Exhibit 10(D)
TRANSITIONAL POWER PURCHASE AGREEMENT
BY AND BETWEEN
NEVADA POWER COMPANY
AND
AES MOHAVE, LLC
DATED: May 10, 2000
ASSET BUNDLE: MOHAVE
TABLE OF CONTENTS
Section Page
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1. DEFINITIONS....................................................... 1
2. TERM.............................................................. 5
3. SECURITY.......................................................... 5
4. SUPPLY SERVICE.................................................... 7
5. NOTIFICATION AND LOAD FORECASTING................................. 10
6. PRICING OF ENERGY................................................. 12
7. INVOICING AND PAYMENTS............................................ 13
8. REGULATORY APPROVALS.............................................. 15
9. COMPLIANCE........................................................ 15
10. INDEMNIFICATION................................................... 11
11. LIMITATION OF LIABILITY........................................... 17
12. INSURANCE......................................................... 18
13. FORCE MAJEURE..................................................... 19
14. DISPUTES.......................................................... 20
15. NATURE OF OBLIGATIONS............................................. 22
16. SUCCESSORS AND ASSIGNS............................................ 23
17. REPRESENTATIONS................................................... 24
18. DEFAULT AND REMEDIES.............................................. 24
19. FACILITY ADDITIONS AND MODIFICATIONS.............................. 25
20. COORDINATION...................................................... 26
21. EMERGENCY CONDITION RESPONSE...................................... 26
22. OUTAGE SCHEDULING................................................. 26
23. REPORTS........................................................... 27
24. COMMUNICATIONS.................................................... 27
25. NOTICES........................................................... 28
26. MERGER............................................................ 28
27. HEADINGS.......................................................... 29
28. COUNTERPARTS AND INTERPRETATION................................... 29
29. SEVERABILITY...................................................... 29
30. WAIVERS........................................................... 29
31. AMENDMENTS........................................................ 30
32. TIME IS OF THE ESSENCE............................................ 30
33. APPROVALS......................................................... 30
34. PLR SERVICE....................................................... 31
Exhibits Page
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EXHIBIT A ASSET BUNDLE CAPACITIES.................................. A-1
EXHIBIT B PRICE FLOOR OF ENERGY AND PRICE CEILING OF ENERGY,....... B-1
EXHIBIT C EXAMPLE OF SUPPLIER'S MONTHLY INVOICE.................... C-1
EXHIBIT D EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS.......... D-1
EXHIBIT E EXAMPLE OF YEAR-END TRUE-UP INVOICE...................... E-1
EXHIBIT F NOTICES, BILLING AND PAYMENT INSTRUCTIONS................ F-1
EXHIBIT G FORM OF AVAILABILITY NOTICE.............................. G-1
EXHIBIT H BUYER'S WHOLESALE SALES CONTRACTS AT THE EFFECTIVE DATE.. H-1
i
EXHIBIT I FORM OF GUARANTEE........................................ I-1
ii
TRANSITIONAL POWER PURCHASE AGREEMENT
This Agreement is made and entered into as of May 10, 2000 by and between Nevada
Power Company, a Nevada corporation ("Buyer"), and AES Mohave, LLC, a Delaware
limited liability company (the "Supplier"). Buyer and Supplier are referred to
individually as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, Buyer is selling its undivided interest in the Mohave generating
station and other assets associated therewith to Supplier or an affiliate
thereof (the "Asset Sale");
WHEREAS, notwithstanding the Asset Sale, Buyer expects that it will be
designated by the Public Utility Commission of Nevada ("PUCN") as the Provider
of Last Resort ("PLR") for its Nevada retail electric customers who are unable
to obtain electric service from an alternative seller or who fail to select an
alternative seller. The load required to serve such customers, plus the
customers under those wholesale sales agreements existing at the Effective Date
and specifically identified in Exhibit H, is referred to herein as Buyer's
Transitional Resource Requirement; and
WHEREAS, as a result of the Asset Sale, Buyer will no longer have its interest
in the Mohave generating station as a source of supply for its Transitional
Resource Requirement; and
WHEREAS, Supplier has or is willing to secure the necessary resources to provide
a portion of Buyer's Transitional Resource Requirement; and
WHEREAS, Buyer desires to purchase from Supplier and Supplier desires to sell
Energy under contract to Buyer; and
NOW, THEREFORE, in consideration of the mutual covenants, representations and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Parties agree as follows:
1. DEFINITIONS
1.1 Format.
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1.1.1 References to Articles and Sections herein are cross-references
to Articles and Sections, respectively, in this Agreement,
unless otherwise stated.
1.1.2 Any parts of this Agreement which are incorporated by reference
shall have the same meaning as if set forth in full text herein.
1.2 Definitions. As used in this Agreement, the following terms shall
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have the meanings set forth below:
1.2.1 "Agreement" means this Agreement together with the Exhibits
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attached hereto, as such may be amended from time to time.
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1.2.2 "Asset Bundle" means a fourteen percent undivided interest in the
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Mohave generating station and other assets associated therewith
pursuant to the terms of the Asset Sale Agreement.
1.2.3 "Asset Bundle Capacity" means, with respect to each unit listed in
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Exhibit A, fourteen percent of the net generating capacity (in
megawatts ("MW")) of such unit (such net generating capacity currently
being 790 MW per unit), as modified from time to time in accordance
with Section 5.1 or Section 22, and not to exceed at any time the net
capacity for each unit listed in Exhibit A. Asset Bundle Capacity
shall also mean, as the context requires, the Energy (in megawatt-
hours ("MWh")) which the units would be capable of generating if they
operated at the capacity level described in the first sentence of this
Section 1.2.3.
1.2.4 "Asset Sale Agreement" means the Agreement between Buyer and Supplier
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or Supplier's affiliate dated as of May 10, 2000, to purchase Buyer's
undivided interest in the Mohave generating station.
1.2.5 "Asset Sale" has the meaning set forth in the Recitals.
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1.2.6 "Asset Sale Closing" means the transfer of Buyer's ownership of its
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undivided interest in the Mohave generating station and other assets
associated therewith through the consummation of the Asset Sale
pursuant to the terms of the Asset Sale Agreement.
1.2.7 "Availability Notice" means a notice delivered from time to time by
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Supplier to Buyer pursuant to Section 5.1 notifying Buyer of changes
in the availability of the Asset Bundle.
1.2.8 "Business Day" means any day other than Saturday, Sunday, and any day
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that is an observed holiday by Buyer.
1.2.9 "Contract Year" means, with respect to the first Contract Year, the
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period beginning on the Effective Date and, with respect to each
subsequent Contract Year, the period beginning at the end of the
preceding Contract Year, and in each case ending on the earlier of the
date which is 12 months thereafter or the termination date of this
Agreement.
1.2.10 "Control Area" has the meaning set forth in the OATT.
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1.2.11 "Control Area Operator" means an entity or organization, and its
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representatives, which is responsible for operating and maintaining
the reliability of the electric power system(s) within the Control
Area.
1.2.12 "Credit Amount" means $50,000,000.
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1.2.13 "Delivered Amount" means, with respect to any Dispatch Hour, the
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Energy delivered by Supplier to Buyer at the designated Point(s) of
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Delivery during such Dispatch Hour, whether or not such Energy was
generated by the Asset Bundle, plus any additional amounts pursuant to
Section 4.1.2.
1.2.14 "Dispatch Hour" means the prescribed hour when Energy is to be
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delivered by Supplier to Buyer at the designated Point(s) of Delivery.
1.2.15 "Effective Date" means the earlier to occur of (a) the date of the
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Asset Sale Closing or (b) the Effective Date pursuant to Section
10.3(a)(i) of the Asset Sale Agreement.
1.2.16 "EDU" means electric distribution utility, the organization with the
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responsibility for the distribution of energy over Buyer's
distribution system to retail end-users.
1.2.17 "Energy" means electricity (measured in MWh) to be provided by
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Supplier to Buyer pursuant to this Agreement
1.2.18 "Event of Default" has the meaning set forth in Section 18 hereof.
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1.2.19 "FERC" means the Federal Energy Regulatory Commission and any
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successor agency thereto.
1.2.20 "Force Majeure" has the meaning set forth in Section 13 hereof.
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1.2.21 "GAAP" means United States generally accepted accounting principles.
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1.2.22 "Good Utility Practice" means any of the applicable practices, methods
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and acts required by any Governmental Authority having jurisdiction or
applicable regional or national reliability council, including NERC,
or WSCC, or any successor entity, whether or not the Party whose
conduct is at issue is a member thereof, and otherwise engaged in or
approved by a significant portion of the United States electric
utility industry during the relevant time period, which, 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 a reasonable cost consistent with law, regulation,
good business practices, reliability, safety, environmental
protection, economy and expediency. Good Utility Practice is not
intended to be limited to the optimum practice, method, or act to the
exclusion of all others, but rather to practices, methods, or acts
generally accepted in the United States electric utility industry.
