Exhibit 10.25.5
EXHIBIT B
AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE II)
AGREEMENT FOR PURCHASE
OF ELECTRIC OUTPUT
(PHASE II)
between
PECO ENERGY COMPANY
and
GRAYS FERRY COGENERATION PARTNERSHIP
Dated: As of July 28, 1992
TABLE OF CONTENTS
Page
BACKGROUND 1
ARTICLES
I. DEFINITIONS 2
1.1 Definitions 2
II. EFFECTIVE DATE AND TERM 10
2.1 Effective Date 10
2.2 Cost Recovery 10
2.3 Term 10
III. CERTAIN OBLIGATIONS OF SELLER 12
3.1 Qualifying Facility Status 12
3.2 Completion of Construction 13
IV. PURCHASES 13
4.1 Amount Purchased 13
4.2 Definitions 14
4.3 Output Purchase Payment 15
V. SUSPENSE ACCOUNT 16
5.1 Suspense Account Balance 16
5.2 Projection Payment 16
5.3 Termination Payment 17
5.4 Suspense Account Guarantee 17
VI. CURTAILMENT. REDUCTION OR INTERRUPTION OF PURCHASES 18
6.1 Purchase Disruptions 18
6.2 Selection 20
6.3 Notice 20
6.4 Extent of Disruptions 21
6.5 SELLER's Obligations on Disruption 21
(i)
ARTICLE
VII. PROJECT OPERATION 22
7.1 Obligation of SELLER 22
7.2 Manner of Delivery 22
7.3 Safe Construction and Operation 22
7.4 Power Factor 24
7.5 Provision of Information 24
7.6 Modifications 25
VIII. SELLER INTERCONNECTION EOUIPMENT 26
8.1 SELLER Interconnection Equipment 26
8.2 Condition Precedent 27
8.3 Design 27
8.4 Construction 28
8.5 Inspection and Access 29
IX. PECO ENERGY INTERCONNECTION EOUIPMENT 30
9.1 PECO ENERGY Interconnection Equipment 30
9.2 Interconnection Design 30
9.3 Consultation with SELLER 31
9.4 Rights and Easements 31
9.5 Acquisition of Permits. Licenses and Approvals 32
9.6 Costs of Acquisition 32
9.7 Notice to Proceed 32
9.8 Reasonable Efforts to Complete Construction 33
9.9 Liability 33
9.10 Design Changes 34
9.11 Notice of Completion 35
9.12 Interconnection Cost Responsibility 35
9.13 Estimated Costs 35
9.14 Payment Schedule 35
9.15 Reconciliation 36
9.16 Suspension 37
9.17 Cancellation Costs 38
X. INITIAL PROJECT OPERATION AND TESTING 39
10.1 Initial Operation 39
10.2 Commercial Operation 40
XI. METERING 40
11.1 Metering Equipment 40
11.2 Meter Charges 41
(ii)
ARTICLE
11.3 Meter Testing 41
11.4 Meter Error 42
11.5 Payment Adjustment 42
11.6 Meter Failure 43
11.7 Suspense Account Adjustments 43
XII. TELEMETERING 43
12.1 Telemetering Equipment 43
12.2 Cost Responsibility 45
12.3 Telemetering Charges 45
XIII. MODIFICATIONS 45
13.1 PECO ENERGY System Modifications 45
13.2 Payment 46
13.3 Maintenance Costs 47
XIV. PAYMENT AND BILLING 48
14.1 Output Purchase Payment 48
14.2 Metering. Telemetering and Administration Charges48
14.3 Payments 49
14.4 Interest 49
14.5 Billing Disputes 50
XV. ASSIGNMENT 51
15.1 Assignment 51
XVI. BANKRUPTCY AND INSOLVENCY 52
16.1 Remedies 52
XVII. WARRANTIES 54
17.1 SELLER's Warranties 54
XVIII. INDEMNIFICATION 54
18.1 Responsibility 54
18.2 Worker's Compensation Responsibility 55
18.3 Procedure 55
(iii)
ARTICLE
XIX. TERMINATION 56
19.1 Termination by PECO ENERGY 56
19.2 Termination by SELLER 57
19.3 Effect of Termination 57
XX. BREACH AND DEFAULT 58
20.1 Breach 58
20.2 Cure and Default 58
20.3 Damages 59
20.4 Mitigation 59
20.5 Indemnification 59
XXI. FORCE MAJEURE 60
21.1 Force Majeure 60
21.2 Excuse from Performance 62
XXII. INSURANCE 63
22.1 Insurance 63
XXIII. GOVERNMENT REGULATIONS 63
23.1 State and Federal 63
XXIV. GOVERNING LAW 64
24.1 Interpretation 64
XXV. MISCELLANEOUS 64
25.1 Notices 64
25.2 Indulgences 65
25.3 Captions and Headings 66
25.4 Validity 66
25.5 Agreement Definition 66
25.6 Modifications 66
25.7 Execution in Counterparts 66
25.8 Gender and Number 67
25.9 Number of Days 67
APPENDICES
A. Estimated Metering, Telemetering and Administration Charges
B. Pricing Values
(iv)
AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE II)
This AGREEMENT is made as of the 28th day of July, 1992, by and
between Grays Ferry Cogeneration Partnership, a partnership with offices of
its managing partner, O'Brien (Schuylkill) Cogeneration, Inc., located at
225 South Eighth Street, Philadelphia, Pennsylvania 19106 ("SELLER"), and
PECO Energy Company, formerly known as Philadelphia Electric Company, a
Pennsylvania corporation with offices located at 2301 Market Street,
Philadelphia, Pennsylvania 19101 ("PECO ENERGY").
BACKGROUND
PECO is a regulated public utility engaged in, among other things, the
generation, purchase, transmission, distribution and sale of electric power
within the Commonwealth of Pennsylvania.
Under Section 210 of PURPA, 16 U.S.C. 824a-3, FERC regulations at 18
C.F.R. 292.201-292.602, and PUC regulations at 52 Pa. Code 57.31-
57.39, PECO ENERGY is required under certain circumstances to purchase
electric power from QUALIFYING FACILITIES.
SELLER intends to design, construct, own and operate an electric
generation facility (the FACILITY in Article I hereof) and certain
associated equipment located at 2600 Christian Street, Philadelphia,
Pennsylvania 19146.
SELLER intends to receive certification from the FERC that the
FACILITY is a QUALIFYING FACILITY, and SELLER intends to and shall maintain
the FACILITY during the term of this
AGREEMENT in compliance with the requirements for a QUALIFYING FACILITY
established by PURPA and FERC's regulations.
SELLER has requested PECO ENERGY, and PECO ENERGY is willing, to (a)
design, construct, install, operate and maintain certain equipment to
enable the FACILITY to interconnect with the PECO ENERGY SYSTEM (the PECO
ENERGY INTERCONNECTION EQUIPMENT) and (b) purchase the NET ELECTRIC OUTPUT
produced by the FACILITY during the term of the AGREEMENT.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the PARTIES, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, when used herein with
capitalization, shall have the following meanings:
AGREEMENT means this agreement for Purchase of Electric Output between
PECO ENERGY and SELLER, including any extension or amendment thereto.
AUXILIARY SERVICE RIDER means the rider set forth in PECO ENERGY's
Electric Service Tariff under which PECO ENERGY provides electric service
to customers whose electrical requirements are not wholly provided by PECO
ENERGY-owned facilities, as the rider may be amended from time to time.
BILLING MONTH means the time period, constituting not less than twenty-
eight (28) days and not more than thirty-four (34) days, between two
successive meter readings made for billing purposes.
2
CANCELLATION COSTS means the costs and liabilities incurred by PECO
ENERGY upon the termination of the AGREEMENT under Sections 19.1 or 19.2
hereof or upon the expiration of the term of the AGREEMENT specified in
Section 2.3 hereof to (a) cancel supplier and contractor orders and
agreements entered into to design, construct, install, operate, maintain
and own PECO ENERGY INTERCONNECTION EQUIPMENT, (b) remove such PECO ENERGY
INTERCONNECTION EQUIPMENT and (c) restore the PECO ENERGY SYSTEM to its
condition prior to the execution of this AGREEMENT.
COMMERCIAL OPERATION DATE means the date designated by SELLER under
Section 10.2 hereof as the date the FACILITY and the SELLER INTERCONNECTION
EQUIPMENT are ready to deliver NET ELECTRIC OUTPUT to the INTERCONNECTION
POINT on a continuous basis for reasons other than testing.
COST RECOVERY PETITION means a petition by PECO ENERGY to the PUC
seeking authority to collect and recover from PECO ENERGY's customers, on a
full and current basis through the ENERGY COST ADJUSTMENT or such other
mechanism as may replace the ENERGY COST ADJUSTMENT, all payments made to
SELLER under the Agreement for purchases of NET ELECTRIC OUTPUT.
CREDIT means (a) an irrevocable letter or letters of credit (b) a
surety or performance bond or (c) an insurance policy, any of which to be
issued by ISSUER on behalf of SELLER
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to PECO ENERGY as beneficiary in a form and on terms and conditions
acceptable to PECO ENERGY.
DATE OF INITIAL OPERATION means the date, acceptable to PECO ENERGY,
that SELLER synchronizes, for the first time, the FACILITY with the PECO
ENERGY SYSTEM.
DESIGN RELEASE means a written notice from SELLER to PECO ENERGY
authorizing PECO ENERGY to (a) design the PECO ENERGY INTERCONNECTION
EQUIPMENT, (b) estimate the completion date for constructing and installing
the PECO ENERGY INTERCONNECTION EQUIPMENT, (c) prepare an estimate of the
cost of constructing and installing the PECO ENERGY INTERCONNECTION
EQUIPMENT, and (d) review the design of the SELLER INTERCONNECTION
EQUIPMENT for acceptance.
ENERGY COST ADJUSTMENT mean the component of PECO ENERGY's PUC-
approved electric rates, as set forth in PECO ENERGY's Electric Service
Tariff, which enables PECO ENERGY to recover its energy costs not reflected
in its base rates.
FACILITY means all equipment and appurtenant structures, which have an
aggregate nameplate rating of up to 119 megawatts, to be constructed,
installed, operated, maintained and owned by SELLER at the PROJECT SITE for
the purpose of generating electricity, representing Phase II of a two-phase
project which SELLER intends to construct at the PROJECT SITE with a total
aggregate nameplate rating of up to 150 megawatts.
FERC means the Federal Energy Regulatory Commission.
4
FINAL PROJECTION DATE means the date as defined in Appendix B.
INTERCONNECTION POINT means the point of physical connection between
the SELLER INTERCONNECTION EQUIPMENT and the PECO ENERGY INTERCONNECTION
EQUIPMENT to be determined by PECO ENERGY, after consultation with SELLER.
ISSUER means, with respect to the CREDIT (a) the commercial bank or
other entity issuing an irrevocable letter or letters of credit, (b) the
company qualified and authorized to issue the surety or performance bond in
the Commonwealth of Pennsylvania, (c) the insurance company authorized to
issue the insurance policy.
LIGHT LOAD CONDITION means a circumstance where (a) the PJM
INTERCONNECTION operators have declared a MINIMUM GENERATION EMERGENCY or
(b) a condition occurs on the PJM INTERCONNECTION or the PECO ENERGY SYSTEM
which, without PECO ENERGY taking action to correct such condition, might
imminently lead to such a declaration. Such actions include, but are not
limited to, (i) a reduction in output from a nuclear unit or (ii) the
removal of an electric generating unit from service which could not be
returned to service during the next anticipated period of peak demand for
power.
METER ERROR CORRECTION PERIOD means the actual time period of a
meter's registration error, if such time period is definitely known, or, if
unknown, a period equal to the lesser
5
of one-half (1/2) of the meter, or three months, plus, if the meter has not
been tested in accordance with the requirements of 52 Pa. Code 57.20, as
that provision may be amended from time to time, the period the meter has
been in service beyond the required test period.
