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Exhibit 10.2a
MILLIKEN OPERATING AGREEMENT
By and Between
NEW YORK STATE ELECTRIC & GAS CORPORATION
and
AES NY, L.L.C.
Dated as of August 3, 1998
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TABLE OF CONTENTS
Page
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SECTION 1 - DEFINITIONS.......................................................................................... 2
1.0 Definitions.................................................................................... 2
SECTION 2 - TERM................................................................................................. 7
2.0 Term........................................................................................... 7
SECTION 3 - SERVICES AND PAYMENTS................................................................................ 9
3.0 Services and Payments.......................................................................... 9
3.1 Voltage Regulation Requirements....................................................... 9
3.2 Requests for Milliken Operation....................................................... 10
3.3 Limitation on Operation............................................................... 22
3.4 Scheduled Maintenance................................................................. 22
3.5 Good Utility Practice and Reliability Rules........................................... 23
3.6 Procedures for Certain Contract Changes............................................... 23
3.7 Retirement of Units and Buy-Out....................................................... 24
3.8 Failure to Operate in Accordance with Agreement....................................... 25
3.9 Contact Persons....................................................................... 30
SECTION 4 - ACCESS TO OWNER'S FACILITIES AND RECORDS............................................................. 30
4.0 Access to Owner's Facilities and Records....................................................... 30
4.1 Access, Easements, Conveyances, Licenses, and Restrictions............................ 30
SECTION 5 - BILLING PROCEDURES................................................................................... 31
5.0 Billing Procedures............................................................................. 31
5.1 Billing Procedures.................................................................... 31
5.2 Payment of Invoices................................................................... 32
5.3 Interest on Unpaid Balances........................................................... 32
5.4 Billing Disputes...................................................................... 32
SECTION 6 - CONFIDENTIALITY ..................................................................................... 33
6.0 Confidentiality................................................................................ 33
6.1 Confidentiality of NYSEG.............................................................. 33
6.2 Confidentiality of Owner.............................................................. 34
6.3 Remedies Regarding Confidentiality.................................................... 35
SECTION 7 - DEFAULT.............................................................................................. 35
7.0 Event of Default............................................................................... 35
SECTION 8 - INDEMNIFICATION...................................................................................... 38
8.0 Indemnification................................................................................ 38
8.1 Owner's Indemnification............................................................... 38
8.2 NYSEG's Indemnification............................................................... 39
8.3 Indemnification procedures............................................................ 39
8.4 Survival.............................................................................. 40
SECTION 9 - FORCE MAJEURE........................................................................................ 40
9.0 Force Majeure.................................................................................. 40
SECTION 10 - LIMITATION OF LIABILITY............................................................................. 42
10.0 Limitation of Damages.......................................................................... 42
SECTION 11 - ADDITIONAL REMEDIES................................................................................. 43
11.0 Additional Remedies............................................................................ 43
SECTION 12 - DISPUTES............................................................................................ 44
12.0 Disputes....................................................................................... 44
SECTION 13 - REPRESENTATIONS..................................................................................... 44
13.0 Representations................................................................................ 44
13.1 Representations of NYSEG.............................................................. 44
13.1.a. Organization................................................................. 44
13.1.b. Authority Relative to this Agreement......................................... 44
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13.1.c. Regulatory Approval.......................................................... 44
13.1.d. Compliance With Law.......................................................... 45
13.2 Representations of the Owner.......................................................... 45
13.2.a. Organization................................................................. 45
13.2.b. Authority Relative to this Agreement......................................... 45
13.2.c. Regulatory Approval.......................................................... 46
13.2.d. Compliance With Law.......................................................... 46
13.3 Representations of Both Parties....................................................... 46
SECTION 14 - ASSIGNMENT/CHANGE IN CORPORATE IDENTITY............................................................. 47
14.0 Assignment/Change in Corporate Identity........................................................ 47
SECTION 15 - SUBCONTRACTORS...................................................................................... 49
15.0 Subcontractors................................................................................. 49
SECTION 16 - LABOR RELATIONS..................................................................................... 49
16.0 Labor Relations................................................................................ 49
SECTION 17 - INDEPENDENT CONTRACTOR STATUS....................................................................... 50
17.0 Independent Contractor Status.................................................................. 50
SECTION 18 - NOTICES............................................................................................. 50
18.0 Notices........................................................................................ 50
SECTION 19 - NO THIRD PARTY BENEFICIARIES........................................................................ 51
19.0 No Third Party Beneficiaries................................................................... 51
SECTION 20 - HEADINGS............................................................................................ 52
20.0 Headings....................................................................................... 52
SECTION 21 - WAIVER.............................................................................................. 52
21.0 Waiver......................................................................................... 52
SECTION 22 - COUNTERPARTS........................................................................................ 52
22.0 Counterparts................................................................................... 52
SECTION 23 - GOVERNING LAW....................................................................................... 52
23.0 Governing Law.................................................................................. 52
23.1 Laws and Regulations.................................................................. 52
SECTION 24 - SEVERABILITY........................................................................................ 53
24.0 Severability................................................................................... 53
SECTION 25 - AMENDMENTS.......................................................................................... 54
25.0 Amendments..................................................................................... 54
SECTION 26 - INSURANCE........................................................................................... 54
26.0 Insurance...................................................................................... 54
SECTION 27 - ENTIRE AGREEMENT.................................................................................... 56
27.0 Entire Agreement............................................................................... 56
SECTION 28 - FURTHER ASSURANCES.................................................................................. 57
28.0 Further Assurances................................................................................ 57
SCHEDULES
Schedule 1 - Costs to be Used in Computing NYSEG's Payment Obligation
Schedule 2 - Schedule and Procedures Directing that Start-up of a
Milliken Unit
Schedule 3 - Minimum Insurance Requirements
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MILLIKEN OPERATING AGREEMENT
This Agreement is made and entered into as of August 3, 1998 by and
between New York State Electric & Gas Corporation ("NYSEG"), a New York
corporation with an office for the transaction of business at Corporate Drive,
Kirkwood Industrial Park, Binghamton, New York 13902-5225 ("NYSEG"), and AES NY,
L.L.C. ("Owner"), a Delaware limited liability company with a principal place of
business located at 1001 North 19th Street, Arlington, Virginia 22209. NYSEG and
the Owner shall each be considered a "Party" and, collectively, they shall be
referred to as the "Parties."
WITNESSETH:
WHEREAS, NYSEG, NGE Generation, Inc. ("NGE"), an affiliate of NYSEG,
and the Owner have entered into an Asset Purchase Agreement ("APA") dated as of
August 3, 1998, for the sale of certain of NGE's fossil-fired generating
facilities (the "Fossil Plants") and associated assets and liabilities to the
Owner;
WHEREAS, in the APA, NGE agreed to transfer to the Owner certain
designated real and personal properties pertaining to the Fossil Plants,
including the Milliken Facilities (as defined herein);
WHEREAS, NYSEG intends to continue to operate its transmission and
distribution businesses;
WHEREAS, NYSEG and the Owner have entered into an Interconnection
Agreement (the "IA") dated as of August 3, 1998, for Interconnection Service, as
described in the IA;
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WHEREAS, NYSEG serves retail customers in its service area known as its
Ithaca Division (as defined herein) and requires voltage support from the
Milliken Facilities during high load periods in order to maintain safe and
reliable electric service in NYSEG's Ithaca Division;
WHEREAS, no substitute currently exists for Milliken voltage support;
and
WHEREAS, the Parties acknowledge that the operation of the Milliken
Facilities in strict compliance of this Agreement is essential to maintain
reliability of the electric system in the Ithaca Division and accordingly the
provisions of this Agreement are in the public interest.
NOW THEREFORE, in order to carry out the transactions contemplated by
the APA and this Agreement, and in consideration of the mutual representations,
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties hereto agree as follows:
SECTION 1.
DEFINITIONS
1.0 Definitions. Wherever used in this Agreement with initial
capitalization, the following terms shall have the meanings specified or
referred to in this Section 1.
1.1 "Affiliate" shall mean, with respect to a corporation, partnership,
or other entity, each such other corporation, partnership, or other entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such corporation, partnership,
or other entity.
1.2 "AGC" shall mean Automatic Generation Control, and shall have the
meaning set forth in the Supplemental Filing (as defined herein), as such term
may be modified from time to time by the ISO.
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1.3 "Agreement" shall mean this Milliken Operating Agreement dated as
of August 3, 1998, by and between NYSEG and the Owner, including all schedules
attached hereto and any amendments thereto.
1.4 "Asset Purchase Agreement" or "APA" shall mean the Asset Purchase
Agreement dated as of August 3, 1998, by and among NYSEG, NGE and the Owner.
1.5 "Day-Ahead Market" shall have the meaning set forth in the
Supplemental Filing, as such term may be modified from time-to-time by the ISO.
1.6 "Directed Hour" shall mean the hours during which NYSEG directs
Owner to operate one or more Milliken unit(s) on a Transaction Day pursuant to
Section 3.2.d. (but not including hours that the unit was already scheduled to
operate).
1.7 "Emergency Condition" shall mean any abnormal system condition that
requires immediate automatic or manual action to prevent or limit loss of
Milliken's Facilities or NYSEG's facilities that could adversely affect the
reliability of an electric system.
1.8 "Incremental Cost Curve" shall mean an incremental cost curve for
electricity produced above the Minimum Generation Level of the applicable
Milliken unit (up to the maximum output of the unit), as described in Schedule 1
of this Agreement.
1.9 "FERC" shall mean the Federal Energy Regulatory Commission, or its
successor.
1.10 "Good Utility Practice" shall mean any of the applicable
practices, methods and acts:
1.10.a. required by NERC, NPCC, NYPP, NYSRC, the
system operator, ISO, Occupational Health
and Safety Administration or the successor
of any of them, whether or not the Party
whose conduct
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is at issue is a member thereof;
1.10.b. required by the policies and standards of
NYSEG relating to emergency operations; or
1.10.c. otherwise engaged in or approved by a
significant portion of the electric
generation, transmission and distribution
utility industries during the relevant time
period, which, in the exercise of reasonable
judgment in light of the facts known at the
time the decision was made, could have been
expected to accomplish the desired result at
a reasonable cost consistent with law,
regulation, good business practices,
generation, transmission, and distribution
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 acceptable practices, methods, or
acts generally accepted in the region.
