Exhibit 10.17.3
AMENDED AND RESTATED
AGREEMENT FOR PURCHASE AND SALE OF ELECTRIC POWER
BETWEEN
O'BRIEN (PARLIN) COGENERATION, INC.
AND
JERSEY CENTRAL POWER & LIGHT COMPANY
AMENDED AND RESTATED AGREEMENT entered into this 30 day of
April 1996 by and between O'BRIEN (PARLIN) COGENERATION, INC., a
Delaware corporation (the "Seller"), and JERSEY CENTRAL POWER &
LIGHT COMPANY, a New Jersey corporation ("JCP&L") (collectively
referred to as "Parties").
ARTICLE 1
RECITALS
WHEREAS, JCP&L and Seller have entered into a certain
Agreement for the Purchase and Sale of Electric Power, dated
October 20, 1986, covering the purchase and sale of electrical
output from the cogeneration facility constructed by Seller at
the DuPont facility in Parlin, New Jersey which facility is a
"qualifying cogeneration facility" as defined in the Public
Utility Regulatory Policies Act of 1978 and the applicable
regulations of the Federal Energy Regulatory Commission
thereunder;
WHEREAS, JCP&L and Seller have entered into a First
Amendment dated as of April 9, 1991 to that Agreement amending
the Agreement in certain respects (the Agreement as so amended
being referred to herein as the "Power Purchase Agreement");
WHEREAS, the New Jersey Board of Public Utilities or its
predecessors has entered appropriate orders approving the Power
Purchase Agreement and the recovery by JCP&L of all payments to
Seller thereunder from JCP&L's customers through JCP&L's.
levelized energy adjustment clause;
WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its
proposed Plan of Reorganization (the "NRG Plan") of O'Brien
Environmental Energy, Inc. ("O'Brien") which provides for the
acquisition by NRG of 49% of the outstanding stock of O'Brien;
WHEREAS, Seller is a wholly owned subsidiary of O'Brien; and
WHEREAS, the Parties now desire, subject to satisfaction of
the conditions set forth below, further to amend
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and to restate the Power Purchase Agreement in order to provide,
among other things, that the Facility shall be operated subject
to the partial dispatching control of JCP&L and that JCP&L shall
assume responsibility for the Facility's fuel supply and intend
that this Amended and Restated Agreement become effective and
govern the purchase and sale of electrical output from the
aforesaid cogeneration facility from and after the Effective Date
(as hereinafter defined).
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other valuable consideration, receipt of
which is hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 2
CONVERSION OF FACILITY TO EWG STATUS
Promptly following entry of the Approval Order (as
hereinafter defined), Seller will file with the FERC an
appropriate application for determination that Seller is an
"exempt wholesale generator" ("EWG") under Section 32(a) (1) of
the Public Utility Holding Company Act of 1935, as amended, and
the regulations of the FERC thereunder. JCP&L will cooperate
with Seller in connection with Seller's application to become an
EWG and will, in order to enable Seller to become an EWG, agree,
subject to receipt of requisite regulatory approvals (which JCP&L
will use reasonable efforts to pursue and obtain), to purchase
from Seller and sell to DuPont such electrical energy as DuPont
may require under its agreement with Seller, in addition to
JCP&L's purchase of the Base Capacity and Dispatchable Capacity
as provided herein, provided that the terms of such purchase from
Seller and sale to DuPont do not result in any net increase in
cost to JCP&L (e.g., the purchase price of such energy from
Seller shall equal the sale price of such energy to DuPont) and
provided, further, that Seller promptly reimburse JCP&L for any
and all reasonable expenses incurred by JCP&L in carrying out its
obligations as set forth in this sentence, including, without
limitation, the expenses incurred in obtaining requisite
regulatory approval of the sale of electrical energy to DuPont.
Seller and JCP&L shall enter into such amendments and
modifications to this Amended and Restated Agreement as may be
reasonably necessary, and not detrimental to JCP&L, to implement
such change. If requested by Seller, JCP&L shall, at no cost to
JCP&L, use reasonable efforts to support Seller's filing with the
FERC for approval of the rates provided for in this Amended and
Restated Agreement. In the event the FERC grants Seller's EWG
application, Seller shall have no further obligation under the
Agreement to maintain the Facility as a Qualifying Facility for
so long as Seller maintains EWG status. JCP&L agrees that, until
either the Effective Date has occurred or it has been definitely
established that the Effective Date will not occur (e.g., the
time period for the occurrence of the Effective Date
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under Section 4.1(b) shall have expired), JCP&L will not pursue
any rights or remedies that it may have against Seller, O'Brien
or its or their predecessors in interest with respect to any past
failure or inability of Seller or the Facility to satisfy
applicable FERC requirements for Qualifying Facilities and
further agrees that, if the Effective Date does occur, on and
after the Effective Date, it shall have no further rights or
remedies against Seller, O'Brien or its or their predecessors in
interest with respect to any past failure or inability of Seller
or the Facility to satisfy applicable FERC requirements for
Qualifying Facilities, all of which shall be deemed to be waived
by JCP&L. Subject to the next sentence, Seller shall, however,
maintain the Facility as a Qualifying Facility in the event that
the FERC denies Seller's EWG application or revokes Seller's EWG
status. If the Effective Date does occur as provided herein and
the FERC denies Seller's EWG application or revokes Seller's EWG
status, JCP&L will allow Seller a reasonable period of time, not
to exceed 180 days, to make such modifications to the Facility
and/or to enter into or modify such contracts as may be necessary
to meet the applicable FERC requirements for Qualifying
Facilities, and, if Seller does so, JCP&L shall have no further
rights or remedies against Seller with respect to any past
failure or inability (including any failure or inability during
such cure period) of Seller or the Facility to satisfy such
requirements.
ARTICLE 3
DEFINITIONS
The following terms when used herein and in any
appendices hereto shall have the following meanings, unless a
different meaning shall be expressly stated or shall be apparent
from the context:
3.1 "Affiliate" means a corporation or other entity that
directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is under
common control with, another corporation or other entity.
3.2 "Agreement" means this Amended and Restated Agreement
including all appendices attached hereto and all
amendments thereto that may be made from time to time.
3.3 "Anniversary Date" means the date in every year that the
Effective Date recurs.
3.4 "Base Capacity" means that portion of the Facility which
shall be operated as base load or must run. The Base Capacity
shall be 41 MW, rated and demonstrated at 92
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Degrees F. The output of the Base Capacity will not vary
with changes in ambient temperature.
3.5 "Billing Period" means the approximate 30 day period
between monthly meter readings.
3.6 "BPU" means the New Jersey Board of Public Utilities or
successor agency thereto.
3.7 "BPU Order" means the order issued by the BPU approving
the Amended and Restated Agreement in the form executed
by the Parties and permitting JCP&L fully to recover all
payments made to Seller thereunder or otherwise in
respect thereof from JCP&L's customers through JCP&L's
levelized energy adjustment clause or similar rate
recovery mechanism, which Order shall in form and
substance be satisfactory to JCP&L.
3.8 "Capacity Test" means a test pursuant to applicable PJM
guidelines during the Initial Test Period or subsequent
test periods, conducted to measure the output of the
Facility at ambient conditions in order to determine the
Facility Capacity at 92 Degrees F.
3.9 "Cogeneration Facility" means the waste heat boiler, gas
and steam turbines, reciprocating engine, fuel cell,
generators and all appurtenant structures, equipment,
including Seller's interconnection facilities, and real
property interests owned or leased and operated by Seller
at Parlin, New Jersey, for the purposes of sequentially
generating electricity and steam and other forms of
useful thermal output.
3.10 "Commercial Operation" means the sale of Electricity by
Seller to JCP&L from Seller's Facility.
3.11 "Contract Availability" is the measure of Facility
Availability as calculated pursuant to the formula set
forth in Article 8.3. Contract Availability shall be
measured on an annual basis.
3.12 "Contract Capacity" shall be 114 MW, rated and
demonstrated at 92 Degrees F.
3.13 "Contract Year" shall mean each twelve month period
during the term hereof commencing on the Effective Date
and each anniversary of the Effective Date; provided that
the last Contract Year shall end on June 17, 2011 even if
less than a twelve month period.
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3.14.1 "Dispatchable Capacity" shall mean that portion of the
Facility which shall operate and export electricity to
JCP&L only when called for by JCP&L. The Dispatchable
Capacity shall be 73 MW at 92 Degrees F., as adjusted for
ambient temperature.
3.14.2 "Dispatch Capacity (Second Combined Cycle)" shall mean
the temperature adjusted output of the second combined
cycle train above the Base Capacity, shown in the Base
Combined Cycle Temperature vs. Capacity curve contained
in Appendix C, to be mutually agreed upon and attached to
this Amended and Restated Agreement after the completion
of testing to be conducted by Seller within 90 days after
the Effective Date pursuant to test procedures and
protocols mutually agreed upon by Seller and JCP&L. Only
the Combined Cycle portion of the Facility, without using
the duct burners, shall be used to achieve this output.
This shall be the first level of dispatch requested by
JCP&L.
3.14.3 "Dispatch Capacity (Duct Fired)" shall mean the
temperature adjusted output of the combined cycle with
duct firing for additional power output, shown in the
Combined Cycle with Duct Firing Temperature vs. Capacity
curve contained in Appendix C, to be mutually agreed upon
and attached to this Amended and Restated Agreement after
the completion of testing to be conducted by Seller
within 90 days after the Effective Date pursuant to test
procedures and protocols mutually agreed upon by Seller
and JCP&L. The Combined Cycle portion of the Facility,
using the duct burners, shall be used to achieve this
output. This shall be the second level of dispatch
requested by JCP&L.
3.14.4 "Dispatch Capacity (Max Output)" shall mean the
temperature adjusted output of the combined cycle with
duct firing and Combustion Turbine overfiring for
additional power output, shown in the Max Output
Temperature vs. Capacity curve contained in Appendix C,
to be mutually agreed upon and attached to this Amended
and Restated Agreement after the completion of testing to
be conducted by Seller within 90 days after the Effective
Date pursuant to test procedures and protocols mutually
agreed upon by Seller and JCP&L. This shall be the third
and final level of dispatch requested by JCP&L. Dispatch
Capacity (Max Output) will only be requested during a
System Emergency.
3.15 "DuPont" means the E.I. DuPont de Nemours Company, the
owner of the leased premises occupied by the Facility,
and Seller's steam purchaser.
3.16 "Effective Date" shall mean the last to occur of (a) the
date on which the BPU issues the BPU Order, (b) ten (10)
5
days following the entry of an order (the "Approval
Order") by the United States Bankruptcy Court for the
District of New Jersey ("Bankruptcy Court") approving
the NRG Plan, (c) the date on which the existing Gas
Service Agreement dated May 13, 1993 between Seller and
PSE&G shall have been terminated or assigned to JCP&L
without any liability to Seller or the Facility, (d) the
date on which JCP&L shall have entered into the PSE&G
Gas Supply Agreement, or, if the existing Gas Service
Agreement described in clause (c) shall have been
assigned to JCP&L, such agreement shall have been
amended or modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall have
received all necessary regulatory approvals and
otherwise shall have become effective in accordance with
its terms, and (e) the date on which that certain Third
Amendment to Power Purchase Agreement dated as of
December ___, 1995 by and between O'Brien (Newark)
Cogeneration, Inc. and JCP&L shall have become effective
in accordance with its terms.
3.17 "Emergency" or a "System Emergency" means a condition or
situation which in JCP&L's sole judgment affects JCP&L
Electric System Integrity, which judgment shall not be
capriciously or arbitrarily exercised. Such conditions
include but are not limited to forced outages, potential
overloading of JCP&L's transmission and distribution
circuits, unusual operation conditions on either JCP&L's
or Seller's system, conditions such that JCP&L is unable
to back down its own generation sufficiently to accept
electricity from the facility without jeopardizing the
integrity of JCP&L's system, or conditions on the PJM
system are such that JCP&L has received a request from
the PJM Interconnection Dispatcher to reduce or interrupt
purchases from generation external to PJM.
3.18 "Exempt wholesale Generator" or "EWG" shall have the
meaning given to that term in Section 32(a) (1) of the
Public Utility Holding Company Act of 1935, as amended,
and the regulations of the FERC thereunder.
3.19 "Facility Heat Rate" means the quantity of fuel (HHV),
expressed in British Thermal Units (BTUs), required to
generate one kWh of output from the Facility at a known
temperature.
3.20 "FERC" means the Federal Energy Regulatory Commission or
successor agency thereto.
3.21 "Fixed Capital Payment" shall have the meaning given to
such term in Article 8.2 hereof.
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3.22 "Fixed O&M Payment" shall have the meaning given to such
term in Article 8.2 hereof.
3.23 "Forced Outage" means the unscheduled removal of the
Facility or a portion thereof from service or the
inability of the Facility to operate in accordance with
the Temperature vs. Capacity Tables of Appendix C.
3.24 "Generating Facility" or "Facility" means the
Cogeneration Facility or the Exempt wholesale Generator
as required by the context.
3.25 "GPU System" means the integrated electric generating
system of General Public Utilities Corporation, a
Pennsylvania corporation, which is the parent of JCP&L.
3.26 "Gross Domestic Product Deflator Index" or "GDPDI" means
the value of the average of the four quarters ending on
September 30 of the previous year divided by the value of
the average of the four quarters ending on September 30
of the year preceding the previous year of the Implicit
Price Deflator for Gross Domestic Product as reported by
the United States Department of Commerce with a 1987
index value of 100.