METER ERROR PERCENTAGE means the difference, expressed as a
percentage, between actual meter registrations during testing, and the
registrations the meter would have made if it were neither fast nor slow,
at an average purchase level that the PARTIES mutually agree is
representative of the level of NET ELECTRIC OUTPUT purchases made by PECO
ENERGY from the PROJECT during the METER ERROR CORRECTION PERIOD.
MINIMUM GENERATION EMERGENCY means an operational condition declared
by the PJM INTERCONNECTION resulting from a period of low demand for
electricity.
NET ELECTRIC OUTPUT means the total electric output of the FACILITY in
excess of (a) the output SELLER uses to operate the FACILITY, (b) the
output Philadelphia Thermal Energy Corporation uses to operate the steam
generating equipment and related facilities located on land at Schuylkill
Station that it leases from PECO ENERGY under a lease dated January 30,
1987; provided that PECO ENERGY shall not provide facilities or service to
transport or deliver power from the FACILITY to that steam generating
equipment and related facilities, and (c) the
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output SELLER uses in the transformation and transmission of electric
output to the INTERCONNECTION POINT.
NOTICE TO PROCEED means written notice provided by SELLER to PECO
ENERGY authorizing PECO ENERGY to construct, purchase and install the PECO
ENERGY INTERCONNECTION EQUIPMENT and agreeing to pay all the costs and
charges incurred and made by PECO ENERGY under this AGREEMENT in
constructing, purchasing and installing the PECO ENERGY INTERCONNECTION
EQUIPMENT.
OPERATIONAL EMERGENCY means a condition or situation which presents,
or is imminently likely to present. a real, substantial and immediate
threat to persons or property. or which impairs or imminently will impair
either (a) PECO ENERGY's ability to furnish and maintain adequate,
efficient. safe, and reliable service to its customers, or (b) the safety,
reliability and stability of the PECO ENERGY SYSTEM.
PARTIES means PECO ENERGY and SELLER.
PARTY means PECO ENERGY or SELLER.
PECO ENERGY means PECO Energy Company and its regulated operating
subsidiaries.
PECO ENERGY INTERCONNECTION EQUIPMENT means the equipment, other than
metering equipment, to be designed, constructed, purchased, installed,
owned, and operated by PECO ENERGY under the terms of the AGREEMENT,
including modifications to the PECO ENERGY T&D SYSTEM, to enable PECO
ENERGY to interconnect the PECO ENERGY SYSTEM with, and to receive NET
7
ELECTRIC OUTPUT from, the PROJECT under the terms and conditions of the
AGREEMENT.
PECO ENERGY SYSTEM means the electric power generation, transmission
and distribution facilities owned, operated and/or maintained by PECO
ENERGY, which will include, after construction and installation, the PECO
ENERGY INTERCONNECTION EQUIPMENT.
PECO ENERGY T&D SYSTEM means the electric power transmission and
distribution facilities owned, operated and maintained by PECO ENERGY,
which will include, after construction and installation, the PECO ENERGY
INTERCONNECTION EQUIPMENT.
PJM INTERCONNECTION means the Pennsylvania - New Jersey - Maryland
Interconnection, a fully coordinated power pool formed pursuant to the PJM
INTERCONNECTION AGREEMENT.
PJM INTERCONNECTION AGREEMENT means the agreement executed by and
among the members of the PJM INTERCONNECTION, and any amendments thereto,
on file with the FERC.
POWER FACTOR shall have that meaning set forth in the IEEE Standard
Dictionary of Electrical and Electronic Terms (ANSI/IEEE Standard 100-1988,
Fourth Edition).
PROJECT means the Phase II FACILITY, SELLER INTERCONNECTION EQUIPMENT
and associated facilities and equipment to be constructed, installed,
owned, operated and
8
maintained by SELLER at the PROJECT SITE for the purpose, among other
things, of generating electricity.
PROJECT SITE means the property leased by SELLER from Philadelphia
Thermal Energy Corporation under a lease dated November 11, 1991, as
amended as of September 17, 1993, upon which a two-phase project, including
the Phase II FACILITY and associated interconnection equipment. will be
situated.
PRUDENT ELECTRICAL PRACTICES means the spectrum of possible practices,
methods and acts which, in the exercise of reasonable judgment and in light
of the facts known at the time a decision was made, would have been used in
prudent electrical engineering and operations to accomplish the desired
result at a reasonable cost consistent with reliability, safety and
expedition, and is not limited to the optimum practices, methods or acts to
the exclusion of all others.
PUC means the Pennsylvania Public Utility Commission.
PURPA means the Public Utility Regulatory Policies Act of 1978.
QUALIFYING FACILITY means a "small power production facility" or
"cogeneration facility" as defined in Section 210 of PURPA, 16 U.S.C. SS
824a-3(j), and meeting the criteria for qualification set forth at 18
C.F.R. SS SS 292.203-292.206.
SELLER means Grays Ferry Cogeneration Partnership.
SELLER INTERCONNECTION EQUIPMENT means the facilities up to and
including the INTERCONNECTION POINT, other than the
9
metering equipment described in Article XI hereof, to be designed,
constructed, installed, operated and maintained by SELLER to (a) permit the
PROJECT to interconnect and operate in parallel with the PECO ENERGY SYSTEM
and (b) permit PECO ENERGY to receive NET ELECTRIC OUTPUT at the
INTERCONNECTION POINT.
SUSPENSE ACCOUNT means an account maintained in PECO ENERGY's records
used solely to record PECO ENERGY'S purchases of NET ELECTRIC OUTPUT under
the AGREEMENT and the associated account balances specified in Section 5.1
hereof.
ARTICLE II
EFFECTIVE DATE AND TERM
2.1 Effective Date. The AGREEMENT shall become effective upon (a)
its execution by authorized representatives of the PARTIES, (b) the
acceptance by the PARTIES, in the manner specified in Section 2.2 hereof,
of the terms of a valid, binding and unappealed final order of a court or
the PUC ruling upon PECO ENERGY's COST RECOVERY PETITION and (c) approval
of the AGREEMENT by the PUC without modification as a contract with an
affiliated interest under 66 Pa.C.S. SS 2102.
2.2 Cost Recovery. Within sixty (60) days after the execution of the
AGREEMENT, PECO ENERGY shall prepare and file a COST RECOVERY PETITION. At
the same time, in view of the fact that Adwin Equipment Company, a wholly
owned subsidiary of PECO ENERGY, is one of the general partners of SELLER,
PECO ENERGY
10
shall prepare and file a petition with the PUC seeking approval of the
AGREEMENT without modification under the affiliated interest provisions of
66 Pa.C.8. S 2102. Within sixty (60) days after (a) the date of entry of
an unappealed valid, binding and final order of the PUC ruling on the COST
RECOVERY PETITION, (b) the filing date of an unappealed valid, binding and
final order of a court on appeal from such a PUC ruling or (c) the date of
entry of an unappealed valid, binding and final order of the PUC ruling on
the COST RECOVERY PETITION on remand, each PARTY shall provide the other
PARTY with written notice of its acceptance or nonacceptance of the terms
and conditions of the final order ruling upon the COST RECOVERY PETITION.
Neither PARTY, however, shall have the right to reject the terms and
conditions of such a final order if the relief sought in the COST RECOVERY
PETITION is granted without modification. The failure to provide written
notice of acceptance or nonacceptance under this Section 2.2 within the
required time period shall be deemed to be acceptance of the terms and
conditions of the final order. If the relief sought in the COST RECOVERY
PETITION is granted without modification, the condition precedent set forth
in Section 2.1 hereof shall be deemed to be satisfied as of the filing date
or date of entry of the final order ruling upon the COST RECOVERY PETITION.
If the relief sought in the COST RECOVERY PETITION is granted with
modification, and the PARTIES accept the terms and conditions of the final
order, the PARTIES
11
shall promptly execute, in the manner set forth in Section 25.6 hereof, an
appropriate modification to the AGREEMENT. and the condition precedent set
forth in Section 2.1 hereof shall be deemed to be satisfied as of the
effective date of such modification. Notwithstanding the final ruling on
the COST RECOVERY PETITION, if the PUC does not approve the AGREEMENT
without modification under the affiliated interest provisions of 66 Pa.C.S.
SS 2102, the AGREEMENT shall not become effective.
2.3 Term. The AGREEMENT, unless sooner terminated in accordance with
any applicable provision of the AGREEMENT, shall remain in full force and
effect for twenty (20) years after the COMMERCIAL OPERATION DATE. The
application provisions of the AGREEMENT, however, shall continue in effect
after the term of the AGREEMENT, including any extensions thereof, to the
extent necessary to provide for final billings and adjustments, and to
preserve and permit the enforcement or institution of action upon any right
or obligation which accrued during the AGREEMENT and was not exercised or
fulfilled upon termination.
ARTICLE III
CERTAIN OBLIGATIONS OF SELLER
3.1 Qualifying Facility Status. Prior to the DATE OF INITIAL
OPERATION, SELLER shall receive and provide PECO ENERGY with certification
from FERC that the PROJECT is a QUALIFYING FACILITY for the full amount of
NET ELECTRIC OUTPUT to be purchased by PECO ENERGY under the AGREEMENT.
SELLER shall maintain the PROJECT in compliance with the requirements for a
QUALIFYING FACILITY established under PURPA and applicable FERC regulations
for the full amount of NET ELECTRIC OUTPUT to be
12
purchased by PECO ENERGY under the AGREEMENT, and any failure by SELLER to
so maintain the PROJECT shall be a breach of the AGREEMENT under Section
20.1 hereof.
3.2 Completion of Construction. SELLER shall complete construction of
the FACILITY and the SELLER' INTERCONNECTION EQUIPMENT, and take all other
steps necessary to enable the PROJECT to deliver NET ELECTRIC OUTPUT to the
INTERCONNECTION POINT for sale to PECO ENERGY1 on or before the fifth (5th)
anniversary of the effective date of the AGREEMENT. Failure by SELLER to
meet this standard shall constitute a default of the AGREEMENT under
Section 20.2 hereof.
ARTICLE IV
PURCHASES
4.1 Amount Purchased. Commencing on the DATE OF INITIAL OPERATION,
and thereafter during the term of the AGREEMENT, SELLER shall sell and
deliver to PECO ENERGY exclusively, and PECO ENERGY shall purchase and
accept delivery of, the PROJECT' S NET ELECTRIC OUTPUT; provided, however,
that PECO ENERGY shall not be required to purchase or accept delivery of
NET ELECTRIC OUTPUT from the PROJECT in excess of the lesser of (a) 119
megawatts or (b) the amount of electric output for
13
which the FERC has certified the FACILITY as a QUALIFYING FACILITY.
4.2 Definitions. The following terms1 when used herein with
capitalization, shall have the following meanings:
(a) FINAL PROJECTION DATE means the date as defined in Appendix B.
(b) LEVELIZED PAYMENT means the product of (i) the number of kilowatt-
hours of NET ELECTRIC OUTPUT that PECO ENERGY purchases under the AGREEMENT
during a BILLING MONTH and (ii) the LEVELIZED RATE.
(c) LEVELIZED RATE shall be the rate specified in Appendix B as
determined by when the COMMERCIAL OPERATION DATE for the PROJECT occurs.
(d) PJM VALUE means the sum of the hourly PJM values during a BILLING
MONTH with each hourly PJM value being the product of (i) the number of
kilowatt-hours of NET ELECTRIC OUTPUT that PECO ENERGY purchases under the
AGREEMENT during that hour and (ii) the PJM RATE during that hour.
