Exhibit 10.8.1
AMENDED AND RESTATED
WHOLESALE POWER CONTRACT
BETWEEN
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION &
TRANSMISSION CORPORATION)
AND
ALTAMAHA ELECTRIC MEMBERSHIP CORPORATION
DATED AS OF
August 1, 1996
TABLE OF CONTENTS
RECITALS.......................................................................1
1. DEFINITIONS.....................................................2
2. PURCHASE AND SALE OBLIGATION....................................2
2.1 Purchase and Sale........................................2
2.2 No Dedication of Resources...............................3
2.3 Member's Unconditional Obligation to Pay.................3
3. POWER SUPPLY PLANNING AND RESOURCE ALLOCATIONS..................3
3.1 Percentage Capacity Responsibilities; Power
Sale Resources ..........................................3
3.2 Change of Certain Member Obligations.....................4
3.3 Planning and Resource Management.........................5
3.4 Future Resources, Power Sale Resources
and Resource Modifications ..............................5
3.5 Cost Responsibility......................................7
3.6 Non-Recourse Resources...................................8
4. POOLING.........................................................8
4.1 Seller's Energy and Capacity Pool........................8
4.2 System Operator..........................................9
4.3 Operating Policies and Procedures........................9
4.4 Sale Transactions by Members in the Pool.................9
4.5 Scheduling Member........................................9
4.6 Right to Designate Agent.................................9
5. RATES..........................................................10
5.1 General.................................................10
5.2 Periodic Review.........................................10
5.3 Pool Settlement.........................................10
5.4 Functional Unbundling...................................10
5.5 Reasonable Rates........................................10
5.6 Allocation of Payment Defaults..........................10
5.7 Covenant of the Member..................................11
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6. DELIVERY POINTS AND GENERAL TERMS AND CONDITIONS
OF SERVICE............................................................11
6.1 Delivery Points.........................................11
6.2 General Terms and Conditions. .........................11
6.3 Seller and Member Duties................................11
7. RIGHTS OF ACCESS, RECORDS AND ACCOUNTS.........................12
7.1 Rights of Access. .....................................12
7.2 Accounting Records. ...................................12
7.3 Access to Books and Records. ..........................12
8. REORGANIZATIONS, TRANSFERS AND SALES OF ASSETS
BY THE MEMBER..................................................13
8.1 Dissolution or Liquidation. ...........................13
8.2 Permitted Transactions. ...............................13
8.3 Service Territory and Distribution System. ............14
8.4 Specific Performance. .................................14
9. ASSIGNMENTS....................................................14
9.1 General. ..............................................14
9.2 Assignment for Security.................................15
9.3 Corporate Reorganization. .............................15
9.4 Receiver or Trustee in Bankruptcy.......................16
9.5 Express Rejection of Implied Limitations................16
10. EVENTS OF DEFAULT AND REMEDIES.................................16
10.1 Payment Default. ......................................16
10.2 Seller's Failure to Deliver. ..........................17
10.3 Performance Default. ..................................17
10.4 Remedies................................................17
11. REASONABLENESS OF RATES........................................18
11.1 Fixed Rate Contract. ..................................18
11.2 Formulaic Rate. .......................................18
11.3 Regulatory Review.......................................18
12. EFFECTIVENESS AND TERM.........................................19
12.1 Effectiveness and Term..................................19
12.2 Reduction in Term.......................................19
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13. AMENDMENTS, ENTIRE AGREEMENT AND CONFLICTS.....................19
13.1 Amendments. ............................................19
13.2 Entire Agreement. .....................................19
13.3 Conflicts. ............................................20
13.4 Counterparts. .........................................20
14. SEVERABILITY...................................................20
15. AMENDMENT AND RESTATEMENT......................................20
16. GOVERNING LAW..................................................20
17. MEDIATION......................................................20
18. MEMBER'S WITHDRAWAL FROM SELLER................................21
18.1 Member Withdrawal. ....................................21
18.2 References..............................................21
19. MISCELLANEOUS..................................................21
19.1 No Retail Sales.........................................21
19.2 Indemnification. ......................................22
19.3 No Restriction on Revenue Allocation. .................22
19.4 Corporate Documents. ..................................22
19.5 Information Requirements. .............................22
19.6 No Third Party Beneficiaries. .........................23
19.7 Rules of Construction...................................23
20. NOTICES........................................................23
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AMENDED AND RESTATED WHOLESALE POWER CONTRACT
THIS AMENDED AND RESTATED WHOLESALE POWER CONTRACT, dated as of August 1,
1996 (together with permitted amendments hereto, this "Agreement"), is entered
into by and between Oglethorpe Power Corporation (An Electric Membership
Generation & Transmission Corporation), an electric membership corporation
organized and existing under the laws of the State of Georgia (the "Seller"),
and Altamaha Electric Membership Corporation, an electric membership corporation
organized and existing under the laws of the State of Georgia (the "Member").
R E C I T A L S:
WHEREAS, the Seller's existing members, including the Member, are 39
electric membership corporations doing business in the State of Georgia, each of
which joined with the others, beginning in 1974, to form the Seller in order to
share the benefits and costs of ownership of an entity that would engage in
providing electric capacity and energy for the benefit of its members; and
WHEREAS, the Seller currently owns and operates electric generation plants
and in the future may construct additional electric generation plants or
purchase or otherwise obtain electric capacity and energy for the purpose, among
others, of supplying electric capacity and energy to its members, several of
which are borrowers from the Rural Utilities Service, as successor to the Rural
Electrification Administration (the "RUS"), and others; and
WHEREAS, the Seller has financed the construction of such generating plants
in whole or in part through loans, and may in the future obtain additional
loans, evidenced by mortgage notes (collectively, the "Notes") made or
guaranteed by the United States of America (the "Government"), acting through
the Administrator of the RUS (the "Administrator") and loans made by, or
securities issued to, or obligations undertaken to, others; and
WHEREAS, the Notes and certain of the loans made by, or securities issued
to, or obligations undertaken to, others (collectively, with the Notes, the
"Secured Obligations") are or may be secured by that certain Consolidated
Mortgage and Security Agreement, dated as of September 1, 1994, made by and
among the Seller; the Government; CoBank, ACB, as successor in interest to
National Bank for Cooperatives; Credit Suisse, acting by and through its New
York Branch; and SunTrust Bank, Atlanta, successor in interest to Trust Company
Bank, as trustee, as it may hereafter be amended, supplemented, restated, or
replaced or substituted for, including by a trust indenture, from time to time
(the "Mortgage"); and
WHEREAS, this Agreement and payments due to the Seller under this Agreement
are pledged and assigned to secure the Secured Obligations as provided in the
Mortgage; and
WHEREAS, the Seller and the Member are parties to that certain Amended and
Consolidated Wholesale Power Contract, dated as of December 1, 1988; and
WHEREAS, the Government and the other holders of the Secured Obligations
are relying on this Agreement and other wholesale power contracts between the
Seller and its other members to assure that the Secured Obligations are repaid
and the purposes of the Rural Electrification Act of 1936, as amended (the
"REAct"), are carried out, and the Seller and the Member, by executing this
Agreement, acknowledge that reliance; and
WHEREAS, the Seller and the Member believe that, under current and
foreseeable industry conditions, the continued ability of the Seller's members
to operate as effective retail electric cooperatives in furtherance of the
purposes of the REAct requires more flexibility in meeting their future needs
for electric capacity and energy than would be available under the "all
requirements" terms of the Existing Contracts, provided that adequate provision
is made for the continued recovery by the Seller of all costs and expenses
associated with electric capacity and energy to which the Seller has committed
through the date of this Agreement; and
WHEREAS, for the purpose of adjusting to changes in the electric industry,
it is the intent of the parties that, as of the effective date of this
Agreement, the Seller shall transfer its transmission and distribution assets
substantially as an entirety to Georgia Transmission Corporation, a new electric
membership corporation organized and existing under the laws of the State of
Georgia ("GTC"); and
WHEREAS, the Member has determined that its interests and the interests of
its consumers will be best served by purchasing certain amounts of electric
capacity and associated energy from *the Seller on the terms and conditions of
this Agreement; and
WHEREAS, the Member is undertaking to purchase from the Seller, and the
Seller is undertaking to sell to the Member, certain amounts of electric
capacity and associated energy on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings herein contained, the Seller and the Member hereby agree as
follows:
1. DEFINITIONS. All capitalized terms used herein shall have the
respective meanings set forth in Schedule C attached hereto, unless the context
in which such term is used clearly requires otherwise.
2. PURCHASE AND SALE OBLIGATION.
2.1 Purchase and Sale. The Seller shall sell and deliver to the
Member, and the Member shall take and pay for or pay for, even if not available,
delivered or taken, at the rates provided for in Section 5, all electric
capacity allocated to the Member as reflected in the Member's
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Percentage Capacity Responsibilities set forth in the Exhibits to Appendix 1 to
"Rate Schedule A" (as amended from time to time in accordance with Section 3).
The Seller shall sell and deliver to the Member, and the Member shall pay for,
at the rates provided for in Section 5, any associated energy that the Member
shall determine to purchase for its own use or for resale pursuant to this
Agreement. The Member's payment obligations associated with its PCR in any
Resource shall continue until all costs of such Resource are paid in full
notwithstanding the occurrence of any event, or the taking of any action
permitted by this Agreement, with respect to such Resources, including, without
limitation, any event or action described in Section 2.3.
2.2 No Dedication of Resources. Neither the establishment of a PCR for
a Member with respect to a Resource nor the sale by the Seller to the Member of
electric capacity and associated energy under this Agreement shall constitute
either (i) a sale, lease, transfer , dedication or conveyance of an ownership
interest in or to any Resource or (ii) an entitlement to the electric capacity
or associated energy from any specific Resource. The Seller shall have the sole
authority, which it may exercise in its discretion, to manage, control and
operate all of its Resources, subject to the Seller's obligations to provide
available electric capacity and associated energy to the Member pursuant to this
Agreement.
2.3 Member's Unconditional Obligation to Pay. The Member shall make
all payments for electric capacity and energy that are required pursuant to this
Agreement in a timely manner, whether or not (i) electric capacity and energy
has or is being provided to the Member hereunder, (ii) Resources or any part
thereof are completed, delayed, terminated, available, operable, operating,
retired, sold, leased, transferred, or otherwise disposed of, (iii) the
construction or operation of the Resources or any part thereof is suspended,
interrupted, interfered with, reduced, curtailed or terminated, (iv) the Seller
is able to purchase or otherwise obtain electric capacity and energy from any
source or (v) any similar contract with any other member of the Seller is
invalid, in each such case for any reason whatsoever and whether or not due to
the conduct, acts or omissions of the Seller. Such payments by the Member shall
not be subject to any reduction, whether by offset, recoupment or otherwise, and
shall not be conditioned upon performance by the other members of the Seller or
the Seller under this Agreement or any other agreement or instrument. This
Section 2.3 shall not be construed to release the Seller from the performance of
any of its obligations expressed in this Agreement or, except to the extent
expressly provided in this Agreement, prevent or restrict the Member from
asserting any rights that it may have against the Seller or any other person
under this Agreement or any other agreement or under any provision of law or
prevent or restrict the Member, at its own cost and expense, from prosecuting or
defending any action or proceeding against or by third parties or taking any
other action to secure or protect its rights under this Agreement.
3. POWER SUPPLY PLANNING AND RESOURCE ALLOCATIONS.
3.1 Percentage Capacity Responsibilities; Power Sale Resources.
3.1.1 Percentage Capacity Responsibilities. The Seller shall at
all times
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maintain Exhibits to Appendix 1 to "Rate Schedule A" which identify all
Resources, all Percentage Capacity Responsibilities for the Member and all other
members with respect to each Resource and the original projected useful life or
the contract term for each Resource. (The identification of the original
projected useful life or the contract term of a Resource is for the sole purpose
of determining whether a Resource Modification constitutes a Major Resource
Modification). The Seller shall not construct or acquire a Future Resource
unless (i) the total of the PCRs allocated to the members of the Seller that
have a PCR in the Future Resource equals one hundred percent (100%) at the time
the Seller approves the principal documents necessary to commit the Seller to
such Future Resource, and (ii) the members of the Seller which do not have a PCR
with respect to such Future Resource are liable for a pro rata share of the
costs and expenses of such Future Resource in the event of a Payment Default by
all members which have a PCR with respect to such Future Resource as provided in
Section 3.5.3.
3.1.2 Power Sales Resources. The Seller shall also identify in
Exhibits to Appendix 1 to "Rate Schedule A" all Power Sales Resources and the
allocations made by the Seller with respect thereto in accordance with Section
3.4.2.
3.2 Change of Certain Member Obligations.
3.2.1 Without the prior written consent of the Member, the Seller
may not (i) allocate a PCR to the Member for a Future Resource, (ii) modify the
Member's PCR for an Existing Resource or a Future Resource or (iii) otherwise
add or modify an Exhibit to Appendix 1 to "Rate Schedule A," except as follows:
(a) If the Seller is not then released by the Member from
its responsibility set forth in clause (ii) of Section 3.3.1 to undertake
future resource procurement, the Seller may allocate a PCR to the Member
with respect to a Future Resource in accordance with Section 3.4.1;
(b) If the Seller is not then released by the Member from
its responsibility set forth in clause (iii) of Section 3.3.1 to sell
electric capacity and energy, the Seller may make an allocation to the
Member with respect to a Power Sale Resource in accordance with Section
3.4.2; and
(c) The Seller may modify the Member's PCR in connection
with a Major Resource Modification in accordance with Section 3.4.3.
3.2.2 Any addition of or modification to an Exhibit to Appendix 1
to "Rate Schedule A" made pursuant to Section 3.2.1 shall be prepared and
approved by the Seller in accordance with this Agreement and shall be
conclusively established by a resolution duly adopted by the Board of Directors
of the Seller concurrently with the Board's authorization of the execution of
the principal documents necessary to obligate the Seller to the transaction
resulting in such
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modification or addition. The Member's obligations shall thereupon be effective
as to any allocation with respect to a Power Sale Resource or any PCR allocated
to the Member in such additional or modified Exhibit, and the Member shall make
all payments required pursuant to this Agreement with respect to such
obligations. Such obligations of the Member shall not be affected by any
subsequent release by the Member of the Seller of the responsibilities set forth
in Section 3.3.1.
3.3 Planning and Resource Management.
3.3.1 Unless and until the Member provides an applicable written
notice pursuant to Section 3.3.2, the Seller shall be responsible for (i) bulk
power supply planning, (ii) future resource procurement, and (iii) sales of
electric capacity and energy for the Member (all three services, collectively,
"Joint Planning and Resource Management"). The Seller shall conduct Joint
Planning and Resource Management in accordance with written policies in effect
from time to time (the Seller's "Resource Policies"). The Member shall provide
an annual written notice to the Seller of the Member's long-range forecast of
load and any power supply resources the Member plans to acquire or dispose of on
its own behalf (an "Annual Planning Report") at the time(s) required and in
accordance with the Seller's Resource Policies. No change to the Seller's
Resource Policies made subsequent to the due date of the Member's Annual
Planning Report shall be effective, as to the Member, until January 1 of the
calendar year following the due date of the Member's next Annual Planning
Report.
3.3.2 The Member may elect to take individual responsibility for
its own (i) bulk power supply planning, (ii) future resource procurement, or
(iii) sales of electric capacity and energy by providing the Seller with written
notice of its release of the Seller from all such responsibilities or any one or
more of them. Any such notice shall be in the form provided in the Seller's
Resource Policies, shall be given no later than the due date of the Member's
Annual Planning Report, and shall be effective January 1 of the following year.
Notwithstanding any notice given under this Section 3.3.2, the Member shall
continue to provide its Annual Planning Report to the Seller unless the Member
is a Scheduling Member pursuant to Section 4.1, and the Member shall pay its
allocated share of the total cost of Joint Planning and Resource Management
until the effective date on which the Member takes individual responsibility for
all three services. If the Member has made any such election, the Seller shall
reassume any such responsibilities only in accordance with the notice
requirements and the terms set forth in the Seller's written policies and
procedures, as the Seller may amend such policies and procedures from time to
time.
3.4 Future Resources, Power Sale Resources and Resource Modifications.
3.4.1 If the Seller is not then released by the Member from its
responsibility set forth in clause (ii) of Section 3.3.1 to undertake future
resource procurement, the Seller may allocate to the Member, and the Member
shall be responsible for, a PCR with respect to any Future Resource approved by
the Seller in accordance with Section 3.2.2. Such allocation shall be made in
accordance with the Seller's Resource Policies.
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3.4.2 If the Seller is not then released by the Member from its
responsibility set forth in clause (iii) of Section 3.3.1 to sell electric
capacity and energy, the Seller may sell all or part of the electric capacity
and associated energy allocated to the Member pursuant to its PCR with respect
to any Resource. No such sale shall affect the Member's PCR with respect to any
such Resource (even though such sale may reduce or eliminate the electric
capacity and associated energy available to the Member during the term of the
sale). Any such sale of electric capacity or energy by the Seller for a term of
greater than one (1) year shall be allocated among the members of the Seller for
whom the sale is made as a Power Sales Resource in accordance with the Seller's
Resource Policies and shall be treated as a Resource in "Rate Schedule A." The
Seller may, in its sole discretion, at any time and from time to time, modify,
amend, extend, shorten or terminate any Power Sales Resource.
3.4.3 The Seller may, in its sole discretion, undertake from time
to time capital expenditures for additions, improvements, repairs or
modifications to a Generating Resource or modify or extend a Power Purchase
Resource (a "Resource Modification"). The parties recognize that a Resource
Modification may change the capacity of a Resource. In such event, a change may
be required to be made with respect to an existing Exhibit, or a new Exhibit may
be required, to Appendix 1 to "Rate Schedule A." Each such Resource Modification
shall be determined by the Board of Directors of the Seller to be either a Major
Resource Modification or a Minor Resource Modification.