3.27 "Interconnection Facilities" means all apparatus required
and associated equipment installed to interconnect and
deliver power from the Facility to JCP&L's electric
system including, but not limited to, connection,
transformation, switching, metering, communication, and
safety equipment, such as equipment required to protect
(1) JCP&L's electric system and its customers from faults
occurring at the Facility, and (2) the Facility from
faults occurring on JCP&L's electric system or on the
systems of others to which JCP&L's electric system is
directly or indirectly connected. Interconnection
Facilities also include any necessary additions and
reinforcements by JCP&L to JCP&L's electric system
required as a result of the interconnection of the
Facility to JCP&L's electric system.
3.28 "JCP&L" means Jersey Central Power & Light Company.
3.29 "JCP&L Electric System Integrity" or "System Integrity"
means the state of operation of JCP&L's electric system
which is deemed to minimize the risk of injury to persons
and/or property and enable JCP&L to provide adequate and
reliable electric service to its customers.
3.30 "kWh" means kilowatt hours of Electricity, the unit of
measure of energy.
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3.31 means reactive kilovolt-ampere, the unit of measure of
reactive power.
3.32 "Maintenance Outage" means the scheduled removal of the
Facility from service in order to perform necessary
repairs on specific components of the Facility where
removal of the Facility could have been postponed to the
weekend past the immediately succeeding weekend. A
Maintenance Outage must be scheduled with PJM through
JCP&L and accepted by JCP&L and PJM, which approval shall
not unreasonably be withheld or delayed by JCP&L. The
duration of the outage will initiate with the removal of
the Facility from service and last until notice is given
that the Facility is available for dispatch.
3.33 "Major Facility Overhaul" means any Planned Outage of the
Facility, or a portion thereof, for replacement or
reconditioning of the Facility's gas turbine(s), turbine
generator(s) or related boiler(s) due to ordinary wear
and tear.
3.34 "Maximum Emergency Generation" means placing all
available JCP&L generating capacity in service and
generating the maximum net plant output to meet peak load
demands or to safeguard the operation of JCP&L's electric
system and/or the PJM Interconnection.
3.35 "MWh" means megawatt hours or one thousand kWhs.
3.36 "Electric Energy" or "Electricity" means the amount of
electricity in MWH generated by the Facility, less any
transformation and transmission line losses and station
usage, delivered by the Seller to JCP&L at the Point of
Interconnection.
3.37 "Non Dispatch Periods" means the uninterrupted interval,
measured in time, during which there is no request for
Output of the Dispatchable Capacity.
3.38 "Operate" means to provide the engineering, purchasing,
repair, supervision, training, inspection, testing,
protection, operation, use, management, replacement and
maintenance of and for the Facility in accordance with
applicable industry standards and Prudent Electrical
Practices.
3.39 "Output" means the net amount of electrical energy (MWH),
as metered by JCP&L, generated by the Facility and
delivered to JCP&L at the Point of Interconnection.
Output excludes transformation losses and station usage.
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3.40.1 "Off-Peak Hours" means all hours other than "On-Peak
Hours."
3.40.2 "Off-Peak Period" means all hours not falling within an
"On-Peak Period."
3.40.3 "On-Peak Hours" means all hours from 8:00 a.m. to 8:00
p.m. prevailing time Monday through Friday 52 weeks per
year other than New Years Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas.
3.40.4 "On-Peak Period" means all hours from 8:00 a.m. to 8:00
p.m. prevailing time Monday through Friday, December -
February and June - September, minus four (4) Holidays:
New Years Day, Independence Day, Labor Day and Christmas.
3.41 "Party" or "Parties" means the signatories to this
Agreement and their permitted successors and assigns.
3.42 "PJM" or "PJM System" means the Pennsylvania/New
Jersey/Maryland Interconnected Power Pool cooperatively
operated under the Pennsylvania/New Jersey/Maryland
Interconnection Agreement dated as of September 26, 1956
as amended or supplemented from time to time.
3.43 "Planned Outage" means the scheduled removal of the
Facility from service for inspection or repair. A
Planned Outage must be scheduled by the Seller two (2)
months in advance and approved by JCP&L and PJM, which
approval shall not be unreasonably withheld by JCP&L. A
Planned Outage will initiate with the removal of the
Facility from service and will terminate when the Seller
notifies JCP&L that it is available for dispatch.
3.44 "Point of Interconnection" means the point at which the
Electrical Interconnection Facilities of Seller connect
with JCP&L's electric system.
3.45 "Project" means the Generating Facility, the Protective
Apparatus and Interconnection Facilities required to
permit operation of Seller's generator in parallel with
JCP&L's electrical system.
3.46 "Protective Apparatus" means that equipment and apparatus
which shall be installed by Seller as required by JCP&L
in accordance with Section 10 of the Standard Terms and
Conditions, entitled, "General Interconnect Requirements
for Customer's Generation" forming part of JCP&L's Tariff
for Electric Service on file with the BPU.
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3.47 "Prudent Electrical Practices" means those practices,
methods, standards, and equipment commonly used, from
time to time, in prudent electrical engineering and
operations to operate electrical equipment lawfully and
with safety, dependability, and efficiency and in
accordance with the National Electrical Safety Code, the
National Electrical Code or any other applicable federal,
state and local codes.
3.48 "PSE&G" means Public Service Electric & Gas Company.
3.49 "PSE&G Gas Supply Agreement" means the Gas Supply
Agreement to be entered into between PSE&G and JCP&L
providing for the supply of natural gas to the Facility.
3.50 "Qualifying Facility" means a Cogeneration or Small Power
Production Facility which meets the criteria set forth in
Title 13, Code of Federal Regulations, Part 292, Subpart
B, Section 292.203 through 292.207, inclusive.
3.51 "Scheduled Dispatch Period" or "SD" means the time
duration of a request for delivery of Output beginning
and ending at the time specified by JCP&L. Such periods
are exclusive of Start Up and Shut Down Periods and shall
require at least thirty (30) minutes notice in advance of
commencement of a Start Up Period.
3.52 "Shut-Down Period" means the period necessary to shut
down the Facility in accordance with good engineering
practices and manufacturer's recommendations immediately
following a Scheduled Dispatch Period, which may not
exceed 30 minutes.
3.53 "Special Facilities" means those additions and
reinforcements to JCP&L's electric system which are
needed to accommodate the maximum delivery of energy and
capacity from the Facility as provided herein and those
parts of the Interconnection Facilities which are owned
and maintained by JCP&L at Seller's request, including
metering and data processing equipment. All Special
Facilities shall be owned, operated, and maintained by
JCP&L pursuant to Section 4.05 of JCP&L's Electric Tariff
Standard Terms and Conditions.
3.54 "Standby Demand" means Seller's electrical load
requirement that JCP&L is expected to supply when
Seller's Generating Facility is not in operation.
3.55 "Start-Up Period" means the one and a half hour period
necessary to ramp up the gas turbines and the steam
turbines (if such steam turbines are "hot") in order for
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these turbines to reach steady state operation during
the period preceding a Scheduled Dispatch Period.
3.56 "Supplemental Start-Up Period" means the three (3)
additional hours required to bring the steam turbine(s)
up to full load prior to the commencement of a Scheduled
Dispatch Period, where such steam turbines are "cold" at
the beginning of a Scheduled Dispatch Period. Under such
conditions, references herein to the "Start-Up Period"
shall be understood to mean the Start-Up Period defined
above plus the Supplemental Start-Up Period. For the
purposes of the definition, a steam turbine shall be
considered to be "cold" if it has not been kept in a
state of readiness, i.e., maintained at 500 Degrees F
with a vacuum on the exhaust and steam to steam turbine
glands.
3.57 "Temperature" means the ambient dry bulb temperature in
degrees Fahrenheit measured at the monitoring station at
Newark Airport.
3.58 "Unit" means a single gas turbine train and associated
steam turbine.
3.59 "Unscheduled Outage" means the unscheduled removal of a
Unit of the Facility from service for inspection or
repair.
ARTICLE 4
TERM
4.1 Duration of Agreement
a) This Amended and Restated Agreement shall be
effective upon the Effective Date, as herein
provided, and shall continue in full force and effect
until June 17, 2011. (the "Initial Term").
b) If the Effective Date does not occur by the earlier
of (i) 75 days after the date of entry of the
Approval Order or (ii) June 15, 1996, this Amended
and Restated Agreement shall, unless otherwise
mutually agreed by the Parties, immediately terminate
and be of no further force or effect, and neither
Party shall have any further rights, obligations, or
liabilities hereunder.
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4.2 Renewal of Agreement
This Amended and Restated Agreement shall be
automatically renewed for a period of three (3)
additional years, commencing with the expiration of the
Initial Term pursuant to Article 4.1, unless either
Party elects to terminate this Amended and Restated
Agreement as of the expiration of the Initial Term.
Such termination shall be valid only if the terminating
Party provides written notice of its intent to terminate
to the other Party at least three (3) full years prior
to the expiration of the Initial Term.
4.3 Electrical Services Supplied by JCP&L
This Amended and Restated Agreement does not provide for
any electric service by JCP&L to Seller. If Seller
requires supplemental or standby electric service from
JCP&L, Seller shall enter into separate contract
arrangements with JCP&L in accordance with JCP&L's
applicable electric tariffs on file with and authorized
by the BPU.
ARTICLE 5
CONSTRUCTION
5.1 Land Rights
Seller hereby grants to JCP&L for the term hereof all
necessary rights of way and easements to install, operate,
maintain, replace and remove JCP&L's metering and other
Interconnection Facilities and Special Facilities, including
adequate and continuing access rights on property of Seller
and Seller agrees to execute such other grants, deeds or
documents as JCP&L may require to enable it to record such
rights of way and easements. If any part of JCP&L's
facilities are to be installed on property owned by others
than Seller, Seller shall, if JCP&L is unable to do so
without cost to JCP&L, procure from the owners thereof, all
necessary permanent rights of way and easements for the
construction, operation, maintenance and replacement of
JCP&L's facilities upon such property in a form satisfactory
to JCP&L. In the event Seller is unable to secure them (i)
by condemnation proceedings or (ii) by other means at such
cost as may be agreeable to Seller, Seller shall reimburse
JCP&L for all costs incurred by JCP&L in securing such
rights, it being understood however, that JCP&L shall have
no obligation to do so.
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5.2 Facility and Equipment Design and Construction
Seller shall design, construct, install, own, operate and
maintain the Facility and all equipment needed to generate
and deliver energy or energy and capacity specified herein,
except for any Special Facilities constructed, installed and
maintained by JCP&L pursuant to JCP&L's Electric Tariff
Standard Terms and Conditions. Such Facility and equipment
shall meet all requirements of applicable codes and all
standards of Prudent Electrical Practices. Seller also
agrees to meet reasonable JCP&L requirements for Seller's
Facility and equipment.
5.3 Interconnection Facility and Protective Apparatus Design and
Construction
JCP&L will coordinate with Seller in Seller's development of
an electrical interconnect system for the supply of
electrical service by Seller to DuPont, and for the
interlock of such system with JCP&L's interconnect system to
be installed for the supply of stand-by electrical service
to DuPont. Seller shall construct, install, own and
maintain the Interconnection Facilities and Protective
Apparatus as required for JCP&L to receive energy or energy
and capacity from Seller's Facility. Seller shall also
reimburse JCP&L for all reasonable costs associated with the
routine maintenance of interconnection equipment on JCP&L's
side of the Point of Interconnection. Upon thirty days
notice by Seller, prior to the planned Effective Date and on
each subsequent anniversary of such Effective Date, JCP&L
shall provide an estimate (for planning purposes only) and a
description of the work to be performed in the succeeding
year to conduct routine maintenance of interconnection
equipment on JCP&L's side of the Point of Interconnection.
Except for the metering facilities pursuant to Article 7,
Seller's ownership of the Interconnection Facilities shall
begin at the point of connection to the JCP&L service line.
Seller's Interconnection Facilities shall be of a size to
accommodate the delivery of the energy or energy and
capacity in the form of three (3) phase, 60 cycle
alternating current at 230 KV and shall conform to the
requirements of Section 10 of JCP&L's Electric Tariff
Standard Terms and Conditions concerning interconnection
requirements attached hereto and made a part hereof. In the
event it is necessary for JCP&L to install Special
Facilities or other Interconnection Facilities or to
reinforce its electric system for purposes of this Amended
and Restated Agreement, Seller shall reimburse JCP&L its
costs in accordance with JCP&L's Electric Tariff Standard
Terms and Conditions. Any reinforcements, Special
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Facilities and other Interconnection Facilities required by
JCP&L shall be justified by Prudent Electrical Practices and
applicable industry standard.
5.4 Special Facilities constructed or installed by JCP&L shall
be paid for by Seller in accordance with the provisions of
Section 4.05 of JCP&L's Electric Tariff Standard Terms and
Conditions
5.5 Seller shall indemnify, hold harmless and agrees to defend
JCP&L from and against any and all liability, loss, cost and
expense, associated with any and all Federal, State and/or
Local income tax liability, arising out of or connected with
the transfer from Seller to JCP&L of Seller's
Interconnection Facilities, Protective Apparatus, Special
Facilities and/or any and all associated and/or related
structures, equipment, facilities and devices in performance
of, pursuant to and/or in connection herewith. JCP&L and
Seller intend that such transfer shall be a Qualifying
Facility transfer pursuant to IRS Advance Notice 88-129.
Accordingly, Seller shall obtain, at its own expense, the
report of an independent engineer regarding electricity
sales by JCP&L to Seller as provided by that Advance Notice.
ARTICLE 6
OPERATION AND MAINTENANCE
6.0 The Generating Facility, the Interconnection Facilities and
the Protective Apparatus shall be operated and maintained in
accordance with applicable New Jersey utility industry
standards and Prudent Electrical Practices with respect to
the operation and maintenance of such equipment generally
and in particular with respect to synchronizing, voltage and
reactive power control. JCP&L shall have the right to
monitor operation of the Project and may require changes in
Seller's method of operation if such changes are, in JCP&L's
sole judgment, necessary to maintain JCP&L Electric System
Integrity.
