Exhibit 10(F)
TRANSITIONAL POWER PURCHASE AGREEMENT
BY AND BETWEEN
NEVADA POWER COMPANY
AND
CLARK POWER LLC
DATED: NOVEMBER 16, 2000
ASSET BUNDLE: CLARK
1
TABLE OF CONTENTS
Section Page
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1. DEFINITIONS..............................................................................................1
2. TERM.....................................................................................................7
3. SECURITY.................................................................................................9
4. SUPPLY SERVICE..........................................................................................10
5. NOTIFICATION............................................................................................13
6. PRICING OF ENERGY AND ANCILLARY SERVICES................................................................15
7. INVOICING AND PAYMENTS..................................................................................15
8. REGULATORY APPROVALS....................................................................................19
9. COMPLIANCE..............................................................................................19
10. INDEMNIFICATION.........................................................................................20
11. LIMITATION OF LIABILITY.................................................................................21
12. FORCE MAJEURE...........................................................................................22
13. DISPUTES................................................................................................24
14. NATURE OF OBLIGATIONS...................................................................................26
15. SUCCESSORS AND ASSIGNS..................................................................................26
16. REPRESENTATIONS.........................................................................................28
17. DEFAULT AND REMEDIES....................................................................................28
18 FACILITY ADDITIONS AND MODIFICATIONS....................................................................29
19. COORDINATION............................................................................................30
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE...........................................................30
21. OUTAGE SCHEDULING.......................................................................................30
22. REPORTS.................................................................................................32
23. COMMUNICATIONS..........................................................................................32
24. NOTICES.................................................................................................33
25. MERGER..................................................................................................34
26. HEADINGS................................................................................................34
27. COUNTERPARTS AND INTERPRETATION.........................................................................34
28. SEVERABILITY............................................................................................34
29. WAIVERS.................................................................................................35
30. AMENDMENTS..............................................................................................35
31. TIME IS OF THE ESSENCE..................................................................................35
32. APPROVALS...............................................................................................35
33. PLR SERVICE.............................................................................................36
34. CONFIDENTIALITY.........................................................................................36
35. CHOICE OF LAW...........................................................................................38
Exhibits Page
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EXHIBIT A ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS..............................................A-1
EXHIBIT B PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE OF
ANCILLARY SERVICES............................................................................B-1
EXHIBIT C SUPPLIER'S MONTHLY INVOICE....................................................................C-1
EXHIBIT D BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS...................................................D-1
EXHIBIT E 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 FORM OF GUARANTEE.............................................................................H-1
EXHIBIT I COMPANY OBSERVED HOLIDAYS.....................................................................I-1
EXHIBIT J ADJUSTMENTS TO TPPA AMOUNT....................................................................J-1
EXHIBIT K ADJUSTMENTS TO MINIMUM ANNUAL TAKE............................................................K-1
EXHIBIT L ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE......................................................L-1
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TRANSITIONAL POWER PURCHASE AGREEMENT
This Agreement is made and entered into as of November 16, 2000 by and between
Nevada Power Company, a Nevada corporation ("Buyer"), and Clark Power 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 Clark generating station and other assets
associated therewith to NRG Energy, Inc. a Delaware corporation, and Dynegy
Holdings Inc., a Delaware corporation, both affiliates of Supplier (the "Asset
Sale");
WHEREAS, notwithstanding the Asset Sale, Buyer expects that it has been
designated 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, 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 Clark 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 and Ancillary Services 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.
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.
2
1.2 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings set forth below:
1.2.1 "Agreement" means this Agreement together with the
---------
Exhibits attached hereto, as such may be amended from
time to time.
1.2.2 "Adjusted Replacement Cost of Energy" means the
-----------------------------------
Replacement Cost of Energy that will be due from
Supplier after True-up in accordance with the provisions
of Section 7.5. Example determinations of the Adjusted
Replacement Cost of Energy are shown on Exhibit E.
1.2.3 "Ancillary Services" means those capacity-related
------------------
services as listed in Exhibit B as well as the Energy
component of such services. These services are defined
in Buyer's OATT.
1.2.4 "Asset Bundle" means the Clark generating station(s) and
------------
other assets associated therewith pursuant to the terms
of the Asset Sale Agreement.
1.2.5 "Asset Bundle Capacity" means, with respect to each unit
---------------------
listed in Exhibit A, the net generating capacity (in
megawatts ("MW")) of such unit, as modified from time to
time in accordance with Section 5.2, Section 20, and
Section 21, 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")) and the Ancillary
Services which the units would be capable of producing
if they operated at the capacity level described in the
first sentence of this Section 1.2.5.
1.2.6 "Asset Sale" has the meaning set forth in the Recitals.
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1.2.7 "Asset Sale Agreement" means the Agreement between Buyer
--------------------
and Supplier's affiliates, NRG Energy, Inc., a Delaware
corporation, and Dynegy Holdings Inc., a Delaware
corporation, dated as of November 16, 2000, to purchase
Buyer's Asset Bundle.
1.2.8 "Asset Sale Closing" means the transfer of Buyer's
------------------
ownership of the Asset Bundle through the consummation
of the Asset Sale pursuant to the terms of the Asset
Sale Agreement.
1.2.9 "Average Cost of Delivered Energy" means the total cost
--------------------------------
of Delivered Energy for the Contract Year after the
application of the Annual True-up Mechanism from Section
7.5 divided by the total Delivered Energy for the
Contract Year. Example determinations of Average Cost of
Delivered Energy are shown on Exhibit E.
1.2.10 "Availability Notice" means a notice delivered from time
-------------------
to time by Supplier to Buyer pursuant to Section 5.2
notifying Buyer of changes in the availability of the
Asset Bundle.
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1.2.11 "Business Day" means any day other than Saturday,
------------
Sunday, and any day that is an observed holiday by Buyer
as shown on Exhibit I.
1.2.12 "Buyer's OATT" means Buyer's then-effective Open Access
------------
Transmission Tariff, as it may be amended, which has
been accepted for filing by the FERC.
1.2.13 "CALPX" means the California Power Exchange and any
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successor entity thereto.
1.2.14 "Confidential Information" has the meaning set forth in
------------------------
Section 34.
1.2.15 "Contract Year" means, with respect to the first
-------------
Contract Year, the period beginning on the Effective
Date and, with respect to each subsequent Contract Year,
the period immediately following the end of the
preceding Contract Year, and in each case ending on the
earlier of the date which is twelve (12) months
thereafter or the termination date of this Agreement.
1.2.16 "Control Area Operator" means an entity or organization,
---------------------
and its representatives, which is responsible for
operating and maintaining the reliability of the
electric power system(s) within the Transmission System.
The Control Area Operator is also referred to as the
transmission operator.
1.2.17 "Credit Amount" shall mean an amount equal to the TPPA
-------------
Amount, plus an additional amount equal to $40/MWh
multiplied by 395 megawatts, multiplied by the number of
hours remaining in this Agreement until March 1, 2003.
1.2.18 "Delivered Amount" means, with respect to any Dispatch
----------------
Hour, the Energy delivered by Supplier to Buyer at the
designated Point(s) of 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, Section 4.1.3 and the Ancillary Services
provided by Supplier for Buyer during any Dispatch Hour
pursuant to the terms of this Agreement.
1.2.19 "Derating" means a reduction to the Asset Bundle
--------
Capacity.
1.2.20 "Dispatch Hour" means the prescribed hour(s) when Energy
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is to be delivered by Supplier to Buyer at the
designated Point(s) of Delivery and the prescribed
hour(s) when Ancillary Services are to be provided to
the ISA by Supplier on behalf of Buyer.
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1.2.21 "EDU" means electric distribution utility, the
---
organization with the responsibility for the
distribution of energy over Buyer's distribution system
to retail end-users.
1.2.22 "Effective Date" means the date that this Agreement
--------------
becomes effective which shall be the date on which the
Closing Date, as defined in the Asset Sale Agreement,
actually occurs.
1.2.23 "Emergency Condition" shall mean a public declaration by
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the ISA or Control Area Operator that the Transmission
System is in danger of imminent voltage collapse or
uncontrollable cascading outages.
1.2.24 "Energy" means electricity (measured in MWh) and
------
associated power-producing capacity to be provided by
Supplier to Buyer pursuant to this Agreement. Also known
as "firm energy and associated firm capacity".
1.2.25 "Event of Default" has the meaning set forth in Section
----------------
17 hereof.
1.2.26 "FERC" means the Federal Energy Regulatory Commission
----
and any successor agency thereto.
1.2.27 "Force Majeure" has the meaning set forth in Section 12
-------------
hereof.
1.2.28 "GAAP" means Generally Accepted Accounting Principles
----
for the United States.
1.2.29 "Good Utility Practice" means the applicable practices,
---------------------
methods, and act:
(i) required by applicable Laws, permits and
reliability criteria, whether or not the Party
whose conduct at issue is a member thereof, and
(ii) 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 judgement 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 good
business practices, 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.
1.2.30 "Governmental Authority" means any foreign, federal,
----------------------
state, local, tribal or other governmental, regulatory
or administrative agency, court, commission, department,
board, or other governmental subdivision, legislature,
rulemaking board, tribunal, arbitrating body, or other
governmental authority.
5
1.2.31 "Gross Replacement Costs of Energy" means Buyer's
---------------------------------
Replacement Cost of Energy prior to adjustment for the
amount that Buyer would have paid for the Energy if
Supplier had delivered the Energy to Buyer. Example
determinations of Gross Replacement Costs of Energy are
shown on Exhibit D.
1.2.32 "Guarantee" has the meaning set forth in Section 3.1.2
---------
hereof.
1.2.33 "Guarantor" has the meaning set forth in Section 3.1.2
---------
hereof.
1.2.34 "Invoiced Replacement Costs" means the Replacement Costs
--------------------------
which have been billed to Supplier or subtracted from
payments to Supplier in accordance with the provisions
of Section 4.2 and Section 7.4.
1.2.35 "ISA" means the Mountain West Independent System
---
Administrator, or the 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 herein as transmission administrator.
1.2.36 "ISA's OATT" means the ISA's then-effective Open Access
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Transmission Tariff, as it may be amended, which has
been accepted for filing by the FERC.
1.2.37 "Law" means any law, treaty, code, rule, regulation,
---
order, 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.
1.2.38 "Limit on Excused Energy" means the amount of energy
-----------------------
that can be excused under the provisions of Section 12.4
as shown on Exhibit A.
1.2.39 "Market Price of Energy" has the meaning set forth in
----------------------
Section 6.2.1.
1.2.40 "Minimum Annual Energy Take" has the meaning set forth
--------------------------
in Section 4.1.2.
1.2.41 "Minimum Investment Grade Rating" of a Person means that
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such Person 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) Baa2 as determined by Moody's
Investors Service, Inc., or (iii) a comparable rating by
another nationally recognized rating service reasonably
acceptable to Buyer.
6
1.2.42 "Minimum Tangible Net Worth" means the total book value
--------------------------
of 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).
1.2.43 "NERC" means the North American Electric Reliability
----
Council and any successor entity thereto.
1.2.44 "Nonemergency Condition" shall mean the determination,
----------------------
direction or order by the ISA, or Control Area Operator
to Supplier and/or Buyer to change the Supply Amount
which is not a result of or due to an Emergency
Condition. A Nonemergency Condition includes an
insufficiency of Ancillary Services to securely operate
the Transmission System.
1.2.45 "Operating Representatives" means the persons designated
-------------------------
to transmit and receive routine operating and emergency
communications required under this Agreement.
1.2.46 "Party" has the meaning set forth in the preamble of
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this Agreement.
1.2.47 "Permitted Deratings" means those reductions to the
-------------------
Asset Bundle Capacity of which Supplier may notify Buyer
from time to time in an Availability Notice pursuant to
Section 5.2.
1.2.48 "Person" means any natural person, partnership, limited
------
liability company, joint venture, corporation, trust,
unincorporated organization, or governmental entity or
any department or agency thereof.
1.2.49 "Point of Delivery" means the point (s) which has (have)
-----------------
been specified as the Interconnection Point(s) in the
Interconnection Agreement between Buyer and Supplier,
dated November 16, 2000, as it may be amended from time
to time, as well as any alternative locations agreed
upon pursuant to Section 4.1.6.
1.2.50 "Price Ceiling of Energy" means the ceiling price of
-----------------------
Energy as stated in Exhibit B.