(a) A Minor Resource Modification shall not affect the
Member's PCR with respect to such Resource (even though such modification
may change the electric capacity and associated energy available to the
Member or the contract term or useful life of the Resource).
(b) If the Board of Directors of the Seller determines that
a Major Resource Modification is required to comply with Legal
Requirements, such Major Resource Modification shall not affect the
Member's PCR with respect to such Resource (even though such modification
may change the electric capacity and associated energy available to the
Member or the contract term or useful life of the Resource). A
determination that a Major Resource Modification is required to comply with
Legal Requirements shall be made only by the vote of seventy-five percent
(75%) of the Board of Directors of the Seller.
(c) If the Seller has determined to make a Major Resource
Modification and the Board of Directors of the Seller has not determined
that such Major Resource Modification is required to comply with Legal
Requirements, such Major Resource Modification shall be a Future Resource.
If at the time the Board of Directors of the Seller authorizes such Major
Resource Modification the Seller is then released by the Member from its
responsibility set forth in clause (ii) of Section 3.3.1 to undertake
future resource procurement, the Member may elect not to participate in a
Major Resource Modification by providing the Seller with prior written
notice in accordance with the Seller's Resource Policies. Such notice shall
serve as the Member's prior written consent for the Seller to
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change the Member's PCR to the extent, if any, required to allocate the
increased capacity or extended life resulting from such Major Resource
Modification solely to the members that are participating in such Major
Resource Modification. (The Seller may also change the Member's PCR in
connection with such a Major Resource Modification if at the time the Board
of Directors of the Seller authorizes such Major Resource Modification, the
Seller is not then released by the Member from its responsibility set forth
in clause (ii) of Section 3.3.1 to undertake future resource procurement.)
Any addition or modification of an Exhibit made by the Seller's Board of
Directors to reflect the allocation of such additional capacity or extended
useful life to participating Members shall be based on the study of an
independent consulting engineer. If the Member elects not to participate in
a Major Resource Modification that extends the useful life, the Board of
Directors of the Seller shall also determine the date on which the PCR of
the Member shall terminate, based on the expected useful life of the
Resource prior to the Major Resource Modification.
3.5 Cost Responsibility.
3.5.1 In the event of a Payment Default by a member of the
Seller, the Seller shall allocate the amount of the Payment Default to each
Resource with respect to which the defaulting member has a PCR, and each
non-defaulting member that has a PCR with respect to each such Resource shall
bear the otherwise unrecovered costs resulting from such Payment Default in the
proportion of its PCR to the aggregate of the PCRs of all non-defaulting members
in each such Resource.
3.5.2 In the event any members of the Seller do not have a PCR
with respect to an Existing Resource and there is a Payment Default by all
members of the Seller that have a PCR with respect to such Existing Resource,
all other members shall become liable for a pro rata share of the costs and
expenses of such Existing Resource. The term "liable for a pro rata share" shall
mean that each of the non-defaulting members shall have their liability based on
the aggregate of Rated Capacity allocated to each of such members pursuant to
its PCR with respect to all Resources of the Seller divided by the aggregate of
such Rated Capacity of all non-defaulting members that share such pro rata
liability. Such pro rata liability shall extend to any modification of an
Existing Resource which is a Minor Resource Modification or a Major Resource
Modification required to comply with Legal Requirements.
3.5.3 In the event of a Payment Default by all members of the
Seller that have a PCR with respect to any Future Resource, the members of the
Seller that do not have a PCR with respect to such Future Resource shall become
liable for a pro rata share of the costs and expenses of such Future Resource
if, and only if, (i) such Future Resource has been approved by seventy-five
percent (75%) of the Seller's Board of Directors and seventy-five percent (75%)
of the members of the Seller, or (ii) such Future Resource is acquired or
constructed solely to meet the requirements of members of the Seller that
continue to take capacity and energy under Existing Contracts. Such pro rata
liability shall extend to any modification of a Future Resource which is a Minor
Resource Modification or a Major Resource Modification required to comply with
Legal
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Requirements.
3.6 Non-Recourse Resources. The Seller may, as provided in this
Section 3.6, enter into an agreement for the purchase of capacity and energy or
energy with a term greater than one (1) year, or acquire or construct a
generating facility without such purchase agreement or generating facility
constituting a Resource subject to the provisions of this Agreement. The Seller
may enter into such a purchase agreement or acquire or construct such a
generating facility if, and only if:
(a) Any such purchase agreement shall be a Non-Recourse
Obligation;
(b) With respect to any such generating facility (including
improvements and modifications):
(i) Any Indebtedness incurred by the Seller to finance the
estimated capitalized cost of such generating facility shall be a
Non-Recourse Obligation;
(ii) The Seller may not provide more than fifteen percent
(15%) of the estimated capitalized cost of such generating facility from
its funds (other than proceeds from Non-Recourse Obligations); and
(iii) Any contract for the purchase of fuel, fuel
transportation or pumping energy for such generating facility with a term
greater than one (1) year shall be a Non-Recourse Obligation; and
(c) The Seller shall enter into a separate power supply agreement
or agreements with one or more of its members or others providing for the
full recovery through rates charged to such parties of all costs of any
such purchase agreement or the construction, acquisition and operation of
any such generating facility.
4. POOLING.
4.1 Seller's Energy and Capacity Pool. From time to time, the Seller
may elect to pool the electric capacity and energy associated with the PCR and
other resources owned or contracted for by its members (including the allocated
electric capacity and energy of the Member) in an energy and capacity pool (the
"Pool") . The Member also may elect from time to time not to have the capacity
represented by the Member's PCR and other resources and associated energy
included in the Pool and to have such capacity and energy to be separately
scheduled (during the effectiveness of any such election, the Member shall be a
"Scheduling Member"). Such election to be a Scheduling Member shall be made by
written notice given to the Seller no later than the due date of the Member's
Annual Planning Report and shall be effective on January 1 of the following
year, or such other date as the Seller and the Member shall agree in writing. If
the Member has made such an election, the Member may re-commit its allocated
electric capacity and energy to the Pool
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only in accordance with the notice requirements and the terms set forth in the
Seller's written policies and procedures.
4.2 System Operator. The Seller may from time to time enter into an
agreement with another entity to operate the Seller's system. Concurrently with
the effective date of this Agreement, the Seller has contracted with Georgia
System Operations Corporation ("GSOC") as the initial operator of the Seller's
system and as the operator of the Pool. The Seller shall continue to utilize
GSOC as the operator of the Seller's system and as operator of the Pool until
(i) such time, if any, that the Seller and GSOC mutually agree otherwise or (ii)
such contract is terminated in accordance with its terms.
4.3 Operating Policies and Procedures. The Seller shall itself, or
pursuant to a contract require the system operator to, at all times maintain in
effect written policies and procedures for system operations, energy
settlements, reserve sharing and settlements, scheduling and dispatching of
resources, sales of excess capacity and energy by the Seller or its members,
load following and related matters, that treat on a comparable basis the
utilization of all of the Seller's Resources by the Pool and by any members of
the Seller which do not participate in the Pool (or if the Seller has not
established a Pool that is continuing, the Seller shall treat on a comparable
basis the utilization of the resources by the Member and other members).
Comparable basis refers to the legal standard then employed by FERC for
determining that there has been no undue discrimination as among the owner of a
facility and others that have the right to use such facility. Any determination
by GSOC or any other independent system operator with respect to application of
its written policies and procedures shall be conclusive as to the Seller and the
Member, subject to the resolution of disputes in accordance with such
independent system operator's applicable tariffs and service agreement.
4.4 Sale Transactions by Members in the Pool. If it is a participant
in the Pool, the Member shall be entitled to resell for its own account all or
any part of the capacity and associated energy purchased hereunder to any person
or entity in accordance with applicable operating policies and procedures in
effect from time to time.
4.5 Scheduling Member. While the Member is a Scheduling Member, the
Member shall be entitled to resell for its own account all or any part of the
capacity and associated energy purchased hereunder to any person or entity and
to schedule for its own account such capacity and energy in accordance with
applicable operating policies and procedures in effect from time to time.
4.6 Right to Designate Agent. Whenever this Agreement requires or
permits the Seller to provide information, schedules, notice or the like to, or
to take direction from, the Member the Member may by written notice to the
Seller, require the Seller to provide such information, schedules, notice or the
like to, or to take direction from, the Member, its agent or both. The
provisions of this Section does not create any right to assign this Agreement,
such matters being governed exclusively by the provisions of Sections 8 and 9.
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5. RATES.
5.1 General. The Member shall make all payments to the Seller that are
required pursuant to this Agreement at the rates and on the terms and conditions
set forth herein and in "Rate Schedule A," as amended from time to time as
provided in Section 3 and this Section 5; provided, however, that no Exhibit to
Appendix 1 to "Rate Schedule A" shall be amended in any manner inconsistent with
Section 3.
5.2 Periodic Review. The Seller at such intervals as it shall deem
appropriate, but in any event not less frequently than once in each calendar
year, shall review the rates for electric capacity and energy furnished
hereunder and under the wholesale power contracts with the Seller's other
members and, if necessary, shall revise such rates so that such rates shall
produce revenues that shall be sufficient, but only sufficient, with the
revenues of the Seller from all other sources, to meet all of the Seller's
costs, to cover all payments on account of indebtedness of the Seller (except
any Non-Recourse Obligation), to provide for the establishment and maintenance
of reasonable reserves, and to comply with all financial requirements contained
in the Mortgage or in any indenture, mortgage, or contract relating to any
indebtedness or other financial obligations of the Seller as they may exist from
time to time (except any Non-Recourse Obligation).
5.3 Pool Settlement. The rates shall include credits and charges to
the Member to reflect settlements related to the operation of the Seller's
Resources, including the Member's PCR and associated energy and other resources
in the Pool, unless the Member shall then be a Scheduling Member.
5.4 Functional Unbundling. The Seller shall account for its direct and
indirect costs so that the rate for each Resource and the charge for each
service that the Seller provides to one or more members recovers all direct
costs and a share of indirect costs for each Resource and service, including
administrative and general expenses and margins, allocated in accordance with
Accounting Requirements.
5.5 Reasonable Rates. The rates and terms and conditions of service
provided by the Seller hereunder, including changes from time to time in "Rate
Schedule A," shall be just and reasonable and not unduly discriminatory, but
shall at all times be sufficient to comply with the requirements of Section 5.2.
5.6 Allocation of Payment Defaults. The Seller shall at all times
provide in "Rate Schedule A" a mechanism by which the Seller shall allocate all
unrecovered costs resulting from a Payment Default by the Member or a Payment
Default by any other member to each Resource with respect to which the
defaulting member has a PCR and a mechanism for recovering such costs from the
members that also have a PCR with respect to such Resource in accordance with
the provisions of Section 3.5.1. Such rate provision shall further ensure that
if the Member has no PCR with respect to a Resource, the Seller shall not seek
to recover from the Member any of the costs of that
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Resource otherwise unrecovered as the result of a Payment Default by another
member unless every member that has a PCR in such Resource has defaulted. In the
event of Payment Defaults by all members that have a PCR with respect to a
Resource, the Seller may recover the amount of such Payment Defaults only in
accordance with Sections 3.5.2 and 3.5.3.
5.7 Covenant of the Member. The Member covenants and agrees to
establish, maintain and collect rates and charges for the service of its
electric system, and to conduct its business, in a manner which shall produce
revenues and receipts at least sufficient to enable the Member to pay to the
Seller, when due, all amounts payable by the Member under this Agreement and to
pay any and all other amounts payable from, or which might constitute a charge
and a lien upon, the revenues and receipts derived from its electric system,
including all operation and maintenance expenses and the principal of, premium,
if any, and interest on all indebtedness related to the Member's electric
system.
6. DELIVERY POINTS AND GENERAL TERMS AND CONDITIONS OF SERVICE.
6.1 Delivery Points. Subject to Section 6.3, the Seller shall furnish
the electric capacity and deliver the energy purchased by the Member under this
Agreement to the Member at (i) the high side of the step-up transformer at each
Resource with respect to capacity and energy that is produced by a Resource that
is interconnected with the Georgia Integrated Transmission System (the "ITS")
and (ii) the interface of the ITS at which capacity is furnished and energy is
delivered to Seller from a Resource that is not interconnected with the ITS.
Title and risk of loss of such energy shall pass from the Seller to the Member
at such delivery points. As between the parties hereto, the Seller shall be
deemed to be in exclusive control (and responsible for any injury and damage
caused thereby) of the electric capacity and energy prior to the delivery point,
and the Member shall be deemed to be in exclusive control (and responsible for
any damages or injury caused thereby) of the electric capacity and energy at and
from the delivery point.
6.2 General Terms and Conditions. The general terms and conditions of
service (which reflect implementing details of this Agreement) provided by the
Seller to the Member hereunder are established in the General Terms and
Conditions in "Rate Schedule A."
6.3 Seller and Member Duties.
6.3.1 The Seller and the Member shall use reasonable diligence to
deliver and receive a constant and uninterrupted supply of electric capacity and
energy. If the supply of electric capacity and energy shall fail or be
interrupted, or become defective, as the result of an event of force majeure or
its adverse effects, the Seller shall not be liable therefor or for damages
caused thereby. "Force majeure" shall mean the occurrence or non-occurrence of
any act or event that could not reasonably have been expected and avoided by
exercise of due diligence and foresight and such act or event is beyond the
reasonable control of the Seller. In the event of an interruption of service,
the Seller and the Member shall use all due diligence to restore their
respective systems to enable the delivery and receipt of electric capacity and
energy. In the event of a power shortage, or an
11
adverse condition or disturbance, the Seller may, without incurring liability,
take such emergency action as, in the judgment of the Seller, may be necessary.
Such emergency action may include, but shall not be limited to, reduction or
interruption of the supply of electricity to some points of delivery in order to
compensate for an emergency condition on the system of the Seller, or on any
other directly or indirectly interconnected system.
6.3.2 The Seller covenants and agrees that it will use its
reasonable best efforts to operate, maintain and manage its Resources in
accordance with Prudent Utility Practice. For purposes of this Agreement,
"Prudent Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts that,
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired result
at lowest reasonable cost consistent with good business practices, reliability,
safety, and expedition. Prudent Utility Practice is not intended to be limited
to the optimum practice, method, or act, to the exclusion of all others, but
rather to include a spectrum of possible practices, methods, or acts generally
acceptable in the region in light of the circumstances.
7. RIGHTS OF ACCESS, RECORDS AND ACCOUNTS.
7.1 Rights of Access. Duly authorized representatives of either party
hereto shall be permitted to enter the premises of the other party hereto at all
reasonable times in order to carry out the provisions hereof.
7.2 Accounting Records. The Seller shall keep accurate records and
accounts in accordance with Accounting Requirements. Promptly after the close of
each fiscal year (and not later than 120 days after the end of each fiscal
year), the Seller shall cause such records and accounts of all transactions of
the Seller with respect to such fiscal year to be subject to an annual audit by
a firm of independent certified public accountants experienced in electric
utility accounting and possessing a national reputation in accounting and
auditing. The Seller shall without delay provide a copy of each such annual
audit, including all written comments and recommendations of such accountants to
the Member.
7.3 Access to Books and Records. The Member shall at all times have
reasonable access during business hours to examine any and all and the books,
records and supporting worksheets and data of the Seller as may be appropriate
to determine the accuracy of any charges or payments required to be made by the
Member to the Seller. If such books, records and supporting worksheets and data
of the Seller contain information about another member of the Seller, the Seller
shall excise any identification of a specific member or members or provide such
information to an independent certified public accountant or other independent
representative of the Member under a confidentiality agreement. If, after such
examination of Seller's records, there is still a dispute as to the accuracy of
any charge and the Member proceeds with mediation, arbitration or litigation,
only requirements of confidentiality imposed by a mediator, arbitrator or court
shall be applied.
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8. REORGANIZATIONS, TRANSFERS AND SALES OF ASSETS BY THE MEMBER.
8.1 Dissolution or Liquidation. The Member shall not dissolve,
liquidate or otherwise wind up its affairs without the approval in writing of
the Seller.
8.2 Permitted Transactions. The Member shall not consolidate or merge
with any other Person or reorganize or change the form of its business
organization from an electric membership corporation or sell, transfer, lease or
otherwise dispose of all or substantially all of its assets (each, a "Member
Transaction") to any Person (or make any agreement therefor), whether in a
single transaction or series of transactions, unless either:
(a) Such Member Transaction is expressly approved in writing by
the Seller; or
(b) All of the following conditions are satisfied:
(i) The Transferee shall be an entity organized and existing
under the laws of the United States of America or any State or the District
of Columbia; and
(ii) No default or breach of this Agreement shall have
occurred and be continuing; and
(iii) If the Transferee is not the Member, the Transferee
shall execute and deliver to the Seller an instrument supplemental hereto
in form reasonably satisfactory to the Seller containing an assumption by
the Transferee of the performance and observance of every covenant and
condition of this Agreement required to be performed or observed by the
Member; and
(iv) A firm of independent certified public accountants
shall prepare for the two calendar years immediately preceding the Member
Transaction a set of pro forma financial statements that assume the
consummation of the Member Transaction throughout the applicable
determination period and that are prepared in accordance with generally
accepted accounting principles. Based on such pro forma financial
statements, such accountants must certify that:
(A) the Transferee's Debt Service Coverage Ratio is at
least 1.25 and Times Interest Earned Ratio is at least 1.50 for each of the
two immediately preceding calendar years (assuming such Member Transaction
had been consummated at the beginning of such two-year period);
(B) the Transferee's Equity equals at least 27% of its
Total Assets after giving effect to such Member Transaction; and
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(C) the ratio of the Transferee's Net Utility Plant to
its Long- Term Debt is at least 1.0 after giving effect to such Member
Transaction.