(e) PJM RATE means PECO ENERGY's hourly billing rate per kilowatt-
hour, determined under the PJM INTERCONNECTION AGREEMENT, for interchange
energy; provided, however, that during any hour when said billing rate
deviates significantly from the average billing rate for all PJM
INTERCONNECTION interchange energy, that average PJM billing rate shall be
substituted for the PECO ENERGY billing rate. If PECO ENERGY
14
discontinues its participation in the PJM INTERCONNECTION, or if the method
of calculating the PECO ENERGY billing rate changes, the PARTIES will in
good faith negotiate a substitute for the PJM RATE which reflects PECO
ENERGY's avoided cost for energy as defined by PURPA and federal and state
regulations adopted pursuant to PURPA.
(f) PROJECTED RATE means the rate specified in Appendix B under the
column heading PROJECTED RATE for the applicable BILLING MONTH.
(g) PROJECTED VALUE means the product of (i) the number of kilowatt-
hours of NET ELECTRIC OUTPUT that PECO ENERGY purchases under the AGREEMENT
during a BILLING MONTH and (ii) the applicable PROJECTED RATE.
4.3 Output Purchase Payment. After the end of each BILLING MONTHD
PECO ENERGY shall pay SELLER, in accordance with Section 14.1 hereof; an
Output Purchase Payment computed as follows:
(a) Prior to the COMMERCIAL OPERATION DATE the Output Purchase
Payment shall be the PJM VALUE.
(b) Commencing on the COMMERCIAL OPERATION DATE and through the FINAL
PROJECTION DATE the Output Purchase Payment shall be either (i) the
LEVELIZED PAYMENT or (ii) the PROJECTED VALUE. SELLER shall1 within two
(2) years after the effective date of this AGREEMENT, notify PECO ENERGY in
writing of SELLER's one-time, irrevocable election to receive either (i)
15
the LEVELIZED PAYMENT or (ii) the PROJECTED VALUE for the entire period
from the COMMERCIAL OPERATION DATE through the FINAL PROJECTION DATE. If
SELLER elects to receive the PROJECTED VALUE, then the provisions of
Article V of this AGREEMENT shall not apply. If SELLER fails to notify
PECO DIERGY of its election within two (2) years of the effective date of
this AGREEMENT1 then PECO ENERGY shall have the right to make the election.
(c) After the FINAL PROJECTION DATE and through the remaining term of
the AGREEMENT the Output Purchase Payment shall be ninety percent (90%) of
the PJM VALUE.
ARTICLE V
SUSPENSE ACCOUNT
5.1 Suspense Account Balance. For any BILLING MONTH in which the
LEVELIZED PAYMENT exceeds the PROJECTED VALUE, the SUSPENSE ACCOUNT will
record a debit equal to the difference between the two. Any debit balance
in the SUSPENSE ACCOUNT shall accrue interest on a monthly basis at the
rate specified in Section 14.4 hereof. For any BILLING MONTH in which the
PROJECTED VALUE exceeds the LEVELIZED PAYMENT, the difference between the
two shall be credited to the SUSPENSE ACCOUNT, but only to the extent
necessary to offset accrued debits and interest from prior BILLING MONTHS.
5.2 Projection Payment. Within thirty (30) days after
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the FINAL PROJECTION DATE, SELLER shall pay PECO ENERGY an amount equal to
the debit balance including accrued interest in the SUSPENSE ACCOUNT as of
the FINAL PROJECTION DATE. The SUSPENSE ACCOUNT shall terminate upon
SELLER'S payment under this Section 5.2.
5.3 Termination Payment. If the AGREEMENT is terminated prior to the
FINAL PROJECTION DATE, SELLER shall pay PECO ENERGY, within thirty (30)
days after the date of termination, an amount equal to the debit balance
and accrued interest in the SUSPENSE ACCOUNT as of the date of termination;
provided, however, that SELLER shall not be obligated to make such payment
in the event that SELLER terminates the AGREEMENT because of a default by
PECO ENERGY (as defined in Section 20.2 hereof). If any of the events
described in Section 16.1 hereof occur, SELLER shall pay PECO ENERGY an
amount equal to the debit balance and accrued interest in. the SUSPENSE
ACCOUNT as of the date of the event.
5.4 Suspense Account Guarantee. The PARTIES shall review the
SUSPENSE ACCOUNT balance at the end of every calendar year during the term
of the AGREEMENT, and SELLER shall provide a CREDIT to PECO ENERGY to
ensure payment of any debit balance in the SUSPENSE ACCOUNT at that time.
The CREDIT provided under this Section 5.4 shall be payable in the City of
Philadelphia by an ISSUER acceptable to PECO ENERGY on terms and conditions
acceptable to PECO ENERGY; provided, however, that PECO ENERGY
17
shall not unreasonably withhold approval of any ISSUER or CREDIT. The
CREDIT shall be established for and structured so as to permit PECO ENERGY
to make multiple demands for payment from ISSUER, and shall require the
ISSUER, upon PECO ENERGY's submission of documents certifying that the
SUSPENSE ACCOUNT debit balance is due and payable, to honor on sight, in
immediately available funds, any written demand by PECO ENERGY for payment.
The CREDIT provided under this Section 5.4 shall be established to be
effective not later than the COMMERCIAL OPERATION DATE, and the CREDIT
provided for the period from the COMMERCIAL OPERATION DATE until the
adjustment at the en".. of the first calendar year shall be two million
dollars ($2,000,000). Upon the failure of SELLER to provide such CREDIT
upon the COMMERCIAL OPERATION DATE and thereafter within ninety (90) days
after the end of any calendar year during the term of the AGREEMENT PECO
ENERGY shall have the right to withhold payments to SELLER for the NET
ELECTRIC OUTPUT SELLER delivers to PECO ENERGY and apply those amounts to
decrease the debit balance until the debit balance has been reduced to the
amount for '6hich SELLER has furnished an acceptable CREDIT.
ARTICLE VI
CURTAILMENT. REDUCTION OR INTERRUPTION OF PURCHASES
6.1 Purchase Disruptions. PECO ENERGY may curtail, reduce or
interrupt its receipt and purchases of NET ELECTRIC OUTPUT from the PROJECT
when:
18
(a) Such curtailment, reduction or interruption is necessary to
enable PECO ENERGY to maintain system operating reliability and/or to
provide service to its customers without a deterioration in quality.
(b) Such curtailment, reduction or interruption is necessary to
enable PECO ENERGY to discharge its obligations under the PJM
INTERCONNECTION AGREEMENT.
(c) Such curtailment, reduction or interruption is necessary to
enable PECO ENERGY to meet its obligations under the Mid-Atlantic Area
Coordination Agreement. which is the May 25, l979 agreement between PECO
ENERGY and the other signatories thereto, and any amendments or extensions
thereof, designed to coordinate the efforts of the signatories to maximize
the reliability of electric service in the territory covered by the
agreement, which is the same, electrically and physically1 as the territory
covered by the PJM INTERCONNECTION AGREEMENT.
(d) Such curtailment, reduction or interruption is necessary because
of a LIGHT LOAD CONDITION.
(e) The receipt of NET ELECTRIC OUTPUT by PECO ENERGY is causing, or
continued receipt of NET ELECTRIC OUTPUT by PECO ENERGY would create, an
OPERATIONAL EMERGENCY.
(f) Such curtailment, reduction or interruption is necessary for PECO
ENERGY to construct, install, maintain, repair, replace, remove, modify,
investigate or inspect any
19
equipment in the PECO ENERGY SYSTEM which may affect or be affected by
operation of the PROJECT.
(g) Such curtailment, reduction or interruption is necessary because
PECO ENERGY is experiencing an event of Force Majeure Case defined in
Section 21.1 hereof).
(h) Such curtailment, reduction or interruption is necessary to
protect the integrity of the PECO ENERGY SYSTEM or any system with which
the PECO ENERGY SYSTEM is directly or indirectly interconnected, or to aid
in the restoration of service on the PECO ENERGY SYSTEM or any system with
which the. PECO ENERGY SYSTEM is directly or indirectly interconnected.
(i) Such curtailment, reduction or interruption is necessary because
SELLER has failed to fulfill its obligations under Sections 6.5, 7.3 or 7.5
hereof.
6.2 Selection. PECO ENERGY shall, in its sole discretion reasonably
applied, determine which of the sources of electrical power interconnected
with the PECO ENERGY SYSTEM, including the PROJECT, to curtail, reduce or
interrupt to eliminate a condition requiring a curtailment, reduction or
interruption for one or more of the reasons set forth in Section 6.l
hereof.
6.3 Notice. PECO ENERGY will attempt to notify SELLER of the
circumstances which necessitate the curtailment, reduction or interruption
of purchases of NET ELECTRIC OUTPUT, and the projected duration thereof, as
far in advance of such
20
event as practicable. The PARTIES recognize that such advance notice may
not be possible in the event of an OPERATIONAL EMERGENCY1 in which event
PECO ENERGY shall provide notice to SELLER of the circumstances and
projected duration of the curtailment, reduction or interruption as soon as
is practicable after the curtailment, reduction or interruption. PECO
ENERGY shall not, however, be liable to SELLER for the cost of purchases of
NET ELECTRIC OUTPUT which would have been made but for the curtailment,
reduction or interruption in the event PECO ENERGY fails to provide notice
to SELLER under this Section 6.3.
6.4 Extent of Disruptions. PECO ENERGY shall use reasonable efforts
to minimize the time during which its purchases of NET ELECTRIC OUTPUT are
curtailed, reduced or interrupted. 'PECO ENERGY shall use reasonable
efforts to resume purchases of NET ELECTRIC OUTPUT under the AGREEMENT
promptly after the conditions described in Section 6.1 hereof have ended,
and any necessary modifications, repairs or replacements have been made,
including any modifications, repairs or replacements made to decrease the
likelihood of a recurrence of the condition causing the curtailment,
reduction or interruption.
6.5 SELLER's Obligations on Disruption. If a curtailment, reduction
or interruption under Section 6.1 hereof is due to a condition of or defect
in the FACILITY, SELLER INTERCONNECTION EQUIPMENT or other PROJECT
equipment, SELLER shall submit to PECO ENERGY a written proposed plan to
rectify
21
the condition or defect. when PECO ENERGY has accepted such plan1 or a
revised version thereof , SELLER shall, at its own expense, repair the
condition or defect. when SELLER has made such repairs it shall notify PECO
ENERGY, and PECO ENERGY shall inspect the repaired, modified or replaced
equipment. Following such inspection PECO ENERGY shall notify SELLER
whether the condition or defect has been remedied to PECO ENERGY's
satisfaction. If PECO ENERGY is satisfied that the condition or defect has
been properly remedied, it shall promptly terminate the curtailment,
reduction or interruption. If PECO ENERGY is not satisfied that the
condition or defect has been properly remedied1 it shall provide SELLER
with a written explanation of why the remedy is not satisfactory.
ARTICLE VII
PROJECT OPERATION
7.1 Obligation of SELLER. SELLER shall take all necessary actions to
coordinate the operation of the PROJECT with the operation of the PECO
ENERGY SYSTEM1 including, but not limited to, those actions specified in
Sections 7.2-7.4 hereof.
7.2 Manner of Delivery. SELLER shall deliver NET ELECTRIC OUTPUT to
the INTERCONNECTION POINT in the form of three (3) phase, sixty (60) hertz,
alternating current at a nominal voltage to be specified by PECO ENERGY.
7.3 Safe Construction and Operation. At its own cost,
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SELLER shall design, construct, install, operate and maintain the PROJECT:
(a) Using equipment and facilities of sufficient quality to operate
the PROJECT in parallel with the PECO ENERGY SYSTEM without causing:
(1) any damage to the PECO ENERGY SYSTEM,
(2) any impairment of or deterioration in the quality of the
service PECO ENERGY renders to its customers,
(3) any damage to the integrity of the PECO ENERGY SYSTEM, or
(4) unreasonable risk of damage to property, of injury or death
to persons, or of an OPERATIONAL EMERGENCY.
