs for such
year.
In the event that the Seller, having lost status as a
"co-generation facility" as described in e(i) of this Article and
having elected not to provide security as described above,
regains such status during the period that the Seller would have
received six (6) cents but for the loss of cogeneration facility
status, the contract pricing will go back into effect
immediately. Further, during the period that the contract
pricing is six cents and the 1988 long-run avoided costs exceed
six cents, Seller shall receive in addition to the six cents per
kilowatt hour, an amount (the "make-up charge") sufficient to pay
the Seller the difference between the contract price and the
revised pricing for the period that Seller was receiving the
revised pricing, adjusted for the value of money over time at the
rate of eleven-twelfths (11/12) of a percent per month (the
"short-fall") (the make-up charge to be calculated as a uniform
monthly payment that will completely amortize the shortfall at
the end of Period A).
The rights of lenders to Seller to cure a breach of any
obligation of Seller not enumerated in this Article XIII and/or
to forestall termination of this Agreement by Buyer for a
material breach of this Agreement by Seller not enumerated in
this Article XIII are addressed in the Security exhibit to this
Agreement.
Article XIV. Indemnification and Insurance
Each party shall indemnify, save harmless and defend
the other its directors, trustees, agents, officers, and
employees, against all claims, demands, judgments and associated
costs and expenses, related to property damage, bodily injuries
or death suffered by third parties resulting from any act or
failure to act by such party related to this Agreement.
Buyer, at its cost and expense, shall maintain and keep
in full force and effect:
(a) Commercial general liability insurance in the
amount of at least $1,000,000 per occurrence for bodily injury
and property damage resulting from the operations of Buyer; and
(b) Statutory workers' compensation insurance and
employer's liability insurance.
Buyer reserves the right to self-insure either all or
any portion of the foregoing coverages.
Seller, at its cost and expense, shall maintain and
keep in full force and effect the following insurance with
respect to the Plant:
(a) Commercial general liability insurance in the
amount of at least $1,000,000 per occurrence for bodily injury
and property damage resulting from the operations of Seller's
facilities; and
(b) Statutory workers' compensation insurance and
employer's liability insurance.
Upon a showing satisfactory to Buyer that Seller has
sufficient net worth to self-insure for purposes of this Article,
Seller shall have the right to self-insure either all or any
portion of the foregoing coverages so long as there is no
material decrease in said net worth, or means, which renders the
same insufficient for purposes of self-insurance. Seller shall
arrange to have its insurance carriers send Buyer a copy of all
notices affecting Seller's insurance coverages required under
this Article.
Seller, if not self-insured, shall be required to
provide annually to Buyer certificates of insurance demonstrating
that the required coverage has been obtained for the ensuing
year. Buyer, if not self-insured, shall notify Seller of this
fact, states in such notice whether it has the insurance
coverages required under this Article, and shall promptly notify
Seller of any reductions in such coverage. Each party, if self-
insured, shall be required to provide the other party with annual
reports of its financial condition and to notify the other party
immediately of any material adverse changes, and to purchase
insurance from outside carriers, if and to the extent that its
net worth or means becomes insufficient for purposes of self-
insurance.
Article XV. Access to Seller's Property
Seller shall grant to Buyer, for no additional
consideration, for the term of this Agreement all rights,
privileges, rights-of-way and easements to construct, install,
operate, maintain, repair, replace, inspect and remove Buyer's
equipment and facilities as are necessary solely for the purpose
of receiving electricity under this Agreement, including adequate
and continuing access rights on property of Seller, and Seller
agrees to execute such other grants, deeds or customary documents
as may reasonably be required to enable Buyer to record such
rights-of-way and easements and to record notice, if and to the
extent permissible under New York law, that this Agreement must
be assigned to and assumed by any purchaser of the Plant as a
condition of transfer of legal title to the Plant.
In the event the parties agree that it is necessary
that any part of the Buyer's facilities solely for the purpose of
receiving electricity under this Agreement is to be installed on
property owned by other than Seller or Buyer, Seller shall, at
its cost and expense, procure from the owner thereof all
necessary rights-of-way and easements for the construction,
operation, maintenance, replacement and removal of Buyer's
facilities upon such property in a recordable form reasonably
satisfactory to Buyer. Buyer shall cooperate with Seller with
respect to Seller's acquisition of such rights-of-way and
easements.
The parties' duly authorized agents or representatives
shall, at all reasonable hours, have access to the premises of
Seller or Buyer for the purpose of (i) inspecting the operation
of the Plant, and (ii) inspection all records and documents
relating to the energy generated by Seller at the Plant delivered
to Buyer's system.
The parties agree that they will not construct any
facilities or structures or engage in any activities that will
materially interfere with the rights granted to the parties under
this Agreement, subject to the provisions of Article IX.
Article XVI. Force Majeure
The term "force majeure" as used herein, shall include,
but not be limited to, acts of God, defects in the design or
manufacture of the gas turbine generator rotor and stator, steam
turbine rotor, steam turbine generator rotor and stator, and main
transformers of the Plant (but only where such defect was not
reasonably discoverable by the party claiming force majeure and
Seller provides supporting documentation to Buyer regarding such
defect), fires, floods, storms, strikes, labor disputes, riots,
insurrections, acts of war (whether declared or otherwise), acts
of governmental, regulatory, or judicial bodies, or any other
causes beyond the reasonable control of and without the fault or
negligence of the party claiming force majeure.
Except as otherwise provided, if because of force
majeure either party is rendered wholly or partly unable to
perform its obligations under this Agreement, except for the
obligation to make payments of money, that party shall be excused
from whatever performance is affected by the force majeure to the
extent so affected, provided, however, that such event shall not
affect the rates applicable to Seller under Article V; provided
further that:
(a) The non-performing party, within fourteen (14)
days after it becomes aware or should have become aware that it
would be unable to perform, gives the other party written notice
describing the particulars of the occurrence;
(b) The suspension of performance is of no greater
scope and of no longer duration than is required by the force
majeure;
(c) No obligations of either party which arose before
the occurrence causing the suspension of performance are excused
as a result of the occurrence; and
(d) The non-performing party endeavors to remedy its
inability to perform. This subparagraph shall not require the
settlement of any strike, walkout, lockout or other labor dispute
on terms which, in the sole judgment of the party involved in the
dispute, are contrary to its interest. It is understood and
agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be entirely within the discretion of
the party having the difficulty.