The specification of conditions in subsection 8.2(b) shall not be construed
to establish minimum standards under which the Member may effect a Member
Transaction, the purpose of such conditions being to establish when the Seller's
approval need not be obtained. In the event the Member seeks the Seller's
approval of a Member Transaction, the Seller may withhold such approval only
upon a determination by the Board of Directors of the Seller that the Member
Transaction could reasonably be expected to have a material adverse effect on
the Member's ability to perform its obligations under this Agreement.
8.3 Service Territory and Distribution System. The Member shall not
convey, transfer, lease, or otherwise dispose of any part of its electric
distribution system or assigned service territory or voluntarily transfer or
assign to another Person any customer of the Member (each, a "Conveyance") if
such Conveyance, considered together with (i) all prior Conveyances, and (ii)
all prior additions (by construction, conveyance, transfer or lease to the
Member) to its electric distribution system, assigned service territory or
customers could reasonably be expected to have a material adverse affect on the
Member's ability to perform its obligations under this Agreement.
8.4 Specific Performance. The Member and the Seller agree that the
failure or threatened failure of the Member to comply with the terms of this
Section 8 will cause irreparable injury to the Seller, which cannot properly or
adequately be compensated by the mere payment of money. The Member agrees,
therefore, that in the event of a breach or threatened breach of this Section 8
by the Member, the Seller, in addition to any other remedies that may be
available to the Seller, shall have the right to obtain from any competent court
a decree enjoining such breach or threatened breach of this Section 8 or
providing that the terms of this Section 8 be specifically enforced.
9. ASSIGNMENTS.
9.1 General.
9.1.1 This Agreement shall be binding upon and inure to the
benefit of the permitted successors and permitted assigns of the parties, except
that this Agreement may not be assigned by either party unless prior consent to
such assignment is given in writing by the other party and, if either party is
then an RUS borrower, the Administrator. Any assignment made without a consent
required hereunder shall be void and of no force or effect as against the
non-consenting party.
9.1.2 No sale, assignment, transfer or other disposition
permitted by this Agreement shall affect, release or discharge either party from
its rights or obligations under this Agreement, except as may be expressly
provided by this Agreement.
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9.2 Assignment for Security.
9.2.1 Notwithstanding any other provision of this Agreement, a
party, without the other party's consent but, if such assigning party is then a
borrower of the RUS, only with the consent of the Administrator, may assign,
transfer, mortgage or pledge its interest in this Agreement as security (an
"Assignment for Security") for any obligation secured by any indenture, mortgage
or similar lien on its system assets without limitation on the right of the
secured party to further assign this Agreement, including, without limitation,
the assignment by the Member or the Seller to create a security interest for the
benefit of the Government, acting through the Administrator, or for the benefit
of any third party.
9.2.2 After any Assignment for Security to the Administrator or
other secured party (including any indenture trustee under any indenture
securing the obligations of the Seller), the Administrator or other secured
party, without the approval of the other party to this Agreement, may (i) cause
this Agreement to be sold, assigned, transferred or otherwise disposed of to a
third party pursuant to the terms governing such Assignment for Security, or
(ii) if the Administrator or other secured party first acquires this Agreement,
sell, assign, transfer or otherwise dispose of this Agreement to a third party;
provided, however, that in either case the party who made the Assignment for
Security is in default of its obligations to the Administrator or other secured
party that are secured by such security interest.
9.3 Corporate Reorganization.
9.3.1 The Seller may assign any or all of its rights and delegate
any or all of its duties under this Agreement in connection with any
reorganization, merger or consolidation of the Seller with another entity in
which the Seller is not the surviving entity if (a) such merger or consolidation
(i) is approved by seventy-five percent (75%) of the Board of Directors of
Seller and seventy-five percent (75%) of the members of Seller, or (ii) is
approved by a majority of the Board of Directors of the Seller and a majority of
the members of the Seller if a payment default under the Mortgage shall have
occurred and be continuing and (b) the surviving entity shall expressly assume
by written agreement executed and delivered to the Member, the performance and
observance of the provisions of this Agreement required to be performed or
observed by the Seller.
9.3.2 The Seller may, in its sole discretion, at any time and
from time to time, retire, sell, transfer, lease, terminate or otherwise dispose
of any Resource (even though such transaction may reduce or eliminate the
electric capacity and associated energy available to the Member with respect to
such Resource); provided, that the Seller shall not sell, transfer, lease or
otherwise dispose of all or substantially all of its Resources (each a "Seller
Transaction") to any Person (or make any agreement therefor), whether in a
single transaction or a series of transactions, unless such Seller Transaction
is either: (a) approved by seventy-five percent (75%) of the Seller's Board of
Directors and seventy-five percent (75%) of the members of the Seller, or (b)
approved by a majority of the Board of Directors of the Seller and a majority of
the members of the Seller if a payment default under the Mortgage shall have
occurred and be continuing. The Seller may sell or
15
lease and leaseback any interest in a Resource (a "Leasehold Interest") in a
sale-leaseback, lease-leaseback or similar transaction of any term or length (a
"Lease Transaction") (even though such Lease Transaction may reduce the capacity
and associated energy available to the Member with respect to such Resource). In
connection with any Lease Transaction, the Leasehold Interest shall be
considered the same Generating Resource and not a new Future Resource.
9.4 Receiver or Trustee in Bankruptcy. The parties intend that the
obligations of the Member under this Agreement shall not be affected by a
receiver, a trustee in bankruptcy, a mortgagee or an indenture trustee taking
charge of the assets or business of the Seller, and that such receiver, trustee,
mortgagee or indenture trustee may exercise all of the rights of, and make all
of the determinations provided to be made in this Agreement by, the Board of the
Directors of the Seller.
9.5 Express Rejection of Implied Limitations. The parties intend that
this Agreement shall be assignable in accordance with the provisions of this
Section 9 without regard to any other provisions of this Agreement, the nature
of the Person to which this Agreement is assigned, or the issues raised in the
case, In the Matter of Wabash Valley Power Ass'n., Inc., 72 F.3d. 1305 (7th Cir.
1995). Consequently, the parties agree that this Agreement may be assigned to
any Person (including any receiver or trustee in bankruptcy) pursuant to this
Section 9 without regard to the fact that (i) such Person is not a cooperative;
(ii) the Board of Directors of such Person, if any, is not chosen by a vote in
which the Member participates; or (iii) such Person is not operated on a
not-for-profit basis. Further, no other provision of this Agreement shall
restrict the assignment of this Agreement pursuant to this Section 9. In the
event an assignment is made to a Person that is not an electric membership
corporation (or other form of electric cooperative), all provisions of this
Agreement requiring approval of the members or of the Board of Directors of the
Seller shall cease to be applicable, and in such instances the Seller may act in
its discretion. References in this Agreement to an assignment of this Agreement
shall mean and include either or both of an assignment of rights or a delegation
of duties.
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 Payment Default. If the Member fails to make full payment to the
Seller when required to be made under the provisions of this Agreement, and such
failure continues for a period of ten (10) business days, the Seller shall give
or cause to be given written notice to the Member. If the Member does not,
within ten (10) business days from the date of the mailing of such notice, pay
the full amount then due to the Seller, together with interest thereon, at the
maximum legal rate of interest permitted by law from the date it became due,
then such failure shall constitute a "Payment Default" on the part of the
Member. The Seller shall promptly provide written notice to the other members of
the Payment Default.
10.1.1 Upon a Payment Default, the Seller may suspend service to
the Member for all or any part of the period of continuing default. The Seller's
right to suspend service shall not be exclusive, but in addition to all other
remedies available to the Seller at law or in equity. No suspension of service
or termination of this Agreement or recovery of additional revenues from
16
other members pursuant to Section 5.6 shall relieve the Member of its
obligations hereunder, which are absolute and unconditional. The Seller shall
credit the obligations of the Member during any suspension of service with the
monies actually received by the Seller from sales of capacity and energy that
would have been available to serve the Member, but the Seller shall not be
responsible for failure to mitigate the consequences of the Member's failure to
pay in absence of gross negligence or willful misconduct.
10.1.2 The Seller may terminate this Agreement if (i) a Payment
Default shall have occurred and be continuing and (ii) such termination is
approved by seventy-five percent (75%) of the Seller's Board of Directors and
seventy-five percent (75%) of the non-defaulting members of the Seller.
10.1.3 The fact that other members have paid increased rates and
charges shall not relieve the Member of its liability for the amount owed by it
to the Seller, and any member, either individually or as a member of a group,
shall have such right of recovery from the Member as may be provided by law. The
Seller or any member as their interests may appear, jointly or severally, may
commence such suits, actions or proceedings, at law or in equity, including
suits for specific performance, as may be necessary or appropriate to enforce
the obligations of the Member under this Agreement.
10.2 Seller's Failure to Deliver. If the Seller fails to deliver
electric capacity and energy as a result of the breach of the duties imposed on
it under Section 6, the Seller shall promptly reimburse the Member for the cost
of electric capacity and energy required to replace such capacity and energy,
but the Member shall not be entitled to terminate this Agreement or to withhold
payments required to be made pursuant to this Agreement.
10.3 Performance Default. If either party fails to comply with any of
the terms, conditions and covenants of this Agreement (and such failure does not
constitute a Payment Default by the Member), the non-defaulting party shall give
the defaulting party written notice of the default (a "Performance Default").
The defaulting party shall have a period of thirty (30) days after receipt of
such notice to commence reasonable efforts to cure such Performance Default, and
it shall have an additional thirty (30) days to cure such Performance Default.
Thereafter, if such Performance Default is continuing, the non-defaulting party,
subject to the provisions of Section 10.4.1, shall have all of the rights and
remedies provided at law and in equity, other than termination of this
Agreement.
10.4 Remedies.
10.4.1 No remedy conferred upon or reserved to the Seller or the
Member under this Agreement is intended to be exclusive of any other remedy or
remedies available hereunder or now or hereafter existing and every such remedy
shall be cumulative and shall be in addition to every other such remedy,
provided that no Performance Default by the Seller shall permit the Member to
terminate this Agreement or relieve the Member of its obligation to make
payments
17
pursuant to this Agreement, which obligation shall be absolute and
unconditional.
10.4.2 No waiver by either party hereto of any one or more
defaults by the other party hereto in the performance of any provision of this
Agreement shall be construed as a waiver of any other default or defaults,
whether of a like kind or different nature.
10.4.3 Any action taken or determination made by the Board of
Directors of the Seller as provided in Sections 3.2.2 and 3.4.3 shall be
conclusive and binding as to the Member and all other members of the Seller.
10.4.4 To the fullest extent permitted by law, neither party
shall be liable to the other for any indirect, consequential, multiple or
punitive damages unless such damages are the result of the party's bad faith,
gross negligence or willful misconduct.
11. REASONABLENESS OF RATES.
11.1 Fixed Rate Contract. The Seller was organized by the Member and
38 other electric membership corporations in Georgia to provide collectively for
their electric capacity and energy requirements. This Agreement was established
between the parties hereto, taking into account the present and projected needs
for electric capacity and energy of the members of the Seller, the costs of the
facilities subject to and contemplated by this Agreement and the alternatives
thereto. The parties agree that the rates established hereunder are just and
reasonable under the current circumstances and reflect their determination of
what would be just and reasonable under future conditions reasonably
contemplated by them. The rates take into account specific benefits achieved by
the parties through this Agreement and not otherwise available to the parties,
and reflect the sharing of those benefits without undue discrimination against
any current or future customer of the Seller.
11.2 Formulaic Rate. The charges to be paid by the Member to the
Seller for electric capacity and energy provided under this Agreement are
intended to be adjusted only pursuant to and in accordance with the formulaic
rates specified in "Rate Schedule A," as such formulae may be revised from time
to time pursuant to the express terms of this Agreement.
11.3 Regulatory Review.
11.3.1 Nothing contained in this Agreement shall be construed as
affecting in any way the right of the Seller unilaterally to file an application
for a change in any part of "Rate Schedule A" to any governmental authority
having jurisdiction, including the FERC under Section 205 of the Federal Power
Act and pursuant to the FERC's rules and regulations promulgated thereunder,
upon approval of the change by the Seller in a manner consistent with this
Agreement. Other than an initial application filed by the Seller with the FERC
to provide service pursuant to "Rate Schedule A," the Seller agrees that the
Member may protest or contest the filings referred to in this Section 11.3 or
any filings made by any member of Seller to change the formulary rate
18
mechanism contained in "Rate Schedule A," and the Member does not waive any
rights it may have with respect to such filings.
11.3.2 It is the intent of the parties hereto that any such
governmental authority having jurisdiction shall not, on its own motion or after
petition by any person other than the Seller, replace the rates contained in
"Rate Schedule A" with any other rate except upon finding that "Rate Schedule A"
is contrary to the public interest.
11.3.3 If the Seller's rates are not established pursuant to a
formulary rate mechanism, such as "Rate Schedule A" as changed from time to
time, the Member shall have the right to file any applications relating to rates
as may be permitted by law.
12. EFFECTIVENESS AND TERM.
12.1 Effectiveness and Term. This Agreement is dated as of the date
specified in the introductory paragraph and shall become effective upon (i)
execution and delivery hereof by the Seller and the Member, (ii) the approval in
writing by the Administrator and (iii) the acquisition by GTC of the Seller's
transmission and distribution assets substantially as an entirety. This
Agreement shall remain in effect until December 31, 2025, and from year to year
thereafter unless terminated on December 31, 2025, or any succeeding December
31, by either party's giving to the other not less than three years' prior
written notice of its intention to terminate.
12.2 Reduction in Term. In the event the Seller prepays all of its
obligations to the United States of America, the term of this Agreement will be
shortened to coincide with the latest maturity of any then outstanding
indebtedness, including any indebtedness issued to finance the amount of the
prepayment, if such latest maturity occurs prior to December 31, 2025, provided,
however, that in no event shall the term of this Agreement be shortened to a
date prior to the expiration of any Lease Transaction, the performance of which
depends upon the continued existence of this Agreement.
13. AMENDMENTS, ENTIRE AGREEMENT AND CONFLICTS.
13.1 Amendments.
13.1.1 No amendment to this Agreement shall be effective unless
it has been approved or accepted for filing and permitted to go into effect by
each governmental authority having jurisdiction.
13.1.2 This Agreement may be amended by agreement between the
Seller and the Member, but no such amendment to this Agreement shall be
effective unless it is in writing, executed by both parties; provided, however,
that changes to "Rate Schedule A" shall be effective when made in accordance
with the express provisions of this Agreement.
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13.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter contemplated by this
Agreement and supersedes all prior agreements, whether oral or written. "Rate
Schedule A", Schedule B and Schedule C are incorporated herein by reference.
13.3 Conflicts.
13.3.1 The Seller's Resource Policies, a current copy of which is
attached hereto as Schedule B, may be modified from time to time by the Seller's
Board of Directors. In the event of any conflict between the provisions of this
Agreement and the Seller's Resource Policies, the provisions of this Agreement
shall govern.
13.3.2 The provisions of this Agreement and "Rate Schedule A"
incorporated by reference shall be interpreted to harmonize as a single
instrument. In the event of any conflict between the provisions of this
Agreement and the provisions of any amendments to "Rate Schedule A" or any
future exhibits, appendices or schedules attached thereto and incorporated by
reference herein, the provisions of this Agreement shall govern.
13.4 Counterparts. This Agreement may be executed in multiple
counterparts to be construed as one.
14. SEVERABILITY. If any part, term, or provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable, the validity of
the remaining portions or provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term, or provision held to be
unenforceable.
15. AMENDMENT AND RESTATEMENT. This Agreement restates into a single
instrument the terms of the Existing Contract and the amendments made hereby.
Prior to the amendments made hereby, the Existing Contract provided that "[t]he
Seller shall sell and deliver to the Member and the Member shall purchase and
receive from the Seller all electric power and energy which the Member shall
require for the operation of the Member's system," subject to certain limited
exceptions. The Seller and the Member acknowledge that their mutual intent in
amending and restating the Existing Contract as provided in this Agreement is to
change the all requirements obligation between them by fixing the Member's
responsibility for electric capacity and associated energy committed to by the
Seller pursuant to and in reliance upon the Existing Contract and similar
contracts with its other members, and charges for such electric capacity and
energy, in a manner such that the Seller can continue to meet its obligations
with respect to such capacity and energy and to permit the Member to utilize
electric capacity and energy from other sources on the terms and conditions set
forth in this Agreement.
16. GOVERNING LAW. Except to the extent governed by applicable federal
law, this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Georgia.
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17. MEDIATION. If a dispute arises out of or relates to this Agreement,
including all attachments hereto, or the breach thereof, the parties shall first
in good faith seek to resolve the dispute through negotiation. If such dispute
cannot be settled through negotiation, the parties agree to try in good faith to
settle the dispute by mediation under the Commercial Mediation Rules of the
American Arbitration Association, before resorting to arbitration, litigation,
or some other dispute resolution procedure; provided that a party may not invoke
mediation unless it has provided the other with written notice of the dispute
and has attempted in good faith to resolve such dispute through negotiation.
Notwithstanding the foregoing, any party may seek immediate equitable relief,
without attempting to settle a dispute through mediation, in any case where such
party is entitled to equitable relief by the terms of this Agreement or
otherwise.
