Exhibit 10(Y)
TRANSITIONAL POWER PURCHASE AGREEMENT
BY AND BETWEEN
SIERRA PACIFIC POWER COMPANY
AND
WPS NORTHERN NEVADA, LLC
DATED: OCTOBER 25, 2000
ASSET BUNDLE: TRACY/PINON
TABLE OF CONTENTS
Section Page
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1. DEFINITIONS..............................................................1
2. TERM.....................................................................8
3. SECURITY.................................................................9
4. SUPPLY SERVICE..........................................................10
5. NOTIFICATION............................................................14
6. PRICING OF ENERGY AND ANCILLARY SERVICES................................15
7. INVOICING AND PAYMENTS..................................................16
8. REGULATORY APPROVALS....................................................19
9. COMPLIANCE..............................................................20
10. INDEMNIFICATION.........................................................20
11. LIMITATION OF LIABILITY.................................................22
12. FORCE MAJEURE...........................................................22
13. DISPUTES................................................................24
14. NATURE OF OBLIGATIONS...................................................27
15. SUCCESSORS AND ASSIGNS..................................................27
16. REPRESENTATIONS.........................................................28
17. DEFAULT AND REMEDIES....................................................29
18. FACILITY ADDITIONS AND MODIFICATIONS....................................30
19. COORDINATION............................................................30
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE...........................30
21. OUTAGE SCHEDULING.......................................................31
22. REPORTS.................................................................32
23. COMMUNICATIONS..........................................................32
24. NOTICES.................................................................33
25. MERGER..................................................................33
26. HEADINGS................................................................34
27. COUNTERPARTS AND INTERPRETATION.........................................34
28. SEVERABILITY............................................................34
29. WAIVERS.................................................................34
30. AMENDMENTS..............................................................35
31. TIME IS OF THE ESSENCE..................................................35
32. APPROVALS...............................................................35
33. PLR SERVICE.............................................................36
34. CONFIDENTIALITY.........................................................36
35. CHOICE OF LAW...........................................................37
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
EXHIBIT M ASSET BUNDLE CONTRACTUAL AND OPERATIONAL CONSTRAINTS.................M-1
TRANSITIONAL POWER PURCHASE AGREEMENT
This Agreement is made and entered into as of October 25, 2000 by and between
Sierra Pacific Power Company, a Nevada corporation ("Buyer"), and WPS Northern
Nevada, LLC, a Nevada 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 Tracy/Pinon generating station and other assets
associated therewith to 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 Tracy/Pinon 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
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the meanings set forth below:
1.2.1 "Agreement" means this Agreement together with the Exhibits
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attached hereto, as such may be amended from time to time.
1.2.2 "Adjusted Replacement Cost of Energy" means the Replacement
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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
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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 Tracy/Pinon generating station(s) and
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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 1.2.6.
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 Asset Sale Agreement between
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Buyer and Supplier, dated as of October 25, 2000, to purchase
Buyer's Asset Bundle.
1.2.8 "Asset Sale Closing" means the transfer of Buyer's ownership of
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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
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time by Supplier to Buyer pursuant to Section 5.2 notifying
Buyer of changes in the availability of the Asset Bundle.
3
1.2.11 "Business Day" means any day other than Saturday, Sunday, and
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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 successor
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entity thereto.
1.2.14 "Confidential Information" has the meaning set forth in Section
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34.
1.2.15 "Contract Year" means, with respect to the first Contract Year,
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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, as
provided in Section 2.1.
1.2.16 "Control Area" has the meaning set forth in Buyer's OATT.
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1.2.17 "Control Area Operator" means an entity or organization, and
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its representatives, which is responsible for operating and
maintaining the reliability of the electric power system(s)
within the Buyer's Control Area. The Control Area Operator is
also referred to as the transmission operator.
1.2.18 "Credit Amount" shall mean an amount initially equal to $200
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million, as decreased on a periodic basis in accordance with
Exhibit J.
1.2.19 "Delivered Amount" means, with respect to any Dispatch Hour,
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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.
1.2.20 "Derating" means a reduction to the Asset Bundle Capacity.
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1.2.21 "Dispatch Hour" means the prescribed hour(s) when Energy is to
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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.
4
1.2.22 "EDU" means electric distribution utility, the organization
---
with the responsibility for the distribution of energy over
Buyer's distribution system to retail end-users.
1.2.23 "Effective Date" means the date that this Agreement becomes
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effective, which shall be the date on which the Closing Date,
as defined in the Asset Sale Agreement, actually occurs;
provided, however, that the Effective Date shall not occur
until the FERC has accepted this Agreement or, if modifications
to this Agreement are required pursuant to Section 2.2.2, the
FERC has accepted the modified Agreement for filing.
1.2.24 "Emergency Condition" shall mean a public declaration by the
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ISA or Control Area Operator that the Control Area is in danger
of imminent voltage collapse or uncontrollable cascading
outages.
1.2.25 "Energy" means electricity (measured in MWh) and associated
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power-producing capacity to be provided by Supplier to Buyer
pursuant to this Agreement. Also known as "firm energy and
associated firm capacity".
1.2.26 "Event of Default" has the meaning set forth in Section 17
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hereof.
1.2.27 "FERC" means the Federal Energy Regulatory Commission and any
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successor agency thereto.
1.2.28 "Force Majeure" has the meaning set forth in Section 12 hereof.
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1.2.29 "GAAP" means Generally Accepted Accounting Principles for the
----
United States.
1.2.30 "Good Utility Practice" means the applicable practices,
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methods, and acts:
(i) required by applicable Laws, applicable permits,
applicable 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 applicable
Laws, applicable permits, applicable reliability
criteria, 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 by the United States electric
utility industry.
5
1.2.31 "Governmental Authority" means any foreign, federal, state,
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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.
1.2.32 "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.
1.2.33 "Guarantee" has the meaning set forth in Section 3.1.2 hereof.
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1.2.34 "Guarantor" has the meaning set forth in Section 3.1.2 hereof.
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1.2.35 "Invoiced Replacement Costs" means the Replacement Costs which
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have been billed to Supplier or subtracted from payments to
Supplier in accordance with the provisions of Section 4.2 and
Section 7.4.
1.2.36 "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.
1.2.37 "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.
1.2.38 "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.
1.2.39 "Limit on Excused Energy" means the amount of energy that can
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be excused under the provisions of Section 12.4 as shown on
Exhibit A.
1.2.40 "Market Price of Energy" has the meaning set forth in Section
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6.2.1.
1.2.41 "Minimum Annual Energy Take" has the meaning set forth in
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Section 4.1.2.
1.2.42 "Minimum Hourly Energy Take" has the meaning set forth in
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Section 4.1.3.
6
1.2.43 "Minimum Investment Grade Rating" of a Person means that such
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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.
1.2.44 "Minimum Tangible Net Worth" means the total book value of
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shareholder's equity less the balance of goodwill, as reported
on the latest quarterly balance sheet prepared in accordance
with Generally Accepted Accounting Principles (GAAP).
