Exhibit 10.14
TRANSMISSION SERVICE
AND
INTERCONNECTION AGREEMENT
BETWEEN
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
AND
O'BRIEN ENERGY SYSTEMS, INC.
Dated as of the 17th day
Of November, 1987
TABLE OF CONTENTS
PAGE
RECITALS 1
ARTICLE I DEFINITIONS 5
ARTICLE II BASIC SERVICE 13
ARTICLE III EXCESS SERVICE 14
ARTICLE IV PHASE-IN PERIOD 16
ARTICLE V INTERRUPTION, CURTAILMENT OR
REDUCTION OF SERVICE 17
Section A Public Service System
Conditions 17
Section B Project Conditions 20
Section C Service Conditions 23
ARTICLE VI OPERATIONS COORDINATION 25
ARTICLE VII NET ELECTRICAL POWER OUTPUT
SPECIFICATIONS 28
ARTICLE VIII TERM 28
ARTICLE IX EFFECTIVENESS AND ENFORCEABILITY 29
ARTICLE X TRANSMISSION SERVICE CHARGES 31
Section A 31
Section B 34
ARTICLE XI BILLING AND PAYMENT 35
ARTICLE XII METERING/RECORDS 38
ARTICLE XIII INTERCONNECTION 46
Section A Design, Construction and In-
stallation of Interconnection 46
Section B Interconnection Costs 49
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TABLE OF CONTENTS
PAGE
Section C Letter of Credit for
Interconnection Costs 54
Section D Cancellation Costs 56
ARTICLE XIV MAINTENANCE OF PLANT 58
ARTICLE XV USE OF THE PUBLIC SERVICE SYSTEM 58
ARTICLE XVI EASEMENTS 59
ARTICLE XVII PERMITS/APPROVALS 60
ARTICLE XVIII DEDICATION OF FACILITIES 63
ARTICLE XIX REARRANGEMENT 63
ARTICLE XX COGENERATION FACILITY/SUBSTATION
FACILITY 64
ARTICLE XXI LIABILITY 71
ARTICLE XXII FORCE MAJEURE 72
ARTICLE XXIII PROTECTIVE DEVICES 74
ARTICLE XXIV INDEMNIFICATION 74
ARTICLE XXV INSURANCE 77
ARTICLE XXVI WARRANTIES 78
ARTICLE XXVII EVENTS OF TERMINATION 78
ARTICLE XXVIII BREACH OF CONTRACT 81
ARTICLE XXIX ARBITRATION 83
ARTICLE XXX SPECIFIC PERFORMANCE 86
ARTICLE XXXI MODIFICATIONS 87
ARTICLE XXXII ASSIGNMENT/TRANSFER 88
ARTICLE XXXIII CURE BY FINANCIER 90
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TABLE OF CONTENTS
PAGE
ARTICLE XXXIV FINANCIER SECURITY AGREEMENT 94
ARTICLE XXXV DETERMINATION OF PSE&G COSTS 95
ARTICLE XXXVI STANDARD FOR PERFORMANCE 95
ARTICLE XXXVII STANDBY ELECTRIC SERVICE 96
ARTICLE XXXVIII ENTIRE AGREEMENT 97
ARTICLE XXXIX SUCCESSORS AND ASSIGNS 97
ARTICLE XL CHOICE OF LAW 98
ARTICLE XLI CAPTIONS 98
ARTICLE XLII COUNTERPARTS 99
ARTICLE XLIV SURVIVAL OF OBLIGATIONS 99
ARTICLE XLV MISCELLANEOUS 100
ARTICLE XLVI NOTICE OF AMENDMENTS TO PJM OR
MID-ATLANTIC AGREEMENTS 100
ARTICLE XLVII RESERVATIONS 101
ARTICLE XLVIII NOTICES 101
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TRANSMISSION SERVICE
INTERCONNECTION AGREEMENT
This AGREEMENT made and entered into as of this 17th day of November, 1987
by and between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey
corporation (PSE&G) and O'BRIEN ENERGY SYSTEMS, INC., a Delaware
corporation (O'BRIEN).
RECITALS
WHEREAS, O'BRIEN has been formed as a Delaware corporation to, among
other things, design, construct, own and operate a cogeneration facility at
the PROJECT SITE.
WHEREAS, O'BRIEN has made application to the Federal Energy Regulatory
Commission (FERC) for and has obtained from the FERC a certification that
the PROJECT is a qualifying facility pursuant to 18 C.F.R. Section 292.204.
WHEREAS, O'BRIEN, intends to maintain the COGENERATION FACILITY during
the term of this AGREEMENT in compliance with the requirements for a
qualifying facility established as of the effective date of this AGREEMENT
in accordance with Title 18,
2
Code of Federal Regulations, Part 292, Subpart B, Section 292.203 through
292.207, inclusive.
WHEREAS, O'BRIEN has advised PSE&G that the NET ELECTRICAL POWER
OUTPUT OF THE COGENERATION FACILITY will be approximately 56,000 kilowatts;
WHEREAS, O'BRIEN estimates that it will commence pre-operation testing
of PROJECT equipment and facilities during the fourth quarter of 1989;
WHEREAS, O'BRIEN estimates that the DATE OF INITIAL OPERATION for the
PROJECT will be during the first quarter of 1990;
WHEREAS, O'BRIEN estimates that the DATE OF COMMERCIAL OPERATION for
the PROJECT will be in or about third quarter of 1990;
WHEREAS, O'BRIEN has an agreement with Jersey Central Power and Light
Company (JCP&L) entitled JCP&L Standard Contract - Long-Term Purchase for
Cogeneration and Small Power Production Located Outside JCP&L Service
Territory dated March 10, 1986 pursuant to which O'BRIEN has agreed to sell
to JCP&L and JCP&L has agreed to purchase from O'BRIEN the NET ELECTRICAL
POWER OUTPUT and associated NET ELECTRICAL ENERGY produced by the
COGENERATION FACILITY;
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WHEREAS, PSE&G is a public utility as defined in N.J.S.A. 48:2-13 and,
as such, is required by applicable statutes and regulations to furnish
safe, adequate and proper service to its retail and sale-for-resale
customers and further, to have and maintain its property, plant and
equipment in such condition as to enable it to do so;
WHEREAS, PSE&G owns and operates electric power transmission
facilities and, while O'BRIEN's planned PROJECT is not connected thereto,
the PROJECT will be located in an area which is in proximity to PSE&G's
electric power transmission facilities.
WHEREAS, O'BRIEN has requested PSE&G to: (i) design, construct,
install, operate and maintain the INTERCONNECTION so as to interconnect the
PROJECT with the electric power transmission facilities of PSE&G at PSE&G's
Essex Switching station; and (ii) receive NET ELECTRICAL POWER OUTPUT and
associated NET ELECTRICAL ENERGY produced by the COGENERATION FACILITY and
supplied to the RECEIPT POINT for DELIVERY TO JCP&L;
WHEREAS, JCP&L owns and operates electric power transmission
facilities which are interconnected with the electric power transmission
facilities of PSE&G;
WHEREAS, PSE&G and JCP&L are members of the Pennsylvania-New Jersey-
Maryland Interconnection (PJM);
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WHEREAS, PJM is a fully coordinated power pool which, pursuant to an
agreement executed by and among its members, affords to the member
utilities for the benefit of their customers reliable electric service at
the lowest possible cost;
WHEREAS, PSE&G has conducted engineering studies to ascertain the
feasibility of complying with O'BRIEN's requests to design, construct,
install, operate and maintain the INTERCONNECTION and to receive NET
ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL ENERGY produced by
the COGENERATION FACILITY and supplied to the RECEIPT POINT for DELIVERY TO
JCP&L;
WHEREAS, PSE&G, as a result of the aforesaid engineering studies, has
determined that it is feasible to design, construct, install, operate and
maintain the INTERCONNECTION and to receive NET ELECTRICAL POWER OUTPUT and
associated NET ELECTRICAL ENERGY produced by the COGENERATION FACILITY and
supplied to the RECEIPT POINT for DELIVERY TO JCP&L, over the term of this
AGREEMENT;
WHEREAS, PSE&G and JCP&L have or will enter into an operating
agreement whereby the DELIVERY TO JCP&L of NET ELECTRICAL POWER OUTPUT and
associated NET ELECTRICAL ENERGY received by PSE&G from the COGENERATION
FACILITY at the RECEIPT POINT pursuant to this AGREEMENT will be effected
through an adjustment by and between JCP&L and PSE&G of their hourly
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measured interconnection energy interchange in an amount equal to the NET
ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL ENERGY received by
PSE&G at the RECEIPT POINT;
NOW, THEREFORE, in consideration of the recitals and mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms when used herein with capitalization shall have
the following meanings, unless a different meaning shall be expressly
stated:
AGREEMENT means this Transmission Service and Interconnection
Agreement between O'BRIEN and PSE&G.
ALTERNATE PROJECT SITE means the site located on portions of parcels
in the City of Newark, County of Essex and State of New Jersey as follows:
(i) Lot 32 Block 2407 on the Tax Map of the City of Newark and being
commonly known as 335-347 Raymond Boulevard, Newark, New Jersey; and (ii)
Lot 5 Block 2406 on the Tax Map of the City of Newark and being commonly
known as 55-56 Lockwood Street, Newark, New Jersey; and (iii) that Lot
known as the Morris Canal Bed Property.
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BASIC SERVICE means the receipt by PSE&G at the RECEIPT POINT of a
level of kilowatts of NET ELECTRICAL POWER OUTPUT for DELIVERY TO JCP&L in
accordance with the level specified in Article II of this AGREEMENT.
BILLING STATEMENT means the monthly statement of charges PSE&G submits
to O'BRIEN for payment, as determined in accordance with Article X of this
AGREEMENT.
CANCELLATION COSTS means the actual costs and/or liabilities, PSE&G
incurs in connection with: (i) the cancellation of supplier and/or
contractor orders/agreements entered into to install and construct the
INTERCONNECTION; (ii) removal of interconnection facilities which have been
installed and are not required to maintain the integrity of the PSE&G
subtransmission network.
COGENERATION FACILITY means the gas turbine with heat recovery steam
generator, one (1) steam turbine, synchronous generators and all
appurtenant structures and equipment which O'BRIEN plans to construct,
install, own, operate and maintain at the PROJECT SITE, which generators
have in aggregate a nameplate rating of 51,400 kilowatts.
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COMMERCIAL OPERATION means the production of electric power and energy
at the COGENERATION FACILITY and the supply of such electric power and
energy to PSE&G at the RECEIPT POINT for DELIVERY TO JCP&L, commencing on
the DATE OF COMMERCIAL OPERATION.
CREDIT means Irrevocable Letter of Credit.
DATE OF COMMERCIAL OPERATION means the date O'BRIEN designates as the
date on which the electric generation units at the COGENERATION FACILITY
and the SUBSTATION FACILITY have been completed, tested and inspected and
are available for and capable of: (i) production of electrical power and
energy; and (ii) the supply thereof to PSE&G at the RECEIPT POINT for
DELIVERY TO JCP&L.
DATE OF INITIAL OPERATION means the date on which O'BRIEN
synchronizes, for the first time, any electric generation unit at the
COGENERATION FACILITY with the PUBLIC SERVICE SYSTEM.
DATE OF START-UP means the date PSE&G designates as the date on which
the SUBSTATION FACILITY will be energized and PSE&G commences the supply of
electric power and energy to the PROJECT.
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DELIVERY TO JCP&L means: (i) the hourly communication by PSE&G to
JCP&L of the amount of NET ELECTRICAL ENERGY produced by the COGENERATION
FACILITY which was received at the RECEIPT POINT by PSE&G for the account
of JCP&L during the previous hour; (ii) the simultaneous adjustment by
PSE&G of its hourly measured interconnection energy interchange in an
amount equal to the NET ELECTRICAL ENERGY so received; and (iii)the
simultaneous adjustment by JCP&L of its hourly measured interconnection
energy interchange in an amount equal to the NET ELECTRICAL ENERGY so
reported to JCP&L by PSE&G.
EXCESS SERVICE means the receipt by PSE&G at the RECEIPT POINT of a
level of kilowatts of NET ELECTRICAL POWER OUTPUT for DELIVERY TO JCP&L in
excess of the level of kilowatts of BASIC SERVICE then applicable pursuant
to and in accordance with the provisions of Article II of this AGREEMENT.
FINANCIER means any individual(s) or entity(ies): (i) lending money
to O'BRIEN for (a) the construction and operation of the PROJECT and/or (b)
the refinance or take-out of any such loan(s); and/or (ii) participating as
an equity investor in the PROJECT; and/or (iii) any lessor under a lease
finance arrangement. FINANCIER also includes any Trustee, acting on behalf
of any of the foregoing individual(s) or entity(ies).
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INITIAL OPERATION means the production of electric power and energy,
commencing on the DATE OF INITIAL OPERATION and prior to the DATE OF
COMMERCIAL OPERATION, by the PROJECT's electric generation unit(s) and the
supply of such electric power and energy to PSE&G at the RECEIPT POINT for
DELIVERY TO JCP&L.
INTERCONNECTION means the 26,000-volt line extension, circuit
reinforcements and associated terminal facility reinforcements to the
PUBLIC SERVICE SYSTEM to be designed, constructed and installed by PSE&G to
interconnect the PROJECT with and to the PUBLIC SERVICE SYSTEM for the
purpose of enabling PSE&G to receive up to 56,000 kilowatts of NET
ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL ENERGY from the
COGENERATION FACILITY pursuant to the terms and conditions of this
AGREEMENT. The Proposed Plan for the INTERCONNECTION is set forth on
Exhibit 1.
ISSUER means a commercial bank or other entity issuing the CREDIT.
LOAN AGREEMENT mean any agreement between O'BRIEN and one or more
FINANCIERS pursuant to which O'BRIEN arranges for and obtains debt
financing to construct and/or operate the PROJECT.
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MONTH means calendar month commencing at 12:00.01 a.m. Eastern Time on
the first day of the calendar month and concluding at midnight Eastern time
on the final day of the same calendar month.
NET ELECTRICAL ENERGY means the gross amount of electrical energy in
kilowatt hours produced by electric generation unit(s) at the COGENERATION
FACILITY less: (i) the electrical energy consumed for use by the
COGENERATION FACILITY; and (ii) the electrical energy consumed in the
transformation and transmission of the electrical energy produced, if any,
prior to the receipt of such electrical energy production by PSE&G at the
RECEIPT POINT.
NET ELECTRICAL POWER OUTPUT means the gross amount of electrical power
in kilowatts produced by any electric generation unit(s) at the
COGENERATION FACILITY less: (i) the electrical power consumed for use by
the COGENERATION FACILITY; and (ii) the electrical power consumed in the
transformation and transmission of the electrical power produced, if any,
prior to the receipt of such electrical power production by PSE&G at the
RECEIPT POINT.
OPERATIONAL EMERGENCY means the existence of a physical or operational
condition and/or the occurrence of an event on the
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PUBLIC SERVICE SYSTEM which is imminently likely to endanger life or
property and/or affects or impairs and/or imminently will affect or impair:
(i) PSE&G's ability to discharge its statutory obligation(s) to provide
safe, adequate and proper service to retail and sale-for resale customers;
and/or (ii) the safety and/or reliability of the PUBLIC SERVICE SYSTEM.
ORIGINAL PROJECT SITE means the site located on Lots 58 and 75 of
Block 2412 in the City of Newark, County of Essex and State of New Jersey.
PROJECT means the COGENERATION FACILITY, SUBSTATION FACILITY and
associated facilities and equipment to be constructed, owned, operated and
maintained by O'BRIEN at the PROJECT SITE for the purpose of generating,
among other things, electric power and energy.
PROJECT SITE means ALTERNATE PROJECT SITE or ORIGINAL PROJECT SITE, as
applicable.
PUBLIC SERVICE SYSTEM means the electric power generation,
transmission, subtransmission and distribution facilities owned, operated
and maintained by PSE&G, which will include the circuit reinforcements and
associated terminal facility reinforcements required to complete the
INTERCONNECTION.
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RECEIPT POINT, also referred to as POINT OF INTERCONNECTION, is the
point of physical connection of the PROJECT to the PSE&G 26 KV
subtransmission system located at the point at which the PSE&G 26 KV
subtransmission system meets with and connects to the SUBSTATION FACILITY.
The RECEIPT POINT is identified on the Proposed Plan for the
INTERCONNECTION.
RELEASE NOTICE means the written notice O'BRIEN gives to PSE&G
authorizing PSE&G to commence the tasks associated with the design,
construction and installation of the INTERCONNECTION.
REQUIRED PERMIT means any permit, license or approval from any
regulatory or governmental body which is required to be obtained by PSE&G
to install, construct, own, operate and/or maintain the INTERCONNECTION.
SERVICE means the rendition by PSE&G to O'BRIEN of BASIC SERVICE only
or BASIC SERVICE and EXCESS SERVICE pursuant to and in accordance with this
AGREEMENT.
SUBSTATION FACILITY means the facilities to be constructed, installed,
owned, operated and maintained by O'BRIEN at the PROJECT SITE to connect
the COGENERATION FACILITY to the PUBLIC SERVICE SYSTEM for the purpose of
enabling O'BRIEN to supply to
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the RECEIPT POINT, in a safe and reliable manner, NET ELECTRICAL POWER
OUTPUT and associated NET ELECTRICAL ENERGY produced by the COGENERATION
FACILITY for receipt by PSE&G.