Article XVII. Assignment or Transfer
Neither this Agreement nor any rights hereunder may be
assigned or transferred, by operation of law or otherwise, by
Seller without the prior written consent of Buyer, which consent
shall not be unreasonably withheld, except as provided
hereinafter. Other than for collateral security purposes in
connection with the financing or refinancing of the Plant, if the
Plant is to be sold, assigned or transferred to any entity, this
Agreement shall be assigned to and assumed by the purchaser,
assignee or transferee in accordance with this Article as a
condition to the effectiveness of the sale, assignment or
transfer.
Upon fifteen (15) days' prior written notice to Buyer,
Seller may, without the consent of Buyer, assign this Agreement
for collateral security purposes in connection with the financing
or refinancing of the Plant. Such prior notice to Buyer shall
specify the entity to whom payments under Article IV are to be
made subsequent to the effective date of the assignment.
If Seller has not been notified in writing by Buyer
that Seller is in breach of this Agreement under Article XIII,
Seller may also assign this Agreement without the consent of
Buyer, subject to the following conditions. Seller shall provide
at least thirty (30) days' prior to the effective date of the
proposed assignment: (1) an assignment and assumption agreement
duly executed by Seller and the assignee in the form of Exhibit C
hereto, providing that the assignee unconditionally assumes, and
agrees to be bound by, all of the terms and conditions of this
Agreement, and whereby the assignee makes certain additional
representations, warranties and covenants, and, upon request, (2)
a favorable opinion of counsel for the assignee respecting the
matters set forth in item (1) above in the form of Exhibit D
hereto.
Article XVIII. Approval of Agreement
Each party to this Agreement acknowledges that the
effectiveness of this Agreement, other than the provisions of
Article XXI, paragraph (k), is conditioned upon approval by the
Commission.
After execution of this Agreement by the parties, Buyer
promptly shall submit this Agreement to the Commission for its
approval and for authorization to recover all payments to Seller
by Buyer hereunder through Buyer's fuel adjustment clause.
In the event that the Commission conditions its
approval of this Agreement on any change to this Agreement
(including the Exhibits thereto), this Agreement shall become
effective only upon agreement of the parties to the change or
changes required by the Commission. In the event the Commission
disapproves this Agreement or conditions its approval of this
Agreement to provide for less than full recovery by Buyer,
through its fuel adjustment clause, of any payments made by Buyer
to Seller under this Agreement, then this Agreement shall become
null and void without either party becoming liable to the other;
provided, however, that this provision does not constitute a
waiver by Seller of the right to appeal or challenge any order
disapproving or conditionally approving this Agreement or of its
right to have this Agreement become effective if such appeal or
challenge is successful.
Article XIX. Amendments, Approval of Amendments
This Agreement shall not be amended unless such
amendment shall be in writing and signed by the parties. Any
such amendment shall not become effective as to the parties or
their successors unless and until such amendment is approved by
the Commission.
In the event that the Commission conditions its
approval of any amendment on any change to such an amendment or
to this Agreement, the proposed amendment shall become effective
only upon agreement of the parties to the changes required by the
Commission. In the event the Commission disapproves the
amendment, such amendment shall become null and void without
either party becoming liable to the other; provided, however,
that this provision does not constitute a waiver by Seller of the
right to appeal or challenge any order disapproving or
conditionally approving such an amendment, or of its right to
have the amendment become effective if such challenge or appeal
is successful.
Approval of any amendment by the Commission pursuant to
this Article must be accompanied by authorization by the
Commission of the full recovery through Buyer's fuel adjustment
clause of all payments to Seller by Buyer under this Agreement
relating to such amendment.
Article XX. Applicable Avoided Cost Payments Upon Termination
In the circumstances described below, Seller shall pay
to Buyer the cumulative positive difference, with interest at the
contract interest rate specified in Article VI, of (A) the
payments made by Buyer to purchase Seller's electricity, minus
(B) the amount Buyer would have paid to Seller if the same amount
of electricity had been purchased at a rate equal to Buyer's
applicable avoided cost:
(a) If, after the Commercial Operation Date, Buyer
shall terminate this Agreement pursuant to Article XIII. Breach;
Cure; Dispute Resolution, or due to any other material breach of
this Agreement by Seller giving rise to a right of Buyer to
terminate this Agreement, the above stated payment shall be made
after such termination and the applicable avoided cost shall be
Buyer's short-run avoided costs as defined in Exhibit H at the
time the electricity was delivered.
(b) If Seller shall terminate this Agreement pursuant
to Article IX. Rearrangement, Relocation, Retirement or
Abandonment of Buyer's Facilities, the above stated payment shall
be made after such termination and the applicable avoided cost
shall be Buyer's long-run avoided cost as estimated by the
Commission in its 1988 Order in Case 28962.
Article XXI. Miscellaneous Provisions
(a) Binding Effect. This Agreement and any extension
shall inure to the benefit of and, other than assigns pursuant to
an assignment for collateral security related purposes in
connection with financing or refinancing the Plant pursuant to
Article XVII, shall be binding upon the parties and their
respective successors and assigns.
(b) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
(c) Notices. Where written notice is required by this
Agreement, all notices, certificates or other communications
hereunder shall be in writing and shall be deemed given when
mailed by United States registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
(1) To Seller:
President
Saranac Energy Company, Inc.
Five Post Oak Park
Suite 1400
Houston, Texas 77027
(2) To Buyer:
Vice President Marketing Services
New York State Electric & Gas Corporation
4500 Vestal Parkway East
P.O. Box 3607
Binghamton, New York 13902-3607
or to such other and different address as may be designated by
the parties.
(d) Prior Agreements Superseded. This Agreement shall
completely and fully supersede all other prior understandings or
agreements, both written and oral, between the parties relating
to the subject matter hereof.
(e) Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
(f) Waiver. No delay or omission in the exercise of
any right under this Agreement shall impair any such right or
shall be taken, construed or considered as a waiver or
relinquishment thereof, but any such right may be exercised from
time to time and as often as may be deemed expedient. In the
event that any agreement or covenant herein shall be breached and
thereafter waived, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other
breach hereunder.
(g) Fuel Supply Contract. Within six (6) months from
the date of Commission approval of this Agreement pursuant to
Article XVII, or within six (6) months from the date of approval
of the application of Seller or its affiliate for authorization
to construct the natural gas pipeline from the United States-
Canada border to the Plant pursuant to Article VII of the New
York Public Service Law ("Gas Pipeline Approval"), whichever is
later but in no event less than six (6) months prior to the
Commencement Date, Seller shall provide Buyer with the material
terms proposed for the fuel supply and transmission contracts for
the Plant. As soon as reasonably possible after receipt of the
contract terms, Buyer shall advise Seller of the date, not to
exceed ninety (90) days, after receipt by Buyer of such
contracts, by which Buyer shall determine whether Seller's fuel
supply and transmission contract terms demonstrate that Buyer can
reasonably expect that Seller will operate the Plant for the term
of this Agreement. Buyer shall make this determination based on
various factors which shall include, but not be limited to, the
following:
(a) term of fuel supply and transmission contracts;
(b) price of fuel supply;
(c) quantity/quality of fuel supply;
(d) availability of fuel supply;
(e) transmission/curtailment of fuel deliveries; and
(f) assumability/assignment of fuel supply and
transmission contracts by Buyer.
