Execution Copy
MODIFICATION NO. 15
TO
INTER-COMPANY POWER AGREEMENT
DATED JULY 10, 1953
AMONG
OHIO VALLEY ELECTRIC CORPORATION,
ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.
(successor to West Penn Power Company
and The Potomac Edison Company)
APPALACHIAN POWER COMPANY (formerly
APPALACHIAN ELECTRIC POWER COMPANY),
THE CINCINNATI GAS & ELECTRIC COMPANY,
COLUMBUS SOUTHERN POWER COMPANY (formerly
COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY),
THE DAYTON POWER AND LIGHT COMPANY,
FIRSTENERGY GENERATION CORP. (successor to OHIO
EDISON COMPANY, PENNSYLVANIA POWER COMPANY and
THE TOLEDO EDISON COMPANY)
INDIANA MICHIGAN POWER COMPANY (formerly
INDIANA & MICHIGAN ELECTRIC COMPANY),
KENTUCKY UTILITIES COMPANY,
LOUISVILLE GAS AND ELECTRIC COMPANY
MONONGAHELA POWER COMPANY,
OHIO POWER COMPANY (formerly THE OHIO
POWER COMPANY), and
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY.
_____________
Dated as of April 30, 2004
MODIFICATION NO. 15
TO
INTER-COMPANY POWER AGREEMENT
THIS AGREEMENT dated as of the 30th day of April, 2004, by
and among OHIO VALLEY ELECTRIC CORPORATION (herein called "OVEC"
or "Corporation"), ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.
(successor to WEST PENN POWER COMPANY and THE POTOMAC EDISON
COMPANY), APPALACHIAN POWER COMPANY ("Appalachian"), THE
CINCINNATI GAS & ELECTRIC COMPANY, COLUMBUS SOUTHERN POWER
COMPANY (formerly COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY)
("Columbus"), THE DAYTON POWER AND LIGHT COMPANY, FIRSTENERGY
GENERATION CORP. (successor to OHIO EDISON COMPANY, PENNSYLVANIA
POWER COMPANY and THE TOLEDO EDISON COMPANY), INDIANA MICHIGAN
POWER COMPANY (formerly INDIANA & MICHIGAN ELECTRIC COMPANY)
("Indiana"), KENTUCKY UTILITIES COMPANY, LOUISVILLE GAS AND
ELECTRIC COMPANY, MONONGAHELA POWER COMPANY, OHIO POWER COMPANY
("Ohio Power"), and SOUTHERN INDIANA GAS AND ELECTRIC COMPANY,
all of the foregoing, other than OVEC, being herein sometimes
collectively referred to as the Sponsoring Companies and
individually as a Sponsoring Company.
W I T N E S S E T H T H A T
WHEREAS, the parties hereto have entered into a
contract, herein called the "Inter-Company Power Agreement,"
dated July 10, 1953, governing, among other things, the rights of
the Sponsoring Companies to receive Surplus Power and Surplus
Energy as may be available at the OVEC's generating stations and
the obligations of the Sponsoring Companies to pay therefor; and
WHEREAS, the Inter-Company Power Agreement has
heretofore been amended by Modification No. 1, dated as of June
3, 1966, Modification No. 2 dated as of January 7, 1967,
Modification No. 3, dated as of November 15, 1967, Modification
No. 4, dated as of November 5, 1975, Modification No. 5, dated as
of September 1, 1979, Modification No. 6, dated as of August 1,
1981, Modification No. 7, dated as of January 15, 1992,
Modification No. 8, dated as of January 19, 1994, Modification
No. 9, dated as of August 17, 1995, Modification No. 10, dated as
of January 1, 1998, Modification No. 11, dated as of April 1,
1999, Modification No. 12, dated as of November 1, 1999,
Modification No. 13, dated as of May 24, 2000, and Modification
No. 14, dated as of April 1, 2001 (said contract so amended and
as modified and amended by this Modification No. 15 being herein
and therein sometimes called the "Agreement"); and
WHEREAS, OVEC and the Sponsoring Companies desire to
amend the Agreement to permit the Sponsoring Companies, under
specified circumstances, to assign their rights, title or
interests in or obligations under this Agreement to other
parties; and
WHEREAS, OVEC and the Sponsoring Companies desire to
enter into this Modification No. 15 as more particularly
hereinafter provided;
NOW, THEREFORE, the parties hereto agree with each
other as follows:
1. Delete subsection 1.0126 and substitute therefor
the following:
1.0126 "Effective Date" means April 30, 2004, or such
later date as required by the Federal Energy Regulatory
Commission (or any other regulatory agency or authority with
jurisdiction) for the effectiveness of Modification No. 15,
including the expiration of any required waiting periods and
the satisfaction of any conditions under any required
regulatory acceptance or approval.
