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EXHIBIT 10.6
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
SEI BIRCHWOOD, INC.
AND
VIRGINIA ELECTRIC AND POWER COMPANY
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POWER PURCHASE AND OPERATING
AGREEMENT
TABLE OF CONTENTS
Article Page
1 Definitions 4
2 Sale and Purchase of Energy and Capacity 14
3 Notices 19
4 Pre-Operation Period 20
5 Term, Defaults, and Termination 25
6 Representations, Warranties and Covenants 45
7 Control and Operation of Facility; Dispatching 59
8 Interconnection 66
9 Metering 71
10 Compensation, Payment, and Billings 73
11 Testing and Capacity Ratings 89
12 Insurance 98
13 Liability, Noncompliance and Guarantees 102
14 Force Majeure 117
15 Taxes and Claims for Labor and Materials 120
16 Choice of Law 121
17 Miscellaneous Provisions 121
18 Statutory and Regulatory Changes 126
19 Coordination of Communications 131
20 Option to Purchase 131
21 Regulatory Changes 135
22 Entirety 137
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POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
SEI BIRCHWOOD, INC.
AND
VIRGINIA ELECTRIC AND POWER COMPANY
THIS AGREEMENT, effective July 13, 1990, is by and between SEI
BIRCHWOOD, INC., a Delaware corporation with its principal office located in
Atlanta, Georgia ("Operator"), and VIRGINIA ELECTRIC AND POWER COMPANY, a
Virginia public service corporation with its principal office located in
Richmond, Virginia ("Virginia Power"). Both Operator and Virginia Power are
herein individually referred to as "Party" and collectively referred to as
"Parties".
R E C I T A L S
WHEREAS, Operator plans to own and operate a new electric
generating facility located within Virginia Power's certificated retail service
area in King George County, Virginia, with an estimated nameplate rating of
292,000 kVA; such facility in all future correspondence to be identified as
Birchwood (or "Facility");
WHEREAS, the Parties currently anticipate that the Commercial
Operations Date (as defined in this Agreement) will occur on or prior to the
Anticipated Commercial Operations Date (as defined in this Agreement);
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WHEREAS, Operator wishes to sell, exclusively to Virginia
Power, all of the Facility's electrical energy and capacity made available for
sale, such sale to be pursuant to the terms and conditions set forth herein; and
WHEREAS, Virginia Power wishes to purchase electrical energy
and capacity which may be Dispatched (as defined in this Agreement) by Virginia
Power pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and of the
mutual covenants and agreements hereinafter set forth, Operator and Virginia
Power agree to the following:
ARTICLE 1: DEFINITIONS
Whenever the following terms appear in this Agreement and in
the Recitals or preamble hereto, whether in the singular or in the plural,
present or past tense, they shall have the meaning stated below:
1.1 "Agreement Year" - The twelve month period beginning on
the Commercial Operations Date or anniversary of the Commercial Operations Date.
1.2 "Anticipated Commercial Operations Date" - November 29,
1996.
1.3 "Business Day" - Monday through Friday excluding holidays
recognized by Virginia Power. As of the date of this Agreement, these holidays
include New Year's Day, Good Friday,
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Memorial Day, Fourth of July, Labor Day, Veteran's Day, Thanksgiving Day, day
after Thanksgiving Day, Christmas Eve and Christmas Day. Such holidays may be
changed by Virginia Power upon ten (10) Days written notice to Operator.
1.4 "Capacity Purchase Price" - The price Virginia Power will
pay Operator for Dependable Capacity in accordance with Article 10.
1.5 "Commercial Operations Date" - The first Day following the
Day Operator notifies Virginia Power that the Facility is available for Dispatch
which date may be no earlier than fifteen (15) Days prior to the Anticipated
Commercial Operations Date.
1.6 "Commercial Operations Test" - The test performed pursuant
to Article 11 which determines the Commercial Operations Date and allows
Operator to establish the Initial Dependable Capacity for the appropriate Summer
Demonstration Period or Winter Period.
1.7 "Construction Start" - The first date upon which all of
the following have occurred: (i) the issuance by Operator to its construction
contractor of a Notice-to-Proceed, (ii) release of orders for the boiler(s) and
turbine generator and (iii) mobilization of construction office facilities on
site.
1.8 "Day" - The 24-hour period beginning and ending at 12:00
midnight the prevailing Eastern Standard or Daylight Savings Time.
1.9 "Change of Law" - A change in, or change in the
interpretation of, or the adoption of, any constitution, charter, act, statute,
law, ordinance, code, rule, regulation or order, or change in the specified
standards of objective criteria contained
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in a permit, license or other approval, which standards or criteria must be met
in order for either party to perform under this Agreement, or other legislative
or administrative action of any governmental or other official agency, or a
final decree, judgment or order of a court, including temporary restraining
orders, or litigation, which occurs subsequent to the effective date of this
Agreement.
1.10 "Dependable Capacity" - The amount of capacity determined
by testing for each Summer Demonstration Period and Winter Demonstration Period
pursuant to Article 11 and made available from the Facility to Virginia Power.
1.11 "Design Limits" - When the Facility operates pursuant to
Virginia Power's Dispatch rights in accordance with this Agreement, it is
capable of operation over the continuous range from approximately 32% of the
Dependable Capacity (the "Minimum Operating Level") through 100% of the
Dependable Capacity (the "Maximum Operating Level"). For example, if the
Dependable Capacity for the Winter period is 202 MW, the Minimum Operating Level
is 65 MW (202 MW x 32%) and the Maximum Operating Level is 202 MW (202 MW x
100%). After the Facility has been off line due to a Scheduled Outage, a Forced
Outage, or in response to Virginia Power's Dispatch of the Facility, it can
achieve the levels of operation specified below within the approximate time
periods indicated below:
(a) If the Facility has been off line for less
than 2 hours (hot start), it can be
resynchronized within 0.5 hours and can
achieve its Minimum Operating
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Level within 1.5 hour following Virginia
Power's notice to start-up.
(b) If the Facility has been off line between 2
hours and 8 hours (warm start), it can be
resynchronized within 1 hour and can achieve
its Minimum Operating Level within 1.75
hours following Virginia Power's notice to
start-up.