Prior to the date of the closing of construction
financing, Seller shall supply Buyer with copies of the
unexecuted fuel supply and transmission contracts for the Plant.
Within thirty (30) days of receiving such contracts, Buyer shall
notify Seller (1) whether the terms of such contracts are, in any
respect material to the above determination, different from the
terms that Buyer previously reviewed pursuant to this paragraph
(g) and (2) which provisions are different, and (3) in what
respect those provisions are different.
If Buyer fails to provide its assessment of the
proposed contract terms within ninety (90) days of receipt of
such proposed terms, or if Buyer fails to notify Seller whether
the unexecuted final contracts are different in any material
respect from the proposed terms within thirty (30) days of
receipt of such contracts, then the proposed terms or actual
contracts, as the case may be, shall be deemed sufficient. If
Buyer reasonably determines that the unexecuted contracts do
differ in some material respect from the proposed contract terms,
Buyer shall have an additional ninety (90) days to complete its
assessment of such different terms. Buyer agrees that if the
terms of the actual contracts are not in any material respect
inferior to or different from the proposed contract terms
previously deemed sufficient by Buyer, the Buyer shall have no
right to object to such actual fuel supply and transmission
contracts.
The parties contemplate that the submission of proposed
contract terms may be piecemeal, and may be repeated by the
submission of new and different proposed contract terms, in whole
or in part, prior to submission of unexecuted contracts. In such
event, Buyer will assess such partial or substitute proposed
contract terms in the manner and on the schedule set out above.
Seller hereby agrees to reimburse Buyer for the costs
of engaging consultants selected by Buyer if use of such
consultants to assess proposed contract terms or review
unexecuted contracts is necessary to expedite the assessment and
review process. In the event of a dispute regarding Buyer's
evaluation of Seller's fuel supply and transmission contracts
pursuant to this paragraph (g), such disputes shall be subject to
Commission review.
On or before seven (7) days after the date of the
closing of construction financing, Seller shall supply Buyer with
copies of the fully executed fuel supply and transmission
contracts for the Plant. Notwithstanding any other provision of
this Agreement, Buyer may object to the fully executed fuel
supply and transmission contracts under the same standards
established for the proposed terms originally provided to Buyer,
if and only if such executed contracts are not in all material
respects comparable to the unexecuted contracts previously
provided to Buyer. Seller shall also provide Buyer promptly with
any and all amendments, modifications and/or revisions to such
contracts.
In the event that the Seller is unable to comply with
the requirement of this Paragraph, this Agreement shall at the
option of the Buyer become null and void without liability or any
description, kind or nature whatsoever by either party to the
other.
All fuel supply and transportation contract
information, specifically designated as confidential and
proprietary at the time it is provided, shall remain the property
of and shall be returned to the providing party when this
Agreement is terminated. Any such confidential or proprietary
information disclosed by either of the parties to the other party
shall be regarded as strictly confidential and shall not, without
the specific prior written consent of the providing party in each
instance, be disclosed to any third party.
Confidentiality or proprietary status shall not apply
to such information if a party can show that:
(1) At any time of disclosure such information was
readily available to the public; or
(2) Subsequent to the time of disclosure such
information became readily available to the public
through no fault of the receiving party; or
(3) Such information has been made known to the
receiving party by a third party in accordance
with such third party's rights without any
restriction on disclosing; or
(4) Such information was in the receiving party's
possession prior to disclosure thereof to the
receiving party by the providing party.
Further, such information may be disclosed as required
by law or regulatory authority exercising jurisdiction over the
receiving party; provided, however, the receiving party shall use
its best efforts to preserve the privileged status of the
confidential and proprietary information through any lawful means
available.
(h) Construction and Commercial Operations. The
Seller must commence construction of the Plant no later than
thirty-six (36) months after the later of (1) Commission approval
of this Agreement pursuant to Article XVIII or (2) Gas Pipeline
Approval. The Commencement Date must occur no later than sixty
(60) months after Commission approval of this Agreement pursuant
to Article XVIII. Seller's obligation to commence construction
and achieve the Commencement Date no later than the
aforementioned milestones shall not be suspended due to force
majeure pursuant to Article XVI. In the event that the Seller is
unable to comply with the requirements of this Paragraph, this
Agreement shall at the option of the Buyer become null and void
without liability of any description, kind or nature whatsoever
by one party to the other.
(i) Deposit. Within six (6) months from the date of
commission approval of this Agreement pursuant to Article XVIII,
the Seller shall post with the Buyer a deposit of $4 for each KW
of Plant capacity -- 79,800 KW ($319,200). Within eighteen (18)
months from the date of approval of this Agreement pursuant to
Article XVIII, the Seller shall post with the Buyer an additional
deposit of $6 for each KW of Plant capacity ($478,800). Not
later than the last day for commencement of construction
specified by Article XXI(h), and in no event later than the last
day of the fifty-second (52nd) month following Commission
approval of this Agreement, the Seller shall post an additional
deposit of $5 for each KW of Plant capacity ($399,000). All such
deposits shall hereinafter be referred to collectively as the
"Deposit." The Deposit shall be in the form of cash or an
irrevocable letter of credit, mutually satisfactory in form and
content to Buyer and Seller under the standards of the
Commission's Opinion and Order Establishing Milestone and
Contract Conversion Procedures (Opinion No. 88-28 issued
November 10, 1988), from a financial institution rated at least
AA for a term that extends ten days beyond the scheduled
Commercial Operation Date of the Plant. If the Deposit is in
cash, the Buyer will hold the Deposit in escrow and invest it in
the Certificate of Deposit or U.S. Treasury Bill of the Seller's
choice; provided, however, the instrument must mature on or
before the Commercial Operation Date of the Plant. The Deposit
will be refunded, with interest, when the Plant achieves the
Commercial Operation Date. In the event that the Seller is
unable to comply with the requirement of this Paragraph, this
Agreement shall at the option of the Buyer become null and void
without liability of any description, kind or nature whatsoever
by Buyer to Seller. Buyer understands that Seller will seek from
the Commission the right to a refund of the deposit in the event
that Gas Pipeline Approval is denied.