1.2.51 "Price Floor of Energy" means the floor price of Energy
---------------------
as stated in Exhibit B.
1.2.52 "Provider of Last Resort (PLR)" has the meaning set
-----------------------------
forth in the Recitals.
1.2.53 "PUCN" means the Public Utilities Commission of Nevada
----
and any successor entity thereto.
7
1.2.54 "Replacement Costs" means with respect to a period of
-----------------
time, the difference between (a) the actual costs,
including without limitation related penalties and
transmission costs, incurred by Buyer to replace any
shortfall between (1) the Supply Amount and (2) the
Delivered Amounts of Energy, (or in the case of
Ancillary Services the Supplier's schedule of Ancillary
Services) during such period and (b) the payments the
Supplier would have been entitled to in respect of such
shortfall in delivery; provided that Replacement Costs
shall also be subject to the annual true-up mechanism
set forth in Section 7.5.
1.2.55 "Supply Amount" means, with respect to each Dispatch
-------------
Hour, the amount of Energy and Ancillary Services, not
to exceed the Asset Bundle Capacity for such Dispatch
Hour, requested by Buyer to be delivered by Supplier
during any Dispatch Hour. The Supply Amount for any
Dispatch Hour shall be determined pursuant to Section
5.1.
1.2.56 "Total Amount of Energy Replaced" means the summation of
-------------------------------
Replacement Energy as shown on Exhibit E.
1.2.57 "TPPA Amount" means $158,000,000 as such amount may be
-----------
adjusted pursuant to Section 2.3.
1.2.58 "Transitional Resource Requirement" or "TRR" means the
---------------------------------
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.
1.2.59 "Transmission System" means the transmission facilities
-------------------
constituting Buyer's control area, as of the date this
Agreement is executed, plus any modification, upgrade or
expansion of, or additions to, such facilities.
1.2.60 "WSCC" means the Western Systems Coordinating Council
----
and any successor entity thereto.
2. TERM
2.1 Term. Unless terminated earlier pursuant to the terms of this
----
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 Sections 2.2.2 or 17.4, this
Agreement may not be terminated without the explicit
prior written approval of Buyer.
2.2.2 If, prior to the Asset Sale Closing, the FERC or any
other
8
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 those amendments to the
Agreement reasonably needed to preserve the bargain
between the Parties. If the Parties fail to negotiate
mutually acceptable amendments to this Agreement within
sixty (60) 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 at least ten (10) Business Days prior to the
termination date; 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.
2.2.4 Any termination of this Agreement pursuant to this
Section 2 shall not take effect until FERC either
authorizes the termination or accepts a written notice
of termination.
2.3 Effect of Termination.
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2.3.1 Adjustment of TPPA Amount. If the Effective Date of this
-------------------------
Agreement is before June 1, 2001, the TPPA Amount shall
be adjusted to equal (1) the TPPA Amount multiplied by
(2) 100% plus the sum of the monthly adjustments from
Exhibit J for each month or portion thereof between the
Effective Date and June 1, 2001. An example calculation
is shown on Exhibit J.
If the Effective Date of this Agreement is after June 1,
2001, the TPPA Amount shall be adjusted to equal (1) the
TPPA Amount multiplied by (2) 100% minus the sum of the
monthly adjustments from Exhibit J for each month or
portion thereof between June 1, 2001 and the Effective
Date. An example calculation is shown on Exhibit J.
If this Agreement is terminated before March 1, 2003,
Supplier shall pay to Buyer an amount, in accordance
with the provisions of Section 7, equal to the TPPA
Amount which existed before any adjustment in accordance
with the first or second paragraph of this Section
2.3.1, multiplied by the sum of the monthly adjustments
for each month or portion thereof between the date on
which this Agreement is terminated and March 1, 2003. An
example calculation is shown on Exhibit J.
2.3.2 Any default or termination of this Agreement shall not
release either Party from any applicable provisions of
this Agreement with respect to:
2.3.2.1 The payment of liquidated damages pursuant to
Sections 4.2, 12, 17, 18, or 21.
2.3.2.2 Indemnity obligations contained in Section 10,
to the extent
9
of the statute of limitations period applicable to
any third party claim.
2.3.2.3 Limitation of liability provisions contained in
Section 11.
2.3.2.4 Payment of any unpaid amounts in respect of
obligations arising prior to or resulting from
termination.
2.3.2.5 For a period of one (1) year after the
termination date, the right to raise a payment
dispute and the resolution thereof pursuant to
Section 13.
2.3.2.6 The resolution of any dispute submitted pursuant
to Section 13 prior to, or resulting from,
termination.
3. SECURITY
3.1 Supplier Certification; Guarantee. As a condition of Buyer's
---------------------------------
execution of, and continuing compliance with, this Agreement,
Supplier shall at Supplier's option comply with the provisions
of either Section 3.1.1 or Section 3.1.2.
3.1.1 Supplier Certification. Supplier shall (a) provide a
----------------------
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 each of: (i) a credit rating of A2 or better from
Moody's Investors Service, Inc., (ii) a credit rating of
A or better from Standard & Poor's Corporation, and
(iii) a Minimum Tangible Net Worth ("MTNW") of one (1)
billion dollars.
3.1.2 Guarantee. In the alternative to the provisions of
---------
Section 3.1.1, the Supplier may provide a corporate
guarantee, in form and substance as set forth in Exhibit
H, made by an entity (the "Guarantor") that:
3.1.2.1 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
3.1.2.2 has a MTNW of no less than one (1) billion
dollars, 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 one (1)
billion dollars; or
3.1.2.3 posts a letter of credit in a form reasonably
acceptable to Buyer in the amount of the Credit
Amount from a financial
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institution with each of: (i) a credit rating of A2
or better from Moody's Investors Service, Inc.,
(ii) a credit rating of A or better from Standard &
Poor's Corporation, and (iii) a Minimum Tangible
Net Worth ("MTNW") of one (1) billion dollars.
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, the
Guarantor, or the financial institution that issued the
letter of credit, 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 17, the
requirements of this Section 3.2.1 are in addition to,
and not in lieu of, the requirements of Section 17.
4. SUPPLY SERVICE
4.1 Obligations of the Parties.
--------------------------
4.1.1 Supply Amount. Supplier shall be required to provide the
-------------
Supply Amount in any Dispatch Hour. As provided in
Section 5.1, Buyer shall makereasonable efforts to
ensure that the Supply Amount is no greater than
necessary to satisfy Buyer's TRR.
4.1.1.1 With the Buyer's prior consent, not to be
unreasonably withheld or delayed, Supplier shall be
entitled to generate or otherwise procure the
Supply Amount from sources other than the Asset
Bundle.
4.1.1.2 Supplier shall deliver the Supply Amount to
Buyer during the Dispatch Hour on a continuous
basis at the Point(s) of Delivery and shall
schedule the Supply Amount in accordance with the
Buyer's OATT or the ISA's OATT, as applicable.
4.1.1.3 The Buyer at its sole discretion shall designate
the allocation of the Supply Amount between Energy
and Ancillary Services in accordance with the
notification provisions of Section 5.
4.1.1.3.1 The Parties recognize that operation
of the Asset Bundle is subject to, and
thus the Supply Amount at times may be
limited by, the operational parameters
of the Asset Bundle. The Parties
further recognize that the
consolidation of two or more
generating units into an Asset Bundle
precludes contractual provisions
addressing such operational
11
parameters in a matter normally applied
to Energy purchases from specified
generating units. Consequently, Supplier
will have the right to raise concerns
regarding the effect of such operational
parameters upon Buyer's scheduling
requests, and Buyer will make good faith
efforts to alleviate Supplier's
concerns.
4.1.2 Minimum Annual Energy Take. The Buyer shall accept a
--------------------------
minimum annual energy take during each Contract Year.
The Minimum Annual Energy Take shall be set forth on
Exhibit A.
4.1.2.1 Buyer's Obligation to Take. If Buyer is
--------------------------
unwilling to accept the Minimum Annual Energy Take
for any Contract Year, as may be adjusted pursuant to
Section 4.1.2.2, the difference (in MWh) between the
Supply Amount of Energy (including consideration for
Energy that would have been taken but was unavailable
due to Permitted Deratings or Force Majeure, as well
as the Total Amount of Energy Replaced) and the
Minimum Annual Energy Take shall be billed at the
Price Ceiling of Energy less the Price Floor of
Energy. An example of the monthly determination of
the amount of Energy to be credited against the
Minimum Annual Energy Take is shown on Exhibit L.
4.1.2.2 Adjustments to Minimum Annual Energy Take. Buyer
-----------------------------------------
shall have the right to reduce the Minimum Annual
Energy Take if the number of customers taking
electric service from Buyer falls below the number of
customers on December 31, 2000. Adjustments will be
applicable, on a pro rata basis, on the first (1/st/)
day of the month immediately following Supplier's
receipt of Buyer's notice of adjustment. Buyer shall
provide supporting data in reasonable detail to
support its calculations. An example of the
calculation of a revised Minimum Annual Energy Take
is shown on Exhibit K.
4.1.3 Supplier Rights to Output. Supplier may sell to others
-------------------------
any portion of the Asset Bundle Capacity in excess of
the Supply Amount.
4.1.4 Point(s) of Delivery. Supplier shall deliver, and Buyer
--------------------
shall take delivery of, the Supply Amount of Energy at
the Point(s) of Delivery. Subject to Section 4.1.6.2,
Supplier shall be responsible for all costs associated
with delivery of the Supply Amount of Energy to the
Point(s) of Delivery.
4.1.5 Alternative Points of Delivery. For any Dispatch Hour,
------------------------------
either Party may designate one or more alternative
Points of Delivery, subject to the other Party's prior
approval and consistent with the Buyer's OATT or
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the ISA's OATT, as applicable, 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
----
procurement or fuel transportation costs or activities
associated with the Asset Bundle during the term of this
Agreement.
4.1.7 Resale. Except as provided in the next sentence, the
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Supply Amount may be resold by Buyer only as necessary
to satisfy Buyer's TRR. If, after submitting the request
of the Supply Amount pursuant to Section 5.1, the Buyer
determines that the scheduled Supply Amount, together
with purchases scheduled under Buyer's other
Transitional Power Purchase Agreements, exceeds Buyer's
most current projected TRR, then the Buyer also shall
resell at wholesale that amount of Energy in excess of
Buyer's actual TRR as necessary to balance its load and
resources.
4.1.8 Right to Review. Buyer and Supplier each shall have the
---------------
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 a Business Day
to a subsequent Business Day. If a review is requested
of other than the previous month's records, then notice
of that request shall be provided with a minimum of
seven (7) calendar days written notice by the requesting
Party. The 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.
4.2 Liquidated Damages.
------------------
4.2.1 If the Delivered Amount of Energy is less than the
Supply Amount of Energy 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. If
Supplier's schedule of Ancillary Services is less than
the Supply Amount of
13
Ancillary Services in any Dispatch Hour during a month,
Supplier shall reimburse Buyer for such Replacement
Costs for the difference between Supplier's schedule and
the Supply Amount of Ancillary Services. An example of
the methodology used to calculate Replacement Costs is
provided in Exhibit D.
4.2.2 Supplier also shall be responsible for any costs
incurred by Buyer associated with a violation of
reliability criteria (including but not limited to
imbalance costs or penalties) due to a deviation between
the Supply Amount and Delivered Amount.
4.2.3 The Parties recognize and agree that the payment of such
amounts by Supplier pursuant to this Section 4.2 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
---------------------------------
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
5.1 Scheduling Notification. Buyer shall provide Supplier with a
-----------------------
request of the Supply Amount no later than twenty-four (24)
hours before day-ahead bids must be submitted to the CALPX.
Buyer shall make reasonable efforts to ensure that the request
of the Supply Amount is no greater than that amount then
projected to be necessary to satisfy Buyer's TRR. In addition,
for each Supply Amount request, the change in the Supply Amount
from one (1) hour to the next hour shall be no greater than the
ramping capability of the units within the Asset Bundle as shown
in Exhibit A.
5.2 Availability Notification.
-------------------------
5.2.1 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.
5.2.2 Availability Notices shall provide, for the ninety-six
(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. Each Availability
Notice also shall contain, as applicable:
14
(a) the units which are subject to a 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;
(f) the projected Asset Bundle Capacity for each
unit during the period covered by the
Availability Notice, pursuant to Section 5.2.4
below; and
(g) remaining freeboard of each of the Asset Bundle
water treatment storage ponds and the forecast
inlet flow rate to the brine concentrator treatment
plant.