18. MEMBER'S WITHDRAWAL FROM SELLER.
18.1 Member Withdrawal. In the event the Member elects to withdraw as
a member of Seller, the Member shall execute a copy of the Withdrawal Agreement
(the "Withdrawal Agreement") in the form attached to the Member Agreement, dated
as of August 1, 1996, among the Seller and its members, and deliver the same to
Seller along with its Notice of Intent to Withdraw, including all required
attachments to such Notice, as required by the Seller's bylaws. Such existing
provisions of the Seller's bylaws and the form of the Withdrawal Agreement are
incorporated by reference into this Agreement, and no amendment of such
provision of the Seller's bylaws or the form of the Withdrawal Agreement shall
reduce the rights of the Member (without its consent) as provided therein. The
Member agrees that in the event of its withdrawal as a member of Seller, the
performance by the Member in accordance with the terms of the Withdrawal
Agreement shall be required in order to satisfy its obligations to Seller under
this Agreement. The Member, by executing this Agreement, hereby stipulates and
agrees that any other member of Seller may satisfy its obligations to the
Seller, to the Member and to all other members of the Seller (current and
former) by performing in accordance with the terms of the Withdrawal Agreement.
18.2 References. For the purposes of this Agreement, each reference to
the "Member" shall mean (i) the withdrawn Member from and after the effective
date of the Member's withdrawal from the Seller or (ii) any permitted assignee
from and after the effective date of an assignment by the Member of this
Agreement as provided in the Withdrawal Agreement. Further, for the purposes of
this Agreement, each reference to a "member" or to the "members" of the Seller
shall include any member or members which withdraw from the Seller or any
permitted assignee of such member or members, except that any reference to an
approval of the members shall not include any withdrawn member or members or
such permitted assignees.
19. MISCELLANEOUS.
19.1 No Retail Sales. The Seller shall not, during the term of this
Agreement, without the consent of the Member, (a) provide retail electric
service in the State of Georgia within the Member's assigned geographic area
established in accordance with the Georgia Territorial Electric Service Act, as
such statute may be amended or replaced, or (b) offer to provide retail
21
electric service to any existing customer of the Member.
19.2 Indemnification. The Member shall indemnify and hold the Seller
harmless from and against any and all losses, costs, liabilities, damages and
expense (including without limitation attorneys' fees and expenses) of any kind
incurred or suffered by the Seller pursuant to, as a result of or in connection
with any resale by the Member of capacity, energy or both in the exercise of the
Member's rights under Sections 4.4 or 4.5 except for losses, costs, liabilities,
damages and expenses (including without limitation attorneys' fees and expenses)
incurred or suffered by the Seller as a proximate cause of any action of the
Seller that is not Prudent Utility Practice or is a breach of this Agreement.
19.3 No Restriction on Revenue Allocation. The Member's PCR and that
of other members of the Seller for any or all Future Resources may be different
from their respective percentages set forth on Exhibit 1 to Appendix 1 to "Rate
Schedule A" with respect to Existing Resources, and may also vary among Future
Resources or be zero as to any Future Resource. Recognizing the potential for
such variation, and notwithstanding anything in any other agreement or document
existing on the date of this Agreement, the Member agrees that the Seller shall
not be restricted in its ability to apply revenues received from the Member or
other amounts received by the Seller from the Member and others from or on
account of the ownership or operation of its system or through or on account of
the financing thereof, in such manner as the Seller shall determine to be in its
best business interest. Likewise, the Member agrees that the Seller shall not be
restricted in the Seller's ability to secure any and all indebtedness it may
incur under instruments conveying security title to or creating a lien or other
security interest in any or all of the Seller's assets, without regard to the
purpose for which the indebtedness has been or may be incurred or the purpose
for which the assets are used or are to be used, but the Member's contingent
liability in the event of a Payment Default shall be governed by Section 3.5.
19.4 Corporate Documents. Whenever this Agreement authorizes the
Seller to amend a schedule hereto, to develop and implement policies or to make
other decisions or do other acts or things, at its sole discretion or otherwise,
the Seller shall do so substantially in accordance with the applicable
provisions of its duly adopted Articles, bylaws and corporate policies. Any
failure on the part of the Seller to comply with this Section shall not relieve
the Member of any obligation under this Agreement, but the Member shall not
otherwise be prevented or limited in asserting any other rights it may have
against the Seller in respect of such failure.
19.5 Information Requirements. The Seller and the Member shall each
furnish to the other promptly upon request any and all information about itself,
its financial condition, business and properties which may be necessary or
desirable to facilitate any financing undertaken by the requesting party or any
continuing disclosure obligation incurred by the requesting party in connection
with any such financing. The supplying party shall be responsible only to the
requesting party for the accuracy and completeness of the information furnished
and shall have no responsibility or liability for the manner in which such
information is used or its appropriateness for such use. The supplying party
shall have no liability to any third party to which the requesting party may
furnish
22
this information or any excerpt therefrom or summary thereof, and shall be
entitled to receive appropriate assurances and indemnities from the requesting
party to that effect as a condition to providing such information, provided that
no such assurance or indemnity shall relieve the supplying party of liability to
the requesting party for the accuracy and completeness of the information
supplied.
19.6 No Third Party Beneficiaries. The Seller and the Member agree
that no other member of the Seller or any other third party is an intended
third-party beneficiary of this Agreement, except as may be provided in a
separate instrument executed by each of the Seller and the Member.
19.7 Rules of Construction.
(a) The descriptive headings of the various articles, sections
and subsections of this Agreement and the Schedules attached hereto have
been inserted for convenience of reference only and shall not be construed
as to define, expand, or restrict the rights and obligations of the
parties.
(b) Wherever the term "including" is used in this Agreement and
the Schedules attached hereto, such term shall not be construed as limiting
the generality of any statement, clause, phrase or term.
(c) The terms defined in this Agreement and the Schedules
attached hereto shall include the plural as well as the singular and the
singular as well as the plural.
20. NOTICES. All notices, requests, statements or payments provided for,
required or permitted by this Agreement shall be sufficient for any and all
purposes under this Agreement when transmitted by facsimile, first class United
States Mail, hand delivery, or a private express delivery service to the
facsimile numbers or addresses provided below.
Seller:
Oglethorpe Power Corporation
2100 East Exchange Place
P. O. Box 1349
Tucker, Georgia 30085-1349
Attention: President and Chief Executive Officer
FAX: (770) 270-7872
23
Member:
Altamaha Electric Membership Corporation
611 West Liberty Street
P.O. Box 346
Lyons, Georgia 30436
Attention: James D. Musgrove, General Manager
FAX: (912) 526-4235
(Signatures on next page)
24
IN WITNESS WHEREOF, the Seller and the Member have caused this Agreement to
be executed, attested, sealed and delivered by their respective duly authorized
officers as of the day and year first written above.
SELLER:
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION)
[CORPORATE SEAL] By: /s/ T.D. Kilgore
----------------------------------------
T. D. Kilgore, President and Chief
Executive Officer
ATTEST:
/s/ Patricia N. Nash
- ----------------------------------------
Patricia N. Nash, Assistant Secretary
MEMBER:
ALTAMAHA ELECTRIC MEMBERSHIP
CORPORATION
[CORPORATE SEAL] By: /s/ Jmon Warnock
----------------------------------------
Name: Jmon Warnock
Title: President
ATTEST:
/s/ Bernard Hart
- ----------------------------------------
Name: Bernard Hart
Title: Secretary-Treasurer
25
SCHEDULE TO EXHIBIT 10.8.1
AMENDED AND RESTATED
WHOLESALE POWER CONTRACT
The following is a list of Substantially Identical Amended and Restated
Wholesale Power Contracts for 37 other Electric Membership Corporations:
1. Amicalola EMC 20. Middle Georgia EMC
2. Canoochee EMC 21. Mitchell EMC
3. Carroll EMC 22. Ocmulgee EMC
4. Central Georgia EMC 23. Oconee EMC
5. Coastal EMC 24. Pataula EMC
6. Cobb EMC 25. Planters EMC
7. Colquitt EMC 26. Rayle EMC
8. Coweta-Fayette EMC 27. Satilla Rural EMC
9. Excelsior EMC 28. Sawnee EMC
10. Flint EMC 29. Slash Pine EMC
11. Grady EMC 30. Snapping Shoals EMC
12. Greystone Power Corporation, 31. Sumter EMC
an EMC 32. Three Notch EMC
13. Habersham EMC 33. Tri-County EMC
14. Hart EMC 34. Troup EMC
15. Irwin EMC 35. Upson EMC
16. Jackson EMC 36. Walton EMC
17. Jefferson EMC 37. Washington EMC
18. Lamar EMC
19. Little Ocmulgee EMC
Schedule A and Schedule B to the Amended and Restated Wholesale Power
Contract are not filed herewith; however the Registrant hereby agrees that
such Schedules will be provided to the Commission upon request.
SCHEDULE C
All capitalized terms used in this Agreement, including in this Schedule C, in
"RATE SCHEDULE A" and in Schedule B, and not otherwise defined shall have the
respective meanings set forth below.
"Accounting Requirements" shall mean the requirements of any system of
accounts prescribed by the RUS as long as the Government is the holder, insurer
or guarantor of any indebtedness of the Member or, in the absence thereof, the
requirements of generally accepted accounting principles applicable from time to
time to companies similar to the Member.
"Administrator" shall be as defined in the third Recital.
"Agreement" shall be as defined in the first sentence of this Agreement.
"Annual Planning Report" shall be as defined in Section 3.3.1.
"Assignment for Security" shall be as defined in Section 9.2.1.
"Conveyance" shall be as defined in Section 8.3.
"Debt Service Coverage Ratio" shall mean the ratio determined as follows:
for each calendar year ADD (i) Patronage Capital or Margins, (ii) Interest
Expense, and (iii) Depreciation and Amortization Expense AND DIVIDE the total so
obtained by an amount equal to the sum of all payments of principal and interest
required to be made on account of Long-Term Debt during such calendar year;
provided, however, that in the event that any Long-Term Debt has been refinanced
during such year, the payments of principal and interest required to be made
during such year on account of such Long-Term Debt shall be based (in lieu of
actual payments required to be made on such refinanced debt) upon the larger of
(y) an annualization of the payments required to be made with respect to the
refinancing debt during the portion of such year such refinancing debt is
outstanding, or (z) the payment of principal and interest required to be made
during the following year on account of such refinancing debt, all as computed
in accordance with Accounting Requirements.
"Depreciation and Amortization Expense" shall mean an amount constituting
the depreciation and amortization, as computed pursuant to Accounting
Requirements.
"Equity" shall mean the total equities and margins (or, if not a
cooperative, equity), excluding Regulatory Assets, as computed pursuant to
Accounting Requirements.
"Existing Contract" shall mean that certain Amended and Consolidated
Wholesale Power Contract, dated as of December 1, 1988, between the Seller and
the Member, and when used in
C-1
the plural, shall mean such contract and the similar contracts dated as of
the same date and between the Seller and any other member.
"Existing Resources" shall mean the Resources as set forth in Exhibit 1 to
Appendix 1 to "RATE SCHEDULE A", as changed as a result or any Minor Resource
Modification and any Major Resource Modification required to comply with Legal
Requirements pursuant to Section 3.4.3.
"FERC" shall mean the Federal Energy Regulatory Commission.
"Force majeure" shall have the meaning set forth in Section 6.3.1.
"Future Resource" shall mean any (i) new Generating Resource, or (ii) Power
Purchase Resource of the Seller or (iii) Major Resource Modification pursuant to
Section 3.4.3(c).
"GSOC" shall be as defined in Section 4.2.
"GTC" shall be as defined in the ninth Recital.
"Generating Resource" shall mean the Seller's interest in and to any
existing, additional or repowered generating facilities, which may be owned
(jointly or individually), leased or otherwise acquired, as changed as a result
of any Minor Resource Modification and any Major Resource Modification required
to comply with Legal Requirements pursuant to Section 3.4.3. A single unit or
facility may be divided into one or more Generating Resources as the result of a
Major Resource Modification.
"Government" shall be as defined in the third Recital.
"ITS" shall be as defined in Section 6.1.
"Indebtedness" shall mean
(1) debt incurred or assumed by the Seller for borrowed money or for
the acquisition, construction or improvement of property other than goods
or services that are acquired in the ordinary course of business of the
Seller;
(2) lease obligations of the Seller that, in accordance with
generally accepted accounting principles are shown on the liability side of
a balance sheet;
(3) all debt (other than indebtedness otherwise treated as
Indebtedness hereunder) for borrowed money or the acquisition, construction
or improvement of property or capitalized lease obligations guaranteed,
directly or indirectly, in any manner by the Seller, or in effect
guaranteed, directly or indirectly, by the Seller through an agreement,
contingent or otherwise, to purchase any such indebtedness or to advance or
C-2
supply funds for the payment or purchase of any such indebtedness or
to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the
owner of the indebtedness against loss, or to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether or not such property is
delivered or such services are rendered), or otherwise; or
(4) any agreement by the Seller to purchase or lease power, supplies,
property or services primarily for the purpose of enabling a debtor or
seller to make payment of debt service on indebtedness, pursuant to which
the Seller agrees to pay for power, supplies, property or services
irrespective of whether or not such power, supplies or property are
delivered or such services are rendered.
"Interest Expense" shall mean an amount constituting the interest expense
on Long-Term Debt, as computed in accordance with Accounting Requirements.
"Joint Planning and Resource Management" shall be as defined in Section
3.3.1.
"Leasehold Interest" shall be as defined in Section 9.3.2.
"Lease Transaction" shall be as defined in Section 9.3.2.
"Legal Requirements" shall mean:
(1) obligations of the Seller under all laws, codes, ordinances,
orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, regulations, and requirements of every governmental authority
having jurisdiction over the matter in question, whether federal, state or
local, which may be applicable to the Seller;
(2) obligations of the Seller under an existing joint ownership
agreement or other existing contract with respect to Existing Resources;
(3) requirements pursuant to Prudent Utility Practice to keep
Existing Resources in good operating condition during the useful life or
contract term of such Existing Resources;
(4) obligations of the Seller under a joint ownership agreement or
other agreement with respect to a Future Resource, which agreement has been
approved by a vote of seventy-five percent (75%) of each of the members of
the Seller's Board of Directors and the members of the Seller; or
(5) requirements pursuant to Prudent Utility Practice to keep a
Future Resource in good operating condition during the useful life or
contract term of such
C-3
Future Resource, if such Future Resource has been approved by a vote of
seventy-five percent (75%) each of the members of the Seller's Board of
Directors and the members of the Seller.
"Long-Term Debt" shall mean an amount constituting long-term debt, as
computed in accordance with Accounting Requirements.
"Major Resource Modification" shall mean any of (i) a Resource
Modification that is expected to result in an increase in the Rated Capacity of
a Resource by five percent (5%) or more, (ii) a Resource Modification that
results in the extension of the projected total useful life by five percent (5%)
or more of the original projected useful life, or (iii) an extension of the
contract term for a Power Purchase Resource by more than one (1) year; all as
conclusively determined by the Seller's Board of Directors and, with respect to
(i) and (ii), based upon a study by an independent consulting engineer.
"member" shall mean a member of the Seller.
"Member" shall mean the electric membership corporation identified as such
in the first sentence of this Agreement.
"Member Transaction" shall be as defined in Section 8.2.
"Minor Resource Modification" shall mean any Resource Modification that is
not a Major Resource Modification.
"Mortgage" shall be as defined in the fourth Recital.
"Non-Recourse Obligation" shall mean any indebtedness or other obligation,
(a) liability for which is limited to (i) specific property of the Seller and
(ii) the revenues and other rights under separate power supply agreements and
(b) for which there is no recourse, directly or indirectly, to any other
property, revenues or agreements of the Seller; provided that such indebtedness
or other obligation is incurred solely in connection with the acquisition,
construction or operation of the property or agreements to which the liability
relates.
"Notes" shall be as defined in the third Recital.
"Patronage Capital or Margins" shall mean the amount of net patronage
capital and margins (or, if not a cooperative, net income), as computed in
accordance with Accounting Requirements.
"Payment Default" shall be as defined in Section 10.1 or where the context
requires similar payment default by another of the members of the Seller.
C-4
"Percentage Capacity Responsibility" or "PCR" of the Member and of each
other member shall mean the percentage allocation with respect to a Resource,
including the allocation of electric capacity, cost responsibility and
revenues, if applicable. Exhibit 1 to Appendix 1 to "RATE SCHEDULE A" sets
forth the PCR for the Member with respect to Existing Resources. Future
exhibit(s) to Appendix 1 to "RATE SCHEDULE A" shall set forth any PCR for the
Member and other members with respect to Future Resources.
"Performance Default" shall be as defined in Section 10.3.
"Person" shall mean an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Pool" shall be as defined in Section 4.1.
"Power Marketing Transaction" shall be as defined in Section 19.
"Power Purchase Resource" shall mean a purchase of capacity and energy or
energy by the Seller with a contract term greater than one (1) year.
"Power Sales Resource" shall mean a sale of capacity and energy or energy
made by the Seller with a contract term greater than one (1) year.
"Prudent Utility Practice" shall be as defined in Section 6.3.2.
"REAct" shall be as defined in the seventh Recital.
"RUS" shall be as defined in the second Recital.
"Rated Capacity" shall mean the capacity rating of a Resource in effect
from time to time, as determined by the Seller and used in Section 3.3 of
Appendix 3 to "RATE SCHEDULE A."
"Regulatory Asset" shall mean the sum of any amounts properly recordable as
unrecovered plant and regulatory study costs or as other regulatory assets, as
computed in accordance with Accounting Requirements.
"Resource" shall mean one of the Generating Resources or Power Purchase
Resources.
"Resource Modification" shall be as defined in Section 3.4.3.
"Resource Policies" shall be as defined in Section 3.3.1.
"Scheduling Member" shall be as defined in Section 4.1.
C-5
"Secured Obligations" shall be as defined in the fourth Recital.
"Seller" shall mean Oglethorpe Power Corporation (An Electric Membership
Generation & Transmission Corporation).
"Seller Transaction" shall be as defined in Section 9.3.2.
