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AMENDMENT NO. 2
TO THE
ENERGY SALES CONTRACT
BETWEEN
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
AND
ALCAN ALUMINUM CORPORATION
d/b/a ALCAN ROLLED PRODUCTS COMPANY
Dated March 21, 1996
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AMENDMENT NO. 2 TO THE ENERGY SALES CONTRACT
BETWEEN SITHE/INDEPENDENCE POWER PARTNERS, L.P.
AND ALCAN ALUMINUM CORPORATION
d/b/a ALCAN ROLLED PRODUCTS COMPANY
This Amendment No. 2, dated as of March 21, 1996, to the Energy Sales
Contract ("Amendment No. 2") by and between Sithe/Independence Power Partners,
L.P. ("Independence") and Alcan Aluminum Corporation d/b/a Alcan Rolled
Products Company ("Alcan").
WITNESSETH:
WHEREAS, the parties entered into an Energy Sales Contract, dated as of
November 18, 1992 ("Energy Sales Contract"), pursuant to which Alcan shall
purchase designated amounts of electricity and steam from a cogeneration
project that Independence has developed on a site in the Town of
Scriba, New York; and
WHEREAS, the parties entered into two letter agreements, dated January 21,
1993 and January 29, 1993, which clarified and/or amended the Energy Sales
Contract;
WHEREAS, the parties entered into Amendment No. 1 to the Energy Sales
Contract dated as of February 3, 1993 ("Amendment No. 1");
WHEREAS, the parties desire to effectuate another written amendment to the
Energy Sales Contract, in accordance with Section 35.01 thereof;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, Alcan and Independence
agree to the following:
1. The defined term "Cost of Producing Electricity" is hereby deleted from
the Energy Sales Contract and replaced, wherever it appears, by the term
"Adjusted Cost of Producing Electricity," and the defined term "Calculated
Profit From Sales" is hereby amended to read as follows:
"Calculated Profit From Sales" shall mean for any month the
positive difference between (i) the average per kilowatthour price
for sales of electricity from the Project (as defined below) to
persons other than Alcan or the Alternative Steam Hosts, if any,
during such month, and (ii) the Adjusted Cost of Producing
Electricity with respect to such month.
2. Article I of the Energy Sales Contract is hereby amended by inserting
the following new defined terms:
"Adjusted Cost of Producing Electricity" shall mean for any
month the sum of (a) the Project's actual Capital Costs
(excluding any return on equity) with respect to the prior month
of operation plus (b) the Project's actual operating costs
(excluding any return on equity) including all actual fixed and
variable fuel transportation costs and expenses, all actual
minimum take or other fuel related penalties and all Fuel
Commodity Costs (as defined below) incurred by the Project
with respect to the prior month of operation, which sum shall be
divided by the difference between (a) the aggregate number of
kilowatthours produced by the Project in that prior month minus
(b) the sum of (I) the Project's actual parasitic load (expressed
in kilowatthours) with respect to such prior month plus (2) the
actual transmission losses (expressed in kilowatthours) deducted
from deliveries of electric energy by the Project to the Project's
customers during such prior month. It is acknowledged and
agreed that Alcan shall not share in or be liable for the
repayment of any cumulative tracking account balance that may
be owed to or by the Project at any time pursuant to any of its
gas supply contracts.
"Fuel Commodity Costs" shall mean for any month the product
of (a) the actual quantity of fuel (expressed in MMBtus)
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purchased by the Project with respect to the prior month of
operation multiplied by (b) the Fuel Price (expressed in
$/MMBtu) for such prior month of operation.
"Fuel Price" shall mean for any month the "Index" price
(expressed in $/MMBtu) reported in the first issue during such
Month of Inside FERC's Gas Market Report under the section
entitled "Prices of Spot Gas Delivered to Pipelines" for deliveries
to ANR Pipeline Co. in Louisiana, plus $0.0175 per MMBtu,
provided that during the period from January 1, 1996 to and
including December 31, 1999, the Fuel Price for the first
116,000 MMBtus purchased by the Project on any day during
such period (a) shall be $2.47/MMBtu during the period from
January 1, 1996 to and including December 31, 1996, (b) shall
be $2.78/MMBtu during the period from January 1, 1997 to and
including December 31, 1997, (c) shall be $3.05/MMBtu during
the period from January 1, 1998 to and including December 31,
1998, and (d) shall be $3.32/MMBtu during the period from
January 1, 1999 to and including December 31, 1999.
Quality of Electricity Criteria - shall have the meaning set forth
in Exhibit T, which is attached hereto and hereby incorporated
into the Energy Sales Contract.