Seller agrees to operate the Facility in parallel with
JCP&L's electric system and, subject to its right to sell
electric energy to DuPont if Seller is not an EWG, and
except as otherwise agreed in writing by JCP&L, to deliver
the Net Electric Energy of the Facility to JCP&L at the
Point of Interconnection in the form of three (3) phase, 60
cycle alternating current at 230 KV. Momentary voltage
fluctuations shall be permitted, provided they neither
disturb service provided by JCP&L to its customers, nor
14
hinder JCP&L in maintaining proper voltage conditions of its
electric system. Unless otherwise requested by JCP&L,
Seller shall operate the Facility at a unity power factor or
supply reactive power to JCP&L's electric system. At
JCP&L's request, Seller shall to the fullest extent
practicable operate the Facility at any excitation level
within the range of the Facility's capability as determined
from the equipment manufacturer's recommendations. Seller
agrees to use its best efforts to comply with any such
request made by JCP&L.
6.1 At JCP&L's request, Seller shall use its best efforts to
deliver power at an average rate of delivery at least equal
to the Contract Capacity during periods when Maximum
Emergency Generation is required by PJM or JCP&L. In the
event that Seller has previously scheduled an outage during
a period of Maximum Emergency Generation or coincident with
an Emergency, Seller shall use its best efforts to
reschedule the outage.
6.2 Conditions Requiring Curtailment or Interruption of
Deliveries of Electricity
a) JCP&L shall have the right upon reasonable notice to
Seller when it can reasonably be given to require
Seller to disconnect the generator from JCP&L's
electric system or to reduce the electrical output of
the generator and deliveries of Electricity into
JCP&L's electric system, whenever JCP&L determines, in
its sole judgment, that such a disconnection or
reduction is necessary to facilitate construction,
installation, maintenance, repair, replacement or
inspection of any of JCP&L's facilities, or equipment,
or to maintain JCP&L's Electric System Integrity, or
because of emergencies, forced outages, potential
overloading of JCP&L's transmission and distribution
circuits, force majeure, operating conditions on either
JCP&L's or Seller's system, or conditions on the PJM
System are such that generators of all PJM member
utilities are required to reduce generation to minimum
levels during periods of low load in accordance with
the applicable GPU/PJM emergency operating procedures
and JCP&L has received a request from the PJM
Interconnection Dispatcher to reduce or interrupt
purchases from generation external to PJM; provided,
however, that any such PJM requirement to reduce or
interrupt such purchases of Base Capacity may not
exceed 600 hours in any calendar year, of which no more
than 400 such hours shall occur during On-Peak Periods.
15
b) If at any time Seller fails to operate and maintain the
Project as provided in Article 6 or the operation of
the Project endangers the safety of JCP&L's personnel
or the safe operation of JCP&L's electric system1 JCP&L
may disconnect from the Seller's Facility until such
condition has been corrected.
c) If JCP&L requires Seller to disconnect the generator
from JCP&L's electric system or reduce deliveries of
Electricity pursuant to Article 6.2, Seller shall have
the right, during such time period, to continue to
serve Seller's native load, if any, and to sell
electric energy to DuPont if Seller is not an EWG.
d) In the event of a force majeure, Seller shall not be
obligated to deliver, and may curtail, interrupt or
reduce deliveries of energy to JCP&L. Seller shall
promptly notify JCP&L of any such curtailment,
interruption or reduction of deliveries.
e) Each Party shall endeavor to correct, within a
reasonable period, the condition on its system which
necessitates the disconnection or the reduction of
electrical Output. The duration of the disconnection
or the reduction in electrical Output shall be limited
to the period of time such a condition exists.
6.3 The Generating Facility shall be operated with all of
Seller's Protective Apparatus in service whenever the
generator is connected to or operating in parallel with
JCP&L's electric system. Any deviation for brief periods of
emergency or maintenance shall only be by agreement of the
Parties.
6.4 Seller shall furnish JCP&L with an annual forecast not later
than December 15 of each year setting forth the expected
dates and anticipated duration of each Planned Outage for
the succeeding 36 months, provided that the dates and
anticipated duration of such Planned Outages may be changed
as hereinafter provided. Seller shall update, on a monthly
basis, the outage request schedule by the 15th day of each
month. Such updates shall be transmitted to JCP&L by
telephone and promptly confirmed in writing. JCP&L shall
forward its response to an outage request not later than 10
days following JCP&L's receipt of such outage request.
Seller shall notify JCP&L's dispatcher approximately 15
minutes prior to the approved outage period of its intent to
remove the Generating Facility from service. Seller shall
also notify JCP&L concerning the cause and duration of any
Forced Outage.
16
6.5 Seller shall not schedule or conduct Planned Outages during
On-Peak Periods.
a) Seller shall keep and maintain accurate and complete
records for the Generating Facility containing such
information regarding operation and maintenance of the
Generating Facility and all associated equipment as is
appropriate and consistent with industry practice and
as may be necessary for JCP&L to comply with its
applicable requirements. JCP&L will advise Seller of
such requirements as are in effect from time to time.
Seller shall make such records available to JCP&L for
inspection and copying from time to time as JCP&L may
reasonably request.
b) Seller shall maintain and classify outage statistics
for the Generating Facility in accordance with the GPU
System outage classification procedures as the same may
be in effect from time to time. Seller shall supply
such statistics to JCP&L upon request. In addition,
Seller shall maintain or cause to be maintained such
other records relating to the Generating Facility as
may be reasonably required by the GPU System of
cogeneration projects, and, upon written notice from
JCP&L, will maintain or cause to be maintained such
other records as the NJBPU, FERC or other regulatory
body having jurisdiction, may from time to time
require.
6.7 If, at any time, JCP&L doubts the integrity of any of
Seller's Protective Apparatus and believes that such loss of
integrity would impair the JCP&L Electric System Integrity,
Seller shall demonstrate, to JCP&L's satisfaction, the
correct calibration and operation of the equipment in
question.
6.8 Seller shall furnish to JCP&L on each January 1 following
the Effective Date satisfactory evidence that during the
previous calendar year, Seller has performed or caused to be
performed all manufacturer-recommended maintenance and
testing of the Generating Facility and the Protective
Apparatus and interconnection equipment, including circuit
breakers, relays and auxiliary equipment. Seller shall
provide JCP&L with at least 30 days prior written notice of
its intent to test such equipment and JCP&L personnel or
their representatives may, if JCP&L desires, observe such
testing.
6.9 Seller shall provide reactive power for its own requirements
and the reactive power losses of interfacing transformers.
Seller shall not deliver excess reactive
17
power to JCP&L unless otherwise agreed upon between the
Parties.
6.10 The Generating Facility shall at all times be operated and
maintained to conform to all applicable laws and
regulations. Seller shall obtain and maintain any
governmental authorizations and permits for the continued
operation of the Generating Facility.
6.11 Dispatch of the Facility
a) Seller agrees to deliver, or cause to be delivered, and
sell to JCP&L, and JCP&L agrees to accept and purchase
from Seller the electric energy associated with the
Base Capacity which is produced by the Facility and
delivered to JCP&L whenever it is made available, and
the electric energy associated with the Dispatchable
Capacity which is produced and delivered to JCP&L
during Start Up, Supplemental Start Up, Shut Down, and
Scheduled Dispatch Periods up to the Dispatch Capacity
at the rates set forth herein. Seller and JCP&L
further agree that, except for the energy which Seller
may sell to DuPont if Seller is not an EWG, all energy
associated with the Contract Capacity will be fully
committed to JCP&L and may not be sold to any other
entity unless otherwise agreed by JCP&L in writing.
Subject to the terms and conditions set forth below,
JCP&L shall have the right to request any of the three
Dispatch Capacity levels above the Base Capacity.
Dispatch of the Facility shall be in accordance with
the rules and procedures of JCP&L and PJM. The first
level of dispatch above the Base Capacity which JCP&L
may call for is the Dispatch Capacity (Second Combined
Cycle). At any time while the Facility is at the
Dispatch Capacity (Second Combined Cycle) level, JCP&L
shall have the option to request the next level of
dispatch which is Dispatch Capacity (Duct Fired). JCP&L
shall have the option to request the Facility to return
to the Dispatch Capacity (Second Combined Cycle) level
without requesting the Facility to shut down entirely.
During a System Emergency, JCP&L may request the third
level of dispatch which is Dispatch Capacity (Max
Output). Notwithstanding anything in this Amended and
Restated Agreement to the contrary, Seller shall not be
obligated to provide more than 73 MW, as may be
adjusted to reflect temperature variations from 92
Degrees F, of Dispatch Capacity at any time. JCP&L
further recognizes that the Seller is only capable of
firing the duct burners on natural gas; it has no
capacity to fire said duct burners on kerosene.
18
When the Facility must burn kerosene, JCP&L agrees not
to request more Scheduled Dispatch Hours than are
authorized under the Facility's air permit issued by
the New Jersey Department of Environmental Protection.
Accordingly, should JCP&L wish to dispatch the Facility
on kerosene in excess of such maximum permitted hours,
it shall obtain an appropriate variance from the New
Jersey Department of Environmental Protection prior to
making a request for additional dispatch hours on
kerosene.
b) On or about the twenty-seventh day of each month, JCP&L
will supply a weekly operating plan for the following
month. Thereafter, JCP&L will provide a weekly
operating plan to the Seller by 3:00 p.m. Friday of
each week for implementation the following Monday.
Nothing in any weekly operating plan provided by JCP&L
pursuant to the two preceding sentences shall preclude
JCP&L from modifying any such plan at any time and for
any reason and from scheduling Scheduled Dispatch
Periods at such time or times as JCP&L, in its sole
discretion, deems necessary or appropriate.
Nonetheless, the weekly operating plan as amended shall
be used by Seller to plan maintenance and work
schedules. Unless otherwise agreed, Seller will be
prepared to commence a Start-Up Period within thirty
(30) minutes of receiving a Scheduled Dispatch Period
request from JCP&L between 5:00 a.m. and 10:00 p.m. on
weekdays. During other periods, JCP&L will use
reasonable efforts except during System Emergencies to
provide Seller with two (2) hours between the
communication of a Scheduled Dispatch Period request
and the commencement of a Start-Up Period. No change
in a Scheduled Dispatch Period request will become
effective unless Seller is provided with at least
thirty (30) minutes notice before being required to
commence a Start-Up Period. Shut-Down Periods will
commence immediately upon notification by JCP&L.
d) If JCP&L requests that the Dispatch Capacity (Second
Combined Cycle) be dispatched, it shall have the right
during the same day to request the shut down of one (1)
Unit, and shall have the further right to restart such
Unit on one additional occasion during the same
calendar day.
e) No Contract Availability penalties shall apply during
Start-Up Periods except any partial or full outage
condition which may exist at the time the Start-Up
Period begins. If the Facility is in a partial outage
at the commencement of a Start-Up Period and the
19
Facility fails to reach an output level which would end
such partial outage, the Facility will only be entitled
to the appropriate partial level of availability credit
for the Start-Up Period.
f) Seller shall be permitted a Shut-Down Period not to
exceed 30 minutes in order to shut down the Facility in
accordance with good engineering practice and
manufacturer's recommendations immediately following a
Scheduled Dispatch Period. No Contract Availability
penalties shall apply during Shut-Down Periods except
any partial or full outage condition which may exist at
the time the Shut-Down Period begins.
6.12 Any review by JCP&L of the design, construction, operation,
or maintenance of the Project is solely for the information
of JCP&L. By making such reviews, JCP&L makes no
representation as to the economic and technical feasibility,
operational capability, or reliability of the Project.
Seller shall in no way represent to any third party that any
such review by JCP&L of the Project, including, but not
limited to, any review of the design, construction,
operation, or maintenance of the Project by JCP&L is a
representation by JCP&L as to the economic and technical
feasibility, operational capability, or reliability of said
facilities. Seller is solely responsible for economic and
technical feasibility, operational capability, or
reliability of said facilities.
6.13 Generation in Excess of Base Capacity During Periods of Non-
Dispatch
Seller will not be paid for the export of any generation of
electricity in excess of 41 MW (the Base Capacity, which
will be 41 MW during all hours of the year) at times when
JCP&L has not called for any portion of the Dispatchable
Capacity to be operated. Notwithstanding the foregoing, the
Seller may, at its option, generate up to 50 MW during
periods of non-dispatch; provided, however, that Seller
shall pay JCP&L for the proportional amount of natural gas
fuel expense for fuel required to generate such excess
energy, and JCP&L will pay Seller the hourly PJM billing
rate for any such excess energy so delivered between 41 MW
and 50 MW. No other payments (fixed energy or capacity)
will be made for energy in excess of 41 MW. The foregoing
shall not, however, effect JCP&L's right to curtail all
Facility output during System Emergencies. Seller must give
proper advance notice as provided in Appendix A and operate
the Facility consistently with the requirements of Appendix
A.
20
ARTICLE 7
DELIVERY AND METERING
7.0 Delivery and Metering
All Electricity shall be delivered to JCP&L at the Point of
Interconnection with the characteristics and at the voltage
level specified in Article 6.0. All meters and equipment
used for the measurement of electric power for determining
JCP&L's payments to Seller hereunder shall be provided,
owned, maintained, inspected and tested by JCP&L. Seller
shall reimburse JCP&L for the reasonable costs of all meters
and equipment used for the measurement of Electricity, and
shall also reimburse JCP&L for costs involved with the
inspection and periodic testing of such meters.