5.2.3 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 21;
(b) response to an Emergency Condition as described in
Section 20;
(c) subject to the limitations expressed in Section
12.5, a Force Majeure event;
(d) a Control Installation Outage pursuant to Section
21.3; or
(e) lack of water treatment pond storage capacity at
the Asset Bundle; provided that such lack of water
treatment pond storage capacity is not due to
Supplier's sales to parties other than Buyer;
provided further that (i) Buyer shall have the
option to augment the Asset Bundle's brine
concentrator treatment plant capacity at Buyer's
cost and (ii) notwithstanding subsection
5.2.3(e)(i), Supplier shall pay for the costs of
augmenting such brine concentrator treatment plant
capacity to the extent that the lack of water
treatment pond storage capacity at the Asset Bundle
is caused by Supplier's sales to parties other than
Buyer.
5.2.4 In respect of any Dispatch 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.
5.2.5 Neither the Asset Bundle Capacity nor the Supply Amount
shall be reduced by Deratings which are not Permitted
Deratings. Supplier shall be responsible for all
Replacement Costs, pursuant to Section 4.2.1, caused by
Deratings that are not Permitted Deratings.
15
6. PRICING OF ENERGY AND ANCILLARY SERVICES
6.1 Overview. The price of Energy paid by Buyer to Supplier shall be
--------
based upon a designated hourly market price, subject to monthly
floor, monthly ceiling, and annual true-up 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.
---------------
6.2.1 Market Price of Energy. In respect of any Dispatch Hour,
----------------------
the designated Market Price of Energy shall be the South
of Path 15 ("SP 15") hourly market-clearing price in the
day-ahead market from the CALPX as published at the
following Web Site (or its successor web site)
http://www.calpx.com/prices/index_prices_dayahead_
--------------------------------------------------
trading.html. Should this hourly 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 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
-----------------------
stated in Exhibit B and shall not change during the term
of this Agreement.
6.3 Pricing of Ancillary Services. The price of the capacity
-----------------------------
component of Ancillary Services is stated in Exhibit B. The
price of Ancillary Services shall not change during the term of
the Agreement. Supplier shall make available to Buyer and Buyer
shall offer to pass through the Energy portion of Ancillary
Services with respect to the Supply Amount to the ISA, or
Control Area Operator, at the Price Ceiling of Energy (plus
expected direct transaction costs). The net proceeds shall be
credited to the Supplier pursuant to Section 7.
6.4 Price Revisions. The Parties waive any and all rights to seek to
---------------
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 tenth (10/th/) day of
---------------------
each month, Supplier shall send to Buyer an invoice setting
forth the Supply Amount, Delivered Amount, the Market Price of
Energy pursuant to Section 6.2.1 for each Dispatch Hour in the
previous month, any amount due in accordance with Section 7.13
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
16
of the invoice, stating in reasonable detail the reason for the
dispute.
7.2 Monthly Invoice Calculation. On each monthly invoice, Supplier
---------------------------
shall 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;
7.2.4 For each Dispatch Hour of the billing period, the
shortfall, if any, between the Supply Amount and the
Delivered Amount (and in the case of Ancillary Services
the shortfall between the Supply Amount of Ancillary
Services and Supplier's schedule of Ancillary Services);
7.2.5 The Supply Amount of Ancillary Service for each dispatch
hour multiplied by the price of Ancillary Services as
stated in Exhibit B; and
7.2.6 The Delivered Amount of Energy related to Ancillary
Services for each dispatch hour multiplied by the Price
Ceiling of Energy as stated in Exhibit B.
7.2.7 If applicable, any amount to be calculated in accordance
with Section 7.13.
7.3 Supplier's Invoice. Supplier will invoice the lesser of the
------------------
amounts 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. Supplier shall also include
in its invoice the amounts calculated in Sections 7.2.5, 7.2.6
and 7.2.7. If the Delivered Amount exceeds the Supply Amount,
Buyer shall not be obligated to pay for the excess amount. Buyer
shall pay Supplier for the amounts invoiced pursuant to Section
7.2.6 upon Buyer's receipt of payment from ISA or Control Area
Operator. 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 7.2.4 or payment is due to Buyer pursuant to Section
7.13, Buyer shall within ten (10) Business Days of receipt of
Supplier's invoice deliver to Supplier a Buyer's invoice
detailing any Replacement Costs or other payment 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
17
Buyer, Buyer may offset such amount from its payment of
Supplier's corresponding invoice.
Buyer shall have the right to adjust the invoices issued in
accordance with this Section 7.4 if Buyer incurs Replacement
Costs that were not known when earlier invoices were issued.
Adjusted invoices shall be issued within thirty (30) days of the
date on which the additional Replacement Costs become known.
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 adjusted 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 for Energy.
-----------------------------------
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, Supplier shall subtract (x)
the amount invoiced by Supplier for Energy
pursuant to Section 7.3 summed of over the
Contract Year from (y) the Price Ceiling of
Energy multiplied by the hourly Delivered Amount
of Energy summed over the Contract Year. If the
difference calculated in accordance with the
preceding sentence is greater than or equal to
zero, Buyer shall pay the difference to
Supplier. If the difference is less than zero,
Supplier shall refund the difference to Buyer.
(b) If (i) the Price Ceiling of Energy multiplied by
the hourly Delivered Amount of Energy summed
over the Contract Year is greater 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, Supplier shall subtract (x)
the amount invoiced by Supplier for Energy
pursuant to Section 7.3 summed of over the
Contract Year from (y) the Market Price of
Energy multiplied by the hourly Delivered Amount
of Energy summed over the Contract Year. If the
difference calculated in accordance with the
preceding sentence is greater than or equal to
zero, Buyer shall pay the difference to
Supplier. If the difference is less than zero,
Supplier shall refund the difference to Buyer.
18
(c) If Buyer incurred Replacement Costs for energy
during the Contract year, Supplier shall
multiply the Total Amount of Energy Replaced
during the Contract Year by the Average Cost of
Delivered Energy after true-up as determined in
accordance with Section 7.5.1 (a) or 7.5.1 (b).
If the amount so obtained is greater than the
sum of the monthly Gross Replacement Costs of
Energy from Buyer's Invoices for the Contract
Year, the Adjusted Replacement Cost of Energy
for the Contract Year shall be zero. If the
amount so obtained is less than the sum of the
monthly Gross Replacement Costs of Energy from
Buyer's Invoices for the Contract Year, the
Adjusted Replacement Cost of Energy for the
Contract Year shall be the sum of the monthly
Gross Replacement Costs of Energy less the
amount obtained in accordance with the first
sentence of this Section 7.5.1(c).
If the Adjusted Replacement Cost of Energy is
greater than the sum of the monthly Invoiced
Replacement Costs of Energy from Buyer's
Invoices for the Contract Year, Supplier shall
pay the difference to Buyer. If the sum of the
monthly Invoiced Replacement costs of Energy is
greater than the Adjusted Replacement Cost of
Energy, Buyer shall pay the difference to
Seller.
7.5.2 True-up adjustments will be calculated by Supplier
within twenty (20) 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 thirty (30) days from
receipt of the true-up invoice.
7.6 Invoice Disagreements. Should there be a good faith dispute over
---------------------
any invoice, the Parties shall promptly seek resolution pursuant
to Section 13. 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 C.F.R. (S) 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 7.3, 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
thirty (30) days after receipt of the invoice.
19
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 C.F.R.(S) 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.
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 and Ancillary Services 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.
7.13 Termination Prior to March 1, 2003. Notwithstanding any other
----------------------------------
provision herein, in the event that this Agreement is terminated
before March 1, 2003 and as a result of such termination Buyer
is entitled to a payment in accordance with Section 2.3.1,
Supplier shall include an amount calculated in accordance with
Section 2.3.1 and Exhibit J, to be paid by Supplier to Buyer in
the next monthly invoice submitted to Buyer following such
termination.
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
20
Practices. Supplier covenants and agrees that as of the
Effective Date it or its permitted assignee shall (a) have the
right to control the operation of the Asset Bundle and (b) be
willing and able to perform its obligations under this
Agreement.
10. INDEMNIFICATION
10.1 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.
10.1.1 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 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.
10.1.2 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 this
Section 10 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.
10.1.3 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 No Negation of Existing Indemnities; Survival. Each Party's
---------------------------------------------
indemnity obligations hereunder 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 that
any third party claim is commenced during the applicable statute
of limitations period.
10.3 Indemnification Procedures.
--------------------------
21
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;
(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 Indemnifying
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.
22
11. LIMITATION OF LIABILITY
11.1 Responsibility for Damages: Except as otherwise provided herein
--------------------------
or to the extent of the other Party's negligence or willful
misconduct, each Party shall be responsible for all physical
damage to or destruction of the property, equipment and/or
facilities owned by it and its affiliates and any physical
injury or death to natural Persons resulting therefrom,
regardless of who brings the claim and regardless of who caused
the damage, and shall not seek recovery or reimbursement from
the other Party for such damage; provided, that in any such case
the Parties will exercise Due Diligence to remove the cause of
any disability at the earliest practicable time.
11.2 No Consequential Damages: To the fullest extent permitted by law
------------------------
and notwithstanding other provisions of this Agreement, in no
event shall a Party, or any of its Agents, be liable to the
other Party, whether in contract, warranty, tort, negligence,
strict liability, or otherwise, for special, indirect,
incidental, multiple, consequential (including but not limited
to lost profits or 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. For purposes of clarification,
Replacement Costs shall not be considered consequential or
incidental damages under this Section 11.2. In addition, this
limitation on liability shall not apply with respect to claims
pursuant to Section 10 hereof.
11.3 Survival: The provisions of this Section 11 shall survive any
--------
termination, cancellation, or suspension of this Agreement.
12. FORCE MAJEURE
12.1 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:
(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, and
including unscheduled transmission and distribution
outages,
(iii) sabotage of facilities and equipment,
(iv) civil disturbance,
(v) strike or labor dispute,
23
(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.
12.2 Economic hardship of either Party shall not constitute Force
Majeure under this Agreement. Notwithstanding this, if Buyer
suffers an event of Force Majeure it shall be relieved of its
obligation to take delivery of, or otherwise pay for, Energy and
Ancillary Services under this Agreement for the duration of the
event of Force Majeure. In addition, if Buyer is unable to have
Energy and Ancillary Services delivered from the Point(s) of
Delivery to its service territory due to an outage on the
Transmission System, that shall be considered a Force Majeure
event and shall relieve Buyer of performance for the extent of
the event.
12.3 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.
12.4 Notwithstanding the above provisions, a Force Majeure event
shall excuse Supplier from its obligation to deliver the Supply
Amount pursuant to Section 4 of this Agreement only for the
first twenty-four (24) hours of the Force Majeure event;
provided that the total amount of energy excused in accordance
with this Section 12.4 during any Contract Year shall not exceed
the Limit on Excused Energy set forth in Exhibit A. After such
twenty-four (24) hour period, Supplier
24
must either deliver the Supply Amount at the Point(s) of
Delivery or pay liquidated damages pursuant to Section 4.2 of
this Agreement. Provided further, to the extent a Force Majeure
event is caused by an outage on the Transmission System,
Supplier shall be excused from its obligations to deliver the
Supply Amount for the duration of the outage.
12.5 If Supplier has notified Buyer of an event of Force Majeure, and
if Supplier so requests, Buyer will attempt to replace the
Supply Amount that is not excused in accordance with Section
12.4 with Energy or Ancillary Services from another Asset
Bundle. However, Buyer's inability to acquire such replacement
Energy or Ancillary Services shall not excuse Supplier from
Supplier's obligation to deliver the Supply Amount not otherwise
excused in accordance with Section 12.4
13. DISPUTES
13.1 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 written
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.
13.2 The Parties agree to cooperate in good faith to expedite the
resolution of any Dispute. Pending resolution of a Dispute, the
Parties shall proceed diligently with the performance of their
obligations under this Agreement.
13.3 The Parties shall first attempt in good faith to resolve any
Dispute through informal negotiations by the Contract
Representatives. In the event that the Contract Representatives
are unable to satisfactorily resolve the Dispute within thirty
(30) days from the receipt of notice of the Dispute, either
Party may by written notice to the other Party refer the Dispute
to its respective senior management for resolution as promptly
as practicable. If the Parties' senior management are unable to
resolve the Dispute within forty-five (45) days from the date of
such referral, thereafter the Parties may agree in writing to
extend the time period of such senior management negotiations.