(c) If the Facility has been off line for more
than 8 hours (cold start), it can be
resynchronized within 3 hours and can
achieve its Minimum Operating Level within
4.5 hours following Virginia Power's notice
to start-up.
Once the Facility has been synchronized with Virginia Power's system and brought
to its Minimum Operating Level, its Net Electrical Output may be increased at an
emergency rate of approximately 3% per minute for up to five (5) consecutive
minutes with a normal rate of approximately 0.9 % per minute. If the Facility is
operating above its Minimum Operating Level, its Net Electrical Output may be
reduced at an emergency rate of approximately 3% per minute for up to five (5)
consecutive minutes down to the Minimum Operating Level with a normal rate of
approximately 0.9% per minute. The Design Limits are subject to refinement
pursuant to Section 4.5 and will be finalized in the procedures manual prepared
pursuant to Section 4.5.
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1.12 "Dispatch" - The right of Virginia Power, or its exercise
in accordance with Prudent Utility Practices, to (i) determine, as provided for
in Section 7.5, the generating level of the Facility in order to commence,
increase, decrease or cease the delivery of the Net Electrical Output to the
Virginia Power system and (ii) distribute the total Virginia Power energy needs
among available electric energy sources for optimum system economy with due
consideration of the Design Limits, incremental generating costs, incremental
power purchase costs, incremental transmission losses, load flow considerations
and other operational considerations as determined solely by Virginia Power.
1.13 "Emergency" - A condition or situation which in the sole
judgment of Virginia Power affects or may affect Virginia Power's ability to
meet its obligations to maintain safe and reliable electric service to Virginia
Power's customers and/or the customers of any member of NERC.
1.14 "Energy Purchase Price" - The price per kilowatthour
Virginia Power will pay Operator for energy delivered to Virginia Power in
accordance with Article 10, Sections 1 through 14. The Energy Purchase Price is
a function of the Fuel Compensation Price, the Heat Rate, and the variable O&M
Price. Accordingly, the Energy Purchase Price for the integrated hourly Net
Electrical Output = FH + V where (i) F= Fuel Compensation Price, (ii) H = Heat
Rate, and (iii) V = O&M Price.
1.15 "Estimated Dependable Capacity" - The Dependable Capacity
for each Summer Period and Winter Period to which Operator commits as set forth
in Section 11.1.
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1.16 "FERC" - The Federal Energy Regulatory Commission or any
successor thereto.
1.17 "Facility" - Operator's generation plant located within
King George County, Virginia, including without limitation or regard to level of
development, land, engineering and design documents, all energy producing
equipment and its auxiliary equipment, fuel handling equipment and all equipment
either installed or to be installed on Operator's side of the Interconnection
Point that is not Interconnection Facilities. The Facility is composed of one
generating unit.
1.18 "Financial Closing" - The later of (a) the date on which
documents which provide funding for the construction of the Facility are
executed, or (b) the date such funds are made available pursuant to those
documents.
1.19 "Forced Outage" - An interruption or reduction of the
Facility's ability to generate that is neither: (i) the result of a Scheduled
Outage; nor (ii) requested by Virginia Power pursuant to the terms of this
Agreement; provided, however, that any interruption or reduction of the
Facility's ability to generate resulting from non-performance by Operator of any
provision of this Agreement (other than due to an event of Force Majeure as
defined in Article 14) shall be a Forced Outage.
1.20 "Fuel Compensation Price" - The Base Fuel Compensation
Price as adjusted from time to time in accordance with Sections 10.2 through
10.13 of this Agreement.
1.21 "Heat Rate" - The number of British Thermal Units (Btu)
projected by the Operator that are required to produce one kilowatthour of
energy at the Facility using the higher heating
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value (HHV) of the fuel. This value will vary with respect to the output level
of the Facility as determined by the Input/Output curve of the form Y = A + BX +
CX2 where (i) the coefficients A, B, and C are provided by the Operator pursuant
to Section 10.1 of this Agreement, (ii) Y is in Btus and (iii) X is the Net
Electrical Output as measured, in accordance with Article 9, by the Virginia
Power-owned meters for one (1) hour. Accordingly, the Heat Rate is (Y + X)
=(A/X) + B + CX.
1.22 "Initial Dependable Capacity" - The Dependable Capacity
level established by testing for the first Summer Period or Winter Period
pursuant to Section 11.6.
1.23 "Initial Synchronization Date" - The first date upon
which (a) energy is generated by the Facility and (b) such energy is metered by
the Virginia Power-owned metering equipment.
1.24 "Interconnection Facilities" - All the facilities,
wherever located, installed by Virginia Power to enable Virginia Power to
receive energy, or energy and Dependable Capacity, from the Facility, including
but not limited to all metering and telemetering equipment; transmission lines,
distribution lines, if any, and all associated equipment; transformers and
associated equipment; relay and switching equipment; and protective devices and
safety equipment.
1.25 "Interconnection Point" - The physical point(s) to be
identified in the Interconnection Study performed by Virginia Power pursuant to
Article 8.5 where the Net Electrical Output of the Facility is delivered to the
Virginia Power system. This point will be on the high voltage side of the
Operator's step-up transformer and, based upon the Facility being located in
Virginia
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Power's certificated retail service area, located in the Facility's switchyard.
1.26 "Interest Rate" - At any time, the rate of interest from
time to time publicly announced by The Chase Manhattan Bank, N.A., at its
principal office, presently located at 1 Chase Manhattan Plaza, New York, New
York 10081, as its prime commercial lending rate. Interest at the Interest Rate
shall be computed Monthly and prorated daily from the time such obligation
arises.
1.26a "Lender" - Any or all lenders (including the indenture
trustee, if any) and equity investors providing any part of either or both the
construction and permanent financing for the Facility or providing lease
financing for any part or all of the Facility.
1.27 "Month" - The period beginning at 12:00 midnight on the
last Day of a month and ending at 12:00 midnight on the last Day of the next
month.
1.28 "NERC" - The North American Electric Reliability Council,
including any successor thereto and subdivisions thereof.
