HECO EXHIBIT 10
---------------
AMENDED AND RESTATED
POWER PURCHASE AGREEMENT
between
HILO COAST PROCESSING COMPANY
and
HAWAII ELECTRIC LIGHT COMPANY, INC.
TABLE OF CONTENTS
AMENDED AND RESTATED POWER PURCHASE AGREEMENT
---------------------------------------------
Page
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I. Definitions 3
A. HELCO Dispatch 3
B. Contract Year 4
C. Partial Contract Year 4
D. Contract Week 4
E. PUC 4
F. PUC Approval 4
G. Good Engineering and Operating Practices 4
II. HCPC's Obligation to Supply Capacity 6
A. Capacity Guarantee 6
B. Plant Shutdown Period 6
C. Capacity Charge 6
D. Conditions Related to Capacity Guarantee 7
III. Sale and Purchase of Energy 9
A. Energy Sale and Purchase Guarantee; Purchase
of Additional Energy 9
B. Determination of Energy Rates 11
C. Application of Rates 13
D. Payments 13
IV. [deleted] 13
V. 69 kv Substation and Transmission Line 13
A. Existing Facilities 13
B. Upgrade of Facilities 14
VI. Metering 15
i
Page
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VII. Purchase of Power by HCPC 16
VIII. Interruption of Service 16
IX. Performance Standards and Sanctions 17
A. Minimum Performance Standards 17
B. Sanctions 19
C. Deletion of Capacity Charge 20
X. Privity 21
XI. Assignment 22
XII. Arbitration 22
A. Enforcement of Contract 22
B. Attorneys' Fees 23
XIII. Training Standards 23
XIV. Term 23
XV. Termination; Default 23
A. Termination upon HCPC's Total Default 23
B. HCPC's Failure to Restore Unit 24
C. HELCO Right to Possession 25
XVI. HELCO's Purchase Options 26
A. Default Purchase Option 26
B. [deleted] 27
C. [deleted] 27
D. Protection of Option to Purchase 27
XVII. Mutual Release 28
ii
Page
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XVIII. Effective Date; Necessary Approvals and
Conditions 28
XIX. General Provisions 30
A. Severability 30
B. Section Headings 31
C. Notices 31
D. Entire Agreement 32
E. Governing Law 32
F. Modifications, Amendments or Waivers 32
G. Interpretation 33
H. Good Faith Efforts 33
Exhibit A A-1
Exhibit B B-1
iii
AMENDED AND RESTATED POWER PURCHASE AGREEMENT
---------------------------------------------
This Amended and Restated Power Purchase Agreement ("the Contract") is
made and entered into on March 24, 1995 by and between HILO COAST PROCESSING
COMPANY (hereinafter referred to as "HCPC") and HAWAII ELECTRIC LIGHT COMPANY,
INC. (hereinafter referred to as "HELCO").
W I T N E S S E T H T H A T:
-----------------------------
WHEREAS, HELCO is and has been an operating electric public utility on
the Island of Hawaii in the State of Hawaii and is subject to the Hawaii Public
Utilities Laws (Chapter 269 of the Hawaii Revised Statutes) and the rules and
regulations of the Hawaii Public Utilities Commission (hereinafter referred to
as the "PUC"); and
WHEREAS, HELCO and Pepeekeo Sugar Company ("Pepeekeo") entered into
that certain Purchase Power Agreement dated July 1, 1971 (hereinafter referred
to as "the Initial Agreement"); and
WHEREAS, Pepeekeo assigned all of its right, title and interest in and
to the Initial Agreement to HCPC, subject to the terms, conditions and
provisions thereof, pursuant to that certain Assignment of Power Purchase
Agreement Contract made September 1, 1971 (hereinafter referred to as the
"Assignment"); and
WHEREAS, HELCO and HCPC agreed to amend and restate the Initial
Agreement as heretofore amended and/or modified in its
1
entirety as of May 31, 1988, for a term through December 31, 2002 (hereinafter
referred to as the "Prior Contract"); and
WHEREAS, on July 31, 1992, C. Brewer and Company, Limited publicly
announced that its subsidiary, Mauna Kea Agribusiness Company, Inc., the primary
supplier of sugar cane processed by HCPC, would discontinue harvesting sugar in
late 1994 and that, thereafter, HCPC's primary fuel would be coal, supplemented
by biomass material; and
WHEREAS, by letter dated March 25, 1994, HCPC notified HELCO of its
intent to abandon the production of power on March 26, 1997; and
WHEREAS, by letter dated April 22, 1994, HELCO notified HCPC of its
preliminary intent to purchase HCPC's power plant facilities pursuant to the
purchase option in its existing power purchase agreement; and
WHEREAS, HELCO and HCPC were not able to negotiate a purchase
agreeable to both parties; and
WHEREAS, on December 12, 1994, HCPC filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code and notified HELCO of its intent
to shut down the power plant on December 18, 1994, which closing was delayed to
December 25, 1994 by agreement of the parties; and
WHEREAS, HELCO commenced an adversary proceeding in the Bankruptcy
Court in which it sought a permanent injunction compelling HCPC to perform the
Prior Contract according to its terms; and
2
WHEREAS, the Bankruptcy Court granted HELCO's motion for a temporary
restraining order ("TRO") until January 6, 1995; and
WHEREAS, on January 5, 1995, HELCO and HCPC entered into a Letter
Agreement setting forth the terms and conditions of an interim operating
agreement, an amended power purchase agreement which, upon approval of the
Bankruptcy Court, is to be effective through December 31, 1999, a cash advance
of $6,000,000 to be provided by HELCO to HCPC to finance severance payments and
other employee benefits and capital expenditures, and a revolving line of credit
of up to $2,000,000 to finance the purchase of fuel and other operating
expenses;
WHEREAS, pursuant to a stipulation between HELCO and HCPC making the
TRO effective through March 7, 1995, which stipulation was subsequently extended
through March 24, 1995, the Bankruptcy Court approved an amended power purchase
arrangement as set forth in the Letter Agreement in lieu of an interim operating
agreement;
NOW, THEREFORE, in consideration of the mutual promises and
obligations set forth herein, the sufficiency of which is hereby mutually
acknowledged, the parties hereto agree as follows:
I. Definitions.
-----------
A. HELCO Dispatch. The term "HELCO dispatch" as used herein means
--------------
HELCO's absolute and sole right, through supervisory equipment and otherwise, to
control electrical energy generated by HCPC pursuant to this Contract up to such
capacity as may be agreed upon from time to time, provided, however, that HELCO
shall take at all times during the 48 operating weeks of
3
every contract year at least 4,000 kw of power in order to keep HCPC's turbine
generator operating at the minimum load required to keep capacity available to
HELCO as provided herein.