3. The third sentence of Section 3.04 is hereby deleted and replaced by the
following:
At any time after the Electrical Start-Up Date, Alcan, at its
option, may designate any or all of the equipment installed as of
January 1, 1996 beyond the Delivery Points, and all spare or
back-up equipment pertaining thereto, as Alcan property and
Independence hereby agrees (i) to transfer ownership of said
equipment without the exchange of further consideration, and (ii)
to deliver to Alcan copies of all documents, drawings and
software pertaining to such equipment, spares and back-ups "As
Commissioned" in the quantity, format and media specified by
Alcan. Any custom software documentation must include the
source code. Absent exigent circumstances, the parties shall
negotiate a reasonable future date(s) for the actual transfer of
ownership, provided, however, that if the parties do not agree
within thirty (30) days of initial notification by Alcan, Alcan
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shall have the option to designate the actual date for transfer of
ownership without further negotiations.
4. Sections 9.04 and 9.05 are hereby deleted and replaced by the following:
9.04 Subject to Section 9.05, the price of Alcan Metered Usage
sold by Independence to Alcan during the first fifteen Years of
Operation shall be as follows:
Year of Operation Price ($ per kilowatthour)
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1 $0.0446
2 $0.0447
3 $0.0480
4 $0.0510
5 $0.0515
6 $0.0512
7 $0.0530
8 $0.0550
9 $0.0565
10 $0.0615
11 $0.0625
12 $0.0665
13 $0.0679
14 $0.0699
15 $0.0738
For subsequent Years of Operation, the price of Alcan Metered
Usage shall be the Adjusted Cost of Producing Electricity. For
purposes herein, each Year of Operation shall begin on the
yearly anniversary of the Electrical Start-Up Date and terminate
on the day immediately preceding the next such yearly
anniversary.
9.05 Notwithstanding the provisions of Section 9.04, Alcan shall
have the following additional options which may affect the price
of Alcan Metered Usage:
(a) after the expiration of the fifth Year of Operation,
and upon sixty days prior written notice to
Independence, Alcan shall have the right to elect
to purchase Alcan Metered Usage at the Adjusted
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Cost of Producing Electricity, provided that any
such election shall mean the fixed prices set forth
in Section 9.04 shall not thereafter be available to
Alcan and all Alcan Metered Usage sold in
subsequent Years of Operation shall be priced at
the Adjusted Cost of Producing Electricity.
(b) Alcan also shall have the right to elect at any time
and from time to time, upon sixty (60) days prior
written notice to Independence, to purchase all of
its electrical needs at the Oswego Works from an
electrical power supplier other than Independence;
provided that any such election to so purchase by
Alcan must be for a period of not less than five
years and, provided further, that once Alcan
exercises the option to purchase from another
electrical power supplier, any electricity
subsequently purchased from the Project shall be
priced at the Adjusted Cost of Producing
Electricity unless the alternate source of supply
involves an agreement that includes some form of
consideration acceptable to Independence, in
which case subsequent purchases of electricity by
Alcan from the Project shall be at the fixed prices
set forth in Section 9.04 for the applicable Year of
Operation.
5. Section 9.07 is deleted and replaced by the following:
9.07 (a) Except for periods during which Alcan is
purchasing electricity from the Project at the fixed
prices set forth in Section 9.04, Alcan shall be
entitled to receive a share of the net proceeds
associated with that portion of the Alcan Capacity
Entitlement which Alcan does not use in
accordance with the terms set forth below. For
purposes herein, the net proceeds of the Alcan
Capacity Entitlement which Alcan does not use
shall be equal to the product of the Net Alcan
Entitlement multiplied by the Calculated Profit
From Sales.
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(i) during any periods occurring in the first
fifteen Years of Operation in which Alcan
is purchasing its electrical needs at the
Oswego Works from Independence
pursuant to Section 9.05(a), Alcan will be
paid or credited with, on a monthly basis
50% of the net proceeds associated with
that portion of the Alcan Capacity
Entitlement which Alcan does not use.
(ii) during any periods occurring in the first
fifteen Years of Operation in which Alcan
is voluntarily purchasing some or all of its
electrical needs at the Oswego Works from
an electrical power supplier other than
Independence pursuant to Section 9.05(b),
Alcan will be paid or credited with, on a
monthly basis, 25% of the net proceeds
associated with that portion of the Alcan
Capacity Entitlement which Alcan does not
use unless the alternate source of electricity
supply for Alcan includes an agreement
that includes some form of consideration
acceptable to Independence, in which case
Alcan will be paid or credited with, on a
monthly basis, 50% of the net proceeds
associated with that portion of the Alcan
Capacity Entitlement which Alcan does not
use during the period that it is receiving
such alternate supply.