1.29 "Net Electrical Output" - All of the Facility's
electrical generating output made available for sale; such Net Electrical Output
shall be provided at sixty (60) hertz and measured by the Virginia Power-owned
metering equipment located on the Virginia Power side of the Interconnection
Point.
1.30 "Off-Peak Hours" - The hours between 10:00 PM and 7:00 AM
Monday through Friday and all Day Saturday and Sunday.
1.31 "On-Peak Hours" - The hours between 7:00 AM and 10:00 PM
Monday through Friday.
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1.32 "O&M Price" - The price Virginia Power will pay Operator
for variable operations and maintenance expenses in accordance with Section
10.14.
1.33 "Prudent Electrical Practices" - The use of equipment,
practices, methods, adherence to applicable industry codes, standards, and
regulations required (i) to protect Virginia Power's system, employees, agents,
and customers from malfunctions occurring at the Facility and (ii) to protect
the Facility, and Operator's employees and agents at the Facility, from
malfunctions occurring on Virginia Power's system or on any other electric
utility with which Virginia Power is directly or indirectly electrically
connected.
1.34 "Prudent Utility Practices" - The practices generally
followed by the electric utility industry, as changed from time to time, which
generally include, but are not limited to, engineering and operating
considerations, the use of equipment, practices, methods, and adherence to
applicable industry codes, standards, and regulations.
1.35 "PURPA" - The Public Utility Regulatory Policies Act of
1978.
1.36 "QF" - A cogeneration facility or a small power
production facility which is a Qualifying Facility under Subpart B of Subchapter
K, Part 292 of Chapter I, Title 18, Code of Federal Regulations, promulgated by
the FERC.
1.37 "Quarter" - A 3-Month period beginning 12:00 midnight on
December 31, March 31, June 30, or September 30.
1.38 "SCC" - The State Corporation Commission of Virginia or
any successor thereto.
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1.39 "Scheduled Outage" - A planned interruption of the
Facility's generation that (a) has been coordinated in advance with Virginia
Power with a mutually agreed start date, time, and duration pursuant to Article
7 and (b) is required for inspection, routine, preventive, or corrective
maintenance.
1.39 "Solid Fuel" - Eastern bituminous coal.
1.41 "Summer Demonstration Period" - The period beginning
12:00 midnight on June 14 and ending at 12:00 midnight on the following
September 15, or some other three consecutive Month portion of the Summer Period
designated by Virginia Power upon twelve (12) Months prior written notice to
Operator.
1.42 "Summer Period" - The Months of April through September.
1.43 "Term" - The initial term of this Agreement as specified
in Section 5.1 plus any renewal term determined pursuant to Section 5.2.
1.44 "Winter Demonstration Period" - The period beginning
12:00 midnight on November 30 and ending at 12:00 midnight on the last Day of
the following February, or some other three consecutive Month portion of the
Winter Period designated by Virginia Power upon twelve (12) Months prior written
notice to Operator.
1.45 "Winter Period" - The Months of October through March.
1.46 "Year" - The 12-Month period beginning 12:00 midnight on
December 31 and ending at 12:00 midnight on the subsequent December 31.
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ARTICLE 2: SALE AND PURCHASE OF ENERGY AND CAPACITY
2.1 Subject to the terms and conditions of this Agreement,
including without limitation Virginia Power's right to Dispatch the Facility
off-line, Operator agrees to sell and Virginia Power agrees to purchase the Net
Electrical Output of the Facility, whenever produced.
2.2 Except as otherwise provided herein, and subject to other
terms hereof, Operator agrees to sell and Virginia Power agrees to purchase
Dependable Capacity from the Facility after the Commercial Operations Date as
determined pursuant to Article 11.
2.3 Notwithstanding anything in this Agreement to the
contrary, and without limiting any other obligations of Operator in this
Agreement, Virginia Power's obligation to purchase Net Electrical Output and
Dependable Capacity from Operator at the rates specified in Article 10 is
contingent upon Operator's submittal to Virginia Power of all the following:
(a) Evidence demonstrating that Operator has
title to the Facility site or a lease of the
Facility site allowing for the construction
and operation of the Facility for the Term
of this Agreement.
(b) No later than Financial Closing, a report by
the financing institution's independent
engineer stating that the Facility, if
operated and maintained in accordance with
Prudent Electrical Practices and Prudent
Utility Practices, can be reasonably
expected to have a useful life at least
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equal to the Term of this Agreement. Such a
report should include EPC Contractor's Scope
documents; major equipment specifications;
preliminary heat, water and mass balance
diagrams; plant general arrangement drawings;
electrical one-lines; soil reports; air and
water preliminary support documents; and
preliminary AGC interface logic.
(c) No later than the Commercial Operations Date,
documents and other evidence demonstrating that
the Facility has been constructed in compliance
with the terms of this Agreement and the
information submitted pursuant to Section
2.3(b).
(d) No later than the Initial Synchronization
Date, evidence that the Operator is in
compliance with Section 4.1(a)(3) hereof.
(e) No later than Construction Start, certificates of
insurance coverage, copies of insurance policies
or evidence of self-insurance as required or
permitted by Article 12.
(f) No later than the Initial Synchronization
Date, evidence that Operator has obtained all
necessary permits, licenses, approvals and other
governmental authorizations needed to generate
and
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transmit electricity from the Facility to
Virginia Power.
(g) No later than the Initial Synchronization
Date, evidence to the reasonable satisfaction
of Virginia Power that Operator has complied
with all requirements of Article 4, to the
extent compliance is required before the Initial
Synchronization Date; provided, however, that if
Virginia Power has not indicated its
satisfaction with same within 40 Days of its
receipt of a completed submission (or prior to
the Commercial Operations Date if earlier), then
Virginia Power will be deemed to have indicated
such satisfaction. Virginia Power will inform
Operator if a submission is incomplete as soon
as practicable after submission.