B. Contract Year. The term "contract year" means a year during the
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term hereof beginning at 0001 hours on January 1 and ending at 0001 hours on
January 1 of the following year.
C. Partial Contract Year. The term "partial contract year" means the
---------------------
period beginning at 0001 hours on the effective date of this Contract and ending
at 0001 hours on January 1, 1996.
D. Contract Week. The term "contract week" means the time period
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during the term hereof from 0001 hours on Monday through 2400 hours the
following Sunday.
E. PUC. PUC means the Hawaii Public Utilities Commission.
---
F. PUC Approval. PUC Approval means the PUC order or orders described
------------
in Section XVIII.
G. Good Engineering and Operating Practices. The practices, methods
----------------------------------------
and acts engaged in or approved by a significant portion of the electric utility
industry for similarly situated U.S. facilities that at a particular time, in
the exercise of reasonable judgment in light of the facts known or that
reasonably should be known at the time a decision is made, would be expected to
accomplish the desired result in a manner consistent with law, regulation,
reliability, safety, environmental protection, economy and expedition. With
respect to
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the power plant, Good Engineering and Operating Practices include but are not
limited to taking reasonable steps to ensure that:
1. Adequate materials, resources and supplies, including fuel, are
available to meet the power plant's needs under normal conditions and reasonably
anticipated abnormal conditions.
2. Sufficient operating personnel are available and are adequately
experienced and trained to operate the power plant properly, efficiently and
within manufacturer's guidelines and specifications and are capable of
responding to emergency conditions.
3. Preventive, routine and non-routine maintenance and repairs are
performed on a basis that ensures reliable long-term and safe operation, and are
performed by knowledgeable, trained and experienced personnel utilizing proper
equipment, tools, and procedures.
4. Appropriate monitoring and testing is done to ensure equipment is
functioning as designed and to provide assurance that equipment will function
properly under both normal and emergency conditions.
5. Equipment is operated in a safe manner and in a manner safe to
workers, the general public and the environment and with regard to defined
limitations such as steam pressure, temperature, and moisture content, chemical
content and quality of make-up water, operating voltage, current, frequency,
rotational speed, polarity, synchronization, control system limits, etc.
5
II. HCPC's Obligation to Supply Capacity.
------------------------------------
A. Capacity Guarantee. HCPC shall furnish HELCO 22,000 kw of
------------------
capacity and 13,600 kvar of reactive under HELCO dispatch during the entire term
hereof except for the "annual overhaul period" set forth in Section II.B. below
and except that HCPC shall be obligated to furnish 20,000 kw of capacity until
the later of: (i) June 1, 1995 or, (ii) such time as HCPC's existing permit
limitations and conditions are complied with and any necessary substation
improvements to accommodate the 22,000 kw, pursuant to Section V, are completed.
The reactive shall be in proportion to power in the range of 0.85 lagging to 1.0
unity power factor and shall be dispatched by HELCO so that HCPC keeps its
turbine generator output, at HELCO's direction, within the limits of plus or
minus 5% of 13.8 kv.
B. Plant Shutdown Period. HCPC shall have the right to shut its
---------------------
turbine generator down and shall have no obligation to furnish HELCO the
capacity described in Section II.A. hereof during four consecutive weeks during
each contract year (the "annual overhaul period"). The annual overhaul period
shall be taken during the period mutually agreeable to HCPC and HELCO, the
specific days to be determined each contract year with HELCO's approval, which
approval shall not be unreasonably withheld.
C. Capacity Charge. As compensation for maintaining the 20,000 kw and
---------------
22,000 kw of capacity under HELCO dispatch during the time periods as described
herein, HELCO will pay HCPC a capacity charge, payable monthly within ten (10)
days
6
after the last day of the calendar month, equal to an amount which would
average $218/kw-yr over the contract term, specifically: (i) $306,167 per month
($167/kw-yr) through December 31, 1995, during the portion of such period when
HCPC is obligated to provide 22,000 kw of capacity pursuant to Section II.A.
($278,333 per month during the portion of such period when HCPC is obligated to
provide only 20,000 kw of capacity pursuant to Section II.A.), and (ii)
$5,082,000 ($231/kw-yr) per contract year thereafter, commencing January 1, 1996
in twelve equal monthly installments. HELCO shall not be obligated to pay any
additional capacity charge for any additional capacity supplied by HCPC, either
at HELCO's request or at HCPC's request. A failure by HCPC to provide the
required capacity to HELCO shall result in the reduction in the capacity charge
due to HCPC from HELCO in accordance with Section IX.B.1. of this Contract.
HELCO shall not have any obligation to pay capacity charges to HCPC (i) for
periods in excess of 24 consecutive hours in which HCPC is unable to fulfill its
obligations under Section II.A. of this Contract without fault as set forth in
Section VIII, or (ii) for periods in which HCPC does not fulfill its obligations
under Section II.A. of this Contract due to HCPC's "total default", as such term
is defined in Section XV.B. of this Contract.
D. Conditions Related to Capacity Guarantee.
----------------------------------------
1. The capacity obligation amounts in Section II.A. are based on
the assumption that such amounts are permissible under HCPC's applicable permits
and any conditions thereunder. Upon HELCO's request, HCPC shall provide
verification
7
of such assumption. Should the assumption be incorrect, HELCO
reserves the right to require that HCPC use its best effort to cure any
discrepancies in a timely manner and/or to adjust such capacity obligation, and
the corresponding capacity charge under Section II.C., in order to comply with
such permits and conditions.
2. The increase in HCPC's capacity obligation under Section II.A.
is contingent upon the completion of any necessary substation upgrades pursuant
to Section V by May 31, 1995, and upon compliance with any applicable PUC rules
with regard to such upgrades. Accordingly, the effective date of the increase in
the capacity obligation to 22,000 kw (projected for June 1, 1995) shall be
delayed if necessary until such time as the foregoing conditions are met.