2. Insert the following new subsections 1.0127
through 1.0132:
1.0127 "Affiliate" means, with respect to a specified
person, any other person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is
under common control with, such specified person; provided
that "control" for these purposes means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person,
whether through the ownership of voting securities, by
contract or otherwise.
1.0128 "Permitted Assignee" means a person that is (a)
a Sponsoring Company or its Affiliate whose long-term
unsecured non-credit enhanced indebtedness, as of the date
of such assignment, has a Standard & Poor's credit rating of
at least BBB- and a Moody's Investors Service, Inc. credit
rating of at least Baa3 (provided that, if the proposed
assignee's long-term unsecured non-credit enhanced
indebtedness is not currently rated by one of Standard &
Poor's or Moody, such assignee's long-term unsecured non-
credit enhanced indebtedness, as of the date of such
assignment, must have either a Standard & Poor's credit
rating of at least BBB- or a Moody's Investors Service, Inc.
credit rating of at least Baa3); or (b) a Sponsoring Company
or its Affiliate that does not meet the criteria in
subsection (a) above, if the Sponsoring Company or its
Affiliate that is assigning its rights, title and interests
in, and obligations under, this Agreement agrees in writing
(in form and substance satisfactory to Corporation) to
remain obligated to satisfy all of the obligations related
to the assigned rights, title and interests to the extent
such obligations are not satisfied by the assignee of such
rights, title and interests; provided that, in no event
shall a person be deemed a "Permitted Assignee" if counsel
for the Corporation reasonably determines that the
assignment of the rights, title or interests in, or
obligations under, this Agreement to such person could cause
a termination, default, loss or payment obligation under any
security issued, or agreement entered into, by the
Corporation prior to such transfer.
1.0129 "Election Period" has the meaning set forth in
Section 12.193(a) hereof.
1.0130 "Offer Notice" means the notice required to be
given to the other Sponsoring Companies by a Transferring
Sponsor offering to sell all or a portion of such
Transferring Sponsor's rights, title and interests in, and
obligations under this Agreement. At a minimum, the Offer
Notice shall be in writing and shall contain (i) the rights,
title and interests in, and obligations under this Agreement
that the Transferring Sponsor proposes to Transfer; and (ii)
the cash purchase price and any other material terms and
conditions of such proposed transfer. An Offer Notice may
not contain terms or conditions requiring the purchase of
any non-OVEC interests.
1.0131 "Third Party" means any person other than a
Sponsoring Company or its Affiliate.
1.0132 "Transferring Sponsor" has the meaning set
forth in Section 12.193(a) hereof.
3. Delete Section 12.19 and substitute therefor
the following:
12.19. Successors and Assigns. This Agreement
may be executed in any number of counterparts, all of which
shall constitute but one and the same document.
12.191. This Agreement shall inure to the
benefit of and be binding upon the parties hereto
and their respective successors and assigns, but a
party to this Agreement may not assign this
Agreement or any of its rights, title or interests
in or obligations (including without limitation
the assumption of debt obligations) under this
Agreement, except to a successor to all or
substantially all the properties and assets of
such party or as provided in Section 12.192 or
12.193, without the written consent of all the
other parties hereto.