1.2.23 "Governmental Authority" means any foreign, federal, state, local or
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other governmental, regulatory or administrative agency, court,
commission, department, board, or other governmental subdivision,
legislature, rulemaking board, tribunal, arbitrating body, or other
governmental authority having jurisdiction over matters contained in
this Agreement.
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1.2.24 "Guarantor" has the meaning set forth in Section 3.1.2 hereof.
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1.2.25 "ISA" means the Mountain West Independent System Administrator, the
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regional transmission organization authorized with the responsibility
for the scheduling and administration of energy and ancillary services
over, through and within the Transmission System in coordination with
other interconnected entities to provide transmission services. The
ISA is also referred to as transmission administrator or transmission
operator.
1.2.26 "Law" means any law, treaty, code, rule, regulation, order,
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determination, permit, certificate, authorization, or approval of an
arbitrator, court or other Governmental Authority which is binding on
a Party or any of its property.
1.2.27 "Minimum Investment Grade Rating" of a Person means that such Person
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has a minimum credit rating on its senior unsecured debt securities of
at least two of the following ratings: (i) BBB- as determined by
Standard & Poor's Corporation, (ii) Baa3 as determined by Moody's
Investors Service, Inc., or (iii) a comparable rating by another
nationally recognized rating service reasonably acceptable to Buyer.
1.2.28 "Minimum Tangible Net Worth" means the total book value of
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shareholder's equity less the balance of goodwill, as reported on the
latest quarterly balance sheet prepared in accordance with generally
accepted accounting principles (GAAP).
1.2.29 "NERC" means the North American Electric Reliability Council and any
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successor entity thereto.
1.2.30 "OATT" means Buyer's then-effective Open Access Transmission Tariff,
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or its successor, which has been accepted for filing by the FERC.
1.2.31 "Party" has the meaning set forth in the first paragraph of this
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Agreement.
1.2.32 "Permitted Deratings" means those reductions to the Asset Bundle
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Capacity of which Supplier may notify Buyer from time to time in an
Availability Notice pursuant to Section 5.1.
1.2.33 "Person" means any individual, partnership, limited liability company,
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joint venture, corporation, trust, unincorporated organization or
governmental entity or any department or agency thereof.
1.2.34 "Point of Delivery" means the 500kV bus in the Mohave 500kV
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switchyard, as well as any alternative locations agreed upon pursuant
to Section 4.1.4.
1.2.35 "Price Ceiling of Energy" means the ceiling price of Energy as shown
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in Exhibit B.
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1.2.36 "Price Floor of Energy" means the floor price of Energy as
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stated in Exhibit B.
1.2.37 "Replacement Costs" means with respect to a period of time,
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the difference between (a) the actual costs, including
without limitation related penalties and transmission costs,
reasonably incurred by Buyer to replace any shortfall
between (1) the Asset Bundle Capacity and (2) the Delivered
Amounts during such period and (b) the payments the Supplier
would have been entitled to in respect of such shortfall in
delivery, taking into account the annual true-up mechanism
set forth in Section 7.5 and any other payment adjustments
provided for hereunder; provided, however, that to the
extent Buyer does not buy Energy to make up any shortfall
prior to real time, and relies on imbalance energy to make
up such a shortfall, Replacement Costs shall not be paid to
the extent Buyer's need to replace the shortfall was
mitigated by reductions in the TRR for such Dispatch Hour.
1.2.38 "Transitional Resource Requirement" or "TRR" means the
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Energy and loss compensation necessary for Buyer to meet its
obligations as a Provider of Last Resort (PLR) for Nevada
and under those wholesale sales agreements existing at the
Effective Date and specifically identified in Exhibit H.
1.2.39 "Transmission System" means the facilities owned,
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controlled, or operated by Buyer that are used to provide
transmission service under the OATT.
1.2.40 "WSCC" means the Western Systems Coordinating Council and
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any successor entity thereto.
2. TERM
2.1 Term. Unless terminated earlier pursuant to the terms of this
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Agreement, the term of this Agreement shall commence on the Effective
Date and continue until the earlier of the effective date of an order
by a Governmental Authority terminating Buyer's PLR responsibility, or
March 1, 2003. Supplier shall provide service under this Agreement
commencing on the first hour on the day after the Effective Date.
2.2 Termination.
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2.2.1 Except pursuant to Section 2.2.2 or an uncured Event of
Default by Buyer, this Agreement may not be terminated
without the explicit prior written approval of Buyer.
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2.2.2 If, prior to the Asset Sale Closing, the FERC or any other
Governmental Authority places conditions on or requires
revisions of this Agreement which have a material adverse
effect on Supplier or Buyer, the Parties agree to negotiate
in good faith amendments to the Agreement to preserve the
bargain between the Parties. If the Parties fail to
negotiate mutually acceptable amendments to this Agreement
within sixty days of such action by the FERC or other
Governmental Authority, either Party may terminate the
Agreement after first notifying the other Party in writing;
provided that neither Party may exercise a right of
termination pursuant to this Section 2.2.2 after the Asset
Sale Closing.
2.2.3 This Agreement may be terminated with the mutual agreement
of the Parties.
2.3 Effect of Termination.
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2.3.1 Any default or termination of this Agreement shall not
release either Party from any applicable provisions of this
Agreement with respect to:
2.3.1.1 Indemnity obligations contained in Section 10, to
the extent of the statute of limitations period
applicable to any third party claim.
2.3.1.2 Limitation of Liability provisions contained in
Section 11.
2.3.1.3 Payment of any unpaid amounts in respect of
obligations arising prior to or resulting from
termination.
2.3.1.4 For a period of one year after the termination
date, the right to raise a payment dispute and the
resolution thereof pursuant to Section 14.
2.3.1.5 The resolution of any dispute submitted pursuant
to Section 14 prior to, or resulting from,
termination.
3. SECURITY
3.1 Supplier Certification; Guarantee. As a condition of Buyer's
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execution of this Agreement, Supplier shall at Supplier's option
comply with at least one of the following provisions:
3.1.1 Supplier Certification. Supplier shall (a) provide a
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certificate from a duly authorized corporate officer of
Supplier certifying that, as of the Effective Date, Supplier
has a credit rating equal to or higher than the Minimum
Investment Grade Rating; or (b) post a letter of credit in a
form reasonably acceptable to Buyer in the amount of the
Credit Amount from a financial institution with a credit
rating of A2 or better from Moody's Investors Service, Inc.
and A or better from Standard & Poor's Corporation and a
Minimum Tangible Net Worth ("MTNW") of $1 billion.
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3.1.2 Guarantee. In the alternative, the Supplier may provide a
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corporate guarantee, in form and substance as set forth in
Exhibit I, made by an entity (the "Guarantor") that:
(a) has a credit rating equal to or higher than the
Minimum Investment Grade Rating, together with a
certificate from a duly authorized corporate
officer of such Guarantor certifying that, as of
the Effective Date, such Guarantor has a credit
rating equal to or higher than the Minimum
Investment Grade Rating; or
(b) has a MTNW of no less than $500 million, together
with a certificate from a duly authorized
corporate officer of such Guarantor certifying
that, as of the Effective Date, such Guarantor has
a MTNW of no less than $500 million; or
(c) posts a letter of credit in a form reasonably
acceptable to Buyer in the amount of the Credit
Amount from a financial institution with a credit
rating of A2/A or better and a minimum tangible
net worth of $1 billion.
The aggregate liability of the Guarantor under the corporate
guarantee shall not exceed the Credit Amount.
3.2 Compliance.
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3.2.1 Reporting. If at any time during the term of this Agreement,
Standard & Poor's Corporation, Moody's Investors Service,
Inc. or another nationally recognized firm downgrades the
credit rating of Supplier or the Guarantor, as applicable,
then Supplier shall provide Buyer with written notice of
such change of circumstance within two (2) Business Days of
any such change. In the event such a downgrade also
constitutes an Event of Default pursuant to Section 18, the
requirements of this Section are in addition to, and not in
lieu of, the requirements of Section 18.
4. SUPPLY SERVICE
4.1 Obligations of the Parties.
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4.1.1 Asset Bundle Capacity. Subject to the terms of Section
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4.1.3, Supplier shall be required to provide in any Dispatch
Hour the Asset Bundle Capacity.
4.1.1.1 Supplier shall be entitled to generate or
otherwise procure the Asset Bundle Capacity from
any source, including either or both of the units
of the Asset Bundle or from sources other than the
Asset Bundle.
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4.1.1.2 Supplier shall deliver the Asset Bundle Capacity
to Buyer during the Dispatch Hour on a continuous
basis at the Point(s) of Delivery and shall
schedule the Delivered Amount in accordance with
the applicable transmission scheduling procedures.
4.1.2 Buyer's Obligation to Take. If Buyer is unable or unwilling
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to take the Asset Bundle Capacity in any Dispatch Hour, the
difference (in MWh) between the Asset Bundle Capacity and
Buyer's actual take in such Dispatch Hour shall be treated
as if it were a part of the Delivered Amount for such
Dispatch Hour. Buyer shall give notice to Supplier as soon
as reasonably practicable if it is unable or unwilling to
take delivery of the full Asset Bundle Capacity in any
Dispatch Hour.