ARTICLE II
BASIC SERVICE
PSE&G shall be obligated, as hereinafter defined, effective with the
DATE OF COMMERCIAL OPERATION, to provide to O'BRIEN a level of BASIC
SERVICE up to but not in excess of 52,000 kilowatts. BASIC SERVICE shall
be subject to interruption, curtailment or reduction only as specified in
Article V.
Upon notice to PSE&G consistent with the provisions of this paragraph,
O'BRIEN shall have the right to renominate (Renomination) a level of BASIC
SERVICE up to but not in excess of a level of 56,000 kilowatts. In the
event O'BRIEN elects to make a Renomination, O'BRIEN shall notify PSE&G in
writing of the renominated level of BASIC SERVICE ninety (90) days prior to
the effective date for such renominated level of BASIC SERVICE.
Nothing herein shall limit the ability of O'BRIEN to make a
Renomination of BASIC SERVICE to any level below the level of BASIC SERVICE
in effect at the time of the Renomination, provided however that, in the
event O'BRIEN makes a Renomination in the form of a reduction to its level
of BASIC SERVICE (Reduced Level), O'BRIEN shall be obligated to provide
twenty-four (24) MONTHS notice to PSE&G prior to PSE&G being obligated to
provide BASIC SERVICE to O'BRIEN at a level greater than the Reduced Level
then in effect.
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Other than as provided for in Article XIII of this AGREEMENT, O'BRIEN
shall have no obligation to pay for the costs of any facilities and
equipment which PSE&G may be required to purchase, construct and install
solely as a consequence of providing a level of BASIC SERVICE to O'BRIEN
pursuant to any Renomination affected in accordance with this Article II.
ARTICLE III
EXCESS SERVICE
Effective with the DATE OF COMMERCIAL OPERATION, O'BRIEN may request
EXCESS SERVICE from PSE&G, and, if EXCESS SERVICE is requested, PSE&G shall
use best efforts, as hereinafter defined, to accommodate O'BRIEN's request.
However, PSE&G shall not be obligated in any way, at any time, to receive
at the RECEIPT POINT NET ELECTRICAL POWER OUTPUT in excess of 56,000
kilowatts. EXCESS SERVICE shall be subject to interruption, curtailment or
reduction only as specified in Article V.
PSE&G's commitment, if any, to provide EXCESS SERVICE, pursuant to
O'BRIEN's request therefor, shall be limited to a commitment to provide
such EXCESS SERVICE for a period of one (1) MONTH in duration. For any
MONTH in which O'BRIEN requires EXCESS SERVICE, O'BRIEN shall make a
request for same to PSE&G at least forty-five (45) calendar days prior to
the first day of the MONTH for which EXCESS SERVICE is requested
(Applicable Month). PSE&G shall notify O'BRIEN within twenty-one (21)
calendar days of O'BRIEN's request for EXCESS SERVICE of the
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amount, if any, of EXCESS SERVICE PSE&G is able to provide to O'BRIEN for
and during the Applicable Month. In the event PSE&G is able to provide
EXCESS SERVICE, PSE&G's commitment to provide EXCESS SERVICE shall be
limited to an obligation to provide EXCESS SERVICE, as agreed to by PSE&G,
solely for the Applicable Month. At the conclusion of the Applicable
Month, PSE&G's commitment and associated obligation for the Applicable
Month shall expire. In the event O'BRIEN desires to have PSE&G renew or
resume EXCESS SERVICE for any additional or other monthly period, O'BRIEN
shall make a request therefor as provided in this Article III. PSE&G's
ability to renew or resume EXCESS SERVICE for any additional or other
monthly period, the making of any commitment by PSE&G and the nature and
extent of any such commitment, will be determined by PSE&G at that time, in
accordance with the provisions of this Article. Any request by O'BRIEN for
EXCESS SERVICE and any decision by PSE&G relative to such request shall be
confirmed in writing by the other party within ten (10) days of any request
and decision, respectively.
PSE&G's best efforts to provide EXCESS SERVICE shall be contingent
upon PSE&G's ability to provide EXCESS SERVICE and such best efforts shall
be subordinate and subject to and must abide a determination by PSE&G that:
(i) the PUBLIC SERVICE SYSTEM is capable of receiving from the COGENERATION
FACILITY NET ELECTRICAL POWER OUTPUT in excess of the level of BASIC
SERVICE then applicable; and (ii) the rendition of EXCESS SERVICE is
compatible to and does not interfere with or impair
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PSE&G's ability to operate the PUBLIC SERVICE SYSTEM in a manner so as to
render safe, reliable, adequate, proper and economic service to its retail
and sale-for-resale customers. Except as otherwise provided in this
AGREEMENT, PSE&G shall not be obligated to: (i) construct, reinforce,
replace or enlarge any electric power generation, transmission,
subtransmission or distribution facilities; and/or (ii) adopt or engage in
any extraordinary operating practice(s), such as off-economic operation of
generating units, in order to meet or satisfy its best efforts commitment
to accommodate O'BRIEN's requests for EXCESS SERVICE.
ARTICLE IV
PHASE-IN PERIOD
Subject to the provisions of Article XX, PSE&G will energize the
SUBSTATION FACILITY and supply electric power and energy to the PROJECT as
of the DATE OF START-UP to permit O'BRIEN to conduct and complete testing
of PROJECT equipment and facilities.
Upon completion of pre-operation testing of PROJECT equipment
facilities, O'BRIEN plans to commence conducting test operations of its
electric generation units. O'BRIEN anticipates that the test operations of
the electric generation units will take approximately six (6) months
(hereinafter referred to as the Phase-In Period). The Phase-In Period will
commence on the DATE OF INITIAL OPERATION and shall terminate on
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the DATE OF COMMERCIAL OPERATION, except as may otherwise be agreed to in
writing by PSE&G.
O'BRIEN anticipates that during the Phase-In Period electric power and
energy will be produced at the COGENERATION FACILITY and supplied to PSE&G
at the RECEIPT POINT for DELIVERY TO JCP&L. PSE&G shall be obligated
during the Phase-In Period to receive at the RECEIPT POINT the electric
power and energy produced at the COGENERATION FACILITY for DELIVERY TO
JCP&L; provided however, PSE&G shall not be obligated to receive at the
RECEIPT POINT for and during any MONTH prior to the DATE OF COMMERCIAL
OPERATION a level of kilowatts in excess of the level of kilowatts of
BASIC SERVICE then available pursuant to and in accordance with the
provisions of Article II; provided however, PSE&G shall use best efforts,
as defined in Article III, to provide during the Phase-In Period a level of
SERVICE up to but not in excess of 56,000 kilowatts, when and as requested
by O'BRIEN.
ARTICLE V
INTERRUPTION, CURTAILMENT OR REDUCTION OF SERVICE
Section A
Public Service System Conditions
PSE&G intends to provide SERVICE to O'BRIEN without interruption,
curtailment or reduction. PSE&G shall use best efforts to provide same
without interruption, curtailment or reduction. However, PSE&G cannot and
does not guarantee that
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SERVICE will be free from interruption, curtailment or reduction. SERVICE
shall be subject to interruption, curtailment or reduction as a consequence
of any of the following actions, operational conditions and/or events: (i)
actions PSE&G must institute to enable PSE&G to operate the PUBLIC SERVICE
SYSTEM so as to discharge its statutory obligations to provide safe,
adequate and proper service to its retail and sale-for-resale customers;
(ii) actions PSE&G must institute to enable PSE&G to discharge its
obligations under the PJM Agreement; (iii) actions PSE&G must institute to
enable PSE&G to discharge its obligations under its Agreement with the Mid-
Atlantic Area Coordination Group; (iv) actions instituted on the PUBLIC
SERVICE SYSTEM by automatic control or actions PSE&G must institute by
manual control for the purpose of maintaining the overall safety and
reliability of or otherwise protecting the PUBLIC SERVICE SYSTEM; (v)
action(s) PSE&G must institute for the purpose of maintenance, repair,
improvement, reinforcement, relocation, rearrangement, replacement and/or
installation of any equipment or facilities on the PUBLIC SERVICE SYSTEM or
action(s) PSE&G must institute for the purpose of the investigation and/or
inspection of any such equipment or facilities on the PUBLIC SERVICE
SYSTEM; or (vi) PSE&G experiencing an event of Force Majeure, as defined in
Article XVIII, provided however, PSE&G may interrupt, curtail or reduce
SERVICE to O'BRIEN only where, and for as long as such event(s),
operational condition(s) or action(s) requires or necessitates
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an interruption, curtailment or reduction of SERVICE to O'BRIEN. Nothing
contained in this Section A shall permit PSE&G to interrupt, curtail or
reduce SERVICE to O'BRIEN solely for reasons of economic dispatch.
In exercising its operation discretion under the AGREEMENT, PSE&G will
not arbitrarily discriminate against O'BRIEN in allocating any required
curtailment, reduction or interruption of SERVICE as may be required by the
provisions of this Article V.
Where practicable, PSE&G shall give O'BRIEN advance notice of any
interruption, curtailment or reduction of SERVICE affected pursuant to this
Section A, the circumstances requiring or necessitating the interruption,
curtailment or reduction of SERVICE and, if able, the reasons therefor, and
the extent and duration thereof. In the event PSE&G is unable, for any
reason, to give O'BRIEN advance notice of such an interruption, curtailment
or reduction of SERVICE, PSE&G shall, as soon thereafter as practicable,
contact O'BRIEN to confirm such interruption, curtailment or reduction,
explaining the circumstances requiring or necessitating the interruption,
curtailment or reduction, and, if able, furnish the reasons therefor and
the extent and duration thereof.
In the event SERVICE is interrupted, curtailed or reduced by PSE&G for
any reason specified in this Section A, PSE&G shall use best efforts to
resume SERVICE to O'BRIEN.
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Section B
Project Conditions
PSE&G may interrupt, curtail or reduce SERVICE to O'BRIEN in the event
O'BRIEN fails to meet, satisfy or discharge its obligations under articles
VI, VII, or XI, as such obligations are defined therein; provided however,
any such interruption, curtailment or reduction of SERVICE for or on
account of O'BRIEN's failure to meet, satisfy or discharge such obligations
may only be effected by PSE&G pursuant to and in accordance with the
provisions of this Section B.
In the event O'BRIEN fails to meet, satisfy or discharge its
obligations under the Articles specified in the preceding paragraph and, as
a consequence, a condition arises, a practice exists or an event occurs at
the PROJECT which creates an OPERATIONAL EMERGENCY, PSE&G shall have the
right to interrupt, curtail or reduce SERVICE to O'BRIEN without being
obligated to provide to O'BRIEN notice thereof or without being obligated
to afford to O'BRIEN, prior to any such interruption, curtailment or
reduction of SERVICE, a right to cure the precipitating cause of or the
event, condition or practice which exists or occurs (Cause); provided
however, where practicable, PSE&G shall provide O'BRIEN with advance notice
of the interruption, curtailment or reduction, the circumstances requiring
or necessitating the interruption, curtailment or reduction and, if known,
the reasons therefor. In the event PSE&G is unable, for any reason, to
give O'BRIEN advance notice of such an
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interruption, curtailment or reduction of SERVICE, PSE&G shall, as soon
thereafter as practicable, contact O'BRIEN to confirm such interruption,
curtailment or reduction, and, inform O'BRIEN of the circumstances
requiring or necessitating the interruption, curtailment or reduction of
SERVICE and, if able, furnish the reasons therefor and the extent and
duration thereof. In the event of such an interruption, curtailment or
reduction, PSE&G shall be obligated to resume SERVICE to O'BRIEN if, but
only if, O'BRIEN has corrected or remedied the Cause which necessitated the
interruption, curtailment or reduction.
In the event O'BRIEN fails to meet, satisfy or discharge its
obligations under the Articles specified in the first paragraph of this
Section B and, as a consequence, a condition arises, a practice exists or
an event occurs at the PROJECT which, although it does not create an
OPERATIONAL EMERGENCY, if permitted to continue or reoccur, may, in the
reasonable judgment of PSE&G, result in the creation of an OPERATIONAL
EMERGENCY, PSE&G shall notify O'BRIEN of the occurrence or existence
thereof and afford to O'BRIEN a right to correct or remedy the Cause prior
to effecting any interruption, curtailment or reduction of SERVICE.
O'BRIEN shall have thirty (30) days from receipt of PSE&G's notice: (i)
to correct or remedy the Cause; or (ii) in the event such Cause cannot be
identified and/or remedied and/or corrected within such thirty (30) days,
to submit to PSE&G, for its approval, a plan, and timetable for
implementation thereof, setting forth specific
22
actions O'BRIEN will take to correct or remedy the Cause. In the event:
(I) the Cause cannot be identified and/or remedied and/or corrected within
such thirty (30) day period and O'BRIEN fails to submit a plan within such
period to correct or remedy the Cause; or (ii) a plan is submitted within
such period, and O'BRIEN fails to exercise best efforts thereafter to
implement such plan, PSE&G shall have the right thereafter, on reasonable
notice to O'BRIEN, to interrupt, curtail or reduce SERVICE to O'BRIEN.
However, if, during the pendency of any cure period afforded to O'BRIEN
pursuant to this Section B, the Cause creates an OPERATIONAL EMERGENCY,
PSE&G may thereafter interrupt, curtail or reduce SERVICE to O'BRIEN.
Any notice PSE&G is obligated to provide to O'BRIEN pursuant to the
provisions of the preceding paragraph of this Section B shall be in
writing. Likewise, any plan O'BRIEN is obligated to submit to PSE&G
pursuant to the provisions of the preceding paragraph of this Section B
shall also be in writing.
Regardless of the existence or potential for creation of an
OPERATIONAL EMERGENCY on the PUBLIC SERVICE SYSTEM, PSE&G may interrupt,
curtail or reduce SERVICE to O'BRIEN for and/or on account of O'BRIEN's
failure to met or discharge its obligations under Article XI to pay any
BILLING STATEMENT when due. In the event such a right to interrupt,
curtail or reduce SERVICE to O'BRIEN arises, PSE&G shall provide written
notice to O'BRIEN of its intention to interrupt, curtail or reduce SERVICE,
stating the reasons therefor, prior to affecting any
23
interruption, curtailment or reduction. O'BRIEN shall have thirty (30)
days from the date of the notice to cure the precipitating cause. In the
event O'BRIEN fails to cure the precipitating cause within such thirty (30)
day period, PSE&G may thereafter interrupt SERVICE to O'BRIEN.
Except as otherwise provided in this Section B, in the event PSE&G
interrupts SERVICE to O'BRIEN for any reason specified in paragraphs three
and give of this Section B, PSE&G shall be obligated to resume SERVICE to
O'BRIEN if, but only if O'BRIEN has, as applicable, either corrected or
remedied the precipitating cause of or the event, practice or condition
which necessitated the interruption, curtailment or reduction of SERVICE or
demonstrates to PSE&G that O'BRIEN has identified the precipitating cause
of the event, practice or condition which necessitated the interruption,
curtailment or reduction and immediately thereafter commences a bona fide
effort, pursuant to a plan, to remedy or correct same; provided however, if
the interruption was triggered as a consequence of O'BRIEN's failure to
meet or discharge its obligation under Article XI, PSE&G shall have no
obligation to resume SERVICE to O'BRIEN unless and until such failure is
corrected or remedied.
Section C
Service Conditions
PSE&G shall not be obligated at any time to receive at the RECEIPT
POINT a level of NET ELECTRICAL POWER OUTPUT in excess
24
of the level of SERVICE PSE&G is obligated to provide to O'BRIEN pursuant
to and in accordance with the terms and conditions of this AGREEMENT. In
the event O'BRIEN supplies to the RECEIPT POINT, at any time, a level of
NET ELECTRICAL POWER OUTPUT in excess of the level of SERVICE PSE&G is
obligated to provide under this AGREEMENT, PSE&G shall have the right to
request O'BRIEN, and if so requested, O'BRIEN shall have the obligation to
reduce as soon as practicable after any such request the supply of NET
ELECTRICAL POWER OUTPUT to PSE&G at the RECEIPT POINT to a level consistent
with the level of SERVICE PSE&G is obligated to provide to O'BRIEN under
this AGREEMENT. In the event O'BRIEN is supplying to PSE&G at the RECEIPT
POINT a level of NET ELECTRICAL POWER OUTPUT in excess of the level of
SERVICE PSE&G is obligated to provide to O'BRIEN pursuant to this AGREEMENT
and O'BRIEN fails to reduce the supply of NET ELECTRICAL POWER OUTPUT to
the level of SERVICE PSE&G is obligated to provide. PSE&G shall have the
right to interrupt, curtail or reduce SERVICE to O'BRIEN. In the event
PSE&G interrupts, curtails or reduces SERVICE to O'BRIEN pursuant to the
provisions of this Section C, PSE&G shall be obligated to resume SERVICE to
O'BRIEN if, but only if, O'BRIEN commits to use best efforts thereafter to
control its supply to the RECEIPT POINT consistent with the level of
SERVICE PSE&G is then obligated or then willing to provide to O'BRIEN.
25
ARTICLE VI
OPERATIONS COORDINATION
Effective with the DATE OF INITIAL OPERATION and during any term of
this AGREEMENT, O'BRIEN shall use best efforts to coordinate the operation
of the PROJECT with the operation of the PUBLIC SERVICE SYSTEM. To
discharge its best efforts obligation to coordinate operation of the
PROJECT with the PUBLIC SERVICE SYSTEM, O'BRIEN shall: (i) use SERVICE
with due regard for the safety, security and reliability of the PUBLIC
SERVICE SYSTEM; (ii) maintain a power factor at or as near unity as
practicable at the point of connection of the PROJECT with and to the
PUBLIC SERVICE SYSTEM, unless requested otherwise by PSE&G; (iii) control
its voltage and speed to values acceptable to PSE&G consistent with sound
utility practice; (iv) coordinate its relaying and fusing so as to conform
with PSE&G's system protection practices, in effect from time to time; (v)
maintain the PROJECT in a safe and reliable operating condition; (vi)
submit to PSE&G the monthly schedules and estimates required by this
Article; and (vii) perform such other actions as may be reasonably
requested by PSE&G, to enable PSE&G to (a) operate the PUBLIC SERVICE
SYSTEM in a safe and reliable manner and (b) operate the PUBLIC SERVICE
SYSTEM so as to discharge PSE&G's statutory obligations to provide safe,
adequate and proper service to its retail and sale-for-resale customers.
