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EXHIBIT 10.53
TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY 65 or 66 SECONDARY CALL)
This Transition Power Purchase Agreement (the "Agreement") is entered
into as of this 11th day of June, 1999 between Niagara Mohawk Power Corporation
("Niagara Mohawk"), a New York corporation, and Huntley Power LLC, a Delaware
limited liability company ("Producer") (each individually a "Party", or
collectively the "Parties").
WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of it's Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;
WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;
WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation Divestiture
Auction ("Auction") to divest itself of its non-nuclear electrical generating
facilities, including it's Huntley generating facility;
WHEREAS Producer has entered into an agreement ("Asset Sales Agreement",
or "ASA") to acquire certain facilities from Niagara Mohawk, consisting of it's
Huntley generating facility located in the Town of Tonawanda, New York; and
WHEREAS pursuant to the ASA Niagara Mohawk and Producer agreed to enter
into Transition Power Purchase Agreements pursuant to which; for a certain
period of time, Niagara Mohawk is to have the option to purchase from Producer
certain quantities of electricity generated by the facility
NOW THEREFORE, in consideration of the mutual representations, covenants
and agreements set forth herein, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE 1.
DEFINITIONS
Whenever used in this Agreement with initial capitalization, the
following terms shall have the meanings specified or referred to in this Article
1.
"Agreement" shall mean this Transition Power Purchase Agreement (Huntley
65 or 66 Secondary Call) dated as of the Closing Date, between Niagara Mohawk
Power Corporation and Producer.
"Asset Sales Agreement" or "ASA" shall mean the Asset Sales Agreement
dated as of December 23, 1998, between Niagara Mohawk Power Corporation and NRG
Energy, Inc.
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"Business Day" shall mean any day other than Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in New York City
are authorized by law or other governmental action to close; and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight)
time.
"Closing" shall mean the closing of the transactions contemplated by the
ASA.
"Closing Date" shall mean the date and time at which the Closing actually
occurs.
"Delivery Point" shall mean the point at which the interconnection
facility is connected to the transmission system as is indicated on a one-line
diagram included as part of Exhibit A of the Interconnection Agreement.
"Force Majeure" means (with respect to Firm Transactions) an event not
anticipated as of the Closing Date which is not within the reasonable control of
the Party claiming Force Majeure (the "Claiming Party"), and which, by the
exercise of due diligence, the Claiming Party, is unable to overcome or avoid or
cause to be avoided. Force Majeure includes, but is not restricted to: acts of
God; fire; civil disturbance; labor dispute, labor or material shortage;
sabotage; action or restraint by court order to public or governmental authority
(so long as the Claiming Party has not applied for or assisted in the
application for, and has opposed where and to the extent reasonable, such
government action); provided, however, that an event of Force Majeure shall not
include (i) the loss of Niagara Mohawk's power markets; (ii) Niagara Mohawk's
inability economically to use or resell Power purchased hereunder, (iii) the
loss or failure of Producer's Power supply unless however the Producer provides
written documentation acceptable to Niagara Mohawk definitively describing the
loss or failure and that such loss or failure is within Good Utility Practice.
"Good Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with good business practices,
reliability, safety and expedition. 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 be acceptable practices, methods, or acts generally accepted in
the region and consistently adhered to by Niagara Mohawk. Good Utility Practices
shall include, but not be limited to North American Electric Reliability Council
("NERC") Criteria & Guidelines, Northeast Power Coordinating Council ("NPCC")
Criteria & Guidelines, New York State Reliability Council ("NYSRC") if any, and
New York Power Pool ("NYPP") criteria, rules and standards, as they may be
amended from time to time including the rules, guidelines and criteria of any
successor organization to the foregoing entities.
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"Interconnection Agreement" shall mean a separate Interconnection
Agreement between Niagara Mohawk Power Corporation and NRG Energy, Inc., or its
permitted assigns.
"Interest Rate" means, for any date, the interest equal to the Prime Rate
as may from time to time be published in The Wall Street Journal under "Money
Rates".
"Interval": means one hour.
"Market Price" means prior to the commencement of the NYISO, Niagara
Mohawk's weighted average purchases and sales in the NYPP for each hour as found
in the Niagara Mohawk's Energy Management System log line 6033-19, and on or
after the commencement of the NYISO, the real time locational based market price
("LBMP") paid to Producers for energy for each hour, at the Unit's bus bar or
the region in which the Unit's bus bar is located, specified and published by
the NYISO.