(j) Usury Savings Clause. If any provision of this
Agreement or the Exhibits hereto calling for the payment of
interest shall require the payment of an amount of interest that
would be in excess of the maximum amount allowed by applicable
law, then the provision shall be interpreted and applied,
automatically and without further action by the parties thereto,
to require payment of not more than the maximum amount permitted
by applicable law.
(k) Interconnection Costs Reimbursement. In the event
Seller requests Buyer to perform any work, studies or analysis
for purposes of determining the interconnection or other
requirements necessary for the parties to perform their
obligations under this Agreement, Buyer shall perform such work,
studies or analysis and shall be reimbursed by Seller for costs
incurred therewith. The parties agree that this provision shall
be binding and effective without regard to any other provision of
this Agreement.
IN WITNESS WHEREOF, the Seller and Buyer have caused
this Agreement to be executed by their proper officers thereunto
duly authorized and their respective corporate seals to be
hereunto affixed and attested as of the date first above written.
IN WITNESS WHEREOF, the Seller and Buyer have caused
this Agreement to be executed by their proper officers thereunto
duly authorized and their respective corporate seals to be
hereunto affixed and attested as of the date first above written.
SARANAC ENERGY COMPANY, INC.
Attest:
By: __/s/ Melanie Gooch______ By: _/s/ David H. Dewhurst____
Name:Mwlanie Gooch Name: David H. Dewhurst
Title: Corporate Secretary Title: President
NEW YORK STATE ELECTRIC & GAS
CORPORATION
Attest:
By: /s/ D.W. Farley By: _/s/ B. M. Rider______
Name: D.W. Farley Name: B. M. Rider
Title: Corporate Secretary Title: Senior Vice President
STATE OF TEXAS )
) ss:
COUNTY OF HARRIS )
On this 26th day of April, 1990, before me personally
came David H. Dewhurst, to me personally known, who, being by me
duly sworn, did depose and say that he resides at 1121 H Post Oak
Park, Houston, Texas, and that he is the President of SARANAC
ENERGY COMPANY, INC. the corporation named in and which executed
the foregoing instrument; that he knows the corporate seal of
said corporation; that the seal affixed to said instrument is the
corporate seal of said corporation; that said seal was affixed to
said instrument on behalf of said corporation by authority of its
Board of Directors or By-Laws; and that he signed his name
thereto by like authority.
__/s/________________________
STATE OF NEW YORK )
) ss:
COUNTY OF BROOME )
On this 27th day of April, 1990, before me personally
came Bernard M. Rider, to me personally known, who, being by me
duly sworn, did depose and say that he resides at 23 Crescent
Drive, Apalachin, N.Y., and that he is a Senior Vice President of
NEW YORK STATE ELECTRIC & GAS CORPORATION, the corporation named
in and which executed the foregoing instrument; that he knows the
corporate seal of said corporation; that the seal affixed to said
instrument is the corporate seal of said corporation; that said
seal was affixed to said instrument on behalf of said corporation
by authority of its Board of Directors or By-Laws; and that he
signed his name thereto by like authority.
_/s/ Jeanette F. Holbert__
AMENDMENT NO. 1 TO
POWER PURCHASE AGREEMENT
BETWEEN
NEW YORK STATE ELECTRIC & GAS CORPORATION
AND
SARANAC ENERGY COMPANY, INC.
This Amendment No. 1 made the 29th day of August, 1991
by and between New York State Electric & Gas Corporation
("Buyer"), a corporation organized under the Transportation
Corporations Law of the State of New York, and Saranac Energy
Company, Inc. ("Seller"), a corporation organized under the law
of the State of Texas, hereby amends that certain power purchase
agreement between Buyer and Seller, dated as of April 27, 1990
(the "Agreement").
WITNESSETH:
WHEREAS, Buyer and Seller entered into the Agreement
and, pursuant to the terms thereof, submitted the Agreement to
the Public Service Commission ("Commission") for approval and for
authority to recover all direct power purchase costs incurred
under the Agreement pursuant to the Buyer's fuel adjustment
clause; and
WHEREAS, the Commission, by an Order Approving
Contracts Subject to Conditions, dated March 5, 1991 ("Order"),
approved the Agreement contingent upon certain conditions and
subsequently issued an Order Granting Rehearing in Part and
Directing Filing of a Contract Supplement, dated July 12, 1991
("Rehearing Order"), which, among other things, directed the
filing of a contract supplement within forty-five (45) days of
the Rehearing Order that would implement the Commission's
directives in the Rehearing Order and Order (to the extent
consistent with the Rehearing Order); and
WHEREAS, the Order and Rehearing Order state that Buyer
shall be permitted to recover all direct purchase costs incurred
pursuant to the Agreement, as modified pursuant to the Order and
Rehearing Order; and
WHEREAS, Buyer and Seller desire to amend the Agreement
in order to comply with the directives of the Order and Rehearing
Order.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration given one party to the
other, the sufficiency of which each party acknowledges, Buyer
and Seller agree as follows:
1. In order to reflect Seller's decision to develop a
single, consolidated project at the site of the Georgia-Pacific
Corporation in Plattsburgh, N.Y. in accordance with the Rehearing
Order, the following modifications are made to the Agreement:
a. The second WHEREAS clause on page 1 of the
Agreement is deleted in its entirety and replaced with the
following:
WHEREAS, Saranac Energy Company, Inc., (or
its assignee pursuant to Article XVII of this
Agreement) ("Seller"), proposes to construct, own,
and operate a natural gas fired cogeneration plant
and appurtenant facilities located in Clinton
County, New York as more specifically defined in
exhibit A "site plan" (the "Plant"), which is
designed to generate nominally 225 MW but not to
exceed 240 MW of capacity (net of station uses)
and to generate approximately 1,971,000 MWH of
electric energy annually (individually and
collectively referred to as "electricity") for
delivery to the electric system of Buyer with
which the Plant will be physically interconnected
to the extent committed under Article III of this
Agreement; and
b. The WHEREAS clause carrying over from page 1 to
page 2 of the Agreement is deleted in its entirety and replaced
with the following:
WHEREAS, the Plant will be a qualifying
facility under the Federal Power Act, as amended
by the Public Utility Regulatory Policies Act of
1978 ("PURPA"), as defined in 16 U.S.C. Section
796, and the regulations promulgated thereunder as
in effect on the date of this Agreement, except
that the Plant shall be required to comply with
amendments to said law and regulations
specifically made retroactive to the Plant; and
c. The last WHEREAS clause on page 2 of the Agreement
is revised to read as follows:
WHEREAS, Buyer, pursuant to the Order and
Rehearing Order, agrees to purchase electricity
generated by the Plant on the terms and conditions
set forth herein and therefore is willing to enter
into this Agreement with Seller.