As of the DATE OF COMMERCIAL OPERATION, O'BRIEN shall provide to PSE&G
by the first (1st) day of each MONTH the
26
following: (i) an hourly schedule of the estimated NET ELECTRICAL POWER
OUTPUT O'BRIEN plans to supply to the RECEIPT POINT for receipt by PSE&G in
the succeeding MONTH; (ii) an estimate of the generation of NET ELECTRICAL
ENERGY which O'BRIEN plans to supply to the RECEIPT POINT for receipt by
PSE&G in the succeeding MONTH; (iii) an estimate of the generation of NET
ELECTRICAL ENERGY which O'BRIEN plans to supply to the RECEIPT POINT for
receipt by PSE&G for the succeeding twelve (12) MONTHs; (iv) the name and
telephone number of responsible management level employees for contact by
PSE&G personnel at any time during the succeeding MONTH relative to any
matter arising out of, relating to, or resulting from PSE&G's obligation to
provide SERVICE to O'BRIEN under this AGREEMENT. In addition, O'BRIEN
shall furnish to PSE&G, on an annual basis, a schedule of planned
maintenance and/or repair activities for the succeeding twelve (12) months.
O'BRIEN shall use best efforts to conduct its operations in accordance
with the data and information submitted to PSE&G as required in the
preceding paragraph, provided however any deviation(s) in the COGENERATION
FACILITY's operations necessitated by and as a consequence of unanticipated
occurrences, conditions or events will not constitute a breach of this
AGREEMENT; provided further however, O'BRIEN will provide to PSE&G, where
and when able, advance notice, in a timely manner, of any such deviation(s)
of a material nature in
27
the COGENERATION FACILITY's operations, and if requested, the reasons
therefor.
Pursuant to and consistent with O'BRIEN's obligation to coordinate
operation of the PROJECT with the operation of the PUBLIC SERVICE SYSTEM,
O'BRIEN shall install and maintain, at its expense during any term of this
AGREEMENT a telephone line reserved for communication by and between PSE&G
operating personnel and O'BRIEN operating personnel.
PSE&G may request, and, when requested, O'BRIEN shall use best
efforts, consistent with O'BRIEN's obligation to meet Newark Boxboard
Inc.'s steam requirements, to provide reactive power, leading or lagging,
from the COGENERATION FACILITY up to the operating limits of the
COGENERATION FACILITY up to the operating limits of the COGENERATION
FACILITY to the extent that it does not require a reduction in NET
ELECTRICAL POWER OUTPUT and further, in the event of an OPERATIONAL
EMERGENCY, PSE&G may request and, if PSE&G makes such a request, O'BRIEN
shall use best efforts, consistent with O'BRIEN's obligation to meet Newark
Boxboard Inc.'s steam requirements, to provide same up to the operating
limits of the COGENERATION FACILITY, whether or not same requires a
reduction in NET ELECTRICAL POWER OUTPUT.
PSE&G shall use best efforts to coordinate with and provide to O'BRIEN
advance notice of any maintenance, repair, rearrangement, relocation,
removal or reinforcement activities which might interfere with or impair
the operation of the COGENERATION FACILITY so as to minimize any
interruption, curtailment or reduction of SERVICE to O'BRIEN; provided
28
however, that the scheduling, implementation and conduct of such activities
shall remain within the sole discretion of PSE&G.
ARTICLE VII
NET ELECTRICAL POWER OUTPUT SPECIFICATIONS
The NET ELECTRICAL POWER OUTPUT supplied by O'BRIEN to the RECEIPT
POINT for receipt by PSE&G during the term of this AGREEMENT shall be at a
nominal voltage of 26,400-volts, 60 Hertz, balanced three-phase alternating
current produced by a synchronous generator(s) equipped with automatic
voltage regulation and automatic speed control. The NET ELECTRICAL POWER
OUTPUT shall be free from harmonics which would interfere with PSE&G's
metering accuracy, the PUBLIC SERVICE SYSTEM, or the quality of PSE&G's
service to its retail and sale-for-resale customer loads. In no event
shall the operation of the COGENERATION FACILITY result in total harmonic
distortion, as defined by the IEEE Standard 519 - 1981 as revised, greater
than five percent (5%) of the fundamental component measured at the POINT
OF INTERCONNECTION.
ARTICLE VIII
TERM
PSE&G shall provide SERVICE to O'BRIEN for a term of twenty-five (25)
years (hereinafter referred to as the Primary Term). The Primary Term
shall commence on the DATE OF COMMERCIAL OPERATION.
29
O'BRIEN shall have the right to renew this AGREEMENT pursuant to the
charges and under the terms and conditions of this AGREEMENT, as may be
modified in accordance with Article XXXI, for a six (6) year term
immediately succeeding the Primary Term (herein referred to as the
Subsequent Term).
This AGREEMENT and each party's obligation(s) hereunder shall
automatically terminate twenty-five (25) years from the DATE OF COMMERCIAL
OPERATION unless this AGREEMENT is renewed pursuant to and in accordance
with the provisions of the preceding paragraph. In the event of such a
renewal, this AGREEMENT and each party's obligations hereunder shall
automatically terminate thirty-one (31) years from the DATE OF COMMERCIAL
OPERATION.
ARTICLE IX
EFFECTIVENESS AND ENFORCEABILITY
This AGREEMENT represents a negotiated agreement between the parties,
and the charges and terms and conditions contained herein are acceptable to
each. It is understood by the parties that this AGREEMENT must be filed at
and accepted for filing by the FERC. Notwithstanding the requirement for
FERC review and acceptance for filing, this AGREEMENT shall become
effective and enforceable, as between the parties, upon execution and
pending
30
a filing at and review by the FERC, provided however, that the provisions
relative to transmission service shall become effective and enforceable
only after FERC acceptance for filing without condition or modification
thereof deemed to be material by either party hereto. In the event the
FERC accepts this AGREEMENT for filing subject to refund, such FERC
acceptance shall not be deemed as a condition or modification for the
purposes of effectiveness of this AGREEMENT under this Article.
In connection with any FERC review of this AGREEMENT as initially
filed, in the event the FERC modifies any material term or condition,
alters any charge(s) contained in this AGREEMENT or in any way conditions
its approval of this AGREEMENT or in any way conditions its approval of
this AGREEMENT, and any party determines that it is adversely affected in a
material way by such FERC action and/or decision the parties hereby agree
to promptly resume negotiations, in good faith, in an effort to reach
agreement on a charge for SERVICE, or on terms and conditions mutually
agreeable to the parties relative to the subject matter of this AGREEMENT.
If no agreement is reached within thirty (30) days of such FERC action
and/or decision the party so affected shall have the right to terminate or
cancel this AGREEMENT by filing written notice of cancellation or
termination (hereinafter referred to as Notice of Cancellation) with the
FERC and serving a copy thereof on the other party. Any such Notice of
Cancellation may be filed after such thirty (30) day period but no later
than forty-five (45) days after such FERC decision is final and not subject
to any
31
further administrative or judicial review; provided however, neither party
shall be obligated to seek rehearing and/or judicial review of any FERC
decision. In the event any party files a Notice of Cancellation, the
parties hereto agree that the cancellation or termination shall become
effective and the parties' obligations under this AGREEMENT shall terminate
sixty (60) days after the filing of the Notice of Cancellation or, at such
earlier date, as otherwise ordered by the FERC.
PSE&G shall use best efforts to file this AGREEMENT with the FERC
within thirty (30) days of final execution of this AGREEMENT and after
filing same the parties hereto agree to take such action, as may be
appropriate, to expedite FERC approval thereof.
ARTICLE X
TRANSMISSION SERVICE CHARGES
Section A
Except as otherwise specifically provided in this AGREEMENT, effective
with the DATE OF COMMERCIAL OPERATION, O'BRIEN shall be obligated to pay to
PSE&G the sum of the charges contained in Subparagraphs A, B, and C below,
in accordance with the billing and payment procedures set forth in Article
XI:
A. a monthly demand charge equal to seventy-five cents ($0.75)
per kilowatt times the level of kilowatts of BASIC
32
SERVICE PSE&G was obligated to provide to O'BRIEN during the
MONTH for which the billing is being made; and
B. a monthly demand charge of seventy-five cents ($.075) per
kilowatt times the greater of the following number of
kilowatts:
(i) the number of kilowatts of EXCESS SERVICE, if any,
which PSE&G committed to provide to O'BRIEN during the
MONTH for which the billing is being made pursuant to
and consistent with Article III; or
(ii) the greatest average number of kilowatts of NET
ELECTRICAL POWER OUTPUT, if any, in excess of the level
of kilowatts of BASIC SERVICE PSE&G was obligated to
provide to O'BRIEN during the MONTH for which the
billing is being made, received by PSE&G at the RECEIPT
POINT during any fifteen (15) minute interval in such
preceding MONTH; and
33
C. point twenty-nine mills ($.00029) per kilowatt hour times
the number of kilowatt hours of NET ELECTRICAL ENERGY
received by PSE&G at the RECEIPT POINT during the MONTH for
which the billing is being made.
If, as a result of an event of Force Majeure as defined in Article
XXII, any electric generation unit at the PROJECT is out of operation for
at least thirty (30) consecutive days (hereinafter referred to as
Qualifying Outage), O'BRIEN's demand charge payment for any MONTH which
includes any portion of such Qualifying Outage shall be adjusted, if
necessary, and the amount of such payment shall be the sum of the amounts
determined as follows: (i) during the period of any MONTH when no
Qualifying Outage exists, the demand charge payment for such period shall
be determined by multiplying the sum of the charges contained in
subparagraphs A and B of this Article X, as applicable, by a fraction, the
numerator of which is the number of hours during which there was no
Qualifying Outage and the denominator of which is the number of hours in
the MONTH; and (ii) during the period of any MONTH when a Qualifying Outage
exists, the demand charge payment for such period shall be determined by
multiplying the demand charge specified in this Article X by the greatest
average number of kilowatts of NET ELECTRICAL POWER OUTPUT during any
fifteen (15) minute interval registered on PSE&G's electricity recording
meter during such
34
Qualifying Outage, and multiplying that result by a fraction, the numerator
of which is the number of hours during which the Qualifying Outage exists
and the denominator is the number of hours in the MONTH. PSE&G shall make
any demand charge adjustment due O'BRIEN for a Qualifying Outage required
by application of the provisions of this paragraph in the BILLING STATEMENT
for the MONTH(s) following the MONTH in which the entitlement to such
adjustment matures.
In the event SERVICE is interrupted, curtailed or reduced by PSE&G
during any MONTH for any reason, other than for any of the reasons
specified in Sections B and C of Article V, the demand charge O'BRIEN was
obligated to pay for such MONTH pursuant to this Section A will be abated
by multiplying the demand charge by the quantity one (1) minus a fraction,
the numerator of which is the number of kilowatts by which the level of
SERVICE was reduced, times the number of hours during which SERVICE was
reduced and the denominator of which is the level of SERVICE committed to
by PSE&G, times the number of hours in the MONTH.
The charges specified in subparagraphs A, B and C of this Section A
shall be subject to change as specified in Article XXXI.
Section B
Effective with the DATE OF INITIAL OPERATION, and solely during the
Phase-In Period, O'BRIEN shall pay to PSE&G for any
35
MONTH one point three-two mills ($.00132) times the number of kilowatt
hours of NET ELECTRICAL ENERGY received by PSE&G at the RECEIPT POINT.
However, if as a result of an event of Force Majeure, as defined in Article
XXII, the DATE OF COMMERCIAL OPERATION does not occur on or by six (6)
months of the DATE OF INITIAL OPERATION, the Phase-In period and the charge
methodology described in this subsection B shall remain in effect for a
period not to exceed the period of incapacity caused by the event of Force
Majeure provided that during such period of incapacity so caused that
O'BRIEN uses best efforts to remedy the incapacity so caused.
Unless the Phase-In Period is extended as a result of an event of
Force Majeure as specified in the first paragraph of this Section B, six
(6) months after the DATE OF INITIAL OPERATION, O'BRIEN shall be obligated
to pay to PSE&G each MONTH an amount for SERVICE calculated pursuant to and
in accordance with the methodology specified in Subsection A of this
Article X.
ARTICLE XI
BILLING AND PAYMENT
After the DATE OF INITIAL OPERATION, PSE&G shall read its electricity
recording meter(s) at the SUBSTATION FACILITY monthly in connection with
making a determination of the charges to be billed to O'BRIEN for any MONTH
in accordance with the provision of Article X and shall thereafter prepare
and present
36
to O'BRIEN, on or before the tenth (10th) day of the MONTH, a BILLING
STATEMENT for payment. O'BRIEN shall pay each BILLING STATEMENT within
thirty (30) days from the date of receipt but not later than the tenth
(10th) day of the succeeding MONTH. If presentation of a BILLING STATEMENT
is delayed by PSE&G and/or is received by O'BRIEN after the tenth (10th)
day of the MONTH, then the time for payment shall be extended for a period
of time equivalent to the delay, provided however, O'BRIEN shall be
obligated to establish any delay in the receipt of any BILLING STATEMENT by
appropriate documentation. The BILLING STATEMENT shall contain a breakdown
of the applicable charge components billed to O'BRIEN in accordance with
the provisions of Article X. O'BRIEN shall remit payment to PSE&G for any
BILLING STATEMENT to the PSE&G department designated on the BILLING
STATEMENT.
In the event O'BRIEN fails to pay the entire amount of any BILLING
STATEMENT when such is due, interest shall accrue on the unpaid portion of
such BILLING STATEMENT, from the due date to the date of payment, which
interest shall accrue at a rate per annum equal to three percent (3%) above
the prime rate of the Chase Manhattan Bank, N.A. or its successor in effect
as of the payment due date. O'BRIEN shall pay the interest charge on any
such unpaid BILLING STATEMENT or unpaid portion thereof when and as billed
by PSE&G.
PSE&G shall provide to O'BRIEN, upon a timely request therefor,
documentation and/or data available to PSE&G to enable
37
O'BRIEN to verify the accuracy of any BILLING STATEMENT. However, any such
request by O'BRIEN shall not extend the due date of or extend, postpone or
otherwise affect O'BRIEN's obligation to pay the associated BILLING
STATEMENT.
In the event O'BRIEN disputes any BILLING STATEMENT, O'BRIEN shall pay
to PSE&G the entire amount thereof, when due, and shall together with the
payment thereof identify and present the dispute in writing and submit
documentation substantiating any claim made relative to the dispute
identified. Upon receipt of notice of the dispute and the supporting
documentation, PSE&G shall have thirty (30) days (Period) from receipt of
such notice to resolve such dispute with O'BRIEN. In the event the dispute
is not resolved within the Period, either party may submit the matter to
arbitration for resolution in accordance with Article XXIX. The amount of
any BILLING STATEMENT disputed by O'BRIEN, in accordance with the
provisions of this paragraph, which is ultimately determined to be due and
owing by PSE&G to O'BRIEN: (i) which is not refunded to O'BRIEN on or
prior to the expiration of the Period shall, until payment, thereafter
accrue interest, as of the last day of such Period, at a rate per annum
equal to three percent (3%) above the prime rate of the Chase Manhattan
Bank, N.A., or its successor in effect as of that date; and (ii) shall be
refunded to O'BRIEN, together with all interest accrued and owing thereon,
within ten (10) days of the date of such determination.
38
ARTICLE XII
METERING/RECORDS
PSE&G shall install, own, operate and maintain an electricity
recording meter at the SUBSTATION FACILITY which, in the judgment of PSE&G,
is required or necessary to enable PSE&G to make an accurate measurement of
the quantity of NET ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL
ENERGY received at the RECEIPT POINT from the COGENERATION FACILITY. The
electricity recording meter shall be of a type suitable for interconnection
billing purposes. The electricity recording meter, as installed, shall
have full load and light load "as left" accuracies that do not deviate more
than + 0.3% from 100%. The lag load "as left" accuracy shall be within
0.5% of the full load accuracy. PSE&G shall operate and maintain such
electricity recording meter so as to assure, to the maximum extent
practicable, that such meter provides an accurate record of the quantities
supplied to and received by PSE&G at the RECEIPT POINT from the
COGENERATION FACILITY.
PSE&G shall designate, select and specify all associated electricity
recording equipment (associated equipment) required by PSE&G to make
measurement of NET ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL
ENERGY supplied by O'BRIEN to the RECEIPT POINT, including but not limited
to current transformers, potential transformers, conduits, cables and
accessories. PSE&G shall purchase and arrange for the delivery of such
associated equipment to O'BRIEN at the PROJECT for
39
installation by O'BRIEN at O'BRIEN's expense. PSE&G shall own, operate and
maintain such associated equipment
The costs of the metering and associated equipment described in the
preceding two paragraphs shall be paid by O'BRIEN as a cost associated with
the design, construction and installation of the INTERCONNECTION as
provided in and in accordance with Article XIII.