4.1.3 Supplier Rights to Output. Supplier may sell to others any
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portion of the Asset Bundle Capacity which Buyer is
unwilling or unable to take.
4.1.4 Point(s) of Delivery. Supplier shall deliver, and Buyer
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shall take delivery of, the Delivered Amount at the Point(s)
of Delivery. Subject to Section 4.1.5.2, Supplier shall be
responsible for all costs associated with delivery of the
Delivered Amount to the Point(s) of Delivery.
4.1.5 Alternative Points of Delivery. For any Dispatch Hour,
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either Party may designate one or more alternative Points of
Delivery, subject to the other Party's approval, such
approval not to be unreasonably withheld or delayed.
4.1.5.1 If Supplier has designated an alternative Point of
Delivery, Supplier shall be responsible for all
costs of delivery to such alternative Point of
Delivery.
4.1.5.2 If Buyer has designated an alternative Point of
Delivery, Buyer shall be responsible for all costs
of delivery to such alternative Point of Delivery.
4.1.6 Fuel. Buyer shall have no responsibility for any fuel
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procurement or fuel transportation associated with the Asset
Bundle during the term of this Agreement.
4.1.7 Resale. Buyer shall not resell the Delivered Amount except
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as necessary to satisfy Buyer's TRR or to maintain
reliability.
4.1.8 Right to Review. Buyer and Supplier each shall have the
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right to review during normal business hours the relevant
books and records of the other Party to confirm the accuracy
of such as it pertains to transactions under this Agreement.
The review shall be consistent with standard business
practices and shall follow reasonable notice to the other
Party. Reasonable notice for a review of the previous
month's records shall be at least a twenty-four (24) hour
period from one Business Day to a subsequent Business Day.
Notice to request a review of other than the
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previous month's records, shall be provided with a minimum
of seven (7) calendar days written notice by the requesting
Party, which notice shall specify the period to be covered
by the review. The Party providing records can make
reasonable requests that the receiving Party keep the
records confidential, and the receiving Party shall take
reasonable steps to accommodate such requests.
4.1.9 Transmission Outages. Supplier shall not be obligated to
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deliver the Asset Bundle Capacity, and no liquidated damages
shall become due, if the Transmission System outages render
the Transmission System incapable of receiving the Asset
Bundle Capacity at the specified Point(s) of Delivery,
provided that in such event Supplier must deliver Energy up
to the capability of the Transmission System to receive such
Energy.
4.2 Liquidated Damages.
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4.2.1 The liquidated damages payment provisions are an integral
part of this Agreement and form a portion of the
consideration for the execution and for any breach of this
Agreement.
4.2.2 If the Delivered Amount is less than the Asset Bundle
Capacity in any Dispatch Hour during a month, and
Replacement Costs computed in respect of such month are
greater than zero, then Supplier shall reimburse Buyer for
such Replacement Costs. An example of the methodology used
to calculate Replacement Costs is provided in Exhibit D.
Supplier's obligation to make payments under this section is
conditioned on Buyer's fulfillment of its obligation to take
reasonable steps to mitigate its Replacement Costs
consistent with Good Utility Practice.
4.2.3 The Parties recognize and agree that the payment of such
amounts by Supplier is an appropriate remedy in the event of
such a failure and that any such payment does not constitute
a forfeiture or penalty of any kind, but rather constitutes
actual costs to Buyer under the terms of this Agreement.
4.3 Supplier Operating Representative. Supplier shall provide and
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maintain a twenty-four (24) hour seven (7) day per week communication
link with Buyer's control center and with Buyer's schedulers.
Supplier's operating representatives shall be available to address and
make decisions on all operational matters under this Agreement on a
twenty-four (24) hour seven (7) day per week basis.
5. NOTIFICATION AND LOAD FORECASTING
5.1 Availability Notification.
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5.1.1 No later than 5:00 a.m. (Pacific Time) of each day, Supplier
shall deliver to Buyer an Availability Notice in the form
set forth in Exhibit G.
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5.1.1.1 Availability Notices shall provide, for the 96-hour
period starting at 6:00 a.m. (Pacific Time) that day,
Supplier's hourly projection of the unavailability or
derating ("Derating") of the Asset Bundle compared to
the Asset Bundle Capacity figures stated for each unit
in Exhibit A.
5.1.2 Each Availability Notice also shall contain, as applicable:
(a) the units which are subject to the Derating;
(b) the magnitude of the Derating;
(c) the hours during which the Derating is expected to
apply;
(d) the cause of the Derating;
(e) the extent, if any, to which the Derating is
attributable to a Permitted Derating; and
(f) the projected Asset Bundle Capacity for each unit
during the period covered by the Availability Notice,
pursuant to Section 5.1.5 below.
5.1.3 Supplier may at any time verbally (with subsequent written
confirmation) notify Buyer of any changes to an Availability
Notice. Such changes shall be effective for the hours designated
in such verbal notice, beginning upon issuance of the notice.
5.1.4 If and to the extent a Derating is the result of one or more of
the following causes, it shall be a Permitted Derating:
(a) approved planned outages pursuant to Section 22;
(b) Transmission System outages as described in Section 4.1.9;
(c) response to an emergency condition as described in Section
21.1;
(d) subject to the limitations expressed in Section 13.5, a
Force Majeure event;
(e) compliance with constraints on flue gas emissions applicable
to the Asset Bundle, provided, however, that to the extent
such constraints can be avoided or mitigated through
purchasing emission allowances on commercially reasonable
terms or other commercially reasonable economic measures
short of installing new equipment or retrofitting existing
equipment, these constraints shall not be Permitted
Deratings; and
(f) equipment limitations due to ambient conditions which differ
from ISO conditions.
5.1.5 In respect of any hour, the Asset Bundle Capacity of each unit
shall be the Asset Bundle Capacity figure stated in Exhibit A
minus any Permitted Derating applicable during such hour.
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5.1.6 For the avoidance of doubt, the Asset Bundle Capacity
shall not be affected by Deratings which are not
Permitted Deratings.
5.1.7 In determining whether to declare a Permitted Derating
that does not involve a planned outage, Supplier shall
take account of operational considerations regarding
the items listed in Section 5.1.4 and shall not vary
its considerations to reflect different market
conditions.
6. PRICING OF ENERGY
6.1 Overview. The price of Energy paid by Buyer to Supplier shall be
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based upon a designated hourly market price, subject to monthly floor
and ceiling provisions. The Price Floor of Energy will ensure that
Supplier will receive an average price for Energy for each month which
is not less than the price stated in Exhibit B. The Price Ceiling of
Energy provision provides that the average price of Energy paid to
Supplier each month and for each year shall not exceed the price
stated in Exhibit B.
6.2 Price of Energy.
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6.2.1 Market Price of Energy. In respect of any Dispatch Hour, the
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designated market price of Energy shall be the unconstrained
hourly market-clearing price in the day-ahead market from
the California Power Exchange (CALPX) as published at the
following Web Site
http://www.calpx.com/prices/index_prices_dayahead_trading.
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html, or its successor web site name. Should such hourly
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market in the day-ahead market not exist for the entire
term, the Parties shall agree upon a similar market price
index.
6.2.2. Price Floor of Energy. The Price Floor of Energy is stated
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in Exhibit B and shall not change during the term of this
Agreement.
6.2.3 Price Ceiling of Energy. The Price Ceiling of Energy is
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stated in Exhibit B and shall not change during the term of
this Agreement.
6.3 Price Revisions. The Parties waive any and all rights to seek to
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revise the provisions of this Agreement, including the prices stated,
pursuant to Sections 205 and/or 206 of the Federal Power Act.
7. INVOICING AND PAYMENTS
7.1 Invoicing and Payment. On or before the 10th day of each month,
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Supplier shall send to Buyer an invoice setting forth the Asset Bundle
Capacity, Delivered Amount and market price pursuant to Section 6.2.1
for each Dispatch Hour in the previous month, and the total due from
Buyer. The invoice shall be calculated based upon data available to
Supplier and shall be in accordance with this Section 7 and Exhibit C.
Buyer shall promptly notify Supplier if Buyer in good faith disputes
any portion of the invoice, stating in reasonable detail the reason
for the dispute.
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7.2 Monthly Invoice Calculation. On each monthly invoice, Supplier shall
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calculate the following amounts:
7.2.1 The Delivered Amount in respect of each Dispatch Hour
multiplied by the corresponding market price of Energy
pursuant to Section 6.2.1, summed over the billing period;
7.2.2 Sum of the Delivered Amounts in respect of all Dispatch
Hours of the billing period multiplied by the Price Ceiling
of Energy;
7.2.3 Sum of the Delivered Amounts in respect of all Dispatch
Hours of the billing period multiplied by the Price Floor of
Energy; and
7.2.4 For each Dispatch Hour of the billing period, the shortfall,
if any, between the Asset Bundle Capacity and the Delivered
Amount.