"Times Interest Earned Ratio" shall mean the ratio determined as follows:
For each calendar year add (i) Patronage Capital or Margins and (ii) Interest
Expense on Long-Term Debt, and divide the total so obtained by Interest Expense
on Long-Term Debt, all as computed in accordance with Accounting Requirement.
"Total Assets" shall mean an amount constituting the total assets, but
excluding any Regulatory Assets, as computed in accordance with Accounting
Requirements.
"Transferee" shall mean the Person formed by any consolidation or that is
the survivor of any merger or reorganization or the Person that acquires or
leases all or substantially all of the electric assets of the Member.
"Withdrawal Agreement" shall be as defined in 18.1.
C-6
AMENDED AND RESTATED
WHOLESALE POWER CONTRACT
BETWEEN
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION &
TRANSMISSION CORPORATION)
AND
OKEFENOKE RURAL ELECTRIC MEMBERSHIP CORPORATION
DATED AS OF
August 1, 1996
TABLE OF CONTENTS
RECITALS.......................................................................1
1. DEFINITIONS.....................................................2
2. PURCHASE AND SALE OBLIGATION....................................2
2.1 Purchase and Sale........................................2
2.2 No Dedication of Resources...............................3
2.3 Member's Unconditional Obligation to Pay.................3
3. POWER SUPPLY PLANNING AND RESOURCE ALLOCATIONS..................3
3.1 Percentage Capacity Responsibilities; Power
Sale Resources ..........................................3
3.2 Change of Certain Member Obligations.....................4
3.3 Planning and Resource Management.........................5
3.4 Future Resources, Power Sale Resources
and Resource Modifications ..............................5
3.5 Cost Responsibility......................................7
3.6 Non-Recourse Resources...................................8
4. POOLING.........................................................8
4.1 Seller's Energy and Capacity Pool........................8
4.2 System Operator..........................................9
4.3 Operating Policies and Procedures........................9
4.4 Sale Transactions by Members in the Pool.................9
4.5 Scheduling Member........................................9
4.6 Right to Designate Agent.................................9
5. RATES..........................................................10
5.1 General.................................................10
5.2 Periodic Review.........................................10
5.3 Pool Settlement.........................................10
5.4 Functional Unbundling...................................10
5.5 Reasonable Rates........................................10
5.6 Allocation of Payment Defaults..........................10
5.7 Covenant of the Member..................................11
i
6. DELIVERY POINTS AND GENERAL TERMS AND CONDITIONS
OF SERVICE...............................................................11
6.1 Delivery Points.........................................11
6.2 General Terms and Conditions. .........................11
6.3 Seller and Member Duties................................11
7. RIGHTS OF ACCESS, RECORDS AND ACCOUNTS.........................12
7.1 Rights of Access. .....................................12
7.2 Accounting Records. ...................................12
7.3 Access to Books and Records. ..........................12
8. REORGANIZATIONS, TRANSFERS AND SALES OF ASSETS
BY THE MEMBER..................................................13
8.1 Dissolution or Liquidation. ...........................13
8.2 Permitted Transactions. ...............................13
8.3 Service Territory and Distribution System. ............14
8.4 Specific Performance. .................................14
9. ASSIGNMENTS....................................................14
9.1 General. ..............................................14
9.2 Assignment for Security.................................15
9.3 Corporate Reorganization. .............................15
9.4 Receiver or Trustee in Bankruptcy.......................16
9.5 Express Rejection of Implied Limitations................16
10. EVENTS OF DEFAULT AND REMEDIES.................................16
10.1 Payment Default. ......................................16
10.2 Seller's Failure to Deliver. ..........................17
10.3 Performance Default. ..................................17
10.4 Remedies................................................17
11. REASONABLENESS OF RATES........................................18
11.1 Fixed Rate Contract. ..................................18
11.2 Formulaic Rate. .......................................18
11.3 Regulatory Review.......................................18
12. EFFECTIVENESS AND TERM.........................................19
12.1 Effectiveness and Term..................................19
12.2 Reduction in Term.......................................19
ii
13. AMENDMENTS, ENTIRE AGREEMENT AND CONFLICTS.....................19
13.1 Amendments. ............................................19
13.2 Entire Agreement. .....................................19
13.3 Conflicts. ............................................20
13.4 Counterparts. .........................................20
14. SEVERABILITY...................................................20
15. AMENDMENT AND RESTATEMENT......................................20
16. GOVERNING LAW..................................................20
17. MEDIATION......................................................20
18. MEMBER'S WITHDRAWAL FROM SELLER................................21
18.1 Member Withdrawal. ....................................21
18.2 References..............................................21
19. MISCELLANEOUS..................................................21
19.1 No Retail Sales.........................................21
19.2 Indemnification. ......................................22
19.3 No Restriction on Revenue Allocation. .................22
19.4 Corporate Documents. ..................................22
19.5 Information Requirements. .............................22
19.6 No Third Party Beneficiaries. .........................23
19.7 Rules of Construction...................................23
20. NOTICES........................................................23
iii
AMENDED AND RESTATED WHOLESALE POWER CONTRACT
THIS AMENDED AND RESTATED WHOLESALE POWER CONTRACT, dated as of August 1,
1996 (together with permitted amendments hereto, this "Agreement"), is entered
into by and between Oglethorpe Power Corporation (An Electric Membership
Generation & Transmission Corporation), an electric membership corporation
organized and existing under the laws of the State of Georgia (the "Seller"),
and Okefenoke Electric Membership Corporation, an electric membership
corporation organized and existing under the laws of the State of Georgia (the
"Member").
R E C I T A L S:
WHEREAS, the Seller's existing members, including the Member, are 39
electric membership corporations doing business in the State of Georgia, each of
which joined with the others, beginning in 1974, to form the Seller in order to
share the benefits and costs of ownership of an entity that would engage in
providing electric capacity and energy for the benefit of its members; and
WHEREAS, the Seller currently owns and operates electric generation plants
and in the future may construct additional electric generation plants or
purchase or otherwise obtain electric capacity and energy for the purpose, among
others, of supplying electric capacity and energy to its members, several of
which are borrowers from the Rural Utilities Service, as successor to the Rural
Electrification Administration (the "RUS"), and others; and
WHEREAS, the Seller has financed the construction of such generating plants
in whole or in part through loans, and may in the future obtain additional
loans, evidenced by mortgage notes (collectively, the "Notes") made or
guaranteed by the United States of America (the "Government"), acting through
the Administrator of the RUS (the "Administrator") and loans made by, or
securities issued to, or obligations undertaken to, others; and
WHEREAS, the Notes and certain of the loans made by, or securities issued
to, or obligations undertaken to, others (collectively, with the Notes, the
"Secured Obligations") are or may be secured by that certain Consolidated
Mortgage and Security Agreement, dated as of September 1, 1994, made by and
among the Seller; the Government; CoBank, ACB, as successor in interest to
National Bank for Cooperatives; Credit Suisse, acting by and through its New
York Branch; and SunTrust Bank, Atlanta, successor in interest to Trust Company
Bank, as trustee, as it may hereafter be amended, supplemented, restated, or
replaced or substituted for, including by a trust indenture, from time to time
(the "Mortgage"); and
WHEREAS, this Agreement and payments due to the Seller under this Agreement
are pledged and assigned to secure the Secured Obligations as provided in the
Mortgage; and
WHEREAS, the Seller and the Member are parties to that certain Amended and
Consolidated Wholesale Power Contract, dated as of December 1, 1988; and
WHEREAS, the Government and the other holders of the Secured Obligations
are relying on this Agreement and other wholesale power contracts between the
Seller and its other members to assure that the Secured Obligations are repaid
and the purposes of the Rural Electrification Act of 1936, as amended (the
"REAct"), are carried out, and the Seller and the Member, by executing this
Agreement, acknowledge that reliance; and
WHEREAS, the Seller and the Member believe that, under current and
foreseeable industry conditions, the continued ability of the Seller's members
to operate as effective retail electric cooperatives in furtherance of the
purposes of the REAct requires more flexibility in meeting their future needs
for electric capacity and energy than would be available under the "all
requirements" terms of the Existing Contracts, provided that adequate provision
is made for the continued recovery by the Seller of all costs and expenses
associated with electric capacity and energy to which the Seller has committed
through the date of this Agreement; and
WHEREAS, for the purpose of adjusting to changes in the electric industry,
it is the intent of the parties that, as of the effective date of this
Agreement, the Seller shall transfer its transmission and distribution assets
substantially as an entirety to Georgia Transmission Corporation, a new electric
membership corporation organized and existing under the laws of the State of
Georgia ("GTC"); and
WHEREAS, the Member has determined that its interests and the interests of
its consumers will be best served by purchasing certain amounts of electric
capacity and associated energy from *the Seller on the terms and conditions of
this Agreement; and
WHEREAS, the Member is undertaking to purchase from the Seller, and the
Seller is undertaking to sell to the Member, certain amounts of electric
capacity and associated energy on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings herein contained, the Seller and the Member hereby agree as
follows:
1. DEFINITIONS. All capitalized terms used herein shall have the
respective meanings set forth in Schedule C attached hereto, unless the context
in which such term is used clearly requires otherwise.
2. PURCHASE AND SALE OBLIGATION.
2.1 Purchase and Sale. The Seller shall sell and deliver to the
Member, and the Member shall take and pay for or pay for, even if not available,
delivered or taken, at the rates provided for in Section 5, all electric
capacity allocated to the Member as reflected in the Member's
2
Percentage Capacity Responsibilities set forth in the Exhibits to Appendix 1 to
"Rate Schedule A" (as amended from time to time in accordance with Section 3).
The Seller shall sell and deliver to the Member, and the Member shall pay for,
at the rates provided for in Section 5, any associated energy that the Member
shall determine to purchase for its own use or for resale pursuant to this
Agreement. The Member's payment obligations associated with its PCR in any
Resource shall continue until all costs of such Resource are paid in full
notwithstanding the occurrence of any event, or the taking of any action
permitted by this Agreement, with respect to such Resources, including, without
limitation, any event or action described in Section 2.3.
2.2 No Dedication of Resources. Neither the establishment of a PCR for
a Member with respect to a Resource nor the sale by the Seller to the Member of
electric capacity and associated energy under this Agreement shall constitute
either (i) a sale, lease, transfer , dedication or conveyance of an ownership
interest in or to any Resource or (ii) an entitlement to the electric capacity
or associated energy from any specific Resource. The Seller shall have the sole
authority, which it may exercise in its discretion, to manage, control and
operate all of its Resources, subject to the Seller's obligations to provide
available electric capacity and associated energy to the Member pursuant to this
Agreement.
2.3 Member's Unconditional Obligation to Pay. The Member shall make
all payments for electric capacity and energy that are required pursuant to this
Agreement in a timely manner, whether or not (i) electric capacity and energy
has or is being provided to the Member hereunder, (ii) Resources or any part
thereof are completed, delayed, terminated, available, operable, operating,
retired, sold, leased, transferred, or otherwise disposed of, (iii) the
construction or operation of the Resources or any part thereof is suspended,
interrupted, interfered with, reduced, curtailed or terminated, (iv) the Seller
is able to purchase or otherwise obtain electric capacity and energy from any
source or (v) any similar contract with any other member of the Seller is
invalid, in each such case for any reason whatsoever and whether or not due to
the conduct, acts or omissions of the Seller. Such payments by the Member shall
not be subject to any reduction, whether by offset, recoupment or otherwise, and
shall not be conditioned upon performance by the other members of the Seller or
the Seller under this Agreement or any other agreement or instrument. This
Section 2.3 shall not be construed to release the Seller from the performance of
any of its obligations expressed in this Agreement or, except to the extent
expressly provided in this Agreement, prevent or restrict the Member from
asserting any rights that it may have against the Seller or any other person
under this Agreement or any other agreement or under any provision of law or
prevent or restrict the Member, at its own cost and expense, from prosecuting or
defending any action or proceeding against or by third parties or taking any
other action to secure or protect its rights under this Agreement.
3. POWER SUPPLY PLANNING AND RESOURCE ALLOCATIONS.
3.1 Percentage Capacity Responsibilities; Power Sale Resources.
3.1.1 Percentage Capacity Responsibilities. The Seller shall at
all times
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maintain Exhibits to Appendix 1 to "Rate Schedule A" which identify all
Resources, all Percentage Capacity Responsibilities for the Member and all other
members with respect to each Resource and the original projected useful life or
the contract term for each Resource. (The identification of the original
projected useful life or the contract term of a Resource is for the sole purpose
of determining whether a Resource Modification constitutes a Major Resource
Modification). The Seller shall not construct or acquire a Future Resource
unless (i) the total of the PCRs allocated to the members of the Seller that
have a PCR in the Future Resource equals one hundred percent (100%) at the time
the Seller approves the principal documents necessary to commit the Seller to
such Future Resource, and (ii) the members of the Seller which do not have a PCR
with respect to such Future Resource are liable for a pro rata share of the
costs and expenses of such Future Resource in the event of a Payment Default by
all members which have a PCR with respect to such Future Resource as provided in
Section 3.5.3.
3.1.2 Power Sales Resources. The Seller shall also identify in
Exhibits to Appendix 1 to "Rate Schedule A" all Power Sales Resources and the
allocations made by the Seller with respect thereto in accordance with Section
3.4.2.
3.2 Change of Certain Member Obligations.
3.2.1 Without the prior written consent of the Member, the Seller
may not (i) allocate a PCR to the Member for a Future Resource, (ii) modify the
Member's PCR for an Existing Resource or a Future Resource or (iii) otherwise
add or modify an Exhibit to Appendix 1 to "Rate Schedule A," except as follows:
(a) If the Seller is not then released by the Member from
its responsibility set forth in clause (ii) of Section 3.3.1 to undertake
future resource procurement, the Seller may allocate a PCR to the Member
with respect to a Future Resource in accordance with Section 3.4.1;
(b) If the Seller is not then released by the Member from
its responsibility set forth in clause (iii) of Section 3.3.1 to sell
electric capacity and energy, the Seller may make an allocation to the
Member with respect to a Power Sale Resource in accordance with Section
3.4.2; and
(c) The Seller may modify the Member's PCR in connection
with a Major Resource Modification in accordance with Section 3.4.3.
3.2.2 Any addition of or modification to an Exhibit to Appendix 1
to "Rate Schedule A" made pursuant to Section 3.2.1 shall be prepared and
approved by the Seller in accordance with this Agreement and shall be
conclusively established by a resolution duly adopted by the Board of Directors
of the Seller concurrently with the Board's authorization of the execution of
the principal documents necessary to obligate the Seller to the transaction
resulting in such
4
modification or addition. The Member's obligations shall thereupon be effective
as to any allocation with respect to a Power Sale Resource or any PCR allocated
to the Member in such additional or modified Exhibit, and the Member shall make
all payments required pursuant to this Agreement with respect to such
obligations. Such obligations of the Member shall not be affected by any
subsequent release by the Member of the Seller of the responsibilities set forth
in Section 3.3.1.
3.3 Planning and Resource Management.
3.3.1 Unless and until the Member provides an applicable written
notice pursuant to Section 3.3.2, the Seller shall be responsible for (i) bulk
power supply planning, (ii) future resource procurement, and (iii) sales of
electric capacity and energy for the Member (all three services, collectively,
"Joint Planning and Resource Management"). The Seller shall conduct Joint
Planning and Resource Management in accordance with written policies in effect
from time to time (the Seller's "Resource Policies"). The Member shall provide
an annual written notice to the Seller of the Member's long-range forecast of
load and any power supply resources the Member plans to acquire or dispose of on
its own behalf (an "Annual Planning Report") at the time(s) required and in
accordance with the Seller's Resource Policies. No change to the Seller's
Resource Policies made subsequent to the due date of the Member's Annual
Planning Report shall be effective, as to the Member, until January 1 of the
calendar year following the due date of the Member's next Annual Planning
Report.
3.3.2 The Member may elect to take individual responsibility for
its own (i) bulk power supply planning, (ii) future resource procurement, or
(iii) sales of electric capacity and energy by providing the Seller with written
notice of its release of the Seller from all such responsibilities or any one or
more of them. Any such notice shall be in the form provided in the Seller's
Resource Policies, shall be given no later than the due date of the Member's
Annual Planning Report, and shall be effective January 1 of the following year.
Notwithstanding any notice given under this Section 3.3.2, the Member shall
continue to provide its Annual Planning Report to the Seller unless the Member
is a Scheduling Member pursuant to Section 4.1, and the Member shall pay its
allocated share of the total cost of Joint Planning and Resource Management
until the effective date on which the Member takes individual responsibility for
all three services. If the Member has made any such election, the Seller shall
reassume any such responsibilities only in accordance with the notice
requirements and the terms set forth in the Seller's written policies and
procedures, as the Seller may amend such policies and procedures from time to
time.
3.4 Future Resources, Power Sale Resources and Resource Modifications.
3.4.1 If the Seller is not then released by the Member from its
responsibility set forth in clause (ii) of Section 3.3.1 to undertake future
resource procurement, the Seller may allocate to the Member, and the Member
shall be responsible for, a PCR with respect to any Future Resource approved by
the Seller in accordance with Section 3.2.2. Such allocation shall be made in
accordance with the Seller's Resource Policies.
5
3.4.2 If the Seller is not then released by the Member from its
responsibility set forth in clause (iii) of Section 3.3.1 to sell electric
capacity and energy, the Seller may sell all or part of the electric capacity
and associated energy allocated to the Member pursuant to its PCR with respect
to any Resource. No such sale shall affect the Member's PCR with respect to any
such Resource (even though such sale may reduce or eliminate the electric
capacity and associated energy available to the Member during the term of the
sale). Any such sale of electric capacity or energy by the Seller for a term of
greater than one (1) year shall be allocated among the members of the Seller for
whom the sale is made as a Power Sales Resource in accordance with the Seller's
Resource Policies and shall be treated as a Resource in "Rate Schedule A." The
Seller may, in its sole discretion, at any time and from time to time, modify,
amend, extend, shorten or terminate any Power Sales Resource.