3. Acceptance Test. Increased firm capacity payments pursuant to
---------------
Section II.C., reflecting the increased capacity obligation under Section II.A.
to 22,000 kw, shall begin when acceptance tests conducted by HELCO indicate that
HCPC has demonstrated delivery of the capacity guarantee during a 100
consecutive hour period at HELCO dispatch, beginning at a time designated in
advance by HCPC, after compliance with Section II.A.(ii). At any time prior to
the capacity tests, HCPC must demonstrate that facility has the ability to
reduce load to the minimum 4,000 kw level and remain stable during the off-peak
period on its primary fuel of coal. It must also demonstrate the ability to ramp
up and down at the rate of 2 mw per minute. During all or part of the acceptance
testing program HCPC shall
8
allow a HELCO representative to be onsite to verify and record various hourly
meter readings and to see that the tests are conducted within the scope of Good
Engineering and Operating Practices. HCPC shall notify HELCO with a minimum
seven (7) days advance notice of when the power plant will be available for
conduct of the acceptance test.
III. Sale and Purchase of Energy.
---------------------------
A. Energy Sale and Purchase Guarantee; Purchase of Additional
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Energy.
- ------
1. During each contract year of the term of this Contract,
HCPC shall make available to HELCO under HELCO dispatch, at the regular rate,
the amounts of kilowatt hours of energy per contract week and per contract year
respectively listed under "Contract Week Amount" and "Contract Year Amount" in
Section III.A.2. below.
2. During each contract year, HELCO shall purchase at least
94% on a weekly basis and at least 98% on an annual basis of said following
amounts of energy (subject to a prorata reduction to the extent that the
contract week or contract year energy amounts are not made available by HCPC):
Capacity Contract Contract
Obligation Week Amount Year Amount
---------- -------------- ---------------
20,000 kw 2,025,500 kwh 97,224,000 kwh
22,000 kw 2,192,400 kwh 105,235,200 kwh
HELCO will use its best efforts, taking into account Good Engineering
and Operating Practices with respect to HELCO's utility system practices, to
dispatch at least the following amounts of energy per day on-peak (subject to a
prorata
9
reduction to the extent that the capacity obligation is not provided by
HCPC on-peak):
Capacity On-Peak
Obligation kwh Amount
----------- ----------
20,000 kw 246,000
22,000 kw 266,000
3. During the partial contract year, HELCO shall purchase at least
94% on a weekly basis of the contract week amount of energy specified in Section
III.A.2. In the partial contract year, the Contract Year Amount shall be equal
to the Contract Week Amount multiplied by the number of full weeks in the
partial contract year minus the number of full weeks in the annual overhaul
period.
4. Any energy utilized by HELCO at HCPC's request or at HELCO's
request in excess of the contract week amount, whether through a temporary
increase in capacity or otherwise, shall not count towards any contract week
amount which HCPC is required to deliver at the regular rate.
5. HCPC anticipates that its power production facilities will produce
energy during on-peak hours in addition to the amounts of energy which HCPC is
obligated to deliver to HELCO under HELCO dispatch ("Additional On-peak
Energy"). An HCPC estimate of the amount of Additional On-peak Energy that may
be made available for the upcoming contract year ("HCPC's annual Additional On-
peak Energy estimate") shall be given in writing to HELCO at least 30 days prior
to the upcoming contract year. HCPC shall use its best efforts to insure the
10
accuracy of the estimate and shall notify HELCO of changes in that estimate as
soon as possible.
6. HELCO shall attempt to arrange for the acceptance of such
Additional On-peak Energy up to HCPC's annual Additional On-peak Energy
estimate, provided that HELCO shall not be obligated to accept and pay for
Additional On-peak Energy to the extent that HELCO determines that it is unable
to do so, based on HELCO's minimum base load requirements and/or transmission
system capacity, as determined by HELCO in accordance with industry standards,
and giving priority to all sources of firm energy available to HELCO both now
and in the future, and all sources of unscheduled energy available to HELCO
under contracts or other legally enforceable obligations with effective dates
prior to the effective date of this Contract. HELCO also shall not be obligated
to accept and pay for Additional On-peak Energy if the cost of such energy would
exceed the cost to HELCO if HELCO generated an equivalent amount of energy
itself, or during any period in which purchases of energy by an electric utility
from a qualifying facility could be discontinued or otherwise would not be
required under the rules and regulations of the PUC. After giving effect to the
foregoing, HELCO agrees that it will use its best efforts to accept such
Additional On-peak Energy.
B. Determination of Energy Rates.
-----------------------------
1. The regular rate for energy shall consist of on-peak and off-
peak rates equal to:
(a) the base on-peak and off-peak rates specified in Section
III.B.4 of this Contract (the
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"base rates") plus two-thirds of the difference between the base on-peak or
off-peak rates and 100% of HELCO's on-peak and off-peak avoided cost,
respectively, if HELCO's on-peak or off-peak avoided cost is greater than
the respective base on-peak or off-peak rate, or
(b) the base on-peak or off-peak rates, if such base rates are
greater than HELCO's respective on-peak or off-peak avoided cost at the
time the energy is delivered.
The calculation of the on-peak energy payment rate is illustrated
in Exhibit B to this Contract.
2. The on-peak hours shall be those between the hours of
0700 hours and 2100 hours each day and the off-peak hours shall be those between
the hours of 2100 hours on one day and 0700 hours on the following day.
3. "HELCO's avoided cost" means HELCO's respective on-peak
and off-peak avoided costs for energy in cents per kilowatt hour as shown by
HELCO's most recent avoided cost filing with the PUC.
4. The base on-peak and off-peak rates shall be HELCO's
avoided cost for the first quarter of 1995, specifically, $0.0541/kwh on-peak
and $0.0451/kwh off-peak.
5. [deleted]
6. [deleted]
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C. Application of Rates.
--------------------
1. The regular rate shall apply to all energy provided by
HCPC per week up to the contract week amount as specified in Section III.A.2.
2. The regular rate also shall apply to all energy
requested by HELCO and delivered by HCPC in excess of the contract week amount;
it being understood, however, that HCPC shall not be required to supply such
energy.
3. Notwithstanding Sections III.B and C.1 and 2 of this
Contract, HELCO shall pay a rate for energy equal to the rates specified in
Sections III.B and C of the Prior Contract until such date as the PUC approves
recovery of HELCO's payments under this Contract to HCPC for purchased energy
(and related revenue taxes) through its Energy Cost Adjustment Clause (to the
extent that such payments are not recovered through HELCO's base electric
rates).
D. Payments. Charges for all energy delivered hereunder shall
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be payable monthly within ten (10) days after the last day of the calendar
month.