PSE&G shall have the right to secure and safeguard the electricity
recording meter and associated equipment installed and maintained at the
SUBSTATION FACILITY. Neither O'BRIEN nor any person other than PSE&G shall
be permitted to operate, maintain, repair, alter, remove, replace,
rearrange, reconstruct, relocate, tamper or interfere with any said meter
or associated equipment.
Unless otherwise agreed to by PSE&G and/or except as otherwise
provided in this AGREEMENT, PSE&G's electricity recording meter shall be
utilized for the determination of the monthly charges reflected in any
BILLING STATEMENT submitted to O'BRIEN for payment under this AGREEMENT.
O'BRIEN and/or JCP&L may install, own, operate and maintain, at their
own expense, electricity recording meter(s) and associated equipment at the
SUBSTATION FACILITY for measurement and recording of the quantity of NET
ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL ENERGY received by
PSE&G at the RECEIPT POINT from the COGENERATION FACILITY; provided that
the installation, operation and/or maintenance of such equipment
40
does not utilize or connect to PSE&G's electricity recording meter or
associated equipment and does not interfere, in any way, with the operation
of such equipment.
Unless otherwise agreed to by PSE&G and/or except as otherwise
provided in this AGREEMENT, the electricity recording meter installed and
maintained by O'BRIEN and/or JCP&L at the SUBSTATION FACILITY shall not be
utilized for any determination of the charges to be included in any BILLING
STATEMENT submitted to O'BRIEN for payment by PSE&G under this AGREEMENT.
The accuracy of PSE&G's electricity recording meter shall be verified
by PSE&G by testing once each year. Such accuracy test shall be conducted
in accordance with the standards set forth in the American national
Standard Code for Electricity Metering. Notice of such accuracy test(s)
shall be given by PSE&G to O'BRIEN. O'BRIEN and/or JCP&L representatives
may attend any such accuracy test. In the event O'BRIEN's and/or JCP&L
representatives elect to be present at any accuracy test, the test and any
necessary adjustment to the electricity recording equipment shall be made
in the presence of and observed by O'BRIEN and/or JCP&L representatives.
O'BRIEN and/or JCP&L may, for good cause, request PSE&G to conduct an
accuracy test of PSE&G's electricity recording equipment. In the event
good cause is shown, PSE&G shall conduct an accuracy test at O'BRIEN's
and/or JCP&L's request. Any cost or expense associated with any accuracy
test performed by PSE&G on PSE&G's electricity recording meter shall be
billed to and paid by
41
O'BRIEN; provided however, in the event an accuracy test is conducted in
connection with a billing dispute and PSE&G's electricity recording meter
is determined as a result of such test to be registering inaccurately in
excess of one percent (1%), PSE&G shall pay the costs of such accuracy
test.
The accuracy of any electricity recording meter maintained by O'BRIEN
at the SUBSTATION FACILITY shall be verified by test at least once each
year. Such accuracy test shall be conducted in accordance with the
standards set forth in the American National Standard Code for Electricity
Metering. O'BRIEN shall establish, at the time of installation, and
maintain the accuracy of such equipment in accordance with the standard of
accuracy set forth in the American national Standard Code for Electricity
Metering. Notice of such accuracy test(s) shall be given by O'BRIEN to
PSE&G. PSE&G may attend any such accuracy test(s). PSE&G may, for good
cause, request O'BRIEN to conduct or have conducted an accuracy test(s) of
O'BRIEN electricity recording meter. In the event good cause is shown,
O'BRIEN shall conduct or have conducted an accuracy test of O'BRIEN's
electricity recording meter. Any cost or expense associated with any
accuracy test(s) shall be paid by O'BRIEN, except where such test(s) was
conducted at PSE&G's request.
In the event PSE&G's electricity recording meter is out of service or
is registering inaccurately, the amount of inaccuracy shall be determined
and such meter shall be repaired, replaced and/or adjusted to register
accurately. Any meter reading(s)
42
and BILLING STATEMENT(S) for the period of the inaccuracy shall be adjusted
so as to reflect any correction of such inaccuracy as far as such
inaccuracy can be reasonably ascertained; provided however, no adjustment
shall be made in any meter reading(s) nor shall any BILLING STATEMENT be
adjusted for or on account of a registration inaccuracy of one percent (1%)
or less.
In the event a registration inaccuracy of greater than one percent
(1%) is found on PSE&G's electricity recording meter, a billing adjustments
shall be made. The billing adjustment shall be made for the period of
inaccuracy, if ascertainable or in the event the period of the inaccuracy
cannot be reasonably ascertained, the period of inaccuracy shall be deemed
to have encompassed one-half (1/2) of the time period since the last
accuracy test of the meter (hereinafter referred to as the Surrogate
Period). The quantities delivered for the period of inaccuracy, if
ascertainable, or, if not ascertainable, the Surrogate period, shall be
determined and adjustments made for billing purposes by determining or
estimating the quantity received by PSE&G during the period of inaccuracy
from the best available source/data, which source/data may include but not
be limited to: (I) registration data obtained from the electricity
recording meter maintained by O'BRIEN at the SUBSTATION FACILITY; and/or
(ii) receipts by PSE&G during an equivalent or similar period when such
equipment was registering accurately; and/or (iii) correction of the error,
if the percentage of error
43
is ascertainable, by calibration, test or mathematical calculation;
provided however, in the event O'BRIEN/JCP&L's metering equipment meets
applicable PSE&G standards and PSE&G determines that such equipment has
been installed, operated and maintained in accordance with applicable PSE&G
standards/ practices/procedures, the period of inaccuracy and the
quantities delivered for such period shall be determined and the
adjustment(s) made for billing purposes solely by reference to
O'BRIEN/JCP&L's electricity recording equipment.
PSE&G and O'BRIEN shall retain the records each prepares and maintains
in the ordinary course of business relative to the amount of NET ELECTRICAL
POWER OUTPUT and associated NET ELECTRICAL ENERGY produced by the
COGENERATION FACILITY and supplied to and received by PSE&G at the RECEIPT
POINT and any records each prepares and maintains relative to any
maintenance, repair or testing of any electricity recording meter
maintained at the SUBSTATION FACILITY. The records possessed by one party
shall be made available for inspection by the other party upon reasonable
notice or request therefor. All such records shall be maintained for a
period of six (6) years.
O'BRIEN shall install equipment at the SUBSTATION FACILITY to enable a
measurement of the following electrical quantities: (I) gross active
electrical power output of each COGENERATION FACILITY generator; (ii) gross
reactive electrical power output of each COGENERATION FACILITY generator;
(iii) terminal voltage of each COGENERATION FACILITY generator; (iv)
voltage at the
44
POINT OF INTERCONNECTION; (v) active power flow on the INTERCONNECTION at
the POINT OF INTERCONNECTION; (vi) reactive power flow on the
INTERCONNECTION at the POINT OF INTERCONNECTION; and (vii) kilowatt-hours
of NET ELECTRICAL ENERGY received by PSE&G at the POINT OF INTERCONNECTION.
PSE&G shall designate, select and specify the equipment to be installed at
the SUBSTATION FACILITY to enable a measurement of the aforementioned
electrical quantities. PSE&G shall purchase and arrange for the delivery
of such equipment to O'BRIEN at the PROJECT for installation by O'BRIEN at
O'BRIEN's expense. The costs of such equipment shall be paid by O'BRIEN as
a cost associated with the design, construction and installation of the
INTERCONNECTION as provided in and in accordance with Article XIII of this
AGREEMENT. PSE&G shall own, operate and maintain the equipment installed
to measure the electrical quantities specified in this paragraph. O'BRIEN
shall pay PSE&G for any costs associated with the operation and maintenance
and/or repair of such equipment. O'BRIEN shall pay any billing for
operation and maintenance of such equipment within thirty (30) days of the
date of the billing.
PSE&G shall energize the SUBSTATION FACILITY if but only if the
equipment PSE&G has directed O'BRIEN to install, pursuant to the preceding
paragraph, has been installed, has been inspected by PSE&G, and pursuant to
such inspection, such installation is determined by PSE&G to meet
applicable standards for operation. PSE&G shall conduct and complete the
inspection of such
45
installation within fifteen (15) working days of receipt of notice from
O'BRIEN that the installation of the equipment has been completed and is
available for inspection. In the event PSE&G determines, as a result of
its inspection of the installation, that such installation does not met
applicable standards for operation, PSE&G shall, as soon thereafter as is
practicable, furnish written notice to O'BRIEN of such fact setting forth
the basis for the determination and any corrective actions O'BRIEN will be
required to take to make the installation acceptable to PSE&G.
Additionally, O'BRIEN shall: (I) lease, at its expense, a telephone
circuit or otherwise establish a telecommunications link(s) to permit
telemetering by means of both digital data links and analog signals, of the
measurements of the electric quantities specified on pages 43 and 44 of
this AGREEMENT at PSE&G's Electric System Operations Center in Newark, New
Jersey; (ii) pay the costs associated with the installation by PSE&G of
equipment required (a) to provide an indication at PSE&G's Electric System
Operations Center of the status of circuit breakers at the COGENERATION
FACILITY and SUBSTATION FACILITY and (b) to provide an alarm indication of
hard lockout relays; and (iii) pay the costs associated with integrating
any telemetered information into PSE&G's Electric System Operations Center,
including the cost of equipment necessary to receive, display, record and
process such telemetered information.
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The costs described in Subparagraphs (ii) and (iii) in the preceding
paragraph shall be paid by O'BRIEN as a cost associated with the design,
construction and installation of the INTERCONNECTION as provided in and in
accordance with Article XIII of this AGREEMENT. Such equipment shall be
owned, operated and maintained by PSE&G.
ARTICLE XIII
INTERCONNECTION
Section A
Design, Construction and Installation of Interconnection
PSE&G shall design, construct and install the INTERCONNECTION to
interconnect the PROJECT with the PUBLIC SERVICE SYSTEM in order to provide
SERVICE to O'BRIEN pursuant to and in accordance with the terms and
conditions of this AGREEMENT. However, PSE&G shall not initiate any
activity in connection with the design, construction or installation of the
INTERCONNECTION until receipt of the RELEASE NOTICE. Within thirty (30)
days of receipt of the RELEASE NOTICE, PSE&G shall notify O'BRIEN as to
when: (I) the Payment Schedule set forth in Section B of this Article XIII
shall commence; and (ii) the CREDIT required by Section C of this Article
XIII must be established. As soon as practicable after the receipt of the
RELEASE NOTICE, PSE&G will establish an estimated completion date
(Estimated Completion Date) and furnish to O'BRIEN a construction schedule
to complete the INTERCONNECTION on or by the Estimated Completion Date.
PSE&G estimates that the
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INTERCONNECTION can be completed within twenty-four (24) MONTHS of
commencement of construction thereof.
On or about the first day of the first MONTH of the Construction
Schedule, PSE&G shall: (i) initiate the tasks required to obtain any
REQUIRED PERMIT or easement(s), license(s), rental(s) or right(s)-of-way
for the construction and installation of the INTERCONNECTION; and (ii)
commence the design, construction and installation of the INTERCONNECTION.
PSE&G shall use best efforts to complete the INTERCONNECTION on or by the
Estimated Completion Date, provided however, it is expressly understood and
agreed that PSE&G's best efforts to complete the INTERCONNECTION on or by
the Estimated Completion Date shall be subordinate and subject to and
construed in light of and consistent with PSE&G's primary obligation to
provide and maintain safe, adequate and proper service to its retail and
sale-for-resale customers and to operate and maintain its plant, property
and equipment in such condition as to enable it to do so.
PSE&G shall advise O'BRIEN when the INTERCONNECTION is completed.
Thereafter, and subject to and in accordance with the provisions of Article
XX, PSE&G shall energize the SUBSTATION FACILITY and permit O'BRIEN to
synchronize its electric generation units with the PUBLIC SERVICE SYSTEM.
PSE&G shall not be liable to O'BRIEN for any direct or indirect
cost(s), expense(s), loss(es), liability(ies) or damage(s) which O'BRIEN
may incur or sustain, which cost,
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expense, loss, liability or damage arises out of, relates to or results
from any delay in the completion of the INTERCONNECTION, except where the
delay in the completion of the INTERCONNECTION results from PSE&G's failure
to use best efforts, as defined herein.
O'BRIEN shall indemnify and hold harmless PSE&G and each and every of
its officers, agents, servants and employees, its successors and assigns,
from and against, any and all claims, demands, suits, actions and/or
liabilities, damages, and/or judgments, as well as against any fees, costs,
charges or expenses which PSE&G, its officers, agents, servants and
employees, its successors and assigns incur in the defense of any such
claims, suits, actions or similar such demands, made or filed by any third
party with whom O'BRIEN is in privity of contract, to the extent such
claims, suits, actions or similar such demands arise out of, relate to, or
result from PSE&G's failure to complete the INTERCONNECTION in a timely
manner as herein provided, except where such failure results from PSE&G's
failure to use best efforts, as defined in this Section A, to complete the
INTERCONNECTION. In effecting and implementing any right of or obligation
to indemnify pursuant to and in accordance with the provisions of this
paragraph, the procedural provisions set forth in Article XXIV of this
AGREEMENT shall be applicable.
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The INTERCONNECTION shall be constructed and installed reasonably in
accordance with the Proposed Plan (Exhibit 1). It is understood that
change(s) in the Proposed Plan may be necessary from time to time prior to
and/or during construction, provided however, any such change shall not
alter the character of SERVICE PSE&G has agreed to provide pursuant to this
AGREEMENT. PSE&G shall have the right and the authority to make any
change(s) in the Proposed Plan or in the route of the INTERCONNECTION where
PSE&G, in its reasonable judgment, determines such change(s) is necessary
or appropriate; provided however, in the event any change in the Proposed
Plan which PSE&G determines is necessary or appropriate will result in a
substantial increase in the estimated cost for same, PSE&G shall not be
permitted to make such change(s) without O'BRIEN's consent unless such
change(s) is necessary to enable the PROJECT to operate with the PUBLIC
SERVICE SYSTEM in a safe and reliable manner. O'BRIEN shall not
unreasonably delay or withhold any consent for any such change(s) which may
be required by the provisions of this paragraph. Changes in the Proposed
Plan shall not require any amendment to this AGREEMENT.
Section B
Interconnection Costs
Subject to the provisions of this Section B, O'BRIEN shall be liable
to PSE&G for and shall pay to PSE&G the costs PSE&G
50
incurs in the design, construction and installation of the INTERCONNECTION
as well as all other costs which PSE&G incurs in affecting the
interconnection of the PROJECT with the PUBLIC SERVICE SYSTEM (herein
collectively referred to as costs associated with or costs incurred in
connection with the design, construction and installation of the
INTERCONNECTION).
PSE&G's estimates that the total cost associated with the design,
construction and installation of the INTERCONNECTION will be one million
six hundred ninety-two thousand four hundred eighty dollars ($1,692,480).
This estimate shall not diminish, change or affect in any way O'BRIEN's
responsibility for and obligation to pay PSE&G its allocable share, as
determined in this Section B, of the costs which PSE&G actually incurs in
connection with the design, construction and installation of the
INTERCONNECTION.
For purpose of allocating to O'BRIEN its share of the costs associated
with the design, construction and installation of the INTERCONNECTION, the
cost estimate specified in the preceding paragraph is broken into the
following classifications:
Switching Station Costs $375,900
Cable Costs $363,760
Manhole and Conduit Costs $952,820
O'BRIEN shall be obligated to pay PSE&G one hundred percent (100%) of all
costs classified as cable and switching station costs.
51
The cost estimate assigned to the manhole and conduit classification
constitutes an estimate for a nine (9) duct installation. PSE&G plans to
install a nine (9) duct installation. However, interconnecting the PROJECT
with the PUBLIC SERVICE SYSTEM will only require a six (6) duct
installation, the cost for which is estimated at eight hundred fourteen
thousand four hundred and ninety dollars ($814,490). As such, the cost
estimate for the INTERCONNECTION has been adjusted to reflect the cost
differential and O'BRIEN's Payment Schedule, as specified in this Section B
of this Article XIII, has been structured to reflect that adjustment.
O'BRIEN's allocable share of the actual costs classified as manhole and
conduit costs shall be determined by application of the following formula:
Estimated costs associated with
six (6) duct installation x Actual Manhole
Estimated cost associated with and Conduit Costs
nine (9) duct installation
O'BRIEN responsibility for and obligation to pay to PSE&G its
allocable share of the estimated costs associated with the design,
construction and installation of the INTERCONNECTION shall be discharged as
follows: commencing on or prior to the last day of the MONTH specified in
the notice to be furnished to O'BRIEN pursuant to and in accordance with
Section A of this Article XIII (MONTH 1) and thereafter on or prior to the
last day of each of the successive 23 MONTHS (MONTH 2 through and
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including MONTH 24), O'BRIEN shall remit to PSE&G the payment specified in
the following Payment Schedule:
PAYMENT SCHEDULE
Amount of
Payment Due Date Payment Obligation
Last day of MONTH 1 $ 4,200
Last day of MONTH 2 4,000
Last day of MONTH 3 3,400
Last day of MONTH 5 4,000
Last day of MONTH 6 4,000
Last day of MONTH 7 4,000
Last day of MONTH 8 4,000
Last day of MONTH 9 164,000
Last day of MONTH 10 164,000
Last day of MONTH 11 164,000
Last day of MONTH 12 164,000
Last day of MONTH 13 20,090
Last day of MONTH 14 156,000
Last day of MONTH 15 161,000
Last day of MONTH 16 19,000
Last day of MONTH 17 19,000
Last day of MONTH 18 19,000
Last day of MONTH 19 19,000
Last day of MONTH 20 28,400
Last day of MONTH 21 108,000
Last day of MONTH 22 50,560
Last day of MONTH 23 55,000
Last day of MONTH 24 51,500
TOTAL OF PAYMENTS FOR ESTIMATED COSTS $ 1,554,150
In the event O'BRIEN fails to remit any payment specified in the
Payment Schedule above, on or by the Payment Due Date, PSE&G may, in
addition to any other remedy or right PSE&G may have under this AGREEMENT,
immediately suspend performance of its obligations under Section A of this
Article XIII. PSE&G shall provide O'BRIEN with written notice of any such
suspension (hereinafter referred to as Notice of Suspension).