12.192. Notwithstanding the provisions of
Section 12.191, any Sponsoring Company shall be
permitted to, upon thirty (30) days notice to the
Corporation and each other Sponsoring Company,
without any further action by the Corporation or
the other Sponsoring Companies, assign all or part
of its rights, title and interests in, and
obligations under this Agreement to a Permitted
Assignee, provided that, the assignee and assignor
of the rights, title and interests in, and
obligations under, this Agreement have executed an
assignment agreement in form and substance
acceptable to the Corporation in its reasonable
discretion (including, without limitation, the
agreement by the Sponsoring Company assigning such
rights, title and interests in, and obligations
under, this Agreement to reimburse the Corporation
and the other Sponsoring Companies for any fees or
expenses required under any security issued, or
agreement entered into, by the Corporation as a
result of such assignment, including without
limitation any consent fee or additional financing
costs to the Corporation under the Corporation's
then-existing securities or agreements resulting
from such assignment).
12.193. Notwithstanding the provisions of
Section 12.191, any Sponsoring Company shall be
permitted to, subject to compliance with all of
the requirements of this Section 12.193, assign
all or part of its rights, title and interests in,
and obligations under this Agreement to a Third
Party without any further action by the
Corporation or the other Sponsoring Companies.
(a) A Sponsoring Company (the
"Transferring Sponsor") that desires to
assign all or part of its rights, title and
interests in, and obligations under this
Agreement to a Third Party shall deliver an
Offer Notice to the Corporation and each
other Sponsoring Company. The Offer Notice
shall be deemed to be an irrevocable offer of
the subject rights, title and interests in,
and obligations under this Agreement to each
of the other Sponsoring Companies that is not
an Affiliate of the Transferring Sponsor,
which offer must be held open for no less
than thirty (30) days from the date of the
Offer Notice (the "Election Period").
(b) The Sponsoring Companies (other than
the Transferring Sponsor and its Affiliates)
shall first have the right, but not the
obligation, to purchase all of the rights,
title and interests in, and obligations under
this Agreement described in the Offer Notice
at the price and on the terms specified
therein by delivering written notice of such
election to the Transferring Sponsor and the
Corporation within the Election Period;
provided that, irrespective of the terms and
conditions of the Offer Notice, a Sponsoring
Company may condition its election to
purchase the interests described in the Offer
Notice on the receipt of approval or consent
from such Sponsoring Company's Board of
Directors; provided further that, written
notice of such conditional election must be
delivered to the Transferring Sponsor and the
Corporation within the Election Period and
such conditional election shall be deemed
withdrawn (as if it had never been provided)
unless the Sponsoring Company that delivered
such conditional election subsequently
delivers written notice to the Transferring
Sponsor and the Corporation on or before the
tenth (10th) day after the expiration of the
Election Period that all necessary approval
or consent of such Sponsoring Company's Board
of Directors have been obtained. To the
extent that more than one Sponsoring Company
exercises its right to purchase all of the
rights, title and interests in, and
obligations under this Agreement described in
the Offer Notice in accordance with the
previous sentence, such rights, title and
interests in, and obligations under this
Agreement shall be allotted (successively if
necessary) among the Sponsoring Companies
exercising such right in proportion to their
respective Power Participation Ratios.
(c) Each Sponsoring Company exercising
its right to purchase any rights, title and
interests in, and obligations under this
Agreement pursuant to this Section 12.193 may
choose to have an Affiliate purchase such
rights, title and interests in, and
obligations under this Agreement; provided
that, notwithstanding anything in this
Section 12.193 to the contrary, any
assignment to a Sponsoring Company or its
Affiliate hereunder must comply with the
requirements of Section 12.192.