7.1 Meters will be read monthly by JCP&L to determine the amount
of Electricity delivered to it. Seller may install
additional metering for its own use, but the determination
of delivered Electricity will be measured by JCP&L's meters
for billing purposes.
7.2 For purposes of monitoring the generator operation, JCP&L
shall have the right to require, at Seller's expense, the
installation of generation telemetering and control of
selected breakers and switching equipment. Seller will also
be responsible for the operating and maintenance costs
associated with the metering and telemetering equipment.
7.3 JCP&L's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected, tested, or
adjusted by JCP&L. Seller shall be given reasonable notice
of testing and have the right to have its Operating
Representative present on such occasions.
7.4 If, upon testing, any electrical measuring equipment is
found to be in error by not more than plus or minus two
percent (2%), previous recordings of such equipment shall be
considered accurate in computing deliveries of Electricity
hereunder, but such equipment shall be promptly adjusted to
record correctly. If, upon testing, any electrical measuring
equipment shall be found to be inaccurate by an amount
exceeding plus or minus two percent(2%), then such equipment
shall be promptly adjusted to record properly and any
previous recordings by such equipment shall be corrected to
zero error. If no reliable informationexists as to when the
equipment became inaccurate, it shall be assumed for
correction
21
purposes hereunder that such inaccuracy began at a point in
time midway between the testing date and the last previous
date on which the equipment was tested and found to be
accurate.
Should the primary meter equipment at any time fail to
register, or should the registration thereof be so erratic
so as to be meaningless, the energy deliveries shall be
determined from the best information available, including,
but not limited to, operator's log and telemetry data of the
meter results.
ARTICLE 8
TERMS OF SALE
8.1 Base Capacity Pricing
The price for Base Capacity delivered to JCP&L shall consist
of an energy component and a capacity component.
The energy component shall be a Fixed component equal to
1.362 cents per kWh and shall be paid from and after the
Effective Date through June 17, 2003.
The energy component of the price for Base Capacity shall be
varied according to the time of delivery as follows:
(i) during On-Peak Hours, the Fixed energy component
of price shall be multiplied by 127%.
(ii) during Off-Peaks Hours, the Fixed energy component
of price shall be multiplied by 85%.
The Fixed energy component of price shall not be paid from
and after June 18, 2003 through the end of the Initial Term.
The capacity component for Base Capacity
shall be as follows:
(iii) 1.21 cents per kWh averaged over all hours.
The capacity component will, however, be paid only for kWh
delivered during the On-Peak Period at the rate of 5.97
cents per kWh.
(iv) There will be no capacity component payment during
the Off-Peak Period.
22
8.2 Full Fixed Payment Components for Dispatchable Capacity.
(a) Fixed Capital Payment:
The Fixed Capital Payment (Based on 100% Contract
Availability) is equal to $9.90/kW-month through June 17,
2003, and shall be $6.40/kW-month for the remaining term of
the Agreement. Prior to March 1, 1996, Seller may elect to
convert the foregoing Fixed Capital Payments to a levelized
rate of $9.02/kW-month for the remaining duration of the
term commencing with the month immediately following the
months in which Seller provides written notification thereof
to JCP&L.
(b) Fixed O&M Payment:
The Fixed O&M Payment (based on 100% Contract Availability)
is equal to $3.50/kW per month in 1996. This payment shall
be adjusted annually by the change in the GDPDI upon the
anniversary of the Effective Date.
The annual Full Fixed Payment shall mean the sum of the
Fixed Capital Payment and the Fixed O&M Payment.
8.3 Fixed Payment Procedure.
A Fixed Payment shall be made to Seller in each Billing
Period during the term hereof commencing with the Effective
Date, in accordance with the procedures described below.
The Fixed Payment is dependent upon the Contract
Availability and Dispatchable Capacity, as described in
Section 8.3(d).
The Full Fixed Payment is composed of the following
components:
a) Fixed Capital Payment. This component of the Full
Fixed Payment shall be equal to the values listed in
Section 8.2(a).
b) Fixed O&M Payment. The 1996 value of this component
shall equal to the value listed in Section 8.2(b).
Commencing with the first anniversary of the Effective
Date and on each subsequent anniversary thereof through-
out the term of this Agreement, this component shall be
calculated as the product of the prior year's Fixed O&M
Payment and the ratio of the average of the four
quarterly GDPDI values ending with the third quarter of
the prior year, to the average of the four quarterly
GDPDI values ending with the third quarter of the year
prior to such prior year. All eight GDPDI
23
values will be referenced from the January publication of
the Survey of Current Business.
Illustrative Example of Fixed O&M Payment.
Assume that the Fixed O&M Payment for 1998 is $4.00/kW
month and the Effective Date is January 1, 1996.
Assume also that the GDPDI values are as follows:
Quarter GDPDI Index
4th Quarter, 1996 150.4
1st Quarter, 1997 152.1
2nd Quarter, 1997 153.5
3rd Quarter, 1997 156.2
4th Quarter, 1997 157.8
1st Quarter, 1998 160.1
2nd Quarter, 1998 162.0
3rd Quarter, 1998 164.3
Then the Fixed O&M Payment for 1999 is computed as:
= ($4.00) * (161.1)
(153.1)
= ($4.00) * (1.0523)
= $4.21/kW month
c) Estimated Fixed Payment: An Estimated Fixed Payment
shall be made to the Seller in each Billing Period of
the Term of this Agreement commencing with the
Effective Date which is equal to the product of the (a)
Full Fixed Payment; (b) the Dispatchable Capacity; and
(c) the Target Availability Multiplier defined below.
d) Actual Fixed Payment: The annual Actual Fixed Payment
is the sum of the monthly Full Fixed Payments for each
Contract Year, adjusted for Dispatchable Capacity and
Contract Availability, that will be paid to Seller on
an annual basis. It is equal to the product of: (a)
the sum of the monthly Full Fixed Payments, (b) the
Dispatchable Capacity; and (c) the Contract
Availability. A single adjustment to the monthly
Estimated Fixed Payment due to Seller (the "Fixed
Payment Adjustment") will be made with the first
payment to Seller of each Contract Year, commencing
with the second Contract Year and for each Contract
Year thereafter.
24
The Fixed Payment Adjustment will be equal to the
annual Actual Fixed Payment for the prior Contract Year
less the sum of the twelve (12) monthly Fixed Payments
for the prior Contract Year. If the Fixed Payment
Adjustment is a debit to Seller, then such amount shall
be fully set off against amounts owed to Seller
pursuant to this Agreement during the next Billing
Period. If following such setoff, a net amount is
still due JCP&L, such payment will be made to JCP&L
within thirty (30) days of receipt of JCP&L's invoice
for such payment. If the Fixed Payment Adjustment is a
credit to Seller, this credit shall be included with
the first payment of each Contract Year, commencing
with the second Contract Year. In all cases, the Fixed
Payment Adjustment shall have no interest component
added.
e) The Target Availability Multiplier. The Target
Availability Multiplier shall equal:
i) For the first Contract Year, the Target
Availability Multiplier will be equal to 95%.
ii) Commencing with the second Contract Year and for
each subsequent Contract Year, the Target
Availability Multiplier will equal the Contract
Availability for the prior Contract Year unless
modified by the Parties' mutual agreement to
reflect an unusual occurrence.
NOTE: Target Availability Multiplier shall never be
greater than one (l.0).
f) Contract Availability. The Contract Availability is
calculated as follows:
Total Hours - Equivalent contract Unavailable Hours
Total Hours
where:
i) Total Hours = total hours in the Contract Year.
(ii) Equivalent Contract Unavailable Hours = total of all
hours during the Contract Year during which there
occurred a full or partial Planned, Forced, or
Maintenance Outage, as those terms are defined in
Article 3 of this Agreement (including outages
resulting from Force Majeure events, but excluding
outages resulting from (x) JCP&L's failure to supply
25
natural gas to the Facility during periods when
PSE&G has not interrupted or recalled the
interstate or intrastate transportation that it
supplies under the PSE&G Gas Supply Agreement and
(y) JCP&L's failure to accept available Output
from the Facility). Partial outages are measured
on an equivalency basis, e.g., a 50% outage for
one hour would be equivalent to a full outage for
one-half hour, and so forth.
NOTE: The Contract Availability Multiplier shall never
be greater than one (1.0).
g) Measurement of Contract Availability.
For purposes of determining Contract Availability, the
following procedure will be used to measure periods of
unavailability:
When a Scheduled Dispatch Period has been requested by
JCP&L in accordance with the terms of this Amended and
Restated Agreement, Seller shall have until the end of
the Start-Up Period (plus the Supplemental Start-Up
Period, in the case of "cold" start-ups) to produce the
requested Dispatch Capacity. If, at the end of the
Start-Up Period (plus the Supplemental Start-Up Period,
in the case of "cold" start-ups), the Facility is
unable to produce the requested Dispatch Capacity, the
Facility is then considered to be in a full or partial
Forced Outage, as the case may be, provided, however,
that Seller shall not be obligated to, and the Facility
shall not be considered to be in a full or partial
Forced Outage as a result of any failure to, produce
Dispatch Capacity in excess of 73 MW, as may be
adjusted to reflect temperature variations from 92
Degrees F, at any time. If the Dispatch Capacity
(Second Combined Cycle) is requested and is
successfully responded to, the remaining Dispatchable
Capacity will be considered available unless a partial
outage had existed at the time Start-up Period was
requested. If the Dispatch Capacity (Second Combined
Cycle) is requested and is not successfully responded
to, the Facility operators and System dispatchers must
use Prudent Electric Practices to assess the effects on
the availability of the remaining Dispatchable
Capacity.
The Facility will remain in a full or partial Forced
Outage until such time as JCP&L is notified by Seller
26
that the Facility is again available for full or
partial dispatch and, at JCP&L's option, can
demonstrate this availability over a two (2) hour
period. At the end of a fully or partially successful
demonstration, the Facility will be considered to be
fully or partially available, respectively.
If, however, JCP&L elects not to dispatch the Facility
when Seller notifies JCP&L of the Facility's
availability, the Seller may at its own cost, choose to
demonstrate Facility availability as specified above
subject to Seller being responsible for any energy
costs above the current PJM billing rate related to
such demonstration; provided, however, that JCP&L is
able to accept the energy so produced. If JCP&L, in
its sole judgment, would not be able to accept the
energy produced during such a demonstration, then JCP&L
will recognize the Facility as being available;
provided, however, that if the Facility is unavailable
at the next Scheduled Dispatch Period request, the
Facility will then be considered to have been
continuously unavailable from the time of the Original
Request.
No Dispatchable Capacity will be considered available
unless the full 41 MW of Base Capacity (or so much
thereof as has not been curtailed or interrupted by
JCP&L) is being exported to the JCP&L System.
Notwithstanding the foregoing, if Seller notifies JCP&L
that the Base Capacity is being curtailed for Seller's
economic benefit and Seller wishes the Facility to be
considered available, JCP&L will consider the Base
Capacity and balance of Facility available if Seller
agrees to make the Base Capacity available along with
the balance of the Facility should JCP&L desire it. In
each event, Seller will receive no payments for Base
Capacity when it is not delivered and only the prices
associated with Base Capacity should JCP&L request the
Facility to run.
h) Heat Rate Incentive
The Average Heat Rate, as defined below, will be used
to calculate the Heat Rate Adjustment depending upon
whether the Average Heat Rate is above or below 9500
BTU/kWh HHV (High Heating Value).
At the conclusion of each Contract Year, JCP&L will
calculate the Average Heat Rate (AHR) for the Facility
over the past 12 months using the following formula
27
which will result in either an increase or decrease to
the payments made by JCP&L to Seller hereunder:
AHR = Net Fuel Input
AG
where:
Net Fuel Input is all the fuel paid for by JCP&L less
fuel associated with and paid for by Seller with
respect to (a) its steam and electric sales made to
DuPont and (b) the fuel used during Facility startup
and shutdown (with the amount of fuel to be deducted
pursuant to (b) to be determined within 90 days after
the Effective Date pursuant to test procedures and
protocols mutually agreed upon by Seller and JCP&L).
AG, or the Annual Generation, is the annual total of
kWhs produced by the Facility, exported to, registered
at the billing meter and purchased by JCP&L.
The Heat Rate Adjustment (HRA) will be calculated at the
conclusion of each Contract Year as follows:
HRA = 0.25 x GHR - AHR x AAFC x AG
1,000,000
where
GHR, or the Guaranteed Heat Rate, is 9500 BTU/kWh for
l996. Thereafter, GHR shall be adjusted in accordance
with the degradation curves supported by the
manufacturer's data as set forth in Appendix D, to be
mutually agreed upon and attached to this Amended and
Restated Agreement within 90 days after the Effective
Date. Such degradation adjustment, however, shall in
no event result in an increase in GHR of more than 2%
above 9500 Btu/kWh.
AAFC, or the Average Annual Fuel Cost, is the average
cost for fuel paid for by JCP&L for the Facility in
$/MMBTU for the time period corresponding to the
Average Heat Rate calculation.
For example, by way of illustration only, if during
1996:
AHR = 9300 Btu/kWh
28
AAFC = $2.60 MMBtu
AG = 700,000,000 kWh [7000 hours at 100MW]
HRA = 0.25 x (9500-9300) BTU/kWh x $2.60/MMBtu
1,000,000
x 700,000,000 kWh = $91,000
JCP&L will provide Seller with an average Heat Rate
Adjustment statement not later than 15 days after each
anniversary of the Effective Date. The Heat Rate
Adjustment payment, if any, will be made by Seller or
by JCP&L (as either an increase in or offset to
payments otherwise made by JCP&L to Seller hereunder)
in six equal monthly installments (without interest)
commencing the second calendar month following each
anniversary of the Effective Date; provided, however,
that any remaining Heat Rate Adjustment payment for the
last full Contract Year during the term hereof and for
the partial Contract Year commencing on the last
anniversary of the Effective Date during the term
hereof and ending on June 17, 2011 shall be invoiced by
JCP&L on or before July 1, 2011, and the net amount
thereof shall be paid, in cash, by Seller or JCP&L, as
the case may be, within 30 days of submission of such
invoice.