IV. [deleted]
V. 69 kv Substation and Transmission Line.
--------------------------------------
A. Existing Facilities.
-------------------
Pursuant to the Initial Agreement, HELCO constructed and equipped a
69/13.8 kv substation, transmission line and other necessary apparatus for the
purpose of making HCPC capacity available to the HELCO system. Pursuant to the
Prior Contract, HELCO charged HCPC $77,238 annually for a 20-year
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period, paid in equal monthly installments from September 15, 1974 to
September 14, 1994.
The interconnection facilities include the following:
1. 69 kv and 13.8 kv equipment at the HELCO Pepeekeo Switching
Station
2. Two 13.8 kv overhead polelines
3. Two 13.8 kv underground circuits
4. 13.8 kv breakers and switchgear equipment at the HCPC power plant
5. 13.8 kv revenue meters and metering support facilities at the HCPC
power plant
6. Communication and current transformer circuit between the Pepeekeo
Switching Station and the HCPC power plant.
The point of interconnection is the jumper cables between the HELCO
13.8 kv overhead lines and HCPC's 13.8 kv underground conductors. HELCO will
continue to own, operate and maintain at its expense items #1, #2, and the
revenue meters in item #5. HCPC will continue to own, operate and maintain at
its expense items #3, #4, the metering support facilities in item #5, and #6.
B. Upgrade of Facilities.
---------------------
To the extent necessary to accommodate HCPC's supply of 22,000 kw of
capacity, HELCO shall, subject to any applicable PUC requirements, upgrade the
existing substation and transmission line facilities, and shall use its best
efforts to
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meet the June 1, 1995 date for increasing HCPC's capacity obligation. Any costs
incurred by HELCO in such upgrade shall be prorated between HELCO and HCPC, such
that HCPC shall be allocated a portion of such cost equal to a fraction, the
numerator of which shall be the number of full or partial calendar months
between the commencement of the 22,000 kw capacity obligation and the end of the
Contract term, and the denominator of which is the estimated useful life of the
upgraded facilities. Such amount shall be payable in substantially equal monthly
installments over the remaining term of this Contract upon completion of the
upgrade, through a credit each month against the amount otherwise payable by
HELCO under Section III.D. for energy purchased hereunder.
VI. Metering.
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All electric energy to be delivered hereunder shall be what is
commonly called 3-phase 60 hertz alternating current and shall be delivered and
metered at an electromotive force of 13.8 kv, a plus or minus 5% variation being
allowable, at HCPC's 13.8 kv bus. All revenue-metering equipment shall be owned
and operated by HELCO in a metering compartment provided by HCPC and meeting all
PUC standards at the 13.8 kv bus. Metering shall be accomplished by an
individual system measuring energy from HCPC. HELCO shall, at least once each
contract year during the term hereof, test and adjust, in the presence of HCPC's
representative, all revenue-metering equipment in conformity with the current
standards followed by HELCO pursuant to PUC order or rule, which was ANSI C12
1975 (6th ed.) as of the date of this Contract. If said equipment is found
inaccurate by more than 2%, then
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adjustment in the billings for such inaccuracy shall be made within 30 days by
one party to the other as the case may be. Any inaccuracy so discovered shall be
conclusively presumed to have existed for half the period between the last
inspection and the inspection in which the inaccuracy was discovered.
VII. Purchase of Power by HCPC.
-------------------------
Sales of electrical energy to HCPC by HELCO shall be governed by
applicable rate schedules and rules and regulations at the time of such sales as
specified in HELCO's tariff filed with the PUC, and not by this Contract.
VIII. Interruption of Service.
-----------------------
If HCPC shall be wholly or partially prevented from delivering the
electrical energy contracted for herein, or if the service thereof shall be
interrupted, or if HELCO shall be prevented from receiving, using and applying
the same, by reason of or through strikes, riot, fire, flood, invasion,
insurrection, lava flow or volcanic activity, tidal wave, civil commotion,
accident, the order of any court or civil authority, any act of God or the
public enemy, or any other similar or dissimilar cause reasonably beyond its
exclusive control and not attributable to its neglect, then and in any such
event, HCPC shall not be obligated to deliver said electrical energy hereunder
during such period and shall not be liable for any damage or loss resulting from
such interruption or suspension, and HELCO shall not be obligated or liable to
take or pay for any such energy during such period. In the event of a strike of
its own employees which would interfere with the delivery of energy hereunder,
HCPC will utilize
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its best efforts to operate the HCPC power plant facilities, including the use
of supervisory labor. In any case, however, so long as HCPC is able to fulfill
its obligations under this Contract, HELCO will continue to pay the capacity
charge set forth in Section II.C. hereinabove. In the event HELCO is able to
fulfill its obligations under this Contract but HCPC is unable to do so, HCPC
shall continue to pay the charge set forth in Section V hereinabove. In the
event of either party being unable to fulfill its obligations under this
Contract without fault as aforesaid, for periods not in excess of 24 consecutive
hours, then, and in such case, there will be no adjustment of the charge set
forth in Section V or the capacity charge. In any of such event or events, the
party or parties suffering such interruption or suspension shall be prompt and
diligent in removing the cause thereof. In order to minimize the possibility of
interruption, HCPC agrees to keep reasonable fuel reserves and a reasonable
inventory of spare parts on hand at all times.
IX. Performance Standards and Sanctions.
-----------------------------------
A. Minimum Performance Standards.
-----------------------------
1. HCPC acknowledges and agrees that the HCPC unit is
expected to meet the following minimum standards for satisfactory day-to-day
performance during each contract year: (i) an on-peak unit availability
(excluding the four-week annual maintenance period and downtime due to a
catastrophic equipment failure) of 95 percent or better; (ii) not more than 6
unit trips per year; and (iii) a forced outage rate of 5 percent or less.
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2. The on-peak availability of the HCPC Unit (in percent)
is to be computed by adding the average megawatts available from the HCPC unit
during each on-peak hour during the contract year, multiplying the total by 100,
and dividing by either 94,080 (while the capacity obligation is 20,000 kw) or
103,488 (while the capacity obligation is 22,000 kw). In the case of the
partial contract year, the foregoing formula shall be adjusted appropriately.
3. "Catastrophic equipment failure" means a sudden,
unexpected failure of a major piece of equipment which (i) substantially reduces
or eliminates the capability of the HCPC Unit to produce power, (ii) is beyond
the reasonable control of HCPC and could not have been prevented by the exercise
of due diligence by HCPC and, (iii) despite the exercise of all reasonable
efforts, requires more than 60 days to repair.