(d) If one or more Sponsoring Companies
have elected to purchase all of the rights,
title and interests in, and obligations under
this Agreement of the Transferring Sponsor
pursuant to the Offer Notice, the assignment
of such rights, title and interests in, and
obligations under this Agreement shall be
consummated as soon as practical after the
delivery of the election notices, but in any
event no later than fifteen (15) days after
the filing and receipt, as applicable, of all
necessary governmental filings, consents or
other approvals and the expiration of all
applicable waiting periods. At the closing
of the purchase of such rights, title and
interests in, and obligations under this
Agreement from the Transferring Sponsor, the
Transferring Sponsor shall provide
representations and warranties customary for
transactions of this type, including those as
to its title to such securities and that
there are no liens or other encumbrances on
such securities (other than pursuant to this
Agreement) and shall sign such documents as
may reasonably be requested by the
Corporation and the other Sponsoring
Companies. The Sponsoring Companies or their
Affiliates shall only be required to pay cash
for the rights, title and interests in, and
obligations under this Agreement being
assigned by the Transferring Sponsor.
(e) To the extent that the Sponsoring
Companies have not elected to purchase all of
the rights, title and interests in, and
obligations under this Agreement described in
the Offer Notice, the Transferring Sponsor
may, within one-hundred and eighty (180) days
after the later of the expiration of the
Election Period or the deemed withdrawal of a
conditional election by a Sponsoring Company
under Section 12.193(b) hereof (if
applicable), enter into a definitive
agreement to, assign such rights, title and
interests in, and obligations under this
Agreement to a Third Party at a price no less
than 92.5% of the purchase price specified in
the Offer Notice and on other material terms
and conditions no more favorable to the such
Third Party than those specified in the Offer
Notice; provided that such purchases shall be
conditioned upon: (i) such Third Party having
long-term unsecured non-credit enhanced
indebtedness, as of the date of such
assignment, with a Standard & Poor's credit
rating of at least BBB- and a Moody's
Investors Service, Inc. credit rating of at
least Baa3 (provided that, if such Third
Party's long-term unsecured non-credit
enhanced indebtedness is not currently rated
by one of Standard & Poor's or Moody, such
Third Party's long-term unsecured non-credit
enhanced indebtedness, as of the date of such
assignment, must have either a Standard &
Poor's credit rating of at least BBB- or a
Moody's Investors Service, Inc. credit rating
of at least Baa3); (ii) the filing or
receipt, as applicable, of any necessary
governmental filings, consents or other
approvals; (iii) the determination by counsel
for the Corporation that the assignment of
the rights, title or interests in, or
obligations under, this Agreement to such
Third Party would not cause a termination,
default, loss or payment obligation under any
security issued, or agreement entered into,
by the Corporation prior to such transfer;
and (iv) such Third Party executing a
counterpart of this Agreement, and both such
Third Party and the Sponsoring Company which
is assigning its rights, title and interests
in, and obligations under, this Agreement
executing such other documents as may be
reasonably requested by the Corporation
(including, without limitation, an assignment
agreement in form and substance acceptable to
the Corporation in its reasonable discretion
and containing the agreement by such
Sponsoring Company to reimburse the
Corporation and the other Sponsoring
Companies for any fees or expenses required
under any security issued, or agreement
entered into, by the Corporation as a result
of such assignment, including without
limitation any consent fee or additional
financing costs to the Corporation under the
Corporation's then-existing securities or
agreements resulting from such assignment).
In the event that the Sponsoring Company and
a Third Party have not entered into a
definitive agreement to assign the interests
specified in the Offer Notice to such Third
Party within the later of one-hundred and
eighty (180) days after the expiration of the
Election Period or the deemed withdrawal of a
conditional election by a Sponsoring Company
under Section 12.193(b) hereof (if
applicable) for any reason or if either the
price to be paid by such Third Party would be
less than 92.5% of the purchase price
specified in the Offer Notice or the other
material terms of such assignment would be
more favorable to such Third Party than the
terms specified in the Offer Notice, then the
restrictions provided for herein shall again
be effective, and no assignment of any
rights, title and interests in, and
obligations under this Agreement may be made
thereafter without again offering the same to
Sponsoring Companies in accordance with this
Section 12.193.
