EXHIBIT 10.25
MASTER ELECTRIC SERVICE AGREEMENT
between
PACIFICORP
and
SUMMO USA CORPORATION
This Master ELECTRIC SERVICE AGREEMENT ("Agreement"), entered into on
this 31st day of October, l996, is by and between PacifiCorp, an Oregon
Corporation that provides retail electric service, and SUMMO USA CORPORATION,
hereinafter referred to as SUMMO, a Colorado corporation conducting business
through facilities located at Lisbon Valley in San Juan County, Utah.
WHEREAS, PacifiCorp is a provider of retail electric energy and power,
hereinafter referred to as "Firm Power and Energy," and
WHEREAS, SUMMO desires to purchase Firm Power and Energy requirements
for its copper mining facilities, hereinafter referred to as "Facilities,"
under this Agreement, and
WHEREAS, PacifiCorp desires to provide Firm Power and Energy to the
Facilities as described above.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1: DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.1 AGREEMENT: This Electric Service Agreement and any extensions or
renewals thereof.
1.2 BILLING DEMAND: The Demand in kilowatts used to determine the Demand
(power) charges in accordance with the provisions of Electric Service
Schedule 9.
1.3 BILLING PERIOD: The period of approximately thirty (30) days
intervening between regular successive meter readings.
1.4 COMMISSION: The Public Service Commission of the State of Utah.
1.5 CONTRACT DEMAND: The maximum amount of power that PacifiCorp is
obligated to provide under this Agreement.
1.6 DEMAND: The rate in kilowatts at which PacifiCorp delivers electric
energy to SUMMO either at a given instant or averaged over any designated
period of time.
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1.7 ELECTRIC SERVICE REGULATIONS: PacifiCorp's effective electric
service regulations on file with and approved by the Commission.
1.8 ELECTRIC SERVICE SCHEDULE: PacifiCorp's effective electric service
schedule on file with and approved by the Commission.
1.9 FIRM POWER AND ENERGY: Electric power expressed in kilowatts and
associated energy expressed in kilowatt-hours intended to have assured
availability to SUMMO to meet all or any agreed-upon portion of SUMMO's load
requirements.
1.10 MEASURED DEMAND: The Demand in kilowatts as shown by or computed
from the readings of PacifiCorp's power Demand) meter for the 15-minute
period of SUMMO's greatest use during the Billing Period, adjusted for Power
Factor as specified in Electric Service Schedule 9.
1.11 POWER FACTOR: The percentage determined by dividing SUMMO's average
power use in kilowatts (real power) by the average kilovolt-ampere power load
(apparent power) SUMMO imposes upon PacifiCorp.
SECTION 2: TERM AND TERMINATION; EARLY TERMINATION CHARGE
2.1 TERM: This Agreement shall remain in full force and effect for a
period of ten (10) years from its effective date and shall automatically be
renewed from year to year subject to the same terms and conditions unless
either party submits written termination notice to the other party not less
than thirty (30) nor more than sixty (60) days prior to expiration of initial
term or any renewal term.
2.2 EARLY TERMINATION CHARGE :If SUMMO terminates service or defaults
during the first ten years of this Agreement, SUMMO shall pay a termination
charge equal to the unamortized extension allowance as computed by
PacifiCorp in accord with Electric Service Schedule No.9 and Electric Service
Regulation No.12.
SECTION 3: DELIVERY OF AND CHARGES FOR FIRM POWER AND ENERGY
3.1 SCOPE OF DELIVERIES: The Contract Demand for deliveries under this
Agreement is 7,500 kW. PacifiCorp shall deliver such amounts of Firm Power
and Energy SUMMO requires to meet its load requirements up to, but not in
excess of, such Contract Demand; PROVIDED, that if the Measured Demand
exceeds the Contract Demand as a result of SUMMO's operations, the Measured
Demand shall establish a new Contract Demand if PacifiCorp has capacity
available adequate to supply such Demand on a firm basis. PacifiCorp shall
notify SUMMO within sixty (60) days of the billing covering the period in
which Measured Demand exceeded the Contract Demand whether such capacity is
available. In such event, the new Contract Demand shall continue in effect
until either (1) the new Demand is in turn exceeded by a Contract Demand, or
(2) the eleventh billing
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month following the billing month in which such Demand was established;
PROVIDED, in the latter event the Contract Demand shall then become the maximum
actual Measured Demand established in any of the preceding eleven (11) billing
months.