8.4 Demonstration of Contract Capacity
Seller shall demonstrate the ability of the Generating
Facility to provide JCP&L Base Capacity within 30 days after
the Effective Date. Thereafter, twice annually at JCP&L's
request, Seller shall, once during On-Peak Period summer
months and once during On-Peak Period winter months
demonstrate the ability of the Generating Facility to
provide Base Capacity for such period of time as is required
by PJM from time to time for all PJM suppliers. Seller's
demonstration of Base Capacity shall be at Seller's expense
(except for the cost of fuel) and conducted at a time and
pursuant to procedures as may be required by applicable GPU
System rules, regulations and guidelines. JCP&L and Seller
agree to use their reasonable best efforts to cause the
capacity demonstration to be scheduled as early as
practicable in each peak period. If Seller fails to
demonstrate the ability of the Generating Facility to
provide at least 90% of the Base Capacity, the Capacity
Component of the price
29
to be paid for Electricity pursuant to Article 8.1 thereof
shall be reduced to the following amount until Seller is
able to demonstrate the ability to provide at least 90% of
the Base Capacity:
Demonstrated Capacity x 5.97 cents/kWh
Base Capacity
If Seller does not demonstrate the ability of the Generating
Facility to provide at least 90% of the Base Capacity during
the applicable On-Peak Period, then a retroactive reduction
of the Capacity Component of the price to be paid for
Electricity pursuant to Article 8.1 based upon the above
formula will be applied to the entire applicable On-Peak
Period.
However, should Seller's failure to demonstrate the ability
of the Generating Facility to provide 90% of Base Capacity
be caused by a "force majeure" event as defined in Article
12 hereof, the provisions of this Article 8.4 for Base
Capacity shall not apply until the "force majeure" has
ceased to exist.
As part of the foregoing Capacity Test, Seller shall
demonstrate the ability of the Generating Facility to
provide JCP&L the Dispatchable Capacity. This test shall be
conducted pursuant to procedures as may be required by
applicable GPU System rules, regulations and guidelines. If
Seller fails to demonstrate the ability of the Generating
Facility to provide the sum of the Base Capacity and 90% of
the Dispatchable Capacity, the Facility will be considered
in either a full or partial Forced Outage for Contract
Availability calculation purposes. This Forced Outage will
remain in effect until the sum of the Base Capacity and 90%
of the Dispatchable Capacity is demonstrated. If the
Facility is unable to demonstrate the sum of the Base
Capacity and 90% of the Dispatchable Capacity at least once
during the entire On-Peak Period summer months in any year,
a penalty will be applied which is equal to:
[Dispatchable Capacity - Demonstrated Capacity In Excess of Base
Capacity] x PJM Capacity Deficiency ($/kW year
A penalty for failure to demonstrate Dispatchable Capacity during
an entire annual On-Peak Period can be collected only one time
per Contract Year.
30
Note: The data used to temperature correct the Capacity
Test will be taken from the temperature provided by
Newark Airport to the National Weather Agency.
However, should Seller's failure to demonstrate the ability
of the Generating Facility to provide the sum of the Base
Capacity and 90% of the Dispatchable Capacity be caused by a
"force majeure" event as defined in Article 12 hereof, the
provisions of this Article 8.4 relating to demonstration of
the availability of at least the sum of the Base Capacity
and 90% of the Dispatchable Capacity shall not apply until
the "force majeure" has ceased to exist.
8.5 Variable O&M and Start-up Payments
A) Variable O&M Payment
A Variable O&M Payment, whose initial 1996 value shall
be $0.004/kWh, shall be paid for the Net Electrical
Energy associated with the Dispatchable Capacity. The
Variable O&M Payment shall be adjusted upon each
anniversary of the Effective Date by the change in the
GDPDI.
B) Seller shall be paid a Start-up Payment for each
requested and successfully completed Start-up Period of
a gas turbine train associated with the Dispatch
Capacity (this payment will not be made for the unit-
used to satisfy the Base Capacity output). The initial
1996 values of the Start-up Payments are contained in
the table below. Start-up fuel costs shall be borne by
JCP&L pursuant to the terms of Article 9 hereof and
Appendix A hereto.
The first 150 starts/year $1500/Start
All starts over 150 starts/year $4,000/Start
These values shall be adjusted by the GDPDI annually.
These payments are intended to compensate the Seller
for the increased O&M costs associated with Start-ups,
ramp ups, ramp downs and stops.
8.6 DuPont Service
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Seller will supply electricity (but only if Seller is
not an EWG) and steam to DuPont during all periods when
the Facility is supplying Base Capacity and/or
Dispatchable Capacity to JCP&L. To the extent JCP&L is
not providing all required electric energy to DuPont
(i.e., if Seller is not an EWG), standby service for
electricity will be supplied by JCP&L to service
Depot's needs during all other periods under the
applicable tariff rates that are in effect at the time
of service. Seller will be responsible for providing
Depot's steam needs during periods of Facility
downtime.
8.7 In recognition of the understanding of the Parties
hereto that any payments made pursuant hereto are
intended by the Parties to be treated as received in
the year in which such payments are due, Seller
acknowledges that the Parties intend that JCP&L shall
have a deductible expense, and Seller shall have
taxable income or expense, as the case may be, with
respect to any payments made to Seller under this
Agreement. Seller shall not take a contrary or
inconsistent position with respect to the foregoing on
any federal, state or local tax return, before any
taxing authority or in any related tax proceeding.
ARTICLE 9
FUEL MANAGEMENT
9.1 JCP&L Responsibility for Facility Fuel Requirements
From and after the Effective Date, JCP&L will be
responsible for the supply of, and shall supply to
Seller, the natural gas required for use by the
Facility including the natural gas required by the
auxiliary boiler to supply DuPont with steam when steam
is not available from the heat recovery steam
generators, on the terms and conditions set forth
in Appendix A hereto. Seller will be responsible for
maintaining on site kerosene inventories for periods of
gas interruption. All costs for the supply of natural
gas shall be borne by JCP&L; provided, however, that
Seller shall reimburse JCP&L for the cost of any fuel
used to generate steam from the auxiliary boiler.
JCP&L will reimburse Seller for any kerosene used
during periods of gas curtailment at the replacement
price of kerosene (except for kerosene used to generate
steam for DuPont from the auxiliary boiler) at the then
prevailing market rate therefor in the area in which
the Facility is located.
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Seller will reimburse JCP&L, at the average monthly
price for natural gas, for the cost of fuel necessary
to provide DuPont with a quantity of BTU/lb of steam
from the Facility which shall be determined within 90
days of the Effective Date pursuant to the methodology
set forth in Appendix B. Until such determination has
been made, such quantity shall be deemed to be 500
BTU/lb of steam. Seller will also reimburse JCP&L the
proportional amount of fuel used to supply DuPont
electricity using the following formula:
DEFP = DEC x FS x FC
[DEC + JCEE]
Where:
DEFP is the DuPont electric fuel payment, in dollars,
which would be made monthly to JCP&L.
DEC is the DuPont electrical consumption, measured in
MWH, for the month in question.
JCEE is the JCP&L electrical exports, measured in MWH,
made by the Facility to JCP&L for the month in
question.
FS is the fuel supplied by JCP&L, measured in MMBTU
HHV, to Facility less the fuel Seller pays for due to
steam sales for the month in question.
FC is the average monthly fuel cost, measured in
$/MMBTU, to the facility for the month in question.
9.2 Natural Gas Fuel Unavailability
During periods when JCP&L is unable to provide gas to
the Facility, it is the responsibility of Seller to
maintain an on-site supply of kerosene to fuel the
Facility. If this fuel is used by Seller, Seller will
be reimbursed for the replacement cost of the kerosene
(except for kerosene used to generate steam for DuPont
from the auxiliary boiler) at the then prevailing
market rate therefor in the area in which the Facility
is located. However, if the Facility's air permit
would limit or prohibit the use of kerosene (e.g., if
the allowed number of hours of kerosene use has already
been exceeded) and JCP&L has been unable to obtain an
appropriate variance from the New Jersey Department of
Environmental protection which would permit the
necessary additional kerosene use, Seller may procure
33
gas from third parties for use by the Facility for so
long as JCP&L is unable to provide the necessary gas
for the Facility. JCP&L shall allow Seller to use
transportation capacity which JCP&L may have available
(taking into account JCP&L's system-wide needs) for
such third party gas and shall reimburse Seller for
such gas (except for gas used to generate steam for
DuPont from the auxiliary boiler) and all related
transportation costs (excluding any transportation made
available without charge by JCP&L) at a rate equal to
the lesser of (i) Seller's actual costs for such gas
and transportation or (ii) the maximum reimbursement to
which Seller would be entitled pursuant to the last
sentence of Section A.2.l of Appendix A hereto.
9.3 Metering Responsibilities
Both Seller and JCP&L shall maintain meters for
measuring the quantity of fuel used by the Facility.
The meters shall be capable of recording total MCFs and
associated calculated BTUs delivered to the Facility on
a continuous, real time basis and shall be calibrated
at regular intervals based on manufacturer's
recommendations. The Parties will use these meter
readings to check the readings obtained by PSE&G. In
the event of a discrepancy between meters, the readings
obtained by PSE&G shall prevail until such time as all
of the meters can be recalibrated. If such
recalibration demonstrates that the PSE&G meter data
was in error, an appropriate adjustment shall be made
for the period in question.
ARTICLE 10
BILLINGS AND RECORDS
10.1 Billing
JCP&L shall mail to Seller not later than thirty (30)
days after the end of each monthly billing period (1) a
statement showing the Electricity delivered to JCP&L
from the Facility for that monthly billing period, (2)
JCP&L's computation of the amount due Seller, (3) such
other amounts as may then be due and payable by Seller
to JCP&L hereunder. Together with such monthly
statement, JCP&L shall mail to Seller JCP&L's check in
payment of the said amount shown due Seller. If Seller
desires a wire transfer, such wire transfer shall be
made within 33 days after the end of the related
monthly billing period.
34
10.2 Records
Both Seller and JCP&L shall keep a record of all
invoices, receipts, charts, computer printouts, punch
cards or magnetic tapes related to the volume or price
of Electricity sales made hereunder. Such records
shall be made available for inspection by either Party
upon reasonable notice. All such materials shall be
kept on record for a minimum of six (6) years from the
date of their preparation.
10.3 Commencing with the Effective Date, Seller shall pay to
JCP&L a monthly administration fee in the amount of
$1,440, as such amount shall have been adjusted
annually on each June 18 commencing June 18, 1991 based
upon the change in the GDPDI. Such fee shall be offset
against JCP&L's payment to Seller pursuant to Section
10.1. This fee is to be further adjusted annually on
each June 18 after the Effective Date based upon the
change in the GDPDI.
10.4 JCP&L shall have the right to set off at any time
against any and all amounts which may be due and owing
from JCP&L to Seller under this Amended and Restated
Agreement the full cost of any and all materials,
equipment, services and supplies for which payment is
past due.
10.5 a) In the event adjustments or corrections to
billing statements are required as a result of
inaccurate meters or other errors in computation or
billing, the Parties shall recompute amounts due from
or to JCP&L during the period of inaccuracy as provided
in Article 7 hereof and otherwise correct any errors in
such billing statement. If the total amount, as
recomputed, due from a Party for the period of
inaccuracy varies from the total amount due as
previously computed, and payment of the previously
computed amount has been made, the difference shall be
paid to the Party entitled to it within thirty (30)
days after the recomputation.
b) If JCP&L or Seller does not receive written notice from
the other Party of an objection to a billing statement
within thirty (30) days from the rendering thereof,
said billing statement shall be deemed correct.
ARTICLE 11
ACCESS TO SELLER'S FACILITY
35
Properly accredited representatives of JCP&L shall, at
reasonable times, with reasonable notice to Seller and subject to
compliance with all of Seller's reasonable safety rules, have
access to Seller's Facility for any purpose reasonably connected
with this Amended and Restated Agreement or the exercise of any
right secured to JCP&L by law or its Tariff for Electric Service.
ARTICLE 12
FORCE MAJEURE
12.1 a) The term "force majeure" as used herein means
unforeseeable causes beyond the reasonable control of
and without the fault or negligence of the party
claiming "force majeure", including but not limited to
acts of God, strike, flood, earthquake, storm, fire,
lightening, epidemic, war, riot, civil disturbance,
sabotage, change in law or applicable regulation
subsequent to the date thereof and action or inaction
by any federal, state or local legislative, executive,
administrative or judicial agency or body which, in any
of the foregoing cases, by exercise of due foresight
such party could not reasonably have been expected to
avoid, and which by the exercise of due diligence, it
is unable to overcome.
b) Anything to the contrary contained in Section
12.1(a) or otherwise herein notwithstanding, except as
may expressly be provided in Section 12.1(a), the term
"force majeure" shall not include any of the
following:'
i) Any reduction, curtailment or interruption of
generation or operation of the Generating Facility,
whether in whole or in part, or the ability of
JCP&L to accept or transmit electricity generated
by the Generating Facility which reduction,
curtailment or interruption is caused by or arises
from the action or inaction of any third party,
including without limitation, any vendor or
supplier to the Generation Facility or JCP&L of
material, equipment, supplies or services, unless,
and then only to the extent that, any such action
or inaction would itself be excused hereunder as a
"force majeure"; provided, however, that failure
of JCP&L to supply natural gas to the Facility
during periods when PSE&G has not interrupted or
recalled the interstate or intrastate transporta-
tion that it supplies under the PSE&G Gas Supply
Agreement and to accept available Output from the
Facility shall be considered a "force majeure"
event with respect
36
to the obligations of Seller hereunder, provided,
further, that the non-supply of natural gas by
JCP&L during periods when PSE&G has interrupted or
recalled the interstate or intrastate
transportation that it supplies under the PSE&G
Gas supply Agreement shall not be considered a
"force majeure" event hereunder;
ii) Any outage, whether or not due to the fault
or negligence of JCP&L or Seller, of the
Generating Facility or JCP&L's electric system
attributable to a defect or inadequacy in the
manufacture, design or installation of the
Generating Facility or JCP&L's facilities or
equipment or to a breakdown of their mechanical or
electrical equipment that prevents, curtails,
interrupts or reduces the ability of the
Generating Facility to generate electricity or the
ability of JCP&L to perform its obligations
hereunder; or
iii) Changes in market conditions that affect the
cost or availability of the Generating Facility's
primary or alternate fuel supply or demand for
Seller's products or affect JCP&L's fuel supplies
or alternate supplies of electric energy or
customer demand therefor.