(b) In a manner that is safe and that will not cause any of the
events or conditions listed in (a) above, and
(c) In accordance and conformance with the following as they may be
amended from time to time:
(1) those Standards for System Safety and Reliability filed by
PECO ENERGY with the PUC and entitled "Requirements for Parallel Operation
of Non-Utility Generators,"
(2) PECO ENERGY's published "Electric Service Requirements,"
(3) the AUXILIARY SERVICE RIDER,
(4) the National Electrical Code,
(5) the National Electrical Safety Code,
(6) applicable local, state and federal laws and
23
regulations, and
(7) PRUDENT ELECTRICAL PRACTICES. SELLER shall install, own and
maintain, as part of the SELLER INTERCONNECTION EQUIPMENT, relays and
associated protective and control equipment and equipment to control
voltage and frequency regulation, all of which it shall operate in a manner
acceptable to PECO ENERGY.
7.4 Power Factor. SELLER shall install and have available automatic
generator field excitation regulators or an alternative regulator system
suitable to PECO ENERGY. SELLER shall operate this equipment to regulate
the FACILITY's reactive (MVAR) output so that at the INTERCONNECTION POINT
the FACILITY's POWER FACTOR is within the range of ninety-five percent
(95%) lagging and one hundred percent (100%) when measured as a generator.
This requirement is applicable over a normal operating voltage range to be
defined by PECO ENERGY based on the voltage specified by PECO ENERGY under
Section 7.2 hereof. Below this range the POWER FACTOR shall be allowed to
go below ninety-five percent (95%) into lagging. Above this range the POWER
FACTOR shall be allowed to go past one hundred percent (100%) into leading.
7.5 Provision of Information. As of the COMMERCIAL OPERATION DATE and
annually thereafter SELLER shall provide PECO ENERGY with (a) a schedule of
planned PROJECT maintenance and repair activities for the following thirty-
six (36) months and
24
(b) an estimate of the amount of NET ELECTRIC OUTPUT it intends to deliver
to the INTERCONNECTION POINT during each of the following twelve (12)
months. Upon written request from PECO ENERGY, SELLER shall also maintain
and classify outage statistics in accordance with the then-current PJM
INTERCONNECTION outage classification procedures, and SELLER shall supply
such statistics to PECO ENERGY.
7.6 Modifications. In the event SELLER fails to meet, satisfy or
discharge its obligations under this AGREEMENT, and, as a consequence
thereof, a condition arises, a practice exists or an event occurs at the
PROJECT which, although it has not yet created any of the conditions or
caused any of the events specified under Section 6.1 hereof, if permitted
to continue or recur may, in PECO ENERGY's judgment reasonably exercised,
result in the creation of such a condition or cause such an event, PECO
ENERGY shall notify SELLER of the occurrence or existence thereof and
afford SELLER an opportunity to correct or remedy the problem. SELLER
shall have thirty C30) 4ays from receipt of PECO ENERGY's notice to correct
or remedy the problem. In the event SELLER cannot identify, remedy or
correct the problem within such thirty C30) days, SELLER shall submit to
PECO ENERGY, for PECO ENERGY's acceptance, a plan setting forth the
specific actions SELLER intends to take to correct or remedy the problem
and a time schedule for the implementation thereof. In the event SELLER
cannot identify, remedy or correct the
25
problem within such thirty (30) days, and (a) SELLER fail. to submit a plan
within such period to correct or remedy the problem, (b) SELLER submits a
plan within such period but fails to exercise reasonable and good faith
efforts thereafter to implement such plan or (c) PECO ENERGY does not
accept SELLER's proposed plan and SELLER fails to submit a revised plan
within fifteen (15) days, then PECO ENERGY shall have the right thereafter,
upon reasonable notice to SELLER, to curtail, reduce or interrupt purchases
of NET ELECTRIC OUTPUT; provided, however, that if during the pendency of
any such cure afforded to SELLER pursuant to this Section 7.6 the problem
creates any of the conditions or causes any of the events specified under
Section 6.1, PECO ENERGY may curtail, reduce or interrupt its purchases of
NET ELECTRIC OUTPUT pursuant to and in accordance with the provisions of
Article VI hereof.
ARTICLE VIII
SELLER INTERCONNECTION EOUIPMENT
8.1 SELLER Interconnection Equipment. At its own cost, SELLER shall
design, construct, install, operate and maintain the SELLER INTERCONNECTION
EQUIPMENT on its side of and at the INTERCONNECTION POINT to (a) permit the
PROJECT to interconnect and operate in parallel with the PECO ENERGY SYSTEM
and (b) permit PECO ENERGY to receive NET ELECTRIC OUTPUT at the
INTERCONNECTION POINT.
26
8.2 Condition Precedent. SELLER shall not commence construction of
the SELLER INTERCONNECTION EQUIPMENT until PECO ENERGY accepts SELLER's
proposed design of such equipment under the procedure specified in Section
8.3 hereof.
8.3 Design. PECO ENERGY shall perform an interconnection study, from
which PECO ENERGY will determine the INTERCONNECTION POINT, and SELLER will
reimburse PECO ENERGY for the costs PECO ENERGY incurs in performing that
study. PECO ENERGY will complete the interconnection study within sixty
(60) days after receiving from SELLER a $5,000 advance payment for the
costs of the study. After PECO ENERGY completes the interconnection study
and determines the INTERCONNECTION POINT, SELLER shall submit to PECO
ENERGY, along with (a) the DESIGN RELEASE and (b) the initial payment
specified in Section 9.2, plans and specifications for the design of the
SELLER INTERCONNECTION EQUIPMENT. Within sixty (60) days after the
submission of such plans and specifications, PECO ENERGY shall notify
SELLER (a) that the proposed design of the SELLER INTERCONNECTION EQUIPMENT
is acceptable, (b) that the proposed design of the SELLER INTERCONNECTION
EQUIPMENT is unacceptable or (c) that additional information is needed.
PECO ENERGY shall not unreasonably withhold acceptance of a proposed
design. PECO' ENERGY's failure to provide such notification to SELLER
within sixty (60) days of the submission of such plans and specifications
shall be deemed an acceptance by PECO ENERGY. If
27
PECO ENERGY notifies SELLER that additional information is needed or that
the proposed design of the SELLER INTERCONNECTION EQUIPMENT is
unacceptable, SELLER may submit to PECO ENERGY revised plans and
specifications. Within thirty (30) days of the submission of such revised
plans and specifications, PECO ENERGY shall notify SELLER whether
additional information is needed, or whether the proposed design is
accepted or rejected. If additional information is requested, or the
revised design is rejected, SELLER may submit further revised plans and
specifications which PECO ENERGY shall review within a reasonable time
period. Thereafter, SELLER may submit revised plans and specifications to
PECO ENERGY as many times as is necessary to obtain PECO ENERGY's
acceptance of a proposed design. PECO ENERGY's acceptance of SELLER's
proposed design of the SELLER INTERCONNECTION EQUIPMENT shall not be
construed as a warranty or representation to SELLER, or any other person or
entity, of the adequacy, suitability, safety or reliability of the design,
construction, installation or operation of the SELLER INTERCONNECTION
EQUIPMENT. PECO ENERGY shall periodically render a statement of charges to
SELLER for the costs PECO ENERGY incurs pursuant to this Section 8.3, and
ELLER shall reimburse PECO ENERGY for all the costs that PECO ENERGY incurs
pursuant to this Section 8.3.
8.4 Construction. Upon PECO ENERGY's acceptance of SELLER's proposed
design, SELLER shall construct the SELLER
28
INTERCONNECTION EQUIPMENT in accordance with the design accepted by PECO
ENERGY. If, subsequent to PECO ENERGY's acceptance, any design
modification affecting the electrical arrangement of the SELLER
INTERCONNECTION EQUIPMENT becomes necessary, SELLER shall notify PECO
ENERGY and obtain PECO ENERGY's prior acceptance of the design
modification. PECO ENERGY, in its sole discretion, shall decide and inform
SELLER whether any such modification in the proposed design of the SELLER
INTERCONNECTION EQUIPMENT requires an amendment of the AGREEMENT. SELLER
shall bear all costs, including additional construction and installation
costs, associated with any such design modification.
8.5 Inspection and Access. Upon the completion of the construction
and installation of the SELLER INTERCONNECTION EQUIPMENT and related
portions of the FACILITY, SELLER shall have the SELLER INTERCONNECTION
EQUIPMENT and related portions of the FACILITY inspected by an authorized
electrical inspection agency and shall provide PECO ENERGY with a copy of
such agency's inspection certificate. PECO ENERGY shall, within five (5)
working days after receipt of such certificate, inspect the FACILITY and
SELLER INTERCONNECTION EQUIPMENT and advise SELLER, within five (5) working
days after the completion of its inspection, whether the FACILITY and
SELLER INTERCONNECTION EQUIPMENT may interconnect and operate in parallel
with the PECO ENERGY SYSTEM as contemplated in Section 10.2 hereof. SELLER
shall reimburse PECO ENERGY for all the costs PECO ENERGY incurs
29
pursuant to this Section 8.5. PECO ENERGY employees. agents and contractors
shall have the right to enter the PROJECT SITE at any time upon reasonable
notice to SELLER, or without notice in the event of an OPERATIONAL
EMERGENCY, for the purposes of (a) inspecting the PECO ENERGY
INTERCONNECTION EQUIPMENT or SELLER INTERCONNECTION EQUIPMENT, (b) reading
meters or (c) making tests to insure the safe operation of the PECO ENERGY
INTERCONNECTION EQUIPMENT and SELLER INTERCONNECTION EQUIPMENT. Any such
inspection, however, shall not relieve SELLER from its sole obligation to
operate and maintain the SELLER INTERCONNECTION EQUIPMENT in accordance
with Section 7.3 hereof at all times.
ARTICLE IX
PECO ENERGY INTERCONNECTION EOUIPMENT
9.1 PECO ENERGY Interconnection Equipment. PECO ENERGY shall design,
construct, purchase, install, operate, maintain and own the PECO ENERGY
INTERCONNECTION EQUIPMENT.
9.2 Interconnection Design. Upon receiving from the SELLER the
DESIGN RELEASE and an initial advance payment specified by PECO ENERGY in
accordance with Section .9.14 hereof 1 PECO ENERGY shall (a) design the
PECO ENERGY INTERCONNECTION EQUIPMENT, (b) prepare and provide to SELLER an
estimated completion date for constructing, purchasing and installing the
PECO ENERGY INTERCONNECTION EQUIPMENT, and (c) prepare an estimate of the
cost of constructing, purchasing and installing
30
the PECO ENERGY INTERCONNECTION EQUIPMENT, and (d) review for acceptance
the design of the SELLER INTERCONNECTION EQUIPMENT.
9.3 Consultation with SELLER. After the submission by PECO ENERGY to
SELLER of the plans and specifications for the design of the PECO ENERGY
INTERCONNECTION EQUIPMENT, PECO ENERGY shall periodically meet with and
inform SELLER of the design, costs, scheduling and other factors which
could affect the construction of the PECO ENERGY INTERCONNECTION EQUIPMENT.
Such discussions shall be promptly completed, and shall not be deemed to
preclude changes or create any warranty for the benefit of or
representation to SELLER, or any other person, as to the plans,
specifications, cost estimates, time schedules or other factors relating to
the proposed construction, purchase, installation, operation or maintenance
of the PECO ENERGY INTERCONNECTION EQUIPMENT.
9.4 Rights and Easements. SELLER shall cause to be granted to PECO
ENERGY and its successors and assigns in perpetuity, or for a shorter
period as the PARTIES may agree, but not less than the term of this
AGREEMENT, at no cost to PECO ENERGY, all necessary rights and easements to
construct, purchase, install, operate, maintain, repair, renew, replace,
remove and relocate (a) PECO ENERGY INTERCONNECTION EQUIPMENT, (b) the
metering and telemetering equipment described in Articles XI and XII hereof
and (c) any PECO ENERGY facilities affected by the PROJECT. SELLER shall
execute and deliver to
31
PECO ENERGY, in recordable form, such instruments as PECO ENERGY may
request with respect to the foregoing. SELLER also shall obtain all
necessary rights and easements to construct, install, own, operate, and
maintain the PROJECT.