4. "Unit trip" means the sudden and immediate removal of
the HCPC Unit from service as a result of an immediate
mechanical/electrical/hydraulic control system trip or operator initiated
trip/shutdown which requires HELCO to take immediate steps to place an
unscheduled generator on line to make up for the loss of output of the HCPC
Unit; provided, however, that a unit trip shall not include: (i) any such
removal which occurs within 48 hours of the time at which the HCPC Unit is
restarted following an outage; (ii) trips caused or initiated by HELCO; or (iii)
trips occurring during periods when HCPC has continued to furnish capacity to
HELCO at the request of HELCO's
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Production Manager after HCPC has notified HELCO's Production Manager that the
HCPC Unit is likely to trip.
5. The forced outage rate of the HCPC unit during a
contract year is to be computed by totaling the average megawatts unavailable
for service due to forced outages or deratings on an hourly basis, multiplying
the total by 100, and dividing by either 175,200 (while the capacity obligation
is 20,000 kw) or 192,720 (while the capacity obligation is 22,000 kw). In the
case of the partial contract year, the foregoing formula shall be adjusted
appropriately.
B. Sanctions.
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1. The capacity charge is to be made on the basis of the
full availability of 22,000 kw (20,000 kw during the period HCPC has a capacity
obligation of 20,000 kw under Section II.A.). For any full on-peak hour in
which the full 22,000 kw (or 20,000 kw, as applicable) is not available, the
capacity charge will be reduced by the following amounts for each kilowatt of
deficiency:
Capacity Obligation Sanction
------------------- --------
20,000 kw $0.0311/kw
22,000 kw
through 1995 (at $167/kw-yr) $0.0314/kw
1996 - 1999 (at $231/kw-yr) $0.0435/kw
2. For each contract year in which the on-peak
availability of the HCPC unit is less than 95 percent, HCPC will pay to HELCO
$5000 for each full percentage point of the
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shortfall unless the shortfall is due to a catastrophic equipment failure.
3. For each unit trip in excess of 6 per contract year,
HCPC shall pay $5000 to HELCO.
4. HELCO shall have the right to set off any payment due
from HCPC under this Section against any payments due to HCPC.
C. Deletion of Capacity Charge.
---------------------------
1. If the performance of the HCPC Unit fails to meet any
of the following minimum criteria for any reason other than a catastrophic
equipment failure, the capacity charge shall be deleted until, with respect to
criterion (v) or (vi), HCPC demonstrates to HELCO's reasonable satisfaction that
it has cured the defect or deficiencies causing the unit trips, and until, with
respect to criterion (i), (ii) or (iii), HCPC operates the unit at or above the
minimum criterion or criteria for one full year:
(i) On-peak availability of no less than 75 percent for
any one contract year;
(ii) On-peak availability of no less than 80 percent
for two out of any three consecutive contract years;
(iii) Forced outage rate no greater than 15
percent for any one contract year;
(iv) Forced outage rate no greater than 10 percent for
two out of any three consecutive contract years;
(v) Unit trips no greater than 18 for any one contract
year; or
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(vi) Unit trips no greater than 12 for any two out of
three consecutive contract years.
2. Any period during which the HCPC Unit does not meet or
exceed the minimum criteria set forth in Section IX.C.1. shall be termed a
"deficiency period."
3. Notwithstanding the provisions of Section IX.C.1.(v)
and (vi), the capacity charge shall not be deleted solely on the basis of
excessive unit trips during such period following a deficiency period (not to
exceed five (5) days) as HCPC is taking appropriate and timely corrective action
acceptable to HELCO to cure any defects or deficiencies causing the unit trips.
HCPC shall not be deemed to be taking appropriate and timely corrective action
unless (i) it provides written notice to HELCO of the defects or deficiencies
causing the unit trips, the corrective action it proposes to take, and an
appropriate schedule for completing such corrective action within two (2) days
after the end of a deficiency period, and (ii) it complies with such schedule.
Such written notice shall not be valid unless it is provided within seven (7)
days after the end of a deficiency period.
X. Privity.
-------
Any other term, covenant or provision herein contained to the contrary
notwithstanding, this Contract is not intended and shall not be construed in any
manner so as to benefit any third party; nor is it intended nor shall it be
construed in a manner such as to place HCPC in privity with any parties who
might have a contract to purchase electric energy from HELCO; nor is it
21
intended nor shall it be construed in any manner so as to impose a duty upon
HCPC to supply electric energy to the public or any portion of the public or to
any private person or parties not a party to this Contract, or to supply
electric energy to any particular locality or district in the County of Hawaii.
XI. Assignment.
----------
This Contract shall not be assigned by either party without the prior
written consent of the other party; provided that HELCO may assign its interest
in this Contract, upon written notice to HCPC, to the Trustee under HELCO's
First Mortgage and Deed of Trust dated May 1, 1941, as it has been and may be
amended from time to time; and further provided that HCPC may assign its
interest in this Contract to Mauna Kea Agribusiness, Inc. and may request
HELCO's consent to an assignment of this Contract pursuant to a refinancing by
HCPC; which consent shall not be unreasonably withheld.
XII. Arbitration.
-----------
A. Enforcement of Contract. In the event any controversy or
-----------------------
dispute arises with respect to this Contract or any of the terms or conditions
hereof other than any dispute arising under Section XV, or with respect to any
alleged breach hereof, such controversy or dispute, and all issues with respect
to any obligation or duty to continue performance under this Contract pending
resolution of such controversy or dispute, shall be submitted to and settled by
arbitration in accordance with the laws of the State of Hawaii (which are
currently codified in Chapter 658 of the Hawaii Revised Statutes) and the
Commercial
22
Rules of the American Arbitration Association and the parties shall be bound by
the award of such arbitration.
B. Attorneys' Fees. In the event of any breach of any covenant
---------------
or condition of this Contract, or any dispute or controversy with respect
hereto, the prevailing party shall be entitled to recover from the other party
all expenses and costs, including reasonable attorneys' fees, incurred in the
enforcement of this Contract.
XIII. Training Standards.
------------------
All HCPC employees operating and maintaining the steam generator and
all HCPC employees maintaining the turbine generator shall have received
training in accordance with good engineering and operating standards and
practices. HCPC's operation and maintenance schedules shall be established to
provide adequate staffing by qualified personnel at all times.
XIV. Term.
----
The term of this Contract shall be from the effective date of this
Contract, determined in accordance with Section XVIII.A., to and including
December 31, 1999.
