EXHIBIT 10.99
SETTLEMENT AGREEMENT
THIS AGREEMENT, dated this day of August 3, 1999, between Scrubgrass
Generating Company, L.P. and Buzzard Power Corporation (hereinafter referred to
collectively as "Scrubgrass") and Pennsylvania Electric Company (hereinafter
referred to as "Penelec"). Scrubgrass and Penelec are collectively referred to
herein as "the Parties".
WHEREAS, Scrubgrass and Penelec entered into an Agreement For The Sale Of
Electric Energy From The Scrubgrass Generating Facility dated August 7,1987, as
well as various amendments thereto (hereinafter referred to collectively as the
"Power Purchase Agreement"), relating to power produced at a power producing
facility in Venango County, Pennsylvania ("Scrubgrass Facility"); and
WHEREAS, various disputes have arisen over the interpretation of certain
provisions of the Power Purchase Agreement; and
WHEREAS, litigation has been commenced in the Court of Common Pleas of
Venango County, Pennsylvania at No.1572-1995 (the "Litigation") regarding the
disputes; and
WHEREAS, Scrubgrass and Penelec have reached an agreement which resolves
the issues raised in the Litigation; and
WHEREAS, the Parties desire to reduce their agreement to writing.
NOW THEREFORE, in consideration of the foregoing premises, as well as for
the mutual promises and other consideration set forth below, and intending to be
legally bound hereby, the Parties hereto agree as follows:
1. Defined Terms: Capitalized terms used in this Agreement and not
otherwise defined shall have their respective meanings as set forth in the Power
Purchase Agreement.
2. This Agreement shall become effective ("Effective Date") only upon the
entry of a valid, binding, final and non-appealable Order by the Pennsylvania
Public Utility Commission ("Commission") approving all terms of this Agreement
in form and substance acceptable to Penelec. In the event the Commission
modifies the obligations of either Party under the Power Purchase Agreement or
this Agreement in any order entered in connection with the approval of this
Agreement beyond the terms hereof, either Party may, upon written notice to the
other Party not later than thirty (30) days after such order has been entered,
declare this Agreement null and void.
3. Within 20 business days of the Effective Date of this Agreement, Penelec
will pay to Scrubgrass for all previous net deliveries of electric energy from
the Scrubgrass Facility in excess of 80 MW at the price set forth in the Power
Purchase Agreement, minus total payments made at 90% of PJM market prices, plus
interest at the legal rate. As of 3/1/99 the amount due for power delivered was
$3,172,021.16 for accrued
underpayment and $405,270.16 for accrued interest. The final payment amount will
be recalculated by Penelec and Scrubgrass, using the same methodology, on the
actual Effective Date to include additional underpayment and interest from
3/11/99 to the Effective Date. The amount paid by Penelec pursuant to this
paragraph shall be paid by wire transfer to the same account to which other
payments are currently being made pursuant to the Power Purchase Agreement.
4. From and after the Effective Date, Penelec shall pay Scrubgrass for all
power produced at the Scrubgrass Facility and delivered to Penelec under and in
accordance with the terms and conditions of the Power Purchase Agreement as
follows:
(a) The hourly limit for which Penelec will pay the rates established and
set forth in the Power Purchase Agreement is 85 MWh/hr ("Hourly
Limit").
(b) The annual limit for which Penelec will pay the rates established and
set forth in the Power Purchase Agreement is 668,914 MWh ("Annual
Limit").
(c) Penelec shall pay Scrubgrass for all energy and capacity which does
not exceed the foregoing Hourly and Annual limits at the rates
established and set forth in the Power Purchase Agreement.
(d) Penelec shall pay Scrubgrass for energy and capacity which exceeds the
Hourly or Annual limits established in paragraphs 4(a) and 4(b) above
("Excess Energy") at the rate of 100% of the hourly integrated PJM
Locational Marginal Price ("Hourly Integrated LMP") in effect at the
"SCRUBGRS 13 kV GEN Bus" at the time Excess Energy is produced, as
determined and published by the PJM Interconnection, LLC, ("PJM") on
the PJM.COM web site or other official forum of PJM, it successors and
assigns, the determination of which shall be final for purposes of
this Agreement.
(e) The Annual Limit shall be applied on a calendar year basis. For
calendar year 1999, the Annual Limit shall be applied effective on
January 1, 1999, regardless of the Effective Date of this Agreement.
5. Notwithstanding the foregoing paragraph, it is agreed that in the event
modifications are made to the Scrubgrass Facility which have the effect of
materially increasing its production or capacity:
(a) this Agreement shall not apply to such additional production or
capacity;
(b) Penelec shall be under no obligation to purchase such additional
production or capacity; and
(c) Scrubgrass shall be under no obligation to sell to Penelec such
additional production or capacity.