53
In such event, and in addition to any other right or remedy it may
have under this AGREEMENT, PSE&G shall have the right to make demand for
and receive payment from ISSUER under the CREDIT for: (i) any costs
associated with the design, construction and installation of the
INTERCONNECTION which PSE&G has incurred, as of the date of suspension, and
for which O'BRIEN has failed to make payment on or by such date; and/or
(ii) any costs associated with the design, construction and installation of
the INTERCONNECTION which PSE&G incurs thereafter as a consequence of a
commitment made or liability incurred by PSE&G prior to the date of
suspension in connection with performance of its obligations under Section
A of this Article XIII.
Within ninety (90) days of completion of the INTERCONNECTION PSE&G
shall furnish to O'BRIEN a Final Reconciliation. The Final Reconciliation
shall contain a statement setting forth the nature and amount of costs
actually incurred by PSE&G in connection with the design, construction and
installation of the INTERCONNECTION, as well as a reconciliation between
the total payments made by O'BRIEN, in accordance with the provisions of
this Article XIII, and the amount of costs actually incurred in connection
with the design, construction and installation of the INTERCONNECTION.
In the event that the total costs actually incurred in connection with
the design, construction and installation of the INTERCONNECTION exceed the
total payments made by O'BRIEN, in
54
accordance with the provisions of this Article XIII, O'BRIEN shall be
responsible for and shall make payment to PSE&G of any differential
resulting from such reconciliation. O'BRIEN shall make payment for any
such differential within thirty (30) days of the date of the delivery to
O'BRIEN of the Final Reconciliation. In such event, the Final
Reconciliation shall constitute PSE&G's bill to O'BRIEN for payment of any
such differential.
In the event the total of the payments made by O'BRIEN to PSE&G, in
accordance with the provisions of this Article XIII, exceeds the costs
actually incurred in connection with the design, construction and
installation of the INTERCONNECTION, PSE&G shall remit to O'BRIEN with the
Final Reconciliation a payment to reimburse O'BRIEN for any such
overpayment.
In connection with affecting the Final Reconciliation, O'BRIEN shall
he the right to review, after a timely request therefor, any documentation
or data available to PSE&G to enable O'BRIEN to verify the accuracy of the
Final Reconciliation. However, such review shall not extend the due date
of, or extend or postpone O'BRIEN's obligation to pay in a timely manner
any payment due, as specified in the Final Reconciliation.
Section C
Letter of Credit for Interconnection Costs
In connection with, and for the purposes of, securing performance by
O'BRIEN of its obligation to pay PSE&G for the
55
costs which PSE&G incurs in connection with the design, construction and
installation of the INTERCONNECTION, O'BRIEN shall establish for, and have
issued to PSE&G, as beneficiary, an irrevocable Letter of Credit (CREDIT).
The CREDIT shall be established at and made payable by a commercial bank
(ISSUER) acceptable to PSE&G on terms and conditions acceptable to PSE&G;
provided however, PSE&G shall not unreasonably withhold approval of any
CREDIT. The CREDIT shall be established for and structured so as to permit
PSE&G to make a demand(s) for and receive payment from ISSUER and shall
require the ISSUER to honor on sight any written demand(s) for payment as
specified in and in accordance with the provisions of Sections B and D of
this Article XIII. The CREDIT shall be established to be effective not
later than the date specified by PSE&G in the notice issued to O'BRIEN
pursuant to and in accordance with the provisions of Section A of this
Article XIII and shall have an Expiry Date coincident with the date of the
payment for MONTH 24 specified in the Payment Schedule to be provided by
PSE&G to O'BRIEN (which period is hereinafter referred to as the Effective
Period). The amount of the CREDIT shall be established and maintained
during the Effective Period in the amount of Three Hundred Thousand Dollars
($300,000).
In the event O'BRIEN fails to have established for and have issued to
PSE&G, as beneficiary, the CREDIT in accordance with the provisions of this
Article XIII, PSE&G may, in addition to
56
any other remedy it may have under this AGREEMENT, suspend performance of
its obligations under Section A of this Article XIII.
Section D
Cancellation Costs
In order to complete the design, construction and installation of the
INTERCONNECTION, PSE&G shall be required to enter into contractual
arrangements with, inter alia, equipment/material suppliers and third-party
contractors. Upon occurrence of any Event of Termination, as specified in
Article XXVII, during the construction period, PSE&G shall have the right
to cancel or terminate any supplier and/or contractor agreement(s) entered
into in connection with discharging its obligations to design, construct
and install the INTERCONNECTION. In the event PSE&G exercises any right
pursuant to and in accordance with this Section D to cancel or terminate
any supplier and/or contractor agreements/orders. PSE&G may incur
CANCELLATION COSTS. In such event, O'BRIEN shall be liable for and make
payment to PSE&G for all CANCELLATION COSTS which PSE&G incurs.
Additionally, upon occurrence of an Event of Termination, as defined
in Article XXVII, during the construction period, PSE&G may be required to
remove and/or complete the construction work in progress in order to
maintain the integrity, safety and
57
reliability of the PUBLIC SERVICE SYSTEM. In such event, PSE&G may also
incur CANCELLATION COSTS. In such event, O'BRIEN shall be liable for and
make payment to PSE&G for all such CANCELLATION COSTS which PSE&G incurs.
In the event PSE&G incurs an CANCELLATION COSTS, PSE&G shall have the
right to demand payment for and receive payment from ISSUER under the
CREDIT for all such costs, provided however, in the event the CREDIT is
insufficient, PSE&G retains the right to demand payment from O'BRIEN for
any such deficiency, and in such event, O'BRIEN shall be obligated to make
payment to PSE&G for such CANCELLATION COSTS not paid under the CREDIT.
In connection with determining the amount of any liability of O'BRIEN
for CANCELLATION COSTS incurred, PSE&G shall give O'BRIEN a dollar credit
for the value to PSE&G of any facilities or equipment received by and which
are thereafter useful to PSE&G.
In the event PSE&G terminates or cancels any supplier and/or
contractor agreements/ orders as permitted in this Section D, PSE&G shall
have complete discretion relative to the manner of resolving any claim
and/or demand by any contractor and/or supplier in connection therewith and
further, PSE&G shall be the sole judge of the acceptability of any
compromise in settlement or resolution of any such claim or demand.
Additionally, PSE&G shall be the sole judge as to what is necessary to
maintain the safety, integrity or reliability of the PUBLIC SERVICE SYSTEM
58
relative to any removal or completion of the construction work in progress.
PSE&G shall exercise reasonable care in resolving contractor/supplier
claim(s)/demand(s) and in affecting any required removal or completion of
the construction work in progress so as to mitigate the dollar amount paid
in affecting the resolution of such claim(s)/demand(s) or in the dollar
amount expanded in completing such removal or completion tasks; provided
however, that PSE&G shall have no liability to O'BRIEN for or on Account of
the dollar amount(s) paid in affecting the resolution of any such
claim(s)/demand(s) or in affecting such removal/completion tasks, except
where the resolution of any such claim(s)/demand(s) or the completion of
such tasks were affected by PSE&G in a manner which was in willful
disregard of its obligation to mitigate, as defined in this paragraph.
ARTICLE XIV
MAINTENANCE OF PLANT
PSE&G shall have and maintain its entire plant at its own expense in
such condition as will enable it to furnish safe, proper and adequate
SERVICE to O'BRIEN pursuant to and in accordance with the terms and
conditions of this AGREEMENT.
ARTICLE XV
USE OF THE PUBLIC SERVICE SYSTEM
The nature and extent of and the terms and conditions relating to
O'BRIEN's use of the PUBLIC SERVICE SYSTEM are set
59
forth in their entirety in this AGREEMENT. Except as otherwise provided in
and pursuant to the terms and conditions of any applicable PSE&G Tariff on
file with the NJBPU or the FERC, O'BRIEN shall not be permitted to use the
PUBLIC SERVICE SYSTEM nor shall PSE&G be obligated to provide any service
to O'BRIEN, other than as provided in this AGREEMENT. Any rights to or
interest in the PUBLIC SERVICE SYSTEM which O'BRIEN has or may claim as a
result of this AGREEMENT shall cease or expire upon termination of this
AGREEMENT.
ARTICLE XVI
EASEMENTS
Except as otherwise specifically provided in this Article XVI, PSE&G
shall acquire any permit(s), easement(s), license(s), rental(s) or right(s)-
of-way necessary to interconnect the PROJECT with the PUBLIC SERVICE
SYSTEM. Any costs associated with the acquisition of any such easement(s),
license(s), rental(s) or right(s)-of-way of a non-recurring nature shall be
billed to and paid by O'BRIEN as a cost associated with the design,
construction and installation of the INTERCONNECTION in accordance with
Article XIII of this AGREEMENT. Any costs associated with the acquisition
of any easement(s), license(s), rental(s) or right(s)-of-way of a recurring
nature shall be billed to O'BRIEN and paid by O'BRIEN within thirty (30)
days of receipt.
60
In order to interconnect the PROJECT with the PUBLIC SERVICE SYSTEM,
PSE&G may be required to maintain certain facilities and equipment at the
PROJECT SITE. In such event and to enable PSE&G to operate, maintain,
repair, reinforce, replace, relocate or remove the facilities and equipment
necessary to offset, operate and maintain an interconnection between the
PROJECT and the PUBLIC SERVICE SYSTEM, O'BRIEN shall obtain for conveyance
to PSE&G an easement to the property at the PROJECT SITE for a term, i.e.,
a duration and in a form and on terms and conditions acceptable to and
approval by PSE&G. The easement, inter alia, shall permit PSE&G, its
agents, servants and employees, at any time upon reasonable notice, to have
access to the property conveyed so as to permit PSE&G, its agents, servants
and/or employees to perform any tasks associated with and incident to the
operation, maintenance, repair, reinforcement removal and/or relocation of
the facilities and equipment necessary to offset, operate and maintain the
interconnection of the PROJECT with the PUBLIC SERVICE SYSTEM.
ARTICLE XVII
PERMITS/APPROVALS
PSE&G shall obtain from appropriate governmental bodies any REQUIRED
PERMIT. PSE&G shall proceed with and use best efforts to obtain any
REQUIRED PERMIT. In the event a third party files
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any pleading with any regulatory or other governmental body or institutes a
suit at law or in equity challenging the right of PSE&G to receive or, in
the event any such body issues any REQUIRED PERMIT to PSE&G, challenges the
propriety of the issuance to PSE&G of any REQUIRED PERMIT, PSE&G shall not
be obligated to commence or, in the event construction has commenced, to
complete construction of the INTERCONNECTION until PSE&G obtains a final
and non-appealable order/judgment relative to the issuance of such REQUIRED
PERMIT or, in the event of a challenge to the issuance thereof, a final and
non-appealable order/judgment upholding the issuance of any REQUIRED
PERMIT. O'BRIEN agrees to cooperate fully with PSE&G to the extent PSE&G
deems such cooperation necessary to secure any REQUIRED PERMIT and/or, in
the event same is occurred, to defend the issuance of any REQUIRED PERMIT.
However, in the event the issuance to PSE&G of any REQUIRED PERMIT is
challenged by a third party and a final and non-appealable order/judgment
has not been issued in connection with such challenge, PSE&G shall be
obligated to commence or complete construction of the INTERCONNECTION,
despite the absence of a final and non-appealable order/judgment relative
to such challenge, if, but only if:
(i) O'BRIEN submits a request in writing to PSE&G requesting PSE&G to
commence or complete construction of the INTERCONNECTION; and
62
(ii) O'BRIEN agrees in such writing to indemnify and hold harmless
PSE&G and each and every of its officers, agents, servants and
employees, its successors and assigns, from and against any and
all claims, demands, suits, actions and the liabilities, losses,
damages, and/or judgements, which may arise from the particular
action being challenged, as well as against any fees, costs,
charges or expenses which PSE&G, its officers, agents, servants
and employees, its successors and assigns incur in the defense of
any such claims, suits, actions or similar such demands made or
filed by any third-party which in any manner arise out of, relate
to, or result from PSE&G's actions which are being challenged.
PSE&G shall not be obligated to commence or complete construction of
the INTERCONNECTION in the event issuance of any REQUIRED PERMIT is denied
to PSE&G. Further, PSE&G shall not be obligated to commence or complete
construction in the event that any decision of any governmental body to
issue any REQUIRED PERMIT is overturned by any court or regulatory body or
any court or regulatory body has issued a stay, pending a final
63
adjudication of a challenge, prohibiting construction activity under any
REQUIRED PERMIT issued to PSE&G.
Any cost(s) and/or expense(s) associated with obtaining such REQUIRED
PERMIT and/or any cost(s) and/or expense(s) associated with defending the
issuance of any such REQUIRED PERMIT shall be paid by O'BRIEN as a
cost/expense associated with the design, construction and installation of
the INTERCONNECTION as provided in and in accordance with Article XIII of
this AGREEMENT.
ARTICLE XVIII
DEDICATION OF FACILITIES
No undertaking by PSE&G under any provision of this AGREEMENT shall
constitute the dedication to O'BRIEN or to the public of the PUBLIC SERVICE
SYSTEM.
ARTICLE XIX
REARRANGEMENT
PSE&G represents to O'BRIEN that it has no present plans or intention
to convert the PUBLIC SERVICE SYSTEM in the area of the PROJECT to a higher
voltage, based upon a projected ten (10) year electric load forecast.
However, in the event PSE&G should decide, for cause, at any time or from
time to time to convert the PUBLIC SERVICE SYSTEM at the point of
connection of the PROJECT to the PUBLIC SERVICE SYSTEM, or in the vicinity
thereof, to a different voltage PSE&G shall advise O'BRIEN in
64
writing as soon as PSE&G shall make such decision, but at least three (3)
years in advance of making any such conversion. In such event, O'BRIEN
shall be responsible to install and pay for only the facilities at the
PROJECT which will be required to continue the interconnected operation of
the PUBLIC SERVICE SYSTEM and the COGENERATION FACILITY, provided however,
any PSE&G facilities at the SUBSTATION which will be required to be
modified as designated and specified by PSE&G to effect such conversion
shall be paid for and installed by O'BRIEN. Unless other billing and
payment arrangements are mutually agreed upon by PSE&G and O'BRIEN, O'BRIEN
shall be billed and shall pay any billing(s) for such costs, as such costs
are incurred by PSE&G, in accordance with the provisions of Article XI of
this AGREEMENT. Cause, as specified in this Article, shall include but not
be limited to obsolescence, changing patterns of demand and usage of
electric power and energy by retail and sale for resale customers or
physical destruction of plant, whether the result of deterioration or
casualty.
ARTICLE XX
COGENERATION FACILITY/SUBSTATION FACILITY
In view of PSE&G's statutory obligations to its retail and sale-for-
resale customers, PSE&G has adopted general requirements relative to the
construction of generation and substation facilities by others. These
requirements have been adopted by PSE&G to ensure that any facilities a
party plans to
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construct for connection to the PUBLIC SERVICE SYSTEM are designed,
constructed and installed so as to be compatible with the PUBLIC SERVICE
SYSTEM and to ensue that operation of these facilities does not adversely
affect the integrity, reliability and/or safe operation of any
interconnection facility and/or the PUBLIC SERVICE SYSTEM. In connection
with the construction of such facilities, PSE&G requires that the plans and
specifications for such generation and substation facilities be submitted
to PSE&G for review prior to the design, construction and installation of
these facilities solely to enable PSE&G to determine, and thus ensure, that
the contemplated design, construction and installation of such facilities
comport with the aforementioned requirements.
O'BRIEN shall, at its own expense, design, construct, install,
own/lease, operate and maintain the COGENERATION FACILITY and SUBSTATION
FACILITY. O'BRIEN shall, upon execution of this AGREEMENT, use best
efforts to: (i) initiate the task required to obtain any required permit,
easement(s), license(s), rental(s) or right(s)-of-way for the construction
and installation of the PROJECT; and (ii) complete the design, construction
and installation of the PROJECT.
Prior to or in connection with execution of this AGREEMENT, a copy of
"Interconnection Protection and Safety Requirements and Standards for
Customer-Owned Generating Facilities" (Exhibit 2) has been furnished to
O'BRIEN. O'BRIEN shall design, construct and install the COGENERATION
FACILITY consistent with
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the requirements set forth in Exhibit 2. In exercising any right of
acceptance with respect to the COGENERATION FACILITY, as specified by this
Article XX, PSE&G's acceptance shall be limited to making a determination
as to whether the design of the COGENERATION FACILITY is consistent with
the requirements contained in Exhibit 2. Deviations from the requirements
set forth in Exhibit 2, relative to the design, construction and
installation of the COGENERATION FACILITY may be permitted with the consent
of PSE&G, which consent shall not be unreasonably withheld.
As soon as practicable after execution of this AGREEMENT, O'BRIEN
shall furnish to PSE&G the following:
A. Plans and specifications for the COGENERATION FACILITY and
SUBSTATION FACILITY.
B. Single line diagram and details of the proposed protection
schemes.