"New York Independent System Operator" or "NYISO" shall mean an
organization formed in accordance with orders of the Federal Energy Regulatory
Commission to administer the operation of the transmission system of New York
State, to provide equal access to the bulk power-transmission system and to
maintain the reliability of the transmission system of New York State.
"Power" means electric operating capacity as measured in MW or KW and/or
energy as measured in MWh or KWh. Energy purchased hereunder will include
applicable reserves (operating capacity), unless the Parties expressly agree
otherwise.
"Price" means the price to be paid per unit as specified by Niagara
Mohawk to Producer for the purchase of Power, including the energy price, demand
charges, transmission charges and any other charges pursuant to Article 2.
"Quantity" means that quantity of Power that Producer agrees to make
available or sell and deliver, or cause to be delivered, to Niagara Mohawk, and
that Niagara Mohawk agrees to purchase and receive, or cause to be received,
from Producer pursuant to Article 3.
"Scheduling" or "Schedule" means the acts of Producer, Niagara Mohawk
and/or their designated representatives, including each Party's Transmission
Providers, if applicable, of notifying, requesting and confirming to each other
the quantity and type of Power to be delivered on a given hour, day or days at a
specified Delivery Point.
"Start-Up Notification" shall mean 11 hours when the Unit has not been
on-line for the previous 10 hours and shall mean 7 hours when the Unit has been
on-line within the previous 10 hours.
"Transmission Providers" means the entity or entities transmitting or
transporting the Power on behalf of Producer or Niagara Mohawk from the Delivery
Point.
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"Units" each of two steam generating units, Huntley 65 and 66, with unit
Maximum Capacity, Minimum Capacity, and Minimum Down Times as set for the in
Schedule A.
ARTICLE 2.
TRANSACTIONS
2.1 Term of Agreement. Term of Agreement will begin upon the Closing Date of
the ASA and will end on the 4th anniversary of the Closing Date.
2.2. Compensation. For each month during the term, Niagara Mohawk shall pay
Producer the aggregate sum of the payments due for each hour of the respective
month less any penalties included in Article 3.1.2. For each hour, Niagara
Mohawk shall pay Producer the greater of (i) the product of the hourly Call
Quantity (Article 3.1.1) multiplied by the Market Price at the Delivery Point or
(ii) the sum of (A) the product of the hourly Call Quantity multiplied by the
$/MWh identified in Schedule B.
2.3 Delivery Point. Producer will make all of the operating capacity and
energy of the Units available to Niagara Mohawk at the Delivery Point.
ARTICLE 3.
SCHEDULING
3.1 Purchase and Sale of Entitlement to Output of Units
3.1.1 Niagara Mohawk may exercise the Call Option with respect to any
Interval by delivery of an exercise notice to Producer (which may be delivered
orally, including by telephone). At that time, Producer will provide the fuel
factor ("F" in Schedule B) - inclusive of all actual fuel costs and
environmental effluent costs - that will be used to determine the cost of the
Power delivered. If any notice is delivered orally, Niagara Mohawk will execute
and deliver a written confirmation confirming the substance of that notice
within two Business Days of that notice. Failure to provide that written
confirmation will not affect the validity of that oral notice.
Niagara Mohawk shall have the right to require Producer to commit, schedule, and
generate electrical output by the Units up to a quantity ("Call Quantity") not
to exceed 90 MW for any one hour during the calendar months of June through
September and December through February. Producer shall have the right to
decline to deliver to Niagara Mohawk in the event Producer is generating with
Unit 65 or 66 and selling to a third party. If Unit 65 or 66 is generating for
Niagara Mohawk, Producer shall have the right to "recall" the Unit in order to
facilitate a sale to a third party. If a "recall" occurs, Niagara Mohawk will
pay for the Power it received up to the "recall" point. However, if a "recall"
occurs Niagara Mohawk will not have to pay for the original Unit start.