7.3 Supplier's Invoice. Supplier will invoice the lesser of the amounts
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calculated in Sections 7.2.1 and 7.2.2 provided that if the amount
calculated in Section 7.2.1 is less than the amount calculated in
Section 7.2.3, Supplier shall invoice Buyer the amount calculated in
Section 7.2.3. Examples of this monthly invoice calculation (and
annual true-up process) are contained in Exhibit C.
7.4 Buyer's Invoice. In the event any shortfall occurs pursuant to Section
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7.2.4, Buyer shall within 10 days of receipt of Supplier's invoice
deliver to Supplier a Buyer's invoice detailing any Replacement Costs
due. Buyer shall provide supporting data in reasonable detail to
support its calculations of Replacement Costs. Supplier shall promptly
notify Buyer if Supplier in good faith disputes any portion of the
invoice, stating in reasonable detail the reason for the dispute. If
the Buyer's invoice results in an amount due from Supplier to Buyer,
Buyer may offset such amount from its payment of Supplier's
corresponding invoice.
7.5 Annual True-Up Mechanism.
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7.5.1 The annual true-up mechanism will provide adjustments among
the Parties with respect to each Contract Year in the
following scenarios:
(a) If (i) the Price Ceiling of Energy multiplied by the
hourly Delivered Amount of Energy summed over the
Contract Year is less than or equal to (ii) the market
price of Energy for each hour pursuant to Section 6.2.1
multiplied by the Delivered Amount of Energy for each
hour during the Contract Year, Buyer shall pay to
Supplier the greater of (A) zero; and (B) the
difference in the dollar amount between (x) the Price
Ceiling of Energy multiplied by the hourly Delivered
Amount of Energy summed over the Contract Year and (y)
the amounts invoiced by Supplier for Energy pursuant to
Section 7.3 summed over the Contract Year; or
(b) If (i) the Price Ceiling of Energy multiplied by the
hourly Delivered Amount of Energy summed over the
Contract Year is
12
greater than (ii) the market price of Energy for each
hour pursuant to Section 6.2.1 multiplied by the
Delivered Amount of Energy for each hour during the
Contract Year, Buyer shall pay to Supplier the greater
of (A) zero; and (B) the difference in the dollar
amount between (x) the market price of Energy for each
hour multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year and (y) the
amounts invoiced by Supplier for Energy pursuant to
Section 7.3 summed over the Contract Year.
7.5.2 Supplier shall also perform the calculations set forth in
Section 7.5.1 using the hourly Asset Bundle Capacity in
place of the hourly Delivered Amount of Energy. Supplier
shall include in the true-up invoice an amount equal to the
lesser of (a) the difference between the amount calculated
pursuant to the first sentence of this Section 7.5.2. and
the amount calculated pursuant to Section 7.5.1.and (b) the
sum of all Replacement Costs incurred during the Contract
Year.
7.5.3 True-up adjustments will be calculated by Supplier within
twenty days after each Contract Year. Examples of the true-
up calculations and invoice form are set forth in Exhibit E.
Interest shall be calculated pursuant to 18 CFR Section
35.19a and shall be included in the true-up invoice.
Invoices for true-up adjustments shall be submitted by
Supplier within thirty (30) days after the end of the
Contract Year. Payments for such invoices shall be due from
Buyer twenty (20) days from receipt of the true-up invoice.
invoice.
7.6 Invoice Disagreements. Should there be a good faith dispute over any
---------------------
invoice, the Parties shall promptly seek resolution pursuant to
Section 14. Pending resolution of the invoice dispute, payment shall
be made or offsets or credits taken, as applicable, based upon the
undisputed portion of the invoice.
7.7 Adjustments. Upon resolution of the dispute, the prevailing Party
-----------
shall be entitled to receive the disputed amount, as finally
determined to be payable along with interest (calculated pursuant to
18 CFR Section 35.19a) through the date of payment. No invoice (or
payment covered thereby) shall be subject to adjustment unless notice
or request for adjustment is given within one (1) year of the date
payment thereunder was due.
7.8 Method of Payment. Subject to Sections 7.6 and 7.7, Buyer shall remit
------------------
all amounts due by wire or electronic fund transfer, pursuant to
Supplier's invoice instructions, no later than twenty days after
receipt of the invoice.
7.9 Overdue Payments. Overdue payments shall bear interest from and
----------------
including, the due date to the date of payment on the unpaid portion
calculated pursuant to 18 CFR Section 35.19a.
7.10 Buyer Right to Offset. Buyer shall have the right to offset any
----------------------
amounts Supplier owes to Buyer, including Replacement Costs (except
for such amounts disputed in good faith by Supplier), against the
amounts owed by Buyer to Supplier.
13
7.11 Taxes. Each Party shall pay ad valorem and other taxes attributed to
-----
its facilities and services provided. Supplier shall not include any
taxes of any kind in its invoices to Buyer. The prices of Energy shall
not change during the term of this Agreement as a result of any
changes in local, state or federal taxes, fees or levies.
7.12 Late Invoices. If either Party submits an invoice outside of the time
-------------
deadlines set forth herein, that Party shall not forfeit its rights to
collect the amounts due thereunder, provided that such invoice is no
more than six (6) months late, and provided that changes to invoices
remain subject to the deadline in Section 7.7
8. REGULATORY APPROVALS
8.1 This Agreement will be filed with the FERC and any other appropriate
regulatory agencies by the appropriate Party as may be required.
9. COMPLIANCE
9.1 Each Party shall comply with all relevant Laws and shall, at its sole
expense, maintain in full force and effect all relevant permits,
authorizations, licenses, and other authorizations material to the
maintenance of facilities and the performance of obligations under
this Agreement.
9.2 Each Party and its representatives shall comply with all relevant
requirements of any authorized Control Area Operator, ISA and/or EDU
to ensure the safety of its employees and the public, and to ensure
electric system reliability and integrity, material to the performance
of this Agreement.
9.3 Buyer and Supplier shall perform or cause to be performed, their
obligations under this Agreement in all material respects in
accordance with Good Utility Practices.
10. INDEMNIFICATION
10.1 Supplier shall indemnify Buyer for failure to maintain insurance
requirements pursuant to Section 12.
10.2 To the fullest extent permitted by law, a Party to this Agreement
("the Indemnifying Party") shall indemnify, defend and hold harmless
the other Party, its parent, affiliates, and successors and agents
(each an "Indemnified Party") from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs, judgments,
damages, losses or expenses asserted by third parties against an
Indemnified Party and arising out of, relating to, or resulting from
the Indemnifying Party's breach of, or the negligent performance of
its obligations under this Agreement.
10.2.1 Such indemnity shall also extend to actual courts costs,
attorneys' fees, expenses and other liabilities incurred in
the defense of any claim, action or proceeding, including
negotiation, settlement, defense and appeals, to
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which this indemnification obligation applies. In
furtherance of the foregoing indemnification and not by way
of limitation thereof, the Indemnifying Party hereby waives
any defense it otherwise might have against the Indemnified
Party under applicable workers' compensation laws.
10.2.2 In claims against any Indemnified Party by an agent of the
Indemnifying Party, or anyone directly or indirectly
employed by them or anyone for whose acts they may be
liable, the indemnification obligation under Section 10.2.1
shall not be limited by a limitation on amount or type of
damages, compensation or benefits payable by or for the
Indemnifying Party or a subcontractor under workers' or
workmen's compensation acts, disability benefit acts or
other employee benefit acts.
10.2.3 Such indemnity shall also extend to all costs and expenses
incurred by the Indemnified Party in any action or
proceeding to enforce the provisions of this Agreement, but
only if and to the extent the Indemnified Party prevails in
such action or proceeding.
10.2.4. Such indemnity obligations shall not be construed to negate,
abridge or reduce other rights or obligations or indemnity
which would otherwise exist at law or equity. The
obligations contained herein shall survive any termination,
cancellation, or suspension of this Agreement to the extent
of the statute of limitations period applicable to any third
party claim.
10.3 Indemnification Procedures:
--------------------------
10.3.1 Any Party seeking indemnification under this Agreement shall
give the other Party notice of such claim promptly but in
any event on or before thirty (30) days after the Party's
actual knowledge of such claim or action. Such notice shall
describe the claim in reasonable detail, and shall indicate
the amount (estimated if necessary) of the claim that has
been, or may be sustained by, said Party. To the extent that
the other Party will have been actually and materially
prejudiced as a result of the failure to provide such
notice, such notice will be a condition precedent to any
liability of the other Party under the provisions for
indemnification contained in this Agreement.