XV. Termination; Default.
--------------------
A. Termination upon HCPC's Total Default.
-------------------------------------
1. Upon the occurrence of a total default by HCPC, HELCO
may, at its option, (i) terminate this Contract by delivering written notice of
such termination to HCPC, and institute proceedings or resort to such other
remedies not in conflict with this Contract as it deems appropriate, or (ii)
continue this Contract, in which event HCPC shall pay HELCO's
23
power replacement cost, and institute proceedings or resort to such other
remedies not in conflict with this Contract as it deems appropriate. Termination
under this Section shall be effective 30 days from the date of HCPC's receipt of
written notice of termination and shall not prejudice any other rights or
remedies HELCO may have.
2. "Total default" means abandonment of the production of
power by failure to maintain continuous service to the extent required by this
Contract, when HCPC has the technical capability to maintain such service
(including the ability to operate HCPC's Unit in a safe manner in accordance
with good engineering and operating practices), for three (3) or more
consecutive days, the last 24 hours of which shall be after notice to HCPC that
it is in total default.
3. "HELCO's power replacement cost" means the cost to
HELCO of replacing the capacity and energy that HCPC is obligated to furnish to
HELCO pursuant to Sections II.A. and III.A.1. and 2. less the net payments HELCO
would have made to HCPC for such capacity and energy.
B. HCPC's Failure to Restore Unit. If HCPC shall fail to make
------------------------------
all reasonable efforts to restore the HCPC Unit to full or substantially full
operating condition following any casualty loss and such failure continues for
ten (10) days after written demand therefor by HELCO, HELCO shall have the
option to terminate this Contract by giving written notice of such termination
to HCPC. Such termination shall be effective 30 days from the date of HCPC's
receipt of written notice of termination
24
and shall not prejudice any other rights or remedies HELCO may have.
C. HELCO Right to Possession. In the event there is a total
-------------------------
default by HCPC as defined under Section XV, HELCO shall have the right but not
any obligation immediately to take possession of the HCPC Power Plant for the
remaining term of the Contract and to generate power regardless of whether or
not it exercises its default purchase option under Section XVI.A. If at the
time of such total default HCPC remains under the jurisdiction of the Bankruptcy
Court, to the extent any automatic stay may apply, the parties agree that HELCO
has cause, within the meaning given that term in Section 362(d)(1) of the
Bankruptcy Code, 11 U.S.C. (S) 362(d)(1), to obtain relief from any automatic
stay to permit it to exercise its rights under this Section. If HELCO takes
possession of the HCPC Power Plant, it must preserve the value and operational
integrity of the plant so that the fair market value (less depreciation) of the
plant is not negatively impacted. During and as a result of any such possession
by HELCO, the risk of damage to or loss of the HCPC Power Plant shall be borne
by HELCO to the extent such damage or loss is attributable to HELCO's failure to
operate the power plant in accordance with (i) Good Engineering and Operating
Practices and (ii) electric public utility standards. In the event HELCO takes
possession of the HCPC Power Plant, HCPC shall make available to HELCO all
operating manuals and equivalent information relating to the operation of the
power plant.
25
XVI. HELCO's Purchase Options.
------------------------
A. Default Purchase Option.
-----------------------
1. In addition to any other rights or remedies HELCO may
have, if a total default by HCPC occurs and HELCO gives notice of termination of
this Contract to HCPC pursuant to Section XV.A., HELCO, at its option, shall
have the right but not any obligation, to purchase the HCPC Power Plant, as
defined and identified on Exhibit "A" to this Contract, free and clear of any
liens, debts, mortgages or other encumbrances (which right shall be termed
HELCO's "default purchase option").
2. In order to preserve its default purchase option, HELCO
shall provide written notice of its preliminary intent to exercise such option
to purchase to HCPC within 30 days after HELCO gives notice of termination of
this Contract to HCPC as a result of HCPC's total default.
3. Notice of intent to purchase hereunder by HELCO shall
be in writing, and shall be given to HCPC within 15 days after agreement between
the parties as to the fair market value of the HCPC Power Plant, or after a
determination of such fair market value, with the closing of any such purchase
contingent upon PUC approval unless waived by HELCO.
4. The purchase price pursuant to HELCO's default purchase
option shall be the fair market value of the HCPC Power Plant.
5. If HELCO gives written notice of its preliminary intent
to exercise its default purchase option after a total default by HCPC occurs,
HELCO shall have the right but not
26
any obligation to immediately take possession of the HCPC Power Plant during any
remaining term of this Contract and to generate electrical energy for its
electric public utility system. If HELCO takes possession of the HCPC Power
Plant, it must preserve the value and operational integrity of the plant so that
the fair market value (less depreciation) of the plant is not negatively
impacted. During and as a result of any such possession by HELCO, the risk of
damage to or loss of the HCPC Power Plant shall be borne by HELCO to the extent
such damage or loss is attributable to HELCO's failure to operate the power
plant in accordance with (i) Good Engineering and Operating Practices and (ii)
electric public utility standards. In the event HELCO takes possession of the
HCPC Power Plant, HCPC shall make available to HELCO all operating manuals and
equivalent information relating to the operation of the power plant.
B. [deleted]
C. [deleted]
D. Protection of Option to Purchase. HCPC will not directly or
--------------------------------
indirectly create, or permit to be created by any action or inaction of HCPC or
those claiming through or under HCPC (and will not permit to remain, and will
promptly discharge, any of the same so created or permitted) any mortgage, lien
or encumbrance with respect to the HCPC Power Plant (other than those existing
and disclosed in writing to HELCO by HCPC as of the date of this Contract) that
would impair the exercise by HELCO of its option to purchase pursuant to Section
XVI.A. of this Contract,
27
without HELCO's prior written consent, which consent shall not be unreasonably
withheld.
XVII. Mutual Release.
--------------
Each party hereby waives and releases any and all claims it now has or
may have against the other party resulting from, arising out of, connected with
or traceable either directly or indirectly to any action of any party under the
Prior Contract up to and including the effective date of this Contract. Any
third party claim brought against either party within 30 days after the
effective date of this Contract but resulting from, arising out of, connected
with or traceable either directly or indirectly to any action of either party
under the Prior Contract or while the TRO was in effect shall not be subject to
such release.
XVIII. Effective Date; Necessary Approvals and Conditions.
--------------------------------------------------
A. This Contract shall be effective as of the earlier of: (i)
the date of approval by the United States Bankruptcy Court or (ii) the date of a
non-appealable dismissal of HCPC's bankruptcy action, Bankruptcy Case No. 94-
01491, United States Bankruptcy Court, State of Hawaii.