(iii) during any periods occurring in the first
fifteen Years of Operation in which Alcan
is involuntarily purchasing all or part of its
electrical needs at the Oswego Works from
an electrical power supplier other than
Independence, Alcan will be paid or
credited with, on a monthly basis, 50% of
the net proceeds associated with that
portion of the Alcan Capacity Entitlement
which Alcan does not use. For purposes of
calculating amounts due to Alcan under
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Sections 9.06 or 9.13 hereof, the fixed
prices set forth in Section 9.04 shall be
used.
(iv) beginning in the sixteenth Year of
Operation, and at all times prior to that
during which the terms of Section 9.13 are
operative, and provided that Alcan is not
then voluntarily purchasing electricity from
a third party supplier pursuant to Section
9.05(b) hereof. Alcan will be paid or
credited with, on a monthly basis, 50% of
the net proceeds associated with that
portion of the Alcan Capacity Entitlement
which Alcan does not use.
(b) For purposes of the calculation of proceeds due to
Alcan under this subsection, sales of all unused
Alcan Capacity Entitlement will be presumed,
discounted only by the Capacity Factor for the
Project. It is agreed that this clause is not
intended to, nor under any circumstances shall it,
result in Alcan reimbursing or being in any way
liable to Independence for sales by Independence
to third parties at prices that are lower than the
Adjusted Cost of Producing Electricity. The
administration of sales to third parties, including
the selection of buyer(s) of the electric capacity
and/or energy, will be the sole responsibility of
Independence. Alcan shall provide, not less than
sixty (60) days prior to the start of each calendar
year, a written, good faith estimate of its projected
annual usage for the ensuing year, it being agreed
that Alcan may designate up to the entire Alcan
Capacity Entitlement plus the capacity and energy
associated with Section 9.09 and, if applicable,
Section 9.10, for its own use, or any part thereof.
Credits inuring to Alcan's benefit under this
Section 9.07 shall be credited to Alcan in
accordance Section 15.01.
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6. The Schedule of Costs attached as Exhibit "R" to the Energy Sales
Contract is hereby declared null and void.
7. The second sentence of Section 9.09 is hereby deleted and replaced by
the following:
The price of purchases under this Section 9.09 shall be equal to
the fixed prices set forth in Section 9.04 or, if applicable,
Section 9.05, plus $0.001/kwh during the first fifteen Years of
Operation and the Adjusted Cost of Producing Electricity plus
$0.001/kwh each Year of Operation thereafter.
8. The third sentence of Section 9.02 is hereby deleted and replaced by the
following:
The quality of electricity delivered shall be at least equal to the
Quality of Electricity Criteria set forth in Exhibit T.
9. The following sentence is hereby inserted between the first and second
sentences of Section 9.06(a):
With regard to Independence's obligations pursuant to the
preceding sentence, at Alcan's request, Independence will install,
at its sole cost, any additional systems or equipment reasonably
required to ensure a maximum of one hour switch-over time to
back-up or standby electricity as soon as reasonably possible
after the first incident where a period of more than one hour was
required for such switch-over.
10. The second sentence of Section 9.06(c) is hereby deleted and replaced
by the following:
If there are more than two interruptions of electrical service from
the Project during any three month period, or if there are more
than two interruptions of Alcan process equipment during any
three month period caused solely by the supply of electricity
which does not meet the Quality of Electricity criteria, upon the
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occurrence of the third (or more) interruption Alcan shall have
the option to elect or remain on back-up or standby service, at
Independence's expense, until Independence can demonstrate to
Alcan's reasonable satisfaction that the cause (or causes) of the
interruptions has been cured provided, however, that
Independence must cure the cause (or causes) of the interruptions
within a reasonable time.
11. The following new Section 9.06(d) is hereby inserted following Section
9.06(c):
9.06 (d) With respect to Section 9.06(c) hereof, Alcan
acknowledges that its process equipment may be
affected by operating problems and interruptions
which are not caused by the quality of electricity
it receives and that Independence is not in a
position to understand the nature or causes of such
problems and interruptions. Accordingly, if any
such problems or interruptions occur which Alcan
reasonably believes are caused solely by
Independence's failure to provide electricity which
meets or exceeds the Quality of Electricity
criteria, Alcan will work with Independence to
confirm and demonstrate to Independence that any
such problem or interruption was so caused and is,
therefore, subject to the second sentence of
Section 9.06(c) hereof.
12. The Phase I equipment list attached hereto and marked as Exhibit "K" is
hereby incorporated into the Energy Sales Contract as Exhibit "K".