10.3.2 In any action or proceeding brought against an Indemnified
Party by reason of any claim indemnifiable hereunder, the
Indemnifying Party may, at its sole option, elect to assume
the defense at the Indemnifying Party's expense, and shall
have the right to control the defense thereof and to
determine the settlement or compromise of any such action or
proceeding. Notwithstanding the foregoing, an Indemnified
Party shall in all cases be entitled to control its defense
in any action if it:
(i) may result in injunctions or other equitable remedies
in respect of the Indemnified Party which would affect
its business or operations in any materially adverse
manner;
15
(ii) may result in material liabilities which may not be
fully indemnified hereunder; or
(iii) may have a significant adverse impact on the business
or the financial condition of the Indemnified Party
(including a material adverse effect on the tax
liabilities, earnings or ongoing business
relationships of the Indemnified Party) even if the
Indemnified Party pays all indemnification amounts in
full.
10.3.3 Subject to Section 10.3.2, neither Party may settle or
compromise any claim for which indemnification is sought
under this Agreement without the prior consent of the other
Party; provided, however, said consent shall not be
unreasonably withheld or delayed.
11. LIMITATION OF LIABILITY
11.1 To the fullest extent permitted by law and notwithstanding other
provisions of this Agreement, in no event shall a Party, or any of
their respective successors or assigns be liable to the other Party,
whether in contract, warranty, tort, negligence, strict liability, or
otherwise, for special, indirect, incidental, multiple, consequential
(excluding replacement power costs and other costs pursuant to Section
4.2, but including lost profits and revenues, and lost business
opportunities), or punitive damages, related to or resulting from
performance or nonperformance of this Agreement or any activity
associated with or arising out of this Agreement. However, this
Limitation of Liability shall not apply with respect to claims
pursuant to Section 10, or for personal injury, death or property
damage asserted by third parties as to which a Party is liable
pursuant to the indemnification provisions hereof or otherwise
hereunder.
11.2 The provisions of this Section 11 shall survive any termination,
cancellation, or suspension of this Agreement.
12. INSURANCE
12.1 Supplier shall maintain at its cost and expense, fire, liability,
business interruption, worker's compensation and other forms of
insurance relating to the damage, destruction and loss of Supplier's
Asset Bundle and facilities. Buyer agrees that it is acceptable for
Supplier to self-insure in whole or in part against such risks.
12.2 If the Asset Bundle is damaged or destroyed in whole or in part by a
casualty, whether insured or not, this Agreement shall continue in
full force and effect and Supplier shall take all commercially
reasonable steps to repair and restore the Asset Bundle and
facilities.
12.3 Every third-party contract of insurance shall be with an insurer
qualified to do business in the State of Nevada and with the
equivalent of a "Best Rating" of "A" or better and shall include
provisions or endorsements
16
(i) stating that such insurance is primary insurance with respect to
the interest of Buyer and that any insurance maintained by Buyer
is excess and not contributory insurance required hereunder;
(ii) providing that no reduction, cancellation or expiration of the
policy shall be effective until ninety (90) days from the date
written notice thereof is actually received by Buyer. Upon
Supplier's receipt of any notice of reduction, cancellation or
expiration, Supplier shall immediately provide written notice
thereof to Buyer; and
(iii) naming Buyer as an additional insured on the general liability
insurance policies as its interests may appear with respect to
this Agreement.
12.4 On or before the Effective Date, Supplier shall provide to Buyer, and
shall continue to provide to Buyer at least fifteen (15) days prior to
the end of each Contract Year, upon any change in coverage, or at the
request of Buyer not to exceed once each year, properly executed and
current certificates of insurance with respect to all insurance
policies required to be maintained by Suppler under this Agreement.
Certificates of insurance shall provide the following information:
(i) the name of insurance company, policy number and expiration
date;
(ii) The coverage required and the limits on each, including the
amount of deductibles or self-insured retentions;
(iii) A statement indicating that Buyer shall receive at least thirty
(30) days prior written notice of cancellation or expiration of
a policy, or reduction of liability limits with respect to a
policy; and
(iv) A statement indicating that Buyer has been named as an
additional insured.
At Buyer's request, not to exceed once each Contract Year, in addition
to the foregoing certifications, Supplier shall deliver to Buyer a
copy of each insurance policy, certified as a true copy by an
authorized representative of the issuing insurance company.
12.5 Buyer shall have the right to inspect the original policies of
insurance applicable to this Agreement at Supplier's place of business
during regular business hours.
13. FORCE MAJEURE
13.1 Each Party shall have the obligation to operate in accordance with
Good Utility Practice at all times.
13.2 An event of "Force Majeure" shall be defined as any interruption or
failure of service or deficiency in the quality or quantity of service
or any other failure to perform any of its obligations hereunder to
the extent such failure occurs without fault or negligence on the part
of that Party and is caused by factors beyond that Party's reasonable
control, which by the exercise of reasonable diligence that Party is
unable to prevent, avoid, mitigate or overcome, including without
limitation:
17
(i) acts of God or the public enemy, such as storms, flood,
lightning, and earthquakes,
(ii) failure, threat of failure, or unscheduled withdrawal of
facilities from operation for maintenance or repair (excluding
such caused by normal wear and tear or manufacturing defects),
and including unscheduled transmission and distribution
outages,
(iii) sabotage of facilities and equipment,
(iv) civil disturbance,
(v) labor dispute,
(vi) action or inaction of a court or public authority, or
(vii) any other cause of similar nature beyond the reasonable control
of that Party.
13.3 Economic hardship of either Party shall not constitute Force Majeure
under this Agreement. Nor shall anything contained in this Section or
elsewhere in this Agreement excuse a Party from strict compliance with
the obligation of the Parties to comply with the terms of this
Agreement relating to timely payments.
13.4 In the event of a Force Majeure, neither Party shall be considered in
default under this Agreement or responsible to the other Party in
tort, strict liability, contract or other legal theory for damages of
any description, and affected performance obligations shall be
extended by a period equal to the term of the resultant delay, but in
no event shall exceed the term of the Agreement, provided that the
Party relying on a claim of Force Majeure:
(i) provides prompt written notice of such Force Majeure event to
the other Party, giving an estimate of its expected duration
and the probable impact on the performance of its obligations
hereunder;
(ii) exercises all reasonable efforts to continue to perform its
obligations under this Agreement;
(iii) expeditiously takes action to correct or cure the event or
condition excusing performance so that the suspension of
performance is no greater in scope and no longer in duration
than is dictated by the problem; provided, however, that
settlement of strikes or other labor disputes will be
completely within the sole discretion of the Party affected by
such strike or labor dispute;
(iv) exercises all reasonable efforts to mitigate or limit damages
to the other Party; and
(v) provides prompt notice to the other Party of the cessation of
the event or condition giving rise to its excuse from
performance.
13.5 Notwithstanding the above provisions, a Force Majeure event shall
excuse Supplier from its obligation to deliver the Asset Bundle
Capacity pursuant to Section 4 of this Agreement only for the first
seven (7) days of the Force Majeure event. After such seven day
period, Supplier must either deliver the Asset Bundle
18
Capacity at the Point(s) of Delivery or pay liquidated damages
pursuant to Section 4.2 of this Agreement.
14. DISPUTES
14.1 Any action, claim or dispute which either Party may have against the
other arising out of or relating to this Agreement or the transactions
contemplated hereunder, or the breach, termination or validity thereof
(any such claim or dispute, a "Dispute") shall be submitted in writing
to the other Party. The submission of any Dispute shall include a
concise statement of the question or issue in dispute, together with a
statement listing the relevant facts and documentation that support
the claim.
14.2 The Parties agree to cooperate in good faith to expedite the
resolution of any Disputes. Pending resolution of Disputes, the
Parties shall proceed diligently with the performance of their
obligations under this Agreement.
14.3 The Parties shall first attempt in good faith to resolve any Dispute.
In the event that representatives of the Parties are unable to
satisfactorily resolve the Dispute within 30 (thirty) days from the
receipt of notice of the Dispute, either Party may by written notice
to the other refer the Dispute to their respective senior management
or may demand in writing the submission of the Dispute to binding
arbitration. In the event a Party refers a Dispute to its senior
management, that Party does not waive its right subsequently to demand
the submission of the Dispute to binding arbitration. Once a Party
demands in writing that a Dispute be submitted to binding arbitration,
the Parties expressly select arbitration as the means to resolve
Disputes and thereby irrevocably waives their right to a jury trial
with respect to any Dispute, subject to the following:
14.3.1 The request for provisional remedies requesting preservation
of the Parties' respective rights and obligations under the
Agreement may be resolved by a court of law located in
County of the principal office of Buyer.
14.4 Subject to the restrictions of Section 6.3, nothing in this Agreement
shall preclude, or be construed to preclude, any Party from filing a
petition or complaint with the FERC or PUCN with respect to any
arbitrable claim over which said agency has jurisdiction. In such
case, the other Party may request FERC or the PUCN, as applicable, to
reject or to waive jurisdiction. If jurisdiction is rejected or
waived with respect to all or a portion of the claim, the portion of
the claim not so accepted by FERC or the PUCN, as applicable, shall be
resolved through arbitration, as provided in this Agreement. To the
extent that FERC or the PUCN, as applicable, asserts or accepts
jurisdiction over the claim, the decision, finding of fact or order of
FERC or the PUCN, as applicable, shall be final and binding, subject
to judicial review under the Federal Power Act or Nevada Revised
Statutes and subject to the provisions of Section 2.2.2, and any
arbitration proceedings that may have commenced with respect to the
claim prior to the assertion or acceptance of jurisdiction by FERC or
the PUCN, as applicable, shall be terminated.