B. HELCO shall use its good faith efforts to obtain, as soon as
practicable, an order or orders from the PUC approving: (i) this Contract,
amending and restating the Prior Contract in its entirety; (ii) the inclusion of
energy and capacity costs to be incurred by HELCO pursuant to this Contract in
HELCO's revenue requirements for ratemaking purposes or for the
28
purpose of determining the reasonableness of HELCO's rates and (iii) recovery of
HELCO's payments to HCPC for purchased energy (and related revenue taxes)
through its Energy Cost Adjustment Clause (to the extent that such payments are
not recovered through HELCO's base electric rates).
C. If the PUC Approval under Section XVIII.B. is not obtained
in either an interim or final form, acceptable to HELCO in its sole discretion,
which shall not be unreasonably invoked, within 180 days of the execution of
this Contract (unless mutually extended by the parties), HELCO, by written
notice to HCPC within 30 days of such 180 day period (as it may be extended by
the parties), may terminate this Contract, such termination to be effective 45
days after receipt by HCPC of such notice. Furthermore, if the PUC approval
under Section XVIII.B(i) is not obtained in either an interim or final form
within 180 days of the execution of this Contract (unless mutually extended by
the parties), HCPC, by written notice to HELCO within 30 days of such 180 day
period (as it may be extended by the parties), may terminate this Contract, such
termination to be effective 45 days after receipt by HELCO of such notice.
D. In addition to any other conditions specified herein, this
Contract shall be contingent upon the parties obtaining approval of the
respective Boards of Directors of HELCO and HCPC. The parties shall use their
good faith efforts to obtain all such approvals within ten (10) days of the date
of execution of this Contract.
29
E. As a condition precedent to the effectiveness of this
Contract, the parties shall execute, obtain any necessary approvals for, and
satisfy any conditions precedent specified in such agreements as are necessary
to provide for a cash advance of $6,000,000 and a revolving line of credit of up
to $2,000,000, as generally described in Paragraphs 11 and 12, respectively, of
the Letter Agreement between the parties dated January 5, 1995, including any
agreements concerning the security relating to such cash advance and revolving
line of credit. The following agreements relate to the $6,000,000 cash advance:
(i) Credit Agreement; (ii) Secured Promissory Note; (iii) Real Property
Mortgage, Security Agreement and Financing Statement; (iv) Assignment of
Proceeds in Power Purchase Agreement; (v) Agreement Re: Setoff and Assignment
of Proceeds; Consent to Setoff and Assignment of Proceeds; and (vi) Letter
Agreement by Mauna Kea Agribusiness Co., Inc. in favor of HELCO Re: Future
Sales of Real Estate by Mauna Kea Agribusiness to Hilo Coast Processing Company.
The following agreements relate to the revolving line of credit of up to
$2,000,000: (i) Revolving Credit Agreement; (ii) Revolving Promissory Note;
(iii) Security Agreement; (iv) Agreement Re: Setoff and Assignment of Proceeds;
Consent to Setoff and Assignment of Proceeds; (v) Pledge and Security Agreement;
(vi) Assignment of Proceeds in Power Purchase Agreement; (vii) Real Property
Second Mortgage, Security Agreement and Financing Statement; and (viii) UCC-1,
Financing Statement.
30
XIX. General Provisions.
------------------
A. Severability. Any portion or provision of this Contract
------------
which is invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision thereof invalid, illegal or
unenforceable in any other jurisdiction.
B. Section Headings. The Section headings included in this
----------------
Contract are for the convenience of the parties only and shall not affect the
construction or interpretation of this Contract. Schedules and Exhibits
referred to in this Contract are an integral part of this Contract.
C. Notices. All notices given pursuant to this Contract shall
-------
be in writing and be personally delivered or mailed with postage prepaid, by
registered or certified mail, return receipt requested to the address set forth
below or such other address as a party may from time to time specify in writing
to the other party. If so mailed and also sent by telegram or facsimile
machine, the notice will conclusively be deemed to have been received on the
business day next occurring 24 hours after the latest to occur of such mailing
and telegraphic communication; otherwise, no notice shall be deemed given until
it actually arrives at the address in question. The addresses to which notice
are initially to be sent are as follows:
31
If to HELCO to:
President
Hawaii Electric Light Company, Inc.
P. O. Box 1027
Hilo, Hawaii 96721
Telecopier No.: (808) 969-0249
With a copy to:
Manager, Rate & Regulatory Affairs Department
Hawaiian Electric Company, Inc.
P. O. Box 2750
Honolulu, Hawaii 96840
Telecopier No.: (808) 543-4718
If to HCPC to:
President and Chief Executive Officer
Hilo Coast Processing Company
P. O. Box 18
Pepeekeo, Hawaii 96783
Telecopier No.: (808) 964-5703
With a copy to:
Chairman of the Board
Hilo Coast Processing Company
c/o C. Brewer and Company, Limited
P. O. Box 1826
Honolulu, Hawaii 96805
Telecopier No.: (808) 544-6182
D. Entire Agreement. This Contract (including Exhibits "A" and
----------------
"B" hereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations between the
parties with respect to the subject matter hereof.
E. Governing Law. This Contract is governed by and is to be
-------------
construed and interpreted in accordance with the laws of the State of Hawaii,
without giving effect to the conflict of law principles thereof.
32
F. Modifications, Amendments or Waivers. Except as otherwise
------------------------------------
provided herein, provisions of this Contract may be modified, amended or waived
only by a written document specifically identifying this Contract and signed by
a duly authorized executive officer of a party.
G. Interpretation. Because the terms of this Contract have
--------------
been negotiated at arm's length among sophisticated parties represented by
experienced counsel and with all parties having had the opportunity to request
and bargain for provisions in their respective interests, the parties agree that
any dispute as to the construction of this Contract shall be resolved by
interpreting its terms according to their ordinary and every day meaning, and
not for or against any party by virtue of its role in negotiating or drafting
this Contract and that the rule of "interpretation against the draftsman" shall
not apply.
H. Good Faith Efforts. For purposes of any provision in this
------------------
Contract which requires any party to obtain certain approvals or comply with
certain conditions, including, but not limited to, any approvals and conditions
under Section XVIII hereof, such party shall use its good faith efforts to
obtain such approvals or comply with such conditions in a timely manner.