13. The Phase III equipment list attached hereto and marked as Exhibit "L"
is hereby incorporated into the Energy Sales Contract as Exhibit "L".
14. The drawing attached hereto and marked as Exhibit "M" to the Energy
Sales Contract, which, pursuant to the definition of Design Point Capacity in
the Energy Sales
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Contract, depicts the Design Point Capacity graph, is hereby
incorporated into the Energy Sales Contract as Exhibit "M".
15. Pursuant to Section 10.04 of the Energy Sales Contract, the Steam
Delivery Point, as actually installed, is shown as the point of connection on
Exhibit "O" attached hereto, which Exhibit "O" is hereby incorporated into the
Energy Sales Contract.
16. The documents attached hereto and entitled Electrical Equipment Beyond
Delivery Point, and marked as Exhibit "P", and Steam Equipment Beyond Delivery
Point, and marked as Exhibit "Q", are hereby incorporated into the Energy Sales
Contract as Exhibits "P" and "Q", respectively.
17. The documents attached hereto and entitled Specification For Quality
of Steam Delivered to Alcan and marked as Exhibit "S" is hereby incorporated
into the Energy Sales Contract.
18. The document attached hereto and entitled Quality of Delivered Power
and marked as Exhibit "T" is hereby incorporated into the Energy Sales
Contract.
19. The parties further agree as follows:
(a) Installation of Steam Equipment/Supply of Steam to Recycling
Facility
l. Sithe/Independence has installed two air handling
units originally planned for Alcan's Oswego
Works into Alcan's new recycling facility.
2. The aggregate annual quantities of thermal energy
to be consumed by Alcan will equal or exceed the
aggregate annual quantities of thermal energy that
Alcan would have consumed had the two air
handling units been installed as originally
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contemplated at Alcan's existing facilities. The
other provisions of the Energy Sales Contract with
respect to Alcan's thermal usage obligations shall
apply.
(b) Supply of Electricity to Recycling Facility
1. Alcan will utilize a portion of the Alcan Capacity
Entitlement, as that term is defined in the Energy
Sales Contract, to supply its additional electrical
needs at the new recycling facility and
Sithe/Independence shall supply such electricity to
Alcan pursuant to the terms of the Energy Sales
Contract provided, however, that
Sithe/Independence will provide a discount for a
portion of the actual additional electrical usage
(not to exceed (i) a maximum demand of 3 MW
in any hour or (ii) 26,280,000 kilowatthours in
any twelve month period) at the new recycling
facility for a period of three years from January 1,
1996. It is the intent of Alcan and
Sithe/Independence that none of the electric
energy purchased by Alcan for use at Alcan's
facilities (other than at the new recycling facility)
will be eligible for any discount hereunder nor
will any electric energy associated with a demand
at the new recycling facility in excess of 3 MW be
eligible for any discount hereunder. The price to
be paid during the three year period of discounts
for such portion of the actual electrical usage at
the new recycling facility eligible for a discount
shall be $.036/kwh. Such discount will be subject
to the following conditions:
(i) Alcan will be responsible for the cost of
installation of any electrical distribution
systems or any related facilities necessary
for the interconnection of the electrical
system of the new recycling facility with
the existing electrical distribution system,
provided that Sithe/Independence may
install additional electrical metering if
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reasonably required to measure the actual
usage at the new recycling facility
(ii) Alcan and Sithe/Independence will work
together to minimize such costs and agree
that billing quality meters will not be
required given that the discount for
services at the recycling facility will
remain in effect for only three years.
(iii) Alcan will provide Sithe/Independence
with reasonable access to all of the
metering data and information collected by
the electrical metering installed by Alcan at
the new recycling facility as well as any
other data or information reasonably
requested by Sithe/Independence to verify
that the discount provided hereunder is
being applied only to the electrical energy
utilized at the new recycling facility and
only to the extent that such electrical
energy is associated with a demand at the
new recycling facility of 3 MW or less.
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IN WITNESS WHEREOF, Independence and Alcan have caused this
Amendment No. 2 to be executed by their proper, duly authorized officers
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: Sithe/Independence, Inc.,
its General Partner
Attest: By: Thomas A. Meinicke
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By: Name: Thomas A. Meinicke
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Name: Title: Asst. Vice President
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Title: Date March 21, 1996
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ALCAN ALUMINUM CORPORATION
d/b/a ALCAN ROLLED PRODUCTS COMPANY
Attest: By: Robert L. Ball
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By: Name: Robert L. Ball
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Name: Title President
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Title: Date: March 21, 1996
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1341.03197/MGL50
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