19
14.5 Unless otherwise agreed by the Parties, any arbitration initiated
under this Agreement shall be conducted in accordance with the
following:
14.5.1 Arbitrations shall be held within the County of the
principal place of business of Buyer.
14.5.2 Arbitrations shall be conducted in accordance with the
"Commercial Arbitration Rules" of the American Arbitration
Association ("AAA") then in effect.
14.5.3 Arbitrations shall be conducted by one neutral arbitrator
who shall be selected pursuant to the AAA rules and the
following:
14.5.3.1 The Parties agree that the list of potential
arbitrators provided by the AAA shall, if
available, contain 20 candidates, and that at
least 50% of the candidates be members of the AAA
National Energy Panel.
14.5.3.2 The Parties also agree that each will be allowed
to strike the names of five candidates, before
ranking the remaining candidates and returning the
list to the AAA in accordance with the Commercial
Arbitration Rules. If the Parties are unable to
agree on an arbitrator, such arbitrator shall be
appointed by the American Arbitration Association.
14.5.3.3 The arbitrator shall not have any current or past
substantial business or financial relationships
with any party to the arbitration (or their
affiliates) and shall not be a vendor, supplier,
customer, employee, consultant, or competitor to
any of the Parties including their affiliates.
14.5.3.4 The arbitrator shall be authorized only to
interpret and apply the provisions of this
Agreement or any related agreements entered into
under this Agreement and shall have no power to
modify or change any of the above in any manner.
The arbitrator shall have no authority to award
punitive or multiple damages or any damages
inconsistent with this Agreement. The arbitrator
shall within 30 days of the conclusion of the
hearing, unless such time is extended by agreement
of all Parties, notify the Parties in writing of
his or her decision, stating his or her reasons
for such decision and separately listing his or
her findings of fact and conclusions of law. The
decision of the arbitrator rendered in such a
proceeding shall be final and binding on the
Parties. Judgment on the award may be entered upon
it in any court having jurisdiction.
14.6 The Parties shall proceed with the arbitration expeditiously and the
arbitration shall, if possible be concluded, in order that the
decision may be rendered within six (6) months after the filing of the
demand for arbitration.
20
14.7 Any arbitration proceedings, decision or award rendered hereunder
and the validity, effect and interpretation of this arbitration
agreement shall be governed by the Federal Arbitration Act of the
United States, 9 U.S.C. (S)(S) 1 et seq.
14.8 The award of the arbitrator shall be final and binding on both
Parties and may be enforced in any court having jurisdiction over
the Party against which enforcement is sought.
14.9 Expect as otherwise stated herein, each Party shall bear its own
expenses, including but not limited to legal fees, except that all
expenses associated with the arbitration shall be apportioned in the
award of the arbitrator based upon the respective merit of the
claims of the Parties.
14.10 This Agreement shall be interpreted pursuant to the laws of the
State of Nevada, as if executed and performed wholly within that
state, and the Federal Power Act.
15. NATURE OF OBLIGATIONS
15.1 Except where specifically stated in this Agreement to be otherwise,
the duties, obligations, and liabilities of the Parties shall be
several; not joint or collective. The provisions of this Agreement
shall not be construed to create an association, trust, partnership,
or joint venture; to impose a trust or partnership duty, obligation,
or liability or agency relationship on or with regard to either
Party.
15.2 Nothing in this Agreement nor any action taken hereunder shall be
construed to create any duty, liability, or standard of care to any
person not a Party to this Agreement. Each Party shall be
individually and severally liable for its own obligations under this
Agreement.
15.3 By this Agreement, neither Party dedicates any part of its
facilities or the service provided under this Agreement to the
public.
16. SUCCESSORS AND ASSIGNS
16.1 This Agreement may be assigned, without express written consent of
the other Party, as follows:
16.1.1 Buyer may assign this Agreement or assign or delegate its
rights and obligations under this Agreement, in whole or in
part, if such assignment is made to an affiliate, parent,
subsidiary, successor or any party, provided that such
assignee operates all or a portion of the PLR or if such
assignment is required by Law or applicable regulations.
16.1.2 Subject to the requirement that Supplier's assignee fulfills
the requirements of this Agreement, including without
limitation obligations under Section 3, Supplier may assign
this Agreement to an affiliate that directly or indirectly
owns at least a fifty percent interest in the Asset Bundle.
16.2 Supplier may, without the consent of Buyer, assign, transfer, pledge
or otherwise dispose of its rights and interests hereunder to a
trustee, lending institution, or any
21
Person for the purposes of financing or refinancing the Asset
Bundle, including upon or pursuant to the exercise of remedies
under such financing or refinancing, or by way of assignments,
transfers, conveyances of dispositions in lieu thereof; provided,
however, that no such assignment or disposition shall relieve or
in any way discharge Supplier or such permitted assignee from the
performance of its duties and obligations under this Agreement.
Buyer agrees to execute and deliver such documents as may be
reasonably necessary to accomplish any such assignment, transfer,
conveyance, pledge or disposition of rights hereunder for
purposes of the financing or refinancing of the Asset Bundle, so
long as Buyer's rights under this Agreement are not thereby
materially altered, amended, diminished or otherwise impaired.
16.3 Either Party may, without the consent of the other Party, assign
this Agreement to a successor to all or substantially all of the
assets of such Party by way of merger, consolidation, sale or
otherwise, provided such successor assumes and becomes liable for
all of such Party's duties and obligations hereunder.
16.4 Except as stated above, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by
either Party, including by operation of law, without the prior
written consent of the other Party, said consent not to be
unreasonably withheld. Any assignment of this Agreement in
violation of the foregoing shall be, at the option of the non-
assigning Party, void.
16.5 Except as set forth above, no assignment or transfer of rights or
obligations under this Agreement by a Party shall relieve said
Party from full liability and financial responsibility for the
performance thereof after any such transfer or assignment unless
and until the transferee or assignee shall agree in writing to
assume the obligations and duties of said Party under this
Agreement and the other Party has consented in writing to such
assumption; said consent not to be unreasonably withheld.
16.6 This Agreement and all of the provisions hereof are binding upon,
and inure to the benefit of, the Parties and their respective
successors and permitted assigns.
17. REPRESENTATIONS
17.1 Representations of the Parties. The Parties represent and warrant
------------------------------
each to the other as follows:
17.1.1 Incorporation. Buyer is a corporation duly
-------------
incorporated, validly existing and in good standing
under the laws of the State of Nevada. Supplier is a
limited liability company duly organized, validly
existing and in good standing under the laws of the
State of Delaware. Both Buyer and Supplier have all
requisite corporate power and authority to own, lease
and operate their material assets and properties and to
carry on their business as now being conducted.
17.1.2 Authority. The Party has full corporate power and
---------
authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory
approvals, to carry out the actions required of it by
this
22
Agreement. The execution and delivery of this Agreement
and the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate
action required on the part of the Party. The Agreement
has been duly and validly executed and delivered by the
Party and, assuming that it is duly and validly
executed and delivered by the other Party, constitutes
a legal, valid and binding agreement of the Party.
17.1.3 Compliance With Law. The Party represents and warrants
-------------------
that it is not in violation of any applicable Law, or
applicable regulation, which violation could reasonably
be expected to materially adversely affect the other
Party's performance of its obligations under this
Agreement. The Party represents and warrants that it
will comply with all Laws, and regulations applicable
to its compliance with this Agreement, non-compliance
with which would reasonably be expected to materially
adversely affect either Party's performance of its
obligations under this Agreement.
17.1.4 Representations of Both Parties. The representations in
-------------------------------
this Section shall continue in full force and effect
for the term of this Agreement.
18. DEFAULT AND REMEDIES
18.1 An Event of Default hereunder shall be deemed to have occurred
upon a Party's (Defaulting Party) failure to comply with any
material obligation imposed upon it by this Agreement. Examples
of an Event of Default include, but are not limited to the
following:
(i) Failure to make any payments due under this Agreement;
(ii) Failure to deliver the Asset Bundle Capacity for a period
of thirty days;
(iii) Failure to follow the directions of a Control Area
Operator, ISA, EDU, WSCC, NERC, PUCN, FERC, or any
successor thereto where following such directions is
required hereunder;
(iv) Supplier being in compliance with neither Section 3.1.1 nor
Section 3.1.2; and
(v) Failure of the Guarantor to be in compliance with the terms
of the Guarantee delivered under Section 3.1.2.
18.2 An Event of Default shall be excused:
18.2.1 In the event such Event of Default was caused by Force
Majeure provided that the Party claiming a Force
Majeure complies with the requirements of Section 13;
and
18.2.2 In the event such Event of Default was caused by
transmission and distribution outages or disruptions.