1.2.45 "Negotiated Service" has the meaning set forth in the wholesale
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generation tariff filed in FERC Docket No. ER00-2018.
1.2.46 "NERC" means the North American Electric Reliability Council
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and any successor entity thereto.
1.2.47 "Nonemergency Condition" shall mean the determination,
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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 Control Area.
1.2.48 "Operating Representatives" means the persons designated by
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each Party to transmit and receive routine operating and
emergency communications required under this Agreement.
1.2.49 "Party" has the meaning set forth in the preamble of this
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Agreement.
1.2.50 "Permitted Deratings" means those reductions to the Asset
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Bundle Capacity of which Supplier may notify Buyer from time to
time in an Availability Notice pursuant to Section 5.2.
1.2.51 "Person" means any natural person, partnership, limited
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liability company, joint venture, corporation, trust,
unincorporated organization, or governmental entity or any
department or agency thereof.
1.2.52 "Point of Delivery" means the point (s) which has (have) been
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specified as the Interconnection Point(s) in the
Interconnection Agreement between Buyer and Supplier, dated
October 25, 2000, as it may be amended from time to time, as
well as any alternative locations agreed upon pursuant to
Section 4.1.6.
1.2.53 "Price Ceiling of Energy" means the ceiling price of Energy as
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stated in Exhibit B.
7
1.2.54 "Price Floor of Energy" means the floor price of Energy as
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stated in Exhibit B.
1.2.55 "Provider of Last Resort (PLR)" has the meaning set forth in
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the Recitals.
1.2.56 "PUCN" means the Public Utilities Commission of Nevada and any
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successor entity thereto.
1.2.57 "Recourse Service" has the meaning set forth in the wholesale
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generation tariff filed in FERC Docket No. ER00-2018.
1.2.58 "Replacement Costs" means with respect to a period of time, the
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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.
1.2.59 "Supply Amount" means, with respect to each Dispatch Hour, the
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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.
1.2.60 "Total Amount of Energy Replaced" means the summation of
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Replacement Energy as shown on Exhibit E.
1.2.61 "TPPA Amount" means the amount paid by Buyer to Supplier in
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consideration of this Agreement as provided in Sections 3.1 and
4.2 of the Asset Sale Agreement.
1.2.62 "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.
1.2.63 "Transmission System" means the facilities that are used to
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provide transmission service within Buyer's Control Area in
accordance with Buyer's OATT or the ISA's OATT.
1.2.64 "WSCC" means the Western Systems Coordinating Council and any
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successor entity thereto.
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2. TERM
2.1 Term.
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2.1.1 Subject to the provisions of Section 2.1.2, 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 at 11:59 p.m.
(Pacific Time) on December 31, 2002. Supplier shall
provide service under this Agreement commencing on the
first hour on the day after the Effective Date.
2.1.2 Provided that this Agreement has not otherwise
terminated as a result of an order by a Governmental
Authority terminating Buyer's PLR responsibility, Buyer
in its sole discretion may provide written notification
to Supplier, at any point during October 2002, that it
is exercising its unilateral right to take service under
the terms and conditions of this Agreement for the
period from January 1, 2003 until 11:59 p.m. (Pacific
Time) February 28, 2003.
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
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
necessary 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.
9
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 on or before December 31, 2002
(or March 1, 2003, if Buyer exercises its rights under Section
2.1.2 of this Agreement), 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: (x) the total monthly
adjustments for every month or portion thereof between the date
on which this Agreement is terminated and December 31, 2002;
and, (y) the total monthly adjustments for every month or
portion thereof between either (i) January 1, 2003 and March 1,
2003, or (ii) if this Agreement is terminated after January 1,
2003, the termination date of this Agreement 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 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.
10
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
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certificate from a duly authorized corporate officer of
Supplier certifying that, as of the Effective Date, Supplier
has a credit rating equal to or higher than the Minimum
Investment Grade Rating; or (b) post a letter of credit in a
form reasonably acceptable to Buyer in the amount of the Credit
Amount from a financial institution with 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
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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 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,
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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
11
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.
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4.1.1 Supply Amount. Supplier shall be required to provide the
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Supply Amount in any Dispatch Hour. As provided in
Section 5.1, Buyer shall make reasonable 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
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
day-ahead requests, and Buyer will make good
faith efforts to alleviate Supplier's
concerns.
4.1.1.3.2 The Parties further recognize that the Asset
Bundle also is subject to the contractual and
operating constraints set forth in Exhibit M.
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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 (1st) 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 Minimum Hourly Energy Take. The Buyer shall accept a Minimum
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Hourly Energy Take for any Dispatch Hour if the Supply Amount,
or a portion thereof, is provided to Buyer from the Asset
Bundle. The Minimum Hourly Energy Take is stated in Exhibit A.
4.1.3.1 Buyer's Obligation to Take. If Buyer is unwilling to
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accept the Minimum Hourly Energy Take, 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 Minimum Hourly Energy Take shall be billed at the
Price Ceiling of Energy less the Price Floor of Energy.
4.1.4 Supplier Rights to Output. Supplier may sell to others any
-------------------------
portion of the Asset Bundle Capacity in excess of the Supply
Amount.
13
4.1.5 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.
4.1.6 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
Buyer's OATT or the ISA's OATT, as applicable, such approval not
to be unreasonably withheld or delayed.
4.1.6.1 If Supplier has designated an alternative Point of
Delivery, Supplier shall be responsible for all costs of
delivery to such alternative Point of Delivery.
4.1.6.2 If Buyer has designated an alternative Point of
Delivery, Buyer shall be responsible for all costs of
delivery to such alternative Point of Delivery.
4.1.7 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.
4.1.8 Resale. Except as provided in the next sentence, the Supply
------
Amount may be resold by Buyer only as necessary to satisfy
Buyer's TRR. If, after submitting the day-ahead request of the
Supply Amount pursuant to Section 5.1, the Buyer determines that
the scheduled Supply Amount, together with purchases scheduled
on a day-ahead basis 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.
4.1.9 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
14
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 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
-----------------------
day-ahead request of the Supply Amount one (1) hour prior to
when day-ahead bids are due to the CALPX. Buyer shall make
reasonable efforts to ensure that the day-ahead 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
day-ahead 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.
15
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:
(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; and
(f) the projected Asset Bundle Capacity for each unit
during the period covered by the Availability
Notice, pursuant to Section 5.2.4 below.
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; or
(c) subject to the limitations expressed in Section
12.5, a Force Majeure event.
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.
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
16
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 North
of Path 15 ("NP 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.
6.5 Recourse Service. Buyer agrees not to purchase Recourse Service
----------------
during the term of the Agreement. However, Buyer is permitted to
purchase Negotiated Service during the term of the Agreement.
7. INVOICING AND PAYMENTS
7.1 Invoicing and Payment. On or before the tenth (10th) 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 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:
17
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 Services 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 Buyer, Buyer may offset such amount from its payment
of Supplier's corresponding invoice.