(h) No later than the Initial Synchronization
Date, documents and other evidence to the
reasonable satisfaction of Virginia Power that
Operator has complied with the requirements of
Article 8; provided, however, that if Virginia
Power has not indicated its satisfaction with
same within 35 Days of its receipt of a
completed submission (or prior to the Commercial
Operations Date if earlier), then Virginia Power
will be deemed to have indicated such
satisfaction. Virginia Power
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will inform Operator if a submission is
incomplete as soon as practicable after
submission.
(i) As soon as available, but no later than thirty
(30) Days prior to Financial Closing, Operator
shall provide to Virginia Power its fuel supply
strategy and any draft or executed fuel supply
contracts (from which contracts pricing and
other competitive terms may be deleted by
Operator) along with evidence of a
transportation contract or, if no contract has
been finalized, evidence indicating that
Operator is diligently pursuing one.
(j) As soon as available, but no later than
Financial Closing, Operator shall provide to
Virginia Power evidence demonstrating that
Operator (i) has obtained from federal, state
and local government agencies and authorities
having jurisdiction all other material permits,
licenses, approvals and other governmental
authorizations, including the necessary air
quality, water use and discharge, solid waste
and hazardous waste disposal permits and
approvals, required for the design and
construction of the Facility in accordance with
the provisions of this Agreement for the Term
specified herein or (ii) has a plan to obtain
the permits, licenses, approvals and other
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governmental authorizations not obtainable as
of Financial Closing prior to the Anticipated
Commercial Operations Date.
(k) As soon as available, but no later than
Financial Closing, Operator shall provide
Virginia Power, at no cost to Virginia Power,
with an environmental assessment of any
environmental problems existing at the Facility
or the presence at the Facility of materials
that are polychlorinated biphenyls, materials
stored in underground storage tanks, wastes that
would qualify as hazardous wastes under the
Resource Conservation and Recovery Act or
hazardous substances under the Comprehensive
Environmental Response Compensation and
Liability Act (in each case including the rules
and regulations adopted thereunder) or any
applicable rule or regulation, other than those
materials in such quantities and concentrations
routinely occurring in nature (collectively,
"Hazardous Substances"). Said environmental
assessment shall be in a form reasonably
acceptable to Virginia Power; provided, however,
that if Virginia Power has not indicated its
satisfaction within 20 Days of its receipt of
same, then Virginia Power will be deemed to have
indicated such satisfaction.
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(l) As soon as available, but prior to the
Commercial Operations Date, receipt by
Virginia Power of a certificate from the
financing institution's engineer, or an
independent engineer who is satisfactory to
Virginia Power, that the Facility has been
designed and constructed such that Operator
is able to operate the Facility in
accordance with the terms and conditions of
this Agreement.
ARTICLE 3: NOTICES
3.1 Any notice or communication required by this Agreement or
Virginia Power to be in writing shall be deemed to be given when sent only if
sent by any means that provides for the verification by an independent third
party of the date sent, including, but not limited to, the following: registered
or certified mail, commercial courier or telegram. Any notice or communication
sent by any other means, including first class mail, telex or telecopy, shall be
deemed to be given when received. Notice or communications (other than Dispatch
orders) sent by telex, telecopy, or telegram shall be confirmed by depositing a
copy of same in any commercial courier service or the postal service for
transmission by registered or certified mail in an envelope properly addressed.
Any notice or communication shall be sent to the respective Parties at the
following addresses:
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In the case of Operator to:
SEI Birchwood, Inc.
100 Ashford Center North, Ste. 400
Atlanta, GA 30338
Attention: President
In the case of Virginia Power to:
Virginia Electric and Power Company (if by hand)
Manager - Capacity Acquisition
One James River Plaza, 15th Floor
701 East Cary Street
Richmond, Virginia 23219
Virginia Electric and Power Company (if by mail)
Manager - Capacity Acquisition
P. O. Box 26666
Richmond, Virginia 23261
3.2 Either Party may, by written notice to the other, change
the representative or the address to which notices and communications are to be
sent.
3.3 Operator shall provide Virginia Power with three (3)
copies of any written notice, communication or submittal called for by this
Agreement that is of an odd size, shape or material or otherwise not readily
reproducible on conventional office copiers.
ARTICLE 4: PRE-OPERATION PERIOD
4.1 (a) Operator shall, at its expense, acquire, and maintain
in effect, from the FERC and from any and all other federal, state and local
agencies, commissions and authorities with jurisdiction over Operator and/or the
Facility, all material permits, licenses, and approvals, and complete or have
completed all environmental impact studies necessary as follows:
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(1) For the construction, operation and
maintenance of the Facility.
(2) For Operator to perform its
obligations under this Agreement.
(3) Either (i) to obtain and maintain
certification as a QF, or (ii) to
have Operator's ability to perform
this Agreement approved by all
applicable state and federal
regulatory agencies, if not a QF.
(b) Prior to the Commercial Operations Date,
Virginia Power shall, at its expense, acquire, and maintain in effect, from the
FERC and from any and all other federal, state and local agencies, commissions
and authorities with jurisdiction over Virginia Power and/or its electric
system, all material permits, licenses, and approvals, and complete or have
completed all environmental impact studies necessary for Virginia Power to
perform its obligations under this Agreement.
(c) Each Party shall provide assistance to the
other Party, upon request of the other Party, as necessary or appropriate for
the other Party to fulfill its obligations under Sections 4.1(a) and 4.1(b).
4.2 Beginning with the effective date of this Agreement and
continuing until the Initial Synchronization Date, Operator shall submit
progress reports in a form reasonably satisfactory to
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Virginia Power prior to the tenth (10th) Business Day of each Month. Such report
shall cover progress for the preceding Month.
4.3 On a date to be specified by Virginia Power in the
interconnection study, Operator shall submit for Virginia Power's review its
construction schedule. At least thirty (30) Days prior to start-up and testing
of the Facility, Operator shall submit to Virginia Power, a start-up and test
schedule for the Facility. Operator shall notify Virginia Power of any changes
to such construction and start-up and test schedules in a timely manner.