23
18.3 Unless excused, in an Event of Default the Non-Defaulting Party
shall be entitled to provide written notice (or verbal notice in
case of emergency followed by written notice) of the Event of
Default to the Defaulting Party and to specify a cure period,
which cure period shall be a minimum of thirty (30) days.
18.4 If an Event of Default is not cured by the Defaulting Party
during the cure period specified by the Non-Defaulting Party, the
Non-Defaulting Party shall be entitled to those remedies which
are not inconsistent with the terms of this Agreement, including
termination and the payment of liquidated damages. A Defaulting
Party shall not be liable to the Non-Defaulting Party for any
punitive, consequential or incidental damages.
18.5 Notwithstanding this Section 18, liquidated damages shall be paid
to Buyer pursuant to Sections 4.2 and 13.
19. FACILITY ADDITIONS AND MODIFICATIONS
19.1 Supplier shall be entitled to make additions and modifications to
the Asset Bundle subject to the following:
19.1.1 To the extent additions and modifications interfere
with the operation of the Asset Bundle in providing
Energy to Buyer beyond the limits for planned outages
set forth in Section 22, liquidated damages shall be
paid to Buyer pursuant to Section 4.2.
19.1.2 Supplier shall use reasonable efforts to minimize any
adverse impact on Buyer during the course of making
such additions and modifications.
19.1.3 Such additions and modifications shall be conducted in
accordance with Good Utility Practice, and all
applicable Laws, regulations and Reliability Criteria.
19.2 Supplier shall seek Buyer's prior written approval for all
Supplier's additions or modifications to the Asset Bundle which
might reasonably be expected to have a material adverse effect
upon Buyer with respect to operations or performance under this
Agreement.
20. COORDINATION
20.1 Upon knowledge thereof, each Party shall promptly give notice to
the other Party of any labor dispute which is delaying or
threatens to delay the timely performance of this Agreement,
which shall include a description of the general nature of the
dispute.
21. EMERGENCY CONDITION RESPONSE
21.1 Buyer and Supplier shall comply with any applicable requirement
of any Governmental Authority, NERC, WSCC, ISA, RTO, Control Area
Operator, transmission operator, EDU or any successor of any of
them, regarding the reduced or increased generation of the Asset
Bundle in the event of an emergency
24
condition. Supplier shall not be obligated to deliver the Asset
Bundle Capacity, and no liquidated damages shall become due, if
generation is reduced in the event of an emergency condition.
21.2 Each Party shall provide prompt verbal notice to the other Party
of any emergency condition.
21.3 Either Party may take reasonable and necessary action to prevent,
avoid or mitigate injury, danger, damage or loss to its own
equipment and facilities, or to expedite restoration of service;
provided, however, that the Party taking such action shall give
the other Party prior notice if at all possible before taking any
action.
22. OUTAGE SCHEDULING
22.1 Buyer acknowledges that Supplier may not be the operator of the
Asset Bundle and may not have direct control over the operation
of the Asset Bundle.
22.2 Supplier shall request that the Operator coordinate with Buyer
any inspections, non-forced outages and maintenance of Supplier's
Asset Bundle so as to minimize the impact on Buyer under this
Agreement.
22.3 Planned Outages.
---------------
22.3.1 Within sixty (60) days following the Effective Date,
Supplier shall provide Buyer with a proposed schedule
of planned outages for the period beginning on the date
of such proposal through March 1, 2003 ("Contract
Period"). The proposed planned outage schedule will
designate days for each unit in which the Asset Bundle
Capacity will be reduced to zero for such unit.
Supplier shall be entitled to designate up to 100 unit-
days during the Contract Period. Unit-days may be
applied to either unit without limitation. Only whole
days, being the 24-hour period commencing at 06:00:00,
may be designated for planned outages.
22.3.2 If all unit-days in Supplier's proposed planned outage
schedule fall within the months of February, March and
November, then it shall not require Buyer's approval
and shall become the final planned outage schedule. To
the extent Supplier's proposed planned outage schedule
designates unit-days which fall outside such months,
the inclusion of such unit-days in the final planned
outage schedule shall be subject to Buyer's approval.
22.3.3 Supplier shall be entitled to amend the final planned
outage schedule with either (a) six months prior
written notice to Buyer or (b) Buyer's approval,
provided however, that to the extent such amendments
contemplate planned outage unit-days outside of the
months February, March and November, Buyer's approval
shall be required in respect of such unit-days.
23.3.4 In considering whether to grant approval under this
Section 22.3, Buyer shall take account of the
restrictions and constraints imposed on Supplier under
the Co-Tenancy Agreement and the Operating Agreement
(both as
25
defined in the Asset Sale Agreement), and Buyer shall
not unreasonably withhold or delay its approval.
23. REPORTS
23.1 Supplier shall promptly provide Buyer with copies of any orders,
decrees, letters or other written communications to or from any
Governmental Authority asserting or indicating that Supplier
and/or its Asset Bundle is in violation of Laws which relate to
Supplier, or operations or maintenance of the Asset Bundle and
which may have a material adverse effect on Buyer. Supplier shall
use reasonable efforts to keep Buyer apprised of the status of
any such matters.
24. COMMUNICATIONS
24.1 Supplier's Operating Representatives shall be available 24 hours
per day for communications with the Control Area Operator and/or
the ISA and Buyer to facilitate the operations contained in this
Agreement.
24.2 Supplier shall, at its expense, maintain and, if reasonably
necessary, install real-time communications equipment at the
Asset Bundle to maintain communications between personnel on site
at the Asset Bundle, Buyer and the Control Area Operator at all
times. Supplier shall provide at its expense:
(i) Ringdown voice telephone lines, and
(ii) Equipment to transmit to and receive telecopies from Buyer
and the Control Area Operator.
24.3 Supplier shall immediately report to Buyer any "Abnormal
Condition" that has or may occur, and provide all pertinent
information, including but not limited to the following:
24.3.1 A description of the "Abnormal Condition" and the
actions to be taken to alleviate the "Abnormal
Condition".
24.3.2 The expected duration including the beginning and
ending time of the "Abnormal Condition".
25.3.3 The amount of any adjustment to the current (real time)
level of Energy.
24.4 Cause of the condition.
----------------------
24.4.1 An "Abnormal Condition" shall include without
limitation any conditions that, to Supplier's
knowledge, have or are reasonably likely to:
(i) Adversely affect Supplier's ability to provide
Energy to Buyer.
(ii) Cause an unplanned reduction in the rate of
delivery of Energy to Buyer.
26
(iii) Cause an unplanned isolation of the Asset Bundle
from the transmission system.
24.5 Supplier shall immediately notify Buyer after such "Abnormal
Condition" has been alleviated.
25. NOTICES
25.1 All notices hereunder shall, unless specified otherwise, be in
writing and shall be addressed, except as otherwise stated
herein, to the Parties' as set forth in Exhibit F.
25.2 All written notices or submittals required by this Agreement
shall be sent either by hand-delivery, regular first class U.S.
mail, registered or certified U.S. mail postage paid return
receipt requested, overnight courier delivery, electronic mail or
facsimile transmission and will be effective and deemed to have
been received on the date of receipt personally, on the date and
time as documented by method of delivery if during normal
business hours or on the next succeeding Business Day, or on the
third Business Day following deposit with the U.S. mail if sent
regular first class U.S. mail.
25.3 Notices of an Event of Default pursuant to Section 18 and or
Force Majeure pursuant to Section 13 may not be sent by regular
first class U.S. mail.
25.4 Any payments required to be made under this Agreement shall be
made to the Party as set forth in Exhibit F.
25.5 Each Party shall have the right to change, at any time upon
written notice to the other Party, the name, address and
telephone numbers of its representatives under this Agreement for
purposes of notices and payments.
26. MERGER
26.1 The Agreement contains the entire agreement and understanding
between the Parties with respect to all of the subject matter
contained herein, thereby merging and superseding all prior
agreements and representations by the Parties with respect to
such subject matter.
26.2 In the event of any conflict between this Agreement and the Asset
Sale Agreement, the terms of the Asset Sale Agreement shall
govern.
27. HEADINGS
27.1 The headings or section titles contained in this Agreement are
inserted solely for convenience and do not constitute a part of
this Agreement between the Parties, nor should they be used to
aid in any manner in the construction of this Agreement.
28. COUNTERPARTS AND INTERPRETATION
27
28.1 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
28.2 In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of authorship of any
of the provisions of this Agreement.
28.3 Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
28.4 The word "including" in this Agreement shall mean "including
without limitation".
29. SEVERABILITY
29.1 If any term, provision or condition of this Agreement is held to
be invalid, void or unenforceable by a court or Governmental
Authority of competent jurisdiction and such holding is subject
to no further appeal or judicial review, then such invalid, void,
or unenforceable term, provision or condition shall be deemed
severed from this Agreement and all remaining terms, provisions
and conditions of this Agreement shall continue in full force and
effect, unless, however, the effect of the severance would
vitiate the intent of the Parties hereto, as determined by either
Party in its reasonable discretion.