3.4.3 The Seller may, in its sole discretion, undertake from time
to time capital expenditures for additions, improvements, repairs or
modifications to a Generating Resource or modify or extend a Power Purchase
Resource (a "Resource Modification"). The parties recognize that a Resource
Modification may change the capacity of a Resource. In such event, a change may
be required to be made with respect to an existing Exhibit, or a new Exhibit may
be required, to Appendix 1 to "Rate Schedule A." Each such Resource Modification
shall be determined by the Board of Directors of the Seller to be either a Major
Resource Modification or a Minor Resource Modification.
(a) A Minor Resource Modification shall not affect the
Member's PCR with respect to such Resource (even though such modification
may change the electric capacity and associated energy available to the
Member or the contract term or useful life of the Resource).
(b) If the Board of Directors of the Seller determines that
a Major Resource Modification is required to comply with Legal
Requirements, such Major Resource Modification shall not affect the
Member's PCR with respect to such Resource (even though such modification
may change the electric capacity and associated energy available to the
Member or the contract term or useful life of the Resource). A
determination that a Major Resource Modification is required to comply with
Legal Requirements shall be made only by the vote of seventy-five percent
(75%) of the Board of Directors of the Seller.
(c) If the Seller has determined to make a Major Resource
Modification and the Board of Directors of the Seller has not determined
that such Major Resource Modification is required to comply with Legal
Requirements, such Major Resource Modification shall be a Future Resource.
If at the time the Board of Directors of the Seller authorizes such Major
Resource Modification the Seller is then released by the Member from its
responsibility set forth in clause (ii) of Section 3.3.1 to undertake
future resource procurement, the Member may elect not to participate in a
Major Resource Modification by providing the Seller with prior written
notice in accordance with the Seller's Resource Policies. Such notice shall
serve as the Member's prior written consent for the Seller to change the
6
Member's PCR to the extent, if any, required to allocate the increased
capacity or extended life resulting from such Major Resource Modification
solely to the members that are participating in such Major Resource
Modification. (The Seller may also change the Member's PCR in connection
with such a Major Resource Modification if at the time the Board of
Directors of the Seller authorizes such Major Resource Modification, the
Seller is not then released by the Member from its responsibility set forth
in clause (ii) of Section 3.3.1 to undertake future resource procurement.)
Any addition or modification of an Exhibit made by the Seller's Board of
Directors to reflect the allocation of such additional capacity or extended
useful life to participating Members shall be based on the study of an
independent consulting engineer. If the Member elects not to participate in
a Major Resource Modification that extends the useful life, the Board of
Directors of the Seller shall also determine the date on which the PCR of
the Member shall terminate, based on the expected useful life of the
Resource prior to the Major Resource Modification.
3.5 Cost Responsibility.
3.5.1 In the event of a Payment Default by a member of the
Seller, the Seller shall allocate the amount of the Payment Default to each
Resource with respect to which the defaulting member has a PCR, and each
non-defaulting member that has a PCR with respect to each such Resource shall
bear the otherwise unrecovered costs resulting from such Payment Default in the
proportion of its PCR to the aggregate of the PCRs of all non-defaulting members
in each such Resource.
3.5.2 In the event any members of the Seller do not have a PCR
with respect to an Existing Resource and there is a Payment Default by all
members of the Seller that have a PCR with respect to such Existing Resource,
all other members shall become liable for a pro rata share of the costs and
expenses of such Existing Resource. The term "liable for a pro rata share" shall
mean that each of the non-defaulting members shall have their liability based on
the aggregate of Rated Capacity allocated to each of such members pursuant to
its PCR with respect to all Resources of the Seller divided by the aggregate of
such Rated Capacity of all non-defaulting members that share such pro rata
liability. Such pro rata liability shall extend to any modification of an
Existing Resource which is a Minor Resource Modification or a Major Resource
Modification required to comply with Legal Requirements.
3.5.3 In the event of a Payment Default by all members of the
Seller that have a PCR with respect to any Future Resource, the members of the
Seller that do not have a PCR with respect to such Future Resource shall become
liable for a pro rata share of the costs and expenses of such Future Resource
if, and only if, (i) such Future Resource has been approved by seventy-five
percent (75%) of the Seller's Board of Directors and seventy-five percent (75%)
of the members of the Seller, or (ii) such Future Resource is acquired or
constructed solely to meet the requirements of members of the Seller that
continue to take capacity and energy under Existing Contracts. Such pro rata
liability shall extend to any modification of a Future Resource which is a Minor
Resource Modification or a Major Resource Modification required to comply with
Legal Requirements.
7
3.6 Non-Recourse Resources. The Seller may, as provided in this
Section 3.6, enter into an agreement for the purchase of capacity and energy or
energy with a term greater than one (1) year, or acquire or construct a
generating facility without such purchase agreement or generating facility
constituting a Resource subject to the provisions of this Agreement. The Seller
may enter into such a purchase agreement or acquire or construct such a
generating facility if, and only if:
(a) Any such purchase agreement shall be a Non-Recourse
Obligation;
(b) With respect to any such generating facility (including
improvements and modifications):
(i) Any Indebtedness incurred by the Seller to finance the
estimated capitalized cost of such generating facility shall be a
Non-Recourse Obligation;
(ii) The Seller may not provide more than fifteen percent
(15%) of the estimated capitalized cost of such generating facility from
its funds (other than proceeds from Non-Recourse Obligations); and
(iii) Any contract for the purchase of fuel, fuel
transportation or pumping energy for such generating facility with a term
greater than one (1) year shall be a Non-Recourse Obligation; and
(c) The Seller shall enter into a separate power supply agreement
or agreements with one or more of its members or others providing for the
full recovery through rates charged to such parties of all costs of any
such purchase agreement or the construction, acquisition and operation of
any such generating facility.
4. POOLING.
4.1 Seller's Energy and Capacity Pool. From time to time, the Seller
may elect to pool the electric capacity and energy associated with the PCR and
other resources owned or contracted for by its members (including the allocated
electric capacity and energy of the Member) in an energy and capacity pool (the
"Pool") . The Member also may elect from time to time not to have the capacity
represented by the Member's PCR and other resources and associated energy
included in the Pool and to have such capacity and energy to be separately
scheduled (during the effectiveness of any such election, the Member shall be a
"Scheduling Member"). Such election to be a Scheduling Member shall be made by
written notice given to the Seller no later than the due date of the Member's
Annual Planning Report and shall be effective on January 1 of the following
year, or such other date as the Seller and the Member shall agree in writing. If
the Member has made such an election, the Member may re-commit its allocated
electric capacity and energy to the Pool only in accordance with the notice
requirements and the terms set forth in the Seller's written policies and
procedures.
8
4.2 System Operator. The Seller may from time to time enter into an
agreement with another entity to operate the Seller's system. Concurrently with
the effective date of this Agreement, the Seller has contracted with Georgia
System Operations Corporation ("GSOC") as the initial operator of the Seller's
system and as the operator of the Pool. The Seller shall continue to utilize
GSOC as the operator of the Seller's system and as operator of the Pool until
(i) such time, if any, that the Seller and GSOC mutually agree otherwise or (ii)
such contract is terminated in accordance with its terms.
4.3 Operating Policies and Procedures. The Seller shall itself, or
pursuant to a contract require the system operator to, at all times maintain in
effect written policies and procedures for system operations, energy
settlements, reserve sharing and settlements, scheduling and dispatching of
resources, sales of excess capacity and energy by the Seller or its members,
load following and related matters, that treat on a comparable basis the
utilization of all of the Seller's Resources by the Pool and by any members of
the Seller which do not participate in the Pool (or if the Seller has not
established a Pool that is continuing, the Seller shall treat on a comparable
basis the utilization of the resources by the Member and other members).
Comparable basis refers to the legal standard then employed by FERC for
determining that there has been no undue discrimination as among the owner of a
facility and others that have the right to use such facility. Any determination
by GSOC or any other independent system operator with respect to application of
its written policies and procedures shall be conclusive as to the Seller and the
Member, subject to the resolution of disputes in accordance with such
independent system operator's applicable tariffs and service agreement.
4.4 Sale Transactions by Members in the Pool. If it is a participant
in the Pool, the Member shall be entitled to resell for its own account all or
any part of the capacity and associated energy purchased hereunder to any person
or entity in accordance with applicable operating policies and procedures in
effect from time to time.
4.5 Scheduling Member. While the Member is a Scheduling Member, the
Member shall be entitled to resell for its own account all or any part of the
capacity and associated energy purchased hereunder to any person or entity and
to schedule for its own account such capacity and energy in accordance with
applicable operating policies and procedures in effect from time to time.
4.6 Right to Designate Agent. Whenever this Agreement requires or
permits the Seller to provide information, schedules, notice or the like to, or
to take direction from, the Member the Member may by written notice to the
Seller, require the Seller to provide such information, schedules, notice or the
like to, or to take direction from, the Member, its agent or both. The
provisions of this Section does not create any right to assign this Agreement,
such matters being governed exclusively by the provisions of Sections 8 and 9.
9
5. RATES.
5.1 General. The Member shall make all payments to the Seller that are
required pursuant to this Agreement at the rates and on the terms and conditions
set forth herein and in "Rate Schedule A," as amended from time to time as
provided in Section 3 and this Section 5; provided, however, that no Exhibit to
Appendix 1 to "Rate Schedule A" shall be amended in any manner inconsistent with
Section 3.
5.2 Periodic Review. The Seller at such intervals as it shall deem
appropriate, but in any event not less frequently than once in each calendar
year, shall review the rates for electric capacity and energy furnished
hereunder and under the wholesale power contracts with the Seller's other
members and, if necessary, shall revise such rates so that such rates shall
produce revenues that shall be sufficient, but only sufficient, with the
revenues of the Seller from all other sources, to meet all of the Seller's
costs, to cover all payments on account of indebtedness of the Seller (except
any Non-Recourse Obligation), to provide for the establishment and maintenance
of reasonable reserves, and to comply with all financial requirements contained
in the Mortgage or in any indenture, mortgage, or contract relating to any
indebtedness or other financial obligations of the Seller as they may exist from
time to time (except any Non-Recourse Obligation).
5.3 Pool Settlement. The rates shall include credits and charges to
the Member to reflect settlements related to the operation of the Seller's
Resources, including the Member's PCR and associated energy and other resources
in the Pool, unless the Member shall then be a Scheduling Member.
5.4 Functional Unbundling. The Seller shall account for its direct and
indirect costs so that the rate for each Resource and the charge for each
service that the Seller provides to one or more members recovers all direct
costs and a share of indirect costs for each Resource and service, including
administrative and general expenses and margins, allocated in accordance with
Accounting Requirements.
5.5 Reasonable Rates. The rates and terms and conditions of service
provided by the Seller hereunder, including changes from time to time in "Rate
Schedule A," shall be just and reasonable and not unduly discriminatory, but
shall at all times be sufficient to comply with the requirements of Section 5.2.
5.6 Allocation of Payment Defaults. The Seller shall at all times
provide in "Rate Schedule A" a mechanism by which the Seller shall allocate all
unrecovered costs resulting from a Payment Default by the Member or a Payment
Default by any other member to each Resource with respect to which the
defaulting member has a PCR and a mechanism for recovering such costs from the
members that also have a PCR with respect to such Resource in accordance with
the provisions of Section 3.5.1. Such rate provision shall further ensure that
if the Member has no PCR with respect to a Resource, the Seller shall not seek
to recover from the Member any of the costs of that Resource otherwise
unrecovered as the result of a Payment Default by another member unless every
10
member that has a PCR in such Resource has defaulted. In the event of Payment
Defaults by all members that have a PCR with respect to a Resource, the Seller
may recover the amount of such Payment Defaults only in accordance with Sections
3.5.2 and 3.5.3.
5.7 Covenant of the Member. The Member covenants and agrees to
establish, maintain and collect rates and charges for the service of its
electric system, and to conduct its business, in a manner which shall produce
revenues and receipts at least sufficient to enable the Member to pay to the
Seller, when due, all amounts payable by the Member under this Agreement and to
pay any and all other amounts payable from, or which might constitute a charge
and a lien upon, the revenues and receipts derived from its electric system,
including all operation and maintenance expenses and the principal of, premium,
if any, and interest on all indebtedness related to the Member's electric
system.
6. DELIVERY POINTS AND GENERAL TERMS AND CONDITIONS OF SERVICE.
6.1 Delivery Points. Subject to Section 6.3, the Seller shall furnish
the electric capacity and deliver the energy purchased by the Member under this
Agreement to the Member at (i) the high side of the step-up transformer at each
Resource with respect to capacity and energy that is produced by a Resource that
is interconnected with the Georgia Integrated Transmission System (the "ITS")
and (ii) the interface of the ITS at which capacity is furnished and energy is
delivered to Seller from a Resource that is not interconnected with the ITS.
Title and risk of loss of such energy shall pass from the Seller to the Member
at such delivery points. As between the parties hereto, the Seller shall be
deemed to be in exclusive control (and responsible for any injury and damage
caused thereby) of the electric capacity and energy prior to the delivery point,
and the Member shall be deemed to be in exclusive control (and responsible for
any damages or injury caused thereby) of the electric capacity and energy at and
from the delivery point.
6.2 General Terms and Conditions. The general terms and conditions of
service (which reflect implementing details of this Agreement) provided by the
Seller to the Member hereunder are established in the General Terms and
Conditions in "Rate Schedule A."
6.3 Seller and Member Duties.
6.3.1 The Seller and the Member shall use reasonable diligence to
deliver and receive a constant and uninterrupted supply of electric capacity and
energy. If the supply of electric capacity and energy shall fail or be
interrupted, or become defective, as the result of an event of force majeure or
its adverse effects, the Seller shall not be liable therefor or for damages
caused thereby. "Force majeure" shall mean the occurrence or non-occurrence of
any act or event that could not reasonably have been expected and avoided by
exercise of due diligence and foresight and such act or event is beyond the
reasonable control of the Seller. In the event of an interruption of service,
the Seller and the Member shall use all due diligence to restore their
respective systems to enable the delivery and receipt of electric capacity and
energy. In the event of a power shortage, or an adverse condition or
disturbance, the Seller may, without incurring liability, take such emergency
11
action as, in the judgment of the Seller, may be necessary. Such emergency
action may include, but shall not be limited to, reduction or interruption of
the supply of electricity to some points of delivery in order to compensate for
an emergency condition on the system of the Seller, or on any other directly or
indirectly interconnected system.
6.3.2 The Seller covenants and agrees that it will use its
reasonable best efforts to operate, maintain and manage its Resources in
accordance with Prudent Utility Practice. For purposes of this Agreement,
"Prudent Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts that,
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired result
at lowest reasonable cost consistent with good business practices, reliability,
safety, and expedition. Prudent Utility Practice is not intended to be limited
to the optimum practice, method, or act, to the exclusion of all others, but
rather to include a spectrum of possible practices, methods, or acts generally
acceptable in the region in light of the circumstances.
7. RIGHTS OF ACCESS, RECORDS AND ACCOUNTS.
7.1 Rights of Access. Duly authorized representatives of either party
hereto shall be permitted to enter the premises of the other party hereto at all
reasonable times in order to carry out the provisions hereof.
7.2 Accounting Records. The Seller shall keep accurate records and
accounts in accordance with Accounting Requirements. Promptly after the close of
each fiscal year (and not later than 120 days after the end of each fiscal
year), the Seller shall cause such records and accounts of all transactions of
the Seller with respect to such fiscal year to be subject to an annual audit by
a firm of independent certified public accountants experienced in electric
utility accounting and possessing a national reputation in accounting and
auditing. The Seller shall without delay provide a copy of each such annual
audit, including all written comments and recommendations of such accountants to
the Member.
7.3 Access to Books and Records. The Member shall at all times have
reasonable access during business hours to examine any and all and the books,
records and supporting worksheets and data of the Seller as may be appropriate
to determine the accuracy of any charges or payments required to be made by the
Member to the Seller. If such books, records and supporting worksheets and data
of the Seller contain information about another member of the Seller, the Seller
shall excise any identification of a specific member or members or provide such
information to an independent certified public accountant or other independent
representative of the Member under a confidentiality agreement. If, after such
examination of Seller's records, there is still a dispute as to the accuracy of
any charge and the Member proceeds with mediation, arbitration or litigation,
only requirements of confidentiality imposed by a mediator, arbitrator or court
shall be applied.
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8. REORGANIZATIONS, TRANSFERS AND SALES OF ASSETS BY THE MEMBER.
8.1 Dissolution or Liquidation. The Member shall not dissolve,
liquidate or otherwise wind up its affairs without the approval in writing of
the Seller.
8.2 Permitted Transactions. The Member shall not consolidate or merge
with any other Person or reorganize or change the form of its business
organization from an electric membership corporation or sell, transfer, lease or
otherwise dispose of all or substantially all of its assets (each, a "Member
Transaction") to any Person (or make any agreement therefor), whether in a
single transaction or series of transactions, unless either:
(a) Such Member Transaction is expressly approved in writing by
the Seller; or
(b) All of the following conditions are satisfied:
(i) The Transferee shall be an entity organized and existing
under the laws of the United States of America or any State or the District
of Columbia; and
(ii) No default or breach of this Agreement shall have
occurred and be continuing; and
(iii) If the Transferee is not the Member, the Transferee
shall execute and deliver to the Seller an instrument supplemental hereto
in form reasonably satisfactory to the Seller containing an assumption by
the Transferee of the performance and observance of every covenant and
condition of this Agreement required to be performed or observed by the
Member; and
(iv) A firm of independent certified public accountants
shall prepare for the two calendar years immediately preceding the Member
Transaction a set of pro forma financial statements that assume the
consummation of the Member Transaction throughout the applicable
determination period and that are prepared in accordance with generally
accepted accounting principles. Based on such pro forma financial
statements, such accountants must certify that:
(A) the Transferee's Debt Service Coverage Ratio is at
least 1.25 and Times Interest Earned Ratio is at least 1.50 for each of the
two immediately preceding calendar years (assuming such Member Transaction
had been consummated at the beginning of such two-year period);
(B) the Transferee's Equity equals at least 27% of its
Total Assets after giving effect to such Member Transaction; and
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(C) the ratio of the Transferee's Net Utility Plant to
its Long- Term Debt is at least 1.0 after giving effect to such Member
Transaction.
