HECO Exhibit 10.4(f)
[MECO Letterhead]
January 23, 2001
Mr. G. Stephen Holaday
Plantation General Manager
Hawaiian Commercial & Sugar Company
P. O. Box 266
Puunene, Hawaii 96784
Dear Mr. Holaday:
Subject: Rescission of Termination Notice for Amended and Restated
Power Purchase Agreement between Alexander & Baldwin, Inc., through
its division, Hawaiian Commercial & Sugar Company ("HC&S"), and Maui
Electric Company, Limited ("MECO"), dated November 30, 1989, as
amended by the First Amendment to Amended and Restated Power Purchase
Agreement, dated November 1, 1990 (which are together referred to as
the "PPA")(1)
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I would like to thank you and John Kreag for our discussion on January
12, 2001, regarding the generation needs for the island of Maui and the status
of negotiations for a new Power Purchase Agreement under which HC&S would
continue to play a significant role in meeting those needs beyond 2001. MECO
and HC&S have had a long term, mutually beneficial relationship, and I fully
expect that we will continue this relationship as our companies evolve to meet
the challenges of a changing business environment on Maui.
MECO had expected to be able to negotiate a new, mutually acceptable
agreement with HC&S by December 2000, which would have provided time to obtain
approval
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(1) HC&S agreed, by acceptance dated December 14, 1990, to the conditions in
MECO's Conditional Notice of Acceptance letter dated December 7, 1990,
and the parties confirmed their mutual understanding with respect to
two minor and technical errors in the PPA, in HC&S' letter dated
January 8, 1991, and agreed to by MECO on January 17, 1991.
Mr. G. Stephen Holaday
January 23, 2001
Page Two
from the Hawaii Public Utilities Commission of the new agreement prior to the
expiration of the existing PPA at the end of the day on December 31, 2001.(2)
Under the circumstances, the parties are not in a position to agree
upon or finalize a new agreement within the time frame originally contemplated,
although the parties continue to negotiate with respect to a new agreement. At
the same time, it is mutually beneficial for the parties to be assured that HC&S
will continue to deliver power to MECO, and MECO will continue to purchase such
power, at least through 2004.
This letter documents and confirms the following actions and
agreements by MECO and HC&S:
1. MECO rescinds the Termination Notice dated December 27, 1999.
2. HC&S agrees to and accepts the rescission of the Termination Notice.
3. MECO and HC&S agree that neither party will give written notice of
termination under Article XVII of the PPA such that the PPA terminates prior
to the end of the day on December 31, 2004. As a result, the PPA remains in
full force and effect through December 31, 2004, and from year to year
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(2) Article XVII of the PPA provides that the PPA "shall continue in effect
through December 31, 1999, and from year to year thereafter, subject to
termination on or after January 1, 2000, on not less than two (2) years'
prior written notice by either party." As was provided in letter
agreements dated December 11, 1997 and October 22, 1998, no notice of
termination was given prior to the end of 1997 or 1998. As a result, the
PPA remained in full force and effect through December 31, 2001, and from
year to year thereafter, subject to termination on or after January 1,
2002, on not less than two (2) years' written notice by either party. By
letter dated December 27, 1999, MECO provided written notice of
termination of the PPA to HC&S (the "Termination Notice"), with the
termination to be effective at the end of the day on December 31, 2001.
Mr. G. Stephen Holaday
January 23, 2001
Page Three
thereafter, subject to termination on or after the end of the day on
December 31, 2004 on not less than two (2) years' prior written
notice by either party. For the PPA to terminate as of the end of
the day on December 31, 2004, written notice of termination must be
provided by either party on or before December 31, 2002.
If the foregoing meets with your approval, please execute the below
acknowledgment and return the original to me, retaining the duplicate original
for your files. MECO values its long-standing relationship with HC&S, and
thanks you for your willingness to work cooperatively to position both companies
for the future.
MAUI ELECTRIC COMPANY, LIMITED
By /s/ William A. Bonnet
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Its President
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Date: January 23, 2001
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By /s/ Lyle J. Matsunaga
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Its Assistant Treasurer
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Date: January 23, 2001
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Acknowledged and Agreed:
ALEXANDER & BALDWIN, INC., by its division
HAWAIIAN COMMERCIAL & SUGAR COMPANY
By /s/ G. Stephen Holaday
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Its Vice President
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Date: January 23, 2001
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By /s/ John P. Kreag
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Its Assistant Treasurer
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Date: January 23, 2001
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