18
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.
(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
19
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.
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
20
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 Early Termination. Notwithstanding any other provision herein,
-----------------
in the event that this Agreement is terminated before December
31, 2002 (or March 1, 2003 if Buyer exercises its rights under
Section 2.1.2), 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 Practices.
21
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.
--------------------------
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
22
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.
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.
23
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 by a Party 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,
(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; provided, however, that Buyer shall not
be relieved of its obligation to pay for any Energy or Ancillary
Services provided by Supplier under
24
this Agreement prior to 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 must either deliver the
Supply Amount at the Point(s) of Delivery or pay liquidated
damages pursuant to Section 4.2 of this Agreement.
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
25
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.
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
26
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.
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
27
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.
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.
28
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 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.
29
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 Nevada limited
liability company duly organized, validly existing and
in good standing under the laws of the State of Nevada.
Both Buyer and Supplier have all requisite corporate or
limited liability company 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 or limited
---------
liability company 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 or limited
liability company 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 to the
following:
(i) Failure to make any payments due under this Agreement;
30
(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 oral 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 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
31
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 October 25, 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 oral 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 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
32
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, at Buyer's discretion, not to be unreasonably
exercised, 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.
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
33
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.
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
34
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 (3rd) Business Day
following deposit with the U.S. mail if sent regular first class
U.S. mail.
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.
35
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 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.
36
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.
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 which do not have a material adverse effect on
Supplier or Buyer, the Parties agree to execute an amendment to
the 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
37
"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 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
38
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 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 Agreement to be executed
by their duly authorized representative on the date set forth below.
SIERRA PACIFIC POWER COMPANY WPS NORTHERN NEVADA, LLC
By: WPS POWER
DEVELOPMENT, INC.
(Its Sole Member)
By: By:
------------------------------ -----------------------
William E. Peterson Gerald L. Mroczkowski
Title: Senior Vice President, General Title: Vice President
Counsel, and Corporate Secretary
Date: October 25, 2000 Date: October 25, 2000
39
EXHIBIT A
TRACY BUNDLE
ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS
NET MINIMUM HOURLY
NET SUMMER WINTER RAMP ENERGY TAKE
CAPABILITY CAPABILITY RATE
UNIT (MW) (MW) (MW/hr) (MWh)
- -----------------------------------------------------------------------------------------------
Tracy Unit 1 53 53 40 21
Tracy Unit 2 83 83 40 25
Tracy Unit 3 108 108 40 20
Tracy Unit 4 & 5 89 93 40
Clark Mt.. 1 10 11 11
Clark Mt.. 2 10 11 11
Clark Mt.. 3 69 84 40
Clark Mt.. 4 69 84 40
Valley Road 1 2 2 2
Valley Road 2 2 2 2
Valley Road 3 2 2 2
Brunswick 1 2 2 2
Brunswick 2 2 2 2
Brunswick 3 2 2 2
Gabbs 1 2 3 3
Gabbs 2 2 3 3
- -----------------------------------------------------------------------------------------------
Total 507 545 280 66
===============================================================================================
Minimum Annual Energy Take: 2,200,000 MWh
Limit on Excused Energy:* 12,000 MWh
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 Limit on Excused Energy is an annual figure, to be prorated in any
Contract Year that is less than a twelve month period.
A-1
EXHIBIT B
TRACY BUNDLE
ENERGY AND ANCILLARY SERVICE PRICES
Energy Prices*
- --------------
Price Floor of Energy: $ 25.42 per MWh
Price Ceiling of Energy: $ 42.92 per MWh
Ancillary Service Prices*
- -------------------------
Regulation and Frequency Response:
On-Peak: $ 12.40 per MW-reserved per hour
Off-Peak: $ 7.09 per MW-reserved per hour
Operating Reserve- Spinning Reserve:
On-Peak: $ 16.15 per MW-reserved per hour
Off-Peak: $ 9.23 per MW-reserved per hour
Operating Reserve- Supplemental Reserve:
On-Peak: $ 10.75 per MW-reserved per hour
Off-Peak: $ 6.14 per MW-reserved per hour
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
TRACY BUNDLE
SUPPLIER'S MONTHLY INVOICE
A Price Ceiling of Energy $ 42.92 /MWh
B Price Floor of Energy $ 25.42 /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
---- -------------- ------------ --------------- ----------------- ---------------- ---------------------
1 507 507 0 40.00 $ 20,280.00 $ 20,280.00
2 507 507 0 40.00 20,280.00 20,280.00
3 507 447 60 40.00 17,880.00 20,280.00
4 507 447 60 40.00 17,880.00 20,280.00
5 377 367 10 30.00 11,010.00 11,310.00
6 407 407 0 30.00 12,210.00 12,210.00
7 497 477 20 20.00 9,540.00 9,940.00
8 507 507 0 20.00 10,140.00 10,140.00
9 507 507 0 20.00 10,140.00 10,140.00
10 507 507 0 25.00 12,675.00 12,675.00
- -------------------------------------------------------------------------------------------------------------------------