Such modifications shall not alter the obligations of either Penelec or
Scrubgrass under this Agreement or under the Power Purchase Agreement. In the
event such modifications are made to the Scrubgrass Facility, Scrubgrass shall
give Penelec sixty (60) calendar days prior written notice of the intent to
complete such modifications. For purposes
of this Agreement, a material increase in production capability or capacity
shall be defined as any such increase which equals or exceeds a 5% increase in
production or capacity in the highest Summer Rated Capacity of the Scrubgrass
Facility achieved before the Effective Date of this Agreement. For purposes of
this Agreement, "Summer Rated Capacity" shall have the same definition and
meaning as contained in the PJM Rules and Procedures for Determination of
Generating Capability.
6. From and after the Effective Date, Scrubgrass shall pay to Penelec an
additional monthly administrative fee in the amount of $2,000, which may be
deducted from the monthly payment to Scrubgrass otherwise made under the Power
Purchase Agreement.
7. Scrubgrass shall continue to make commercially reasonable efforts to
provide +/- 2 MW automatic regulation ("AR"). In the event the Scrubgrass
Facility does not provide AR for more than thirty (30) consecutive days for
reasons other than scheduled or forced outages or minimum generation
requirements, the Hourly Limit shall be reduced to 83 MWh/hr until AR is again
provided.
8. Penelec shall utilize the AR of the Scrubgrass Facility in the same
manner it has been used historically and for system control purposes, consistent
with and pursuant to the requirements of the Federal Energy Regulatory
Commission ("FERC"), North American Electric Reliability Council ("NERC") and/or
PJM, and shall take no action directly or indirectly to encourage or induce any
change in the utilization of AR at the Scrubgrass Facility or in the manner or
frequency of testing of AR at the Scrubgrass Facility.
9. Commencing immediately, and continuing through the payments for
production in June of 2003, Penelec shall make by wire transfer all future
payments required under this Agreement or under the Power Purchase Agreement no
later than the 23rd business day of the month following the production month.
10. From and after the payment for production in June 2003, Penelec shall
make by wire transfer all future payments required under this Agreement or under
the Power Purchase Agreement no later than the 47th business day following the
production month.
11. Scrubgrass Generating Company, L.P. and Buzzard Power Corporation, for
themselves, their officers, agents, directors, employees, attorneys,
subsidiaries, affiliates, successors and assigns, hereby release, remise and
forever discharge Penelec and its officers, agents, directors, employees,
attorneys, subsidiaries, affiliates, successors and assigns of and from all
actions, causes of action, suits, demands, damages and any and all claims and
choses in action of every kind and nature whatsoever, at law or in equity,
whether real or imagined, contingent or non-contingent that they have or could
have instituted, including but not limited to all claims or causes of action
which were asserted or could have been asserted in the Litigation.
12. Penelec for itself, its officers, agents, directors, employees,
attorneys, subsidiaries, affiliates, successors and assigns, hereby releases,
remises and forever discharges Scrubgrass Generating Company, L.P. and Buzzard
Power Corporation and their officers, agents, directors, employees, attorneys,
subsidiaries, affiliates, successors and assigns of and from all actions, causes
of action, suits, demands, damages and any and all claims and choses in action
of every kind and nature whatsoever, at law or in equity, whether real or
imagined, contingent or non-contingent that they have or could have instituted,
including but not limited to all claims or causes of action which were asserted
or could have been asserted in the Litigation.
13. Unless specifically stated otherwise in this Agreement, the Power
Purchase Agreement and each of its provisions, shall remain in full force and
effect, and bind the parties thereto and hereto in accordance with their
respective terms.
14. Penelec shall use its best efforts to seek and obtain prompt approval
of this Agreement by the Public Utility Commission, and shall advise Scrubgrass
when such approval had been granted. Each Party shall provide reasonable
cooperation to the other to assist them in carrying out any of their respective
obligations hereunder.
15. Upon completion of all things necessary to cause this Agreement to
become effective, and upon payment of the amounts agreed upon in Paragraph 3
hereof, Scrubgrass shall take all steps necessary to cause the Litigation to be
terminated with prejudice.
16. Counterparts. This Agreement may be executed in any number of
counterparts, any one of which need not contain the signature of more than one
Party, and all of which together shall for all purposes constitute one and the
same instrument.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
18. Retention of Rights. The Parties retain all of their rights in law,
equity or otherwise to enforce this Agreement or seek and recover damages for a
breach of the terms and conditions hereof.
IN WITNESS WHEREOF, the Parties hereto have caused this Settlement
Agreement to be duly executed and delivered by the respective officers thereunto
duly authorized as of the day and year first written above.
Pennsylvania Electric Company Scrubgrass Generating Company, L. P.
By:________________________ By:_____________________________
Buzzard Power Corporation
By:______________________________