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3.1.2 Producer shall comply with Niagara Mohawk's exercise of rights
under Article 3.1.1 in accordance with Good Utility Practice. In the event,
unless excused pursuant to Article 5, Producer fails to meet the Call Quantity
request of Niagara Mohawk, Producer shall compensate Niagara Mohawk. For each
month during the term, Producer shall pay Niagara Mohawk the aggregate sum of
the product of (i) the Service Classification Number 1 ("SC-1") rate minus the
Interval Market Price ($/MWh), times (ii) the Interval Call Quantity not
provided by Producer. If the Market Price during an hour is greater than the
SC-1 rate, then the charge for that hour will be zero. Payment of this Article
3.1.2 shall be made in accordance with Article 4. Such payment shall begin in
the first hour of notification plus the Start-Up Notification.
3.2 Commitment, Scheduling and Dispatch. If so required under Article 3.1.1,
Producer shall commit and deliver power from one or more of the Units. For the
Unit(s) Producer elects to designate to meet the on-peak energy requirement
under Article 3.1.1, Niagara Mohawk shall be obligated at the request of
Producer, to receive and pay for energy off-peak at the Minimum Capacity
(Schedule A) of the Units.
ARTICLE 4.
PAYMENT
4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting
forth the quantity of power which was delivered to Niagara Mohawk, during the
preceding calendar month, the total amount due from Niagara Mohawk, and any
applicable supporting documentation. Niagara Mohawk shall remit the amount due
by wire transfer, or as otherwise agreed, pursuant to Producer's invoice
instructions, on the later of fifteen days from receipt of Producer's invoice or
the twenty-fifth (25th) day of the calendar month in which the invoice is
rendered.
4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest
Rate plus 2% from, and including, the due date to, but excluding, the date of
payment.
4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
Niagara Mohawk shall immediately notify Producer of the basis for the dispute
and pay the portion of such statement conceded to be correct no later than the
due date. If any amount withheld under dispute by Niagara Mohawk is ultimately
determined (under the terms herein) to be due to Producer, it shall be paid
within one (1) Business Day of such determination along with interest accrued at
the Interest Rate until the date paid. Inadvertent overpayments shall be
returned by Producer upon request or deducted by Producer from subsequent
payments, with interest accrued at the Interest Rate from the date originally
paid until the date paid or deducted.
4.4 Set-off. In the event Producers fails to make payment to Niagara Mohawk
for Article 3.1.2, Niagara Mohawk may set off any or all amounts which Producer
owes to it under the Agreement or under the Swap Transaction, against any or all
amounts which it owes to Producer.
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ARTICLE 5.
FORCE MAJEURE
5.1 Performance Excused. If either Party is rendered unable by an event of
Force Majeure to carry out, in whole or part, its obligations under the
Agreement, then, for only the pendency of such Force Majeure, the Party affected
by the event (other than the obligation to make payments then due or becoming
due with respect to performance which occurred prior to the event) shall be
temporarily relieved of its obligations insofar as they are affected by Force
Majeure but for no longer period. The Party affected by an event of Force
Majeure shall provide the other Party with written notice setting forth the full
details thereof within two (2) Business Days after the occurrence of such event
and shall take all reasonable measures to mitigate or minimize the effects of
such event of Force Majeure; provided, however, that this provision shall not
require Producer to deliver, or Niagara Mohawk to receive, Power at points other
than the Delivery Point.
ARTICLE 6.
TITLE TRANSFER; LIABILITY
6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.
6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 6.1, in the indemnifying Party. "Claims" means all claims or
actions, threatened or filed and, whether groundless, false or fraudulent, that
directly or indirectly relate to the subject matter of an indemnity, and the
resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are
threatened or filed prior to or after the termination of this Agreement.
6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate
damages and covenants that it will use commercially reasonable efforts to
minimize any damages it may incur as a result of the other Party's performance
or non-performance of this Agreement.
ARTICLE 7.
LAW
7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS
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OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Any
law suits arising under this AGREEMENT shall be instituted in the Federal or
State courts of New York located in the City of Syracuse and each party hereby
irrevocably submits to the in personam jurisdiction of such courts. Each Party
herein waives its respective right to a jury trial with respect to any
litigation arising under or in connection with this Agreement or any
Transaction.
ARTICLE 8.