The specification of conditions in subsection 8.2(b) shall not be construed
to establish minimum standards under which the Member may effect a Member
Transaction, the purpose of such conditions being to establish when the Seller's
approval need not be obtained. In the event the Member seeks the Seller's
approval of a Member Transaction, the Seller may withhold such approval only
upon a determination by the Board of Directors of the Seller that the Member
Transaction could reasonably be expected to have a material adverse effect on
the Member's ability to perform its obligations under this Agreement.
8.3 Service Territory and Distribution System. The Member shall not
convey, transfer, lease, or otherwise dispose of any part of its electric
distribution system or assigned service territory or voluntarily transfer or
assign to another Person any customer of the Member (each, a "Conveyance") if
such Conveyance, considered together with (i) all prior Conveyances, and (ii)
all prior additions (by construction, conveyance, transfer or lease to the
Member) to its electric distribution system, assigned service territory or
customers could reasonably be expected to have a material adverse affect on the
Member's ability to perform its obligations under this Agreement.
8.4 Specific Performance. The Member and the Seller agree that the
failure or threatened failure of the Member to comply with the terms of this
Section 8 will cause irreparable injury to the Seller, which cannot properly or
adequately be compensated by the mere payment of money. The Member agrees,
therefore, that in the event of a breach or threatened breach of this Section 8
by the Member, the Seller, in addition to any other remedies that may be
available to the Seller, shall have the right to obtain from any competent court
a decree enjoining such breach or threatened breach of this Section 8 or
providing that the terms of this Section 8 be specifically enforced.
9. ASSIGNMENTS.
9.1 General.
9.1.1 This Agreement shall be binding upon and inure to the
benefit of the permitted successors and permitted assigns of the parties, except
that this Agreement may not be assigned by either party unless prior consent to
such assignment is given in writing by the other party and, if either party is
then an RUS borrower, the Administrator. Any assignment made without a consent
required hereunder shall be void and of no force or effect as against the
non-consenting party.
9.1.2 No sale, assignment, transfer or other disposition
permitted by this Agreement shall affect, release or discharge either party from
its rights or obligations under this Agreement, except as may be expressly
provided by this Agreement.
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9.2 Assignment for Security.
9.2.1 Notwithstanding any other provision of this Agreement, a
party, without the other party's consent but, if such assigning party is then a
borrower of the RUS, only with the consent of the Administrator, may assign,
transfer, mortgage or pledge its interest in this Agreement as security (an
"Assignment for Security") for any obligation secured by any indenture, mortgage
or similar lien on its system assets without limitation on the right of the
secured party to further assign this Agreement, including, without limitation,
the assignment by the Member or the Seller to create a security interest for the
benefit of the Government, acting through the Administrator, or for the benefit
of any third party.
9.2.2 After any Assignment for Security to the Administrator or
other secured party (including any indenture trustee under any indenture
securing the obligations of the Seller), the Administrator or other secured
party, without the approval of the other party to this Agreement, may (i) cause
this Agreement to be sold, assigned, transferred or otherwise disposed of to a
third party pursuant to the terms governing such Assignment for Security, or
(ii) if the Administrator or other secured party first acquires this Agreement,
sell, assign, transfer or otherwise dispose of this Agreement to a third party;
provided, however, that in either case the party who made the Assignment for
Security is in default of its obligations to the Administrator or other secured
party that are secured by such security interest.
9.3 Corporate Reorganization.
9.3.1 The Seller may assign any or all of its rights and delegate
any or all of its duties under this Agreement in connection with any
reorganization, merger or consolidation of the Seller with another entity in
which the Seller is not the surviving entity if (a) such merger or consolidation
(i) is approved by seventy-five percent (75%) of the Board of Directors of
Seller and seventy-five percent (75%) of the members of Seller, or (ii) is
approved by a majority of the Board of Directors of the Seller and a majority of
the members of the Seller if a payment default under the Mortgage shall have
occurred and be continuing and (b) the surviving entity shall expressly assume
by written agreement executed and delivered to the Member, the performance and
observance of the provisions of this Agreement required to be performed or
observed by the Seller.
9.3.2 The Seller may, in its sole discretion, at any time and
from time to time, retire, sell, transfer, lease, terminate or otherwise dispose
of any Resource (even though such transaction may reduce or eliminate the
electric capacity and associated energy available to the Member with respect to
such Resource); provided, that the Seller shall not sell, transfer, lease or
otherwise dispose of all or substantially all of its Resources (each a "Seller
Transaction") to any Person (or make any agreement therefor), whether in a
single transaction or a series of transactions, unless such Seller Transaction
is either: (a) approved by seventy-five percent (75%) of the Seller's Board of
Directors and seventy-five percent (75%) of the members of the Seller, or (b)
approved by a majority of the Board of Directors of the Seller and a majority of
the members of the Seller if a payment default under the Mortgage shall have
occurred and be continuing. The Seller may sell or
15
lease and leaseback any interest in a Resource (a "Leasehold Interest") in a
sale-leaseback, lease-leaseback or similar transaction of any term or length (a
"Lease Transaction") (even though such Lease Transaction may reduce the capacity
and associated energy available to the Member with respect to such Resource). In
connection with any Lease Transaction, the Leasehold Interest shall be
considered the same Generating Resource and not a new Future Resource.
9.4 Receiver or Trustee in Bankruptcy. The parties intend that the
obligations of the Member under this Agreement shall not be affected by a
receiver, a trustee in bankruptcy, a mortgagee or an indenture trustee taking
charge of the assets or business of the Seller, and that such receiver, trustee,
mortgagee or indenture trustee may exercise all of the rights of, and make all
of the determinations provided to be made in this Agreement by, the Board of the
Directors of the Seller.
9.5 Express Rejection of Implied Limitations. The parties intend that
this Agreement shall be assignable in accordance with the provisions of this
Section 9 without regard to any other provisions of this Agreement, the nature
of the Person to which this Agreement is assigned, or the issues raised in the
case, In the Matter of Wabash Valley Power Ass'n., Inc., 72 F.3d. 1305 (7th Cir.
1995). Consequently, the parties agree that this Agreement may be assigned to
any Person (including any receiver or trustee in bankruptcy) pursuant to this
Section 9 without regard to the fact that (i) such Person is not a cooperative;
(ii) the Board of Directors of such Person, if any, is not chosen by a vote in
which the Member participates; or (iii) such Person is not operated on a
not-for-profit basis. Further, no other provision of this Agreement shall
restrict the assignment of this Agreement pursuant to this Section 9. In the
event an assignment is made to a Person that is not an electric membership
corporation (or other form of electric cooperative), all provisions of this
Agreement requiring approval of the members or of the Board of Directors of the
Seller shall cease to be applicable, and in such instances the Seller may act in
its discretion. References in this Agreement to an assignment of this Agreement
shall mean and include either or both of an assignment of rights or a delegation
of duties.
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 Payment Default. If the Member fails to make full payment to the
Seller when required to be made under the provisions of this Agreement, and such
failure continues for a period of ten (10) business days, the Seller shall give
or cause to be given written notice to the Member. If the Member does not,
within ten (10) business days from the date of the mailing of such notice, pay
the full amount then due to the Seller, together with interest thereon, at the
maximum legal rate of interest permitted by law from the date it became due,
then such failure shall constitute a "Payment Default" on the part of the
Member. The Seller shall promptly provide written notice to the other members of
the Payment Default.
10.1.1 Upon a Payment Default, the Seller may suspend service to
the Member for all or any part of the period of continuing default. The Seller's
right to suspend service shall not be exclusive, but in addition to all other
remedies available to the Seller at law or in equity. No suspension of service
or termination of this Agreement or recovery of additional revenues from
16
other members pursuant to Section 5.6 shall relieve the Member of its
obligations hereunder, which are absolute and unconditional. The Seller shall
credit the obligations of the Member during any suspension of service with the
monies actually received by the Seller from sales of capacity and energy that
would have been available to serve the Member, but the Seller shall not be
responsible for failure to mitigate the consequences of the Member's failure to
pay in absence of gross negligence or willful misconduct.
10.1.2 The Seller may terminate this Agreement if (i) a Payment
Default shall have occurred and be continuing and (ii) such termination is
approved by seventy-five percent (75%) of the Seller's Board of Directors and
seventy-five percent (75%) of the non-defaulting members of the Seller.
10.1.3 The fact that other members have paid increased rates and
charges shall not relieve the Member of its liability for the amount owed by it
to the Seller, and any member, either individually or as a member of a group,
shall have such right of recovery from the Member as may be provided by law. The
Seller or any member as their interests may appear, jointly or severally, may
commence such suits, actions or proceedings, at law or in equity, including
suits for specific performance, as may be necessary or appropriate to enforce
the obligations of the Member under this Agreement.
10.2 Seller's Failure to Deliver. If the Seller fails to deliver
electric capacity and energy as a result of the breach of the duties imposed on
it under Section 6, the Seller shall promptly reimburse the Member for the cost
of electric capacity and energy required to replace such capacity and energy,
but the Member shall not be entitled to terminate this Agreement or to withhold
payments required to be made pursuant to this Agreement.
10.3 Performance Default. If either party fails to comply with any of
the terms, conditions and covenants of this Agreement (and such failure does not
constitute a Payment Default by the Member), the non-defaulting party shall give
the defaulting party written notice of the default (a "Performance Default").
The defaulting party shall have a period of thirty (30) days after receipt of
such notice to commence reasonable efforts to cure such Performance Default, and
it shall have an additional thirty (30) days to cure such Performance Default.
Thereafter, if such Performance Default is continuing, the non-defaulting party,
subject to the provisions of Section 10.4.1, shall have all of the rights and
remedies provided at law and in equity, other than termination of this
Agreement.
10.4 Remedies.
10.4.1 No remedy conferred upon or reserved to the Seller or the
Member under this Agreement is intended to be exclusive of any other remedy or
remedies available hereunder or now or hereafter existing and every such remedy
shall be cumulative and shall be in addition to every other such remedy,
provided that no Performance Default by the Seller shall permit the Member to
terminate this Agreement or relieve the Member of its obligation to make
payments
17
pursuant to this Agreement, which obligation shall be absolute and
unconditional.
10.4.2 No waiver by either party hereto of any one or more
defaults by the other party hereto in the performance of any provision of this
Agreement shall be construed as a waiver of any other default or defaults,
whether of a like kind or different nature.
10.4.3 Any action taken or determination made by the Board of
Directors of the Seller as provided in Sections 3.2.2 and 3.4.3 shall be
conclusive and binding as to the Member and all other members of the Seller.
10.4.4 To the fullest extent permitted by law, neither party
shall be liable to the other for any indirect, consequential, multiple or
punitive damages unless such damages are the result of the party's bad faith,
gross negligence or willful misconduct.
11. REASONABLENESS OF RATES.
11.1 Fixed Rate Contract. The Seller was organized by the Member and
38 other electric membership corporations in Georgia to provide collectively for
their electric capacity and energy requirements. This Agreement was established
between the parties hereto, taking into account the present and projected needs
for electric capacity and energy of the members of the Seller, the costs of the
facilities subject to and contemplated by this Agreement and the alternatives
thereto. The parties agree that the rates established hereunder are just and
reasonable under the current circumstances and reflect their determination of
what would be just and reasonable under future conditions reasonably
contemplated by them. The rates take into account specific benefits achieved by
the parties through this Agreement and not otherwise available to the parties,
and reflect the sharing of those benefits without undue discrimination against
any current or future customer of the Seller.
11.2 Formulaic Rate. The charges to be paid by the Member to the
Seller for electric capacity and energy provided under this Agreement are
intended to be adjusted only pursuant to and in accordance with the formulaic
rates specified in "Rate Schedule A," as such formulae may be revised from time
to time pursuant to the express terms of this Agreement.
11.3 Regulatory Review.
11.3.1 Nothing contained in this Agreement shall be construed as
affecting in any way the right of the Seller unilaterally to file an application
for a change in any part of "Rate Schedule A" to any governmental authority
having jurisdiction, including the FERC under Section 205 of the Federal Power
Act and pursuant to the FERC's rules and regulations promulgated thereunder,
upon approval of the change by the Seller in a manner consistent with this
Agreement. Other than an initial application filed by the Seller with the FERC
to provide service pursuant to "Rate Schedule A," the Seller agrees that the
Member may protest or contest the filings referred to in this Section 11.3 or
any filings made by any member of Seller to change the formulary rate
18
mechanism contained in "Rate Schedule A," and the Member does not waive any
rights it may have with respect to such filings.
11.3.2 It is the intent of the parties hereto that any such
governmental authority having jurisdiction shall not, on its own motion or after
petition by any person other than the Seller, replace the rates contained in
"Rate Schedule A" with any other rate except upon finding that "Rate Schedule A"
is contrary to the public interest.
11.3.3 If the Seller's rates are not established pursuant to a
formulary rate mechanism, such as "Rate Schedule A" as changed from time to
time, the Member shall have the right to file any applications relating to rates
as may be permitted by law.
12. EFFECTIVENESS AND TERM.
12.1 Effectiveness and Term. This Agreement is dated as of the date
specified in the introductory paragraph and shall become effective upon (i)
execution and delivery hereof by the Seller and the Member, (ii) the approval in
writing by the Administrator and (iii) the acquisition by GTC of the Seller's
transmission and distribution assets substantially as an entirety. This
Agreement shall remain in effect until December 31, 2025, and from year to year
thereafter unless terminated on December 31, 2025, or any succeeding December
31, by either party's giving to the other not less than three years' prior
written notice of its intention to terminate.
12.2 Reduction in Term. In the event the Seller prepays all of its
obligations to the United States of America, the term of this Agreement will be
shortened to coincide with the latest maturity of any then outstanding
indebtedness, including any indebtedness issued to finance the amount of the
prepayment, if such latest maturity occurs prior to December 31, 2025, provided,
however, that in no event shall the term of this Agreement be shortened to a
date prior to the expiration of any Lease Transaction, the performance of which
depends upon the continued existence of this Agreement.
13. AMENDMENTS, ENTIRE AGREEMENT AND CONFLICTS.
13.1 Amendments.
13.1.1 No amendment to this Agreement shall be effective unless
it has been approved or accepted for filing and permitted to go into effect by
each governmental authority having jurisdiction.
13.1.2 This Agreement may be amended by agreement between the
Seller and the Member, but no such amendment to this Agreement shall be
effective unless it is in writing, executed by both parties; provided, however,
that changes to "Rate Schedule A" shall be effective when made in accordance
with the express provisions of this Agreement.
19
13.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter contemplated by this
Agreement and supersedes all prior agreements, whether oral or written. "Rate
Schedule A", Schedule B and Schedule C are incorporated herein by reference.
13.3 Conflicts.
13.3.1 The Seller's Resource Policies, a current copy of which is
attached hereto as Schedule B, may be modified from time to time by the Seller's
Board of Directors. In the event of any conflict between the provisions of this
Agreement and the Seller's Resource Policies, the provisions of this Agreement
shall govern.
13.3.2 The provisions of this Agreement and "Rate Schedule A"
incorporated by reference shall be interpreted to harmonize as a single
instrument. In the event of any conflict between the provisions of this
Agreement and the provisions of any amendments to "Rate Schedule A" or any
future exhibits, appendices or schedules attached thereto and incorporated by
reference herein, the provisions of this Agreement shall govern.
13.4 Counterparts. This Agreement may be executed in multiple
counterparts to be construed as one.
14. SEVERABILITY. If any part, term, or provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable, the validity of
the remaining portions or provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term, or provision held to be
unenforceable.
15. AMENDMENT AND RESTATEMENT. This Agreement restates into a single
instrument the terms of the Existing Contract and the amendments made hereby.
Prior to the amendments made hereby, the Existing Contract provided that "[t]he
Seller shall sell and deliver to the Member and the Member shall purchase and
receive from the Seller all electric power and energy which the Member shall
require for the operation of the Member's system," subject to certain limited
exceptions. The Seller and the Member acknowledge that their mutual intent in
amending and restating the Existing Contract as provided in this Agreement is to
change the all requirements obligation between them by fixing the Member's
responsibility for electric capacity and associated energy committed to by the
Seller pursuant to and in reliance upon the Existing Contract and similar
contracts with its other members, and charges for such electric capacity and
energy, in a manner such that the Seller can continue to meet its obligations
with respect to such capacity and energy and to permit the Member to utilize
electric capacity and energy from other sources on the terms and conditions set
forth in this Agreement.
16. GOVERNING LAW. Except to the extent governed by applicable federal
law, this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Georgia.
20
17. MEDIATION. If a dispute arises out of or relates to this Agreement,
including all attachments hereto, or the breach thereof, the parties shall first
in good faith seek to resolve the dispute through negotiation. If such dispute
cannot be settled through negotiation, the parties agree to try in good faith to
settle the dispute by mediation under the Commercial Mediation Rules of the
American Arbitration Association, before resorting to arbitration, litigation,
or some other dispute resolution procedure; provided that a party may not invoke
mediation unless it has provided the other with written notice of the dispute
and has attempted in good faith to resolve such dispute through negotiation.