In the event the Parties' senior management do not resolve the
dispute within the prescribed or extended time period, either
Party may initiate arbitration through the serving and filing of
a demand for arbitration and the Parties expressly agree that
arbitration in accordance with this Section 13 shall be the
exclusive means to further resolve any Dispute and hereby
irrevocably waive their right to a jury trial with respect to
any Dispute, provided that at any time:
13.3.1 A request made by a Party 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 the County of the
principal place of business of Buyer.
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13.3.2 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 Dispute over which said agency has
jurisdiction. In such case, the other Party may request
the FERC or PUCN, as applicable, to reject or to waive
jurisdiction. If jurisdiction is rejected or waived with
respect to all or a portion of the Dispute, the portion
of the Dispute not so accepted by the FERC or PUCN, as
applicable, shall be resolved through arbitration in
accordance with this Agreement. To the extent that the
FERC or PUCN, as applicable, asserts or accepts
jurisdiction over the Dispute, the decision, finding of
fact or order of FERC 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. Any arbitration proceedings that may
have commenced with respect to the Dispute prior to the
assertion or acceptance of jurisdiction by the FERC or
PUCN, as applicable, shall be terminated to the extent
the FERC or PUCN accepts or asserts jurisdiction over
such Dispute.
13.4 Unless otherwise agreed by the Parties, any arbitration
initiated under this Agreement shall be conducted in accordance
with the following:
13.4.1 Arbitrations shall be held within the County of the
principal place of business of Buyer.
13.4.2 Except as otherwise modified herein, the arbitration
shall be conducted in accordance with the "Commercial
Arbitration Rules" of the American Arbitration
Association ("AAA") then in effect.
13.4.3 Arbitration shall be conducted by one neutral arbitrator
who shall be selected pursuant to the AAA rules and the
following:
13.4.3.1 The Parties agree that the list of potential
arbitrators provided by the AAA shall, if available,
contain twenty (20) candidates, and at least fifty
percent (50%) of the candidates shall be members of
the AAA National Energy Panel.
13.4.3.2 The Parties also agree that each shall 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 AAA.
13.4.3.3 The arbitrator shall not have any current or
past substantial business, financial, or personal
relationships with either Party (or their Affiliates)
and shall not be a vendor, supplier, customer,
employee, consultant, or competitor to either of the
Parties or their Affiliates.
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13.4.3.4 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 provision of this Agreement. The arbitrator shall
have no authority to award punitive or multiple damages
or any damages inconsistent with this Agreement. The
arbitrator shall within thirty (30) days of the
conclusion of the hearing, unless such time is extended
by agreement of the 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. Judgment
on the award may be entered in any court having
jurisdiction.
13.5 The Parties shall proceed with the arbitration expeditiously,
and the arbitration shall be concluded within five (5) months of
the filing of the demand for arbitration pursuant to this
Section 13 in order that the decision may be rendered within six
(6) months of such filing, unless the arbitrator extends such
time at the request of a Party upon a showing of good cause or
upon agreement of the Parties.
13.6 Any arbitration proceedings, decision or award rendered
hereunder and the validity, effect and interpretation of any
arbitration agreement shall be governed by the Federal
Arbitration Act of the United States, 9 U.S.C. (S)(S) 1 et seq.
13.7 The decision 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.
13.8 The fees and expenses of the arbitrator shall be shared by the
Parties equally, unless the decision of the arbitrator shall
specify some other apportionment of such fees and expenses. All
other expenses and costs of the arbitration shall be borne by
the Party incurring the same.
14. NATURE OF OBLIGATIONS
14.1 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.
14.2 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.
14.3 By this Agreement, neither Party dedicates any part of its
facilities or the service provided under this Agreement to the
public.
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15. SUCCESSORS AND ASSIGNS
15.1 This Agreement may be assigned, without express written consent
of the other Party, as follows:
15.1.1 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.
15.1.2 Supplier also may assign this Agreement as provided in
Section 11.5 of the Asset Sale Agreement; provided that
such assignment is to an entity that (a) has the right
to control the operation of the Asset Bundle and (b) is
willing and able to perform its obligations under this
Agreement.
15.2 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 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.
15.3 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
including Section 3 hereof.
15.4 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.
15.5 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
28
consented in writing to such assumption; said consent not to be
unreasonably withheld.
15.6 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.
16. REPRESENTATIONS
16.1 Representations of the Parties. The Parties represent and
------------------------------
warrant each to the other as follows:
16.1.1 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.
16.1.2 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 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.
16.1.3 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.
16.1.4 Representations of Both Parties. The representations in
-------------------------------
this Section 16 shall continue in full force and effect
for the term of this Agreement.
17. DEFAULT AND REMEDIES
17.1 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
29
to the following:
(i) Failure to make any payments due under this Agreement;
(ii) Failure to deliver the Supply Amount for a period of
five (5) consecutive 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 not being in compliance with Section 3; and
(v) Failure of the Guarantor to be in compliance with the
terms of the Guarantee delivered under Section 3.1.2.
17.2 An Event of Default shall be excused:
17.2.1 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 12; and
17.2.2 In the event such Event of Default was caused by
transmission and distribution outages or disruptions.
17.3 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.
17.4 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. For
purposes of clarification, Replacement Costs shall not be
considered consequential or incidental damages under this
Section 17.4.
17.5 Notwithstanding this Section 17, liquidated damages shall be
paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.
18. FACILITY ADDITIONS AND MODIFICATIONS
18.1 Supplier shall be entitled to make additions and modifications
to the Asset Bundle subject to the following:
18.1.1 To the extent additions and modifications interfere with
the operation of the Asset Bundle in providing the
Supply Amount to Buyer beyond the limits for planned
outages set forth in Section 21, liquidated
30
damages shall be paid to Buyer pursuant to Section 4.2.
18.1.2 Supplier shall use reasonable efforts to minimize any
adverse impact on Buyer during the course of making such
additions and modifications.
18.1.3 Such additions and modifications shall be conducted in
accordance with Good Utility Practice, and all
applicable Laws, regulations, reliability criteria and
the Interconnection Agreement between Buyer and
Supplier, dated November 16, 2000, as it may be amended
from time to time.
18.2 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 an adverse effect upon
Buyer with respect to operations or performance under this
Agreement.
19. COORDINATION
19.1 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.
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE
20.1 Buyer and Supplier shall comply with any applicable requirement
of any Governmental Authority, NERC, WSCC, ISA, 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 Condition or Nonemergency
Condition.
20.2 Supplier shall not be obligated to deliver the Supply Amount and
no liquidated damages shall become due, if the Supply Amount is
reduced in the event of an Emergency Condition or a Nonemergency
Condition.
20.3 Each Party shall provide prompt verbal notice to the other Party
of any Emergency Condition or Nonemergency Condition.
20.4 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. However, this Section 20.4 shall not
be construed to supersede Sections 20.2 and 20.3.
21. OUTAGE SCHEDULING
21.1 Supplier shall request Buyer's approval prior to any
inspections, proposed
31
planned outages or other non-forced outages (all hereinafter
referred to as "planned outages") of the Asset Bundle so as to
minimize the impact on the availability of the Asset Bundle.
Under no circumstances shall Supplier conduct a planned outage
without the express prior consent of Buyer pursuant to this
Section 21.
21.2 Planned Outages.
---------------
21.2.1 Within sixty (60) days following the Effective Date of
this Agreement and on or before October 1 of each
Contract Year, Supplier shall provide Buyer with a
schedule of proposed planned outages for the period
beginning on the date of such proposed schedule for the
following twelve (12) months. The proposed planned
outage schedule will designate days for each unit in
which the Asset Bundle Capacity will be reduced in part
or total for each such unit. Each proposed schedule
shall include all applicable information, including but
not limited to the following: Month, day and time of
requested outage; facilities impacted (such as Unit and
description); duration of outage; purpose of outage;
amount of capacity (in MWs) which is derated; other
conditions and remarks; and name of contact and phone
number.
21.2.2 Buyer shall promptly review Supplier's proposed schedule
and shall either require modifications or approve the
proposed schedule. Supplier shall use its best efforts
to accomplish all planned outages in accordance with the
approved schedule. Supplier shall be responsible to
Buyer for Replacement Costs (i) if any outage period
exceeds its approved schedule, provided that changes to
the approved schedule may be requested by either Party
and each Party shall make reasonable efforts to
accommodate such changes, provided further the Buyer
shall have no obligation to agree to Supplier's
revisions to the approved planned outage schedule; and
(ii) if Supplier conducts a planned outage without the
consent of Buyer as provided herein.
21.3 Control Installation Outages
----------------------------
21.3.1 Supplier also may schedule such unit outages (each, a
"Control Installation Outage") as required to install at
the Asset Bundle new or retrofit emission control
equipment to the existing Asset Bundle necessary to
continue operating the Asset Bundle without sanctions or
operating restrictions threatened or imposed by a
Governmental Authority. Supplier shall make diligent
efforts to include any Control Installation Outage
within the proposed planned outage schedule pursuant to
Section 21.2.1; provided that, if Supplier is required
by such Governmental Authority having jurisdiction over
the matter to perform a Control Installation Outage
within a specific timeframe and, therefore, Supplier
cannot comply with the provisions of the preceding
sentence, Supplier at a minimum will provide the
following notice:
32
i) Three (3) weeks for each Control Installation
Outage with an expected duration of less than
one (1) day;
ii) Five (5) weeks for each Control Installation
Outage with an expected duration between one (1)
and five (5) days; and,
iii) Fifteen (15) weeks for each Control Installation
Outage with an expected duration of longer than
five (5) days.
Moreover, if Supplier is required to perform a Control
Installation Outage within a specific timeframe, Buyer,
after consultation with Supplier and in accordance with
Good Utility Practice, at its sole discretion may
designate the period within such timeframe in which a
Control Installation Outage may occur.
21.3.2 Supplier also shall: (i) coordinate and cooperate with
Buyer regarding the scheduling of each proposed Control
Installation Outage in order to minimize the economic
effect on Buyer resulting from such Control Installation
Outage; (ii) advise Buyer of its meetings and
communications with the Governmental Authority having
jurisdiction over the matter and, in its discretion,
will invite Buyer to participate in such meetings and
communications; and, (iii) take commercially reasonable
steps to seek review of any decision of such
Governmental Authority requiring a Control Installation
Outage during the months of June through September.
22. REPORTS
22.1 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 an adverse effect on Buyer. Supplier shall use
reasonable efforts to keep Buyer appraised of the status of any
such matters.
23. COMMUNICATIONS
23.1 Supplier's Operating Representatives shall be available
twenty-four (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.
23.2 Supplier shall, at its expense, maintain and 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.
33
23.3 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:
(i) A description of the "Abnormal Condition" and the
actions to be taken to alleviate the "Abnormal
Condition";
(ii) The expected duration including the beginning and ending
time of the "Abnormal Condition"; and
(iii) The amount of any adjustment to the current (real time)
level of Energy and Ancillary Services.
23.4 Cause of the Condition.
-----------------------
23.4.1 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 and Ancillary Services to Buyer;
(ii) Cause an unplanned reduction in the amount of
delivery of Energy and Ancillary Services to
Buyer; or
(iii) Cause an unplanned isolation of the Asset Bundle
from the transmission system.
23.5 Supplier shall immediately notify Buyer after such "Abnormal
Condition" has been alleviated.
24. NOTICES
24.1 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.
24.2 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 (3/rd/) Business Day following deposit with the
U.S. mail if sent regular first class U.S. mail.
34
24.3 Notices of an Event of Default pursuant to Section 17 and or
Force Majeure pursuant to Section 12 may not be sent by regular
first class U.S. mail.
24.4 Any payments required to be made under this Agreement shall be
made to the Party as set forth in Exhibit F.
24.5 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.
25. MERGER
25.1 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.
25.2 In the event of any conflict between this Agreement and the
Asset Sale Agreement, the terms of the Asset Sale Agreement
shall govern.
26. HEADINGS
26.1 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.
27. COUNTERPARTS AND INTERPRETATION
27.1 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
27.2 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.
27.3 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.
27.4 The word "including" in this Agreement shall mean "including
without limitation".