12.2 Except for the obligation of either Party to make any
required payments hereunder, the Parties shall be excused
from performing their respective obligations under this
Amended and Restated Agreement and shall not be liable in
damages or otherwise if and to the extent that they are
unable to so perform or are prevented from performing by a
"force majeure", provided that:
a) the non-performing Party, as promptly as practicable
after the occurrence of the "force majeure", but in no
event later than 14 days thereafter, 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 reasonably required
by the "force majeure";
c) the non-performing Party uses its best efforts to
remedy its inability to perform; and
d) as soon as the non-performing Party is able to resume
performance of its obligations excused as a result of
37
the occurrence, it shall give prompt written
notification thereof to the other Party.
12.3 Neither Party shall be required to settle 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 being understood and agreed
that the settlement of strikes, walkouts, lockouts or other
labor disputes shall be entirely within the discretion of
the Party having such dispute.
12.4 a) Either Party may terminate this Amended and
Restated Agreement upon 10 days written notice if,
following the Effective Date (1) the Generating
Facility is either destroyed or substantially damaged
and Seller advises JCP&L that it does not intend
promptly to reconstruct or repair the Generating
Facility, or (2) an event of "force majeure" hereunder
prevents either Party from substantial performance of
its respective obligations hereunder for a period of 24
consecutive months; provided, however, that this
Amended and Restated Agreement may not be so terminated
if the Party prevented from performing due to such
"force majeure" event (i) is, to the reasonable
satisfaction of the other Party, unable despite the use
of its best efforts to overcome the effects of such
"force majeure" during such 24 months and (ii)
demonstrates to the reasonable satisfaction of the
other Party that the effects of such "force majeure"
can nevertheless be overcome and that it is diligently
applying its best efforts to do so. The Party
prevented from performing shall at its expense provide
the other Party not later than 60 days following a
request therefor or with an opinion of an independent
engineering firm, reasonably acceptable to such other
Party, supporting the matters set forth in (ii) above.
Failure to provide such an opinion shall be adequate
ground for termination of this Amended and Restated
Agreement.
b) Upon termination of this Amended and Restated
Agreement as provided in subparagraph (a) above, the
Parties shall have no further liability or obligation
to each other except for any obligations arising prior
to the date of such termination.
38
ARTICLE 13
INSURANCE LIABILITY AND INDEMNIFICATION
13.1 Insurance
a) Seller agrees to keep, or cause its contractors to
keep, the Generating Facility continuously insured with
reputable insurance companies against loss or damage in
the amounts and for the risks that property of similar
character is usually so insured by entities owning and
operating like properties.
b) Seller shall maintain, or cause its contractors to
maintain, in effect insurance coverage for the
Generating Facility with initial minimum limits as
follows:
Insurance Limits
1. a. Worker's Compensation
Insurance As required by statute
b. Employer's Liability
Insurance $1,000,000
2. Comprehensive General Liability
(Public Liability) Insurance
including:
a. Bodily Injury $5,000,000 per occurrence
and
Property Damage $5,000,000 per occurrence
or
b. Bodily Injury $5,000,000 combined
and single occurrence
Property Damage
c. Personal Injury $5,000,000 per occurrence
3. Automobile Liability Insurance
(Owned, hired and non-owned):
39
a. Bodily Injury $2,000,000 per Accident
b. Property Damage $2,000,000 per Accident
c) Seller shall also procure or cause to be procured and
maintain in effect business interruption insurance (or
in lieu thereof, an operation and maintenance agreement
for the Generating Facility with a reputable equipment
manufacturer containing availability guarantees for the
Generating Facility which agreement shall be
satisfactory to JCP&L).
d) JCP&L may, upon 90 days prior written notice, require
Seller and Seller shall, from time to time, increase
the foregoing initial limits to amounts which shall be
reasonable, based upon. (a) commercial availability of
such increased limits on commercially reasonable terms,
and (b) the location, size and type of the Generating
Facility, to meet changed circumstances and then
current industry practice.
e) Seller's liability insurance (other than its worker's
compensation insurance) shall include provisions or
endorsements (a) naming JCP&L as an additional insured,
(b) stating that such insurance is primary insurance
with respect to the interest of JCP&L and that any
insurance maintained by JCP&L is excess and not
contributory insurance with the insurance required
hereunder, and providing that such policies shall not
be canceled or their limits of liability reduced except
upon 30 days prior written notice to JCP&L.
f) A copy of each such insurance policy, certified as a
true copy by an authorized representative of the
issuing insurance company or in lieu thereof, a
certificate in form satisfactory to JCP&L certifying
that such insurance is in effect, shall be furnished to
JCP&L not less than 30 days prior to the commencement
of construction of the Interconnection Facilities and
15 days prior to the expiration date of each such
policy.
13.2 Liability
Neither JCP&L nor Seller, nor their respective officers,
directors, agents, employees, parent or affiliates, or their
respective officers, directors, agents or employees shall be
liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees,
successors, or assigns, for claims for incidental, special,
40
indirect or consequential damages of any nature connected
with or resulting from performance or non-performance of
this Amended and Restated Agreement, including, without
limitation, claims in the nature of lost revenues, income or
profits (other than payments properly due under this Amended
and Restated Agreement) irrespective of whether such claims
are based upon warranty, negligence, strict liability,
contract operation of law or otherwise.
Seller shall be liable to JCP&L for any and all direct
damage caused to JCP&L's facilities and property resulting
from or caused by the presence, operation, maintenance,
condition, electrical output or removal of Seller's
Facility.
Nothing in this Amended and Restated Agreement shall be
construed to create any duty to, any standard of care with
reference to, or any liability to, any person not a Party
hereto.
Except where specifically stated in the Amended and Restated
Agreement to be otherwise, the duties, obligations and
liabilities of the Parties are intended to be several and
not joint or collective. Nothing contained herein shall
ever be construed to create an association, trust,
partnership, or joint venture or impose a trust or
partnership duty, obligation or liability on or with regard
to either Party. Each Party shall be individually and
severally liable for its own obligation hereunder.
13.3 Seller hereby indemnifies and agrees to defend JCP&L, its
Affiliates, officers, directors, partners, agents and. employees
against all loss, damage, expense, and liability to third persons
for injury to or death of persons or damage to property,
proximately caused by the negligent design, construction,
ownership, operation or maintenance of any of Seller's works or
facilities used in connection with this Amended and Restated
Agreement, and JCP&L indemnifies and agrees to defend Seller, its
Affiliates, officers, directors, agents, partners, and employees
against all loss, damage, expense and liability to third persons
for injury to or death of persons or injury to property
proximately caused by the negligence of JCP&L, in connection
therewith; provided, however, that neither Party, nor their
respective Affiliates, officers, agents, directors, partners, or
employees shall be liable to the other Party, its Affiliates,
agents, officers, directors, partners, or employees for
incidental, special, indirect or consequential damages of any
nature connected with or resulting from performance or non-
performance of this Amended and Restated Agreement. Each Party
hereto shall furnish the other Party with written notification as
soon as practicable (but in no event later than ten (10) days
prior to
41
the time any response is required by law) after such Party
becomes aware of any event of circumstances, or the threat
thereof, which might give rise to such indemnification. At
the indemnified Party's request, the indemnifying Party
shall defend any suit asserting a claim covered by this
indemnity and shall pay all costs and expenses (including
the cost of investigation and attorney's fees and expenses)
that may be incurred in enforcing this indemnity. The
indemnified Party may, at its own expense, retain separate
counsel and participate in the defense of any such suit or
action.
ARTICLE 14
EVENTS OF DEFAULT
14.1 Definition
The following shall constitute an Event of Default
hereunder:
a) JCP&L fails to make payment of any amount undisputed
due Seller hereunder, which failure continues for a
period of thirty (30) days after notice of such
nonpayment;
b) JCP&L or Seller fails to perform fully any material and
essential obligation hereunder, which failure is not
excused by force majeure or the non-performance of the
other Party and such failure continues for more than
thirty (30) days after notice of such failure to
perform. However, the notice and thirty (30) day grace
period of the Paragraph (b) shall not apply to the
breaches covered by paragraphs (c), (d) and (e) below;
c) Except for sales of electricity to DuPont as may be
specifically provided herein, Seller sells or supplies
any Electricity from the Facility to a party other than
JCP&L without JCP&L's prior written consent;
d) By order of a court of competent jurisdiction, a
receiver or liquidator or trustee of either Party or of
any of the property of either Party shall be appointed,
and such receiver or liquidator or trustee shall not
have been discharged within a period of sixty (60) days;
or if by decree of such a court, a Party shall be adjud-
icated bankrupt or insolvent or any substantial part of
the property of such Party shall have been sequestered,
and such decree shall have continued undischarged and
unstayed for a period of sixty (60) days after the
entry thereof; or if a petition to declare bankruptcy
or to reorganize a Party pursuant to any of the
provisions of
42
the Federal Bankruptcy Act, as it now exits or as it
may hereafter be amended, or pursuant to any other
similar state statute applicable to such Party, as now
or thereafter in effect, shall be filed against such
Party and shall not be dismissed within sixty (60) days
after such filing; or
e) If either Party shall file a voluntary petition in
bankruptcy under any provision of any federal or state
bankruptcy law or shall consent to the filing of any
bankruptcy or reorganization petition against it under
any similar law; or, without limitation of the
generality of the foregoing, if a Party shall file a
petition or answer or consent seeking relief or
assisting in seeking relief in a proceeding under any
of the provisions of the Federal Bankruptcy Act, as it
now exists or as it may hereafter be amended, or
pursuant to any other similar state statute applicable
to such Party, as now or hereafter in effect, or an
answer admitting the material allegation of a petition
filed against it in such a proceeding; or if a Party
shall make an assignment for the benefit of its
creditors; or if a Party shall admit in writing its
inability to pay its debts generally as they become
due; or if a Party shall consent to the appointment of
a receiver or receivers, or trustees, or liquidator or
liquidators of it or of all or any part of its
property.
14.2 Remedies for Breach
a) If the defaulting Party fails to cure any default
within thirty (30) days of receipt of notice of said
default, the non-defaulting Party may seek all
available remedies at law or in equity, including
without limitation the right to recover damages caused
by such default; provided, however, that neither Party,
nor their respective Affiliates, officers, agents,
directors, partners or employees shall be liable to the
other Party, its Affiliates, officers, agents,
directors, partners or employees for incidental,
special, indirect or consequential damages of any
nature connected with or resulting from performance or
non-performance of this Amended and Restated Agreement.
b) Secured Party's Option
In the event that Seller has assigned this Amended and
Restated Agreement as a security interest to a lender
pursuant to and in accordance with Article 18 hereof,
then such lender shall be entitled to receive notice of
any breach hereof by Seller and such lender shall have
43
the same opportunity as Seller to cure such breach to
the extent Seller has agreed to give such right to its
lender.
c) If either Party breaches this Amended and Restated
Agreement, the other Party has the right (but not the
duty) to bring an action in a court of competent
jurisdiction to require the breaching Party to
terminate such breach and to specifically perform the
breaching Party's obligation in accordance with the
terms and conditions of the Amended and Restated
Agreement.
14.3 JCP&L's Rights and Obligations
Except as herein. otherwise provided, unless and until this
Amended and Restated Agreement has been terminated, JCP&L
shall not, as a result of any breach or alleged breach by
Seller, refuse to make, suspend or delay any of the payments
due Seller hereunder.
14.4 Waiver of Breach
Either Party may waive breach by the other Party, provided
that no waiver by or on behalf of either JCP&L or Seller of
any breach of any of the covenants, provisions, conditions,
restrictions or stipulations contained herein shall take
effect or be binding on JCP&L or Seller unless the waiver is
reduced to writing and executed by JCP&L or Seller, and any
such waiver shall be deemed to extend only to the particular
breach waived and shall not limit or otherwise affect any
rights that JCP&L or Seller may have with respect to any
other or future breach.
ARTICLE 15
REGULATORY APPROVAL
15.1 This Amended and Restated Agreement shall not become
effective until each of the following shall have occurred:
a) the BPU Order shall have been issued;
b) the Bankruptcy Court shall have issued the Approval
Order;
c) the existing Gas Service Agreement dated May l3, 1993
between Seller and PSE&G shall have been terminated or
44
assigned to JCP&L without any liability to Seller or
the Facility;
d) JCP&L shall have entered into the PSE&G Gas Supply
Agreement or, if the existing Gas Service Agreement
described in clause (c) shall have been assigned to
JCP&L, such agreement shall have been amended or
modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall
have received all necessary regulatory approvals and
otherwise become effective in accordance with its
terms; and
e) that certain Third Amendment to Power Purchase
Agreement dated as of December ___, 1995 by and between
O'Brien (Newark) Cogeneration, Inc. and JCP&L shall
have become effective in accordance with its terms.