4,830 4,680 150 $ 142,035.00 $ 147,535.00
I. Sum of (Delivered Energy times corresponding hourly Market Price) Sec 7.2.1 $ 142,035.00
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market Price) $ 147,535.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling Sec 7.2.2 $ 200,865.60
of Energy
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy $ 207,303.60
K. Sum of hourly Delivered Energy multiplied by the Price Floor Sec 7.2.3 $ 118,965.60
of Energy
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy $ 122,778.60
L. Invoiced Amount - Energy Sec 7.3 (K less than I less than J) $ 142,035.00
M. Theoretical Amount for Expected Performance (KT less than IT less than JT) $ 147,535.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
- ------------------------------------------------------------------------
N O P Q R S
Schedule of Ancillary Price x
Dispatch Ancillary Capacity Supplier Capacity Price of Ancillary Price x Schedule
Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- -------- ---------------------
(N - O) (O x Q) (N x Q)
1 0 0 0 7.09 $ 0.00 $ 0.00
2 0 0 0 7.09 0.00 0.00
3 0 0 0 12.40 0.00 0.00
4 0 0 0 12.40 0.00 0.00
5 30 30 0 12.40 372.00 372.00
6 0 0 0 12.40 0.00 0.00
7 0 0 0 12.40 0.00 0.00
8 0 0 0 12.40 0.00 0.00
9 0 0 0 12.40 0.00 0.00
10 0 0 0 12.40 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
30 30 0 $ 372.00 $ 372.00
T. Invoiced Amount - Ancillary Service Capacity - Sec 7.2.5 $ 372.00
Regulation and Frequency Response
U. Theoretical Amount for Expected Performance $ 372.00
C-1
EXHIBIT C
TRACY BUNDLE
SUPPLIER'S MONTHLY INVOICE
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
- -------------------------------------------------------
V W X Y Z AA
Schedule of Ancillary Price x
Dispatch Ancillary Capacity Supplier Capacity Price of Ancillary Price x Schedule
Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- -------- ---------------------
(V - W) (W x Y) (V x Y)
1 0 0 0 9.23 $ 0.00 $ 0.00
2 0 0 0 9.23 0.00 0.00
3 0 0 0 16.15 0.00 0.00
4 0 0 0 16.15 0.00 0.00
5 80 80 0 16.15 1,292.00 1,292.00
6 80 60 20 16.15 969.00 1,292.00
7 0 0 0 16.15 0.00 0.00
8 0 0 0 16.15 0.00 0.00
9 0 0 0 16.15 0.00 0.00
10 0 0 0 16.15 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
160 140 20 $ 2,261.00 $ 2,584.00
AB. Invoiced Amount - Ancillary Service Capacity - Spinning Sec 7.2.5 $ 2,261.00
Reserve
AC. Theoretical Amount for Expected Performance $ 2,584.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
- -----------------------------------------------------------
AD AE AF AG AH AI
Schedule of Ancillary Price x
Dispatch Ancillary Capacity Supplier Capacity Price of Ancillary Price x Schedule
Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- -------- ---------------------
(AD - AE) (AE x AG) (AD x AG)
1 0 0 0 6.14 $ 0.00 $ 0.00
2 0 0 0 6.14 0.00 0.00
3 0 0 0 10.75 0.00 0.00
4 0 0 0 10.75 0.00 0.00
5 10 10 0 10.75 107.50 107.50
6 10 10 0 10.75 107.50 107.50
7 10 10 0 10.75 107.50 107.50
8 0 0 0 10.75 0.00 0.00
9 0 0 0 10.75 0.00 0.00
10 0 0 0 10.75 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
30 30 0 $ 322.50 $ 322.50
AJ. Invoiced Amount - Ancillary Service Capacity - Supplemental Sec 7.2.5 $ 322.50
Reserve
AK. Theoretical Amount for Expected Performance $ 322.50
MONTH 1 - ANCILLARY SERVICE ENERGY
- ----------------------------------
AL AM AN AO AP AQ
Schedule of Ancillary Price x
Dispatch Ancillary Energy Supplier Price Ceiling of 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 42.92 $ 0.00 $ 0.00
2 0 0 0 42.92 0.00 0.00
3 0 0 0 42.92 0.00 0.00
C-2
EXHIBIT C
TRACY BUNDLE
SUPPLIER'S MONTHLY INVOICE
4 0 0 0 42.92 0.00 0.00
5 40 40 0 42.92 1,716.80 1,716.80
6 30 10 20 42.92 429.20 1,287.60
7 10 10 0 42.92 429.20 429.20
8 0 0 0 42.92 0.00 0.00
9 0 0 0 42.92 0.00 0.00
10 0 0 0 42.92 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
80 60 20 $ 429.20 $ 2,575.20 $ 3,433.60
AR. Invoiced Amount - Ancillary Services Energy Sec 7.2.6 $ 2,575.20
AS. Theoretical Amount for Expected Performance $ 3,433.60
MONTH 1 - TOTAL INVOICE AMOUNT Sec 7.3 (L + T + AB + AJ $ 147,565.70
+ AR)
===============================================================================================================================
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)
1 507 507 0 45.00 $ 22,815.00 $ 22,815.00
2 507 507 0 45.00 22,815.00 22,815.00
3 507 447 60 45.00 20,115.00 22,815.00
4 507 447 60 55.00 24,585.00 27,885.00
5 377 367 10 55.00 20,185.00 20,735.00
6 407 407 0 55.00 22,385.00 22,385.00
7 497 477 20 35.00 16,695.00 17,395.00
8 507 507 0 35.00 17,745.00 17,745.00
9 507 507 0 35.00 17,745.00 17,745.00
10 507 507 0 40.00 20,280.00 20,280.00
- -------------------------------------------------------------------------------------------------------------------------
4,830 4,680 150 $ 205,365.00 $ 212,615.00
I. Sum of (Delivered Energy times corresponding hourly Market Sec 7.2.1 $ 205,365.00
Price)
IT. Sum of (Asset Bundle Capacity times corresponding $ 212,615.00
hourly Market Price)
J. Sum of hourly Delivered Energy multiplied by the Price Sec 7.2.2 $ 200,865.60
Ceiling of Energy
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of $ 207,303.60
Energy
K. Sum of hourly Delivered Energy multiplied by the Price Sec 7.2.3 $ 118,965.60
Floor of Energy
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of $ 122,778.60
Energy
L. Invoiced Amount - Energy Sec 7.3 (I greater than J) $ 200,865.60
M. Theoretical Amount for Expected Performance (IT greater than JT) $ 207,303.60
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)
1 507 507 0 30.00 $ 15,210.00 $ 15,210.00
2 507 507 0 20.00 10,140.00 10,140.00
3 507 447 60 20.00 8,940.00 10,140.00
C-3
EXHIBIT C
TRACY BUNDLE
SUPPLIER'S MONTHLY INVOICE
4 507 447 60 20.00 8,940.00 10,140.00
5 377 367 10 15.00 5,505.00 5,655.00
6 407 407 0 15.00 6,105.00 6,105.00
7 497 477 20 15.00 7,155.00 7,455.00
8 507 507 0 15.00 7,605.00 7,605.00
9 507 507 0 15.00 7,605.00 7,605.00
10 507 507 0 15.00 7,605.00 7,605.00
- -------------------------------------------------------------------------------------------------------------------------
4,830 4,680 150 $ 84,810.00 $ 87,660.00
I. Sum of (Delivered Energy times corresponding hourly Market Sec 7.2.1 $ 84,810.00
Price)
IT. Sum of (Asset Bundle Capacity times corresponding hourly Market $ 87,660.00
Price)
J. Sum of hourly Delivered Energy multiplied by the Price Sec 7.2.2 $ 200,865.60
Ceiling of Energy
JT. Sum of hourly Asset Bundle Capacity multiplied by the Price $ 207,303.60
Ceiling of Energy
K. Sum of hourly Delivered Energy multiplied by the Price Sec 7.2.3 $ 118,965.60
Floor of Energy
KT. Sum of hourly Asset Bundle Capacity multiplied by the Price Floor $ 122,778.60
of Energy
L. Invoiced Amount - Energy Sec 7.3 (I less than K) $ 118,965.60
M. Theoretical Amount for Expected Performance (IT less than KT) $ 122,778.60
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.