1.11 "IA" shall mean the Interconnection Agreement between Owner and
NYSEG, dated August 3, 1998, with respect to Milliken.
1.12 "ISO" shall mean the New York Independent System Operator, or its
successor or its equivalent, which has assumed responsibility for the continued
operation of the NYPP/New York control area and the administration of the ISO
Tariff, subject to regulation by FERC, as described in the Supplemental Filing
and as modified from time-to-time.
1.13 "ISO Tariff" shall mean the tariff included in the Supplemental
Filing, as such tariff may be amended from time-to-time.
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1.14 "Ithaca Division" shall mean the portion of NYSEG's service
area, the load of which is currently served from the following NYSEG
substations: Milliken, Coddington, Etna, Candor, and East Ithaca substations.
1.15 "LBMP" shall mean the Locational Based Marginal Price, as such
term is defined in the Supplemental Filing and described in the ISO Tariff, as
such term may be modified from time-to-time by the ISO.
1.16 "Milliken" or "Milliken Facilities" shall mean the Milliken
Generating Station consisting of two generating units located in South Lansing,
New York, and associated facilities.
1.17 "Milliken Conditions" shall have the meaning given in Section 3.2.
1.18 "Minimum Generation Costs" shall mean the costs to operate a
Milliken generating unit at its Minimum Generation Level.
1.19 "Minimum Generation Level" shall mean the lowest level of
output at which a Milliken generating unit can maintain safe and stable
operations, as described in Schedule 1 of this Agreement.
1.20 "NERC" shall mean North American Electric Reliability Council, or
its successor.
1.21 "NPCC" shall mean Northeast Power Coordinating Council, a regional
reliability governing body, or its successor.
1.22 "NYPP" shall mean the New York Power Pool, or its successor.
1.23 "NYSEG" shall mean New York State Electric & Gas Corporation.
1.24 "NYSRC" shall mean the New York State Reliability Council or its
successor or equivalent, as described in the Supplemental Filing, as may be
modified from time-to-time.
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1.25 "Owner" shall mean AES NY, L.L.C.
1.26 "Real Time Market" shall have the meaning set forth in the
Supplemental Filing, as such term may be modified from time to time by the ISO.
1.27 "Real Time LBMP" shall have the meaning set forth in the
Supplemental Filling, as may be modified from time to time by the ISO.
1.28 "Services" shall mean the voltage support and other related
services provided by Owner to NYSEG in accordance with the terms of this
Agreement.
1.29 "Start-up Cost[s]" in Section 3.2.f. shall mean the cost[s] to
bring a Milliken unit into operation from a Cold Start (as defined in Section
3.2.f) or a Warm Start (as defined in Section 3.2.f.) condition, as set forth in
Schedule 1 of this Agreement.
1.30 "Supplemental Filing" shall mean the filing made by the NYPP
Member Systems with FERC on December 19, 1997, in Docket Nos. ER97-1523-000 and
OA97-470-000.
1.31 "Transaction Day" shall mean any day during which NYSEG directs
Owner to operate the Milliken units, in accordance with Section 3.2.d. of this
Agreement.
1.32 "Transfer Date" shall mean the date on which the Closing, as
that term defined in the APA and applies to Milliken, has occurred and is
effective.
SECTION 2
TERM
2.0 Term.
2.1 Subject to the regulatory authorizations described in this Section
2.1, this Agreement shall become effective when signed, and the provision of
service hereunder shall
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commence on the Transfer Date, and shall continue in full force and effect for
60 months, unless extended by NYSEG for one additional 24-month term in
accordance with Section 2.2. This Agreement is subject to any necessary
regulatory acceptance or approval without any material modification or
condition. If any regulatory agency having jurisdiction over this Agreement
requires any modification to, or imposes any condition of acceptance or approval
of, this Agreement, and
(i) such modification or condition could reasonably be expected
to, in the aggregate, create, as to Owner, a Buyer Material
Adverse Effect, as defined in Section 5.3(a) of the APA, or,
as to NYSEG, a material adverse effect on the business,
assets, operations, or conditions (financial or otherwise) of
NYSEG, then the Parties shall engage in good faith
negotiations for a period of thirty (30) days following the
issuance of that acceptance or approval in order to agree to
revisions to this Agreement to satisfy, or otherwise address,
such modification or condition. If the Parties fail to agree
mutually to such changes, then the Parties may exercise their
rights under Article 9 of the APA, or
(ii) such modification or condition could not reasonably be
expected to, in the aggregate, create, as to Owner, a Buyer
Material Adverse Effect, as defined in Section 5.3(a) of the
APA, or, as to NYSEG, a material adverse effect on the
business, assets, operations or conditions (financial or
otherwise) of NYSEG, then the Parties shall engage in good
faith negotiations for a period of thirty (30) days following
the issuance of that acceptance or approval in order to agree
to revisions to this Agreement to satisfy, or otherwise
address, such modification or condition.
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If the Parties fail to agree mutually to such changes, then
NYSEG may make a unilateral filing to satisfy the modification
or condition, which filing shall attempt to satisfy the intent
of the Parties under this Agreement; provided, however, that
the Owner shall have the right to protest the manner in which
NYSEG has attempted to satisfy such modification or condition.
2.2 Prior to the end of the 48th month of the term of this Agreement,
NYSEG shall notify Owner in writing whether NYSEG intends to extend the term of
this Agreement for an additional term of 24 months. If NYSEG exercises its right
to extend the term of this Agreement for such additional 24-month term, all the
other terms and conditions (including, without limitation, the pricing formulae
and all other charges) shall remain the same as set forth herein during such
additional 24-month term.
2.3 At least six months prior to the end of the 24-month term described
in the preceding Section 2.2, the Parties shall negotiate in good faith to reach
agreement on an extension of this Agreement after such 24-month term that is
mutually acceptable to both Parties. If the Parties are unable to reach
agreement on such an extension, this Agreement will terminate at the end of the
additional 24-month term, subject to the notice requirements of 18 C.F.R.
Section 35.15, or its successor, which shall apply, and any applicable
requirements of the Federal Power Act and FERC's rules and regulations.
2.4 The applicable provisions of this Agreement shall continue in
effect after cancellation, termination or expiration hereof to the extent
necessary to provide for final billings and billing adjustments, payments
pertaining to liability and indemnification obligations, and liability
limitations arising from acts or events that occurred while this Agreement was
in effect.
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2.5 Except as set forth in Sections 2.0 and 3.6, any changes to any
provision of this Agreement shall be made in accordance with Section 25.
SECTION 3
SERVICES AND PAYMENTS
3.0 Services and Payments.
3.1 Voltage Regulation Requirements. Owner shall at all times
after the Transfer Date, in accordance with Good Utility Practice: (i) have and
maintain a functioning automatic voltage regulator at each Milliken unit; (ii)
supply Voltage Support Service (as described in the ISO Tariff); (iii) follow
ISO instructions on voltage support (whether issued directly to Owner by the ISO
or through NYSEG's Energy Control Center in accordance with the ISO Tariff
(including Rate Schedule 2 thereof)); (iv) comply with Section 4.2.2 of the IA;
and (v) operate Milliken to produce 121 kiloVolts ("KV") at the Milliken 115 KV
bus (or such other voltage level determined by the ISO or NYSEG Energy Control
Center from time-to-time) when one or both units are operating. Nothing
contained in this Agreement prevents Owner from receiving compensation from the
ISO for providing Voltage Support Service or any other ancillary service
pursuant to the ISO Tariff. No payments shall be owed by NYSEG (either before or
after the ISO is operational) for any of the Services described in this Section
3.1.
3.2 Requests for Milliken Operation. When NYSEG forecasts that its load
within NYSEG's Ithaca Division will be equal to or greater than 136 MW (the
"Milliken Conditions") for the following day or days, the Parties shall follow
the procedures described in this Section 3.2 and Schedule 2 (which schedule is
attached hereto and incorporated by reference herein). Any
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day on which NYSEG directs the Milliken unit(s) to operate under Section 3.2.d.
is described herein as a "Transaction Day."
3.2.a.(1) If the Day-Ahead Market is operational,
NYSEG will notify Owner by telephone, within
one hour after the results of the Day-Ahead
Market become available, that the Milliken
Conditions exist on the following day. If,
because of weekends or Holidays, the
Day-Ahead Market covers more than one day,
then NYSEG will indicate on which days NYSEG
requires Milliken to operate. NYSEG shall
follow-up, as soon as reasonably
practicable, by sending to Owner by
facsimile a written confirmation of NYSEG's
oral notification to Owner. The term
"Holidays" means those holidays designated
by NERC.
3.2.a.(2) However, if the Day-Ahead Market is not
operational, NYSEG and Owner shall adhere to
the schedule and notification procedures set
forth in part B of Schedule 2 and this
Section 3.2.a.(2):
(a) By 10:00 a.m. on the day NYSEG
forecasts that the Milliken
Conditions will occur on the next
day(s), NYSEG will notify Owner that
the Milliken Conditions will exist
for the following day(s);
(b) By 11:00 a.m. of the day on which
NYSEG has notified Owner that the
Milliken Conditions will exist,
Owner shall provide NYSEG with the
following information: Owner
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shall provide NYSEG a tentative
schedule for the following six days
which shall state whether Owner
anticipates that each Milliken unit
will operate at the Minimum
Generation Level or higher during
each hour of such six-day period;
(c) By 12:00 noon on the day NYSEG
forecasts that the Milliken
Conditions will exist on the next
day, NYSEG shall notify Owner by
telephone whether NYSEG is requiring
Owner to operate one or both
Milliken units on the following days
identified in NYSEG's notice
(including any weekend days or
Holidays) and provide Owner with
NYSEG's schedule for operating the
Milliken units on such days; and
(d) By 1:00 p.m. on the day that NYSEG
provides such notice to Owner, the
Parties shall submit any required
schedules to NYPP.