C. Instruction manuals for all protective components.
D. Component specifications and internal wiring diagrams of
protection components if not provided in instruction manuals.
E. All protective equipment ratings if not provided in instruction
manuals.
F. Generator data required to analyze fault contributions and load
flows, including, but not limited to, equivalent impedances and time
constants.
Subsequent to submission to and review by PSE&G of Items A through F
enumerated above, PSE&G shall prepare and submit to O'BRIEN "General
Requirements and Specifications for a 26,000-Volt Customer's Outdoor
Substation" (hereinafter referred
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to as Requirements). O'BRIEN shall design, construct and install the
SUBSTATION FACILITY consistent with the requirements set forth in
Requirements. After preparation of the plans and specifications for the
SUBSTATION FACILITY, O'BRIEN shall submit same to PSE&G for its review and
acceptance. The plans and specifications for same may deviate from the
requirements set forth in Requirements provided however, any deviation
therefrom must be submitted to and be acceptable to PSE&G. O'BRIEN shall
construct and install the SUBSTATION FACILITY pursuant to and consistent
with the plans and specifications relating to the design of the SUBSTATION
FACILITY which have been submitted to and found acceptable by PSE&G.
PSE&G shall use best efforts to complete any review of any submissions
made to PSE&G by O'BRIEN pursuant to and in accordance with the provisions
of this Article XX within thirty (30) days of receipt of any such
submissions.
Prior to the DATE OF START-UP, PSE&G will perform the functional tests
required by PSE&G on the relays located in the SUBSTATION FACILITY. PSE&G
will specify and effect the settings of such relays. During the term of
this AGREEMENT, PSE&G shall have access to and the right to inspect and
perform scheduled maintenance on such relays as well as the right to
readjust the settings of such relays as required.
PSE&G shall notify O'BRIEN upon completion of the INTERCONNECTION and
shall thereafter, at O'BRIEN's request, be obligated to energize the
SUBSTATION FACILITY, if but only if,
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PSE&G, after inspection, has determined that the SUBSTATION FACILITY has
been completed in accordance with the final plans and specifications for
such facility. In the event such a determination is made, PSE&G shall
energize the SUBSTATION FACILITY and commence the supply of electric energy
to the PROJECT to permit O'BRIEN to conduct pre-operation testing of
PROJECT equipment and facilities. Electric energy will be supplied to the
PROJECT by PSE&G during the test period pursuant to PSE&G's Tariff for
Cogenerator Standby Service.
Thereafter, O'BRIEN shall notify PSE&G when O'BRIEN decides to place
its electric generation unit into INITIAL OPERATION. At that time, O'BRIEN
shall permit PSE&G to examine the electric generation unit to enable PSE&G
to determine whether such electric generation unit satisfies the
requirements contained in Exhibit 2. PSE&G shall be obligated to permit
O'BRIEN to synchronize its electric generation unit with the PUBLIC SERVICE
SYSTEM and receive electric power and energy from the COGENERATION FACILITY
at the RECEIPT POINT if but only if: (I) PSE&G has examined and pursuant
to such examination determined that the PROJECT's electric generation unit
satisfies the requirements contained in Exhibit 2; and, (ii) O'BRIEN has
the installation inspected and approved by an electrical inspection
authority approved by the NJBPU and receives and furnishes satisfactory
evidence to PSE&G of issuance of a Certificate of Approval relative to the
inspection. Thereafter, PSE&G shall permit synchronization of the
PROJECT's electric generation unit
69
with the PUBLIC SERVICE SYSTEM and shall be obligated, at O'BRIEN's
request, to commence receipt of electric power and energy supplied to the
RECEIPT POINT.
O'BRIEN shall not synchronize its electric generation unit with the
PUBLIC SERVICE SYSTEM at any time without notification to and without
obtaining the consent of PSE&G, which consent shall not be withheld except
pursuant to and in accordance with the provisions of Article V and this
Article XX.
Upon appropriate notification by O'BRIEN, PSE&G shall use best efforts
to conduct and complete any examination of the COGENERATION FACILITY and/or
SUBSTATION FACILITY required under the provisions of this Article within
fifteen (15) working days. PSE&G shall not unreasonably delay any such
examination nor unreasonably withhold any acceptance required to trigger
the DATE OF START-UP.
After the DATE OF START-UP, O'BRIEN shall not rearrange, reconfigure,
modify, alter or change in a material way the SUBSTATION FACILITY and,
after the DATE OF INITIAL OPERATION, O'BRIEN shall not rearrange,
reconfigure, modify, alter or change in any material way any electric
generation unit(s) without notice to and the acceptance by PSE&G of such
rearrangement, reconfiguration, modification, alteration or change. PSE&G
shall not unreasonably delay or unreasonably withhold any such acceptance.
Any review made by PSE&G of the Plans and Specifications of the
COGENERATION FACILITY or SUBSTATION FACILITY, any
70
examination made by PSE&G of the actual design, construction and/or
installation of the COGENERATION FACILITY or SUBSTATION FACILITY and/or any
determination made by PSE&G in connection with any such review or
examination will be solely for the purpose of permitting PSE&G, consistent
with its statutory obligations to its retail and sale-for-resale customers,
to: (i) determine whether the design, construction and installation of
such facilities are compatible with the PUBLIC SERVICE SYSTEM; and (ii)
ensure that operation of the COGENERATION FACILITY and SUBSTATION FACILITY
will not adversely affect the integrity, reliability or safe operation of
the PUBLIC SERVICE SYSTEM.
PSE&G's review or examination, and any determination made in
connection therewith, is not intended to be, nor will same be made by PSE&G
for the purpose of, nor should same be interpreted, construed and/or relied
upon by O'BRIEN, or any other person or entity, as an endorsement,
approval, confirmation and/or warranty of or by PSE&G relative to any
aspect of the design, construction or installation of O'BRIEN's facilities,
their safety, reliability, economic and/or technical feasibility,
performance and/or operational capability and/or the suitability of same
for their intended purpose(s). O'BRIEN shall not represent to any third
party that PSE&G's review was undertaken for any reason other than the
reasons expressly stated in this Article.
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O'BRIEN shall permit PSE&G, its officers, agents, servants and
employees, its successors and assigns, when and as requested, access to,
egress and ingress, from and over the PROJECT SITE at any time and upon
reasonable notice, as same may be necessary or required by PSE&G, to permit
PSE&G, its officers, agents, servants and employees, its successors and
assigns, to gain access to the SUBSTATION FACILITY to take any action
necessary to discharge its obligations or to exercise its rights under this
AGREEMENT, including but not limited to access to: (i) permit PSE&G to
examine, inspect, test, operate, maintain, repair and replace its
electricity recording equipment and associated electricity measuring
equipment; (ii) permit PSE&G to perform switching operations on switch gear
located in the SUBSTATION FACILITY; and (iii) permit PSE&G to examine,
inspect, test and set protective relays as required by PSE&G. O'BRIEN
shall not deny, refuse or delay PSE&G's access to the PROJECT, provided
that while at the PROJECT such PSE&G representative shall observe such
reasonable safety precautions as may be required by O'BRIEN and shall
conduct themselves in a manner that will not unnecessarily impair O'BRIEN's
operation of the COGENERATION FACILITY.
ARTICLE XXI
LIABILITY
Neither party nor its officers, directors, partners, agents, servants,
employees, affiliates, parent, subsidiaries or
72
respective successors or assigns shall be liable to the other party for
claims for incidental, special, direct, indirect or consequential damages
(Damages) whether such Damages claim is based on a cause of action based in
warranty, negligence, strict liability, contract, operation of law or
otherwise except where such claim for Damages arises out, relates to or
results from the gross negligence of such party or the willful disregard by
a party of its obligations under this AGREEMENT, provided however, each
party shall have the right to recover from the other party direct damages
upon the occurrence of a breach of this AGREEMENT as defined in and which
has been established pursuant to and in accordance with Article XXVIII of
this AGREEMENT.
ARTICLE XXII
FORCE MAJEUR
An event of "Force Majeure" as used herein means an event beyond the
reasonable control of and which occurs without the fault or negligence of
the party claiming Force Majeure and is one which such party is (was)
unable to prevent or overcome which events may include but are not limited
to: acts of God; strikes, lockouts or other similar such industrial
disturbances; acts of the public enemy, wars, civil disturbances,
blockades, military action, insurrections or riots; landslides, floods,
washouts, lightning, earthquakes, tornadoes, hurricanes, blizzards or other
storms or storm warnings; explosions, fires, sabotage or vandalism;
mandates, directives, orders or restraints of any
73
governmental, regulatory or judicial body or agency; breakage, defects,
malfunctioning, or accident to machinery, equipment, materials or lines of
pipe or wires; freezing of machinery, equipment, materials or lines of pipe
or wires; inability or delay in the obtaining of materials or equipment;
inability to obtain or utilize any permit, approval, easement, license or
right-of-way. The settlement of strikes, lockouts or other similar such
industrial disturbances shall be entirely within the discretion of the
party directly affected. The requirement herein that any event of Force
Majeure shall be remedied with all reasonable dispatch shall not require
the settlement of strikes, lockouts or other similar such industrial
disturbances by acceding to the demands of the opposing party when such
course is, in the opinion of the party directly affected, inadvisable.
In the event PSE&G is rendered unable, wholly or in part, by an event
of Force Majeure, to perform any obligation it has under this AGREEMENT, it
is agreed that, on PSE&G giving notice and full particulars of such event
of Force Majeure to O'BRIEN, as soon thereafter as practicable, the
obligations of PSE&G, so far as they are affected by such event of Force
Majeure, shall be suspended during the continuance of any inability or
incapacity so caused, but for no longer period. PSE&G shall use best
efforts to remedy the cause of such inability or incapacity.
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PSE&G shall not be liable to O'BRIEN for any claim(s), lease(s),
damage(s), liability(ies) or expense(s) sustained or incurred by O'BRIEN,
arising out of, relating to, or resulting from PSE&G's inability or
incapacity to perform its obligations under this AGREEMENT due to any event
of Force Majeure, as herein defined.
ARTICLE XXIII
PROTECTIVE DEVICES
O'BRIEN has been advised and acknowledges that actions, conditions,
and/or events on the PUBLIC SERVICE SYSTEM (PSE&G System Condition(s)) may
adversely impair PROJECT operations and/or the condition of PROJECT
facilities and equipment. As such, O'BRIEN agrees to: (i) install,
operate and maintain protective devices at the PROJECT and institute and
maintain procedures at the PROJECT so as to minimize any potential damage
to PROJECT equipment and facilities; and (ii) minimize any interruption in
the production and supply of steam to Newark Boxboard Inc., arising as a
result of the occurrence of any such PSE&G System Condition(s).
ARTICLE XXIV
INDEMNIFICATION
O'BRIEN shall indemnify and hold harmless PSE&G and each and every of
its officers, agents, servants and employees, its successors and assigns
of, from and against any and all claims,
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demands, suits, actions and liabilities, losses, damages, and/or judgments,
which may arise therefrom, as well as against any fees, costs, charges or
expenses which PSE&G, its officers, agents, servants and employees, its
successors and assigns, incur in the defense of any such claims, suits,
actions or similar such demands made or filed by any third-party, which in
any manner arise out of, relate to, or result from PSE&G's failure, for any
reason, to provide SERVICE to O'BRIEN under this AGREEMENT, except where
such failure results from the gross negligence of PSE&G or willful
disregard by PSE&G of its obligations under this AGREEMENT.
O'BRIEN shall indemnify and hold harmless PSE&G and each and every of
its officers, agents, servants and employees, its successors and assigns,
from and against any and all claims, demands, suits, actions and
liabilities, losses, damages, and/or judgments, which may arise therefrom,
as well as against any fees, costs, charges or expenses which PSE&G, its
officers, agents, servants and employees, its successors and assigns incur
in the defense of any such claims, suits, actions or similar such demands
made or filed by any third party, to the extent such claim, suit, action or
similar demand arises out of, relates to, or results from the design,
construction, installation, operation, maintenance, repair, replacement,
supervision, inspection, testing, protection, reinforcement,
reconstruction, decommissioning, removal, use, control or ownership of the
PROJECT, except to the extent such liability,
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loss, damage and/or judgment results from the gross negligence of PSE&G or
willful disregard by PSE&G of its obligations under this AGREEMENT.
In case a claim is asserted or action brought against PSE&G as to
which PSE&G believes it is entitled to indemnification under this Article,
PSE&G shall promptly notify O'BRIEN in writing of such claim or action.
Prompt notice of any action shall mean such notice as would be required to
enable O'BRIEN to assert and prosecute appropriate defenses in any such
action. If PSE&G fails to give O'BRIEN prompt notice under this paragraph,
O'BRIEN shall have no obligation to indemnify PSE&G under this Article.
Upon receipt of such notice, O'BRIEN shall promptly make a determination of
whether it believes it is required to indemnify PSE&G and shall promptly
notify PSE&G in writing of that determination. If O'BRIEN determines that
it is required, pursuant to this Article XXIV to indemnify PSE&G, O'BRIEN
shall assume the defense thereof, including the employment of counsel, and
shall upon receipt thereof promptly assume the payment of all costs and
expenses with respect thereto. PSE&G shall cooperate in all reasonable
respects with O'BRIEN in the defense of such claim or action. PSE&G shall
have the right, at its own expense, to employ separate counsel in any such
action and to participate in the defense thereof. O'BRIEN shall not be
liable for any settlement of any such claim or action affected without its
consent. Before settling any claim or action, O'BRIEN shall demonstrate to
PSE&G that O'BRIEN has sufficient financial means or has made adequate
arrangements to make all payments under any such settlement as and when
due.
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ARTICLE XXV
INSURANCE
O'BRIEN shall obtain and maintain in force and effect for the PROJECT:
1. A policy of comprehensive general liability insurance in a
minimum amount of three million dollars ($3,000,000) for each
occurrence for bodily injury, including death, and property
damage.
2. A workmen's compensation or employer's liability insurance
policy in accordance with applicable New Jersey statutory
requirements.
The policy amount stated in subparagraph 1 above is a minimum level which
O'BRIEN shall be obligated to maintain in force and effect. However, and
regardless of such minimum level requirement, O'BRIEN shall be obligated to
maintain in force and effect insurance coverage in such amount and against
such risks as shall be consistent with prudent practice in its industry.
Satisfactory evidence of the existence of insurance coverage consistent
with the requirements of this Article shall be furnished by O'BRIEN to
PSE&G on or prior to the DATE OF INITIAL OPERATION and thereafter on or
before January 1 of each year until this AGREEMENT is terminated.
Any policy of insurance obtained by O'BRIEN, as required by this
Article, shall not be materially altered, cancelled or terminated, without
furnishing PSE&G notice thereof thirty (30)
days prior to the effective date of such alteration, cancellation, or
termination.
ARTICLE XXVI
WARRANTIES
O'BRIEN warrants that it will at the time NET ELECTRICAL POWER OUTPUT
and associated NET ELECTRICAL ENERGY is supplied to the RECEIPT POINT have
good title to or the good right to deliver all power and energy so made
available. O'BRIEN agrees to indemnify and hold harmless PSE&G against any
and all claims, demands, suits, actions, costs, and liabilities, damages,
losses and/or judgments arising out of, relating to or resulting from any
adverse claim to NET ELECTRICAL POWER OUTPUT and associated NET ELECTRICAL
ENERGY received by PSE&G at the RECEIPT POINT, as well as against any fees,
costs, charges or expenses which PSE&G might incur in the defense of any
such claim, suit, action or similar such demand made or filed by such
person, its successors or assigns, asserting such adverse claim. In
effecting the right of or obligation to indemnify pursuant to and in
accordance with the provisions of this paragraph the procedural provisions
set forth in Article XXIV of this AGREEMENT shall govern.
ARTICLE XXVII
EVENTS OF TERMINATION
Either party may terminate this AGREEMENT upon the occurrence of any
of the following events (Events of
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Termination): (i) O'BRIEN's failure to have the PROJECT placed into
COMMERCIAL OPERATION on or before October 1, 1990; provided however, in the
event the PROJECT has not been placed in COMMERCIAL OPERATION on or before
October 1, 1990, but the PROJECT has been, is at the time and continues
thereafter, to be under a bona fide program of continuous construction the
October 1, 1990 data shall be extended until October 1, 1991; (ii) a final
and non-appealable order/judgment that the PROJECT fails to meet the
requirements of a qualifying facility established as of the effective date
of this AGREEMENT in accordance with Title 18, Code of Federal Regulations,
Part 292, Subpart B, Section 292.203 through 292.207, inclusive; provided
however, that any such determination shall not constitute an Event of
Termination pursuant to this Article XXVII if thereafter O'BRIEN uses
reasonable efforts to resume thermal energy production and sales to regain
qualifying facility status; (iii) termination, for any reason, of the Long
Term Power Purchase of Cogeneration and Small Power Production Located
Outside JCP&L Service Territory between O'BRIEN and JCP&L dated March 10,
1986; provided however, in the event said termination is contested,
termination of this AGREEMENT is subject to entry of a final and non-
appealable order/judgment terminating the Agreement of Purchase; (iv)
termination of the site lease for the PROJECT SITE; (v) O'BRIEN's decision
to abandon or cancel the PROJECT; or (vi) O'BRIEN's failure, after the DATE
OF COMMERCIAL OPERATION, for a period of 365 consecutive days to supply to
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PSE&G at the RECEIPT POINT NET ELECTRICAL POWER OUTPUT and associated NET
ELECTRICAL ENERGY except where such failure results from an event of Force
Majeure as defined in Article XXII, provided however, that O'BRIEN has used
during such 365 day period and continues thereafter to use best efforts to
resume the supply of NET ELECTRICAL POWER OUTPUT and associated NET
ELECTRICAL ENERGY to PSE&G at the RECEIPT POINT.