3.2 REQUEST FOR ADDITIONAL CONTRACT DEMAND: Upon PacifiCorp's receipt of
SUMMO's written request for additional power and energy, PacifiCorp shall
attempt to supply such additional power and energy under terms and conditions
acceptable to both parties. Within 15 days of the request PacifiCorp shall
advise SUMMO in writing whether the additional power and energy is or can be
made available. If PacifiCorp does provide SUMMO with Firm Power and Energy
in excess of the Contract Demand commitments, such deliveries shall trigger a
Contract Demand superseding the Contract Demand set forth in section 3.1.
3.3 PAYMENT FOR AND COMMENCEMENT OF CONSTRUCTION: Within one (l) year of
the date of this Agreement SUMMO expects to obtain all necessary permits and
financing for its copper mining facilities in Lisbon Valley, Utah. Summo
shall notify PacifiCorp when it obtains such permits and financing. If SUMMO
provides such notice after December 24, 1996, PacifiCorp may recalculate the
cost of the line extension and adjust the line extension payment and
guaranteed minimum payments in a manner to compensate PacifiCorp fully for
any decreased value of the dollar from the date of this Agreement to the date
PacifiCorp receives such notice. Until it gives notice to PacifiCorp,
SUMMO shall owe no financial obligation to PacifiCorp except the payment
of $35,000 required upon execution of this Agreement pursuant to section 4.4.
SUMMO shall make the first payment required under section 4.4 when it
notifies PacifiCorp that it has obtained the necessary permits and financing.
PacifiCorp shall complete construction of the facilities necessary to provide
service to SUMMO in accordance with the terms of this agreement within eight
(8) months of its receipt of such notice.
3.4 POINT OF DELIVERY: The Point of Delivery for all Firm Power and
Energy delivered to SUMMO shall be at the terminus of PacifiCorp's 69 kV
power line at SUMMO's copper mine.
3.5 DELIVERY VOLTAGE: PacifiCorp shall deliver Firm Power and Energy at
the Point of Delivery in the form of alternating current at a nominal
frequency of 60 Hertz, and at a nominal voltage of 69,000 volts.
3.6 REACTIVE REQUIREMENTS:
3.6.1 SUMMO'S OBLIGATIONS: SUMMO shall control and limit the flow
of reactive power between PacifiCorp's and SUMMO's system so as to
maintain a Power Factor of between ninety five percent (95%) lagging and
ninety percent (90%) leading at all times. If SUMMO's Power Factor
adversely affects operation of PacifiCorp's facilities or adversely
affects PacifiCorp's other customers, SUMMO shall install at SUMMO's
expense switched capacitors, synchronous condensers, or such other
devices and
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equipment as PacifiCorp may reasonably require to eliminate that portion
of unscheduled reactive power flow which causes the Power Factor to
exceed the limits established herein. Should SUMMO fail to take
corrective action requested by PacifiCorp within six (6) months after
written notice from PacifiCorp, PacifiCorp may perform such services or
supply and install such equipment as it deems necessary to provide
corrective action, whereupon SUMMO shall compensate PacifiCorp for all
sums expended and all services contracted or performed, including
PacifiCorp's standard overhead costs, plus ten percent (10%) of all
expenditures. SUMMO shall pay such sums within thirty (30) days after
PacifiCorp has mailed to SUMMO an itemized statement of its charges
therefor.
3.6.2 ADJUSTMENT TO BILLING DEMAND: In the event SUMMO's Power
Factor drops below either 95% lagging or 90% leading, PacifiCorp's
Billing Demands shall be increased as specified for Power Factor that
drops below 90% lagging in Electric Service Schedule 9.
3.6.3 HARMONICS: SUMMO shall operate its facilities on harmonic
distortion within the guideline of the Agreement.
3.6.3. 1 The total harmonic voltage distortion (THD)
shall be less than five percent (5%), and the maximum individual
frequency voltage harmonic shall be less than three percent (3%) of
the fundamental. The voltage notch depth shall be less than twenty
percent (20%) and the notch area shall be less than 22,800
microseconds-volts.