d. Subparagraph (b) of Section 1.1 of Article I of the
Agreement is deleted in its entirety and replaced with the
following:
(b) Seller represents, covenants and
warrants that if the Plant is constructed, Seller
shall own and operate the Plant during the term of
this Agreement and that the Plant will have a
nominal rated capacity of approximately 225 MW and
in no event will exceed 240 MW of capacity (net of
station uses) and is projected to generate
approximately 1,971,000 MWH of electric energy
annually, and that this Agreement shall be binding
for the term hereof on Seller. Seller represents
and further warrants that, at the time of the
Commercial Operation Date (as herein defined) of
the Plant and at all times hereafter during the
term of this Agreement, the Plant will be a
qualifying facility under the Federal Power Act,
as amended by PURPA, and the regulations
promulgated thereunder as in effect on the date of
this Agreement, except that the Plant shall be
required to comply with amendments to said law and
regulations specifically made retroactive to the
Plant.
e. Subparagraph (e) of Article XIII of the Agreement
is deleted in its entirety and replaced with the following:
(e) The rights of lenders to Seller to cure
a breach of any obligation of Seller not
enumerated in this Article XIII and/or to
forestall termination of this Agreement by Buyer
for a material breach of this Agreement by Seller
not enumerated in this Article XIII are addressed
in the Security exhibit to this Agreement.
2. Subparagraph (c) of Section 1.1 of Article I of the
Agreement is deleted in its entirety and replaced with the
following:
(c) Seller represents, covenants and
warrants that, to the best of Seller's knowledge,
information and belief then available at the time
of the Commercial Operation Data of the Plant.
Seller will be in material compliance with, all
laws, judicial and administrative orders, rules
and regulations, with respect to the ownership and
operation of the Plant, including but not limited
to the following: all requirements to obtain and
comply with the conditions of any applicable
certificates, licenses, permits, and governmental
approvals; the requirements of the Order and
Rehearing Order; the filing of all applicable
environmental impact analyses; and, if applicable
and required by law, the mitigation of
demonstrable environmental impacts.
3. Section 1.3 of Article I of the Agreement is
deleted in its entirety and replaced with the following:
On or before October 10, 1991, each party
shall furnish the other a favorable opinion of its
counsel, in the form of Exhibits F and G, and
otherwise in compliance with the Commission's
"Order Approving Contracts Subject to Conditions,"
issued March 5, 1991, and "Order Granting
Rehearing in Part and Directing Filing of a
Contract Supplement," issued July 12, 1991,
respecting certain representations made by the
party furnishing the opinion.
4. In order to comply with the Commission's directive
that language providing that the Commission will arbitrate
contract breach disputes and fuel supply/transportation disputes
be deleted, the following modifications are made to the
Agreement:
a. The phrase "subject to the dispute resolution
procedure in Article XIII(c)" is deleted from the carry over
sentence on the bottom of page 17 of the Agreement and is
replaced with the phrase "subject to the Seller's right to
petition the Commission for a determination that such facts are
necessary."
b. Subparagraph (a) of Article XIII of the
Agreement is deleted in its entirety and replaced with the
following:
(a) The sale by Seller to a party, or diversion
by Seller for electricity committed to Buyer by
under Article III without the approval of Buyer,
shall constitute a breach, as a result of which
breach Buyer may, in its discretion, upon sixty
(60) days' written notice to Seller specifying the
reason(s) and the basis for terminating the
Agreement, treat the Agreement as terminated and
all obligations to purchase and pay for
electricity (other than electricity provided prior
to the date of termination) extinguished;
provided, however, that such notice must be sent
within (1) year after actual discovery by Buyer of
the facts giving rise to the claim of breach. The
rights of lenders to Seller to cure such a breach
and/or to forestall termination by Buyer pursuant
to this paragraph are addressed in the Security
exhibit to this Agreement.
c. Subparagraph (b) of Article XIII of the Agreement
is deleted in its entirety and replaced with the following:
(b) Upon the discovery, by a party either
that a material, factual representation made in
this Agreement by the other party as a basis for
the party's willingness to enter into this
Agreement, or made by such other party's assignee,
has been falsely made and the falsehood was made
wilfully, knowingly or with a reckless disregard
for its truth or falsity, or that a material
warranty under Article I of this Agreement has
been wilfully and knowingly breached, the party
may terminate this Agreement; provided, however,
that the party seeking to terminate the Agreement
must terminate the Agreement within one (1) year
after actual discovery by that party of the facts
giving rise to the claim herein. The rights of
lenders to Seller to cure such breach and/or to
forestall termination by Buyer pursuant to this
paragraph are addressed in the Security exhibit to
this Agreement.
d. Subparagraph (c) of Article XIII of the Agreement
is deleted in its entirety and replaced with the following:
(c) Under events 1-7 enumerated below, the
identified act, failure or omission by Seller or
Buyer will constitute a breach of this Agreement.
Seller or Buyer shall notify the other party in
writing, which notice shall specify the nature of
the act, failure or omission and the evidence
supporting the claim; provided, however, that such
notice must be sent within one (1) year after
actual discovery by the party seeking to terminate
this Agreement of the facts giving rise to the
claim herein. Following such notice, the other
party and, in the case of breach by Seller,
Seller's secured lenders, shall have a sixty (60)
day period in which to cure the act, failure or
omission, or, if the breach cannot be cured
through diligent action within the sixty (60) day
period, to work diligently to cure the breach. In
the latter event, the breaching party shall notify
the party alleging the breach of the additional
period necessary to cure the breach, and the party
alleging the breach shall either agree with such
additional period as the non-breaching party
believes is reasonable or disagree in writing with
the additional requested period within seven (7)
working days of receipt of notice from the party
alleged to be in breach. In the event the party
alleged to be in breach fails to cure either
within (a) said sixty (60) day period, (b) seven
(7) working days of receipt by the party alleged
to be in breach of written notice from the non-
breaching party that the non-breaching party does
not accept the extension of the cure period
claimed to be necessary by the party alleged to be
in breach, or (c) the additional necessary period
agreed to in writing by the non-breaching party,
this Agreement may be terminated by the party
alleging the breach. Upon such termination, all
further obligations to pay any amounts previously
owed to the other party) shall be extinguished:
1. An assignment of this Agreement or any rights
created by it is made in violation of the
provisions of Article XVII.