C-4
EXHIBIT D
TRACEY 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 2,200.00
3 60 35.00 100.00 1,850.00
4 60 30.00 50.00 350.00
5 10 30.00 50.00 0.00
6 0 na 0.00 500.00
7 20 25.00 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
- -------------------------------------------------------------------------------------
150 $ 4,900.00
E. Gross Replacement Cost of Energy $ 4,900.00
F. Theoretical Supplier's Invoice for Expected Performance $147,535.00
G. Actual Supplier's Invoice Amount 142,035.00
-----------
H. Avoided Payment to Supplier (F-G) $ 5,500.00
I. Invoiced Replacement Cost - Energy (E is less than H) $ 0.00
MONTH 1 - ANCILLARY SERVICES CAPACITY-REGULATION AND FREQUENCY RESPONSE
- -----------------------------------------------------------------------
J K* L* M
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MWh) of Capacity ($/MWh) 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 Response $ 0.00
O. Theoretical Supplier's Invoice Amount for Expected Performance $ 372.00
P. Actual Supplier's Invoice Amount 372.00
-----------
Q. Avoided Payment to Supplier (O-P) $ 0.00
D-1
EXHIBIT D
TRACY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
- -------------------------------------------------------
R S * T * U
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
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
V. Gross Replacement Cost of Ancillary Capacity - Spinning Reserve $ 900.00
W. Theoretical Supplier's Invoice Amount for Expected Performance $ 2,584.00
X. Actual Supplier's Invoice Amount 2,261.00
Y. Avoided Payment to Supplier (W - X) $ 323.00
MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
- ---------------------------------------------------
Z AA * AB * AC
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(Z x AA) + AB
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
AD. Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve $ 0.00
AE. Theoretical Supplier's Invoice Amount for Expected Performance $ 322.50
AF. Actual Supplier's Invoice Amount 322.50
---------------
AG. Avoided Payment to Supplier (AE - AF) $ 0.00
MONTH 1 - ANCILLARY SERVICE ENERGY
- ----------------------------------
AH AI * AJ * AK
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
D-2
EXHIBIT D
TRACY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
Hour Energy (MWh) of Energy ($/MWh) of Energy ** Cost of Energy
---- ------------ ----------------- ------------ --------------
(AH x AI) + AJ
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 45.00 20.00 920.00
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 $ 920.00
$ 920.00
AL. Gross Replacement Cost of Ancillary Energy
AM. Theoretical Supplier's Invoice Amount for Expected Performance $ 3,433.60
AN. Actual Supplier's Invoice Amount 2,575.20
AO. Avoided Payment to Supplier (AM - AN) $ 858.40
AP. Total of Gross Replacement Costs - Ancillary Services (N + V + AD + AL) $ 1,820.00
AQ. Total of Avoided Payments to Supplier - Ancillary
Services (Q + Y + AG + AO) $ 1,181.40
AR. Invoiced Replacement Cost - Ancillary Services *** (AP (more than) AQ) $ 638.60
MONTH 1 - TOTAL INVOICE AMOUNT (I + AR) $ 638.60
===========================================================================================================
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 $ 207,303.60
G. Actual Supplier's Invoice Amount 200,865.60
---------------
H. Avoided Payment to Supplier (F - G) $ 6,438.00
I. Invoiced Replacement Cost - Energy (E (more than) H) $ 1,242.00
MONTH 3 - ENERGY
- ----------------
D-3
EXHIBIT D
TRACY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
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 28.00 100.00 1,780.00
4 60 24.00 50.00 1,490.00
5 10 24.00 0.00 240.00
6 0 na 0.00 0.00
7 20 24.00 50.00 530.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
- --------------------------------------------------------------------------------------------------
150 $ 4,040.00
E. Gross Replacement Cost of Energy $ 4,040.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 122,778.60
G. Actual Supplier's Invoice Amount 118,965.60
---------------
H. Avoided Payment to Supplier (F - G) $ 3,813.00
I. Invoiced Replacement Cost - Energy (E (more than) H) $ 227.00
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.
* Replacement Costs will be directly assigned whenever causal relationships can
be established; otherwise allocations will be based upon the average of costs
that have not been directly assigned.
** Net of Transaction Costs that Buyer would have incurred if Supplier had
performed.
*** If AQ is equal to AP, the invoiced replacement cost for Ancillary Services
for the month will be zero. If AQ is greater than AP, a credit, which is equal
to AQ minus AP, will be carried forward to subsequent months during the Contract
Year and applied against any Replacement Costs for Ancillary Services that would
otherwise have been billed to Supplier. The total of all Replacements Costs for
Ancillary Services billed to Supplier during each Contract Year shall not be
less than zero.
D-4
EXHIBIT E
TRACY BUNDLE
YEAR END TRUE-UP INVOICE
A Price Ceiling of Energy $ 42.92 /MWh
B Price Floor of Energy $ 25.42 /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 4,680 $ 142,035.00 $ 200,865.60 $ 118,965.60 $ 142,035.00
2 4,680 205,365.00 200,865.60 118,965.60 200,865.60
3 4,680 84,810.00 200,865.60 118,965.60 118,965.60
4 5,070 253,500.00 217,604.40 128,879.40 217,604.40
5 5,070 233,220.00 217,604.40 128,879.40 217,604.40
6 4,870 224,020.00 209,020.40 123,795.40 209,020.40
7 5,070 243,360.00 217,604.40 128,879.40 217,604.40
8 5,070 233,220.00 217,604.40 128,879.40 217,604.40
9 4,530 212,910.00 194,427.60 115,152.60 194,427.60
10 5,070 223,080.00 217,604.40 128,879.40 217,604.40
11 5,070 268,710.00 217,604.40 128,879.40 217,604.40
12 4,770 228,960.00 204,728.40 121,253.40 204,728.40
- -----------------------------------------------------------------------------------------------------------------
Total 58,630 $ 2,553,190.00 $ 2,516,399.60 $ 1,490,374.60 $ 2,375,669.00
(Total of Column D) (more 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) $140,730.60
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total E / Total C) $42.92
J K L M N
Invoiced
Replacement Replacement Energy Gross Replacement Adjusted Replacement 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 1,242.00
3 150 4,040.00 227.00
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 $ 19,314.00 $ 16,620.00 $ 0.00 $ 1,469.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,469.00
E-1
EXHIBIT E
TRACY BUNDLE
YEAR END TRUE-UP INVOICE
Total Annual True-up * (H + O) $142,199.60
==================================================================================================================
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 4,680 $ 142,035.00 $ 200,865.60 $ 118,965.60 $ 142,035.00
2 4,680 205,365.00 200,865.60 118,965.60 200,865.60
3 4,680 84,810.00 200,865.60 118,965.60 118,965.60
4 5,070 192,660.00 217,604.40 128,879.40 192,660.00
5 5,070 172,380.00 217,604.40 128,879.40 172,380.00
6 4,870 165,580.00 209,020.40 123,795.40 165,580.00