9.5 Acquisition of Permits. Licenses and Approvals. PECO ENERGY
shall make applications to obtain from appropriate governmental bodies any
permit, license or approval required to construct, purchase, install, own,
operate and maintain PECO ENERGY INTERCONNECTION EQUIPMENT. SELLER shall
provide any assistance reasonably requested by PECO ENERGY to enable PECO
ENERGY to obtain any such permit, license or approval. SELLER shall also
obtain from appropriate governmental bodies any permit, license or approval
required to construct, install, own, operate and maintain the PROJECT.
9.6 Costs of Acquisition. SELLER shall pay, as a cost or expense
associated with the design, construction, purchase and installation of PECO
ENERGY INTERCONNECTION EQUIPMENT under Sections 9.13-9.17 hereof, any
reasonable cost or expense associated with PECO ENERGY's obtaining any
permit, license or approval pursuant to Section 9.5 hereof, or any
reasonable cost or expense associated with defending the issuance of any
such required permit, license or approval.
9.7 Notice to Proceed. PECO ENERGY shall commence construction,
purchase and installation of the PECO ENERGY INTERCONNECTION EQUIPMENT
following receipt from SELLER of the
32
NOTICE TO PROCEED and the payment specified by PECO ENERGY in accordance
with Section 9.14 hereof.
9.8 Reasonable Efforts to Complete Construction. PECO ENERGY shall
use reasonable efforts to complete the construction of the PECO ENERGY
INTERCONNECTION EQUIPMENT on or before the estimated completion date;
provided, however, that the PARTIES understand and agree that PECO ENERGY's
reasonable efforts to complete the construction of the PECO ENERGY
INTERCONNECTION EQUIPMENT on or before the estimated completion date shall
be subordinate and subject to PECO ENERGY'S primary obligations to furnish
and maintain adequate, efficient, safe, and reliable service and facilities
to its customers and to operate and maintain its plant, property and
equipment in such condition as to enable it to do so.
9.9 Liability. PECO ENERGY shall not be liable to SELLER for any
direct or indirect costs, expenses, losses, liabilities or damages which
SELLER may incur or sustain and which arise out of, relate to or result
from any delay in the completion of construction of the PECO ENERGY
INTERCONNECTION EQUIPMENT, except where the delay in the completion of the
construction of the PECO ENERGY INTERCONNECTION EQUIPMENT results from PECO
ENERGY's failure to use reasonable efforts, as qualified in Section 9.8
hereof. SELLER shall indemnify and hold harmless PECO ENERGY and each and
every of its officers,
33
agents, servants, employees, successors and assigns from and against any
and all claims, demands, suits, actions, liabilities, damages, or
judgments, as well as against any fees, costs, charges or expenses which
PECO ENERGY, its officers, agents, servants, employees, successors and
assigns incur in the defense of any such claims, demands, suits, actions or
judgments, made or filed by any third party to the extent such claims,
demands, suits, actions or judgments arise out of, or relate to, any delay
in the completion of the construction of the PECO ENERGY INTERCONNECTION
EQUIPMENT, except where such delay results from PECO ENERGY's failure to
utilize reasonable efforts as qualified in Section 9.8 hereof.
9.10 Design Changes. PECO ENERGY shall construct the PECO ENERGY
INTERCONNECTION EQUIPMENT reasonably in accordance with its proposed
design. PECO ENERGY shall have the right, however, to make changes in such
proposed design when it determines, in its judgment reasonably exercised
and. after consultation with SELLER, that such changes are necessary to
enable the PROJECT to interconnect and operate in parallel with the PECO
ENERGY SYSTEM in a safe and reliable manner. PECO ENERGY shall provide
SELLER with notice of any design change which would require a change 'in
the SELLER INTERCONNECTION EQUIPMENT; provided, however, that the failure
of PECO ENERGY to provide such notice shall not relieve SELLER of its sole
obligation to pay the cost of constructing the PECO ENERGY
34
INTERCONNECTION EQUIPMENT.
9.11 Notice of Completion. PECO ENERGY shall notify SELLER when it
has completed the construction of the PECO ENERGY INTERCONNECTION
EQUIPMENT.
9.12 Interconnection Cost Responsibility. SELLER shall be responsible
for, and shall pay to PECO ENERGY1 all reasonable costs and charges PECO
ENERGY incurs and makes in designing, constructing, purchasing and
installing the PECO ENERGY INTERCONNECTION EQUIPMENT.
9.13 Estimated Costs. PECO ENERGY shall, in accordance with Section
9.2 hereof, estimate the total costs it expects to incur in designing,
constructing, purchasing and installing the PECO ENERGY INTERCONNECTION
EQUIPMENT. The provision by PECO ENERGY to SELLER of this or any other such
cost estimate shall not diminish, change or affect SELLER's responsibility
and obligation to pay to PECO ENERGY all costs PECO ENERGY actually incurs
in designing, constructing, purchasing and installing the PECO ENERGY
INTERCONNECTION EQUIPMENT.
9.14 Payment Schedule. PECO ENERGY and SELLER agree that SELLER shall
prepay PECO ENERGY for all costs PECO ENERGY incurs in designing,
constructing, purchasing and installing the PECO ENERGY INTERCONNECTION
EQUIPMENT in accordance with this Section 9.14. With the submission of the
DESIGN RELEASE under Section 9.2 hereof, SELLER shall make a payment
specified by PECO ENERGY to cover the costs PECO ENERGY expects to incur
35
pursuant to Section 9.2. Upon completion of the cost estimate to be
developed pursuant to Section 9.2(c), PECO ENERGY and SELLER shall develop
a payment schedule, acceptable to PECO ENERGY, for SELLER to advance funds
sufficient to cover the costs PECO ENERGY expects to incur for the
specified work. The first payment on that schedule shall be made with the
NOTICE TO PROCEED issued by SELLER in accordance with Section 9.7. SELLER
shall thereafter make payments in accordance with the agreed schedule.
PECO ENERGY shall not commence the construction, purchase or installation
of any PECO ENERGY INTERCONNECTION EQUIPMENT until a payment schedule
acceptable to PECO ENERGY is developed.
9.15 Reconciliation. Following completion of the construction of the
PECO ENERGY INTERCONNECTION EQUIPMENT, PECO ENERGY shall provide to SELLER
a final reconciliation setting forth the nature and amount of the costs and
charges PECO ENERGY actually incurred or made in (a) designing,
constructing, purchasing and installing the PECO ENERGY INTERCONNECTION
EQUIPMENT and (b) performing its obligations under Sections 8.3, 8.5 and
9.2 hereof. In the event that the total of such costs and charges PECO
ENERGY actually incurred or made exceeds the total payments made by SELLER
to PECO ENERGY under Sections 9.2, 9.7 and 9.14 hereof, SELLER shall be
responsible for and shall pay to PECO ENERGY any such differential within
thirty (30) days of the date of delivery to SELLER of the final
reconciliation.
36
In the event that the total payments made by SELLER to PECO ENERGY pursuant
to Sections 9.2, 9.7 and 9.14 hereof exceed such costs PECO ENERGY actually
incurred or made, PECO ENERGY shall refund to SELLER, Within thirty (30)
days of the final reconciliation, any such overpayment.
9.16 Suspension. In the event SELLER fails to remit any payment
specified in Sections 9.14 or 9.15 hereof on or before the day such payment
is due, PECO ENERGY may, in addition to any other remedy or right PECO
ENERGY may have under the AGREEMENT, immediately suspend performance of its
obligations under this AGREEMENT. PECO ENERGY shall provide SELLER with
notice of any such suspension of performance. In the event PECO ENERGY
suspends performance of its obligations under this AGRED(ENT pursuant to
this Section 9.16, SELLER may, after curing the precipitating cause
thereof, request PECO ENERGY to resume the tasks associated with the
design, construction and installation of the PECO ENERGY INTERCONNECTION
EQUIPMENT. Upon receipt of any such request PECO ENERGY shall, as soon
thereafter as practicable, review its work commitments and shall establish
and submit to SELLER, as applicable: (a) a revised estimated construction
completion date and (b) a revised payment schedule. If SELLER accepts the
revised estimated construction completion date and the revised payment
schedule, PECO ENERGY shall resume the construction and installation of the
PECO ENERGY INTERCONNECTION EQUIPMENT.
37
9.17 Cancellation Costs. If PECO ENERGY is not in default (as defined
in Section 20.2 hereof), SELLER shall be liable to pay to PECO ENERGY all
CANCELLATION COSTS which PECO ENERGY incurs. In the event PECO ENERGY
incurs CANCELLATION COSTS for which SELLER is responsible under this
AGREEMENT, PECO ENERGY shall provide SELLER with a written demand for
payment. SELLER shall be obligated to make payment to PECO ENERGY for any
CANCELLATION COSTS immediately upon PECO ENERGY's presentation of the
written demand. If the AGREEMENT is terminated under Sections 19.1 or 19.2
hereof before PECO ENERGY has completed the construction and installation
of the PECO ENERGY INTERCONNECTION EQUIPMENT, PECO ENERGY shall have the
right to cancel or terminate any supplier and contractor agreements and
orders entered into in connection with discharging its obligations to
design, construct and install the PECO ENERGY INTERCONNECTION EQUIPMENT.
In the event PECO ENERGY terminates or cancels any supplier or contractor
agreements or orders as permitted in this Section 9.17, PECO ENERGY shall
consult with SELLER but retain final discretion relative to the manner of
resolving any such claim or demand ~y any contractor or supplier, and PECO
ENERGY shall be the sole judge of the acceptability of any compromise in
settlement or resolution of any such claim or demand. Additionally, PECO
ENERGY shall be the sole judge as to what is necessary to maintain the
safety, integrity or reliability of the PECO ENERGY SYSTEM relative to
38
any removal or completion of PECO ENERGY INTERCONNECTION EQUIPMENT. PECO
ENERGY shall exercise reasonable care in resolving contractor and supplier
claims and demands and in effecting any required removal or completion of
PECO ENERGY INTERCONNECTION EQUIPMENT so as to mitigate the dollar amount
paid in effecting the resolution of such claims and demands or the dollar
amount expended in completing such removal or completion tasks; provided,
however, that PECO ENERGY shall have no liability to SELLER for or on
account of the dollar amounts paid in effecting the resolution of any such
claims and demands or in effecting such removal or completion tasks except
where PECO ENERGY effects the resolution of any such claims and demands or
the completion of such tasks in a manner which is in willful disregard of
its obligation to mitigate.
ARTICLE X
INITIAL PROJECT OPERATION AND TESTING
10.1 Initial Operation. Upon (a) PECO ENERGY's inspection and
acceptance of the SELLER INTERCONNECTION EQUIPMENT under Section 8.5 hereof
and (b) PECO ENERGY's notification of SELLER under Section 9.11 hereof of
the completion of the installation and construction of the PECO ENERGY
INTERCONNECTION EQUIPMENT, SELLER shall select and notify PECO ENERGY of a
DATE OF INITIAL OPERATION, which must be acceptable to PECO ENERGY. PECO
ENERGY will promptly notify SELLER whether the DATE OF INITIAL OPERATION it
has selected is
39
acceptable. As of the DATE OF INITIAL OPERATION, PECO ENERGY shall permit
any electric generation unit at the PROJECT to interconnect and synchronize
with the PECO ENERGY SYSTEM for testing purposes. SELLER shall, at PECO
ENERGY's request, inform PECO ENERGY of the results of any such testing.
10.2 Commercial Operation. Following the DATE OF INITIAL OPERATION
and the PROJECT testing specified in Section 10.1, SELLER shall select and
notify PECO ENERGY of a COMMERCIAL OPERATION DATE.