3.6.3.2 The total demand distortion (TDD) or harmonic current
distortion shall be less than eight percent (8%) of the maximum
demand load current. Individual odd current harmonics shall be less
than the following percentage of the fundamental (60 hertz) current.
3rd through 9th 7.0%
11th through 15th 3.5%
17th through 21st 2.5%
23rd through 35th 1.5%
35th and higher 0.5%
Individual even harmonics shall be limited to twenty-five percent
(25%) of the odd harmonic limits specified above.
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SECTION 4: PAYMENT FOR POWER AND ENERGY
4.1 STATEMENTS: All billing statements shall show the amount due for
Firm Power and Energy purchased.
4.2 PAYMENT FOR POWER AND ENERGY: PacifiCorp shall serve SUMMO under
Electric Service Schedule No.9. All bills shall be paid by the due date of
the bill.
4.3 GUARANTEED MINIMUM PAYMENT: In consideration of the special
investment by PacifiCorp to supply service hereunder, SUMMO shall make
minimum annual total payments for service of $281,664 in each year for a
period of five years, beginning six months from the commencement of
deliveries. The guaranteed minimum payments shall be in the amount of $23,472
per month for sixty (60) consecutive months. PacifiCorp shall calculate and
bill the guaranteed minimum at intervals of every twelve (12) months
beginning one year from commencements of deliveries. Where the actual billed
service is less than $281,664, PacifiCorp shall bill SUMMO for the difference
between actual billed service and the required stated minimum. In the event
actual use as determined by meter readings exceeds the monthly minimum
guaranteed payment, SUMMO shall pay the higher amount.
4.4 SUMMO LINE EXTENSION PAYMENT: SUMMO shall pay $735,000 pursuant to
Electric Service Regulation No.12 in partial compensation for PacifiCorp's
cost of construction of the facilities necessary to provide service to SUMMO's
copper mining facilities. PacifiCorp acknowledges receipt of $35,000
delivered by SUMMO contemporaneously with the execution of this Agreement.
SUMMO shall pay the remaining balance of $700,000 in quarterly installments
of $100,000 each beginning with the payment which SUMMO is required to
provide simultaneously with the notice specified in section 3.3.
4.5 REFUND OF SUMMO EXTENSION PAYMENT: For the five years commencing on
the sixth (6th) through the end of the tenth (10th contract years PacifiCorp
shall make available to SUMMO a credit on its bill for Firm Power and Energy
in an amount up to $147,000 per contract year, which credit shall be allowed
on a dollar-for-dollar basis for all actual billed service in each year in
excess of $281,664.
SECTION 5: METERING
5.1 METERING EQUIPMENT: PacifiCorp shall provide, maintain, and test
meters and metering equipment required for billing purposes. The parties
shall specify the locations for PacifiCorp's installation of metering
equipment in SUMMO's premises, and SUMMO shall allow PacifiCorp access to
such locations without charge during reasonable business hours.
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5.2 TELECOMMUNICATIONS FACILITIES: Upon PacifiCorp's request, SUMMO
shall install a dedicated telephone line for meter reading purposes without
charge to PacifiCorp.
5.3 SECONDARY METERING: PacifiCorp may install its meter on the
secondary side of SUMMO's transformers.
5.4 TRANSFORMER LOSS CURVES: If secondary metering is used, transformer
and other losses occurring between the Point of Delivery and the meter shall
be computed and added to the meter readings to determine the monthly demand
and energy consumption. SUMMO shall, prior to commencement of service,
provide PacifiCorp with transformer loss curves and test data to allow
PacifiCorp to calculate transformer losses for billing purposes.
SECTION 6: INTEGRATION
This Agreement replaces and supersedes in their entirety all prior
agreements between the parties related to the same subject matter except that
certain Customer Requested Work Agreement dated August 1, 1995, and covering
PacifiCorp's design of the electrical facilities and providing assistance to
SUMMO to obtain permission to construct a 69 kV power line from PacifiCorp's
Pinto-Hatch 69 kV line to SUMMO's copper mine.