2. A failure to Comply with any material
provision of either Article XI or the Buyer's
Bulletin described in Article VIII.
3. A failure to grant or obtain rights-of-way or
easements or to execute documents as required
by this Agreement.
4. A failure by one party to make payments when
due, when such payments due reach a level
which cannot be offset by any payments due
and owing that party by the other party for
services rendered, equipment supplied or
electricity purchased in any one month.
5. A failure to maintain, or an intentional or
knowing material impairment of, any security
which is provided to secure payments for
electricity, including, but not limited to,
any refusal to surrender possession of the
Plant pursuant to a security provision
granting Buyer a right to possession.
6. A failure by Seller for a period of sixty
(60) days to use good faith efforts to resume
the delivery of electricity pursuant to this
Agreement after the Plant has ceased
operating.
7. A failure by Seller to deliver to Buyer an
accurately executed "Independent Power
Producer Generator Notice," Buyer's Form NB
232, within ninety (90) days from the date of
execution of the Agreement.
The rights of lenders to Seller to cure such
a breach and/or to forestall termination
pursuant to this paragraph (c) are addressed
in the Security exhibit to this Agreement.
5. In order to comply with the Commission's
directives relative to the timing of the submission of a fuel
supply contract and relative to the settlement of disputes
regarding the adequacy of fuel supply and transmission
arrangements, the texts of the first six paragraphs of
subparagraph (g) of Article XXI of the Agreement are deleted in
their entirety and replaced with the following:
(g) At any time after the execution hereof,
seller may provide Buyer with the material terms
or unexecuted contracts proposed for the fuel
supply and transmission contracts for the Plant.
As soon as reasonably possible after receipt of
such contracts or terms, Buyer shall advise Seller
of the date, not to exceed ninety (90) days after
receipt by Buyer of such contracts or terms, by
which Buyer shall determine whether Seller's fuel
supply and transmission contracts or terms
demonstrate that Buyer can reasonably expect that
Seller will operate the Plant for the term of this
Agreement. Buyer shall make this determination
based on various factors which shall include, but
not be limited to, the following:
(a) term of fuel supply and transmission
contracts;
(b) price of fuel supply;
(c) quantity/quality of fuel supply;
(d) availability of fuel supply;
(e) transmission/curtailment of fuel deliveries;
and
(f) assumability/assignment of fuel supply and
transmission contracts by Buyer.
Prior to the last day on which Seller is
permitted to commence construction under Article
XXI(h), hereof, Seller shall supply Buyer with
copies of the executed fuel supply and
transmission contracts for the Plant. Provided
Buyer has previously reviewed material terms or
unexecuted contracts, then within thirty (30) days
of receiving such executed contracts, Buyer shall
notify Seller (1) whether the terms of such
contracts are, in any respect material to the
above determination, different from the contracts
or terms that Buyer previously reviewed pursuant
to this paragraph (g), (2) which provisions are
different, and (3) in, what respect those
provisions are different.
If Buyer fails to provide its assessment of
the proposed contracts or terms within ninety (90)
days of receipt of such proposed contracts or
terms, or if Buyer has previously reviewed
material terms or unexecuted contracts and Buyer
fails to notify Seller whether the executed final
contracts are different in any material respect
from the proposed terms within thirty (30) days of
receipt of such executed contracts, then the
proposed terms or executed contracts, as the case
may be, shall be deemed sufficient. If Buyer
reasonably determines that the executed contracts
do differ in some material respect from the
proposed contracts or terms, Buyer shall have an
additional ninety (90) days to complete its
assessment of such different terms. Buyer agrees
that if the terms of the executed contracts are
not in any material respect inferior to or
different from the proposed contracts or terms
previously deemed sufficient by Buyer, the Buyer
shall have no right to object to such executed
fuel supply and transmission contracts.
The parties contemplate that the submission
of proposed contracts or terms may be piecemeal,
and may be repeated by the submission of new and
different proposed contracts or terms, in whole or
in part, prior to submission of executed
contracts. In such event, Buyer will assess such
partial or substitute proposed contracts or terms
in the manner and on the schedule set out above.
Seller hereby agrees to reimburse Buyer for
the costs of engaging consultants selected by
Buyer if use of such consultants to assess
proposed contract terms or review contracts is
necessary to expedite the assessment and review
process.
On or before the last day on which Seller is
permitted to commence construction under Article
XXI(h), hereof, Seller shall supply Buyer with
copies of the fully executed fuel supply and
transmission contracts for the Plant.
Notwithstanding any other provision of this
Agreement, Buyer may object to the fully executed
fuel supply and transmission contracts under the
same standards established for the proposed terms
originally provided to Buyer, if and only if such
executed contracts are not in all material
respects comparable to the material terms or
unexecuted contracts previously provided to Buyer.
Seller shall also provide Buyer promptly with
any and all amendments, modifications and/or
revisions to such contracts.
6. Subparagraph (a) of Article XIV on page 42 of the
Agreement is deleted in its entirety and replaced with the
following:
(a) Commercial general liability
insurance in the amount of at least
$5,000,000 per occurrence for bodily
injury and property damage resulting
from the operation of Seller's
facilities; and
7. The text of Article XIX of the Agreement shall be
deleted in its entirety and shall be replaced with the following:
Any amendment of this Agreement shall
not be effective unless such amendment
shall be in writing and executed by
Seller and Buyer.
8. In order to comply with the Commission's directive
relative to the commencement of construction and commercial
operation milestones, the following modifications are made to the
Agreement:
a. The text of subparagraph (h) of Article
XXI of the Agreement is deleted in its entirety and replaced with
the following:
(h) Construction and Commercial Operation
Seller must commence construction of the Plant no
later than March 5, 1994 and the Plant must
commence commercial operation no later than March
5, 1996. Seller's obligation to commence
construction and commercial operation of the Plant
no later than the aforementioned milestone dates
shall not be suspended due to force majeure
pursuant to Article XVI. Seller may extend the
commencement of construction date of March 5, 1994
by posting additional deposits as provided by
subparagraph (i) of this Article XXI. Seller may
extend the commencement of commercial operation
date of March 5, 1996 by forfeiting portion of the
Deposits posted, as provided by subparagraph (i)
of this Article XXI. In the event Seller is
unable to comply with either milestone date
established herein, as said milestone date may be
extended pursuant to the terms of this Article
XXI, this Agreement shall, at the option of Buyer,
become null and void without liability of any
description, kind, or nature whatsoever by one
party to the other, and any Deposit posted shall
be deemed forfeited to Buyer, and Buyer may retain
any cash and enforce collection upon any letter of
credit.
b. The text of subparagraph (i) of Article
XXI of the Agreement is deleted in its entirety and replaced with
the following:
(i) Deposit
On or before September .5, 1991, the Seller shall
post with the Buyer a deposit of $4 for each KW of
Plant capacity - 240 MW ($960,000). On or before
September 5, 1992, the Seller shall post with the
Buyer an additional deposit of $6 for each KW of
Plant capacity - 240 MW ($1,440,000). On or
before March 5, 1994, the Seller shall post a
final deposit of $5 for each KW of Plant capacity-
240,000 MW ($1,200,000).