ARTICLE XI
METERING
11.1 Metering Equipment. PECO ENERGY shall determine the design of
the metering installation for the purpose of registering and recording the
quantity of NET ELECTRIC OUTPUT purchased by PECO ENERGY from SELLER. Such
metering equipment shall be capable, among other things, of providing the
data required to determine the kilowatt-hours purchased during each hour of
the BILLING MONTH, as well as total NET ELECTRIC OUTPUT purchased during
each BILLING MONTH, under the terms of the AGREEMENT and shall permit
continuous reading by SELLER and PECO ENERGY. PECO ENERGY and SELLER shall
have the respective responsibilities for metering set forth below:
(a) PECO ENERGY shall own and maintain all metering equipment.
40
(b) PECO ENERGY shall provide SELLER with all required current
transformers, which SELLER shall install.
(c) SELLER shall provide and install metering enclosures, mounting
equipment and overcurrent protection as required.
(d) PECO ENERGY shall make secondary connections to metering
transformers.
(e) SELLER shall make primary connections to metering transformers.
11.2 Meter Charges. SELLER shall pay to PECO ENERGY, in the manner
specified in Section 14.2 hereof, monthly metering equipment carrying and
maintenance charges, which are estimated in Appendix A hereto.
11.3 Meter Testing. PECO ENERGY shall verify the accuracy of PECO
ENERGY's recording meter by performing the meter tests and conforming to
the other standards set forth in the PUC's regulations at 52 Pa. Code 55
57.20-57.25 and any amendments or modifications thereto. The metering
equipment shall be sealed, and SELLER shall be informed in advance and may
have a representative present when such seals are broken or when a
recording meter is inspected, tested or adjusted. SELLER may, at any time,
request a test of the accuracy of a recording meter installed pursuant
hereto and shall bear the cost thereof, except that PECO ENERGY shall bear
the cost of any such test when the test establishes a METER ERROR
PERCENTAGE in excess of
41
two percent (21). In the event SELLER elects to have a representative
present at a test of the accuracy of a recording meter, the accuracy test
and any associated adjustments to the recording meter shall be made in the
presence of and observed by SELLER's representative.
11.4 Meter Error. If, as a result of an accuracy test, a recording
meter is found to have a METER ERROR PERCENTAGE of more than two percent
(2%), PECO ENERGY shall, at its own expense, restore the recording meter to
condition of accuracy or replace it.
11.5 Payment Adjustment. If , as a result of an accuracy test, the
recording meter is found to nave a METER ERROR PERCENTAGE of more than two
percent (2.0%) fast, PECO ENERGY shall render a bill or take a credit for
any associated overpayment equal to the product of (a) the total NET
ELECTRIC OUTPUT purchased during the METER ERROR CORRECTION PERIOD, (b) the
LEVELIZED RATE, the PROJECTED VALUE or ninety percent (90%) of the PJM RATE
as applicable under Section 4.3 hereof for the BILLING MONTHS during the
METER ERROR CORRECTION PERIOD and (c) the METER ERROR PERCENTAGE. If, as a
result of an accuracy test, the recording meter is found to have a METER
ERROR PERCENTAGE of more than two percent (2.0%) slow, PECO ENERGY shall
pay SELLER for any associated underpayment, which payment shall equal the
product of (a) the total NET ELECTRIC OUTPUT purchased during the METER
ERROR CORRECTION PERIOD, (b) the
42
LEVELIZED RATE, the PROJECTED VALUE or ninety percent (90%) of the PJN RATE
as applicable under Section 4.3 hereof for the BZLLING MONTHS during the
METER ERROR CORRECTION PERIOD and (c) the METER ERROR PERCENTAGE.
11.6 Meter Failure. Should the recording meter installed pursuant to
Section 11.1 hereof fail to register during any period of time. the NET
ELECTRIC OUTPUT purchased by PECO ENERGY during such period shall be
estimated by PECO ENERGY. SELLER shall cooperate in making such estimates
by providing to PECO ENERGY, upon PECO ENERGY's request, registration data
from any recording meter maintained by SELLER at the PROJECT SITE or other
relevant data.
11.7 Suspense Account Adjustments. If a refund is issued, bill
rendered or payment reduced under Sections 11.5 or 11.6 hereof because of
meter inaccuracy or failure, an appropriate adjustment, if any, shall be
made to the SUSPENSE ACCOUNT to reflect the credits or debits that would
have been made to the SUSPENSE ACCOUNT during the METER ERROR CORRECTION
PERIOD if the meter had been neither fast nor slow.
ARTICLE XII
TELEMETERING
12.1 Telemetering Equipment. SELLER shall provide telemetering
equipment to enable PECO ENERGY to monitor the PROJECT's NET ELECTRIC
OUTPUT and reactive power on a continuous basis. PECO ENERGY shall specify
the telemetering equipment
43
design to record SELLER's breaker position, the output of the FACILITY1 the
NET ELECTRIC OUTPUT of the PROJECT, and any other requirements needed to
maintain the reliability and stability of the PECO ENERGY SYSTEM. PECO
ENERGY and the SELLER shall have the respective responsibilities for
telemetering set forth below:
(a) PECO ENERGY shall specify all telemetering equipment and
installation standards.
(b) SELLER shall furnish, own and install all telemetering equipment
on the PROJECT SITE in accordance with the standards specified by PECO
ENERGY.
(c) PECO ENERGY shall maintain all telemetering equipment except the
voltage and current transformers.
(d) SELLER shall maintain voltage and current transformers.
(e) PECO ENERGY shall install wiring inside the remote terminal and
termination cabinet.
(f) PECO ENERGY shall specify and order telephone pairs as required.
(g) SELLER shall lease a telephone circuit or otherwise establish a
telecommunications link to PECO ENERGY's operations center at 2301 Market
Street, Philadelphia, Pennsylvania 19101, capable of permitting PECO ENERGY
to receive the telemetering data specified in this Section 12.1 by means of
both digital data links and analog signals.
44
12.2 Cost Responsibility. Any costs incurred by PECO ENERGY in
designing1 designating, selecting, specifying, or installing telemetering
equipment shall be paid to PECO ENERGY by SELLER pursuant to the provisions
of Article IX hereof as a cost associated with the design1 construction and
installation of the PECO ENERGY INTERCONNECTION EQUIPMENT. SELLER shall
bear all the costs it incurs under Section 12.1.
12.3 Telemetering Charges. SELLER shall pay to PECO ENERGY, in a
manner set forth in Section 14.2 hereof, all costs PECO ENERGY incurs in
maintaining and operating telemetering equipment pursuant to the AGREEMENT,
which costs are estimated in Appendix A hereto.
ARTICLE XIII
MODIFICATIONS
13.1 PECO ENERGY System Modifications. The PARTIES hereto recognize
that PECO ENERGY may determine during the term of the. AGREEMENT that
certain modifications, including, without limitation1 repairs, additions,
replacements or other changes, on or to the PECO ENERGY SYSTEM are
necessary to:
(a) to accommodate or meet changing patterns of demand and usage of
electric power and energy or other changes in the PECO ENERGY SYSTEM,
(b) to meet revised safety and operating standards and procedures,
(c) to maintain the quality of the initial
45
interconnection installations required by this AGREEMENT, or,
(d) to satisfy any applicable law, regulation or order. If such
modifications, improvements, repairs, additions, replacements or other
changes on or to the PECO ENERGY SYSTEM require, in PECO ENERGY's sole
judgment reasonably exercised, associated changes to the PECO ENERGY
INTERCONNECTION 'EQUIPMENT, the SELLER INTERCONNECTION EQUIPMENT or the
metering and telemetering equipment described. in Articles XI and XII
hereof, PECO ENERGY shall provide SELLER with a description of the required
changes and an estimate of the cost of such required changes. Thereafter,
SELLER shall make the required modifications to the SELLER INTERCONNECTION
EQUIPMENT, and PECO ENERGY shall make the designated modifications to the
PECO ENERGY INTERCONNECTION EQUIPMENT and the metering and telemetering
equipment described in Articles XX and XII hereof.
13.2 Payment. SELLER shall be responsible for and shall pay to PECO
ENERGY any costs and expenses PECO ENERGY incurs associated with the
required changes described in Section 13 1 hereof. Unless other billing
and payment arrangements are mutually agreed upon by the PARTIES, SELLER
shall pay to PECO ENERGY the estimated cost set forth in the estimate
provided by PECO ENERGY to SELLER pursuant to Section 13.1 hereof within
thirty (30) days of its receipt of such cost estimate. within ninety (90)
days of completion of the modifications to the-PECO ENERGY INTERCONNECTION
EQUIPMENT and/or metering and
46
telemetering equipment described in Articles XI and XII hereof, PECO ENERGY
shall provide SELLER with a final reconciliation setting forth the nature
and amount of the costs PECO ENERGY actually incurred in performing the
modifications. In the event that the total costs actually incurred by PECO
ENERGY exceed the payment made by SELLER to PECO ENERGY pursuant to this
Section 13.2, SELLER shall be responsible for and shall pay to PECO ENERGY
any such differential within thirty (30) days of the date of delivery to
SELLER of the final reconciliation. In the event that the payment made by
SELLER to PECO ENERGY pursuant to this Section 13.2 exceeds the costs PECO
ENERGY actually incurred in making the modifications, PECO ENERGY :hall
refund to SELLER, with the final reconciliation, any such overpayment.
13.3 Maintenance Costs. PECO ENERGY shall maintain the PECO ENERGY
INTERCONNECTION EQUIPMENT during the term of the AGREEMENT according to
PECO ENERGY's sole judgment reasonably applied and based on common
practices for the PECO ENERGY T&D SYSTEM. SELLER shall be responsible for
and pay to PECO ENERGY all reasonable costs PECO ENERGY incurs associated
with such maintenance. PECO ENERGY shall periodically render a reasonably
detailed maintenance bill to SELLER, covering maintenance expenses incurred
over the time period since the last maintenance bill. SELLER shall pay to
PECO ENERGY the amount of each such bill within thirty (30) days after its
receipt. A
47
maintenance bill not paid within thirty (30) days shall accrue interest as
provided in Section 14.4 hereof.
ARTICLE XIV
PAYMENT AND BILLING
14.1 Output Purchase Payment. Within thirty (30) days after the DATE
OF INITIAL OPERATION, and at the conclusion of each BILLING MONTH
thereafter, PECO ENERGY shall read the recording meter at the PROJECT SITE
for billing purposes. Within thirty (30) days after such meter reading PECO
ENERGY shall remit to SELLER an amount equal to the Output Purchase Payment
(calculated in accordance with Section 4.3 hereof) less any offsets and
reductions authorized under the AGREEMENT.
14.2 Metering. Telemetering and Administration Charges. The Output
Purchase Payment made by PECO ENERGY to SELLER for each BZLLING MONTH shall
be reduced by monthly metering. telemetering, and associated administration
charges. Estimates of such charges are set forth in Appendix A hereto.
The administration charges shall be updated and increased periodically by a
percentage equal to PECO ENERGY's annual percentage change in its wages for
regular and probationary employees as of the date each such change becomes
effective. In the event the metering, telemetering and associated
administration charges are greater than the Output Purchase Payment for a
BILLING MONTH, SELLER shall be responsible for and
48
shall pay to PECO ENERGY the difference within thirty (30) days of the
issuance of a bill or invoice by PECO ENERGY.
14.3 Payments. Except as otherwise specifically provided in the
AGREEMENT, all payments or reimbursements required to be made under the
AGREEMENT shall be due and payable by the appropriate PARTY to the other
PARTY within thirty (30) days of the sending of a bill or invoice. With
respect t~ payments to be made by SELLER to PECO ENERGY1 if at the end of
such a thirty (30) day period PECO ENERGY has not received payment from
SELLER, PECO ENERGY may, without limitation, reduce any future Output
Purchase Payment by an amount equal to the account owed by SELLER to PECO
ENERGY plus interest as provided in Section 14.4 hereof.