NYSEG shall follow-up, as soon as reasonably
practicable, by sending to Owner by
facsimile (or other method agreed to by the
Parties in writing) a written confirmation
of NYSEG's oral notification pursuant to
3.2.a.(2)(c) to Owner.
3.2.b.(1) Within two hours of NYSEG's telephone notice
to Owner pursuant to Section 3.2(a)(1),
Owner shall notify NYSEG by telephone, or in
any manner reasonably requested by NYSEG,
whether both
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Milliken units are scheduled to operate each
hour of the day(s) included in NYSEG's
notice under Section 3.2.a.(1). Owner shall
follow-up, as soon as is reasonably
practicable, by sending to NYSEG by
facsimile (or other method agreed to by the
Parties in writing) a written confirmation
of whether each such unit is scheduled to
operate during each hour of such day(s).
3.2.b.(2) When NYSEG informs Owner that the Milliken
Conditions exist, Owner shall authorize and
direct the ISO to make available to NYSEG by
2:00 p.m. of each day the results of the
unit commitment for Milliken in the
Day-Ahead Market (as defined in the ISO
Tariff) and any other bilateral schedules
submitted to the ISO for Milliken between
the close of the Day-Ahead Market and 2:00
p.m. and at such other times other
information that NYSEG reasonably requires
under this Agreement.
3.2.c.(1) If Owner notifies NYSEG that both Milliken
units are scheduled to operate during each
hour of the day(s) identified in NYSEG's
notice pursuant to Section 3.2.a.(1) or (2):
3.2.c.(1)(a) Except as provided in Section
3.2.d.(8), Owner shall not take
either unit off line or operate it
below the Minimum Generation Level
("Decommit") during such day(s)
without NYSEG's prior approval; and
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3.2.c.(1)(b) NYSEG will owe no compensation to
Owner under this Agreement
associated with said operations.
3.2.c.(2) If Owner notifies NYSEG in the Owner's
notice (pursuant to Sections 3.2.a.(2) or
3.2.b.(1) that one or both Milliken units
are not scheduled to operate during each
hour of the day(s) identified in NYSEG's
notice pursuant to Section 3.2.a.(1) or (2),
Owner shall also provide NYSEG with the
following information:
3.2.c.(2)(a) If a unit(s) is scheduled
to operate during some
hours of such day(s), Owner
shall indicate which hours
the unit(s) are scheduled
to operate; and
3.2.c.(2)(b) If a unit is not scheduled
to operate at all during
such day(s), Owner shall
inform NYSEG of whether the
unit(s) are currently
operating, and, if so, at
what hour the unit(s) are
scheduled to go off-line.
3.2.c.(2)(c) If a unit(s) is scheduled
to go off-line during or
prior to the start of the
day(s) identified in
NYSEG's notice pursuant to
Section 3.2.a.(1) or
3.2.a.(2), Owner shall
inform NYSEG of the hour(s)
that the unit(s) is
scheduled to go off-line.
3.2.d. The Parties shall comply with the following procedures
on Transaction Days:
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3.2.d.(1) If neither Milliken unit has been
scheduled to operate during the
Transaction Day, Owner shall operate
both units (including the obligation
to start-up both units) during the
hours specified by NYSEG for the
Transaction Day. NYSEG will specify
consecutive hours during which Owner
shall operate the unit(s).
3.2.d.(2) If one Milliken unit has been
scheduled to operate during the
Transaction Day: (i) Owner shall not
Decommit that unit during the
Transaction Day without NYSEG's
prior approval, and (ii) Owner shall
operate the other Milliken unit
(including the obligation to
start-up that unit) during the hours
specified by NYSEG for the
Transaction Day. NYSEG will specify
consecutive hours during which Owner
shall operate the unit(s).
3.2.d.(3) If NYSEG directs Owner to operate a
Milliken unit(s) during the
Transaction Day, and if Owner has
informed NYSEG that such unit(s) is
scheduled to go off-line prior to
the Transaction Day, then NYSEG will
have the option of directing Owner
to operate and Owner shall operate
the unit(s) starting from the hour
that the unit(s) is scheduled to go
off-line through the end of last
consecutive hour specified by NYSEG
for the Transaction Day.
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3.2.d.(4) If Owner has informed NYSEG that a
Milliken unit is scheduled to
operate during some, but not all,
hours of the Transaction Day, NYSEG
may direct Owner to and Owner shall
operate the unit during additional
consecutive hours of the Transaction
Day, as specified by NYSEG.
3.2.d.(5) NYSEG will have sole discretion to
direct a Milliken unit(s) to operate
when NYSEG forecasts that the
Milliken Conditions will occur.
3.2.d.(6) If the Real Time Market is
operational and NYSEG directs Owner
to operate one or both Milliken
unit(s), NYSEG will direct Owner to
and Owner shall bid all energy
associated with the entire capacity
("capacity") of such unit(s) into
the Real Time Market (as described
in the ISO Tariff) for each Directed
Hour that NYSEG directs Owner to
operate the unit(s), in accordance
with this Section 3.2.d., as
follows:
3.2.d.(6)(a) Owner shall submit
a zero bid for
Start-up Costs and
Minimum Generation
Costs, using the
Minimum Generation
Level specified in
Schedule 1 (which
is attached hereto
and incorporated
by reference
herein); and
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3.2.d.(6)(b) Owner shall bid no
higher than its
Incremental Cost
Curve, as
specified in
Schedule 1, for
output above the
Minimum Generation
Level for the
applicable
Milliken unit.
If the Real-Time Market is not
operational and NYSEG directs Owner
to operate one or both Milliken
units, NYSEG will direct Owner to
operate such Milliken unit(s) at the
Minimum Generation Level on
Transaction Days and Owner shall
operate such Milliken unit(s) at the
Minimum Generation Level or at a
higher output level, subject to Good
Utility Practice.
3.2.d.(7) The Directed Hours may occur either
before or after or both before and
after the hours that the Milliken
unit(s) is scheduled to operate, so
long as all such hours are
consecutive.
3.2.d.(8) Subject to Sections 3.3 and 3.8,
nothing in this Agreement prevents
Owner from taking those actions that
it determines are necessary to
respond to Emergency Conditions at
the Milliken Facilities.
3.2.e. For the Services provided under this Agreement and
subject to the maximum compensation limit set forth
in Section 3.2.i., NYSEG shall pay
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Owner the amount, if any, by which the sum of Owner's
Costs on Transaction Days (as set forth in Section
3.2.f.) for the Milliken unit(s) that NYSEG directed
Owner to operate pursuant to Section 3.2.d. exceed
the sum of Owner's revenues (as set forth in Section
3.2.g. and 3.2.h.) from the said Milliken unit(s)
during the same Transaction Day. If NYSEG directs a
Milliken unit to continue operating prior to the
start of the Transaction Day under Section 3.2.d.(3),
the hours that the unit operates under NYSEG's
direction during the prior day shall be considered
part of the Transaction Day for purposes of Sections
3.2.e., f., g., and h.
3.2.f. Owner's Costs on Transaction Days shall consist of
the following applicable costs from Schedule 1:
3.2.f.(1) Minimum Generation Costs for the
applicable Milliken unit(s) for each
Directed Hour during a Transaction
Day in which such unit(s) operate;
and
3.2.f.(2) The incremental production costs for
the applicable Milliken unit(s)
determined using the Incremental
Cost Curve (as described in Schedule
1) for each Directed Hour during the
same Transaction Day in which such
unit(s) operated above Minimum
Generation Level (as set forth in
Schedule 1) subject to the
Adjustment in Section 3.2.g.; and
3.2.f.(3) If applicable, Start-up Costs for
either a Warm Start or Cold Start
(as specified in Schedule 1), as
follows:
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3.2.f.(3)(i) If NYSEG directs
Owner to start-up
a Milliken unit on
the Transaction
Day that has been
off-line for more
than 48 hours,
Owner's Costs
shall include
"Cold Start"
Start-up Costs.
3.2.f.(3)(ii) If NYSEG directs
Owner to start-up
a unit on a
Transaction Day
that has been
off-line for 48
hours or less,
Owner's Costs
shall include
"Warm Start"
Start-up Costs.
3.2.f.(3)(iii) Notwithstanding the
foregoing, Owner shall not
be entitled to any Start-up
Cost payments hereunder, if
the Milliken units are
already (a) operating or
(b) scheduled to operate on
the Transaction Day.
3.2.g. Revenues during Directed Hours. Owner's revenues for
Directed Hours shall consist of the sum of hourly
energy revenues, as described in this Section 3.2.g.,
and revenues for the provision of operating reserves
from such unit during Directed Hours. The hourly
energy revenue for each Directed Hour shall consist
of the product of the Real-Time LBMP at the Milliken
unit and the actual Milliken generation for that hour
(prior to any offsets for purchases, penalties or
other charges) ("LBMP Revenues") subject to the
following adjustment (the "Adjustment"):
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For every Directed Hour at each Milliken
unit during which the unit operates above
the Minimum Generation Level, NYSEG will
determine whether the LBMP at the Milliken
unit for that hour is less than the
incremental cost of providing the last MW of
actual output, using the Incremental Cost
Curve in Schedule 1. If LBMP is less than
the incremental cost of production, then,
using the Incremental Cost Curve, NYSEG will
identify the production level at which the
LBMP at the Milliken unit in that hour
equals the incremental production cost of
the unit. For any actual production of the
unit above that level during that hour, the
Owner will be deemed to have received no
additional energy revenues and incurred no
incremental production costs.
Any penalties or other charges or costs incurred by
Owner, including, without limitation, penalties or
charges for failure of a unit to follow the ISO's or
NYSEG's instructions, shall be Owner's sole
responsibility and shall not be netted against
Owner's revenues for purposes of this section or
Section 3.2.h. If the Real-Time LBMP is not
available, the Parties will attempt in good faith to
agree on a new market price index to replace the Real
Time LBMP described in this Section 3.2.g. and in
Section 3.2.h., provided, however, that if the
Parties are unable to agree on such a new substitute
market price index, the Parties shall use the hourly
integrated Pennsylvania-New Jersey-Maryland ("PJM")
Locational Marginal Price
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("LMP") at the "NYPP-W" interface, as reported on the
PJM Oasis, or its successor price, in lieu of the
Real-Time LBMP described in Section 3.2.g. and
Section 3.2.h.