7 5,070 182,520.00 217,604.40 128,879.40 182,520.00
8 5,070 212,940.00 217,604.40 128,879.40 212,940.00
9 4,530 194,790.00 194,427.60 115,152.60 194,427.60
10 5,070 202,800.00 217,604.40 128,879.40 202,800.00
11 5,070 248,430.00 217,604.40 128,879.40 217,604.40
12 4,770 228,960.00 204,728.40 121,253.40 204,728.40
- -----------------------------------------------------------------------------------------------------------------
Total 58,630 $ 2,233,270.00 $ 2,516,399.60 $ 1,490,374.60 $ 2,207,506.60
(Total of Column E) (more 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) $ 25,763.40
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $38.09
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 1,242.00
3 150 4,040.00 227.00
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 $ 17,140.91 $ 16,620.00 $ 0.00 $ 1,469.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,469.00
===================================================================================================================
E-2
EXHIBIT E
TRACY BUNDLE
YEAR END TRUE-UP INVOICE
Total Annual True-up * (H + O) $ 27,232.40
==================================================================================================================
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 4,680 $ 142,035.00 $ 200,865.60 $ 118,965.60 $ 142,035.00
2 4,680 205,365.00 200,865.60 118,965.60 200,865.60
3 4,680 84,810.00 200,865.60 118,965.60 118,965.60
4 5,070 162,240.00 217,604.40 128,879.40 162,240.00
5 5,070 152,100.00 217,604.40 128,879.40 152,100.00
6 4,870 136,360.00 209,020.40 123,795.40 136,360.00
7 5,070 141,960.00 217,604.40 128,879.40 141,960.00
8 5,070 141,960.00 217,604.40 128,879.40 141,960.00
9 4,530 117,780.00 194,427.60 115,152.60 117,780.00
10 5,070 121,680.00 217,604.40 128,879.40 128,879.40
11 5,070 121,680.00 217,604.40 128,879.40 128,879.40
12 4,770 114,480.00 204,728.40 121,253.40 121,253.40
- -----------------------------------------------------------------------------------------------------------------
Total 58,630 $ 1,642,450.00 $ 2,516,399.60 $ 1,490,374.60 $ 1,693,278.40
(Total of Column E) (more 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) $ (50,828.40)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $28.01
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 1,242.00
3 150 4,040.00 227.00
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 $ 12,606.22 $ 16,620.00 $ 4,013.78 $ 1,469.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (2,544.78)
Total Annual True-up * (H + O) $ (53,373.18)
===================================================================================================================
E-3
EXHIBIT E
TRACY BUNDLE
YEAR END TRUE-UP INVOICE
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 4,680 $ 142,035.00 $ 200,865.60 $ 118,965.60 $ 142,035.00
2 4,680 205,365.00 200,865.60 118,965.60 200,865.60
3 4,680 84,810.00 200,865.60 118,965.60 118,965.60
4 5,070 91,260.00 217,604.40 128,879.40 128,879.40
5 5,070 86,190.00 217,604.40 128,879.40 128,879.40
6 4,870 77,920.00 209,020.40 123,795.40 123,795.40
7 5,070 76,050.00 217,604.40 128,879.40 128,879.40
8 5,070 70,980.00 217,604.40 128,879.40 128,879.40
9 4,530 58,890.00 194,427.60 115,152.60 115,152.60
10 5,070 60,840.00 217,604.40 128,879.40 128,879.40
11 5,070 60,840.00 217,604.40 128,879.40 128,879.40
12 4,770 57,240.00 204,728.40 121,253.40 121,253.40
- -----------------------------------------------------------------------------------------------------------------
Total 58,630 $ 1,072,420.00 $ 2,516,399.60 $ 1,490,374.60 $ 1,595,344.00
(Total of Column E) (more than) (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) $ (104,969.40)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total F / Total C) $25.42
J K L M N
Invoiced
Replacement Replacement Energy Gross Replacement Adjusted Replacement 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 1,242.00
3 150 4,040.00 227.00
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 $ 11,439.00 $ 16,620.00 $ 5,181.00 $ 1,469.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (3,712.00)
Total Annual True-up * (H + O) $ (108,681.40)
================================================================================================================
E-4
* Positive Total Annual True-up is indicative of a payment from Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment from Supplier
to Buyer.
E-5
EXHIBIT F
NOTICES, BILLING AND PAYMENT INSTRUCTIONS
Supplier:
- --------
a) Agreement Notices:
------------------
Address: B. Frank Moon
WPS Northern Nevada, LLC
c/o WPS Power Development, Inc.
1088 Springhurst Drive
Green Bay, WI 54304
Phone: 920//617-6017
Fax: 920/617-5999
b) Payment Check:
--------------
Name: WPS Northern Nevada, LLC
Address: c/o WPS Power Development, Inc.
1088 Springhurst Drive
Green Bay, WI 54304
c) Payment Wire Transfer:
----------------------
Bank: Firstar Bank, Milwaukee, N.A.
ABA#: 075000022
For: WPS Northern Nevada, LLC, c/o WPS Power Development,
Inc.
Account No.: 121740515
d) Invoices:
--------
Name: WPS Northern Nevada, LLC
Address: c/o WPS Power Development, Inc.
1088 Springhurst Drive
Green Bay, WI 54304
Phone: 920/617-6040
Fax: 920/617-6140
e) Operating Notifications:
-----------------------
i) Pre-Schedule Thomas G. Balzola Phone: 920/617-6059
Fax: 920/617-5999
ii) Real Time Thomas G. Balzola Phone: 920/617-6059
Fax: 920/617-5999
iii) Monthly Checkout Thomas G. Balzola Phone: 920/617-6059
Fax: 920/617-5999
F-6
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.,
Las Vegas, Nevada 89151 M/S 20
Telephone: 702/227-2476 Las Vegas, Nevada 89146
Fax: 702/367-5096
E-mail: kcrews@nevp.com
c) Schedules:
---------
i) Pre-Schedule: Primary Phone: 702/862-7195
Name: Rick Engebretson E-mail: rengebretson@nevp.com
Alternate Phone: 702/862-7194
Name: Tim Schuster 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-7
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 H
Asset
Permitted Bundle
Available Permitted Asset Bundle Available Total Derating Derating Capacity
Availability Hour from Unit 1 Total Derating Derating of Capacity of from Unit 2 of Unit 2 of Unit 2 of Unit 2
Date Ending (MW) of Unit 1 (MW) Unit 1 (MW) Unit 1 (MW) (MW) (MW) (MW) (MW)
---- ------ ---- -------------- ----------- ----------- ---- ---- ---- ----
(A (less (___ - A) (C (less (A - C) (E (less (___ - E) (B (less (G - E)
than) or than) or than) or than) or
= ___) = B) = ___) =
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
I** J
Cause and Expected
Alternative Duration of Deratings and
Point(s) of Identification of
Delivery Permitted Deratings
-------- -------------------
* The Parties' operational personnel will 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.
EXHIBIT H
FORM OF GUARANTY
This Guaranty is entered into as of October 25, 2000, by WPS Resources
Corporation, a Wisconsin corporation ("Guarantor"), on behalf of WPS Northern
Nevada, LLC, a Nevada limited liability company ("Supplier"), in favor of and
for the benefit of Sierra Pacific Power Company, a Nevada corporation ("SPPC").
SPPC is sometimes referred to herein as "Beneficiary".