All such deposits posted pursuant to the terms of
this subparaqraph(i) shall hereinafter be referred
to collectively as the "Deposit." The Deposit
shall be in the form of cash or an irrevocable
letter of credit, mutually satisfactory in form
and content to Buyer and Seller under the
standards of the Commission's Opinion and Order
Establishing Milestone and Contract Conversion
Procedures (Opinion No. 88-28, issued November 10,
1988), from a financial institution rated at least
AA for a term that extends at least ten (10) days
beyond the commercial operation milestone date of
March 5, 1996, or ten (10) days beyond any
extension of said commercial operation milestone
date pursuant to the provisions of this
subparagraph (i).
If the Deposit is in cash, the Buyer will hold the
Deposit in escrow and invest it in the Certificate
of Deposit or U.S. Treasury Bill of the Seller's
choice; provided, however, the instrument must
mature on that date that is at least ten (10) days
after the commercial operation milestone date of
March 5, 1996, as that date may be extended
pursuant to the provisions of this subparagraph
(i).
If Seller fails to post any Deposit as required by
the terms of this subparagraph (i), this Agreement
shall at the option of Buyer become null and void
without any liability of any description, kind or
nature whatsoever by Buyer to Seller, and any
Deposit posted shall be deemed forfeited to Buyer,
and Buyer may retain any cash, exclusive of
accrued interest which shall be returned to Seller
on demand, and enforce and collect upon any letter
of credit. Seller's Deposit obligations under
this subparagraph (i) shall not be suspended due
to force majeure pursuant to Article XVI of this
Agreement.
Except for amounts forfeited to obtain an
extension of the commercial operation milestone
date, any Deposits will be refunded, with accrued
interest, and any letter of credit withdrawn, if
the Plant commences commercial operation on or
before the commercial operation milestone date, as
that date may be extended pursuant to the
provisions of this subparagraph (i).
In the event Seller fails to commence construction
of the Plant on or before March 5, 1994, Seller
may elect to secure monthly extensions of that
milestone date, up to a maximum of six (6)
additional months, by posting within seven (7)
business days after March 5, 1994, and within
seven (7) business days of the commencement of
construction milestone date as it is extended by
the prior monthly deposit, additional refundable
deposits in the form of (a) cash, or (b)
irrevocable letter(s) of credit from a financial
institution rated at least AA and in form and
substance satisfactory to Buyer, in an amount
equal to $1 for each kw of Plant capacity - 240 MW
($240,000), for each additional month.
equal to $1 for each kw of Plant capacity - 240 MW
($240,000), for each additional month.
If Seller fails to commence commercial operation
of the Plant on or before March 5, 1996, Seller
may elect to secure monthly extensions of the
commercial operation milestone date, up to a
maximum of twelve (12) additional months, by
forfeiting irrevocably to Buyer a portion of the
Deposit posted in an amount equal to $1 for each
kw of Plant capacity - 240 MW ($240,000) for each
monthly extension of the commercial operation
milestone date.
9. The text of Exhibit A - Project Description to the
Agreement is deleted and replaced with the revised Exhibit A
attached hereto as Appendix I.
10. Exhibit A-3 to the Agreement is deleted in its
entirety and replaced with the following:
Buyer having the responsibility to arrange
for the transmission or wheeling of electricity
generated by the Plant (which will produce
approximately 225 MW of electricity, not to exceed
240 MW net of station uses) to the extent
necessary or desirable for the operation of
Buyer's system after such electricity is delivered
to Buyer pursuant to this Agreement, but both the
probable amount of costs for such transmission and
the responsibility therefor being in dispute
between Buyer and Seller; and Seller requiring a
predetermined liability for such costs in order to
permit financing of the Facility, Buyer and Seller
hereby agree as follows:
1. The terms and conditions set forth in
this Exhibit shall be treated confidentially by
the parties, consistent with applicable legal
requirements, and the parties shall request the
Commission to afford these terms and conditions
trade secret status.
2. If and for so long as Seller is
providing electricity from the Plant to Buyer with
Buyer having the responsibility to arrange and pay
for transmission of up to all of such power to
points outside Buyer's Clinton County service
territory, Seller shall pay to Buyer a Wheeling
Fee calculated in accordance with the following:
If and for so long as Seller is delivering
electricity as described above, one-twelfth of
$4,250,000 per month for the first twelve months
following the Commercial Operation Date.
For each subsequent twelve-month period,
Seller shall pay monthly 105% of the final monthly
payment for the previous twelve-month period. The
monthly payments are illustrated in the following
table:
TABLE A-3
Wheeling Fee
Year Following
Commercial Operation Date Monthly Payment
1 $354,167
2 $371,875
3 $390,469
4 $409,992
5 $430,492
6 $452,016
7 $474,617
8 $498,348
9 $523,265
10 $549,429
11 $576,900
12 $605,745
13 $636,032
14 $667,834
15 $701,226
3. Each monthly payment by Seller shall be
made, in arrears, on or before the first business
day of the following month; and at Buyer's
discretion, if payment has not been received by
Buyer at the time of Buyer's payment to Seller for
power received during the previous billing month,
such monthly payment with interest pursuant to
Article VI of the Agreement from that first
business day may be offset against Buyer's said
monthly payment to Seller. Once begun, payments
under this exhibit, shall be made for a minimum of
two years (twenty-four consecutive months). If
Seller shall fail to make any required payment of
the wheeling Fee to Buyer, Buyer shall notify
lenders to Seller and Seller's parent corporation,
and extend a thirty (30) day grace period to such
entities. Payment of due amounts by any of such
entities shall cure Seller's breach of the
agreement contained in this exhibit and thereby
preserve this agreement concerning transmission
cost payments for Seller; but failure of all such
entities to cure such breach shall not release
Seller from its obligations under the preceding
sentence, and such obligation of Seller shall be
subject to the Security provisions in Exhibit B to
the Agreement.