28. SEVERABILITY
28.1 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
35
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.
28.2 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.
29. WAIVERS
29.1 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.
30. AMENDMENTS
30.1 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 is reasonably expected to
materially affect Buyer's PLR service under this Agreement.
30.2 The Parties shall meet to discuss the impact of any changes in
Buyer's OATT or the ISA's OATT, as applicable, 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.
30.3 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.
30.4 Amendments to this Agreement shall be in writing and shall be
executed by an authorized representative of each Party.
31. TIME IS OF THE ESSENCE
31.1 Time is of the essence of this Agreement and in the performance
of all of the covenants and conditions hereof.
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32. APPROVALS
32.1 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.
32.2 Notwithstanding the provisions of Section 2.2.2 of this
Agreement, if any Governmental Authority in its review of the
Agreement places conditions on or requires revisions of the
Agreement that have no more than a de minimus effect on Supplier
or Buyer, the Parties agree to execute an amendment to this
Agreement reasonably acceptable to each Party incorporating such
conditions or revisions.
32.3 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.
32.4 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.
33. PLR SERVICE
33.1 The Agreement is premised on Buyer providing PLR service.
Notwithstanding anything to the contrary contained herein, if
Nevada retail electricity restructuring (including
implementation of 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 customers
shall be considered as the TRR.
34. CONFIDENTIALITY
34.1 Confidential Information. Certain information provided by a
------------------------
Party (the "Disclosing Party") to the other Party (the
"Receiving Party") in connection with the negotiation or
performance of this Agreement may be considered confidential
and/or proprietary (hereinafter referred to as "Confidential
Information") by the Disclosing Party. To be considered
Confidential Information hereunder, such information must be
clearly labeled or designated by the Disclosing Party as
"confidential" or "proprietary" or with words of like meaning.
If disclosed orally, such information shall be clearly
identified as confidential and such status shall be
37
confirmed promptly thereafter in writing.
34.2 Treatment of Confidential Information. The Receiving Party shall
-------------------------------------
treat any Confidential Information with at least the same degree
of care regarding its secrecy and confidentiality as the
Receiving Party's similar information is treated within the
Receiving Party's organization. The Receiving Party shall not
disclose the Confidential Information of the Disclosing Party to
third parties (except as stated hereinafter) nor use it for any
purpose other than the negotiation or performance of this
Agreement, without the express prior written consent of the
Disclosing Party. The Receiving Party further agrees that it
shall restrict disclosure of Confidential Information as
follows:
34.2.1 Disclosure shall be restricted solely to its agents as
may be necessary to enforce the terms of this Agreement
after advising those agents of their obligations under
this Section 34.2.
34.2.2 In the event that the Receiving Party is requested,
pursuant to or as required by applicable Law or by legal
process, to disclose any Confidential Information, the
Receiving Party shall provide the Disclosing Party with
prompt notice of such request or requirement in order to
enable Disclosing Party to seek an appropriate
protective order or other remedy and to consult with
Disclosing Party with respect to Disclosing Party taking
steps to resist or narrow the scope of such request or
legal process. The Receiving Party agrees not to oppose
any action by the Disclosing Party to obtain a
protective order or other appropriate remedy. In the
absence of such protective order, and provided that the
Receiving Party is advised by its counsel that it is
compelled to disclose the Confidential Information, the
Receiving Party shall:
(i) furnish only that portion of the Confidential
Information which the Receiving Party is advised
by counsel is legally required; and
(ii) use its commercially reasonable best efforts, at
the expense of the Disclosing Party, to ensure
that all Confidential Information so disclosed
will be accorded confidential treatment.
34.3 Excluded Information. Confidential Information shall not be
--------------------
deemed to include the following:
34.3.1 information which is or becomes generally available to
the public other than as a result of a disclosure by the
Receiving Party;
34.3.2 information which was available to the Receiving Party
on a non-confidential basis prior to its disclosures by
the Disclosing Party; and
34.3.3 information which becomes available to the Receiving
Party on a non-confidential basis from a person other
than the Disclosing Party or its
38
representative who is not otherwise bound by a
confidentiality agreement with Disclosing Party or its
agent or is otherwise not under any obligation to
Disclosing party or its agent not to disclose the
information to the Receiving Party.
34.4 Injunctive Relief Due to Breach. The Parties agree that remedies
-------------------------------
at law may be inadequate to protect each other in the event of a
breach of this Section 34, and the Receiving Party hereby in
advance agrees that the Disclosing Party shall be entitled to
seek and obtain, without proof of actual damages, temporary,
preliminary and permanent injunctive relief from any court or
Governmental Authority of competent jurisdiction restraining the
Receiving Party from committing or continuing any breach of this
Section 34.
35. CHOICE OF LAW
35.1 This Agreement and the rights and obligations of the Parties
shall be construed and governed by the Laws of: (i) the State of
Nevada as if executed and performed wholly within that state;
and (ii) the Federal Power Act, to the extent the rights and
obligations of the Parties are covered by such act.
IN WITNESS WHEREOF, the Parties hereto have caused this Transitional Power
Purchase Agreement for the Clark Asset Bundle to be executed by their duly
authorized representative on the date set forth below.
NEVADA POWER COMPANY CLARK POWER LLC
- -------------------------- --------------------------
By: William E. Peterson By: Edward P. Hermann
Title: Senior Vice President, Title: Vice President
General Counsel, and Corporate Secretary
Date: November 16, 2000 Date: November 16, 2000
39
EXHIBIT A
CLARK BUNDLE
ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS
NET SUMMER NET WINTER MINIMUM HOURLY
CAPABILITY CAPABILITY RAMP RATE ENERGY TAKE
UNIT (MW) (MW) (MW/hr) (MWh)
- -----------------------------------------------------------------------------
Unit 1 42 42 42
Unit 2 66 69 69
Unit 3 67 70 70
Unit 4 50 59 59
Unit 5 73 81 81
Unit 6 73 81 81
Unit 7 73 81 81
Unit 8 73 81 81
Unit 9 85 88 88
Unit 10 85 88 88
- -----------------------------------------------------------------------------
Total 687 740 740 n/a
=============================================================================
Minimum Annual Energy Take: 2,700,000 Mwh
Limit on Excused Energy:* Annual: 40,000 MWh
+ Winter Months: 2,500 MWh per month
*The 40,000 MWh Limit on Excused Energy is an annual amount, to be prorated in
any Contract Year that is less than a twelve month period, that can be called on
in any month(s). The additional Limit on Excused Energy for Winter months is in
excess of the annual amount for the particular month and is not carried forward
if not otherwise used during the month. For example, in the month of April,
Supplier will have a Limit on Excused Energy of 2,500 MWh plus the unused amount
of the 40,000 MWh annual Limit on Excused Energy.
For purposes of this Exhibit A, the summer months shall consist of the months of
June through September. The winter months shall consist of the months of January
through May and the months of October through December.
A-1
EXHIBIT B
CLARK BUNDLE
ENERGY AND ANCILLARY SERVICE PRICES
Energy Prices*
-------------
Price Floor of Energy: $22.77 per MWh
Price Ceiling of Energy: $42.65 per MWh
Ancillary Service Prices*
------------------------
Regulation and Frequency Response:
Summer On-Peak: $25.75 per MW-reserved per hour
Summer Off-Peak: $14.71 per MW-reserved per hour
Winter On-Peak: $13.59 per MW-reserved per hour
Winter Off-Peak: $ 7.77 per MW-reserved per hour
Operating Reserve- Spinning Reserve:
Summer On-Peak: $23.45 per MW-reserved per hour
Summer Off-Peak: $13.40 per MW-reserved per hour
Winter On-Peak: $12.52 per MW-reserved per hour
Winter Off-Peak: $ 7.16 per MW-reserved per hour
Operating Reserve- Supplemental Reserve:
Summer On-Peak: $ 8.82 per MW-reserved per hour
Summer Off-Peak: $ 5.04 per MW-reserved per hour
Winter On-Peak: $ 4.26 per MW-reserved per hour
Winter Off-Peak: $ 2.44 per MW-reserved per hour
For purposes of this Exhibit B, the summer months shall consist of the
months of June through September. The winter months shall consist of the
months of January through May and the months of October through
December.
The On-Peak periods shall consist of Hour Ending (HE) 0700 through HE
2200 PPT, Monday through Saturday. The Off-Peak periods shall consist of
HE 0100 through HE 0600, HE 2300 and HE 2400 PPT, Monday through
Saturday; HE 0100 through HE 2400 PPT Sunday and additional Off-Peak
days (holidays) as designated annually by the WSCC.
* SUBJECT TO FERC APPROVAL
------------------------
B-1
EXHIBIT C
CLARK BUNDLE
SUPPLIER'S MONTHLY INVOICE
A Price Ceiling of Energy $ 42.65 /MWh
B Price Floor of Energy $ 22.77 /MWh
MONTH 1 - ENERGY
- ----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Capacity
---- -------------- ------------ --------------- ----------------- ---------------- ---------------------
(C - D) (D x F) (C x F)
1 687 687 0 40.00 $ 27,480.00 $ 27,480.00
2 687 687 0 40.00 27,480.00 27,480.00
3 687 627 60 40.00 25,080.00 27,480.00
4 687 627 60 40.00 25,080.00 27,480.00
5 557 547 10 30.00 16,410.00 16,710.00
6 587 587 0 30.00 17,610.00 17,610.00
7 677 657 20 20.00 13,140.00 13,540.00
8 687 687 0 20.00 13,740.00 13,740.00
9 687 687 0 20.00 13,740.00 13,740.00
10 687 687 0 25.00 17,175.00 17,175.00
- ------------------------------------------------------------------------------------------------------------------------------------
6,630 6,480 150 $196,935.00 $202,435.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $196,935.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $202,435.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling of Energy Sec 7.2.2 $276,372.00
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price
Ceiling of Energy $282,769.50
K. Sum of hourly Delivered Energy multiplied by the Price Floor of Energy Sec 7.2.3 $147,549.60
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $150,965.10
L. Invoiced Amount - Energy Sec 7.3 (K ** I ** J) $196,935.00
M. Theoretical Amount for Expected Performance (KT ** IT ** JT) $202,435.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
- ------------------------------------------------------------------------
N O P Q R S
Dispatch Schedule of Ancillary Ancillary Capacity Supplier Capacity Price of Price x Ancillary Price x Schedule
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(N - O) (O x Q) (N x Q)
1 0 0 0 14.71 $0.00 $0.00
2 0 0 0 14.71 0.00 0.00
3 0 0 0 25.75 0.00 0.00
4 0 0 0 25.75 0.00 0.00
5 30 30 0 25.75 772.50 772.50
6 0 0 0 25.75 0.00 0.00
7 0 0 0 25.75 0.00 0.00
8 0 0 0 25.75 0.00 0.00
9 0 0 0 25.75 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
** Less Than
C-1
EXHIBIT C
CLARK BUNDLE
SUPPLIER'S MONTHLY INVOICE
10 0 0 0 25.75 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
30 30 0 $772.50 $772.50
T. Invoiced Amount - Ancillary Service Capacity - Regulation and Frequency Response Sec 7.2.5 $772.50
U. Theoretical Amount for Expected Performance $772.50
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
- -------------------------------------------------------
V W X Y Z AA
Dispatch Schedule of Ancillary Ancillary Capacity Supplier Capacity Price of Price x Ancillary Price x Schedule
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ----------------------
(V - W) (W x Y) (V x Y)
1 0 0 0 13.40 $ 0.00 $ 0.00
2 0 0 0 13.40 0.00 0.00
3 0 0 0 23.45 0.00 0.00
4 0 0 0 23.45 0.00 0.00
5 80 80 0 23.45 1,876.00 1,876.00
6 80 60 20 23.45 1,407.00 1,876.00
7 0 0 0 23.45 0.00 0.00
8 0 0 0 23.45 0.00 0.00
9 0 0 0 23.45 0.00 0.00
10 0 0 0 23.45 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
160 140 20 $3,283.00 $3,752.00
AB. Invoiced Amount - Ancillary Service Capacity - Spinning Reserve Sec 7.2.5 $3,283.00
AC. Theoretical Amount for Expected Performance $3,752.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