If any Event of Termination occurs and either party elects to exercise
its right, as provided in the preceding paragraph, to terminate this
AGREEMENT, such party shall provide the other party with written notice of
termination of this AGREEMENT (hereinafter referred to as Notice of
Termination). The Notice of Termination shall specify the basis for such
termination. This AGREEMENT and the parties' obligations hereunder shall
terminate effective thirty (30) days after receipt by the other party of
such Notice of Termination.
The occurrence of any Event of Termination shall not give rise to a
right by PSE&G to terminate this AGREEMENT if within five (5) business days
of the receipt of any Notice of Termination O'BRIEN requests PSE&G in
writing to stay the termination for a specified period up to but not
exceeding eighteen (18) months and thereafter makes payment to PSE&G of the
monthly demand charge calculated in accordance with the provisions of
Section A of Article X, which calculation shall be based on the level of
SERVICE established as of the date of execution of this AGREEMENT.
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Termination of this AGREEMENT for and on account of any Event of
Termination specified in this Article XXVII shall not relieve O'BRIEN from
any obligation under this AGREEMENT to pay PSE&G for any unpaid costs
associated with the design, construction and installation of the
INTERCONNECTION, CANCELLATION COSTS, or any other unpaid bill or BILLING
STATEMENT.
ARTICLE XXVIII
BREACH OF CONTRACT
A breach of this AGREEMENT may occur upon the happening of any of the
following:
A. failure of O'BRIEN to make payment of any billing submitted by
PSE&G to O'BRIEN pursuant to this AGREEMENT, which failure
continues for a period of thirty (30) days after the due date as
determined pursuant to and in accordance with Article XI of this
AGREEMENT;
B. failure of a party to perform any obligation under this
AGREEMENT, which failure continues for a period of fifteen (15)
days after written notice of such nonperformance is received by
such party. Any notice of nonperformance (hereinafter referred
to as Notice of Nonperformance)
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In the event a party claims that a breach of this AGREEMENT has
occurred, such party shall provide the other party with written notice
thereof (hereinafter referred to as Notice of Breach). The Notice of
Breach shall state the basis for such claim and any remedy sought. The
parties shall have thirty (30) day period after service of the Notice of
Breach the parties are unable to resolve their differences by negotiation
the party alleging the breach shall have the right to submit the dispute
for resolution to arbitration or to any regulatory body having
jurisdiction.
The nature and extent of any damage incurred or sustained by the non-
breaching party, as a result of any breach, shall be determined and
calculated as of the date the breaching party's failure to perform
commenced.
Except as otherwise provided in Article V and Article XIII of this
AGREEMENT, neither party shall refuse to make, suspend or delay any
payment(s) required to be made under this AGREEMENT or otherwise carry out
any of its obligations under this AGREEMENT for or on account of or as a
result of an alleged breach of this AGREEMENT.
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Any waiver by a party of any breach shall be deemed to extend only to
the particular breach waived and shall not limit or otherwise affect any
right(s) that such party may have with respect to any other or future
breach, whether of a similar or different nature.
ARTICLE XXIX
ARBITRATION
Any controversy, dispute or claim between the parties to this
AGREEMENT, which the parties are unable to resolve by negotiation, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (AAA), then in effect, and the
provisions of this Article. No suit at law which seeks to resolve any
controversy, dispute or claim between the parties shall be instituted by
either party hereto, except where such suit is instituted to confirm an
arbitration award received pursuant to this Article. However, nothing
contained herein shall deprive either party of any right to: (i) obtain
injunctive or other equitable relief in any court in the State of New
Jersey, on an interim basis, pending disposition of the arbitration of any
controversy, dispute or claim in accordance with article XXX or otherwise;
and/or (ii) institute a suit for specific performance; and/or (iii) assert
any crossclaim or third-party claim in any suit at law instituted by a
third-party; and/or (iv) file and prosecute any complaint at and with the
FERC or make and prosecute any
84
claim or position in any filing made at the FERC by either party or some
third-party, provided however, that nothing herein shall prevent either
party from seeking FERC review of any proposed change of the charges set
forth in Article X of this AGREEMENT.
Any controversy, dispute or claim submitted to arbitration shall be
settled by arbitration in Newark, New Jersey in accordance with the laws of
the State of New Jersey. Any award entered pursuant to such arbitration
shall be binding on both parties and judgment upon the award rendered or
received may be entered in the Superior Court of the State of New Jersey
pursuant to N.J.S.A. 2A:24-1 et seq.
Exclusive jurisdiction relative to the entry of judgment on any
arbitration award relative to any controversy or claim between the parties
shall be in any court of appropriate subject matter jurisdiction located in
New Jersey, and the parties to this AGREEMENT, expressly subject themselves
hereby to the personal jurisdiction for entry of any such judgment and for
the resolution of any dispute, action, or suit arising in connection with
the entry of such judgment.
The controversy or claim to be arbitrated shall be referred to three
(3) arbitrators, one to be selected by each party and the third to be
selected by the AAA. The selections to be made by the parties shall be
made from the list of the National Panel of Arbitrators maintained by the
AAA. The arbitrator to be selected by the AAA shall be an attorney-at-law
of the State of New Jersey. All decisions and awards shall be made by a
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majority of the arbitrators, except for decisions relating to discovery as
set forth herein.
In the event any arbitrator dies, or refuses to act, or becomes
incapable, incompetent or unfit to act before hearings have been completed
and/or before in award has been rendered, a successor arbitrator may be
selected by the party who originally made the selection. The selection of
the successor arbitrator shall be made consistent with the selection
procedure set forth in the preceding paragraph.
The arbitrators selected pursuant to this AGREEMENT shall be governed
by and apply the laws of the State of New Jersey and federal law, as
applicable, in conducting any arbitration proceeding and/or in making any
award.
Notice of a demand for arbitration (hereinafter to as Demand for
Arbitration) of any controversy or dispute between the parties shall be
filed in writing with the AAA by the party seeking arbitration and a copy
of same shall be served contemporaneously with such filing on the other
party. The notice shall state, with specificity, the nature of the dispute
and the remedy sought. After such notice has been filed, the parties may
make discovery of any matter relevant to such dispute before the hearing,
to the extent and in the manner provided by the Rules Governing Civil
Practice in the Superior Court contained in the Rules Governing Civil
Practice in the Superior Court contained in the Rules Governing the Courts
of the State of New Jersey. Any question that may arise with respect to
the obligations of the parties relative to discovery and/or relative
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to the protection of the discovery material shall be referred solely to the
arbitrator selected by the AAA. His determination shall be final and
conclusive. Discovery shall be completed not later than ninety (90) days
after filing of the notice of arbitration unless such period for discovery
is extended by the arbitrator selected by the AAA, upon a showing of good
cause by either party to the arbitration.
The arbitrators may consider any material which is relevant to the
subject matter of any such controversy even if such material might also be
relevant to an issue or issues not subject to arbitration hereunder. A
stenographic record shall be made of any arbitration hearing.
Arbitration may not be utilized and the arbitrators selected in
accordance with this Article shall not possess the authority or power to
alter, amend or modify any of the terms or conditions or charges set forth
in this AGREEMENT, and further, the arbitrators may not enter any award
which alters, amends or modifies such terms, conditions or charges in any
form or manner.
ARTICLE XXX
SPECIFIC PERFORMANCE
Without regard to the requirements or provisions of Article XXIX and
Article XXVIII, in addition to any of the rights and/or remedies referred
to in this AGREEMENT, either party shall have the right to institute an
action against the other party in a
87
court of equity in the State of New Jersey or at the FERC to obtain
specific performance by such other party of any of such other party's
obligations under this AGREEMENT.
ARTICLE XXXI
MODIFICATIONS
The terms and conditions under which SERVICE shall be provided, and
the charges applicable thereto, are as herein set forth. This AGREEMENT is
subject to modification from time to time, by mutual agreement of the
parties, reduced to writing and signed by both parties.
Either party shall have the right, from time to time, without
limitation or reservation, through filings with the FERC or any successor
agency, to request authorization to change the charges provided for in
Article X of this AGREEMENT; provided however, PSE&G's right to file for
authorization for a change in the charges shall be limited to filings to
modify the transmission service charge to reflect change sin the
transmission related costs in PSE&G's most recent approved rates then in
effect. Any party intending to file with FERC under this paragraph shall
give the other party written notice of such intent as well as a copy of the
proposed filing at least fifteen (15) days prior to such filing. If
requested, the party intending to make such filing will meet with the other
party to discuss the content of such filing.
88
However, in the event the obligations of PSE&G under this AGREEMENT
are adversely affected in a material way at any time during any term of
this AGREEMENT as a result of any governmental, legislative and/or
regulatory action(s), which specifically deals with this type of
transaction, the SERVICE under this AGREEMENT and/or the terms and
conditions thereof, PSE&G shall have the right to make a filing with the
FERC to request authority to alter, amend or change any charge or term or
condition of this AGREEMENT, other than the Term as specified in Article
VIII, which PSE&G asserts has been affected by such action(s).
Any party shall have the right to oppose any filing made by the other
party under this Article to the extent that such other party is legally
permitted to do so.
ARTICLE XXXII
ASSIGNMENT/TRANSFER
O'BRIEN may and is expressly permitted at any time and from time to
time during the term of this AGREEMENT, to assign its rights in this
AGREEMENT to FINANCIER. PSE&G shall, at O'BRIEN's request, execute a
Consent to Assignment provided that the terms and conditions of same are
acceptable to PSE&G and, in connection with any such request, O'BRIEN
submits to PSE&G for review any relevant documents requested by PSE&G,
which documents shall be treated by PSE&G as confidential, and not
disclosed to any third-party without the written consent of
89
O'BRIEN. Upon written notice to PSE&G, O'BRIEN may transfer its rights and
obligation sunder this AGREEMENT to any entity controlling, controlled by
or under common control with O'BRIEN. Except as otherwise provided herein
with respect to FINANCIER or any entity controlling, controlled by or under
common control with O'BRIEN, O'BRIEN may not assign its rights and/or
transfer its rights and obligations in this AGREEMENT without the prior
written consent of PSE&G, which consent shall not be unreasonably withheld.
Nothing contained herein shall prevent O'BRIEN from pledging or mortgaging
all or any part of the property of the PROJECT in connection with financing
the PROJECT.
Except with respect to any entity controlling, controlled by or under
common control with O'BRIEN, no assignee, transferee, pledgee or mortgagee
and/or any person designated by such assignee, transferee, pledgee or
mortgagee may operate the PROJECT, pursuant to any rights such party may
have under any mortgage, assignment, transfer, or security agreement,
unless such entity or person has been approved and authorized by PSE&G to
operate the PROJECT, and in connection with seeking to obtain such approval
and authorization, agrees to be bound by, subject to and to comply with the
terms and conditions of this AGREEMENT while operating the PROJECT. PSE&G
shall not unreasonably delay or withhold any such approval or
authorization.
PSE&G may, on notice to O'BRIEN, assign and transfer its rights and
obligations under this AGREEMENT to any entity
90
controlling, controlled by or under common control with PSE&G.
Additionally, PSE&G may, on notice to and with the approval of O'BRIEN,
assign its rights and/or transfer its rights and obligations under this
AGREEMENT. O'BRIEN shall not unreasonably delay or withhold any approval
of an assignment or assignment/transfer by PSE&G provided that the assignee
or assignee/transferee agrees to be bound by, subject to and to comply with
the terms and conditions of this AGREEMENT.
ARTICLE XXXIII
CURE BY FINANCIER
Within thirty (30) days of execution of this AGREEMENT, O'BRIEN shall
furnish to PSE&G a list containing the names and addresses of the
FINANCIERS O'BRIEN will or intends to utilize in connection with placing
the COGENERATION FACILITY into COMMERCIAL OPERATION. During any term of
this AGREEMENT, O'BRIEN shall update the list as changes are made thereto.
For so long as O'BRIEN shall have outstanding and unpaid any financing
liabilities, PSE&G agrees to promptly furnish to all FINANCIERS, then known
to PSE&G, a copy of any Notice 3 of Cancellation, Notice of Nonperformance,
Notice of Suspension, Notice of Breach, Demand for Arbitration or Notice of
Termination given to O'BRIEN. Additionally, PSE&G shall not terminate this
AGREEMENT unless any written notice of such termination or breach, as the
case may be, and the reasons therefor have been given to and received by
each FINANCIER then
91
known to PSE&G thirty (30) days prior to the effective date of the
termination. PSE&G shall not terminate this AGREEMENT if, after notice
thereof, and prior to any effective date of termination FINANCIER has:
(i) cured the condition precipitating the notice of Breach under
Article XXVIII or Notice of Termination under Article XXVII; or
(ii) if the condition precipitating such Notice of Breach or such
Notice of Termination is not capable of being cured prior to the date
of termination, commenced in a diligent manner to cure the condition
precipitating the Notice of Breach or Notice of Termination and for so
long as the FINANCIER diligently continues such efforts; or
(iii) if the condition precipitating the Notice of Breach or
Notice of Termination is not capable of being cured prior to the date
of termination, caused the initiation of and is diligently prosecuting
efforts to gain possession of the PROJECT and for so long as the
FINANCIER diligently continues such efforts.
92
As indicated herein, in the event the condition precipitating the Notice of
Breach or Notice of Termination is not capable of being cured prior to the
date of termination, PSE&G shall not terminate this AGREEMENT where
FINANCIER is diligently prosecuting efforts to cure the condition
precipitating the Notice of Termination or Notice of Breach or to gain
possession of the PROJECT, provided however, in the event the FINANCIER
does not so cure or gain possession of the PROJECT within ninety (90) days
of the date of the notice PSE&G served on FINANCIER, and FINANCIER intends
to continue its efforts, FINANCIER shall be obligated thereafter to
commence payment of the applicable monthly demand charge specified in
Article X.
In the event FINANCIER gains possession of the PROJECT, FINANCIER
shall promptly designate a person to operate the PROJECT. The name and
credentials of the person designated shall be promptly submitted thereafter
to and such person so designated must be approved and authorized by PSE&G
to operate the PROJECT. Any approval of the person so designated shall not
be unreasonably delayed or withheld by PSE&G. In the event PSE&G approves
the person so designated, PSE&G shall not be obligated to give
authorization to the person so designated to actually operate the PROJECT
unless and until the person so designated agrees in writing to be bound by,
subject to and to comply with the terms and conditions of this AGREEMENT
for the period during which the person so designated intends to operate the
PROJECT. Upon execution of the aforesaid instrument, the
93
person so designated shall thereafter, inter alia, be responsible for and
commence the payment of the charges set forth in Article X. However,
FINANCIER, and the person so designated, shall have no responsibility
whatsoever for any obligation of O'BRIEN incurred prior to the date on
which FINANCIER takes possession of the PROJECT.
In the event of a foreclosure and a resultant sale or transfer of the
PROJECT to a new entity, any obligation of PSE&G to perform its obligations
under the AGREEMENT shall be conditioned upon: (i) the approval of PSE&G
of any new operator of the PROJECT, which approval shall not be
unreasonably withheld or delayed; (ii) agreement by the new entity to
comply with the rules and regulations of the NJBPU, the FERC, and any other
agency having jurisdiction over the PROJECT relative to the sale or
transfer of same; (iii) receipt by such new entity of any license(s),
permit(s) and approval(s) as may be required in connection with the sale or
transfer of the PROJECT; and (iv) the execution and delivery of a written
assumption agreement, in form satisfactory to PSE&G, pursuant to which the
new entity and/or operator agree to assume all obligations under and agree
therein to be bound by, subject to and to comply with the terms and
conditions of this AGREEMENT.
Notwithstanding any rights which FINANCIER may have, in the event
PSE&G interrupts SERVICE to the PROJECT in connection with the occurrence
of the condition or event which precipitated the Notice of Termination or
Notice of Breach, PSE&G shall not be
94
obligated to resume SERVICE to the PROJECT unless the condition or event or
cause thereof which precipitated the Notice of Termination or Notice of
Breach is or has been remedied in accordance with the provisions of this
AGREEMENT. Prior to PSE&G being obligated to resume SERVICE to the
PROJECT, PSE&G shall have the right to require FINANCIER to provide
adequate assurance to PSE&G that the condition or event precipitating the
Notice of Termination or Notice of Breach will not reoccur.
ARTICLE XXXIV
FINANCIER SECURITY AGREEMENTS
As indicated in Article XXXII, O'BRIEN may assign any rights in this
AGREEMENT to FINANCIER and may pledge or mortgage any or all of the
property of the PROJECT. In the event FINANCIER alleges that a breach or
an event of default has occurred under any operative agreement between
FINANCIER and O'BRIEN and FINANCIER thereafter elects to exercise any
right(s) under any applicable security, mortgage, assignment or other
agreement then in effect between FINANCIER and O'BRIEN, it is agreed that,
upon receipt of such notice from FINANCIER, PSE&G shall provide notice to
O'BRIEN and thereafter PSE&G shall accept the instructions of FINANCIER in
accordance with the terms of any applicable security, mortgage or
assignment agreement. In such event, O'BRIEN shall have no claim against
PSE&G for, and hereby agrees to release PSE&G from, any liability for any
cost, expense, loss, damage or liability
95
O'BRIEN may incur or sustain arising out of. Relating to or resulting from
any action(s) which PSE&G determines it is obligated to take pursuant to
any operative agreement between O'BRIEN and FINANCIER.