Virginia Power shall have the right to reasonably review, monitor and physically
inspect all aspects and phases of the project including the engineering/design,
procurement, construction, and start-up and testing of the Facility, and
Operator shall comply with all reasonable requests of Virginia Power resulting
therefrom. Operator shall cooperate in such reviews, monitoring and physical
inspections of the Facility as may be reasonably required by Virginia Power
before, during, and after completion of construction. Virginia Power's technical
review and inspection of the Facility shall not be construed as endorsing the
design thereof nor as any warranty of the safety, durability, reliability, or
suitability of the Facility. Such review and inspection shall not relieve
Operator of any of Operator's obligations under this Agreement.
4.4 Beginning with the Commercial Operations Date, Operator
will submit to Virginia Power (and update such submittals from time to time as
is necessary) the following:
(a) electrical one line diagrams with logic
descriptions as needed;
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(b) heat, water, and mass balance diagrams;
(c) major equipment vendor specifications;
(d) plant general arrangement drawings;
(e) necessary air and water permit documents; and
(f) AGC interface logic.
4.5 Operator and Virginia Power shall mutually develop written
interface operating procedures no later than one hundred and twenty (120) Days
prior to the Anticipated Commercial Operations Date. The interface operating
procedures will be a mutual agreement based on the design of the Facility and
the design of the interconnection to Virginia Power's bulk electric system. The
interface operating procedures will (i) refine the Design Limits in accordance
with Prudent Utility Practices to reflect the capabilities of the equipment
ordered for the Facility and (ii) be intended as a guide on how to integrate the
Operator's Facility and output into Virginia Power's bulk electric system. Such
operating procedures shall specify, among other things, that in determining
whether and when Operator's unit will be Dispatched off-line and on-line,
Virginia Power will use the dispatch logic appropriate for Virginia Power's
pulverized coal unit nearest in size to Operator's Facility. Topics covered
shall include, but not necessarily be limited to, method of day-to-day
communications, key personnel lists for Operator and Virginia Power, clearances
and switching
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practices, outage reporting and scheduling, daily capacity and energy reports,
unit operations log, and reactive power support.
4.6 Virginia Power shall prepare and submit to Operator a
written voltage schedule no later than sixty (60) Days prior to the Anticipated
Commercial Operations Date. Virginia Power may change such voltage schedule any
time during the Term of this Agreement upon thirty (30) Days prior written
notice to Operator. Operator shall use such voltage schedule in the operation of
its Facility. This voltage schedule shall be based on the normally expected
operating conditions for the Facility including the Design Limits and the
capabilities of Operator's equipment as identified in the interconnection study
and as refined during the design of such equipment.
4.7 Operator shall notify Virginia Power of its planned
Initial Synchronization Date in writing no less than thirty (30) Days prior to
that date. Virginia Power and Operator shall agree on the Initial
Synchronization Date and Virginia Power shall have the right to have
representatives present at the initial synchronization.
4.8 Virginia Power reserves the right to delay the Initial
Synchronization Date due to problems with the Facility which in its reasonable
judgment, based on Prudent Utility Practices, could adversely affect Virginia
Power's operations. In such event, Virginia Power shall give Operator reasonable
notice of such problems as soon as practicable after Virginia Power has
knowledge of such problems and Operator shall remedy any such problems relating
to facilities or equipment that Operator installed or maintains.
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ARTICLE 5: TERM AND TERMINATION
5.1 The Term of this Agreement shall begin upon execution and
shall continue for a period of twenty-five (25) years from the Commercial
Operations Date unless extended under this Article 5, terminated, or canceled.
If the Term is extended under this Article 5, the word "Term" shall thereafter
be deemed to mean the original Term so extended.
5.2 The Parties may extend this Agreement, with mutually
satisfactory terms and conditions, for periods of up to five (5) years (or such
other period as the Parties agree) provided that no later than three (3) years
prior to the expiration of the Term the Party requesting such extension notifies
the other Party of its desire to extend the Agreement and such extension and its
terms and conditions are agreed to by the Parties no later than two (2) years
prior to the expiration of this Agreement.
5.3 The following conditions apply to defaults under this
Agreement:
(a) Events of Default - Operator - Any of the
following failures or actions shall
constitute an "Event of Default" as to
Operator, if Operator fails to cure such
failure or action within (i) sixty (60)Days
after receipt of notice from Virginia Power
describing the default failure or action,
and (ii) an additional sixty (60) Day
period, granted by Virginia Power, which
Virginia Power shall grant if such failure
or action cannot reasonably be cured within
such initial sixty (60)
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Day period, and Operator can demonstrate
that it has used due diligence to cure
during such initial sixty (60) Day period,
and (iii) within such additional cure
periods as Virginia Power may, at its sole
option, grant to Operator:
(1) Failure to complete
Financial Closing by
November 30, 1994;
(2) Failure to achieve
Construction Start of the
Facility by May 1, 1995;
(3) Abandonment of construction
or operation of the
Facility at any time;
(4) Failure to provide, in
accordance with this
Agreement, executed fuel
supply contract(s) by
September 29, 1995;
(5) Operator, at any time,
shall fail to pay pursuant
to this Agreement any sum
due and payable to Virginia
Power hereunder, which
failure has continued for
20 Days after notice
thereof has been given by
Virginia Power to Operator;
provided, however, that
failure to pay the sums
described in Section
5.3(a)(11) hereof shall be
governed by that
subsection;
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(6) Any representation or
warranty made by Operator
herein or in any
certificate delivered to
Virginia Power pursuant
hereto or thereto shall
prove to be incorrect in
any material respect when
made, unless (i) the fact,
circumstance or condition
that is the subject of such
representation or warranty
is made true within 20 days
after notice thereof has
been given to Operator by
Virginia Power and (ii)
such cure removes any
adverse effect on Virginia
Power of such fact,
circumstance or condition
being otherwise than as
first represented, or
unless such fact,
circumstance or condition
being otherwise than as
first represented does not
materially adversely affect
Virginia Power;
(7) A court having jurisdiction
shall enter (i) a decree or
order for relief in respect
of Operator in an
involuntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law, or (ii) a
decree or order
adjudicating Operator
bankrupt or insolvent, or
approving as properly filed
a petition
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seeking reorganization,
arrangement, adjustment or
composition of or in