The Parties agree to use all reasonable efforts to obtain
such approvals in a timely manner, and if requested by
Seller, agree to negotiate in good faith any changes which
the BPU may request as a condition to the issuance of the
BPU Order. Any changes herein which may be requested by
Seller's Lenders will be negotiated by Seller and JCP&L in
good faith.
ARTICLE 16
NOTICES AND SERVICE
16.1 All notices required or permitted hereunder shall be in
writing and shall be personally delivered or sent by
certified United States mail, postage prepaid, telex,
facsimile transmission, or overnight express mail or courier
service addressed as follows:
If to Seller to:
O'Brien (Parlin) Cogeneration, Inc.
c/o NRG Energy
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
If to the Company to:
Jersey Central Power & Light Company
Attn: Manager -Cogeneration
300 Madison Avenue
Morristown, New Jersey 07962-1911
or to other person at such other address as a Party shall
designate by like notice to the other Party.
45
16.2 Unless otherwise provided herein, all notices hereunder
shall be deemed to be given when sent or personally
delivered.
ARTICLE 17
AMENDMENTS
No amendment or modification of the terms of this
Amended and Restated Agreement shall be binding on either JCP&L
or Seller unless reduced to writing and signed by both Parties.
Unless otherwise agreed by the Parties, no such amendment or
modification shall become effective unless approved by the BPU in
form and substance satisfactory to each Party.
ARTICLE 18
RIGHT OF FIRST REFUSAL AND CONSENT
FOR THIRD PARTY INTERESTS
Neither Party shall transfer, assign, merge or delegate
its rights, interest or duties hereunder without the prior
written consent of the other Party, nor shall Seller sell or
transfer all or any part of the Project facilities covered by
this Amended and Restated Agreement, without the prior written
consent of JCP&L. Such prior written consent will not be
unreasonably withheld, but will, in addition to any other
reasonable conditions, require that: (1) the proposed
transferee, purchaser, assignee, delegatees or acquirer has
agreed in writing to be bound by all the terms and conditions
hereby, and (2) in the case of a proposed sale or transfer by
Seller of part or all of the Project facilities covered hereby,
Seller shall have first offered in writing to sell or transfer
such facilities to JCP&L pursuant to the same terms and
conditions that Seller will enter into with the proposed
transferee or purchaser, and JCP&L in writing has rejected such
offer. Upon presentation of said offer to JCP&L by Seller, JCP&L
shall have thirty (30) days to review and approve said offer. If
Seller does not receive written notification from JCP&L within
said thirty (30) days, it shall be presumed that JCP&L has no
objection to the proposed transaction and has rejected such
offer. Any sale, transfer, assignment, merger or delegation made
without such prior written consent shall be null and void.
It is specifically understood and agreed by and between
the Parties that JCP&L may at any time, without Seller's consent,
assign this Amended and Restated Agreement to any successor to
JCP&L, or to Pennsylvania Electric Company, Metropolitan Edison
Company, or any other electric utility which is part of the
General Public Utilities' System, provided that such assignee
agrees to be
46
bound by all of the terms and conditions of the Amended and
Restated Agreement.
ARTICLE 19
CHOICE OF LAW
The Parties hereto hereby agree that all disputes
arising under the Amended and Restated Agreement not resolved
between the Parties shall be decided by a court of competent
jurisdiction in the State of New Jersey and Seller hereby submits
itself to the jurisdiction of such court for such purposes.
ARTICLE 20
CERTAIN JCP&L COSTS
Seller hereby agrees to reimburse JCP&L for JCP&L's
costs and expenses (including reasonable fees and expenses of
JCP&L's counsel) incurred in connection with JCP&L's review,
execution and delivery of any instruments agreements, or
documents necessary in connection with Seller's assignment,
transfer, sale or other disposition of this Amended and Restated
Agreement or any interest in the Facility.
ARTICLE 21
OTHER AGREEMENTS
From and after the Effective Date, this Amended and
Restated Agreement shall supersede any and all oral or written
agreements and understandings heretofore made relating to the
subject matter hereof, including without limitation the Power.
Purchase Agreement, and this Amended and Restated Agreement
constitutes the entire agreement and understanding of the Parties
relating to the subject matter hereof.
ARTICLE 22
CAPTIONS
All indices, titles, subject headings, section titles
and similar items are provided for the purpose of reference and
convenience and are not intended to be inclusive, definitive or
to affect the meaning, content or scope hereof.
47
ARTICLE 23
PARTIES
Wherever in the Amended and Restated Agreement any
Party shall be designated or referred to by name or general
reference, such designation is intended to and shall have the
same effect as if the words, "heirs, executors, administrators,
personal or legal representatives, and permitted successors,
purchasers, transferees, grantees, delegatees, and assignees" had
been inserted after each and every such designation and all the
terms, covenants and conditions herein contained shall be for and
shall inure to the benefit of and shall bind the respective
Parties hereto, and their heirs, executors, administrators,
personal or legal representatives, and their permitted
successors, purchasers, transferees, grantees, delegatees and
assignees, respectively.
In all references herein to any parties, persons,
entities or corporations the use of any particular gender or the
plural or singular number is intended to include the appropriate
gender or number as the text hereof may require.
ARTICLE 24
COUNTERPARTS
This Amended and Restated Agreement may be executed in
any number of counterparts, and all such counterparts executed
and delivered, each as an original, shall constitute but one and
the same instrument.
ARTICLE 25
WAIVER
Any waiver at any time by either Party of its rights
with respect to a default hereunder, or with respect to any other
matters arising in connection with this Amended and Restated
Agreement, shall not be deemed a waiver with respect to any
subsequent default or any other matter.
ARTICLE 26
DISPUTES
Should a dispute between the Parties arise hereunder,
the Parties hereto shall continue in good faith to perform their
respective obligation hereunder. The Parties shall negotiate
with
48
each other in a bona fide effort to resolve any such dispute
without resorting to judicial proceeding, and failing settlement,
they shall submit any unresolved dispute for settlement by
alternative dispute resolution techniques. If the dispute
remains unresolved for more than ninety (90) days after formal
commencement of such efforts to resolve the dispute, either Party
may seek judicial enforcement of its rights and remedies
hereunder as herein provided. Notwithstanding the foregoing, the
rights and remedies of the Parties hereto set forth in Article 14
shall in no way be impaired, restricted or otherwise affected.
ARTICLE 27
GRATUITIES
JCP&L shall prohibit its employees from using their
official position for personal financial gain, or from accepting
any personal advantage from anyone under circumstances which
might reasonably be interpreted as an attempt to influence the
recipients in the conduct of their duties. Seller and its
employees and representatives shall not, under circumstances
which might reasonably be interpreted as an attempt to influence
the recipients in the conduct of their duties, extend any
gratuity or special favor to employees of JCP&L.
IN WITNESS WHEREOF, the Parties hereto have caused this Amended
and Restated Agreement to be signed by their respective officers
thereunto duly authorized as of the day and year first set forth
above.
IN WITNESS
ATTEST: O'BRIEN (PARLIN) COGENERATION, INC.
By: /s/ Leonard Bluhm
Title: Title:
ATTEST: JERSEY CENTRAL POWER & LIGHT COMPANY
By: /s/ M. P. Morell
Assistant Secretary Title: Vice President
49
Appendix A
Facility Fuel Management Services
A.1 GPU Natural Gas Private Pooling Point ("PPP")
A.1.1 GPU Service Corporation ("GPUSC") is authorized to
act on behalf of and as agent for JCP&L in all matters pertaining
to the procurement and delivery of natural gas for consumption by
those participating gas-fired generating facilities owned by
JCP&L or certain facilities owned by an Independent Power
Producer with a Power Purchase Agreement with JCP&L, including
the Facility. JCP&L and GPUSC shall hereafter collectively be
referred to as the "Company".
A.l.2 GPUSC has established a Natural Gas Private
Pooling Point ("PPP"), which is a portfolio of natural gas supply
and transportation assets, that is managed collectively by New
Jersey Natural Energy Corporation ("NJNE") and GPUSC pursuant to
a Master Fuel Management Agreement. NJNE is a wholly owned
subsidiary of New Jersey Resources Corporation.
A.1.3 Facilities served by the PPP, including the
Facility, will be provided a comprehensive natural gas management
service such that neither the Facility's owners nor operator
shall be responsible nor held liable for procuring, transporting,
scheduling, nominating or delivering natural gas to the
Facility's burner tip. In the case of the Facility, this shall
include serving the requirements of the base load portion of the
Facility, the additional loads when the Facility's dispatchable
operation is directed by the Company's dispatchers, or the
additional loads and requirements for producing steam (and, if
applicable, electricity) for DuPont (including the Facility's
auxiliary boilers) provided that Seller both complies with the
explicit notification requirements set forth herein and elects to
accept delivery of such natural gas at the price specified in
Sections A.2.2 and A.2.3 below, as appropriate.
A.l.4 GPUSC has designated a full time employee assigned
to the PPP, and officed at GPUSC's dispatch center, to coordinate
all natural gas procurement and scheduling for PPP facilities
including the Facility. Such employee shall hereafter be
referred to as the "Fuel Manager". The Fuel Manager or his
designee shall be available twenty-four hours per day, seven days
per week.
A.2 Operations
A.2.l The PPP shall provide natural gas to the
Facility's Burner Tip to operate the Base Capacity of the
Facility unless the Seller notifies the GPUSC dispatcher that
such Base Capacity is not available as a consequence of a planned
or forced outage. In the event of a forced outage, the Seller
shall immediately notify the Company dispatcher of the outage
condition and its anticipated duration. The Seller shall notify
JCP&L of a major Planned
Outage, i.e., scheduled outages expected to last longer than
seven (7) consecutive days, at least two (2) months prior to the
planned start of said outage. Further, the Seller shall notify
JCP&L of its intent to resume operation of the Base Capacity at
least one (1) week prior to the completion of a major Planned
Outage. Seller shall use best efforts to notify the Company of
Maintenance Outages and short duration Planned Outages, i.e.,
unscheduled Planned Outages or Planned Outages expected to take
less than seven (7) days, within one day of the decision to
conduct such an outage. If the PPP fails to properly procure and
cause to be delivered an adequate supply of natural gas to
operate the Base Capacity of the Facility during periods when
PSE&G has not interrupted or recalled the interstate or
intrastate transportation that it supplies to the PPP pursuant to
its agreement with the Company to support, among other things,
the operation of the Facility, then the Seller shall,
nonetheless, ensure that an adequate supply of kerosene is
available at all times and agree to operate the Base Capacity of
the Facility on kerosene provided that the Company shall pay for
said kerosene pursuant to Article 9 of the Agreement and that
operation of the Facility on kerosene does not cause the Facility
to violate its air permits. Alternatively, the Seller may Procure
and cause to be delivered a supply of natural gas to the Facility
from a third party supplier to operate the Base Capacity of the
Facility during such periods. The Company shall reimburse the
Seller for the all-in cost of such natural gas up to the sum of
the mid-point of the range of the most recent price to Mid-
Atlantic Citygates, Transco, Zone 6, or Texas Eastern, Zone M-3,
whichever is greater, as published in the following day's Gas
Daily, Eastern Edition, and PSE&G's reasonable charge to
transport said natural gas to the Facility.
A.2.2 In accordance with Section 6.13 of the Agreement,
the Seller may elect to generate up to 50 MW during periods of
non-dispatch if it agrees to pay for the proportional amount of
fuel to generate such excess. The Seller shall notify the Fuel
Manager by telephone and fax of its intention to generate such
excess prior to 0900 hours of the day preceding Seller's proposed
generation in order for the PPP to make proper arrangements for
additional supplies and delivery of natural gas. The Fuel
Manager shall fax confirmation of the Seller's request by 1200
hours on that day and shall also provide to the Seller a firm
price quote for the additional fuel. The Fuel Manager shall use
reasonable efforts to procure and cause to be delivered such gas
at a competitive, market based price. Upon receipt of such firm
price quote, Seller shall have the option, to be exercised by
telephone or fax notice by 1300 hours on that day, (i) to accept
such firm price quote, or (ii) to elect not to take the requested
gas from the PPP, but instead to procure and pay for other gas
directly from a third party supplier, or (iii) to elect not to
generate additional energy above the Base Capacity. In the event
Seller elects to procure and pay for gas from a third party
supplier, JCP&L shall seek to cause such gas to be delivered to
the Facility through its intrastate transportation agreement with
PSE&G, at the contract rates provided therein, all at Seller's
expense.
A.2.3 In accordance with Section 9.1 of the Agreement,
the PPP shall be responsible for tendering natural gas to the
Facility for production of steam (and, if applicable,
electricity) for DuPont, including natural gas required for the
Facility's auxiliary boiler which shall be operated, from time to
time, by the Seller to produce steam for sale to DuPont. The
Seller shall notify the Fuel Manager of its intention to operate
the Facility to
2
produce steam and electricity, if applicable, for DuPont, if such
operation would require operating the Facility at a greater load
than would otherwise be required to provide Base Capacity and/or
Dispatch Capacity to JCP&L under the Agreement, including
Seller's intention to operate the auxiliary boiler, and the
amount of natural gas required prior to 0900 hours of the day
preceding Seller's proposed operation in order for the PPP to
make proper arrangements for additional supplies and delivery of
natural gas or, if notice by such time is not feasible (e.g.,
because notice of reduction in the Dispatch Capacity was not
given by JCP&L by that time or because of the sudden occurrence
of a full or partial Forced Outage), as much notice as is
feasible under the circumstances. The Fuel Manager shall fax
confirmation of the Seller's request by 1200 hours on that day
(or, if response by that time is not feasible because shorter
notice was given by Seller as permitted under the previous
sentence, as soon as is feasible). Seller shall pay for such
additional natural gas at the rate provided in Section A.2.5
below.