3.2.h. Revenues during Non-Directed Hours. For days in which
a Milliken unit would not have been scheduled to
operate but for NYSEG's direction under Section
3.2.d., Owner's revenues will also include any Net
Revenues (as defined below) from energy produced by
that unit during the hours of the Transaction Day in
which such unit was not directed by NYSEG to operate
("Non-Directed Hours") and revenues for the provision
of operating reserves from such unit during the
Non-Directed Hours. "Net Revenues" will be calculated
as follows: (a) the output of the Milliken unit(s) in
each Non-Directed Hour, times the Real-Time LBMP (or
as described in Section 3.2.g., the PJM LMP at
NYPP-W) for each such hour at the Milliken load bus,
minus (b) the Minimum Generation Costs and any
applicable incremental production costs determined
from the Incremental Cost Curve for such hour. For
the purposes of this Section 3.2.h., Owner will be
deemed to receive Real-Time LBMP revenues for all
actual output during Non-Directed Hours of a
Transaction Day. If total Net Revenues for these
Non-Directed Hours are positive, they will be
included in Owner's revenues for purposes of this
Section 3.2.h. If total Net Revenues for Non-Directed
Hours are negative, they will not be included in the
calculations in this Section 3.2.h.
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3.2.i. In no event shall NYSEG be obligated to compensate
Owner for more than the applicable Start-up Costs and
Minimum Generation Costs for Directed Hours on the
Transaction Day, as such costs are described in
Schedule 1.
3.2.j. Except for the payments specified in Section 3.2.e.,
no other payments will be due from NYSEG under this
Agreement.
3.3 Limitation on Operation. Owner shall satisfy the requirements
set forth in Sections 3.1, 3.2.c., and 3.2.d., except and only to the extent
that Owner cannot do so as a result of an ISO or a NYSEG order requiring Owner
to reduce the output or take one or both of the Milliken units off line as a
result of emergency operating requirements (but not a result of Base Point
Signals or AGC signals, as such terms are defined in the ISO Tariff), or as a
result of an event of Force Majeure (as defined in Section 9.2).
3.4 Scheduled Maintenance. If Owner desires to schedule a
maintenance outage for either Milliken Unit, Owner shall notify NYSEG in writing
of the proposed outage at least seventy-two (72) hours prior to the hour that
the unit is scheduled to be out of service, or such other time period
established by the ISO or NYPP. All scheduled maintenance outages of the
Milliken units will be subject to advance NYSEG written approval, which approval
shall not be unreasonably withheld, and must comply with all ISO and NYPP rules.
In general, scheduled maintenance outages for Milliken will be permitted only
during non-peak months (i.e., April, May, June, September and October), unless
otherwise agreed in writing by the Parties. In addition, both Milliken units
shall not be scheduled for maintenance at the same time, unless the Parties
agree otherwise in writing.
3.5 Good Utility Practice and Reliability Rules. In addition to
the actions specified in
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this Agreement, the Interconnection Agreement and all other agreements between
the Parties: (1) Owner shall maintain and operate the Milliken Facilities in a
safe and efficient manner and pursuant to Good Utility Practice; and (2) Owner
shall comply with all applicable reliability rules, including, without
limitation, the ISO's, NYPP's, and NYSRC's rules and any other applicable local
reliability rules.
3.6 Procedures for Certain Contract Changes. Notwithstanding any other
provision of this Agreement:
(i) (a) if the ISO, the day-ahead scheduling procedures, the
Real-Time Market (as defined in the ISO Tariff) or any other
aspect of the ISO's rules or procedures necessary to implement
this Agreement is not in effect by 45 days prior to the
anticipated Transfer Date, or (b) if at any time the ISO
Tariff or the ISO's rules or procedures relating to day-ahead
scheduling, the Real-Time Market (as defined in the ISO
Tariff) or any other aspect of the ISO's rules or procedures
that relate to the implementation of this Agreement are
changed materially from the Supplemental Filing; or
(ii) (a) if NYSEG implements a change in any rule or practice in
accordance with Good Utility Practice that affects or is
reasonably expected to affect the Services under this
Agreement, or (b) if FERC, the Public Service Commission of
the State of New York , the ISO, NYPP, NYSRC, NERC, or NPCC,
or any of their successors, implements any change in any law,
tariff, rule, regulation, procedure, or practice which affects
or is reasonably expected to affect NYSEG's requirements for
Services under this Agreement, then NYSEG and Owner shall,
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to the extent time permits, negotiate in good faith to
determine the amendments, if any, to this Agreement that are
necessary to conform the terms of this Agreement to the extent
reasonably necessary to carry out the intent and purposes of
this Agreement. If the Parties are unable to reach agreement
on such amendments, NYSEG shall have the right to make a
unilateral filing with the FERC to modify this Agreement
pursuant to Sections 205 or 206 of the Federal Power Act and
FERC's rules and regulations thereunder; provided that Owner
shall have the right to oppose such filing by NYSEG and to
participate fully in any proceeding established by FERC to
address such amendment.
3.7 Retirement of Units and Buy-Out.
3.7.a. If Owner desires to retire or take out of service one
or both Milliken units, or to remove Milliken from
NYSEG's direction under the terms of this Agreement,
Owner shall notify NYSEG in writing. Owner and NYSEG
shall thereupon cooperate in good faith to evaluate
alternatives to replace the voltage support provided
by the Milliken unit(s), in accordance with Good
Utility Practice, including, without limitation,
consideration of transmission upgrades or generation
alternatives (the "Alternative"). Upon selecting an
Alternative that is acceptable to both Parties, the
Parties shall negotiate in good faith to attempt to
reach a written agreement on necessary modifications
to this Agreement and on the terms and conditions for
such Alternative, including, without limitation, the
costs (if any) that shall be borne by each Party. If
the Parties are unable to reach an
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agreement, as described in the preceding sentence,
that is satisfactory to both Parties, then this
Agreement shall remain in full force and effect.
3.7.b. Neither Milliken unit shall be retired and/or taken
out of service, nor shall this Agreement be modified
or terminated, pursuant to Section 3.7.a., until such
time as NYSEG notifies Owner in writing that the
Alternative is in commercial operation and NYSEG
authorizes removal of the Milliken unit(s) from
service and/or the modification or termination of
this Agreement.
3.8 Failure to Operate in Accordance with Agreement.
3.8.a.(1) In addition to any other amounts due
pursuant to this Agreement, if NYSEG must
Shed Load (as defined herein), in accordance
with Good Utility Practice, in the Ithaca
Division as a result of Owner's failure to
comply with any of its obligations under
this Agreement (an "Occurrence") and such
failure is not excused by an event of Force
Majeure (as defined in Section 9) or caused
by NYSEG's own negligence, Owner shall pay
to NYSEG the following amounts: (i) for each
Occurrence, Owner shall pay to NYSEG the sum
of $3,000 per hour for each hour, or part
thereof, that NYSEG Sheds Load (as defined
herein); (ii) for only the second Occurrence
in a 365-day period, Owner shall pay to
NYSEG the additional sum of $22,000 per hour
for each hour, or part thereof, that NYSEG
Sheds Load (in addition to the payment
described in item
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(i) above); (iii) and for the third
Occurrence and any subsequent occurrences,
Owner shall pay to NYSEG the additional sum
of $42,000 per hour for each hour, or part
thereof, that NYSEG Sheds Load (in addition
to the payment described in item (i) above)
unless and until the independent engineer
(as described in Section 3.8.a.(2))
certifies that Owner has implemented the
recommendations or alternative measures
described in Section 3.8.a.(2)(B). If at
least one Milliken unit is operating at or
above its Minimum Generation Level in
accordance with the terms of this Agreement
and NYSEG Sheds Load, the Owner shall not be
liable pursuant to this Section 3.8.a.(1).
3.8.a.(2) In addition to the foregoing payments, upon
the second Occurrence in any 365-day period,
the following provisions shall also apply:
(A) An independent engineer will be
promptly appointed by NYSEG, at
Owner's expense, in accordance with
the following provisions: (i) to
investigate and issue a written
report, within 30 days of the date
of its appointment, on the causes of
such Occurrences and any other
Occurrences prior to the issuance of
such report; and (ii) to recommend
those actions that should be
implemented, in accordance with Good
Utility Practice, to correct any
operating or equipment deficiencies
or any other problems which may
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29
have caused or contributed to all
such Occurrences and to avoid the
incidence of future Occurrences. If
there are any additional Occurrences
after the issuance of the
independent engineer's report, but
before the certification described
in Section 3.8.a.(2)(c), the
independent engineer shall issue a
revised report that addresses such
additional Occurrences and provides
the same information required by
this Section 3.8.a.(2)(A). Prior to
signing this Agreement, the Parties
shall develop a list of nationally
recognized independent engineering
firms. NYSEG shall select the
independent engineer from this list.
(B) The Owner shall, at its own expense,
promptly implement all
recommendations made by the
independent engineer, as described
in paragraph (A) above, or shall, at
its own expense, promptly implement
alternative measures, in accordance
with Good Utility Practice, which
recommendations or alternative
measures shall be satisfactory to
NYSEG in its exercise of reasonable
discretion.
(C) The independent engineer will also
be requested to certify that the
recommendations or alternative
measures described in the preceding
Section 3.8.a.(2)(B) were
implemented by
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the Owner.
(D) The Parties agree to cooperate in
good faith with, and provide all
information reasonably required by,
the independent engineer and to
provide access to their facilities
and records as may be reasonably
required by the Independent
Engineer.