SECTION 7: EXCLUSIVE SUPPLIER & RESALE OF POWER
The Firm Power and Energy that PacifiCorp delivers to SUMMO pursuant to
this Agreement may not be resold directly or indirectly by SUMMO to any of
SUMMO's subcontractors or to any other party. PacifiCorp shall be the
exclusive provider of Firm Power and Energy throughout the term of this
Agreement unless the Agreement is terminated and SUMMO pays the appropriate
early termination charge under sections 2.2, 4.3 and 4.4 hereof.
SECTION 8: JURISDICTION OF REGULATORY AUTHORITIES
PacifiCorp's currently applicable, effective Electric Service Schedule
No.9 and Electric Service Regulations are attached hereto, incorporated
herein and by reference made a part hereof. SUMMO shall abide by them and all
amendments and changes thereto so approved by the Commission. In the event
that the Commission or any other state, federal, or municipal authority
issues any rules, regulations, or orders which require PacifiCorp to alter or
amend any of the provisions of this Agreement or to terminate or curtail the
delivery of Firm Power and Energy to SUMMO, PacifiCorp shall not be liable to
SUMMO for damages or losses of any kind whatsoever which SUMMO may sustain as
a result of such rule, regulation, or order, including consequential damages.
In the event that the Utah Commission or federal body promulgates rules,
regulations or statutes allowing SUMMO to obtain power or energy from a
source other than PacifiCorp, including the use of PacifiCorp's facilities,
nothing in the Agreement shall be construed to
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prevent such alternative power supply; PROVIDED, that SUMMO shall not be
relieved of its obligations under sections 2.2, 3.6.1, 3.6.2, 4.3 and 4.4
hereunder.
SECTION 9: FORCE MAJEURE
Neither Party shall be subject to any liability or damages for inability
to provide or receive service to the extent that such failure shall be due to
causes beyond the control of either PacifiCorp or SUMMO, including, but not
limited to, the following: (a) the operation and effect of any rules,
regulations and orders promulgated by any commission, municipality, or
governmental agency of the United States, or subdivision thereof; (b)
restraining order, injunction or similar decree of any court; (c) war; (d)
flood; (e) earthquake; (f) act of God; (g) sabotage; or (h) strikes or
boycotts. Should any of the foregoing occur, the minimum billing demands
that would otherwise be applicable under this Schedule shall be waived and
SUMMO shall have no liability for service until SUMMO is able to resume
service; provided, the party claiming Force Majeure shall make every
reasonable attempt to remedy the cause thereof as diligently and
expeditiously as possible.
SECTION 10: NOTICE
Any notice required to be given hereunder shall be deemed to have been
given when it is sent, with postage prepaid, by registered or certified mail,
return receipt requested, to the parties hereto at their respective addresses
as follows:
If to SUMMO:
SUMMO USA, CORP.
Attn: James D. Frank, Vice President and Chief Financial Officer
900 Denver Center Building
1776 Lincoln Street
Denver, CO 80203
If to PacifiCorp:
PacifiCorp
Lee M. Kimball, Strategic Account Manager
P.O. Box 728
51 East Main
American Fork, UT 84003
SECTION 11: ASSIGNMENT
Neither party shall assign this Agreement without the written consent of
the other party, which consent shall not be unreasonably withheld.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by persons duly authorized as of the date first above written.
PACIFICORP
By: /s/ [illegible]
--------------------------------
SUMMO USA CORPORATION
By: /s/ [illegible]
--------------------------------
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P.S.C.U. NO. 41 ORIGINAL SHEET NO. 9.1
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UTAH POWER & LIGHT COMPANY
ELECTRIC SERVICE SCHEDULE NO. 9
STATE OF UTAH
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GENERAL SERVICE - HIGH VOLTAGE
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AVAILABILITY: At any point on the Company's interconnected system where
there are facilities of adequate capacity.
APPLICATION: This Schedule is for alternating current, three-phase
electric service supplied at approximately 46,000 volts or 69,000 volts or
greater, through a single point of delivery. Seasonal service will be
available only under other appropriate schedules.
MONTHLY BILL: (Computer Codes 9, 115, 116)
CUSTOMER SERVICE CHARGE:
$100.00 per service connection
POWER CHARGE:
$5.87 per kW all kW
ENERGY CHARGE:
2.4227 CENTS per kWh all kWh
MINIMUM: The monthly customer charge plus appropriate power and
energy charges.
