Exhibit 10.8
October 31, 2001
Mr. Robert F. Harrington
Commercial Manager, Elwood Energy
Peoples Energy Corporation
150 North Michigan Avenue, Suite 3900
Chicago, Illinois 60601
RE: Letter Agreement Modifying Elwood Energy LLC's Gas Transportation and
Balancing Agreement
Dear Mr. Harrington:
This Letter Agreement modifies several provisions within the Gas Transportation
and Balancing Agreement ("Agreement") and related Exhibits, dated May 1, 2001,
between Northern Illinois Gas Company d/b/a Nicor Gas Company ("Company") and
Elwood Energy LLC, Elwood Energy II, LLC and Elwood Energy III, LLC (referred
collectively as "Elwood Energy" or "Customer"). Capitalized terms used but not
defined herein shall have the meaning ascribed such terms in the Agreement.
1. Forecast Burn Communication
For the Non-Summer Months only, Customer, or its authorized agent, shall be
allowed to notify Company of a change to Customer's 7:00 A.M. Forecast Burn
and Company shall accept such change provided that;
A. Customer has fulfilled its initial obligation to notify Company, on or
before 7:00 A.M. CCT on the Business Day prior to the beginning of each
Gas Day, of Customer's Forecast Burn for the following Gas Day(s)
expressed as its hourly and daily forecasted use of gas.
B. Customer, or its authorized agent, communicates such change in hourly
and daily Forecast Burn to Company on or before 9:15 A.M. CCT on the
Business Day prior to the beginning of each Gas Day.
C. Customer's communicated change to the 7:00 A.M. hourly and daily
Forecast Burn shall be limited solely to changes in Customer's
forecasted burn for Customer's combustion turbine units 5, 6, 7 and 8.
D. Customer's communicated change to the 7:00 A.M. Forecast Burn shall be
limited solely to upward adjustments from Customer's initial forecast
for units 5, 6, 7 and 8.
E. Customer's communicated change to the 7:00 A.M. Forecast Burn shall not
exceed, in representative gas quantities, the increase in electrical
dispatch by Customer for units 5, 6, 7 and 8 at 9:00 A.M. CCT versus
the electrical dispatch at 7:00 A.M. CCT.
F. Customer's communicated change to the 7:00 A.M. Forecast Burn shall not
exceed 1,264,000 therms per day or 79,000 therms per hour above the
original 7:00 A.M. Forecast Burn.
Mr. Robert F. Harrington
Page 2
G. Any change to the 7:00 A.M. Forecast Burn, communicated by Customer or
its authorized agent to Company in accordance with the above shall be
binding on Customer in determining any applicable Forecast Variance
charge.
2. Minimum Maximum Daily Nomination
A. For the Non-Summer Months only, in conjunction with a properly
communicated and Company accepted change to Customer's 7:00 A.M.
Forecast Burn, Customer, or its authorized agent, may notify Company of
any corresponding and desired change in Customer's requested range of
gas deliverability for the Gas Day(s), both in aggregate and by
individual pipeline, provided such requested change in gas
deliverability is received by Company on or before 9:15 A.M. CCT on the
Business Day prior to the Gas Day.
B. In the event there is a properly communicated and Company accepted
change to Customer's 7:00 A.M. Forecast Burn by Company, Company shall
have the ability to redetermine Customer's Minimum Maximum Daily
Nomination (MMDN), as determined by Company and communicated to
Customer, on or before 8:00 A.M. CCT. Any such corresponding
redetermination in MMDN quantities by Company shall be communicated to
Customer on or before 9:45 A.M. CCT on the Business Day prior to the
Gas Day(s).
C. Company's ability to redetermine Customer's 8:00 A.M. MMDN quantities
shall only exist when there is a properly communicated and Company
accepted change to Customer's 7:00 A.M. Forecast Burn. Revisions to
MMDN quantities by Company may only be in an upward direction.
D. Company's right to redetermine Customer's 8:00 A.M. MMDN quantities
shall not exceed the applicable and corresponding changes in hourly and
daily Forecast Burn as submitted by Customer in a properly communicated
and Company accepted change to Customer's 7:00 A.M. Forecast Burn.
Customer agrees to abide by any such changes in MMDN quantities invoked
by Company.
3. Nominations
A. For the Non-Summer Months only, in conjunction with a properly
communicated change to Customer's 7:00 A.M. Forecast Burn, Customer, or
its authorized agent, shall notify Company by 10:30 A.M. CCT of the
quantity of gas to be delivered by individual pipelines and in total
and electronically nominated to Company on or before 11:30 A.M. CCT,
within any revised MMDN quantities, if applicable, for the next Gas
Day(s).
B. Nominations by Customer, or its authorized agent, will be accepted by
Company if received electronically by Company no later than 11:30 A.M.
CCT on the Business Day prior to the Gas Day.
C. For the Gas Days of Sunday and Monday and where in conjunction with a
properly communicated and Company accepted change to Customer's 7:00
A.M. Forecast Burn and any subsequent revision to Customer's MMDN
quantities, Customer shall be permitted to change its daily nomination
on applicable interstate pipelines, and such nomination changes will be
accepted by Company, if submitted by Customer or its authorized agent,
and communicated to Company's Gas Control via facsimile no later than
11:30 A.M. CCT on the calendar day prior to the Gas
Mr. Robert F. Harrington
Page 3
Day, provided that such nomination change is mutually agreeable between
Company and Customer.
4. Term
A. This Letter Agreement shall be effective for an eight (8) month term
beginning on October 1, 2001 and ending May 31, 2002 (Non-Summer
Months), inclusive of the beginning and ending dates. This Letter
Agreement may be extended for an additional Non-Summer Month period(s)
by mutual agreement between Company and Customer.
B. Unless otherwise agreed upon, the terms of this Letter Agreement shall
not be applicable on Critical Days declared by Company or Peoples Gas
Light and Coke Company or on Gas Days when the Company forecasts
Effective Degree Days to be greater than or equal to sixty (60)
Effective Degree Days.
This Letter Agreement shall be considered as an Amendment to the Gas
Transportation and Balancing Agreement and related Exhibits, dated May 1,
2001, between Company and Customer, and in full compliance with Section 36,
as set forth in the Agreement. In the event of any conflict between this
Letter Agreement and the Agreement or any Exhibits to the Agreement
including the Communications Protocol, this Letter Agreement shall apply.
Unless detailed above, no other provisions of the Agreement shall be
considered modified.
If the above is acceptable to you, please indicate by executing the Letter
Agreement in the space provided below.
Sincerely,
/s/ Theodore J. Lenart
Theodore J. Lenart
Assistant Vice President, Supply Ventures
Agreed to and Accepted by:
By: /s/ Tony Belcher
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Print: Tony Belcher
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Title: General Manager
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Date: 12-11-01
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