respect of Operator under
any applicable Federal or
state law, or appointing a
custodian, receiver,
liquidator, assignee,
trustee, sequestrator or
other similar official of
Operator or of any
substantial part of its
affairs; provided, however,
that if Operator can
demonstrate that the
bankruptcy, insolvency or
reorganization is not
likely to lead to a
rejection of this Agreement
and Operator can still
perform under this
Agreement, then such event
shall not be deemed an
Event of Default;
(8) Operator shall (i) commence
a voluntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law or any other
case or proceeding to be
adjudicated a bankrupt or
insolvent, or (ii) consent
to the entry of a decree or
order for relief in respect
of Operator in any
involuntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law or to the
commencement
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of any bankruptcy or
insolvency case or
proceeding against it, or
(iii) file any petition,
answer or consent seeking
reorganization or relief
under any applicable
Federal or state law, or
(iv) consent to the filing
of any petition or to the
appointment of or taking
possession by a custodian,
receiver, liquidator,
assignee, trustee,
sequestrator or similar
official of Operator or of
any substantial part of its
property, or (v) make an
assignment for the benefit
of creditors, or (vi) be
unable, or admit in writing
its inability, to pay its
debts as they become due,
or (vii) take any action in
furtherance of any of the
foregoing; provided,
however, that if Operator
can demonstrate that the
bankruptcy, insolvency or
reorganization is not
likely to lead to a
rejection of this Agreement
and Operator can still
perform under this
Agreement, then such event
shall not be deemed an
Event of Default;
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(9) In connection with any
event described in
subsections (7) or (8) of
this Section, this
Agreement shall be rejected
within the meaning of the
Bankruptcy Reform Act of
1978, as amended, for which
event no cure period shall
be permitted hereunder;
(10) Management directed or
endorsed acts by Operator,
or its employees,
contractors or
subcontractors of any tier,
of tampering with any
Virginia Power-owned meters
or metering devices and/or
Interconnection Facilities,
for which event no cure
period shall be permitted
hereunder;
(11) Failure to post security as
stipulated in Sections 13.3
and 13.5; for which event
no cure period shall be
permitted hereunder and
Operator agrees that in no
event shall Operator be
entitled to any extension
of the deadline for the
posting of security
pursuant to Sections 13.3
or 13.5, including by
reason of Force Majeure
pursuant to Article 14;
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(12) Failure to achieve the
Commercial Operations Date
by November 24, 1997, for
which event no cure period
shall be permitted
hereunder; or
(13) After the Commercial
Operations Date, Operator,
at any time, shall fail to
discharge or perform any
other material duty or
obligation of Operator
under this Agreement.
(b) Lender shall have the right, upon written
notice to Virginia Power, to effect a cure,
as specified in 5.3(a); above, in the stead
of Operator, of any failure or action that
could lead to an Event of Default as to
Operator under Section 5.3(a). If Lender
gives such notice during the first 60-day
cure period specified in 5.3(a) above, and
attempts to cure in the stead of Operator,
Lender automatically will be granted an
additional 90 Day period after the
expiration of the original cure period,
which shall be in lieu of the additional 60
Day period provided for in Section 5.3(a);
and thereafter, Virginia Power may, at its
sole option, grant further periods in which
to cure such default. An "Event of Default"
shall not have occurred as to Operator
unless Lender fails to cure within the
additional ninety (90)
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Day period and such other cure periods as
Virginia Power may grant to Lender under
this Section 5.3(b).
(c) Rights of Virginia Power for Event of
Default of Operator - If an Event of Default
as to Operator has occurred and shall be
continuing at the conclusion of the cure
period applicable to such Event of Default,
Virginia Power, shall be entitled to
exercise the remedies set forth below, which
shall be exclusive:
(1) If an Event of Default as to
Operator has occurred under Sections
5.3(a)(1), (2), (3), (4) and
5.3(a)(12), Virginia Power, at its
discretion, may terminate this
Agreement by notice to Operator and
retain the security provided by
Operator pursuant to Section 13.3 or
Section 13.5, as appropriate.
(2) If an Event of Default as to
Operator has occurred under Section
5.3(a)(5) or 5.3(a)(6), Virginia
Power, at its discretion, may
recover its actual damages from
Operator.
(3) If an Event of Default as to
Operator has occurred under Section
5.3(a)(7), (8), (9), (10), (11) and
(13), Virginia Power, at its
discretion, may take either or both
of the
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following actions: (i) proceed by
appropriate proceedings, judicial,
administrative or otherwise at law,
in equity or otherwise, to protect
and enforce its rights, to recover
any damages to which it may be
entitled, and to enforce performance
by Operator, including specific
performance of Operator's
obligations hereunder; and (ii)
terminate this Agreement by notice
to Operator.
No delay or omission of Virginia Power to
exercise any right or remedy accruing upon
any Event of Default as to Operator shall
impair any such right or remedy or
constitute a waiver of such event or an
acquiescence thereto; except to the extent
that the Event of Default has been cured or
that Operator has expended money to
effectuate a cure after having received
Virginia Power's assurance that it would
waive such rights and remedies if such
actions were undertaken and were successful.
Every right and remedy given by this
Agreement to Virginia Power may be exercised
from time to time, and as often as may be
deemed expedient, by Virginia Power.
(d) Events of Default - Virginia Power - Any of
the following failures or actions shall
constitute an "Event of Default" as to
Virginia Power, if Virginia Power fails to
cure such failure or
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action within (i) sixty (60) Days after
receipt of notice from Operator describing
the failure or action, and (ii) an
additional sixty (60) Day period granted by
Operator, which Operator shall grant if such
failure or action cannot reasonably be cured
within such initial sixty (60) Day period,
and Virginia Power can demonstrate that it
has used due diligence to cure during such
initial sixty (60) Day period, and (iii)
within such additional cure periods as
Operator may, at its sole option, grant to
Virginia Power:
(1) Virginia Power shall fail to pay
pursuant to this Agreement any
amount due and payable under this
Agreement and such failure shall
have continued for a period of 20
Days after notice thereof has been
given by Operator to Virginia Power;
(2) Virginia Power shall fail to accept
or purchase Net Electrical Output in
accordance with this Agreement, and
such failure shall (i) not arise
from Virginia Power's good faith
belief that it is entitled to
suspend or curtail receipt or
purchase of Net Electrical Output
pursuant to the terms of this
Agreement, and (ii) continue for a
period of ten (10) Days after notice
thereof
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shall have been given to Virginia
Power by Operator; or
(3) Virginia Power shall fail to
discharge or perform any other
material duty or obligation of
Virginia Power under this Agreement.