14.4 Interest. In the event a PARTY fails to pay all or part of any
amount it owes the other PARTY under the terms of the AGREEMENT when such
payment is due, interest shall accrue on the unpaid portion from the due
date at a rate equal to the lesser of
(a) three (3) points above the per annum interest rate publicly
announced from time to time by the First Pennsylvania Bank, N.A., or by its
successor or survivor in the event of a bank merger, as the prime interest
rate currently being charged to its most credit-worthy borrowers for ninety
(90) day unsecured commercial loans, or, if the prime rate should be
discontinued or no longer quoted, a comparable rate designated by
49
PECO ENERGY in the reasonable exercise of its sole discretion, or
(b) the current rate of PECO ENERGY '5 most recent issue of long-term
debt, provided it issued such debt within the preceding twenty-four (24)
months.
14.5 Billing Disputes. PECO ENERGY shall provide to SELLER, upon a
timely request therefor, documentation and data available to PECO ENERGY to
enable SELLER to verify the accuracy of any Output Purchase Payment made by
PECO ENERGY to SELLER, or any amount billed by PECO ENERGY to SELLER
pursuant to the AGREEMENT; provided, however, that any such request by
SELLER shall not extend. postpone or otherwise affect SELLER's obligation
to pay any amounts billed by PECO ENERGY to SELLER under the AGREEMENT by
the due date. In the event SELLER disputes any amount billed by PECO ENERGY
to SELLER under the AGREEMENT, SELLER shall pay to PECO ENERGY the entire
amount thereof, when due1 and shall together with the payment thereof (a)
identify and present the dispute in writing to PECO ENERGY, and (b) submit
to PECO ENERGY documentation substantiating any claim made relative to the
dispute. Upon receipt of notice of the dispute and the supporting
documentation1 PECO ENERGY shall have thirty (30) days to attempt to
resolve the dispute with SELLER. In the event the dispute is not resolved
within such thirty (30) day period, either PARTY may pursue any legal or
other remedy.
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ARTICLE XV
ASSIGNMENT
15.1 Assignment. (a) Neither PARTY shall assign or transfer the
AGREEMENT or any claim or interests therein without the prior written
consent of the other PARTY, which consent shall not unreasonably be
withheld. Either PARTY, however, shall have the right to assign the
AGREEMENT to an affiliated entity without the consent of the other PARTY,
provided such assignment does not impair performance of the PARTIES'
respective obligations under the AGREEMENT. All covenants, stipulations,
terms, conditions and provisions of the AGREEMENT shall be binding upon the
PARTIES and shall extend to and be binding upon the successors and assigns
of the PARTIES permitted under this Section 15.1.
(b) Notwithstanding the first sentence of this Section l5.l~ PECO
ENERGY hereby consents to the assignment by SELLER of all of SELLER's
right, title and interest in and to this AGREEMENT, and any addendums and
amendments thereto, to Philadelphia United Power Corporation, a
Pennsylvania corporation ("PUPCO"). The foregoing consent is expressly
intended to permit SELLER to fulfill its obligations under certain
agreements among SELLER, PUPCO and its affiliate, Philadelphia Thermal
Energy corporation. This consent is conditioned on Seller and PUPCO
providing PECO ENERGY at least thirty (30) days written notice pursuant to
Section 25.1 prior
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to PUPCO accepting any formal assignment of this AGREEMENT. As provided in
subsection (a) of this Section 15.1. upon the assignment of this AGREEMENT
to PUPCO, all covenants, stipulations, terms, conditions and provisions of
this AGREEMENT shall be binding upon PUPCO as SELLER's assignee, and PUPCO
shall be entitled to all of the rights of SELLER hereunder, provided that
PUPCO shall have no right, title or interest in this Agreement prior to the
effectiveness of the assignment to PUPCO. PECO ENERGY will not be
obligated to permit the assignment of SELLER's rights under this AGREEMENT
to any party other than PUPCO or its corporate successors (but not
assigns), provided that, so long as PUPCO remains fully liable to PECO
ENERGY for performance of this AGREEMENT, and provided that such assignment
does not impair the performance of the PARTIES' respective obligations
under this Agreement, PUPCO may, upon the prior written consent of PECO
ENERGY which shall not be unreasonably withheld, subcontract for FACILITY
electric production under this Agreement.
ARTICLE XVI
BANKRUPTCY AND INSOLVENCY
16.1 Remedies. In the event of
(a) the filing of a. petition seeking the involuntary reorganization
or liquidation of SELLER under any applicable federal or state bankruptcy,
insolvency, reorganization or similar law, and such petition or action is
not actively
52
contested within sixty (60) days after the filing thereof, or the granting
of such petition, whether contested or appealed or not;
(b) the commencement of an action seeking the appointment of a
receiver, trustee or other similar official for SELLER, of for any
substantial part of SELLER's property, and such petition or action is not
actively contested within sixty (60) days after the filing thereof, or the
appointment of such a receiver, trustee or other similar official, whether
contested or appealed or not;
(c) the filing of a petition by SELLER seeking the voluntary
reorganization or liquidation of SELER under any applicable federal or
state bankruptcy, insolvency or similar law; or
(d) the placement of SELLER's affairs in the hands of any court or
governmental agency for administration, including under any financially
distressed municipalities law if SELLER is a political subdivision or
municipal corporation or similar entity under applicable law;
PECO ENERGY may, in addition to any other remedies it may have under the
AGREEMENT, including, in particular, under Sections 5.3 and 5.4,
immediately suspend its performance hereunder unless and until SELLER
provides PECO ENERGY with assurance, which PECO ENERGY in its sole
discretion determines is adequate, that SELLER's obligations under the
AGREEMENT will be met.
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ARTICLE XVII
WARRANTIES
17.1 SELLER's Warranties. SELLER warrants it will have good title to1
and the right to deliver, all MET ELECTRIC OUTPUT it delivers to the
INTERCONNECTION POINT for purchase by PECO ENERGY under the AGREEMENT.
SELLER agrees to indemnify and hold PECO ENERGY harmless against any and
all claims, demands, suits, actions, costs, liabilities, damages, losses or
judgments arising out of, relating to or resulting from any adverse claim
to the NET ELECTRIC OUTPUT purchased by PECO ENERGY pursuant to the
AGREEMENT, as well as against all fees, costs, charges, and expenses which
PECO ENERGY might incur in a defense of any such claim, suit, action or
similar such demand made or filed by any person. In effecting the right of
or obligation to indemnify under this Section 17.1 the procedural
provisions of Article XVIZI of the AGREEMENT shall govern. In addition,
SELLER represents and warrants that the partners of SELLER have authorized
Robert A. Shinn, Vice President of O'Brien (Schuylkill) Cogeneration, Inc.,
the managing partner of SELLER, to execute this AGREEMENT in the name of
SELLER.
ARTICLE XVIII
INDEMNIFICATION
18.1 Responsibility. Each PARTY shall indemnify the other PARTY, its
officers, agents, and employees against all loss, damages, expense, and
liability for injury to or death of
54
persons or injury to property proximately caused by the indemnifying.
PARTY's construction, ownership, operation, or maintenance of, or by
failure of, any of such PARTY's works or facilities used directly in
connection with this AGREEMENT. The indemnifying PARTY shall, at the other
PARTY's request, defend any suit asserting a claim covered by this
indemnity. The indemnifying PARTY shall pay all costs that may be incurred
by the other PARTY in enforcing this indemnity.
18.2 Worker's Compensation Responsibility. Each PARTY shall indemnify
and hold harmless the other PARTY, and each and every of its officers,
agents, servants, employees, successors and assigns, from any and all
claims of the other PARTY's employees arising from any worker's
compensation laws.
18.3 Procedure. If a claim is asserted or action brought against an
indemnitee (PECO ENERGY or SELLER as applicable), and the indemnitee
believes that it is entitled to indemnification under this ARTICLE XVIII,
the indemnitee shall promptly notify the indemnitor. (the other PARTY), in
writing, of such claim or action. Such notice shall be provided in
sufficient time to enable the indemnitor to assert and prosecute
appropriate defenses to the claim or action. If the indemnitee fails to
give the indemnitor sufficiently prompt notice, the indemnitor shall have
no further obligation to indemnify the indemnitee pursuant to this ARTICLE
XVIII. Upon receipt of such notice, the indemnitor shall make a prompt
determination of
55
whether it believes it is required to indemnify the indemnitee, and shall
promptly notify the indemnitee1 in writing, of its determination. If the
indemnitor determines that it is required to indemnify, it shall assume the
defense of the indemnitee, including the employment of counsel, and shall
thereafter pay all costs and expenses relative to the defense of the claim
or action. The indemnitee shall cooperate with the indemnitor in all
reasonable respects in this defense. The indemnitee shall also have the
right, at its own expense, to employ separate counsel in any such action
and to participate in the defense thereof. The indemnitor shall not be
liable for any settlement of any claim or action made without its consent.
Conversely, before settling any claim or action, the indemnitor shall
demonstrate to the indemnitee that the indemnitor has sufficient financial
means, or has made adequate arrangements, to make all settlement payments
as and when due.
ARTICLE XIX
TERMINATION
19.1 Termination by PECO ENERGY. PECO ENERGY may terminate the
AGREEMENT:
(a) if SELLER is in default of the AGREEMENT,
(b) if the PUC, or any other governmental agency, issues a binding
order during the term of the AGREEMENT denying, over the objections of PECO
ENERGY and SELLER, PECO ENERGY authority to collect on a full and current
basis from its
56
customers through the ENERGY COST ADJUSTMENT the costs PECO ENERGY incurs
in purchasing NET ELECTRIC OUTPUT pursuant to the AGREEMENT; provided1
however, that PECO ENERGY shall not have the right to terminate the
AGREEMENT if SELLER agrees within twenty (20) days of the date of issuance
of such a binding order to modify the AGREEMENT to accept payments for NET
ELECTRIC OUTPUT at any lower rate which PECO ENERGY is authorized to
recover on a full and current basis from its customers through the ENERGY
COST ADJUSTMENT, or
(c) if SELLER fails to provide PECO ENERGY with adequate assurance of
performance under Article XVI hereof.
19.2 Termination by SELLER. SELLER may terminate the AGREEMENT:
(a) if PECO ENERGY is in default of the AGREEMENT, or
(b) if, prior to the COMMERCIAL OPERATION DATE, SELLER
permanently terminates FACILITY operations and permanently abandons the
FACILITY. SELLER shall, upon any termination by it, pay to PECO ENERGY any
amounts due and owing under the AGREEMENT, including, if applicable, any
debit balances and accrued interest in the SUSPENSE ACCOUNT pursuant to
Section 5.3 and including an amount determined by PECO ENERGY, in its sole
discretion, to be sufficient to cover PECO ENERGY's CANCELLATION COSTS.
19.3 Effect of Termination. A termination of the
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AGREEMENT under Sections 19.1 or 19.2 hereof shall not be deemed to be a
breach or default under Article XX hereof.
ARTICLE XX
BREACH AND DEFAULT
20.1 Breach. A breach of the AGREEMENT shall occur upon the
occurrence of any of the following conditions or events:
(a) The failure of a PARTY to pay any amount due to the other PARTY
under the AGREEMENT, which failure continues for a period of thirty (30)
days after the due date for such payment as determined under the AGREEMENT.
(b) The failure by a PARTY to perform or observe any material term or
condition of the AGREEMENT.