ARTICLE XXXV
DETERMINATION OF PSE&G COSTS
The costs for any work done or service performed by PSE&G personnel,
as required by this AGREEMENT, which costs are to be billed to and to be
paid by O'BRIEN pursuant to this AGREEMENT shall be determined by PSE&G in
accordance with PSE&G's "Procedures for Work Done at the Expense of
Others," then in effect.
ARTICLE XXXVI
STANDARD FOR PERFORMANCE
Unless otherwise expressly provided for in this AGREEMENT, PSE&G shall
undertake and discharge any obligation it has in this AGREEMENT to, inter
alia, design, construct, install, separate, maintain, repair, replace,
reinforce, rearrange, purchase, select, examine, review, inspect or accept
any facility or equipment, pursuant to and in accordance with any
applicable PSE&G practice(s), standard(s) and/or procedure(s). PSE&G shall
use the same care and diligence in controlling the costs of such
activity(ies) O'BRIEN is required to make payment for under this AGREEMENT
as if the work were being performed by
96
and for PSE&G's own account in accordance with PSE&G's practices, standards
and/or procedures.
ARTICLE XXXVII
STANDBY ELECTRIC SERVICE
In the event O'BRIEN requires standby electric service to the
COGENERATION FACILITY same shall be furnished by PSE&G pursuant to an
applicable tariff on file with the NJBPU. In such event, pursuant to and
in accordance with the provisions of The Order of the NJBPU in "In the
Matter of the Consideration and Determination of Cogeneration and Small
Power production Standards Pursuant to the Public Utility Regulatory
Policies Act of 1978, Docket No. 8010-687," PSE&G will establish a credit
(Credit) for O'BRIEN in an amount determined in accordance with the
following:
Estimated Cost of Standby Facility X Actual Cost for = Credit
Estimated Cost for INTERCONNECTION INTERCONNECTION
PSE&G estimates the Estimated Cost of Standby Facility will be eight
thousand three hundred and thirty dollars ($8,330).
This Credit may be refunded to O'BRIEN without interest, in whole or
in part, in annual payments over the ten (10) year period following the
DATE OF COMMERCIAL OPERATION. The amount of refund for each annual period
will be calculated as follows:
Total of payments made for electric
service supplied by PSE&G under
the applicable prevailing rate X 10% = Amount of Refund
schedule during the preceding
annual period
97
The total refund during such ten (10) year period shall not exceed the
amount of the Credit determined pursuant to and in accordance with the
provisions of this paragraph. If after such ten (10) year period O'BRIEN
has not received, based on its annual payment for electric service, a total
refund of the Credit O'BRIEN shall forfeit any further entitlement to the
balance of the Credit remaining at the end of such ten (10) year period.
ARTICLE XXXVIII
ENTIRE AGREEMENT
This AGREEMENT constitutes the entire agreement and understanding of
the parties relating to the subject matter of this AGREEMENT and each party
confirms that it is not relying upon any representation, assumption,
understanding or warranty, except as specifically set forth herein.
ARTICLE XXXIX
SUCCESSORS AND ASSIGNS
This AGREEMENT shall be binding upon and shall inure to the benefit
of, or may be performed by, the successors and assigns of the parties,
except that no assignment, pledge or other transfer of this AGREEMENT by
any party shall operate to release the assignor, pledgor or transferor from
any of its obligations under this AGREEMENT, unless consent to the release
is given in writing by the other party, which consent shall not be
98
unreasonably delayed or withheld, or unless such transfer is incident to a
reorganization or merger or consolidation with or transfer of all or
substantially all of the assets of the transferor to another person or
business entity which person or entity shall, as part of such succession,
assume all the obligations of the transferor under this AGREEMENT.
ARTICLE XL
CHOICE OF LAW
This AGREEMENT shall be interpreted, construed, governed by, performed
and enforced in accordance with the laws of the State of New Jersey and
federal law, where applicable. All questions concerning the validity,
construction and enforceability of the AGREEMENT as well as questions
concerning the sufficiency of other aspects of performance under the
AGREEMENT shall be determined under the laws of the State of New Jersey.
ARTICLE XLI
CAPTIONS
The subject headings of the Articles of this AGREEMENT are inserted
solely for the purpose of convenient reference and are not intended to, nor
shall same affect the meaning of any provision of this AGREEMENT.
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ARTICLE XLII
COUNTERPARTS
This AGREEMENT may be executed in counterparts. Each shall be deemed
an original but together shall constitute one and the same instrument.
ARTICLE XLIII
SURVIVAL OF OBLIGATIONS
Termination of this AGREEMENT for any reason shall not relieve PSE&G
or O'BRIEN of any obligation accruing or arising prior to such termination.
ARTICLE XLIV
FURTHER ASSURANCES
After execution of this AGREEMENT, O'BRIEN shall, upon execution of
the Site Lease, immediately forward a copy of said Site Lease to PSE&G.
Additionally, if either Party reasonably determines or is reasonably
advised that any further instruments or any other things are necessary to
carry out the terms of this AGREEMENT, the other Party shall execute and/or
deliver all such instruments and assurances and do all things reasonably
necessary and proper to carry out the terms of this AGREEMENT.
100
ARTICLE XLV
MISCELLANEOUS
In case of conflict between any provisions hereof and any applicable
law, regulation or regulatory order, such applicable law, regulation or
regulatory order shall govern.
All terms defined in this AGREEMENT shall have the same defined
meanings when used in any notice, correspondence, report or other document
made or delivered pursuant to or in connection with this AGREEMENT, unless
the context shall otherwise require.
Each reference herein to O'BRIEN and PSE&G shall be deemed to include
their respective successors and assigns.
All of the covenants, warranties, undertakings and agreements of
O'BRIEN and PSE&G shall bind the respective parties, their successors and
assigns.
ARTICLE XLVI
NOTICE OF AMENDMENTS TO PJM OR MID-ATLANTIC AGREEMENTS
In the event that application is made for approval of any amendment to
the PJM Agreement, the Mid-Atlantic Area Coordination Group Agreement, or
any other agreement to which PSE&G is a party, which amendment, if allowed
to take affect, would impair the SERVICE being provided to O'BRIEN under
this AGREEMENT, PSE&G shall provide timely notice to O'BRIEN of such
application.
101
ARTICLE XLVII
RESERVATIONS
No party shall be prejudiced or bound, except as otherwise
specifically provided herein, nor shall any party be deemed to have
approved, accepted, agreed or consented to any concept, theory or principle
underlying or supposed to underlie any of the matters contained herein,
including but not limited to any concept, theory, principle or method used
to calculate the rates provided for herein.
All parties further understand and agree that the provisions of this
AGREEMENT relate only to the specific matter referred to herein and no
party or person waives any claim or right which it may otherwise have with
respect to any matter not expressly provided for herein.
ARTICLE XLVIII
NOTICES
Any notice, request, demand, or statement which either PSE&G or
O'BRIEN may desire to give to the other shall be in writing and shall be
considered as duly delivered when mailed by certified mail addressed to
said party as follows:
(a) If to PUBLIC SERVICE ELECTRIC AND GAS COMPANY:
Public Service Electric and Gas Company
80 Park Plaza - Mail Code T14A
P.O. Box 570
Newark, New Jersey 07101-0570
ATTENTION: GENERAL MANAGER
SYSTEM PLANNING AND INTERCONNECTIONS
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(b) If to O'BRIEN ENERGY SYSTEMS, INC.:
O'Brien Energy Systems, Inc.
225 South Eighth Street
Philadelphia, Pennsylvania 19106
ATTENTION: JEFFERY D. BARNES
Routine communications, including monthly BILLING STATEMENTS and
payments, shall be considered as duly delivered when mailed by either
certified or ordinary mail:
(a) If to PUBLIC SERVICE ELECTRIC AND GAS COMPANY:
Public Service Electric and Gas Company
80 Park Plaza - Mail Code T14A
P.O. Box 570
Newark, New Jersey 07101-0570
ATTENTION: GENERAL MANAGER
SYSTEM PLANNING AND INTERCONNECTIONS
(b) If to O'BRIEN ENERGY SYSTEMS, INC.:
O'Brien Energy Systems, Inc.
225 South Eighth Street
Philadelphia, Pennsylvania 19106
ATTENTION: JEFFERY D. BARNES
IN WITNESS WHEREOF, this AGREEMENT has been executed and delivered as
of the date and year first above written.
O'BRIEN ENERGY SYSTEMS, INC.
/s/ Jeffrey Barnes
Jeffery U. Barnes
Executive Vice President
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
/s/ S. A. Mallard
Stephen A. Mallard
Senior Vice President
26-KV INTERCONNECTION
O'BRIEN ENERGY SYSTEMS
COGENERATION PROJECT
EXHIBIT 1
ESSEX
SWITCHING O'BRIEN ENERGY SYSTEMS
STATION COGENERATION PROJECT
(Drawing)
EXHIBIT 2 (Pg. 1 of 4)
INTERCONNECTION, PROTECTION AND SAFETY REQUIREMENTS
AND STANDARDS FOR CUSTOMER-OWNED GENERATING FACILITIES
The following requirements and standards for connection of customer-owned
generating facilities to the utility system, shall be met to assure the
integrity and safety operation of the utility system with no deterioration
to the quality and reliability of service to other customers.
1. All small power producers or cogenerators shall make application to
the utility for approval to interconnect their facilities with the
utility system.
2. The utility may require the following as part of the application.
A. Plans and specifications of the proposed installation.
B. Single line diagram and details of the proposed protection
schemes.
C. Instruction manuals for all protective components.
D. Component specifications and internal wiring diagrams of
protective components if not provided in instruction manuals.
E. All protective equipment's ratings if not provided in instruction
manuals.
F. Generator data required to analyze fault contributions and load
current flows including, but not limited to, equivalent
impedances and time constants.
3. The utility shall within thirty (30) days from the receipt of all
required data from the applicant either approve or reject the
application for connection to the utility system. Connection to the
utility system will be permitted only upon obtaining the formal
approval of the utility. The utility may require the execution of a
formal application form and/or interconnection agreement by the
customer.
EXHIBIT 2 (Pg. 2 of 4)
4. The installation of the customer's facilities must be in compliance
with the requirements of the National Electrical Code and all
applicable local, state and federal codes or regulations. The
installation shall be done in a workman-like manner, and shall meet or
exceed industry acceptance standards of good practice. The provisions
of the National Electrical Safety Code and the standards of the
Institute of Electrical and Electronics Engineers, National Electrical
Manufacturers Association and the American National Standards
Institute shall be observed to the extent that they are applicable.
Prior to connection, the utility must be provided with evidence of the
satisfactory electrical inspection by an authorized inspection agency.
5. The customer's facility shall have the following characteristics:
A. Output voltage shall be compatible and consistent with the
utility system to which the customer's facility is to be
connected.
B. The customer's facility shall produce 60 Hertz sinusoidal output
compatible with the utility system to which the facility is to be
connected.
C. The customer's facility must provide and maintain automatic
synchronization with the utility system to which it is to be
connected.
D. The break point between customers' facilities producing single-
phase or three-phase output shall be in accordance with existing
utility motor specifications or as otherwise specified by the
utility.
E. At no time shall the operation of the customer's facility result
in excessive harmonic distortion of the utility waveform. Total
harmonic distortion greater than 5% shall be deemed excessive and
shall result in disconnection of the facility from the utility
system.
F. The installation of power factor correction (PFC) capacitors on
the customer's facility may be required under conditions to be
determined by the utility when necessary to assure the quality
and reliability of service to other customers. The cost of such
capacitors shall be borne by the customer.
EXHIBIT 2 (Pg. 3 of 4)
G. The cost of supplying and installing any special facilities or
devices occasioned by the customer's installation which the
utility may deem necessary on its system shall be borne by the
customer.
6. Automatic disconnecting devices with appropriate control devices which
will isolate the customer's facility from the utility system within a
time period specified by the utility for, but not necessarily limited
to, the following conditions, shall be provided by the customer:
A. A fault on the customer's equipment.
B. A fault on the utility system.
C. A deenergized utility line to which the customer is
connected.
D. An abnormal operating voltage or frequency.
E. Failure of automatic synchronization with the utility
system.
F. Loss of a phase or improper phase sequence.
G. Total harmonic content in excess of 5%
H. Abnormal power factor.
The devices shall be so designed and constructed to prevent reconnection of
the customer's facility to the utility system until the cause of
disconnection is corrected.
7. The utility shall reserve the right to specify settings of all
isolation devices which are part of the customer's system.
8. The utility may require initial inspection and testing as well as
subsequent inspection and testing of the customer's isolation and
fault protection systems at the customer's expense. Maintenance of
these systems must be performed and documented by the customer at
specified intervals to the satisfaction of the utility. The utility
shall reserve the right to disconnect the customer from the utility
system for failure to comply with these inspections, testing and
maintenance requirement.
EXHIBIT 2 (Pg. 4 of 4)
9. The customer is solely responsible for providing adequate protection
for the equipment located on the customer's side of the
interconnection system. This protection shall include, but not be
limited to, negative phase sequence voltage on three-phase systems.
10. The customer shall provide a utility controlled disconnecting device
on the utility side of the interconnection system. The utility may
require that this device accept a utility provided padlock. The
utility may also require manual operation of the device when required.
11. The customer shall agree to grant access to the utility's authorized
representative during any reasonable hours to install, inspect and
maintain the utility's metering equipment.
12. The customer must satisfy, and shall be subject to, all terms and
conditions of the utility's tariff for electric services.
13. No wind generator, tower structure or device shall be installed at a
location where, in the event of failure, it can fall in such a manner
as to contact, land upon, or interfere with any utility lines or
equipment.
14. The customer shall maintain the generator and its associated
structure, wiring and devices in a safe and proper operating condition
so that the installation continues to meet all the requirements
contained herein.
15. By installation and connection of a generator and/or appurtenant
facilities, devices and equipment with the utility system, the
customer agrees to indemnify and hold the utility harmless from any
and all liability or claim therefore for damage to property, including
property of the utility and injury or death to persons resulting from
or caused by the presence, operation, maintenance of removal of such
customer's installation.
O'BRIEN (NEWARK) COGENERATION, INC.
MONTHLY OPERATING CONDITIONS - 1993
(CONT'D)
2/21/94
JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC YEAR
OPERATING INCOME 0.0 19.8 368.1 624.5 691.9 741.5 2445.8
% HOURS ON GAS 100.0% 100.0% 100.0% 100.0% 100.0% 84.0% 0.951
HOURS ON GAS 0.0 19.8 368.1 624.5 691.9 622.9 2327.2
MMBUT/HR 0.0 1279.0 568.6 552.3 526.5 539.7 550.0
MMBUT 0 25330 209310 344926 364265 336194 1280025
GAS PRICE($ PER MMBTU) 0 2.917 3.091 2.898 3.010 3.152 3.048
GAS COST 0 73887 653103 1005770 1102501 1065793 3901055
HOURS ON EXTENDED SERVICE 0.0 0.0 0.0 0.0 0.0 118.6 118.6
MMBTU/HR 0.0 0.0 0.0 0.0 0.0 539.7 539.7
MMBTU 0 0 0 0 0 64030 64030
PRICE (PER MMBTU) 0.000 0.000 0.000 0.000 0.000 7.400 7.400
EXTENDED GAS SERVICE COST 0 0 0 0 0 473821 473821
HOURS ON KEROSENE 0.0 0.0 0.0 0.0 0.0 0.0 0.0
MMBTU/HR 0.0 0.0 0.0 0.0 0.0 0.0
MMBTU 0 0 0 0 0 0 0.0
PRICE ($ PER MMBTU) 0.000 0.000 0.000 0.000 0.000 0.000 0.000
KEROSENE COST 0 0 0 0 0 0 0
GAS COST 0 73887 653103 1005770 1102501 1065793 3901055
HEDGING (GAIN)/LOSS 0 0 0 0 0 0 0
EXTENDED GAS SERVICE COST 0 0 0 0 0 473821 473821
KEROSENE 0 0 0 0 0 0 0
AUX BOILER FUEL 0 49423 32691 10128 0 0
TOTAL FUEL COST 0 123310 685794 1015899 1102501 1539614 4467118
PERM FURNISHINGS AND EQUIP Initial Mar-94 Apr-94 May-94 Jun-94 TOTAL
Offices - Plant Manager/Asst. PM Note 1 6,000 6,000
Admin Asst. - Reception Area Note 1 3,000 3,000
Conference Room Note 1 3,000 3,000
Other Furnish Note 1 1,500 1,500
Technical Library 15,000 15,000
Typewriter Note 1 300 300
Facsimile Machine Note 1 1,500 1,500
Photocopier Note 1 2,600 2,600
(4) Computers/cabling/etc. (486 Note 1 9,500 9,500
systems)
Telephone System (if not in EPC Note 1 0
scope)
Audio/Visual Training Equip. 3,500 3,500
(4) Sets of Computer Software 2,200 2,200
Preventative Maintenance Software 9,000 9,000
(2) Printers 1,800 1,800
Drawing & Display Boards 600 600
TOTAL PERM FURN AND EQUIP 32,100 27,400 0 0 0 59,500
TOTAL MATERIALS AND SERVICES COSTS
36,200 107,400 50,075 24,900 8,550 229,125
HANDLING CHARGE 0% 0 0 0 0 0 0
OPERATOR'S FEE 0 0 0 0 0 0
TOTAL MOBILIZATION COST/MONTH
$96,200 $144,100 $85,175 $42,900 $25,550 $393,925
Notes: 1) If Items do not exist or are not in a reasonably
satisfactory condition as determined by the Parties
2) Items to be shared between Newark and Parlin included in
Parlin Mobilization schedule)