33
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
HILO COAST PROCESSING COMPANY
By /s/ Kent T. Lucien
-----------------------------------------
Its Treasurer
HAWAII ELECTRIC LIGHT COMPANY, INC.
By /s/ Warren H. W. Lee
-----------------------------------------
Its President
By /s/ Harwood D. Williamson
-----------------------------------------
Its Chairman
34
STATE OF HAWAII )
) SS.
CITY & COUNTY OF HONOLULU )
On this 24th day of March, 1995, before me appeared Kent T. Lucien,
to me personally known, who being by me duly sworn, did say that he is the
Treasurer of HILO COAST PROCESSING COMPANY, an agricultural cooperative, and
that said instrument was signed on behalf of said corporation by authority of
its Board of Directors, and said officer acknowledged said instrument to be the
free act and deed of said corporation.
/s/ Mona Jean Aragon
-----------------------------------
Notary Public, State of Hawaii
My commission expires: 11-4-96
--------
35
STATE OF HAWAII )
) SS.
CITY & COUNTY OF HONOLULU )
On this 24th day of March, 1995, before me appeared Warren H. W. Lee
and Harwood D. Williamson to me personally known, who, being by me duly sworn,
did say that they are the President and Chairman of HAWAII ELECTRIC LIGHT
COMPANY, INC. a Hawaii corporation, and that said instrument was signed in
behalf of said corporation by authority of its Board of Directors, and said
President and Chairman severally acknowledged said instrument to be the free act
and deed for said corporation.
/s/ Donna K. Ahuna
-----------------------------------
Notary Public, State of Hawaii
My commission expires: 4-16-96
-------
L.S.
36
EXHIBIT A
HCPC POWER PLANT OWNERSHIP TRANSFER
-----------------------------------
1. Transfer ownership of the power generating plant, associated equipment, and
structures to include, but not be limited to the following:
A. Powerhouse (boiler and turbine generator)
B. Bagasse storage and handling buildings
C. Coal storage area
D. Fuel storage area
E. Circulating water wells and pipeline
F. Circulating water outfalls
G. Fresh water well located off-site
H. Land that Items A-G above are situated on as shown on the attached
map. (Location of Item G is not shown.)
2. Obtain easements and rights-of-way to include but not be limited to the
following:
A. 13.8 KV generator feeder from the power plant to the HELCO substation
B. Service roads
C. Service water line from the fresh water well
D. Power supply line for the fresh water well pump
3. Sever interconnections with plantation facilities, for the following items:
A. 2.4 KV distribution system
B. Domestic utilities (water, sanitary sewer, power, etc.)
C. Service utilities (air, steam, etc.)
4. HCPC should obtain all government approvals and proper subdivision of the
affected property prior to transfer of ownership. (Note: Coal storage
area is situated on a parcel zoned for residential use.)
5. Equipment included in paragraph 1 above is described in greater detail on
the attached page A3.
A-1
[The original of this page is a map depicting the land upon which the HCPC
power plant and related facilities subject to the purchase option in the
power purchase agreement, specifically those listed as items 1.A-1.G on
Page A-1, are situated.]
A-2
HCPC POWER PLANT OWNERSHIP TRANSFER
LIST OF EQUIPMENT
Number
of Units Description
- -------- ----------------------------------------
5 Air Compressors, Instrument Air Dryer,
Air Tank and Miscellaneous Tanks
4 Demineralize Chemical Treatment Pumps,
Fuel Oil Heating, Pumping and Storage
and Condensate Tanks
Misc Piping, Superstructure, Support Steel
and Bridge Crane
8 Minor Component Group Consisting of
Rotary Seal Valves, Pressure Control
Valves, Fiberglass Tank, Kittrell
Silencer Check Valves and L.D. Fan
Coupling
4 Conveying and Storage Equipment for
Bagasse and Boiler Ash
4 Control Instrumentation System and
Accessories
4 Motors for Fans and Boiler Feed Pumps
and Auxiliaries
3 480 V and 2,400 V Load Centers and 13.8
KV Switchgear
1 Concrete Substructure and Foundations
for Boiler and Turbogenerator
9 20 Mega-Watt DeLaval
Turbo-Generator/Condenser, Vacuum Pump,
Spare Parts and Cooling Water Heat
Exchanger
1 330,000 lb./hr. 1,250 psig. 825/o/
F.T.T. Babcock and Wilcox Boiler and
Spare Parts
5 Boiler Feed Pumps and Drive Turbine,
Generator and Feedwater Heater
1 Fuel Storage Structure
1 Foundations
1 Fuel Reclaimers
9 Fuel Conveyors, Bagasse Plows and Trash
Conveyer and Drives
1 Electrical System
3 Salt Water Wells Nos. 1, 2 and 3
1 Fresh Water Well System (off-site) with
6-inch Water Line to Power Plant
A-3
EXHIBIT B
Calculation of Energy Payment Rate
Assumptions:
- -----------
HELCO on-peak base ("floor") rate (Prior Contract): $0.0437
HCPC on-peak energy payment rate (Prior Contract): HELCO avoided cost
HCPC on-peak base ("floor") rate (this Contract): $0.0541 (rounded to $0.054
for illustration purposes)
HCPC on-peak energy payment rate (this Contract): formula reflecting two-thirds
of the increase/decrease between quarterly avoided cost figures
HELCO on-peak filed avoided energy cost payment rates:
First year lst quarter $ 0.054
2d quarter $ 0.057
3d quarter $ 0.060
PUC approval
4th quarter $ 0.063
Second year 1st quarter $ 0.057
2d quarter $ 0.051
3d quarter $ 0.053
4th quarter $ 0.057
HCPC on-peak energy payment rates:
- ---------------------------------
First year lst quarter $ 0.054
2d quarter $ 0.057
3d quarter $ 0.060
PUC approval $ 0.058 (1)
4th quarter $ 0.060
Second year 1st quarter $ 0.056
2d quarter $ 0.054 (2)
3d quarter $ 0.054 (3)
4th quarter $ 0.056 (4)
(1) Immediate adjustment upon PUC approval, to reflect sharing formula
(2) Due to floor
(3) Effect of III.B: energy payment rate will not be increased even though
HELCO's avoided cost increases, where HELCO's avoided cost for both the
current and prior quarter are less than or equal to the floor
(4) Effect of III.B: where HELCO's avoided cost increases and the current
quarter's avoided cost is above the floor but the prior quarter's avoided
cost is below the floor, HCPC's energy payment is increased but only to the
extent of two-thirds the difference between the floor and the current
quarter's avoided cost.
B-1