12.194 Charges for Surplus Energy to
Assignee. With respect to any assignment
permitted under this Section 12.19 hereof
after the Effective Date, charges for Surplus
Energy availed of by any such assignee shall
be based on the calculation applicable under
Section 6.024 hereof subject to the following
changes: (i) if the average cost per Btu of
all fuel consumed by the assignor (or in the
case of any successive assignments, the first
assignor after the Effective Date) in such
assignor's own generating stations for the
next preceding month (calculated as if such
assignor were still a Sponsoring Company)
would be greater than the average cost per
Btu of all fuel consumed by the Corporation
in its own generating stations during the
current billing month, then for purposes of
the calculation in Section 6.024 hereof, the
Corporation shall use the average cost per
Btu of all fuel consumed by such assignor in
its own generating stations for the next
preceding month in calculating the charges
for such assignee; or (ii) if the average
cost per Btu of all fuel consumed by the
assignor (or in the case of any successive
assignments, the first assignor after the
Effective Date) in such assignor's own
generating stations for the next preceding
month (calculated as if such assignor were
still a Sponsoring Company) would be less
than or equal to the average cost per Btu of
all fuel consumed by the Corporation in its
own generating stations during the current
billing month, then (A) the charges for such
assignee for Surplus Energy shall be equal to
an amount obtained by multiplying the billing
kilowatt-hours of Surplus Energy availed of
by such assignee during the current billing
month by the average station heat rate of the
Project Generating Stations for the current
billing month times the average cost per Btu
of all fuel consumed by the Corporation in
its own generating stations during the
current billing month, and (B) the charges
for all Sponsoring Companies (other than any
assignee(s) with charges for Surplus Energy
subject to the calculations in this Section
12.194(ii)) shall be calculated in accordance
with Section 6.024 hereof as if any
assignee(s) with charges for Surplus Energy
subject to the calculations in this Section
12.194(ii) had not availed itself of any
kilowatt-hours of Surplus Energy during the
current billing month and without such
assignee(s) participating in any Power
Participation Ratio share of the charges or
credits applicable to the other Sponsoring
Companies under Sections 6.024(ii) and (iii)
hereof.
12.195 Delivery Point for Third Party
Assignee. Notwithstanding any other provision
of this Agreement to the contrary, with
respect to any assignment permitted under
this Section 12.19 hereof to a Third Party,
as of the date of such assignment, Surplus
Power and Surplus Energy to be delivered
between Corporation and such Third Party
assignee pursuant to this Agreement shall be
delivered at the points, as scheduled by such
assignee, where the transmission facilities
of Corporation interconnect with the
transmission facilities of any Sponsoring
Company (or its successor or predecessor).
4. This Modification No. 15 shall become effective at
12:00 o'clock Midnight on the Effective Date.
5. The Inter-Company Power Agreement, as modified by
Modifications Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and
14 and as hereinbefore provided, is hereby in all respects
confirmed.
6. This Modification No. 15 may be executed in any
number of copies and by the different parties hereto on separate
counterparts, each of which shall be deemed an original but all
of which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Modification No. 15 as of the day and year first written
above.
OHIO VALLEY ELECTRIC CORPORATION
By: /s/ Michael Morris
ALLEGHENY ENERGY SUPPLY COMPANY, L.L.C.
By: /s/ David C. Benson
APPALACHIAN POWER COMPANY
By: /s/ Henry W. Fayne
THE CINCINNATI GAS & ELECTRIC COMPANY
By: /s/ Michael J. Cyrus
COLUMBUS SOUTHERN POWER COMPANY
By: /s/ Henry W. Fayne
THE DAYTON POWER AND LIGHT COMPANY
By: /s/ W. Steven Wolff
FIRSTENERGY GENERATION CORP.
By: /s/ Donald R. Schneider
INDIANA MICHIGAN POWER COMPANY
By: /s/ Henry W. Fayne
KENTUCKY UTILITIES COMPANY
By: /s/ Paul W. Thompson
LOUISVILLE GAS AND ELECTRIC COMPANY
By: /s/ Paul W. Thompson
MONONGAHELA POWER COMPANY
By: /s/ David C. Benson
OHIO POWER COMPANY
By: /s/ Henry W. Fayne
SOUTHERN INDIANA GAS AND ELECTRIC
COMPANY
By: /s/ William S. Doty