(E) If the Owner does not, within 15
days begin to implement the
recommendations or alternative
measures described in Section
3.8.a.(2)(B) and use all reasonable
efforts to expeditiously complete
implementation of such
recommendations or alternative
measures, Owner will be in breach of
the Agreement and NYSEG may pursue
all available legal and equitable
remedies.
3.8.a.(3) As used in this Section 3.8.a., the term
"Shed(s) Load" or "Load Shedding" means
NYSEG's process of deliberately removing
load from NYSEG's electric system in the
Ithaca Division, whether manually,
automatically, or through voluntary customer
appeals, in accordance with Good Utility
Practice in response to an abnormal
condition to maintain the integrity of the
electric system and minimize overall
customer outages.
3.8.a.(4) An Occurrence shall be deemed to have ended
at the earlier of: (i) the operation of
Milliken in accordance with the terms of the
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Agreement; (ii) the operation of at least
one Milliken unit at its Minimum Generation
Level; or (iii) the end of the applicable
days on which the Milliken Conditions exist.
3.8.a.(5) If Owner is obligated to compensate NYSEG
under this Section 3.8 and complies with the
payment provisions of Section 5, Owner may
request and NYSEG shall provide records or
other information reasonably necessary to
demonstrate that NYSEG followed applicable
Load Shedding procedures.
3.8.b. The Parties agree that the agreements contained in
this Section 3.8. are an integral part of the
transactions contemplated by this Agreement and are
an integral part of the Parties' consideration under
the APA, IA, the Transmission Assignment Agreement,
and the New York Transition Agreement between the
Parties, and the amounts set forth in Section
3.8.a.(1) represent the Parties' best estimate of the
damages incurred by NYSEG, and that the payment by
Owner of such an amount is an appropriate remedy, and
such payment constitutes liquidated damages and not a
forfeiture or penalty. Owner irrevocably and
unconditionally waives any claim that this Section
3.8 is or may be unenforceable as to Owner.
3.9 Contact Persons. As set forth in Section 18.1, each Party
shall appoint a representative, and one or more alternates, who are responsible
for receiving and giving the notifications and for resolving other day-to-day
operating issues under this Agreement.
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SECTION 4
ACCESS TO OWNER'S FACILITIES AND RECORDS
4.0 Access to Owner's Facilities and Records.
4.1 Access, Easements, Conveyances, Licenses, and Restrictions.
4.1.a. General. Owner agrees to grant NYSEG, and its
authorized contractors and agents, reasonable access
to the Milliken Facilities and to Owner's records
Monday through Friday during normal business hours as
may be reasonably necessary to enable NYSEG to
exercise its rights under, and determine Owner's
compliance with, the terms of this Agreement,
provided that NYSEG shall, to the extent practicable
under the circumstances, provide Owner with
reasonable prior written notice that NYSEG requires
such access. Such access shall be provided to such
representatives of NYSEG, as NYSEG shall designate,
and in a manner so as not to unreasonably interfere
with the ongoing business operations, rights, and
obligations of Owner.
4.1.b. Owner shall provide a representative to escort
NYSEG's representatives in and around the Milliken
Facilities. Owner shall not take any action that
would impede, restrict, diminish, or terminate such
access or other access rights by NYSEG and its
authorized contractors and agents.
SECTION 5
BILLING PROCEDURES
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5.0 Billing Procedures.
5.1 Billing Procedures.
5.1.a. Within ten (10) days after the first day of each
month immediately following the month in which a
Transaction Day has occurred, Owner shall prepare an
invoice for any payments due Owner pursuant to
Section 3.2.e. as a result of NYSEG directing Owner
to operate Milliken on any Transaction Days during
the preceding month. NYSEG shall submit invoices to
Owner whenever necessary under this Agreement.
5.1.b. Each invoice shall delineate the month in which the
services were provided, shall fully describe the
services rendered, and shall be itemized to reflect
the services performed or provided.
5.1.c. All invoices shall be paid within thirty (30) days of
receipt. All payments shall be made in immediately
available funds payable to the other Party, or by
wire transfer to a bank named by each Party.
5.1.d. NYSEG may set-off any amounts owed to Owner against
any amount owed to NYSEG by Owner pursuant to this
Agreement or any other agreement or arrangement
between NYSEG and Owner.
5.1.e. Disputed amounts shall be placed in an interest
bearing escrow account, subject to resolution.
5.2 Payment of Invoices. Payment of invoices shall not relieve the
paying Party from any responsibilities or obligations it has under this
Agreement, nor shall such payment constitute a waiver of any claims arising
hereunder.
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5.3 Interest on Unpaid Balances. Interest on any unpaid amounts
(including amounts placed in escrow) and overpayments, if any, shall be
calculated in accordance with the methodology specified for interest on refunds
in FERC's regulations at 18 C.F.R. Section 35.19a (a)(2)(iii).
Interest on delinquent amounts shall be calculated from the due date of
the bill to the date of payment. Interest on overpaid amounts shall be
calculated from the date such overpayment was received by the other Party. When
payments are made by mail, bills shall be considered as having been paid on the
date of receipt by the other Party.
5.4 Billing Disputes.
5.4.a. In the event of a billing dispute hereunder, each
Party shall continue to provide services as long as
the Party required to make payments hereunder shall
pay to the other Party all invoiced amounts that are
not in dispute and shall pay into an escrow account
all invoiced amounts that are in dispute.
5.4.b. If either Party fails to make any payments (the
"Non-Paying Party") required by Section 5.4.a., the
Party that is owed payment (the "Owed Party") shall
provide written notice to the Non-Paying Party
identifying with particularity the amounts that the
Owed Party believes that the Non-Paying Party owes
(including all calculations and supporting
documentation). The Non-Paying Party shall thereupon
have thirty (30) days to cure, from the date of
receipt of such notice, by either paying the Owed
Party or depositing into an escrow account the
disputed amounts which shall remain in the escrow
account until resolution of the dispute
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pursuant to Section 12.
5.4.c. In the event a Non-Paying Party fails to cure as
described in Section 5.4.b, the provisions of Section
7.0 shall apply.
SECTION 6
CONFIDENTIALITY
6.0 Confidentiality.
6.1 Confidentiality of NYSEG. NYSEG shall hold in confidence,
unless compelled to disclose by judicial or administrative process or other
provisions of law, all documents and information furnished by the Owner in
connection with this Agreement. Except to the extent that such information or
documents are (a) generally available to the public other than as a result of a
disclosure by NYSEG, (b) available to NYSEG on a non-confidential basis prior to
disclosure to NYSEG by the Owner, or (c) available to NYSEG on a
non-confidential basis from a source other than the Owner, provided that such
source is not known, and by reasonable effort could not be known, by NYSEG to be
bound by a confidentiality agreement with the Owner or otherwise prohibited from
transmitting the information to NYSEG by a contractual, legal or fiduciary
obligation, NYSEG shall not release or disclose such information to any other
person, except to its employees or contractors on a need-to-know basis, in
connection with this Agreement who has not first been advised of the
confidentiality provisions of this Section 6.1 and has agreed in writing to
comply with such provisions. In no event shall such information be disclosed in
violation of the requirements of FERC Orders 889 and 889-A, and any successor
thereto. NYSEG shall promptly notify the Owner if NYSEG receives notice or
otherwise concludes that
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the production of any information subject to this Section 6.1 is being sought
under provision of law. NYSEG may utilize information subject to this Section
6.1 in any proceeding under Article 12, or otherwise to enforce NYSEG's rights
under this Agreement, subject to a confidentiality agreement with the
participants.
6.2 Confidentiality of Owner. Owner shall hold in confidence,
unless compelled to disclose by judicial or administrative process or other
provisions of law, all documents and information furnished by the NYSEG in
connection with this Agreement. Except to the extent that such information or
documents are (a) generally available to the public other than as a result of a
disclosure by the Owner, (b) available to Owner on a non-confidential basis
prior to disclosure to the Owner by NYSEG, or (c) available to the Owner on a
non-confidential basis from a source other than the NYSEG, provided that such
source is not known, and by reasonable effort could not be known, by the Owner
to be bound by a confidentiality agreement with NYSEG or otherwise prohibited
from transmitting the information to the Owner by a contractual, legal or
fiduciary obligation, the Owner shall not release or disclose such information
to any other person, except to its employees on a need-to-know basis, in
connection with this Agreement, who has not first been advised of the
confidentiality provisions of this Section 6.2 and has agreed in writing to
comply with such provisions. In no event shall such information be disclosed in
violation of the requirements of FERC Orders 889 and 889-A, and any successor
thereto. Owner shall promptly notify NYSEG if Owner receives notice or otherwise
concludes that the production of any information subject to this Section 6.2 is
being sought under provision of law. Owner may utilize information subject to
this Section 6.2 in any proceeding under Article 12, subject to a
confidentiality agreement with the participants.
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6.3 Remedies Regarding Confidentiality. The Parties agree that
monetary damages would be inadequate to compensate non-disclosing party for the
disclosing party's breach of its obligations under Section 6.1 or 6.2. The
Parties accordingly agree, subject to Section 10, that either Party shall be
entitled to equitable relief, by way of injunction or otherwise, if the other
Party breaches or threatens to breach its obligations under Section 6.1 or 6.2.
SECTION 7
DEFAULT
7.0 Event of Default.
7.1 Any one of the following shall constitute an event of default under
this Agreement:
7.1.a. A material breach of any material term or condition
of this Agreement, including, but not limited to, any
material breach of a representation, warranty or
covenant made in this Agreement, including the
Appendices or Owner's failure to comply with the
provisions of Sections 3 and 14.
7.1.b. The appointment of a receiver or liquidator or
trustee for either Party or of any property of a
Party, and such receiver, liquidator or trustee is
not discharged within sixty (60) days;
7.1.c. The entry of a decree adjudicating a Party or any
substantial part of the property of a Party bankrupt
or insolvent, and such decree is continued
undischarged and unstayed for a period of sixty (60)
days; or
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7.1.d. The filing of a voluntary petition in bankruptcy
under any provision of any federal or state
bankruptcy law by a Party or against it.