29.2 The Parties shall endeavor in good faith to replace such invalid,
void, or unenforceable provisions with a valid and enforceable
provision which achieves the purposes intended by the Parties to
the greatest extent permitted by law.
30. WAIVERS
30.1 No failure or delay on the part of a Party in exercising any of
its rights under this Agreement or in insisting upon strict
performance of provisions of this Agreement, no partial exercise
by either Party of any of its rights under this Agreement, and no
course of dealing between the Parties shall constitute a waiver
of the rights of either Party under this Agreement. Any waiver
shall be effective only by a written instrument signed by the
Party granting such waiver, and such shall not operate as a
waiver of, or estoppel with respect to, any subsequent failure to
comply therewith.
31. AMENDMENTS
31.1 The Parties shall negotiate in good faith to determine necessary
amendments, if any, to this Agreement, provided that in
negotiating such amendments the Parties shall attempt, in good
faith, to reasonably preserve the bargain initially struck in
this Agreement if any Governmental Authority, FERC, any state or
the PUCN, implements a change in any Law or applicable regulation
that materially affects or
28
is reasonably expected to materially affect Buyer's PLR service
under this Agreement.
31.2 The Parties shall meet to discuss the impact of any changes in
Buyer's OATT, or any rule or practice of NERC, WSCC, or any other
Governmental Authority on the terms of this Agreement upon
request by either Party during the term of this Agreement.
31.3 In the event that it is deemed necessary to amend this Agreement,
the Parties will attempt to agree upon such amendment and will
submit such mutually agreed upon amendment(s) to the FERC for
filing and acceptance.
31.4 Amendments to this Agreement shall be in writing and shall be
executed by an authorized representative of each Party.
32. TIME IS OF THE ESSENCE
32.1 Time is of the essence of this Agreement and in the performance
of all of the covenants and conditions hereof.
33 APPROVALS
33.1 Each Party's performance under this Agreement is subject to the
condition that all requisite governmental and regulatory
approvals for such performance are obtained in form and substance
satisfactory to the other Party in its reasonable discretion.
Each Party shall use best efforts to obtain all required
approvals and shall exercise due diligence and shall act in good
faith to cooperate and assist each other in acquiring any
regulatory approval necessary to effectuate this Agreement.
Further, the Parties agree to reasonably support the other Party
in any associated regulatory proceedings, including by being a
witness on behalf of the other Party.
33.2 This Agreement is made subject to present or future state or
federal laws, regulations, or orders properly issued by state or
federal bodies having jurisdiction.
33.3 The Parties hereto agree to execute and deliver promptly, at the
expense of the Party requesting such action, any and all other
and further instruments, documents and information which may
reasonably be necessary or appropriate to give full force and
effect to the terms and intent of this Agreement.
34. PLR SERVICE
34.1 The Agreement is premised on Buyer providing PLR service.
Notwithstanding anything to the contrary contained herein, if
Nevada retail electricity restructuring (including retail
customer choice of electricity suppliers) is delayed beyond the
Effective Date of this Agreement, the Parties shall continue to
perform this Agreement in all respects pursuant to the terms and
conditions hereof as if Buyer was the PLR and Buyer's retail and
wholesale load shall be considered as the TRR. In no event shall
the term of the Agreement be extended beyond March 1, 2003.
29
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representative on the date set forth below.
NEVADA POWER COMPANY AES MOHAVE, LLC
By:_________________________ By:_________________________
Title:______________________ Title:______________________
Date:_______________________ Date:_______________________
30
EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
EXHIBIT A ASSET BUNDLE CAPACITIES A-1
EXHIBIT B PRICE FLOOR OF ENERGY AND PRICE CEILING B-1
OF ENERGY
EXHIBIT C EXAMPLE OF SUPPLIER'S MONTHLY INVOICE C-1
EXHIBIT D EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS D-1
EXHIBIT E EXAMPLES OF YEAR END TRUE-UP INVOICE E-1
EXHIBIT F NOTICES, BILLING AND PAYMENT F-1
INSTRUCTIONS
EXHIBIT G FORM OF AVAILABILITY NOTICE G-1
EXHIBIT H BUYER'S WHOLESALE SALES CONTRACTS
AT THE EFFECTIVE DATE H-1
EXHIBIT I FORM OF GUARANTEE I-1
EXHIBIT A
ASSET BUNDLE CAPACITIES
ASSET BUNDLE: MOHAVE UNITS
Capacity/1/ (MW-net)
--------------------
Plant & Unit Winter Summer Fuel
- ------------ ------ ------ ----
Mohave/1/ 1 111.0 111.0 Coal
Mohave/1/ 2 111.0 111.0 Coal
----- -----
Total Capacity 222.0 222.0
/1/ The values listed in this Exhibit are the maximum values for Asset Bundle
Capacities. Asset Bundle Capacities may be adjusted from time to time in
accordance with the Agreement.
A-1
EXHIBIT B
MOHAVE BUNDLE
PRICE FLOOR OF ENERGY AND PRICE CEILING OF ENERGY
Energy Prices
- -------------
Price Floor of Energy: $ 22.65 per MWh
Price Ceiling of Energy: $ 33.49 per MWh
B-1
EXHIBIT C
EXAMPLE OF SUPPLIER'S MONTHLY INVOICE
[See attached Excel spreadsheet]
D-1C-1
EXHIBIT D
EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS
[See attached Excel spreadsheet]
D-1
EXHIBIT E
EXAMPLE OF YEAR END TRUE-UP INVOICE
[See attached Excel spreadsheet]
E-1
EXHIBIT F
NOTICES, BILLING AND PAYMENT INSTRUCTIONS
Supplier:
- --------
a) Agreement Notices: Address: _______________________________
------------------
_______________________________
_______________________________
Phone: _______________________________
Fax: _______________________________
b) Payment Check: Address: _______________________________
--------------
_______________________________
_______________________________
c) Payment Wire Transfer: Bank: _______________________________
----------------------
ABA #: _______________________________
For: Supplier's Name ___________________
Account No:
For: ___________________________________
d) Operating Notifications:
-----------------------
i) (Management, if required)
ii) Pre-Schedule: (Phone and Fax Nos.)
Telephone Number: ____________________________________________________
Fax Number: __________________________________________________________
iii) Real Time (Phone and Fax Nos.)
Telephone Number: ____________________________________________________
Fax Number: __________________________________________________________
F-1
iv) Monthly Checkout Person: (Phone and Fax Nos.)
Telephone Number: ____________________________________________________
Fax Number: __________________________________________________________
Buyer:
- ------
a) Agreement Notices:
------------------
Address ________________________________
________________________________________
________________________________________
________________________________________
________________________________________
Phone __________________________________
Fax ____________________________________
b) Invoices:
---------
US Post Office: (Via Certified Mail) Overnight Delivery
--------------- ------------------
Address ________________________________ Address ____________________
________________________________________ ____________________________
________________________________________ ____________________________
________________________________________ ____________________________
________________________________________ ____________________________
c) Schedules:
----------
i) Pre-Schedule: Primary Name _____________ Phone ______________
Alternate Name ___________ Phone ______________
ii) Real Time Phone:
Fax: ____________________________________________
iii) Monthly Checkout: Phone:
Fax: ____________________________________________
F-2
EXHIBIT G
FORM OF AVAILABILITY NOTICE
[See attached Excel Spreadsheet]
)
F-1
EXHIBIT H
BUYER'S WHOLESALE SALES CONTRACTS AT THE EFFECTIVE DATE
- ----------------------------------------------------------------------------------------------------------------------------------
Historical Amounts (kWh)
No. Party Contract Expiration Estimated Amounts 1998 1999
=================================================================================================================================
1. Lincoln County Supplemental Power 11/1/2019 LCPD has not taken None None
Power District Requirements Contract power for the last
several years
- ----------------------------------------------------------------------------------------------------------------------------------
2. Boulder City Supplemental Power 11/1/2019 5 to 10 MW (summer 8,076,942 2,082,456
Requirements Contracts only)
- ----------------------------------------------------------------------------------------------------------------------------------
3. Overton Power Coordination Tariff Replaces Supplemental 26 MW summer 49,198,105 71,700,473
District Power Requirements 20 MW winter
Contract on 6/1/2000. 15 MW spring/fall
Tariff can be cancelled
upon 30 days notice.
- ----------------------------------------------------------------------------------------------------------------------------------
4. Needles, CA Requirements Contract 1/2/2017 16 MW summer 26,412,967 33,276,159
4 MW spring/fall
- ---------------------------------------------------------------------------------------------------------------------------------
5. CRC (BMI) Coordination Tariff 30 days notice to cancel 9 MW 65,586,419*
- ---------------------------------------------------------------------------------------------------------------------------------
* Ten months 1999-2000.
F-2
EXHIBIT I
FORM OF GUARANTEE
[TO COME]