MISCELLANEOUS
8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party either (A) which affiliate's
creditworthiness is not materially different than that of such Party, or (B) in
connection with the assignment of the rights under the ASA to acquire the
Huntley Station, or (iii) transfer or assign this Agreement to any person or
entity succeeding to all or substantially all of the assets of such Party;
provided, however, that in each such case, any such assignee shall agree to in
writing be bound by the terms and conditions hereof and creditworthiness is not
materially different than that of such Party.
8.2 Notices. All Notices and other communications hereunder shall be in
writing and shall be deemed given (as of the time of delivery or, in the case of
a telecopied communication, as of confirmation), if delivered personally, if
sent by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.
TO NIAGARA MOHAWK:
NOTICES & CORRESPONDENCE: SCHEDULING:
Niagara Mohawk Power Corporation (315) 460-2468
Supply Services - HCB#3 (315) 460-2425
300 Erie Boulevard West Fax - (315) 460-2122
Syracuse, New York 13202-4250
Phone: (315) 460-2341 DISPATCHERS:
Phone: (315) 460-2271 (315) 460-2120
Fax: (315) 460-2660 (315) 460-2130
Fax - (315) 460-2197
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INVOICES: CHECK PAYMENTS:
Niagara Mohawk Power Corporation Niagara Mohawk Power Corporation
Power Scheduling and Billing - HCB#3 Misc. Accounts Receivable C-3
300 Erie Boulevard West 300 Erie Boulevard West
Syracuse, New York 13202-4250 Syracuse, New York 13202-4250
Phone: (315) 460-2190
Fax: (315) 460-2494 PAYMENTS BY WIRE:
Citibank New York
Account #: 40662754
ABA #: 021000089
Credit To: Niagara Mohawk Power Corp.
TO PRODUCER:
NOTICES & CORRESPONDENCE: PAYMENTS:
Huntley Power LLC LaSalle National Bank, Chicago
1221 Nicollet Mall ABA #: 071 000 505
Minneapolis, MN 55403 Account #: 58 000 768 52
Attn: President Beneficiary: NRG Energy, Inc.
Fax No.: (612) 373-5430
Phone No.: (612) 373-8864
INVOICES: SCHEDULING:
Attn: Dan Hudson Attn: Dan Hudson
Fax No.: (612) 373-5430 Fax No.: (612) 373-5430
Phone No.: (612) 373-8864 Phone No.: (612) 373-8864
8.3 General. This Agreement (including the Schedules attached hereto)
constitutes the entire agreement between the Parties with respect to the subject
matter contemplated by this Agreement. The Agreement shall be considered for all
purposes as prepared through the joint efforts of the parties and shall not be
construed against one party or the other as a result of the preparation,
substitution, submission or other event of negotiation, drafting or execution
hereof. No amendment or modification to this Agreement shall be enforceable
unless reduced to writing and executed by both Parties. This Agreement shall not
impact any rights enforceable by any third-party (other than a permitted
successor or assignee bound to this Agreement). No waiver by a Party of any
default by the other Party shall be construed as a waiver of any other default.
Any provision declared or rendered unlawful by any applicable court of law or
regulatory agency or deemed unlawful because of a statutory change will not
otherwise affect the remaining lawful obligations that arise under this
Agreement. The term "including" when used in this Agreement shall be by way of
example only and shall not be considered in any way to be in limitation. The
headings used herein are for
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convenience and reference purposes only. All indemnity and audit rights shall
survive the termination of this Agreement for six years.
8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the Quantities of Power delivered at the Delivery Point and the cost
based actual fuel factor ("F" in Schedule B) used to produce the Power. If any
such examination reveals any inaccuracy in any statement, the necessary
adjustments in such statement and the payments thereof will be made promptly and
shall bear interest calculated at the Interest Rate from the date the
overpayment or underpayment was made until paid; provided, however, that no
adjustment for any statement or payment will be made unless objection to the
accuracy thereof was made prior to the lapse of one (1) year from the rendition
thereof.
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TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY 65 OR 66 SECONDARY CALL)
The Parties have executed this Master Power Agreement in multiple
counterparts to be construed as one effective as of the Closing Date.
HUNTLEY POWER LLC NIAGARA MOHAWK POWER CORPORATION
By: /s/ Michael O'Sullivan By: /s/ Clement E. Nadeau
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Name: Michael O'Sullivan Name: Clement E. Nadeau
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Title: Vice President Title: Vice President Energy Delivery
Date: 6/11/99 Date: 6/9/99
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