WHEREAS, Supplier and SPPC are entering into a Transitional Power Purchase
Agreement dated as of October 25, 2000 (the "TPPA") by which Supplier has agreed
to sell and SPPC has agreed to buy Energy and Ancillary Services (as defined in
the TPPA) produced by the Tracy/Pinon generating station being sold by SPPC; and
WHEREAS, it is a condition to the obligation of SPPC to enter into the TPPA
for Guarantor to guaranty the Supplier's obligations under the TPPA on and after
the Effective Date (as defined in the TPPA), subject to the limitations herein
(the "Guarantied Obligations").
1. Guaranty. Subject to the terms and conditions herein, Guarantor
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)).
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,
Guarantor will upon demand pay, or cause to be paid, in cash, to SPPC, an amount
equal to the lesser of: (i) the aggregate of the unpaid Guarantied Obligations
and (ii) the Credit Amount (as defined in the TPPA) as of the date of such
failure of Supplier to pay such Guarantied Obligations. In the event Guarantor
fails 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 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, subject to the terms and conditions herein.
2. Expenses. The Guarantor agrees to reimburse SPPC for all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any default by 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 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
H-3
thereby is consummated) and (ii) the enforcement of this Section 2.
3. Guaranty Absolute; Continuing Guaranty. The obligations of Guarantor
hereunder are 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, Guarantor agrees that: (a) this Guaranty is a guaranty of payment when
due and not of collectibility; (b) the obligations of Guarantor hereunder are
independent of the obligations of Supplier under the TPPA and a separate action
or actions may be brought and prosecuted against 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) Guarantor's payment of a portion, but not
all, of the Guarantied Obligations shall in no way limit, affect, modify or
abridge Guarantor's liability for any portion of the Guarantied Obligations that
has not been paid. This Guaranty is a continuing guaranty and shall be binding
upon Guarantor 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
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's 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 Guaranty 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 Guaranty 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 SPPC under the
TPPA.
5. No Discharge. This Guaranty and the obligations of 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 guaranty of or security for the
payment of the Guarantied Obligations, (b) any waiver or modification of, or any
consent to departure from, any of the terms or provisions of any other guaranty
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
H-4
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, 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 Guarantor as an obligor in respect of
the Guarantied Obligations.
6. Waivers for the Benefit of Beneficiary. Guarantor waives, for the
benefit of Beneficiary: (a) any right to require the Beneficiary, as a condition
of payment or performance by Guarantor, 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 Guaranty and any legal or equitable discharge of
Guarantor's obligations hereunder, (ii) the benefit of any statute of
limitations affecting Guarantor's 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 Guaranty; 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 Guaranty.
7. Waiver of Rights Against Supplier. Guarantor waives any claim, right or
remedy, direct or indirect, that Guarantor now has or may hereafter have against
the Supplier or any of its assets in connection with this Guaranty or the
performance by 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 indemnification that 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. 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 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. Guarantor represents and
warrants to SPPC as follows:
H-5
(a) Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. 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) Guarantor has the corporate power and authority to execute and deliver
this Guaranty and to consummate the transactions contemplated hereby. The
execution and delivery of this Guaranty and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Guarantor, and no other corporate proceedings on the part of
Guarantor, including the approval of its shareholders, are necessary to
authorize this Guaranty or to consummate the transactions so contemplated. This
Guaranty has been duly and validly executed and delivered by Guarantor and
constitutes a valid and binding agreement of Guarantor, enforceable against
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 Guarantor's
knowledge) threatened against 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.
(d) The representations and warranties made herein will remain true until
Guarantor has fulfilled all obligations to pay in full the Guarantied
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 Guarantor
to the Beneficiary under this Guaranty, 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 Guarantor and any other property of Guarantor held by the
Beneficiary to or for the credit or the account of Guarantor against and on
account of the Guarantied Obligations and liabilities of Guarantor to the
Beneficiary under this Guaranty.
10. Disputes. Any action, claim or dispute arising out of or relating to
this Guaranty (any such action, claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. In the event Guarantor and SPPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either Guarantor or SPPC may initiate
arbitration through the serving and filing of a demand for arbitration.
Guarantor and SPPC 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 Guaranty may be resolved by a court of law located in the
County of the principal place of business of SPPC. 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 Guaranty, and no consent to any departure by
Guarantor therefrom, shall in any event be effective without the written
concurrence of SPPC and, in the case of any such amendment or modification,
Guarantor. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
H-6
12. Miscellaneous. It is not necessary for Beneficiary to inquire into the
capacity or powers of 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 Guaranty 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 Guaranty 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 Guaranty 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
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 Guarantor, addressed to: Ralph G. Baeten
WPS Resources Corporation
700 North Adams Street
Green Bay, WI 54307
Facsimile: (920) 433-7653
If to SPPC, addressed to: William E. Peterson
Sierra Pacific 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.
By:
---------------------------
Ralph G. Baeten
Title: Treasurer
Address: WPS Resources Corporation
700 North Adams Street
Green Bay, WI 54307
H-7
EXHIBIT I
COMPANY OBSERVED HOLIDAYS
New Year's Day January 1st
President's Day Third Monday in February
Memorial Day (observed) Last Monday in May
Independence Day July 4th
Labor Day First Monday in September
Nevada Day Last Friday in October
Thanksgiving Day Fourth Thursday in November
Thanksgiving Friday Friday after Thanksgiving
Christmas Day December 25th
Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.
I-1
EXHIBIT J
TRACY BUNDLE
ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT
Monthly Monthly
Month Adjustment Month Adjustment
-------------------------------- -------------------------------
Mar-01 4.6% Mar-02 3.7%
Apr-01 3.0% Apr-02 2.5%
May-01 3.3% May-02 2.6%
Jun-01 5.6% Jun-02 4.3%
Jul-01 5.7% Jul-02 4.5%
Aug-01 5.6% Aug-02 4.4%
Sep-01 4.3% Sep-02 3.4%
Oct-01 5.3% Oct-02 4.2%
Nov-01 5.3% Nov-02 4.2%
Dec-01 6.5% Dec-02 5.2%
Jan-02 7.0% Jan-03 5.5%
Feb-02 5.7% Feb-03 4.5%
ADJUSTMENTS TO TPPA AMOUNT
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 3.0% 50.0% 1.5%
May-01 3.3% 100.0% 3.3%
--------------------------------------------------------------------
Total 4.8%
E. Total of Monthly Applicable Adjustments 4.8%
F. Adjusted TPPA Amount (A x (1+D)) $ 15,720,000
=================================================================================
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
---------------------------------------------------------------------
(H x I)
Jun-01 5.6% 100.0% 5.6%
Jul-01 5.7% 100.0% 5.7%
Aug-01 5.6% 100.0% 5.6%
J-1
EXHIBIT J
TRACY BUNDLE
ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT
Sep-01 4.3% 50.0% 2.2%
- ----------------------------------------------------------------
Total 19.1%
K. Total of Monthly Applicable Adjustments 19.1%
L Adjusted TPPA Amount (G x (1-K)) $ 12,135,000
================================================================================
Example 3 - Termination Date of October 31, 2002
- --------------------------------------------------------------------------------
M. TPPA Amount: $ 15,000,000
N O P
Monthly Applicable Applicable
Month Adjustment Portion ** Adjustment
- ----------------------------------------------------------------
(N x O)
Nov-02 4.2% 100.0% 4.2%
Dec-02 5.2% 100.0% 5.2%
Jan-03*** 5.5% 100.0% 5.5%
Feb-03*** 4.5% 100.0% 4.5%
- ----------------------------------------------------------------
Total 19.4%
Q. Total of Monthly Applicable Adjustments 19.4%
R Payment Amount (M x Q) $ 2,910,000
================================================================================
* 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.