20.2 Cure and Default. In the event that any PARTY breaches the
AGREEMENT. the other PARTY shall provide the breaching PARTY with a written
notice of the breach. Thereafter, if the breach is not rectified or cured
within forty-five (45) days after receipt of such notice the breaching
PARTY shall be deemed to be in default of the AGREEMENT; provided, however,
that, except where there has been a failure to make a payment within thirty
(30) days after the due date for such payment as determined under the
AGREEMENT, if such breach cannot be reasonably cured within such forty-five
(45) day period, then the breaching PARTY shall have an additional
reasonable period, not to exceed one (1) year, to effect such cure, and
shall not be deemed to be in default of the AGREEMENT
58
provided that the breaching PARTY commences to effect such cure within
forty-five (45) days of its receipt of notice of the breach, and at all
times thereafter proceeds diligently in effecting such cure.
20.3 Damages. In the event a PARTY is in breach or default of the
AGREEMENT, then the other PARTY, in addition to any other remedy it may
have under the AGREEMENT, shall be entitled to all direct damages caused by
such breach or default, but in no event shall either PARTY be liable to the
other PARTY for any indirect, special or consequential damages resulting
from such breach or default, and in no event shall PECO ENERGY be liable
for damages in excess of twenty-five million dollars ($25,000,000). In
addition, upon termination of the AGREEMENT SELLER shall pay PECO ENERGY,
pursuant to Section 5.3, an amount equal to the debit balance and accrued
interest in the SUSPENSE ACCOUNT as of the date of termination.
20.4 Mitigation. Each PARTY shall mitigate damages in the event of a
breach or default by the other PARTY to the AGREEMENT.
20.5 Indemnification. Nothing in this Article XX shall in any way
affect the obligations of the PARTIES to indemnify each other as provided
in Articles XVII and XVIII hereof.
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ARTICLE XXI
FORCE MAJEURE
21.1 Force Majeure. Subject td the provisions of Section 21.2 hereof,
either PARTY hereto shall be excused from performance hereunder, other than
the obligation to make payments of amounts already due and the payment of
the Projection Payment or Termination Payment under Sections 5.2 and .3
hereof 1 and shall not be liable in damages or otherwise if 1 and to the
extent that. it shall be unable to perform fully or is prevented from
performing fully by any act, event, cause or condition that is beyond its
reasonable control, that is not caused by its fault or negligence. and that
by the exercise of reasonable diligence it is unable to overcome or
prevent, including but not limited to the following:
(a) An act of God, flood, earthquake, storm, fire, explosion,
lightning, landslide, epidemic or damage by the elements.
(b) The failure of any subcontractor or supplier to perform for
reasons other than nonpayment of undisputed claims.
(c) The entry of a valid and enforceable injunctive or restraining
order or judgment, order or decree of any federal or state court or
administrative agency or governmental officer or body having or purporting
to have jurisdiction thereof, or any change in or adoption of any
constitution, charter, act, statute, law, ordinance, code, rule, regulation
or order, or
60
other legislative or administrative action of the United States or the
Commonwealth of Pennsylvania. or any agency, department, authority,
political subdivision or other instrumentality of either thereof; provided1
however, that the contesting in good faith of any order, judgment or action
shall not constitute or be construed as the lack of reasonable diligence or
efforts, or failure to act, of the non-performing PARTY; and provided
further that Force Majeure shall not include any actions or orders of any
governmental body insofar as such actions or orders (i) result in any loss
of QUALIFYING FACILITY status, (ii) require specific changes or
modifications to the AGREEMENT, or (iii) pertain to the extent of PECO
ENERGY'S recovery from its customers of payments to SELLER hereunder.
(d) The inability to obtain and maintain rights of way, permits,
licenses, and other required authorizations from any local, state or
federal agency, instrumentality or person for the PROJECT or activities
necessary to provide services hereunder.
(e) The discovery at the PROJECT SITE of an archaeological find of
significance.
(f) Strikes, walkouts1 slowdowns, lockouts or other labor disputes or
industrial disturbances.
(g) Acts of the public enemy, wars, blockages, boycotts,
insurrections or riots.
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(h) Loss, diminution or impairment of PECO ENERGY's electrical
supply.
(i) A break or fault in the PECO ENERGY T&D SYSTEM.
(j) Any other cause beyond the reasonable control of and without the
fault or negligence of the PARTY that is unable to perform and which. by
the exercise of reasonable diligence, that PARTY is unable to overcome or
prevent.
21.2 Excuse from Performance. The PARTY claiming Force Majeure shall
be excused from performance only if:
(a) It promptly gives the other PARTY oral notification of the
existence of any Force Majeure upon becoming aware thereof, and it provides
in writing particulars of such Force Majeure within five (5) days of such
oral notification,
(b) The suspension of performance on account of the Force Majeure is
of no greater scope and of no longer duration than is required by the Force
Majeure,
(c) It uses reasonable efforts under the circumstances to remedy the
inability to perform, but neither PARTY shall be required to settle any
strike, walkout, lockout or other labor dispute on terms which, in its sole
judgment, is contrary to its best interests, and
(d) It gives the other PARTY prompt oral notification of the
cessation of the Force Majeure, and thereafter provides confirmation in
writing within. five (5) days of said oral notification.
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ARTICLE XXII
INSURANCE
22.1 Insurance. SELLER shall, at a minimum, carry general liability
insurance with a combined single limit for bodily injury and property
damage (including broad form contractual liability) of at least ten million
dollars ($10,000,000). SELLER shall forward a certificate evidencing such
insurance to PECO ENERGY, at the address listed in Section 25.1, prior to
PECO ENERGY's inspection of the FACILITY and the SELLER INTERCONNECTION
EQUIPMENT pursuant to Section 8.5 hereof. SELLER shall provide annually
thereafter a certificate evidencing such ongoing insurance coverage.
ARTICLE XXIII
GOVERNMENT REGULATIONS
23.1 State and Federal. The AGREEMENT and all rights and obligations
of the PARTIES hereunder are subject to all applicable state and federal
laws and all duly promulgated orders and regulations and duly authorized
actions taken by the executive, legislative, or judicial branches of
government or any of their respective agencies, departments, authorities or
other instrumentalities. In the event that any such statute, ordinance,
order, rule, regulation or other action shall increase PECO ENERGY's cost
of performance under the AGREEMENT, SELLER shall pay or reimburse PECO
ENERGY for such costs.
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ARTICLE XXIV
GOVERNING LAW
24.1 Interpretation. The interpretation and performance of the
AGREEMENT shall be in accordance with and controlled by the laws and
regulations of the Commonwealth of Pennsylvania and the United States of
America.
ARTICLE XXV
MISCELLANEOUS
25.1 Notices. Except as otherwise specifically provided herein, any
notice, request, demand, statement and/or payment provided herein shall be
in writing and s~1 be sent to the PARTIES at the following addresses:
PECO ENERGY:
PECO Energy Company
Attn: Interconnection Arrangements
2301 Market Street
Philadelphia, PA 19101
Telecopy: (215) 841-4234
SELLER:
O'Brien (Schuylkill) Cogeneration, Inc.
225 South Eighth Street
Philadelphia, PA 19106
Telecopy: (215) 922-5227
PUPCO (after an assignment pursuant to Article XV):
Philadelphia United Power Corporation
2600 Christian Street
Philadelphia, Pa 19146
Telecopy: (215) 875-6910
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Such notices shall be deemed to have been given and received when (a)
personally delivered, (b) ninety-six (96) hours after deposit in the U.S.
Mail, postage prepaid, properly addressed to the appropriate PARTY, or (c)
twenty-four (24) hours after a telecopy is properly sent and received.
Oral notification under Section 21.2 shall be made by telephone to the
following numbers:
PECO ENERGY: (215) 841-4236
SELLER: (215) 627-5500
PUPCO: (215) 875-6900
Either PARTY may change the address, telecopy number, or telephone number
to which notice is to be given by written notice to the other PARTY.
Nothing in this Section 25.1 shall be deemed to require PECO ENERGY to
provide prior notice of any kind in the event of an OPERATIONAL EMERGENCY.
25.2 Indulgences. Neither the failure nor the delay on the part of
either PARTY to exercise any right, remedy, power or privilege under the
AGREEMENT shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same, nor shall any waiver of any right,
remedy1 power or privilege with respect to any other occurrence be
construed as a waiver of such right9 remedy, power or privilege with
respect to any other occurrence.
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25.3 Captions and Headings. Captions and headings in the AGREEMENT
are for convenience only, do not constitute a part of the AGREEMENT, and
shall not affect its interpretation.
25.4 Validity. Except as otherwise specifically provided in the
AGREEMENT, if any portion of the AGREEMENT is invalid or illegal, it shall
not affect the validity or enforceability of any other portion of the
AGREEMENT.
25.5 Agreement Definition. The AGREEMENT with Appendices A and B
hereto constitutes the entire AGREEMENT between the PARTIES relating to the
subject matter hereof, and all previous and contemporaneous agreements,
understandings, discussions, inducements, conditions, communications and
correspondence, whether oral or written, express or implied, with respect
to the subject matter hereof are superseded by the execution of the
AGREEMENT.
25.6 Modifications. The AGREEMENT may not be modified or amended
except in writing signed by or on behalf of both PARTIES by their duly
authorized officers with the same formality that as followed in the
execution of the AGREEMENT.
25.7 Execution in Counterparts. The AGREEMENT may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against the PARTY whose signature appears thereon, and all of which shall
together constitute one and the same instrument. The AGREEMENT shall become
binding when one or more counterparts hereof, individually or taken
66
together, shall bear the signatures of the PARTIU reflected hereon as the
signatories.
25.8 Gender and Number. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.
25.9 Number of Days. In computing the number of days for purposes of
the AGREEMENT, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls
on a Saturday, Sunday or holiday on which federal banks are or may elect to
be closed, then the final day shall be deemed to be the next day which is
not a Saturday, Sunday or such holiday.
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IN WITNESS WKEREOFD the PARTIES have caused the AGREEMENT to be
executed as of the day and year first above written.
PECO ENERGY COMPANY, formerly
known as PHILADELPHIA ELECTRIC
COMPANY
Attest:/s/ By:/s/ William H. Smith III
Secretary William H. Smith, III
Vice President
GRAYS FERRY COGENERATION
PARTNERSHIP
Attest:/s/ By:/s/Robert A. Shinn
Robert A. Shinn
Vice President
O'Brien (Schuylkill)
Cogeneration, Inc.
JOINDER
The undersigned hereby acknowledges and agrees to be bound by the
terms of this Agreement in accordance with the terms of Section 15.1 (b)
hereof.
CORPORATION PHILADELPHIA UNITED POWER
By:/s/ S. G. Smith
Attest:/s/ Robert A. Shinn
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APPENDIX A
ESTIMATED METERING TELEKETERING AND ADMINISTRATION CHARGES
Estimated Monthly Metering Charge* $150
Estimated Monthly Telemetering Charge** $500
Monthly Administration Charge*** $750
* Includes carrying and maintenance charges.
** Includes only maintenance and operating charges.
*** To be updated periodically in accordance with Section 14.2 of
this AGREEMENT.
APPENDIX B
PRICING VALUES
If the COMMERCIAL OPERATION The One LEVELIZED RATE (Cents
DATE occurs per Kilowatt-hour) is, until
the FINAL PROJECTION DATE
Dec. 26, 1991 - Dec. 25, 1992 3.49
Dec. 26, 1991 - Dec. 25, 1993 3.65
Dec. 26, 1991 - Dec. 25, 1994 3.82
Dec. 26, 1991 - Dec. 25, 1995 4.02
Dec. 26, 1991 - Dec. 25, 1996 4.23
Dec. 26, 1991 - Dec. 25, 1997 4.43
Dec. 26, 1991 - Dec. 25, 1998 4.64
Dec. 26, 1991 - Dec. 25, 1999 4.81
Dec. 26, 1991 - Dec. 25, 2000 4.95
PROJECTED RATE
Calendar Year (Cents per Kilowatt-hour)
1992 2.58
1993 2.77
1994 2.92
1995 3.18
1996 3.57
1997 3.91
1998 4.33
1999 4.68
2000 4.95
FINAL PROJECTION DATE - December 31, 2000