7.2 The following shall apply when there is an event of default:
7.2.a. Upon the occurrence of an event of default, the Party
not in default must give written notice of the
default to the defaulting Party. Such notice shall
set forth, in reasonable detail, the nature of the
default and, where known and applicable, the steps
necessary to cure such default. Subject to Section
7.3, the defaulting Party shall have thirty (30) days
following receipt of such notice either to (i) cure
such default, or (ii) commence in good faith all such
steps as the non-defaulting Party may, in its
reasonable judgment, determine to be necessary and
appropriate to cure such default in the event such
default cannot, in the reasonable judgment of such
non-defaulting Party, be completely cured within such
thirty (30) day period.
7.2.b. If the Owner fails to cure such default or take such
steps as provided under Section 7.2.(a) above, this
Agreement may be terminated by NYSEG by providing
written notice to Owner. This Agreement shall
thereupon terminate as of the date specified in
NYSEG's notice and NYSEG may exercise all such rights
and remedies as may be available to it to recover
damages caused by such default. Except as provided in
this Section 7.2.b. below, Owner shall not have the
right to terminate this Agreement as a result of a
default by NYSEG. If, and only if, NYSEG is in
default for failure to make payments as described in
Section 5.4 and NYSEG fails to
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cure or take steps to cure such default, then Owner
may, provide sixty (60) days' written notice to NYSEG
of Owner's intent to terminate this Agreement which
termination shall be in accordance with the
requirements of the Federal Power Act and FERC's
rules and regulations (including 18
C.F.R.Section 35.15).
7.2.c. Notwithstanding the foregoing, upon the occurrence of
any such event of default, the non-defaulting Party
shall be entitled (i) to commence an action to
require the defaulting Party to remedy such default
and specifically perform its duties and obligations
hereunder in accordance with the terms and conditions
hereof, and (ii) to exercise such other rights and
remedies as it may have at equity or at law.
7.3 Notwithstanding anything in this Agreement to the contrary and
without waiving or limiting NYSEG's other rights hereunder: (a) if the Owner's
failure to comply with the provisions of Sections 3.0 and 14.0 and Schedules 1
and 2 of this Agreement creates or is likely to create an imminent threat to the
reliable operation of the electric system in NYSEG's Ithaca Division, NYSEG (i)
shall have no obligation to permit the Owner an opportunity to cure that event
of default, and (ii) NYSEG shall have the right to take immediately all
reasonable steps and/or to exercise immediately all remedies available under
this Agreement, or at law or in equity, in order to cure such default; and (b)
if there is an Occurrence (as that term is defined in Section 3.8.), Owner shall
be obligated to pay NYSEG the amounts set forth in Section 3.8.a. regardless of
whether Owner cures the event of default within the period specified in Section
7.2.a.
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SECTION 8
INDEMNIFICATION
8.0 Indemnification.
8.1 Owner's Indemnification. The Owner shall indemnify and hold
harmless and defend NYSEG, its parent, affiliates, and successors, and their
officers, directors, employees, agents, subcontractors, and successors, from and
against any and all claims, demands, liabilities, costs, losses, judgments,
damages and expenses (including, without limitation, reasonable attorney and
expert fees, and disbursements incurred by NYSEG in any actions or proceedings
between NYSEG and a third party, the Owner, or any other party) for damage to
property, injury to or death of any person, including NYSEG's employees, the
Owner's employees and their affiliates' employees, or any third parties, to the
extent caused wholly or in part by any act or omission, negligent or otherwise,
by the Owner and/or its officers, directors, employees, agents, and
subcontractors arising out of or connected with this Agreement.
8.2 NYSEG's Indemnification. NYSEG shall indemnify and hold
harmless and defend Owner, its parent, affiliates, and successors, and their
officers, directors, employees, agents, subcontractors, and successors, from and
against any and all claims, demands, liabilities, costs, losses, judgments,
damages and expenses (including, without limitation, reasonable attorney and
expert fees, and disbursements incurred by Owner in any actions or proceedings
between Owner and a third party, NYSEG, or any other party) for damage to
property, injury to or death of any person, including Owner's employees, NYSEG's
employees and their affiliates' employees, or any third parties, to the extent
caused wholly or in part by any act or omission,
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negligent or otherwise, by NYSEG and/or its officers, directors, employees,
agents, and subcontractors arising out of or connected with this Agreement.
8.3 Indemnification Procedures. If either Party intends to seek
indemnification under this Section 8 from the other Party, NYSEG or the Owner,
as the case may be, shall give the the other Party notice of such claim within
ninety (90) days of the commencement of, or NYSEG's or the Owner's, as the case
may be, actual knowledge of, such claim or action. Such notice shall describe
the claim in reasonable detail, and shall indicate the amount (estimated if
necessary) of the claim that has been, or may be sustained by NYSEG or the
Owner, as the case may be. 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.
Neither Party may settle or compromise any claim without the prior consent of
the other Party; provided, however, said consent shall not be unreasonably
withheld or delayed.
8.4 Survival. The indemnification obligations of Owner and NYSEG
under this Section 8 for acts or occurrences prior to expiration, termination,
or cancellation of this Agreement shall continue in full force and effect
regardless of whether this Agreement expires or terminates, or is canceled,
surrendered or completed. Such obligations shall not be limited in any way by
any limitation on insurance, by the amount or types of damages, or by any
compensation or benefits payable by the Parties under worker's compensation
acts, disability benefit acts or other employee acts, or otherwise.
SECTION 9
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FORCE MAJEURE
9.0 Force Majeure.
9.1 Notwithstanding anything in this Agreement to the contrary,
the Owner and NYSEG shall not be liable in damages or otherwise or responsible
to the other for its failure to carry out any of its obligations under this
Agreement, other than any obligation to pay an amount when due, if and only to
the extent that it is unable to so perform or is prevented from performing by an
event of Force Majeure (as defined in Section 9.2).
9.2 The term "Force Majeure," as used herein, means those causes
beyond the reasonable control of the Party affected, which by the exercise of
reasonable diligence, including Good Utility Practice, that Party is unable to
prevent, avoid, mitigate, or overcome, including the following: any act of God,
labor disputes (including a strike, slowdown, or other labor dispute), act of
the public enemy, war, insurrection, riot, fire, storm or flood, severe weather
disturbance, lighting, explosion, electric system disturbance, order, government
decree or rule, regulation or restriction imposed by governmental, military or
lawfully-established civilian authorities, or any other cause of a similar
nature beyond a Party's reasonable control. The cost to operate and/or maintain
Milliken shall not be deemed an event of Force Majeure.
9.3 If a Party shall rely on the occurrence of an event or
condition described above as a basis for being excused from performance of its
obligations under this Agreement, then the Party relying on the event or
condition shall: (a) provide prompt written notice of such Force Majeure event
to the other Party giving a detailed written explanation of the Force Majeure
event and an estimation of its expected duration and the probable impact on the
performance of its obligations hereunder; (b) exercise all reasonable efforts in
accordance with Good Utility
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Practice to continue to perform its obligations under this Agreement; (c)
expeditiously take action to correct or cure the event or condition excusing
performance, provided that settlement of labor disputes will be completely
within the sole discretion of the Party affected by such labor dispute; (d)
exercise all reasonable efforts to mitigate or limit damages to the other Party;
and (e) provide prompt notice to the other Party of the cessation of the event
or condition giving rise to its excuse from performance.
SECTION 10
LIMITATION OF LIABILITY
10.0 Limitation of Damages.
10.1 Except for indemnity obligations set forth in Section 8, neither
NYSEG nor the Owner, nor their respective officers, directors, agents,
employees, parents, affiliates, successors, assigns, or subcontractors nor their
respective officers, directors, agents, employees, successors, assigns, or
subcontractors shall be liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees, successors, assigns, or
subcontractors for claims, suits, actions, causes of action or otherwise for
incidental, punitive, special, indirect, multiple or consequential damages
(including attorneys' fees or litigation costs) connected with, or resulting
from, performance or non-performance of this Agreement, or any actions
undertaken in connection with, or related to this Agreement, including, without
limitation, any such damages which are based upon causes of action for breach of
contract, tort (including negligence and misrepresentation), breach of warranty
or strict liability.
The provisions of this Section 10.1 shall apply regardless of fault and
shall survive
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termination, cancellation, suspension, completion or expiration of
this Agreement.
10.2 If NYSEG defaults in the performance of any covenant, warranty, or
obligation under this Agreement, and such default is not excusable due to an
event of Force Majeure or due to the Owner's default in its performance under
this Agreement, NYSEG's liability to the Owner shall be limited to the Owner's
direct damages incurred by the Owner as a result of such default by NYSEG.
The provisions of this Section 10.2 shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.
SECTION 11
ADDITIONAL REMEDIES
11.0 Additional Remedies.
To the extent NYSEG elects to pursue an equitable remedy in response to
Owner's breach of this Agreement and such breach has or is likely to have a
material adverse impact on the reliability of the electric system in the Ithaca
Division, Owner hereby irrevocably waives Owner's right to assert that an
adequate legal remedy exists.
SECTION 12
DISPUTES
12.0 Disputes.
12.1 Any disagreement between NYSEG and the Owner as to their rights
and obligations under this Agreement shall first be addressed by the Parties. In
the event that representatives of the Owner and NYSEG are unable in good faith,
to satisfactorily resolve their
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disagreement, they shall refer the matter to their respective senior management.
If after using their good faith best efforts to try to resolve the dispute,
senior management cannot resolve the dispute in 30 days, either Party may
exercise any right or remedy available pursuant to this Agreement or at law or
in equity.
SECTION 13
REPRESENTATIONS
13.0 Representations.
13.1 Representations of NYSEG. NYSEG represents and warrants to the
Owner as follows:
13.1.a. Organization. NYSEG is a corporation duly
organized, validly existing and in good standing
under the laws of the State of New York and NYSEG
has the requisite corporate power and authority
to carry on its business as now being conducted.
13.1.b. Authority Relative to this Agreement. NYSEG has
the requisite 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 actions it contemplates have
been duly and validly authorized by all required
corporate action. The Agreement has been duly and
validly executed and delivered by NYSEG and
constitutes a legal, valid and binding agreement
of NYSEG.