A.2.4 Once nominated, the Seller is obligated to consume
within plus or minus five percent (5%) any additional gas
requested pursuant to Sections A.2.2 and A.2.3 hereof, in the
aggregate during each calendar month, unless other arrangements
can be made at the time between the Seller and the Fuel Manager.
In the event the Facility, for whatever reason, is unable or
fails to consume the additional gas that it had previously
requested, the Company shall use reasonable efforts to redirect,
place into storage, or remarket such excess gas so as to mitigate
the cost of disposing of said excess gas. Should the Facility
consume an amount of natural gas greater than one hundred and
five percent (105%) of the aggregate amount requested during the
calendar month, then the Company shall use reasonable efforts to
remedy any resulting imbalances including, when practicable,
withdrawal of natural gas reserves from storage if an adequate
supply of such natural gas exists and can be accessed. However,
the incremental cost of such gas along with any and all penalties
or claims that may nonetheless be applied by a third party,
including but not limited to an interstate pipeline company or
PSE&G, as a result of an imbalance, shall be paid by the Seller.
A.2.5 The Fuel Manager shall provide the Company and the
Seller with a monthly weighted average cost of gas ("WACOG") to
the PSE&G city gate that shall be combined with the cost of
variable intrastate transportation charged to the PPP by PSE&G to
deliver gas to the Facility's burner tip. The combined WACOG and
intrastate transportation charges will be used in the calculation
of Seller's reimbursement to ICP&L for steam (and, if applicable,
electric) sales to DuPont. The WACOG shall be the PPP's overall
WACOG at PSE&G's city gate and shall be reported to the Company
and the Seller no later than three (3) business days after the
end of the month. Upon receipt of the Seller's written request,
the Fuel Manager shall provide documentation supporting the
calculation of the WACOG and shall provide access, as required to
relevant supporting detail including invoices and LDC metering
summaries.
A.2.6 The Company may request that the Seller operate
the Dispatch Capacity of the Facility. A Scheduled Dispatch
Period shall require a minimum of thirty (30) minutes advanced
notice prior to the commencement of a Start-up Period which shall
not exceed one and one half hours (plus the supplemental Start-up
period in the case of a cold start). The PPP shall provide all
natural gas required by the Facility during a Start-Up Period
(plus the
3
supplemental Start-up period in the case of a cold start), the
Scheduled Dispatch Period and the subsequent Shut-Down Period.
It is the responsibility of the PPP to ensure that an adequate
supply of natural gas is available to operate the Dispatch
Capacity of the Facility, subject to the adjustments contemplated
in Sections 6.11. The Fuel Manager shall estimate the amount of
natural gas required based upon the anticipated duration of the
Scheduled Dispatch Period, the level of Dispatch requested (i.e.,
second combined cycle, duct firing, or maximum output), the
typical natural gas consumption during regular Start-Ups and Shut-
Downs and the expected heat rate of the Facility. Unless
otherwise advised by the Seller, the Fuel Manager shall utilize
the Average Heat Rate of the preceding Contract Year, or 9500
BTU/kWh, to determining the natural gas requirements of the
Facility. Seller shall use reasonable efforts to maintain an
accurate estimate of the Facility's Heat Rate and shall report
any significant variations (i.e., +1-5%) from the Average Heat
Rate then in effect, either due to the material condition of the
Facility or temperature conditions. Seller shall not be
responsible for any cost or charges, including storage or
remarketing costs or imbalance charges, resulting from any
difference between such estimates and the Facility's actual usage
provided that (i) Seller operates the Facility as contemplated
and (ii) Seller has properly notified the Fuel Manager of any
significant variations in the Heat Rate used by the Fuel Manager
in calculating the natural gas requirements of the Facility. If
the PPP fails to properly procure and cause to be delivered an
adequate supply of natural gas to operate the Dispatch Capacity
of the Facility during periods when PSE&G has not interrupted or
recalled the interstate or intrastate transportation that it
supplies to the PPP pursuant to its agreement with the Company to
support, among other things, the operation of the Facility, then
the Seller shall, nonetheless, ensure that an adequate supply of
kerosene is available at all times and agree to operate the
Dispatch Capacity of the Facility on kerosene provided that the
Company shall pay for said kerosene and that operation of the
Facility on kerosene, as provided in the Agreement, does not
cause the Facility to violate its air permits. In either event,
should the Company not elect to operate the Dispatch Capacity on
kerosene either because of cost or air permit restrictions, not
withstanding anything else herein to the contrary, the Seller
shall be entitled to receive compensation pursuant to Article 8
of the Agreement.
A.2.7 From time to time, the Company may direct the
Seller to operate the Facility on kerosene instead of natural gas
during periods when natural gas is either unavailable or
prohibitively expensive. In accordance with Section 6.11(a) of
the Agreement, the Company shall not request the Seller to
operate the Dispatch Capacity for more hours than is currently
authorized under the Facility's air permit without first
obtaining an appropriate variance from the New Jersey Department
of Environmental Protection. The Company shall reimburse Seller
for the cost of kerosene as provided in Article 9 of the
Agreement. The Company shall provide at least a comparable level
of natural gas service to the Facility for the purpose of
operating the Base Capacity to that provided by PSB&G to its QF
customers under its prevailing CIG Tariff.
4
A.3 Metering of Natural Gas Flows to the Facility
A.3.l In accordance with Section 9.3 of the Agreement,
both Seller and JCP&L shall maintain meters for measuring the
quantity of fuel used by the Facility. It is contemplated by the
Parties at the time of this Agreement that JCP&L shall be
afforded access to PSE&G's billing meter and shall further be
permitted to connect its remote telemetering unit ("RTU") to such
billing meter for the purpose of electronically transmitting real
time fuel consumption data to GPUSC's dispatch center. In the
event that, for whatever reason, access to PSE&G's billing meter
is denied or deemed to be impracticable, then JCP&L shall have
the right to cause to be installed at its own expense a meter
capable of recording and electronically transmitting required
real time fuel consumption data at the Facility.
A.3.2 The Fuel Manager will monitor the consumption of
natural gas at the Facility to ensure that an adequate supply of
natural gas is available to operate both the Facility's Base
Capacity and, when requested by ICP&L, the Dispatch Capacity. In
the event that the Fuel Manager determines that an insufficient
quantity of natural gas remains to continue to operate the
Facility at its current level of output, it may request the
Company, and the Company may direct the Seller, that the a
Scheduled Dispatch Period be shortened unless additional supplies
can be secured. If the shortfall is substantial (i.e., greater
than 5% variation from anticipated consumption at the point in
time that the comparison is made and cannot be readily
explained), the Company and/or the Seller may request that any or
all gas measuring meters be recalibrated. If it is determined
that the additional fuel consumption is the result of a material
change in the Faci1ity's performance, the Fuel Manager shall
notify the Seller in writing immediately, who shall, in turn,
confirm receipt of such notification and explain the cause or
causes of the change in performance and what steps will be taken
to remedy the situation. The extent of the change in performance
may necessitate that the Facility be declared to be in a full or
partial Forced Outage until the condition is remedied.. In any
event, the provisions set forth in Section 8.3h of the Agreement
shall apply.
A.3.3 The Company shall seek to cause PSE&G to deliver
natural gas of interstate pipeline quality to the Facility at its
system operating pressure.
A.4 Title
A.4. 1 Title to the natural gas supply used to fuel the
Base Capacity and Dispatch Capacity of the Facility shall remain
with GPUSC.
A.4.2 Title to the natural gas requested by the Seller
to fuel the auxiliary boiler, to provide steam (and, if
applicable, electricity) to DuPont, or to operate the Base
Capacity above the 41 MW contractual limit pursuant to Section
6.13 of the Agreement shall transfer to the Seller at the PSE&G
billing meter. Such title transfer shall create an obligation on
the part of the Seller to reimburse the Company the full cost of
the natural gas as provided herein.
5
A.4.3 At all times, tide to any interstate
transportation which may be used from to time to transport
natural gas to the PSE&G city gate for the purpose of operating
the Facility including the auxiliary boiler shall remain with
GPUSC.
A.4.4 The Company warrants that it will have good and
marketable tide to all natural gas supplied to Seller and full
authority to deliver such natural gas to Seller free and clear of
any liens, claims or encumbrances of any third party.
A.5 Liability
A.5.1 The Seller shall have no responsibility to procure
natural gas for the Facility, nor shall it be liable for any
claims or penalties resulting from the supply and or
transportation of natural gas to the Facility when operation of
the Facility is within the prescribed terms of the Agreement.
Such operation shall include operating the Base Capacity of the
Facility at the 41 MW limit, operating the Dispatch Capacity of
the Facility when done so in the prescribed manner in response to
a request made by the Company, operating the auxiliary boiler
during Non-Dispatch Periods upon proper notification by the
Seller to the Fuel Manager, and generating any additional output
above the Base Capacity up to 50 MW upon proper notification by
the Seller to the Fuel Manager.
A.5.2 The Seller shall be liable for the unmitigated
cost of disposing of additional gas supplies previously requested
by the Seller referenced in Section A.2.4 of this Appendix but
not consumed at the Facility pursuant to the terms and
limitations set forth in that Section.
A.5.3 The Seller shall be liable for the entire cost of
any natural gas consumed by the Base Capacity of the Facility in
excess of 41 MW or by the auxiliary boiler during Non-Dispatch
Periods as provided in Sections A.2.2 and A.2.3 above. Further,
in addition to the full cost of the natural gas consumed, the
Seller shall be entirely liable for any penalties or claims that
might result as a consequence of its failure to properly notify
the Fuel Manager of its intention to operate the Base Capacity at
a level greater than 41 MW or to operate the auxiliary boiler.
Under no circumstances shall the Seller operate the Dispatch
Capacity without the direct knowledge and consent of the Company.
Such an action on the part of the Seller shall constitute a
breach of the Agreement. Further, the Seller shall be entirely
liable for the full cost of the natural gas consumed as well as
any and all penalties or claims that might result as a
consequence of its actions.
A.5.4 The Company shall not be held liable for any fines
imposed by the New Jersey Department of Environmental Protection
on the Seller resulting from the Facility exceeding the
authorized level of operations on kerosene. It is the Seller's
responsibility to ensure compliance with all of its permits.
However, Seller shall not be obligated to produce either the Base
Capacity or the Dispatch Capacity if the PPP has not provided
adequate natural gas for such production during periods when
PSB&G has not interrupted or recalled the interstate or
intrastate transportation that it supplies to the PPP, pursuant
to its agreement with the Company, to support, among other
things, the operation of the Facility, if such production would
cause the Facility to exceed authorized levels of operation on
kerosene. Such failure
6
to produce either Base Capacity or Dispatch Capacity shall not be
considered a Forced Outage under the Agreement.
A.5.5 Pursuant to Section A.2.7 of this Appendix, the
PPP shall provide a level of service comparable to PSE&G's CIG
Tariff which contemplates some number of days of interruption
during periods when the ambient air temperature falls below some
predetermined contract level. During such periods of natural gas
interruption, the Seller may operate the Facility on kerosene,
provided that such operation does not exceed the authorized
levels of operation on kerosene under the Facility's permit. The
Company shall reimburse the Seller the cost of said kerosene
pursuant to Sections 9.1 and 9.2 of the Agreement. However, if
the Seller is unable to operate the Base Capacity due to the
unavailability of kerosene or because the Facility has exceeded
the authorized number of hours of operation under the air permit,
the Company shall not be liable to the Seller for any lost
revenue that would otherwise be paid pursuant to Section 8.1 of
the Agreement and the Base Capacity shall be considered to be in
a Forced Outage and all provisions related thereto shall apply.
If the Seller is unable to operate the Dispatch Capacity on
kerosene because Seller has failed to maintain an adequate supply
of kerosene available, then the Dispatch Capacity shall be
considered to be in a Forced Outage and all provisions related
thereto shall apply.
A.6 Conflicts
A.6.1 Nothing contained in this Appendix shall supersede
or nullify any portion or provision of the Agreement. In the
event of conflict between this Appendix and the Agreement, the
terms and conditions set forth in the Agreement shall always
prevail.
A.7 Billing and Payments
A.7.1 The Parties shall establish and maintain
guidelines which shall govern the billing and subsequent payment
for natural gas volumes supplied by the Company and delivered to
the Seller at the PSB&G billing meter. Such guidelines shall be
established and amended, as required, through letter agreement.
7
Appendix B
Sample DuPont Steam Credit Calculation
Actual value will be determined by plant test
Plant Plant STG GTG GTG GTG Fuel HHV HHV DuPont Net
GMC NMW GMW GMW LOAD as % Consumption Fuel Fuel Steam Ht Rate
of Use Reduction BTU/kWh
GMW MMBTU MMBTU
Full Load 5325 4825 1491 3834 100% 720% 100% 4612 9,558
40 MW & 20,000 46 41 1288 3312 864% 720% 8975% 4139 20,000 10.095 lb/hr
No Extraction 476 426 14.5 3312 864% 696% 8975% 4139 0 9.716
Loan Reduction 160 05 1.1
40 MW & no 46 41 140 320 835% 696% 8756% 4038 101 0 9,849
Extraction
<FN>
DuPont Steam Credit 504.2 BTU/l.b
Assumptions
12.500 lb/MWh calculated by (3413 BTU/kWh)/(303 BTU/lb)/098 (for
gen)/092 (for mechanical)
1.60 MW steam electric value
0753 fuel reduction/loan reduction