Notwithstanding the foregoing, any party may seek immediate equitable relief,
without attempting to settle a dispute through mediation, in any case where such
party is entitled to equitable relief by the terms of this Agreement or
otherwise.
18. MEMBER'S WITHDRAWAL FROM SELLER.
18.1 Member Withdrawal. In the event the Member elects to withdraw as
a member of Seller, the Member shall execute a copy of the Withdrawal Agreement
(the "Withdrawal Agreement") in the form attached to the Member Agreement, dated
as of August 1, 1996, among the Seller and its members, and deliver the same to
Seller along with its Notice of Intent to Withdraw, including all required
attachments to such Notice, as required by the Seller's bylaws. Such existing
provisions of the Seller's bylaws and the form of the Withdrawal Agreement are
incorporated by reference into this Agreement, and no amendment of such
provision of the Seller's bylaws or the form of the Withdrawal Agreement shall
reduce the rights of the Member (without its consent) as provided therein. The
Member agrees that in the event of its withdrawal as a member of Seller, the
performance by the Member in accordance with the terms of the Withdrawal
Agreement shall be required in order to satisfy its obligations to Seller under
this Agreement. The Member, by executing this Agreement, hereby stipulates and
agrees that any other member of Seller may satisfy its obligations to the
Seller, to the Member and to all other members of the Seller (current and
former) by performing in accordance with the terms of the Withdrawal Agreement.
18.2 References. For the purposes of this Agreement, each reference to
the "Member" shall mean (i) the withdrawn Member from and after the effective
date of the Member's withdrawal from the Seller or (ii) any permitted assignee
from and after the effective date of an assignment by the Member of this
Agreement as provided in the Withdrawal Agreement. Further, for the purposes of
this Agreement, each reference to a "member" or to the "members" of the Seller
shall include any member or members which withdraw from the Seller or any
permitted assignee of such member or members, except that any reference to an
approval of the members shall not include any withdrawn member or members or
such permitted assignees.
19. MISCELLANEOUS.
19.1 No Retail Sales. The Seller shall not, during the term of this
Agreement, without the consent of the Member, (a) provide retail electric
service in the State of Georgia within the Member's assigned geographic area
established in accordance with the Georgia Territorial Electric Service Act, as
such statute may be amended or replaced, or (b) offer to provide retail
21
electric service to any existing customer of the Member.
19.2 Indemnification. The Member shall indemnify and hold the Seller
harmless from and against any and all losses, costs, liabilities, damages and
expense (including without limitation attorneys' fees and expenses) of any kind
incurred or suffered by the Seller pursuant to, as a result of or in connection
with any resale by the Member of capacity, energy or both in the exercise of the
Member's rights under Sections 4.4 or 4.5 except for losses, costs, liabilities,
damages and expenses (including without limitation attorneys' fees and expenses)
incurred or suffered by the Seller as a proximate cause of any action of the
Seller that is not Prudent Utility Practice or is a breach of this Agreement.
19.3 No Restriction on Revenue Allocation. The Member's PCR and that
of other members of the Seller for any or all Future Resources may be different
from their respective percentages set forth on Exhibit 1 to Appendix 1 to "Rate
Schedule A" with respect to Existing Resources, and may also vary among Future
Resources or be zero as to any Future Resource. Recognizing the potential for
such variation, and notwithstanding anything in any other agreement or document
existing on the date of this Agreement, the Member agrees that the Seller shall
not be restricted in its ability to apply revenues received from the Member or
other amounts received by the Seller from the Member and others from or on
account of the ownership or operation of its system or through or on account of
the financing thereof, in such manner as the Seller shall determine to be in its
best business interest. Likewise, the Member agrees that the Seller shall not be
restricted in the Seller's ability to secure any and all indebtedness it may
incur under instruments conveying security title to or creating a lien or other
security interest in any or all of the Seller's assets, without regard to the
purpose for which the indebtedness has been or may be incurred or the purpose
for which the assets are used or are to be used, but the Member's contingent
liability in the event of a Payment Default shall be governed by Section 3.5.
19.4 Corporate Documents. Whenever this Agreement authorizes the
Seller to amend a schedule hereto, to develop and implement policies or to make
other decisions or do other acts or things, at its sole discretion or otherwise,
the Seller shall do so substantially in accordance with the applicable
provisions of its duly adopted Articles, bylaws and corporate policies. Any
failure on the part of the Seller to comply with this Section shall not relieve
the Member of any obligation under this Agreement, but the Member shall not
otherwise be prevented or limited in asserting any other rights it may have
against the Seller in respect of such failure.
19.5 Information Requirements. The Seller and the Member shall each
furnish to the other promptly upon request any and all information about itself,
its financial condition, business and properties which may be necessary or
desirable to facilitate any financing undertaken by the requesting party or any
continuing disclosure obligation incurred by the requesting party in connection
with any such financing. The supplying party shall be responsible only to the
requesting party for the accuracy and completeness of the information furnished
and shall have no responsibility or liability for the manner in which such
information is used or its appropriateness for such use. The supplying party
shall have no liability to any third party to which the requesting party may
furnish
22
this information or any excerpt therefrom or summary thereof, and shall be
entitled to receive appropriate assurances and indemnities from the requesting
party to that effect as a condition to providing such information, provided that
no such assurance or indemnity shall relieve the supplying party of liability to
the requesting party for the accuracy and completeness of the information
supplied.
19.6 No Third Party Beneficiaries. The Seller and the Member agree
that no other member of the Seller or any other third party is an intended
third-party beneficiary of this Agreement, except as may be provided in a
separate instrument executed by each of the Seller and the Member.
19.7 Rules of Construction.
(a) The descriptive headings of the various articles, sections
and subsections of this Agreement and the Schedules attached hereto have
been inserted for convenience of reference only and shall not be construed
as to define, expand, or restrict the rights and obligations of the
parties.
(b) Wherever the term "including" is used in this Agreement and
the Schedules attached hereto, such term shall not be construed as limiting
the generality of any statement, clause, phrase or term.
(c) The terms defined in this Agreement and the Schedules
attached hereto shall include the plural as well as the singular and the
singular as well as the plural.
20. NOTICES. All notices, requests, statements or payments provided for,
required or permitted by this Agreement shall be sufficient for any and all
purposes under this Agreement when transmitted by facsimile, first class United
States Mail, hand delivery, or a private express delivery service to the
facsimile numbers or addresses provided below.
Seller:
Oglethorpe Power Corporation
2100 East Exchange Place
P. O. Box 1349
Tucker, Georgia 30085-1349
Attention: President and Chief Executive Officer
FAX: (770) 270-7872
23
Member:
Okefenoke Electric Membership Corporation
P.O. Box 602
Nahunta, GA 31553-0602 Attention:
FAX: (912) 462-6100
(Signatures on next page)
24
IN WITNESS WHEREOF, the Seller and the Member have caused this Agreement
to be executed, attested, sealed and delivered by their respective duly
authorized officers as of the day and year first written above.
SELLER:
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION)
[CORPORATE SEAL] By: /s/ T.D. Kilgore
----------------------------------------
T. D. Kilgore, President and Chief
Executive Officer
ATTEST:
/s/ Patricia N. Nash
- ----------------------------------------
Patricia N. Nash, Assistant Secretary
MEMBER:
OKEFENOKE RURAL ELECTRIC
MEMBERSHIP CORPORATION
[CORPORATE SEAL] By: /s/ Robert W. Combs
----------------------------------------
Name: Robert W. Combs
Title: President
ATTEST:
/s/ James L. Conner
- ----------------------------------------
Name: James L. Conner
Title: Secretary/Treasurer
25
Schedule A and Schedule B to the Amended and Restated Wholesale Power
Contract are not filed herewith; however the Registrant hereby agrees that
such Schedules will be provided to the Commission upon request.
26
SCHEDULE C
All capitalized terms used in this Agreement, including in this Schedule C, in
"RATE SCHEDULE A" and in Schedule B, and not otherwise defined shall have the
respective meanings set forth below.
"Accounting Requirements" shall mean the requirements of any system of
accounts prescribed by the RUS as long as the Government is the holder, insurer
or guarantor of any indebtedness of the Member or, in the absence thereof, the
requirements of generally accepted accounting principles applicable from time to
time to companies similar to the Member.
"Administrator" shall be as defined in the third Recital.
"Agreement" shall be as defined in the first sentence of this Agreement.
"Annual Planning Report" shall be as defined in Section 3.3.1.
"Assignment for Security" shall be as defined in Section 9.2.1.
"Conveyance" shall be as defined in Section 8.3.
"Debt Service Coverage Ratio" shall mean the ratio determined as follows:
for each calendar year ADD (i) Patronage Capital or Margins, (ii) Interest
Expense, and (iii) Depreciation and Amortization Expense AND DIVIDE the total so
obtained by an amount equal to the sum of all payments of principal and interest
required to be made on account of Long-Term Debt during such calendar year;
provided, however, that in the event that any Long-Term Debt has been refinanced
during such year, the payments of principal and interest required to be made
during such year on account of such Long-Term Debt shall be based (in lieu of
actual payments required to be made on such refinanced debt) upon the larger of
(y) an annualization of the payments required to be made with respect to the
refinancing debt during the portion of such year such refinancing debt is
outstanding, or (z) the payment of principal and interest required to be made
during the following year on account of such refinancing debt, all as computed
in accordance with Accounting Requirements.
"Depreciation and Amortization Expense" shall mean an amount constituting
the depreciation and amortization, as computed pursuant to Accounting
Requirements.
"Equity" shall mean the total equities and margins (or, if not a
cooperative, equity), excluding Regulatory Assets, as computed pursuant to
Accounting Requirements.
"Existing Contract" shall mean that certain Amended and Consolidated
Wholesale Power Contract, dated as of December 1, 1988, between the Seller and
the Member, and when used in
C-1
the plural, shall mean such contract and the similar contracts dated as of
the same date and between the Seller and any other member.
"Existing Resources" shall mean the Resources as set forth in Exhibit 1 to
Appendix 1 to "RATE SCHEDULE A", as changed as a result or any Minor Resource
Modification and any Major Resource Modification required to comply with Legal
Requirements pursuant to Section 3.4.3.
"FERC" shall mean the Federal Energy Regulatory Commission.
"Force majeure" shall have the meaning set forth in Section 6.3.1.
"Future Resource" shall mean any (i) new Generating Resource, or (ii) Power
Purchase Resource of the Seller or (iii) Major Resource Modification pursuant to
Section 3.4.3(c).
"GSOC" shall be as defined in Section 4.2.
"GTC" shall be as defined in the ninth Recital.
"Generating Resource" shall mean the Seller's interest in and to any
existing, additional or repowered generating facilities, which may be owned
(jointly or individually), leased or otherwise acquired, as changed as a result
of any Minor Resource Modification and any Major Resource Modification required
to comply with Legal Requirements pursuant to Section 3.4.3. A single unit or
facility may be divided into one or more Generating Resources as the result of a
Major Resource Modification.
"Government" shall be as defined in the third Recital.
"ITS" shall be as defined in Section 6.1.
"Indebtedness" shall mean
(1) debt incurred or assumed by the Seller for borrowed money or for
the acquisition, construction or improvement of property other than goods
or services that are acquired in the ordinary course of business of the
Seller;
(2) lease obligations of the Seller that, in accordance with
generally accepted accounting principles are shown on the liability side of
a balance sheet;
(3) all debt (other than indebtedness otherwise treated as
Indebtedness hereunder) for borrowed money or the acquisition, construction
or improvement of property or capitalized lease obligations guaranteed,
directly or indirectly, in any manner by the Seller, or in effect
guaranteed, directly or indirectly, by the Seller through an agreement,
contingent or otherwise, to purchase any such indebtedness or to advance or
C-2
supply funds for the payment or purchase of any such indebtedness or
to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the
owner of the indebtedness against loss, or to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether or not such property is
delivered or such services are rendered), or otherwise; or
(4) any agreement by the Seller to purchase or lease power, supplies,
property or services primarily for the purpose of enabling a debtor or
seller to make payment of debt service on indebtedness, pursuant to which
the Seller agrees to pay for power, supplies, property or services
irrespective of whether or not such power, supplies or property are
delivered or such services are rendered.
"Interest Expense" shall mean an amount constituting the interest expense
on Long-Term Debt, as computed in accordance with Accounting Requirements.
"Joint Planning and Resource Management" shall be as defined in Section
3.3.1.
"Leasehold Interest" shall be as defined in Section 9.3.2.
"Lease Transaction" shall be as defined in Section 9.3.2.
"Legal Requirements" shall mean:
(1) obligations of the Seller under all laws, codes, ordinances,
orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, regulations, and requirements of every governmental authority
having jurisdiction over the matter in question, whether federal, state or
local, which may be applicable to the Seller;
(2) obligations of the Seller under an existing joint ownership
agreement or other existing contract with respect to Existing Resources;
(3) requirements pursuant to Prudent Utility Practice to keep
Existing Resources in good operating condition during the useful life or
contract term of such Existing Resources;
(4) obligations of the Seller under a joint ownership agreement or
other agreement with respect to a Future Resource, which agreement has been
approved by a vote of seventy-five percent (75%) of each of the members of
the Seller's Board of Directors and the members of the Seller; or
(5) requirements pursuant to Prudent Utility Practice to keep a
Future Resource in good operating condition during the useful life or
contract term of such
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Future Resource, if such Future Resource has been approved by a vote of
seventy-five percent (75%) each of the members of the Seller's Board of
Directors and the members of the Seller.
"Long-Term Debt" shall mean an amount constituting long-term debt, as
computed in accordance with Accounting Requirements.
"Major Resource Modification" shall mean any of (i) a Resource
Modification that is expected to result in an increase in the Rated Capacity of
a Resource by five percent (5%) or more, (ii) a Resource Modification that
results in the extension of the projected total useful life by five percent (5%)
or more of the original projected useful life, or (iii) an extension of the
contract term for a Power Purchase Resource by more than one (1) year; all as
conclusively determined by the Seller's Board of Directors and, with respect to
(i) and (ii), based upon a study by an independent consulting engineer.
"member" shall mean a member of the Seller.
"Member" shall mean the electric membership corporation identified as such
in the first sentence of this Agreement.
"Member Transaction" shall be as defined in Section 8.2.
"Minor Resource Modification" shall mean any Resource Modification that is
not a Major Resource Modification.
"Mortgage" shall be as defined in the fourth Recital.
"Non-Recourse Obligation" shall mean any indebtedness or other obligation,
(a) liability for which is limited to (i) specific property of the Seller and
(ii) the revenues and other rights under separate power supply agreements and
(b) for which there is no recourse, directly or indirectly, to any other
property, revenues or agreements of the Seller; provided that such indebtedness
or other obligation is incurred solely in connection with the acquisition,
construction or operation of the property or agreements to which the liability
relates.
"Notes" shall be as defined in the third Recital.
"Patronage Capital or Margins" shall mean the amount of net patronage
capital and margins (or, if not a cooperative, net income), as computed in
accordance with Accounting Requirements.
"Payment Default" shall be as defined in Section 10.1 or where the context
requires similar payment default by another of the members of the Seller.
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"Percentage Capacity Responsibility" or "PCR" of the Member and of each
other member shall mean the percentage allocation with respect to a Resource,
including the allocation of electric capacity, cost responsibility and
revenues, if applicable. Exhibit 1 to Appendix 1 to "RATE SCHEDULE A" sets
forth the PCR for the Member with respect to Existing Resources. Future
exhibit(s) to Appendix 1 to "RATE SCHEDULE A" shall set forth any PCR for the
Member and other members with respect to Future Resources.
"Performance Default" shall be as defined in Section 10.3.
"Person" shall mean an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Pool" shall be as defined in Section 4.1.
"Power Marketing Transaction" shall be as defined in Section 19.
"Power Purchase Resource" shall mean a purchase of capacity and energy or
energy by the Seller with a contract term greater than one (1) year.
"Power Sales Resource" shall mean a sale of capacity and energy or energy
made by the Seller with a contract term greater than one (1) year.
"Prudent Utility Practice" shall be as defined in Section 6.3.2.
"REAct" shall be as defined in the seventh Recital.
"RUS" shall be as defined in the second Recital.
"Rated Capacity" shall mean the capacity rating of a Resource in effect
from time to time, as determined by the Seller and used in Section 3.3 of
Appendix 3 to "RATE SCHEDULE A."
"Regulatory Asset" shall mean the sum of any amounts properly recordable as
unrecovered plant and regulatory study costs or as other regulatory assets, as
computed in accordance with Accounting Requirements.
"Resource" shall mean one of the Generating Resources or Power Purchase
Resources.
"Resource Modification" shall be as defined in Section 3.4.3.
"Resource Policies" shall be as defined in Section 3.3.1.
"Scheduling Member" shall be as defined in Section 4.1.
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"Secured Obligations" shall be as defined in the fourth Recital.
"Seller" shall mean Oglethorpe Power Corporation (An Electric Membership
Generation & Transmission Corporation).
"Seller Transaction" shall be as defined in Section 9.3.2.
"Times Interest Earned Ratio" shall mean the ratio determined as follows:
For each calendar year add (i) Patronage Capital or Margins and (ii) Interest
Expense on Long-Term Debt, and divide the total so obtained by Interest Expense
on Long-Term Debt, all as computed in accordance with Accounting Requirement.
"Total Assets" shall mean an amount constituting the total assets, but
excluding any Regulatory Assets, as computed in accordance with Accounting
Requirements.
"Transferee" shall mean the Person formed by any consolidation or that is
the survivor of any merger or reorganization or the Person that acquires or
leases all or substantially all of the electric assets of the Member.
"Withdrawal Agreement" shall be as defined in 18.1.
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