4. The terms and conditions of this exhibit
are subject to the receipt by Buyer of written
approval by the Commission of the Agreement,
including this exhibit, and assurance from the
Commission that Buyer will be allowed full
recovery of all prudently-incurred transmission or
wheeling costs incurred for transmission or
wheeling of electricity generated by the Plant
during the term of this Agreement over and above
the current Wheeling Fee through Buyer's fuel
adjustment clause; and if such prior rate recovery
authorization is not so received, then this
Agreement, including the terms and conditions set
forth in this exhibit, shall be null and void, in
the same manner as is set forth in Article XVIII.
5. Upon execution of this Agreement, Seller
shall request the Commission to suspend action on
its petition in Case 89-E-171 until Commission
action on this Agreement as a whole, including the
exhibits thereto, and Buyer shall support this
request. Seller shall, upon Commission approval
of the Agreement and this transmission cost
agreement, withdraw its petition pending before
the Commission in Case 89-E-171.
11. The amount of Thirty-Five million dollars
($35,000,000) appearing on pages B-6 and B-8 of the Agreement is
replaced with Thirty Million Five Hundred Thousand Dollars
($30,500,000) dollars.
12. The carry-over paragraph on page B-6 and B-7 of
the Agreement is deleted in its entirety and replaced with the
following:
The above notwithstanding, Seller may refinance
the debt and/or incur additional debt for the
Plant, provided that the principal balance of the
debt resulting from such refinancing and/or
additional financing which has a security interest
in the Plant superior to Buyer's pledge is no
greater than the sum of (i) the principal balance
of the debt for the Plant outstanding at the time
of refinancing (the "Refinancing" portion), and
(ii) such amount as is reasonably required, in the
opinion of an independent engineer, to cause such
repair alterations, modifications or improvements
to the Plant as necessary for the continued
operation of the Plant in compliance with this
Agreement and with changes in the law subsequent
to the Construction Closing Date (any debt
incurred pursuant to clause(ii) above hereinafter
referred to as the "Increased Financing"); and
provided further that, the amortization of the
aggregate amount of principal (a) under such
Refinancing does not extend beyond the original
date for the full amortization of principal for
the debt being refinanced and (b) under such
Increased Financing does not extend beyond the
date on which the term of this Agreement expires.
13. In order to reflect Seller's revised pricing
proposal, the Agreement is modified as follows:
a. The text of the carry over paragraph on page
22 and 23 of the Agreement is deleted in its entirety and
replaced with the following:
In the event that Seller demonstrates to Buyer's
satisfaction that both of the aforesaid options
would render operation of the Plant uneconomic for
the balance of this Agreement, then Seller may
elect to terminate this Agreement upon sixty (60)
days' prior written notice to Buyer, provided that
Seller either (a) has paid to Buyer any positive
balance in the LC Tracking Account and all other
amounts due Buyer under this Agreement, or (b)
agrees to reimburse Buyer monthly the amount by
which Buyer's actual reasonably incurred cost for
replacement electricity exceeds the amount that
Buyer would have paid to Seller under this
Agreement in a reasonable and mutually
satisfactory manner, and has paid all other
amounts due to Buyer under this Agreement.
b. The text of Article XX shall be deleted in
its entirety, and the following shall be added to Article XIII of
the Agreement:
(f) If Buyer shall terminate this Agreement
pursuant to Article XIII, or due to any other
material breach of this Agreement by Seller
giving rise to a right of Buyer to terminate
this Agreement, Seller shall pay to Buyer the
cumulative positive difference, with interest
at the contract interest rate specified in
Article VII, of (A) the payments made by
Buyer to purchase Seller's electricity, minus
(B) the amount Buyer would have paid to
Seller if the same amount of electricity had
been purchased at a rate equal to Buyer's
short-run avoided cost as defined in Exhibit
H at the time the electricity was delivered.
c. Pages B-29 through and including B-32 are
deleted and replaced with the text attached hereto as Appendix
II.
d. A new paragraph 8, which appears as Appendix
III attached hereto, shall be inserted on page B-20 of the
Agreement.
e. References to Article XX throughout this
Agreement shall be deemed to refer to the new subparagraph (f) of
Article XIII.
f. Article XXI of the Agreement shall be
renumbered as Article XX and any references to Article XXI shall
be read as a reference to the renumbered Article XX.
14. This Amendment No. 1 to the Agreement shall
be submitted to the Commission for its approval. The Agreement,
as modified by Amendment No. 1, shall become effective as to the
Seller and Buyer, in accordance with the provisions of Article
XVIII of the Agreement.
15. Pursuant to ordering clause 2 of the
Rehearing Order, Seller waives all of its right to appeal the
decisions of the Albany County Supreme Court, dated June 12, 1991
in Falcon Seaboard Oil Co. v. Public Service Commission, Slip.
Op. No. 01-90-ST2731.
IN WITNESS WHEREOF, the Seller and Buyer have caused
this Amendment No. 1 to be executed by their proper officers
thereunto duly authorized and their respective corporate seals to
be hereunto affixed and attested as of the date first above
written.
ATTEST: SARANAC ENERGY COMPANY, INC.
By: /s/ Doug Divine By:: /s/ David H. Dewhurst
David H. Dewhurst
President
Name: Doug Divine
Title: Senior Manager
Regulatory Relations
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: /s/ Delores R. Hix By:: /s/ Jack H. Roskoz
Jack H. Roskoz
Senior Vice President
Name: Dolores R. Hix
Title: ASSISTANT SECRETARY
STATE OF Texas )
) ss.:
COUNTY OF Harris)
On this 29th day of August, 1991, before me personally
came David H. Dewhurst to me personally known, who, being by me
duly sworn, did depose and say that he resides in Houston, Texas,
that he is President of Saranac Energy Company, Inc. the
corporation named in and which executed the foregoing instrument;
that he knows the corporate seal of said corporation; that said
seal was affixed to said instrument on behalf of said corporation
by authority of its Board of Directors or By-Laws; and that he
signed his name thereto by like authority.
/s/ Marty Sutkin
STATE OF NEW YORK)
) ss.:
COUNTY OF BROOME )
On this 30th day of August, 1991, before me personally
came Jack H. Roskoz, to me personally known, who, being by me
duly sworn, did depose and say that he resides in the State of
New York, County of Broome, that he is the Senior Vice President
of New York State Electric & Gas Corporation, the corporation
named in and which executed the foregoing instrument; that he
knows the corporate seal of said corporation; that said seal was
affixed to said instrument on behalf of said corporation by
authority of its Board of Directors or By-Laws; and that he
signed his name thereto by like authority.
/s/ Jeanette F. Fendick
JEANETTE F. FENDICK
Notary Public, State of New York
No. 4648976
Resident in Broome County
My commission expires August 31, 1993