POWER FACTOR: This rate is based on the Customer maintaining at all
times a Power factor of 90% lagging, or higher, as determined by measurement.
If the average Power factor is found to be less than 90% lagging the Power as
recorded by the Company's meter will be increased by 3/4 of 1% for every 1%
that the Power factor is less than 90%.
CONTRACT PERIOD: One year or longer.
CONTRACT DEED: This provision does not apply to any General Service
Customers who contracted prior to July 29, 1982, for service except for those
Customer's whose Electric Service Agreements already contain this
specification. However, in the event that Customer makes any material changes
or increases in his installation which amount to at least 25% of Customer's
greatest historical actual demand, Company, under the provisions of Paragraph
6, Electric Service Regulation No. 5, will require a new Contract containing
this provision. "Contract Demand" as used herein shall mean the maximum Power
contracted for by Customer and in excess of which the Company is under no
obligation to supply, as set forth in the Electric Service Agreement executed
by
[LOGO]
P.S.C.U. No. 41 ORIGINAL SHEET NO. 9.3
- -----------------------------------------------------------------------------
ELECTRIC SERVICE SCHEDULE NO. 9 - CONTINUED
and action of Customer but are not the result of Customer's usual and
ordinary operations, shall be excluded from determination of new
Contract Demands. Upon prior arrangement with Company, Customer may
test, repair or start-up equipment at mutually acceptable and scheduled
off-peak periods and any demands in excess of the Contract Demand
established during such test, repair or start-up shall be excluded from
determination of new Contract Demands.
FORCE MAJEURE: Neither Company or Customer shall be subject to any
liability or damages for inability to provide or receive service to the
extent that such failure shall be due to causes beyond the control of
either Company or Customer, including, but not limited to the following:
(a) the operation and effect of any rules, regulations and orders
promulgated by any Commission, municipality, or governmental agency of
the United States, or subdivision thereof; (b) restraining order,
injunction or similar decree of any court; (c) war; (d) flood; (e)
earthquake; (f) act of God; (g) sabotage; or (h) strikes or boycotts.
Should any of the foregoing occur, the minimum billing demands that
would otherwise be applicable under this Schedule shall be waived and
Customer will have no liability for service until such time as Customer
is able to resume service.
The party claiming Force Majeure under this provision shall make
every reasonable attempt to remedy the cause thereof as diligently and
expeditiously as possible.
Should Customer find it necessary to shut down operations because
of market or economic conditions for a period of at least thirty (30)
days, the 65% minimum billing demands that would otherwise be
applicable under this Schedule shall be waived; provided, however, that
in this event, 65% minimum billing demands shall not be waived for more
than two (2) billing months in any contract year.
TERMINATION: This provision does not apply to any Customers who
contracted prior to July 29, 1982, for service except for those
Customers whose Electric Service Agreements contain Contract Demand
provisions with 65% minimum demand payment obligations. Termination of
electric service by the Customer prior to the expiration date of the
Electric Service Agreement (or any extension thereof) will not relieve
the Customer of his obligations under this Rate Schedule and the
Electric Service Agreement, including all 65% minimum payment
obligations. In the event of termination, the 65% minimum payment
amounts as stated herein, shall remain in full force and effect for the
remaining unexpired term of the Electric Service Agreement; provided,
however, that Company upon written request of Customer, shall attempt to
sell Customer's Contract Demand obligations, or any portion thereof, to
other parties and, upon such sale, Customer shall be relieved of the
equivalent 65% minimum Contract Demand payment obligation. Company shall
determine the priority of Customer's request to sell any Portion of its
Contract Demand obligations by the date upon which Company receives
Customer's written request. A sale is deemed to have occurred on the
date Company executes an Electric Service Agreement for service with
another party, and Customer, in order of priority, shall be relieved of
its equivalent 65% minimum Contract Demand payment obligation as of that
date.
Termination prior to the expiration date of the Electric Service
Agreement (or any extensions thereof) shall not relieve Customer of any
non-contract demand minimum payment obligations incurred as a result of
Company investments in special facilities