(e) Rights of Operator for Event of Default of
Virginia Power - If an Event of Default as
to Virginia Power has occurred and shall be
continuing at the conclusion of the cure
period applicable to such Event of Default,
Operator shall be entitled to exercise the
remedies set forth below, which shall be
exclusive:
(1) proceed against Virginia Power by
appropriate proceedings, judicial,
administrative or otherwise, at law,
in equity or otherwise, to protect
and enforce its rights, to recover
any damages to which it may be
entitled and to enforce performance
by Virginia Power, including
specific performance of Virginia
Power's obligations hereunder; and
(2) by written notice to Virginia Power,
suspend its obligations hereunder
until such failure is cured, and if
such failure continues for ten (10)
days after such notice of
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suspension, Operator may terminate
this Agreement by notice to Virginia
Power.
No delay or omission of Operator to
exercise any right or remedy accruing upon
any Event of Default as to Virginia Power
shall impair any such right or remedy or
constitute a waiver of such event or an
acquiescence thereto; except to the extent
that the Event of Default has been cured or
that Virginia Power has expended money to
effectuate a cure after having received
Operator's assurance that it would waive
such rights and remedies if such actions
were undertaken and were successful. Every
right and remedy given by this Agreement to
Operator may be exercised from time to time,
and as often as may be deemed expedient, by
Operator.
(f) If Operator terminates this Agreement
pursuant to Section 5.3(e)(2) or Virginia
Power terminates this Agreement pursuant to
Section 5.6, Operator may require Virginia
Power to provide, and Virginia Power shall
provide, transmission services at
compensatory, nondiscriminatory rates
subject to approval by the appropriate
regulatory authority to Operator sufficient
for Operator to wheel energy generated by
Facility to any other utility outside of
Virginia Power's control area with which
Virginia Power is directly interconnected,
so long as such transmission
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service does not adversely affect the
reliability of Virginia Power's service to
its retail and wholesale customers.
(g) (1) If a Party disputes the amount or
propriety of a payment claimed by
the other Party to be due and
payable hereunder, then the Parties
shall continue to fulfill their
respective obligations under and in
accordance with this Agreement and
will not terminate the Agreement, or
reduce payments, except as provided
in subparagraph 2, unless and until
the dispute or allegation has been
finally resolved by agreement of the
Parties, settlement, litigation, or
other proceeding providing
otherwise. Furthermore, upon the
occurrence of and during the
pendency of the default cure periods
or an Event of Default by Operator,
Virginia Power shall continue to
make payments under this Agreement
except as provided in subparagraph
2 below or until such time as it
terminates this Agreement.
(2) Each Party shall pay to the other
Party all undisputed payments and
charges owed to or assessed by such
other Party under this Agreement as
and when due hereunder. To the
extent that any Party disputes any
payments or charges owed to or
assessed by the other
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Party under this Agreement, the
disputing Party shall deposit the
disputed payment or charge into an
interest-bearing escrow account with
a bank and upon terms agreed to by
both Parties (such agreement not to
be unreasonably withheld). The funds
contained in such account shall be
released upon the final resolution
of such dispute by agreement of the
Parties, settlement, litigation or
other proceeding providing
otherwise.
5.4 In the event Virginia Power terminates this Agreement
for an Operator Event of Default prior to the Commercial Operations Date in
accordance with this Article 5, Virginia Power may retain or draw upon all of
the security provided pursuant to Section 13.3 as liquidated damages to offset
damages Virginia Power incurs or reasonably expects to incur as a result of
Operator's Default. The Parties acknowledge that Virginia Power is relying on
the availability of the Dependable Capacity and Net Electrical Output for the
term of this Agreement and that in the event of termination of the Agreement
due to Operator default, Virginia Power will be damaged. The Parties further
acknowledge that the amount of such damages are not susceptible to an accurate
determination; therefore, the Parties agree that the liquidated damages set
forth herein represent a fair and reasonable amount of all damages under the
circumstances.
5.5(a) In the event Virginia Power terminates this Agreement
after the Commercial Operations Date for reasons of an
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Event of Default by Operator, then Virginia Power, in addition to its other
rights and remedies under Section 5.3(c), may (so long as all obligations and
liabilities of Operator (other than financial obligations and liabilities) have
been either assumed by Virginia Power (and Operator released therefrom) or
terminated) purchase the Facility and its assets, including, but not limited to,
its fuel, materials, records, drawings and spare parts inventory, upon paying
Operator in immediately available funds the greater of the following:
(i) an amount not in excess of the amount of the original
permanent financing for the Facility obtained by Operator, as
escalated by changes to the Gross National Product Implicit
Price Deflator (GNPIPD) from the Month in which the date said
original permanent financing occurred to the Month in which
date of the Event of Default occurs (or, if termination occurs
before the date of permanent financing, the amount of the
construction financing for the Facility obtained by Operator,
as escalated by changes to the GNPIPD from the Month in which
the date said construction financing was obtained to the Month
in which the date of sale occurs); or
(ii) the fair market value of the Facility, determined by an
appraiser appointed pursuant to the procedure set forth in
Section 5.5(f) below, the appraiser having taken into account
the condition of the Facility as of the date of the Event of
Default,
plus, in either case, the following:
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(iv) an amount equal to the federal, state and local taxes payable
as a result of the sale and transfer of the Facility to
Virginia Power; and
(v) any and all amounts payable by Operator either (x) to
terminate any and all other obligations and liabilities of
Operator, or (y) in connection with the assumption by Virginia
Power of, and the release of Operator from, any and all other
obligations and liabilities of Operator, or (z) a combination
of x and y above; and
(vi) all costs, expenses and other amounts incurred by Operator in
connection with Virginia Power's purchase of the Facility
pursuant to this Section 5.5
(b) Virginia Power shall give written notice to Operator of
its intent to purchase the Facility within 60 Days after the maturation of an
Event of Default giving Virginia Power a termination remedy, and Operator and
Virginia Power shall commence the appraisal procedure set forth in Section
5.5(f) to determine the fair market value of the Facility. Virginia Power shall
give Operator a binding commitment to purchase the Facility within twelve (12)
Months of its notice of intent to purchase the Facility. If Virginia Power
declines to exercise such option, or does not give Operator notice within such
twelve (12) Month period, the option shall expire and the Agreement shall expire
thirty (30) Days after Operator's receipt of such declination of the option or
the end of such twelve (12) Month period. Unless and until Virginia Power's
purchase of the Facility is consummated, this Agreement shall survive and
Virginia Power shall continue to
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purchase the Dependable Capacity and Net Electrical Output pursuant to and in
accordance with the provisions hereof. This Agreement shall terminate upon the
consummation of Virginia Power's purchase of the Facility. Transfer of the
Facility to Virginia Power shall be contingent on Virginia Power's receiving
marketable title to the Facility, free of any financial, vendors' or mechanics'
liens, but subject to covenants, conditions, reservations and restrictions of
record, if any.