- -----------------------------------------------------------
AD AE AF AG AH AI
Dispatch Schedule of Ancillary Ancillary Capacity Supplier Capacity Price of Price x Ancillary Price x Schedule
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(AD - AE) (AE x AG) (AD x AG)
1 0 0 0 5.04 $ 0.00 $ 0.00
2 0 0 0 5.04 0.00 0.00
3 0 0 0 8.82 0.00 0.00
4 0 0 0 8.82 0.00 0.00
5 10 10 0 8.82 88.20 88.20
6 10 10 0 8.82 88.20 88.20
7 10 10 0 8.82 88.20 88.20
8 0 0 0 8.82 0.00 0.00
9 0 0 0 8.82 0.00 0.00
10 0 0 0 8.82 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
30 30 0 $264.60 $264.60
AJ. Invoiced Amount - Ancillary Service Capacity - Supplemental Reserve Sec 7.2.5 $264.60
C-2
EXHIBIT C
CLARK BUNDLE
SUPPLIER'S MONTHLY INVOICE
AK. Theoretical Amount for Expected Performance $264.60
MONTH 1 - ANCILLARY SERVICE ENERGY
- ----------------------------------
AL AM AN AO AP AQ
Dispatch Schedule of Ancillary Ancillary Energy Supplier Price Ceiling of Price x Ancillary Price x Schedule
Hour Energy (MWh) Supplied (MWh) Shortfall (MWh) Energy ($/MWh) Energy Supplied of Ancillary Energy
---- ----------- -------------- --------------- -------------- --------------- -------------------
(AL - AM) (AM x AO) (AL x AO)
1 0 0 0 42.65 $ 0.00 $ 0.00
2 0 0 0 42.65 0.00 0.00
3 0 0 0 42.65 0.00 0.00
4 0 0 0 42.65 0.00 0.00
5 40 40 0 42.65 1,706.00 1,706.00
6 30 10 20 42.65 426.50 1,279.50
7 10 10 0 42.65 426.50 426.50
8 0 0 0 42.65 0.00 0.00
9 0 0 0 42.65 0.00 0.00
10 0 0 0 42.65 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
80 60 20 $426.50 $ 2,559.00 $3,412.00
AR. Invoiced Amount - Ancillary Services Energy Sec 7.2.6 $ 2,559.00
AS. Theoretical Amount for Expected Performance $3,412.00
MONTH 1 - TOTAL INVOICE AMOUNT Sec 7.3 (L + T + AB + AJ + AR) $203,814.10
====================================================================================================================================
MONTH 2 - ENERGY
- ----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ----------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 687 687 0 45.00 $ 30,915.00 $ 30,915.00
2 687 687 0 45.00 30,915.00 30,915.00
3 687 627 60 45.00 28,215.00 30,915.00
4 687 627 60 55.00 34,485.00 37,785.00
5 557 547 10 55.00 30,085.00 30,635.00
6 587 587 0 55.00 32,285.00 32,285.00
7 677 657 20 35.00 22,995.00 23,695.00
8 687 687 0 35.00 24,045.00 24,045.00
9 687 687 0 35.00 24,045.00 24,045.00
10 687 687 0 40.00 27,480.00 27,480.00
- ------------------------------------------------------------------------------------------------------------------------------------
6,630 6,480 150 $285,465.00 $292,715.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $285,465.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $292,715.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling of Energy Sec 7.2.2 $276,372.00
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $282,769.50
C-3
EXHIBIT C
CLARK BUNDLE
SUPPLIER'S MONTHLY INVOICE
K. Sum of hourly Delivered Energy multiplied by the Price Floor of Energy Sec 7.2.3 $147,549.60
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $150,965.10
L. Invoiced Amount - Energy Sec 7.3 (I *** J) $276,372.00
M. Theoretical Amount for Expected Performance (IT *** JT) $282,769.50
MONTH 3 - ENERGY
- ----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ----------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 687 687 0 30.00 $ 20,610.00 $ 20,610.00
2 687 687 0 20.00 13,740.00 13,740.00
3 687 627 60 20.00 12,540.00 13,740.00
4 687 627 60 20.00 12,540.00 13,740.00
5 557 547 10 15.00 8,205.00 8,355.00
6 587 587 0 15.00 8,805.00 8,805.00
7 677 657 20 15.00 9,855.00 10,155.00
8 687 687 0 15.00 10,305.00 10,305.00
9 687 687 0 15.00 10,305.00 10,305.00
10 687 687 0 15.00 10,305.00 10,305.00
- ------------------------------------------------------------------------------------------------------------------------------------
6,630 6,480 150 $117,210.00 $120,060.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $117,210.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $120,060.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling of Energy Sec 7.2.2 $276,372.00
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $282,769.50
K. Sum of hourly Delivered Energy multiplied by the Price Floor of Energy Sec 7.2.3 $147,549.60
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $150,965.10
L. Invoiced Amount - Energy Sec 7.3 (I ** K) $147,549.60
M. Theoretical Amount for Expected Performance (IT ** KT) $150,965.10
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
** Less Than
*** Greater Than
C-4
EXHIBIT D
CLARK BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ENERGY
- ----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 60 35.00 100.00 2,200.00
4 60 30.00 50.00 1,850.00
5 10 30.00 50.00 350.00
6 0 na 0.00 0.00
7 20 25.00 0.00 500.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- --------------------------------------------------------------------------------------------------
150 $ 4,900.00
E. Gross Replacement Cost of Energy $ 4,900.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $202,435.00
G. Actual Supplier's Invoice Amount 196,935.00
------------
H. Avoided Payment to Supplier (F - G) $ 5,500.00
I. Invoiced Replacement Cost - Energy (E ** H) $ 0.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
- ------------------------------------------------------------------------
J K * L * M
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(J x K) + L
1 0 na $0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- ------------------------------------------------------------------------------------------------
0 $ 0.00
N. Gross Replacement Cost of Ancillary Capacity - Regulation and Frequency $ 0.00
Response
O. Theoretical Supplier's Invoice Amount for Expected Performance $772.50
P. Actual Supplier's Invoice Amount 772.50
--------
Q. Avoided Payment to Supplier (O - P) $ 0.00
R. Invoiced Replacement Cost - Ancillary Capacity (N = Q) $ 0.00
** Less Than
D-1
EXHIBIT D
CLARK BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
- -------------------------------------------------------
S T * U * V
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(S x T) + U
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 40.00 100.00 900.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- --------------------------------------------------------------------------------------------------
20 $ 900.00
W. Gross Replacement Cost of Ancillary Capacity - Spinning Reserve $ 900.00
X. Theoretical Supplier's Invoice Amount for Expected Performance $3,752.00
Y. Actual Supplier's Invoice Amount 3,283.00
----------
Z. Avoided Payment to Supplier (X - Y) $ 469.00
AA. Invoiced Replacement Cost - Ancillary Capacity (W GREATER THAN Z) $ 431.00
MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
- ---------------------------------------------------
AB AC * AD * AE
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(AB x AC) + AD
1 0 na $0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- --------------------------------------------------------------------------------------------------
0 $ 0.00
AF. Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve $ 0.00
AG. Theoretical Supplier's Invoice Amount for Expected Performance $264.60
AH. Actual Supplier's Invoice Amount 264.60
AI. Avoided Payment to Supplier (AG - AH) $ 0.00
AJ. Invoiced Replacement Cost - Ancillary Capacity (AF = AI) $ 0.00
D-2
EXHIBIT D
CLARK BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ANCILLARY SERVICE ENERGY
- ----------------------------------
AK AL * AM * AN
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy ** Cost of Energy
---- ------------ ----------------- ------------ --------------
(AK x AL) + AM
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 50.00 20.00 1,020.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- ----------------------------------------------------------------------------------------------------
20 $1,020.00
AO. Gross Replacement Cost of Ancillary Energy $1,020.00
AP. Theoretical Supplier's Invoice Amount for Expected Performance $3,412.00
AQ. Actual Supplier's Invoice Amount 2,559.00
----------
AR. Avoided Payment to Supplier (AP - AQ) $ 853.00
AS. Invoiced Replacement Cost - Ancillary Energy (AO ** AR) $ 167.00
MONTH 1 - TOTAL INVOICE AMOUNT (I + R + AA + AJ + AS) $ 598.00
====================================================================================================
MONTH 2 - ENERGY
- ----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 60 40.00 200.00 2,600.00
4 60 55.00 100.00 3,400.00
5 10 48.00 200.00 680.00
6 0 na 0.00 0.00
7 20 35.00 300.00 1,000.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- --------------------------------------------------------------------------------------------------
150 $ 7,680.00
E. Gross Replacement Cost of Energy $ 7,680.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $282,769.50
G. Actual Supplier's Invoice Amount 276,372.00
------------
** Less Than
D-3
EXHIBIT D
CLARK BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
H. Avoided Payment to Supplier (F - G) $6,397.50
I. Invoiced Replacement Cost - Energy (E ** H) $1,282.50
MONTH 3 - ENERGY
- ----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 60 27.00 100.00 1,720.00
4 60 22.00 50.00 1,370.00
5 10 22.00 0.00 220.00
6 0 na 0.00 0.00
7 20 22.00 50.00 490.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- ---------------------------------------------------------------------------------------------------
150 $ 3,800.00
E. Gross Replacement Cost of Energy $ 3,800.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $150,965.10
G. Actual Supplier's Invoice Amount 147,549.60
------------
H. Avoided Payment to Supplier (F - G) $ 3,415.50
I. Invoiced Replacement Cost - Energy (E *** H) $ 384.50
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
** Less Than
*** Greater Than
D-4
EXHIBIT E
CLARK BUNDLE
YEAR END TRUE-UP INVOICE
A Price Ceiling of Energy $42.65 /MWh
B Price Floor of Energy $22.77 /MWh
EXAMPLE 1
- ---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 6,480 $ 196,935.00 $ 276,372.00 $ 147,549.60 $ 196,935.00
2 6,480 285,465.00 276,372.00 147,549.60 276,372.00
3 6,480 117,210.00 276,372.00 147,549.60 147,549.60
4 6,870 329,760.00 293,005.50 156,429.90 293,005.50
5 6,870 302,280.00 293,005.50 156,429.90 293,005.50
6 6,670 293,480.00 284,475.50 151,875.90 284,475.50
7 6,870 316,020.00 293,005.50 156,429.90 293,005.50
8 6,870 322,890.00 293,005.50 156,429.90 293,005.50
9 6,330 303,840.00 269,974.50 144,134.10 269,974.50
10 6,870 309,150.00 293,005.50 156,429.90 293,005.50
11 6,870 370,980.00 293,005.50 156,429.90 293,005.50
12 6,570 321,930.00 280,210.50 149,598.90 280,210.50
- ------------------------------------------------------------------------------------------------------------------
Total 80,230 $3,469,940.00 $3,421,809.50 $1,826,837.10 $3,213,550.10
(Total of Column D) GREATER THAN (Total of Column E) therefore Annual True-up calculated under Section 7.5.1(a)
- ----------------------------------------------------------------------------------------------------------------
H. Annual True-up - Delivered Energy (Total E - Total G) $208,259.40
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total E / Total C) $42.65
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,282.50
3 150 3,800.00 384.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------
Total 450 $19,192.50 $16,380.00 $0.00 $ 1,667.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,667.00
E-1
EXHIBIT E
CLARK BUNDLE
YEAR END TRUE-UP INVOICE
Total Annual True-up * (H + O) $209,926.40
===================================================================================================================
EXAMPLE 2
- ---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 6,480 $ 196,935.00 $ 276,372.00 $ 147,549.60 $ 196,935.00
2 6,480 285,465.00 276,372.00 147,549.60 276,372.00
3 6,480 117,210.00 276,372.00 147,549.60 147,549.60
4 6,870 261,060.00 293,005.50 156,429.90 261,060.00
5 6,870 254,190.00 293,005.50 156,429.90 254,190.00
6 6,670 226,780.00 284,475.50 151,875.90 226,780.00
7 6,870 329,760.00 293,005.50 156,429.90 293,005.50
8 6,870 233,580.00 293,005.50 156,429.90 233,580.00
9 6,330 240,540.00 269,974.50 144,134.10 240,540.00
10 6,870 240,450.00 293,005.50 156,429.90 240,450.00
11 6,870 302,280.00 293,005.50 156,429.90 293,005.50
12 6,570 256,230.00 280,210.50 149,598.90 256,230.00
- --------------------------------------------------------------------------------------------------------------
Total 80,230 $2,944,480.00 $3,421,809.50 $1,826,837.10 $2,919,697.60
(Total of Column E) GREATER THAN (Total of Column D) therefore Annual True-up calculated under Section 7.5.1(b)
- --------------------------------------------------------------------------------------------------------------
H. Annual True-up - Delivered Energy (Total D - Total G) $ 24,782.40
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $ 36.70
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,282.50
3 150 3,800.00 384.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------