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13.1.c. Regulatory Approval. NYSEG has obtained, or will
obtain by the Transfer Date, any and all
approvals of, and given any notice to, any public
authority that are required for NYSEG to execute
and deliver this Agreement and shall cooperate
with Owner to the extent reasonably required by
Owner to obtain the regulatory approvals referred
to in Section 13.2.c.
13.1.d. Compliance With Law. NYSEG represents and
warrants that it is not in violation of any
applicable law, statute, order, rule, regulation,
or judgment promulgated or entered by any
federal, state, or local governmental authority,
which violation would affect NYSEG's performance
of its obligations under this Agreement. NYSEG
represents and warrants that it will comply with
all applicable laws, rules, regulations, codes,
and standards of all Federal, state, and local
governmental agencies having jurisdiction over
NYSEG or this Agreement.
13.2 Representations of the Owner. The Owner represents and warrants to
NYSEG as follows:
13.2.a. Organization. The Owner is a limited liability
company duly organized, validly existing and in
good standing under the laws of the State of
Delaware and the Owner has the requisite power
and authority to carry on its business as now
being conducted.
13.2.b. Authority Relative to this Agreement. The Owner
has the requisite
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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
actions it contemplates have been duly and
validly authorized by all required corporate
action. This Agreement has been duly and validly
executed and delivered by the Owner and
constitutes a legal, valid and binding agreement
of the Owner.
13.2.c. Regulatory Approval. The Owner has obtained, or
will obtain by the Transfer Date, any and all
approvals of, and given any notice to, any public
authority that are required for the Owner to
execute and deliver this Agreement and shall
cooperate to the extent reasonably required by
NYSEG to obtain the regulatory approvals referred
to in Section 13.1.c.
13.2.d. Compliance With Law. The Owner represents and
warrants that it is not in violation of any
applicable, law, statute, order, rule, regulation
or judgment promulgated or entered by any
Federal, state, or local governmental authority,
which violation would affect the Owner's
performance of its obligations under this
Agreement. The Owner represents and warrants that
it will comply with all applicable laws, rules,
regulations, codes, and standards of all Federal,
state, and local governmental agencies having
jurisdiction over the Owner or this Agreement.
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13.3 Representations of Both Parties. The representations and
warranties in Sections 13.1.d. and 13.2.d. shall continue in full force and
effect for the term of this Agreement.
SECTION 14
ASSIGNMENT/CHANGE IN CORPORATE IDENTITY
14.0 Assignment/Change in Corporate Identity.
14.1 This Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the Parties and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned, except to an Affiliate of
NYSEG that owns all or part of its transmission system or to an Affiliate of
Buyer that owns Milliken, by or through any Party hereto, whether by operation
of law or otherwise, without the prior written consent of the other Party, which
consent shall not be unreasonably withheld. Any assignment of this Agreement in
violation of the foregoing shall be, at the option of the non-assigning Party,
void. Notwithstanding the foregoing, the Owner may assign, transfer, convey,
pledge or otherwise dispose of its rights and interests hereunder to a trustee
or lending institution(s) for the purposes of financing or refinancing the
acquisition of Milliken, which assignment, transfer, conveyance, pledge or
disposition may be upon or pursuant to the exercise of remedies under such
financing or refinancing, or by way of assignments, transfers, pledges,
conveyances or dispositions in lieu thereof; provided, however, that no such
assignment, transfer, conveyance, pledge or disposition shall relieve or in any
way discharge the Owner from the performance of its duties and obligations under
this Agreement. NYSEG agrees to execute and deliver, at the Owner's expense,
such documents as may be reasonably necessary to accomplish
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any such assignment, transfer, conveyance, pledge or disposition of rights
hereunder for purposes of the financing or refinancing of the acquisition of
Milliken, so long as NYSEG's rights under this Agreement are not thereby
altered, amended, diminished or otherwise impaired.
14.2 No assignment, transfer, conveyance, pledge or disposition of
rights, interests, duties or obligations under this Agreement by a Party shall
relieve the Party from liability and financial responsibility for the
performance thereof after any such transfer, assignment, conveyance, pledge or
disposition unless and until the transferee or assignee shall agree in writing
to assume the obligations and duties of that Party under this Agreement and
non-assigning Party has consented in writing to such assumption and to a release
of the assigning Party from such liability.
14.3 If the Owner terminates its existence as a corporate entity, if
the Owner merges into, is acquired by, is sold to or consolidates with another
business entity, or if all or substantially all of the Owner's assets are
transferred to another person or business entity without complying with this
Section 14, NYSEG shall have the right, enforceable in a court of competent
jurisdiction, to enjoin the Owner's successor from using Milliken in any manner
that does not comply with the requirements of this Agreement.
14.4 Any direct or indirect assignment, sale, conveyance, lease, or
other transfer of Milliken, whether by operation of law or otherwise, shall be
null and void unless, with NYSEG's prior written consent, the transferee of
Milliken assumes all of the Owner's right, title and interest in and to this
Agreement, and all of the Owner's rights, interests, duties and obligations
hereunder.
SECTION 15
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SUBCONTRACTORS
15.0 Subcontractors.
15.1 Nothing in this Agreement shall prevent the Parties from utilizing
the services of subcontractors as they deem appropriate; provided, however, that
each Party shall require each subcontractor to perform its obligations under
this Agreement and to comply with the terms and conditions of this Agreement.
15.2 The creation of any subcontract relationship shall not relieve the
hiring Party of any of its obligations under this Agreement. Subject to Section
10, each Party shall be fully responsible to the other Party for the acts and/or
omission of any subcontractor it hires as if no subcontract had been made. Any
obligation imposed by this Agreement upon Party, where applicable, shall be
equally binding upon, and shall be construed as having application to, any
subcontractor of such Party.
SECTION 16
LABOR RELATIONS
16.0 Labor Relations. NYSEG and the Owner agree to notify the other Party
immediately orally, and then in writing, of any labor dispute (including a
strike or other labor dispute) or anticipated labor disturbance of which its
management has actual knowledge that may reasonably be expected to affect the
operations of the other Party with respect to this Agreement.
SECTION 17
INDEPENDENT CONTRACTOR STATUS
17.0 Independent Contractor Status. Nothing in this Agreement shall be construed
as creating any relationship between NYSEG and the Owner other than that of
independent contractors.
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SECTION 18
NOTICES
18.0 Notices.
18.1 On or prior to the effective date of this Agreement, each Party
shall indicate to the other Party, by notice, the appropriate persons and their
telephone numbers (including one or more alternates) during each eight-hour work
shift to contact in the event of an emergency, or a scheduled or forced
interruption. The notice last received by a Party shall be effective until
modified in writing by the other Party.
18.2 Except as otherwise provided herein, all notices, requests,
claims, demands and other communications hereunder shall be in writing and shall
be given (and will be deemed to have been duly given if so given) by hand
delivery, telecopy (confirmed in writing) or telex, or by mail (registered or
certified, postage prepaid) to the respective Parties as follows:
For NYSEG:
New York State Electric & Gas Corporation
Corporate Drive
Kirkwood Industrial Park
Binghamton, NY 13902-5225
Attn: Denis E. Wickham
Senior Vice President - Energy Operating Services
with a copy to:
John Kobuskie
Manager - Electric Supply, Planning and Procurement
New York State Electric & Gas Corporation
Corporate Drive
Kirkwood Industrial Park
Binghamton, New York 13902-5225
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For Owner:
AES NY, L.L.C.
1001 North 19th Street
Arlington, Virginia 22209
Attn: Project Manager
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: Richard Sonkin, Esq.
or such other address as is furnished in writing by such Party; and any such
notice or communication given by mail, telecopy or telex shall be deemed to have
been given as of the date so mailed or transmitted as the case may be.
SECTION 19
NO THIRD PARTY BENEFICIARIES
19.0 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person, other than the Parties, any rights
or remedies under or by reason of this Agreement.
SECTION 20
HEADINGS
20.0 Headings. The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not affect the meaning or interpretation of
this Agreement.
SECTION 21
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WAIVER
21.0 Waiver. Except as otherwise provided in this Agreement, any failure of a
Party to comply with any obligation, covenant, agreement, or condition herein
may be waived by the Party entitled to the benefit thereof only by a written
instrument signed by the Party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first Party to comply with such obligation, covenant, agreement, or
condition.
SECTION 22
COUNTERPARTS
22.0 Counterparts. This Agreement may be executed in two or more counterparts,
all of which will be considered one and the same Agreement and each of which
will be deemed an original.
SECTION 23
GOVERNING LAW
23.0 Governing Law.
23.1 Laws and Regulations. This Agreement and all rights, obligations,
and performances of the Parties hereunder, are subject to all applicable Federal
and state laws, and to all duly-promulgated orders and other duly-authorized
action of governmental authorities having jurisdiction.
23.2 When not in conflict with or preempted by Federal law, this
Agreement will be governed by and construed in accordance with the law of the
State of New York, without giving effect to the conflict of law principles
thereof. Except for those matters covered in this Agreement that are
jurisdictional to the FERC or the appellate courts having jurisdiction over FERC
matters, any action arising out of or concerning this Agreement must be brought
in the
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federal or state courts of the State of New York. Both Parties hereby consent to
the exclusive jurisdiction of the State of New York for the purpose of hearing
and determining any action not preempted by Federal law or not within the
jurisdiction of the FERC.
SECTION 24
SEVERABILITY
24.0 Severability. In the event that any of the provisions of this
Agreement are held to be unenforceable or invalid by any court or regulatory
authority of competent jurisdiction, the Parties shall, to the extent possible,
negotiate an equitable adjustment to the provisions of this Agreement with a
view toward effecting the purpose of this Agreement, and the validity and
enforceability of the remaining provisions hereof shall not be affected by such
holding.