*** In the event the Agreement is terminated on or before December 31, 2002, the
refund of the TPPA Amount shall be calculated as if Buyer had not exercised its
rights pursuant to Section 2.1.2. That is, the monthly adjustments of the TPPA
Amount for the months of January 2003 and February 2003 shall be payable to
Buyer in the event of termination prior to December 31, 2002.
ADJUSTMENTS TO CREDIT AMOUNT ***
A. Credit Amount*: $ 200,000,000
B C D
Beginning Adjusted
Month Credit Amount Adjustment Credit Amount
- ---------------------------------------------------------------
( ** ) (B - C)
Mar-01 $ 200,000,000 0 $ 200,000,000
J-2
EXHIBIT J
TRACY BUNDLE
ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT
Apr-01 $ 200,000,000 0 $ 200,000,000
May-01 $ 200,000,000 0 $ 200,000,000
Jun-01 $ 200,000,000 0 $ 200,000,000
Jul-01 $ 200,000,000 11,200,000 $ 188,800,000
Aug-01 $ 188,800,000 11,400,000 $ 177,400,000
Sep-01 $ 177,400,000 11,200,000 $ 166,200,000
Oct-01 $ 166,200,000 8,600,000 $ 157,600,000
Nov-01 $ 157,600,000 10,600,000 $ 147,000,000
Dec-01 $ 147,000,000 10,600,000 $ 136,400,000
Jan-02 $ 136,400,000 13,000,000 $ 123,400,000
Feb-02 $ 123,400,000 14,000,000 $ 109,400,000
Mar-02 $ 109,400,000 11,400,000 $ 98,000,000
Apr-02 $ 98,000,000 7,400,000 $ 90,600,000
May-02 $ 90,600,000 5,000,000 $ 85,600,000
Jun-02 $ 85,600,000 5,200,000 $ 80,400,000
Jul-02 $ 80,400,000 8,600,000 $ 71,800,000
Aug-02 $ 71,800,000 9,000,000 $ 62,800,000
Sep-02 $ 62,800,000 8,800,000 $ 54,000,000
Oct-02 $ 54,000,000 6,800,000 $ 47,200,000
Nov-02 $ 47,200,000 8,400,000 $ 38,800,000
Dec-02 $ 38,800,000 8,400,000 $ 30,400,000
Jan-03**** $ 30,400,000 10,400,000 $ 20,000,000
Feb-03**** $ 20,000,000 11,000,000 $ 9,000,000
* As defined in Section 1.2.18 of the Agreement.
** Monthly Adjustment for prior month times Credit Amount.
*** The adjusted Credit Amounts, as shown above, are the amounts applicable to
the first day of each month. A prorata share of the monthly adjustments will be
subtracted from the previous daily adjusted Credit Amount to establish the daily
adjusted Credit Amount for the current day. For example: the adjusted Credit
Amount for June 2, 2001 will be $200,000,000 less one thirtieth of the monthly
adjustment for July 2001 ($11,200,000 / 30) or $199,626,666.67. Thus, the Credit
Amount at February 28, 2003, will equal zero.
**** Provided the Buyer exercises its rights pursuant to Section 2.1.2.
J-3
EXHIBIT K
TRACY 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) 2,200,000
I. Revised Minimum Annual Take (MWh) (G x H) 1,970,100
J K
Month During Applicable Min.
Contract Year Annual Take (MWh)
- -------------------------------------------
1 2,200,000
2 2,200,000
3 2,200,000
4 2,200,000
5 1,970,100
6 1,970,100
7 1,970,100
8 1,870,000
9 1,870,000
10 1,760,000
11 1,760,000
12 1,760,000
- -------------------------------------------
Total 23,730,300
L. Minimum Take for Contract Year (MWh) (Total of K / 12) 1,977,525
* 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.
K-1
EXHIBIT L
TRACY 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)
1 507 507 507
2 507 507 0
3 507 507 507
4 507 507 507
5 507 507 507
6 507 487 20 507
7 507 487 20 507
8 507 487 20 507
9 507 507 507
10 507 507 507
11 507 507 507
12 507 507 507
13 507 0 507 507
14 507 0 507 507
15 507 0 507 507
16 507 0 507 507
17 507 457 30 487
18 507 507 507
19 507 507 507
20 507 507 507
21 507 507 507
22 507 507 507
23 507 507 507
24 477 477 477
25 457 457 457
26 427 427 427
27 457 427 30 457
28 477 477 477
29 507 507 507
30 507 507 507
31 507 507 507
32 507 507 507
33 507 507 507
34 507 507 507
35 507 507 507
36 507 507 507
- ---------------------------------------------------------------------------------------------------------------------
total 18,012 15,844 70 2,028 50 17,992
L-1
EXHIBIT L
TRACY BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
* Includes energy excused because of Supplier's and Buyer's events of Force
Majeure
** G cannot be greater than B
EXHIBIT M
ASSET BUNDLE CONTRACTUAL AND OPERATING CONSTRAINTS
1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean
that portion of the Asset Bundle Capacity that has been designated as
being subject to contractual and operational constraints in accordance
with the provisions of this Exhibit M.
2. Section 4.1.4 of the Agreement, which addresses Supplier's right to
Asset Bundle Capacity in excess of the Supply Amount, shall not be
applicable to Constrained Capacity.
3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
Agreement, which addresses Buyer's notifications to Supplier, shall not
be deemed to include Constrained Capacity unless Buyer's schedules
specifically designate Constrained Capacity as being applicable to the
schedules.
4. The Asset Bundle Capacity described in the following table shall be
deemed Constrained Capacity.
- ---------------------------------------------------------------------------------------------------------
Asset Bundle Source of Capacity Annual Limit Monthly Limit Daily Limit
- ---------------------------------------------------------------------------------------------------------
72 hours at max.
Clark Mt. 3-4 capacity for
Tracy (7 MW per unit summer) each unit* None None
- ---------------------------------------------------------------------------------------------------------
Tracy Valley Rd 1-3 200 hours at
(6 MW summer) max. capacity
for each unit* None None
- ---------------------------------------------------------------------------------------------------------
Tracy Clark Mt. 1-2, Brunswick 1-3, 100 hours at
and Gabbs 1-2 max. capacity
(30 MW summer) for each unit* None None
- ---------------------------------------------------------------------------------------------------------
* Buyer is attempting to raise the operating limits on these generating units.
If Buyer is successful, the higher limits will be applicable to this Exhibit M.