Total 450 $16,515.22 $16,380.00 $0.00 $ 1,667.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,667.00
Total Annual True-up * (H + O) $26,449.40
===================================================================================================================
E-2
EXHIBIT E
CLARK BUNDLE
YEAR END TRUE-UP INVOICE
EXAMPLE 3
- ---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- --------------- ---------------
(A x C) (B x C)
1 6,480 $ 196,935.00 $ 276,372.00 $ 147,549.60 $ 196,935.00
2 6,480 285,465.00 276,372.00 147,549.60 276,372.00
3 6,480 117,210.00 276,372.00 147,549.60 147,549.60
4 6,870 219,840.00 293,005.50 156,429.90 219,840.00
5 6,870 206,100.00 293,005.50 156,429.90 206,100.00
6 6,670 186,760.00 284,475.50 151,875.90 186,760.00
7 6,870 178,620.00 293,005.50 156,429.90 178,620.00
8 6,870 185,490.00 293,005.50 156,429.90 185,490.00
9 6,330 158,250.00 269,974.50 144,134.10 158,250.00
10 6,870 171,750.00 293,005.50 156,429.90 171,750.00
11 6,870 144,270.00 293,005.50 156,429.90 156,429.90
12 6,570 144,540.00 280,210.50 149,598.90 149,598.90
- -----------------------------------------------------------------------------------------------------------------
Total 80,230 $2,195,230.00 $3,421,809.50 $1,826,837.10 $2,233,695.40
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated under Section 7.5.1(b)
- ----------------------------------------------------------------------------------------------------
H. Annual True-up - Delivered Energy (Total D - Total G) $ (38,465.40)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $ 27.36
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,282.50
3 150 3,800.00 384.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------
Total 450 $ 12,312.77 $ 16,380.00 $ 4,067.23 $ 1,667.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (2,400.23)
E-3
EXHIBIT E
CLARK BUNDLE
YEAR END TRUE-UP INVOICE
Total Annual True-up * (H + O) $ (40,865.63)
================================================================================
EXAMPLE 4
- ---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 6,480 $ 196,935.00 $ 276,372.00 $ 147,549.60 $ 196,935.00
2 6,480 285,465.00 276,372.00 147,549.60 276,372.00
3 6,480 117,210.00 276,372.00 147,549.60 147,549.60
4 6,870 151,140.00 293,005.50 156,429.90 156,429.90
5 6,870 116,790.00 293,005.50 156,429.90 156,429.90
6 6,670 153,410.00 284,475.50 151,875.90 153,410.00
7 6,870 158,010.00 293,005.50 156,429.90 158,010.00
8 6,870 96,180.00 293,005.50 156,429.90 156,429.90
9 6,330 113,940.00 269,974.50 144,134.10 144,134.10
10 6,870 130,530.00 293,005.50 156,429.90 156,429.90
11 6,870 82,440.00 293,005.50 156,429.90 156,429.90
12 6,570 124,830.00 280,210.50 149,598.90 149,598.90
- ---------------------------------------------------------------------------------------------------------------
Total 80,230 $ 1,726,880.00 $ 3,421,809.50 $ 1,826,837.10 $ 2,008,159.10
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated under Section 7.5.1(b)
- ----------------------------------------------------------------------------------------------------
H. Annual True-up - Delivered Energy (Total F - Total G) $ (181,322.00)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total F / Total C) $ 22.77
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 1,282.50
3 150 3,800.00 384.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------
Total 450 $ 10,246.50 $ 16,380.00 $ 6,133.50 $ 1,667.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (4,466.50)
===================================================================================================================
E-4
EXHIBIT E
CLARK BUNDLE
YEAR END TRUE-UP INVOICE
Total Annual True-up * (H + O) $ (185,788.50)
================================================================================
* Positive Total Annual True-up is indicative of a payment form Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment form Supplier
to Buyer.
E-5
EXHIBIT F
NOTICES, BILLING AND PAYMENT INSTRUCTIONS
Supplier:
- --------
a) Agreement Notices: Name and Address:______________________
------------------ Phone:_________________________________
Fax:___________________________________
b) Payment Check: Name and Address:______________________
--------------
c) Payment Wire Transfer: Bank:__________________________________
---------------------- ABA#:__________________________________
For: Supplier's Name __________________
Account No: ___________________________
For:___________________________________
d) Invoices: Name and Address:______________________
--------- Phone:_________________________________
Fax:___________________________________
e) Operating Notifications:
------------------------
i) (Management, if required)
ii) Pre-Schedule: Phone:_________________________________
Fax:___________________________________
iii) Real Time: Phone:_________________________________
Fax:___________________________________
iv) Monthly Checkout Phone:_________________________________
Person: Fax:___________________________________
F-1
Buyer:
a) Agreement Notices:
-----------------
Address: Gary Craythorn
Manager, Resource Contracts
Nevada Power Company
6226 West Sahara Avenue, M/S 26A
Las Vegas, Nevada 89146
Phone: 702/367-5425
Fax: 702/227-2455
E-mail: gcraythorn@nevp.com
b) Invoices:
--------
US Post Office: (Via Certified Mail) Overnight Delivery
-------------- ------------------
Address: Nevada Power Company Address: Nevada Power Company
Attn: Kathy Crews Attn: Kathy Crews
P.O. Box 230, M/S 20 6226 West Sahara Ave., M/S 20
Las Vegas, Nevada 89151 Las Vegas, Nevada 89146
Telephone: 702/227-2476
Fax: 702/367-5096
E-mail: kcrews@nevp.com
c) Schedules:
i) Pre-Schedule: Primary Name: Rick Engebretson Phone: 702/862-7195
E-mail: rengebretson@nevp.com
Alternate Name: Tim Schuster Phone: 702/862-7194
E-mail: tschuster@nevp.com
Fax: 702/227-2404
ii) Real Time: Phone: 702/862-7106
Fax: 702/227-2404
iii) Monthly Checkout: Kathy Crews Phone:702/227-2476
Fax:702/367-5096
E-mail:kcrews@nevp.com
d) Control Area/Transmission:
i) Reliability Dispatch: Phone: (702) 451-2026
Fax: (702) 862-7113
ii) Transmission Dispatch: Phone: (702) 451-8346
Fax: (702) 862-7113
F-2
EXHIBIT G
FORM OF AVAILABILITY NOTICE*
Date of Notice:
Time of Notice:
Supplier:
Name of Supplier's Representative:
Buyer:
Asset Bundle:
Availability Dates (96 hours total):
A B C D E F G
Availability Hour Available from Total Derating of Permitted Asset Bundle Available Total Derating Permitted
Date Ending Valmy Unit Valmy Unit (MW) Derating Capacity of from Valmy of Valmy Derating of
---- ------ ---- -------------- Unit 1 (MW) Unit 1 (MW) Unit 2 (MW) Unit 2 (MW) Unit 2 (MW)
1 (MW) ----------- ----------- ---------- ----------- -----------
-----
(A ** or = ____) (___ - A) (C) ** or = B) (A - C) (E ** or = ___) (___ - E) (B ** or = F)
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
0100
0200
0300
0400
0500
0600
0700
:
(96 hours total)
:
300
400
500
H I** J
Asset bundle Alternative Cause and Expected Duration of
Availability Hour Capacity of Point(s) of Deratings and Identification
Date Ending Unit 2 (MW) Delivery Permitted Deratings
---- ------ ---------- ------- -------------------
(G - E)
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
0100
0200
0300
0400
0500
0600
0700
:
(96 hours total)
:
300
400
500
* The Parties' operational personnel shall develop a similar form for the
other generating units in the bundle.
** The Parties' operational personnel shall develop the necessary procedure
to document requests and responses to utilize Alternative Point(s) of
Delivery.
G-1
EXHIBIT H
FORM OF GUARANTEE
This Guarantee is entered into as of November 16, 2000 by NRG Energy, Inc.,
a Delaware corporation, and Dynegy Holdings Inc., a Delaware corporation (each,
a "Guarantor"), on behalf of Clark Gardner Power LLC, a Delaware limited
liability company ("Supplier"), in favor of and for the benefit of Nevada Power
Company, a Nevada corporation ("NPC"). NPC is sometimes referred to herein as
"Beneficiary".
WHEREAS, Supplier and NPC are entering into a Transitional Power Purchase
Agreement dated as of November 16, 2000 (the "TPPA") by which Supplier has
agreed to sell and NPC has agreed to buy Energy and Ancillary Services (as
defined in the TPPA) produced by the Clark generating station being sold by NPC;
and
WHEREAS, it is a condition to the obligation of NPC to enter into the TPPA
for Guarantor to guarantee the Supplier's obligations under the TPPA in an
amount not to exceed the Credit Amount (as defined in the TPPA) (the "Guarantied
Obligations").
1. Guarantee. Each Guarantor jointly and severally, and irrevocably and
unconditionally, guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Guarantied Obligations (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)).
In the event that all or any portion of the Guarantied Obligations is paid
by Supplier, the obligations of Guarantor hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) is rescinded or recovered directly or
indirectly from the Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations (to the extent such payments, in the
aggregate, do not exceed the Credit Amount).
Subject to the other provisions of this Section 1, upon failure of Supplier
to pay any of the Guarantied Obligations when and as the same shall become due,
the Guarantors will upon demand pay, or cause to be paid, in cash, to NPC, an
amount equal to the aggregate of the unpaid Guarantied Obligations to the extent
due. In the event the Guarantors fail to pay the Guarantied Obligations, each
and every default in the payment shall give rise to a separate cause of action
and separate causes of action may be brought hereunder as each such cause of
action arises. In no event shall the amount recoverable hereunder by Beneficiary
from the Guarantors, singly or jointly, ever exceed the Credit Amount (as
defined in the TPPA).
2. Expenses. Each Guarantor agrees to reimburse NPC for all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any default by such Guarantor
hereunder and any enforcement or collection proceeding resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with bankruptcy, insolvency, receivership, foreclosure, winding up
or liquidation proceedings of or involving the Guarantor, judicial or regulatory
proceedings of or
H-3
involving the Guarantor and workout, restructuring or other negotiations or
proceedings of or involving the Guarantor (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 2.
3. Guarantee Absolute; Continuing Guarantee. The obligations of each
Guarantor hereunder are joint and several, irrevocable, absolute, independent
and unconditional, and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantors agree that: (a) this
Guarantee is a guarantee of payment when due and not of collectibility; (b) the
obligations of each Guarantor hereunder are independent of the obligations of
Supplier under the TPPA and a separate action or actions may be brought and
prosecuted against either Guarantor whether or not any action is brought against
the Supplier and whether or not the Supplier is joined in any such action or
actions; and (c) either Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantors' liability for any portion of the Guarantied Obligations that has not
been paid. This Guarantee is a continuing guarantee and shall be binding upon
the Guarantors and its successors and assigns.
4. Actions by Beneficiary. The Beneficiary may from time to time, without
notice or demand and without affecting the validity or enforceability of this
Guarantee or giving rise to any limitation, impairment or discharge of the
Guarantors' liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guarantee or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security hereafter held by
or for the benefit of the Beneficiary in respect of this Guarantee or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Beneficiary may have against any
such security, and (f) exercise any other rights available to NPC under the
TPPA.
5. No Discharge. This Guarantee and the obligations of each Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guarantee of or
security for the payment of the Guarantied Obligations, (b) any waiver or
H-4
modification of, or any consent to departure from, any of the terms or
provisions of any other guarantee or security for the Guarantied Obligations,
(c) the Guarantied Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even if the Beneficiary might have
elected to apply such payment to any part or all of the Guarantied Obligations,
(e) any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (f) any defenses,
set-offs or counterclaims which the Supplier may assert against the Beneficiary
in respect of the Guarantied Obligations, including but not limited to failure
of consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction (other than the right to set off or recoup
overdue undisputed payments due from Beneficiary under the TPPA), and (g) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of either Guarantor as an
obligor in respect of the Guarantied Obligations.