SECTION 25
AMENDMENTS
25.0 Amendments.
Except as otherwise provided in Sections 2.0 and 3.6 hereof:
25.1 the rates, terms and conditions contained in this
Agreement are not subject to change under
Sections 205 or 206 of the Federal Power Act, as
either section may be amended or superseded,
absent the mutual written agreement of the
Parties;
25.2 it is the intent of this Section 25 that, to the
maximum extent permitted by law, the rates, terms
and conditions in this Agreement shall not be
subject to change, regardless of whether such
change is sought (a) by the FERC acting sua
sponte on behalf of a Party or third party, (b)
by a
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Party, (c) by a third party, or (d) in any
other manner; and
25.3 this Agreement may be amended, modified, or
supplemented only by written agreement of both
NYSEG and the Owner.
SECTION 26
INSURANCE
26.0 Insurance.
26.1 The Owner agrees to maintain, at its own cost and expense, fire,
liability, worker's compensation, and other forms of insurance relating to its
property and facilities in the manner, and in the minimum amounts, and for the
durations set forth in Schedule 3 to this Agreement (which is attached hereto
and incorporated by reference herein).
26.2 The Owner agrees to furnish to NYSEG certificates of insurance
evidencing the insurance coverage set forth in Schedule 3. The Owner agrees to
notify NYSEG of any policies maintained hereunder written on a "claims made"
basis. NYSEG may require Owner to maintain tail coverage for five years on all
policies written on a "claims made" basis.
26.3 Every contract of insurance providing the coverages required in
Schedule 3 shall include provisions or endorsements (a) stating that such
insurance is primary insurance with respect to the interest of NYSEG and that
any insurance maintained by NYSEG is excess and not contributory insurance
required hereunder, and (b) if available on commercially reasonable terms
providing that no reduction, cancellation or expiration of the policy shall be
effective until thirty (30) days from the date written notice thereof is
actually received by NYSEG. Upon the Owner's receipt of any notice of reduction,
cancellation or expiration, the Owner shall immediately notify NYSEG in
accordance with Section 18.
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26.4 NYSEG and its affiliates shall be named as additional insureds on
the general liability insurance policies set forth in Schedule 3 as regards
liability under this Agreement.
26.5 The Owner shall provide and shall continue to provide to NYSEG
during the term of this Agreement (including any extensions), by delivering to
its corporate office at Corporate Drive, Kirkwood Industrial Park, Binghamton,
New York 13902-5225, Attention: Denis E. Wickham, Senior Vice President, Energy
Operating Services, properly executed and current certificates of insurance
relative to insurance policies. Certificates of insurance shall provide the
following information:
(i) Name of insurance company, policy number and expiration
date.
(ii) The coverage required and the limits on each, including
the amount of deductibles or self-insured retentions, which shall be for the
account of the Owner.
(iii) A statement indicating that NYSEG shall receive at least
thirty (30) days prior written notice of cancellation or reduction of liability
limits with respect to said insurance policies (if available on commercially
reasonable terms), and
(iv) To the extent applicable, a statement indicating that
NYSEG has been named as an additional insured.
26.6 A copy of each insurance policy, certified as a true copy by an
authorized representative of the issuing insurance company, or in lieu thereof
or in addition thereto, at NYSEG's discretion, a certificate in form
satisfactory to NYSEG certifying to the issuance of such insurance, shall be
furnished to NYSEG not less than ten (10) days prior to the Transfer Date and
fifteen (15) days prior to the expiration date of each such policy and/or
certificate.
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26.7 NYSEG shall have the right to inspect the original policies of
insurance applicable to this Agreement at the Owner's place of business during
regular business hours.
SECTION 27
ENTIRE AGREEMENT
27.0 Entire Agreement. This Agreement, together with the APA, IA,
Easement Agreement, Transmission Assignment Agreement, and the New York
Transition Agreement, each between the Parties, constitute the entire
understanding between the Parties, and supersede any and all previous
understandings, oral or written, which pertain to the subject matter contained
herein.
SECTION 28
FURTHER ASSURANCES
28.0 Further Assurances. The Parties hereto agree to promptly execute
and deliver, at the expense of the Party requesting such action, any and all
other and further instruments, documents and information which may be reasonably
requested in order to effectuate the transactions contemplated hereby.
Owner hereby agrees to cooperate with, and to assist, NYSEG in
acquiring any regulatory approval necessary to effectuate this Agreement, which
obligation will include without limitation, filing of testimony, and preparation
of other documents and witnesses.
IN WITNESS WHEREOF, the Parties have caused their authorized
representatives to execute this Agreement as of the date first above written.
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NEW YORK STATE ELECTRIC
& GAS CORPORATION
By:
Name: Kenneth M. Jasinski
Title: Executive Vice President
AES NY, L.L.C.
By:
Name: Henry Aszklar
Title: Manager
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Schedule 1
COSTS TO BE USED IN COMPUTING
NYSEG'S PAYMENT OBLIGATION
Milliken Unit 1
a) Minimum Generation Level: 70 MW(1)
b) Cold Start-up Cost (if applicable): $18,900 x FOI
c) Warm Start-up Cost (if applicable): $13,000 x FOI
d) Minimum Generation Cost (if applicable): $1,030/hr (@70 MW) x CI
e) Incremental Cost Curve (Unit 1) (if applicable): cost in dollars =
($ 0.01953 x__ MW + $11.29) x CI
Milliken Unit 2
a) Minimum Generation Level: 70 MW
b) Cold Start-up cost (if applicable): $18,900 x FOI
c) Warm Start-up Cost (if applicable): $13,000 x FOI
d) Minimum Generation Cost (if applicable): $1,060/hr (@70 MW) x CI
e) Incremental Cost Curve (Unit 2) (if applicable): cost in dollars =
($0.01465 x__MW + $11.41) x CI
- ------------------
(1) Subject to NYSEG's prior written agreement, Owner may decrease the
Minimum Generation Level and associated costs for either or both
Milliken units.
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Where "FOI" is the Fuel Oil Price Index (as described herein) divided
by the Base Fuel Oil Price Index (as described herein) and "CI" is the Coal
Price Index (as described herein) divided by Base Coal Price Index (as described
herein); and
Where,
Fuel Oil Price Index = The Fuel Oil Price Index shall be based on
the Producer Price Index ("PPI") for Light
Fuel Oils (Commodity Code 0573) as published
by the U.S. Department of Labor, Bureau of
Labor Statistics ("BLS") (adjusted annually,
as set forth below).
Base Fuel Oil Price Index = The Base Fuel Oil Price Index shall be the
PPI for December 1997, which was 59.5.
Coal Price Index = The Coal Price Index shall be based on the
Producer Price Index (PPI) for Bituminous
Coal (Commodity Code 0512, sub-code 0203) as
published by the BLS (adjusted annually, as
set forth below).
Base Coal Price Index = The Base Coal Price Index shall be the PPI
Bituminous Coal for December 1997, which was
96.8.
NOTES: New price indices will be effective on April 1st of
each year. These revised indices will be based on the
Fuel Oil Price Index and Coal Price Index for the
previous 12-month period based on the updated price
index for the month of December of that year.
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Schedule 2
SCHEDULE AND PROCEDURES
DIRECTING THE START-UP OF
A MILLIKEN UNIT*
B. If the Day-Ahead Market (as described in the ISO Tariff) is
operational:
11 a.m. ISO posts results (unit commitment, day-ahead
schedules and bilateral schedules) from day-ahead
market.
by 12 noon NYSEG notifies Owner if Milliken Conditions exist for
following day or for the following weekend days
and/or Monday (i.e., the days being scheduled in the
day-ahead market.)**
by 2 p.m. Owner notifies NYSEG of its schedules, pursuant to
Sections 3.2.b. and 3.2.c.2, including whether both
units have been committed in the competitive market
for the following day and any additional days
identified in NYSEG's notice, and for which hours the
units are committed.
by 3 p.m. NYSEG notifies Owner that NYSEG is requiring Owner to
operate one or both units on the following day and
any other days identified in NYSEG's notice,
including the consecutive hours during which NYSEG
will require one or both units to operate.
by 4 p.m. Owner submits to the ISO its hourly bid schedule for
the real time SCD market for the hours of the
following days in which Owner is required by NYSEG to
operate one or both units, as per this Agreement.
B. If the Day-Ahead Market (as described in the ISO Tariff) is not
operational:
by 10:00 a.m. NYSEG notifies Owner that the Milliken Conditions
exist on the next day(s).
by 11:00 a.m. Owner notifies NYSEG of Owner's schedules for both
Milliken units on the following day, including all
information required under this Agreement, including
Sections 3.2.b. and 3.2.c.(2), and a tentative
schedule for the following six days that shall state
whether each unit is expected to operate at the
Minimum Generation Level or higher during each hour
of such six-day period.
by 12:00 noon NYSEG notifies Owner whether NYSEG is requiring Owner
to operate one or both Milliken on the following
day(s) when the unit(s) are required to operate on
the following day(s).
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by 1:00 p.m. The Parties will submit any required schedules to
NYPP.
* Subject to Section 3.6, the Parties will modify the above schedule, as
may be necessary, to conform to the ISO's or NYPP's procedures.
** For Holidays (as defined herein), the schedule will be adjusted
accordingly.
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Schedule 3
MINIMUM INSURANCE REQUIREMENTS
(1) Worker's Compensation Insurance in accordance with statutory
requirements including Employer's Liability Insurance with limits of
not less than $1 million per occurrence and endorsement providing
insurance for obligations under the U.S. Longshoremen's and Harbor
Worker's Compensation Act and the Jones Act, where applicable.
(2) Commercial General Liability Insurance including, but not limited to,
bodily injury, property damage, products/completed operations,
contractual and personal injury liability with a combined single limit
of at least $2 million per occurrence, at least $5 million annual
aggregate.
(3) Excess (Umbrella) Liability Insurance providing excess general
liability, automobile and employers' liability with a combined single
limit of at least $5 million.
(4) All Risk Property Insurance including Boiler and Machinery against
damage to all owned, leased or operated property that is part of the
facility within limits consistent with industry practice.
(5) Automobile Liability Insurance including owned, non-owned and hired
automobiles with combined bodily injury and property damage limits of
at least $1 million per occurrence, $2 million aggregate.