6. Waivers for the Benefit of Beneficiary. Each Guarantor waives, for the
benefit of Beneficiary, until the Guarantied Obligations are paid in full: (a)
any right to require the Beneficiary, as a condition of payment or performance
by the Guarantors, to (i) proceed against the Supplier, any other guarantor of
the Guarantied Obligations or any other Person, (ii) proceed against or exhaust
any security held from the Supplier, any other guarantor of the Guarantied
Obligations or any other Person, or (iii) pursue any other remedy in the power
of the Beneficiary; (b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of the Supplier including, without
limitation, any defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of the Supplier
from any cause other than payment in full of the Guarantied Obligations; (c) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (d) (i) any principles or provisions of
law, statutory or otherwise, that are or might be in conflict with the terms of
this Guarantee and any legal or equitable discharge of Guarantors' obligations
hereunder, (ii) the benefit of any statute of limitations affecting Guarantors'
liability hereunder or the enforcement hereof, (iii) any rights to set-offs,
recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that the Beneficiary protect, secure, perfect or insure any lien on
any property subject thereto; (e) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guarantee; and (f) to the fullest extent permitted
by law, any defenses or benefits that may be derived from or afforded by law
which limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Guarantee.
7. Waiver of Rights Against Supplier. Until the Guarantied Obligations are
paid in full, each Guarantor waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against the Supplier
or any of its assets in connection with this Guarantee or the performance by
such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (a) any right of subrogation,
reimbursement or
H-5
indemnification that such Guarantor now has or may hereafter have against the
Supplier, (b) any right to enforce, or to participate in, any claim, right or
remedy that the Beneficiary now has or may hereafter have against the Supplier,
and (c) any benefit of, and any right to participate in, any collateral or
security hereafter held by the Beneficiary. Each Guarantor further agrees that,
to the extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement and indemnification as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against the Supplier or against any collateral or security shall be junior and
subordinate to any rights the Beneficiary may have against Supplier, to all
right, title and interest the Beneficiary may have in any such collateral or
security, and to any right the Beneficiary may have against such other
guarantor.
8. Representations and Warranties of Guarantor. Each Guarantor represents
and warrants to NPC as follows:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Such Guarantor has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
(b) it has the corporate power and authority to execute and deliver this
Guarantee and to consummate the transactions contemplated hereby. The execution
and delivery of this Guarantee and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of such Guarantor, and no other corporate proceedings on the part of
such Guarantor, including the approval of its shareholders, are necessary to
authorize this Guarantee or to consummate the transactions so contemplated. This
Guarantee has been duly and validly executed and delivered by such Guarantor and
constitutes a valid and binding agreement of such Guarantor, enforceable against
such Guarantor in accordance with its terms.
(c) There are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or (to such
Guarantor's knowledge) threatened against such Guarantor or its subsidiaries
that could reasonably be expected to have a material adverse effect on the
consolidated financial condition, operations or business taken as a whole of it
and its subsidiaries, except as set forth in periodic filings by such Guarantor
with the Securities and Exchange Commission.
(d) The representations and warranties made herein will remain true until
such Guarantor has fulfilled its obligations to pay in full the Guaranteed
Obligations.
9. Set Off. In addition to any other rights the Beneficiary may have under
law or in equity, if any amount shall at any time be due and owing by either
Guarantor to the Beneficiary under this Guarantee, the Beneficiary is authorized
at any time or from time to time, without notice (any such notice being
expressly waived), to set off and to appropriate and to apply any indebtedness
of the Beneficiary owing to such Guarantor and any other property of such
H-6
Guarantor held by the Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to the Beneficiary under this Guarantee.
10. Disputes. Any action, claim or dispute arising out of or relating to
this Guarantee (any such action, claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. In the event the Guarantors and NPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either the Guarantors or NPC may initiate
arbitration through the serving and filing of a demand for arbitration. The
Guarantors and NPC expressly agree that such arbitration shall be the exclusive
means to further resolve any Dispute and hereby irrevocably waive their right to
a jury trial with respect to any Dispute, provided that at any time a request
made for provisional remedies requesting preservation of respective rights and
obligations under the Guarantee may be resolved by a court of law located in the
County of the principal place of business of NPC. Arbitration shall be conducted
in accordance with Sections 13.4, 13.5, 13.6, 13.7, and 13.8 of the TPPA.
11. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guarantee, and no consent to any departure by
either Guarantor therefrom, shall in any event be effective without the written
concurrence of NPC and, in the case of any such amendment or modification,
either Guarantor. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
12. Miscellaneous. It is not necessary for Beneficiary to inquire into the
capacity or powers of either Guarantor or Supplier or the officers, directors or
any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiary by this Guarantee are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiary by virtue of any statute or rule of law or in the
TPPA. Any forbearance or failure to exercise, and any delay by Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guarantee shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This Guarantee shall inure to the benefit of Beneficiary and its respective
successors and assigns.
13. Notices. All notices, requests, demands, waivers, consents and other
communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by overnight air
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means, (b) one (1) business day after having been
H-7
delivered to an air courier for overnight delivery or (c) three (3) business
days after having been deposited in the U.S. mails as certified or registered
mail, return receipt requested, all fees prepaid, directed to the parties at the
following addresses:
If to Guarantors, addressed to: David Lloyd, Esq.
NRG Energy, Inc.
Symphony Towers
Suite 2740
750 "B" Street
San Diego, CA 92101-8129
Facsimile: (619) 615-7663
Alisa B. Johnson, Esq.
Dynegy Holdings Inc.
1000 Louisiana Street, Suite 5800
Houston, TX 77002
Facsimile:(713) 767-8508
with copies to: William H. Holmes, Esq.
Stoel Rives LLP
900 SW Fifth Avenue
Suite 2300
Portland, OR 97204-1268
Facsimile: 503-220-2480
If to NPC, addressed to: William E. Peterson
Nevada Power Company
6100 Neil Road
Reno, Nevada 89511
Facsimile: (775) 834-5959
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its officers thereunto duly authorized as of the date first
written above.
NRG ENERGY, INC. DYNEGY HOLDINGS INC.
________________________________ __________________________________
By: Craig A. Mataczynski By: __________________
Title: President Title: __________________
Address: 901 Marquette Ave., Suite 2300 Address: 1000 Louisiana St., Suite 5800
Minneapolis, MN 55402 Houston, TX 77002
H-8
EXHIBIT I
COMPANY OBSERVED HOLIDAYS
New Year's Day January 1/st/
Martin Luther King's Day Third Monday in January
President's Day Third Monday in February
Memorial Day (observed) Last Monday in May
Independence Day July 4/th/
Labor Day First Monday in September
Veteran's Day November 11/th/
Thanksgiving Day Fourth Thursday in November
Thanksgiving Friday Friday after Thanksgiving
Christmas Eve December 24/th/
Christmas Day December 25/th/
Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.
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EXHIBIT J
CLARK BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
Monthly Monthly
Month Adjustment Month Adjustment
---------------------------- ---------------------------------
Mar-01 2.9% Mar-02 2.3%
Apr-01 3.3% Apr-02 2.8%
May-01 4.3% May-02 3.6%
Jun-01 5.1% Jun-02 4.2%
Jul-01 11.7% Jul-02 9.5%
Aug-01 11.5% Aug-02 8.4%
Sep-01 9.0% Sep-02 6.6%
Oct-01 3.2% Oct-02 2.5%
Nov-01 2.9% Nov-02 2.1%
Dec-01 3.3% Dec-02 2.4%
Jan-02 2.5% Jan-03 2.2%
Feb-02 2.1% Feb-03 2.1%
Example 1 - Effective Date of Agreement is April 15, 2001
---------------------------------------------------------
A. TPPA Amount: $15,000,000
B C D
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
------------------------------------------------------------------------
(B x C)
Apr-01 3.3% 50.0% 1.7%
May-01 4.3% 100.0% 4.3%
------------------------------------------------------------------------
Total 6.0%
E. Total of Monthly Applicable Adjustments 6.0%
F Adjusted TPPA Amount (A x (1+D)) $15,900,000
=================================================================================================
Example 2 - Effective Date of Agreement is September 15, 2001
-------------------------------------------------------------
G. TPPA Amount: $15,000,000
H I J
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
------------------------------------------------------------------------
J-1
EXHIBIT J
CLARK BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
(H x I)
Jun-01 5.1% 100.0% 5.1%
Jul-01 11.7% 100.0% 11.7%
Aug-01 11.5% 100.0% 11.5%
Sep-01 9.0% 50.0% 4.5%
-------------------------------------------------------------------------
Total 32.8%
K. Total of Monthly Applicable Adjustments 32.8%
L Adjusted TPPA Amount (G x (1-K)) $10,080,000
========================================================================================================
Example 3 - Termination Date of December 31, 2002
-------------------------------------------------
M. TPPA Amount: $15,000,000
N O P
Monthly Applicable Applicable
Month Adjustment Portion ** Adjustment
----------------------------------------------------------------------------
(N x O)
Jan-03 2.2% 100.0% 2.2%
Feb-03 2.1% 100.0% 2.1%
----------------------------------------------------------------------------
Total 4.3%
Q. Total of Monthly Applicable Adjustments 4.3%
R Payment Amount (M x Q) $645,000
========================================================================================================
* The applicable portion of the month is the number of days in the month
during which deliveries of energy from Supplier to Buyer were made divided
by the number of days in the month.
** The applicable portion of the month is the number of days in the month
during which deliveries of energy from Supplier to Buyer would have been
made divided by the number of days in the month.
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EXHIBIT K
CLARK BUNDLE
ADJUSTMENTS TO MINIMUM ANNUAL TAKE
A B C D E F
Base Number Base Energy Sales per Current Number Adjusted Energy
Class * of Customers Sales (MWh) Customer (MWh) of Customers Sales (MWh)
- ----------------------------------------------------------------------------------------------------------------------
(C / B) (D x E) **
Residential 475,000 5,800,000 12 470,000 5,738,947
Commercial 65,000 2,800,000 43 60,000 2,584,615
Industrial 1,000 4,900,000 800 3,600,000
Street Lighting 5 130,000 5 130,000
Other Retail 50 600,000 50 600,000
Wholesale 5 850,000 5 850,000
- --------------------------------------------------------------------------------------------------------------------
541,060 15,080,000 530,860 13,503,563
G. Adjustment to Minimum Annual Take (F / C) 89.55%
H. Minimum Annual Take from Exhibit A (MWh) 40,000
I. Revised Minimum Annual Take (MWh) (G x H) 35,820
J K
Month During Applicable Min.
Contract Year Annual Take (MWh)
- -----------------------------------------
1 40,000
2 40,000
3 40,000
4 40,000
5 35,820
6 35,820
7 35,820
8 34,000
9 34,000
10 32,000
11 32,000
12 32,000
- -----------------------------------------
Total 431,460
L. Minimum Take for Contract Year (MWh) (Total of K / 12) 35,955
* As reported on Buyer's FERC Form 1
** Adjusted Energy Sales for the remaining Industrial, Street Lighting,
Other Retail, and Wholesale customers will be based upon actual sales
during the base period.
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EXHIBIT L
CLARK BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
A B C D E * F G **
Dispatch Supply Delivered Permitted Force Replacement Applicable
Hour Amount (MWh) Energy (MWh) Derating(MWh) Majeure(MWh) Energy(MWh) Energy(MWh)
- ----------------------------------------------------------------------------------------------------------------
(C+D+E+F)
1 687 687 687
2 687 687 687
3 687 687 687
4 687 687 687
5 687 687 687
6 687 667 20 687
7 687 667 20 687
8 687 667 20 687
9 687 687 687
10 687 687 687
11 687 687 687
12 687 687 687
13 687 0 687 687
14 687 0 687 687
15 687 0 687 687
16 687 0 687 687
17 687 637 30 667
18 687 687 687
19 687 687 687
20 687 687 687
21 687 687 687
22 687 687 687
23 687 687 687
24 657 657 657
25 637 637 637
26 607 607 607
27 637 607 30 637
28 657 657 657
29 687 687 687
30 687 687 687
31 687 687 687
32 687 687 687
33 687 687 687
34 687 687 687
35 687 687 687
36 687 687 687
- ----------------------------------------------------------------------------------------------------------------
K-2
EXHIBIT L
CLARK BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
total 24,492 21,604 70 2,748 50 24,472
* Includes energy excused because of Supplier's and Buyer's events of
Force Majeure
** G cannot be greater than B
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