(c) After transfer of title to the Facility to Virginia Power,
Operator shall indemnify and hold harmless Virginia Power from any and all
claims and liabilities placed on or against the Facility which arose prior to
transfer of title to the Facility to Virginia Power, save and except those
claims and liabilities placed on or against the Facility as a result of an act
or omission of Virginia Power, whether during or after the period Operator owned
the Facility.
(d) Upon giving to Operator notice that Virginia Power intends
to purchase to the Facility as provided in this Section 5.5, Virginia Power's
obligation to take title shall be subject to Virginia Power obtaining acceptable
releases and approvals from all governmental and regulatory bodies and agencies
with jurisdiction over Virginia Power's acquisition of the Facility.
(e) Not used.
(f) The fair market value of the Facility on the date of
the maturation of Event of Default shall be determined by an independent
appraiser qualified to appraise the fair market value of Facility. The
determination of the fair market value by the appraiser shall be binding upon
both Parties. If the Parties
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cannot agree upon a single appraiser, each Party shall select an appraiser and
those two appraisers shall select a third appraiser, and the determination of
the fair market value by the third appraiser shall be binding upon the Parties.
Virginia Power shall pay for the costs of implementing this appraisal procedure.
5.6 Virginia Power may terminate this Agreement at its
convenience upon three hundred and sixty-five (365) Days notice to the Operator.
In such event, Virginia Power shall pay Operator on the date of termination in
immediately available funds a lump sum amount equal to the sum of:
(a) the greater of (i) the net book value of the Facility (as
determined in accordance with generally accepted accounting principles)
or (ii) the amount of the original permanent financing for the Facility
obtained by Operator, as escalated by changes to the GNPIPD from the
month in which the date of such original permanent financing occurred
to the month in which the date of such termination occurs (or, if
termination occurs before the date of permanent financing, the amount
of the construction financing for the Facility obtained by Operator, as
escalated by changes to the GNPIPD from the month in which the date
said construction financing occurred to the month in which the date of
termination occurs);
plus, in either case, the following:
(b) any and all costs, expenses, and other amounts
incurred by Operator incident to prepaying its financing; plus
(c) any and all amounts payable by Operator to terminate
any and all other obligations and liabilities of Operator; plus
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(d) all costs, expenses and other amounts incurred by
Operator in connection with Virginia Power's termination under Section
5.6; plus
(e) an amount equal to the amount of federal, state and local
taxes payable as a result of the payment to Operator of the amounts set
forth in Section 5.6 (a) through (e); plus
(f) the net present value of Operator's anticipated pre-tax
profits for what would have been the remaining term of this Agreement
had this Agreement not been terminated by Virginia Power;
all of the above to be full and complete compensation to Operator for such
termination; provided, however, that in no event will such amount be less than
the amount necessary to obtain a release of the Facility from any lien thereon
securing an amount not in excess of the amount of the original permanent
financing (or, if termination occurs before the date of permanent financing, the
construction financing) obtained by Operator. In the event the Facility is
re-valued or re-financed for any reason, the net book value or lien amount used
herein shall be the value that would otherwise be in effect under the original
devaluation methodology or lien amortization schedule. In order to determine the
amount to be paid pursuant to Section 5.6(e) above, the Parties shall retain an
independent appraiser qualified to make such determination. Such determination
by the appraiser shall be binding upon both Parties. If the Parties cannot agree
upon a single appraiser, each Party shall select an appraiser and those two
appraisers shall select a third appraiser and the determination of the third
appraiser shall
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be binding upon the Parties. Upon payment in immediately available funds of the
amount calculated hereunder, this Agreement shall automatically terminate,
except as set forth above, and Operator shall retain title the Facility.
Virginia Power shall pay for the costs of implementing the above appraisal
procedure.
For what would have been the remaining term of this Agreement had this
Agreement not been terminated by Virginia Power, Operator shall pay to Virginia
Power annually no later than twenty (20) Business Days after its auditors have
issued its financial statements (the "Current Financials") with respect to the
most recently ended calendar year (the "Past Year") an amount equal to five
percent (5%) of the Operator's gross revenues for the Past Year as set forth in
the then Current Financials, but in no event shall the amount paid in respect of
any Past Year pursuant to this paragraph exceed fifty percent (50%) of
Operator's pre-tax profits with respect to such Past Year. With respect to the
amount payable under this paragraph, such obligation by Operator shall be in the
nature of a royalty and the Parties acknowledge that such obligation shall not
create an association, joint venture or partnership between the Parties or
impose any partnership obligation or liability upon the Operator or give any
management rights to Virginia Power.
5.7 Operator shall cooperate with Virginia Power in Virginia
Power's exercise of its rights under this Article 5 by (i) providing to Virginia
Power all the documentation necessary and appropriate to the determination of
the net book value or lien value of the Facility, in the case of an exercise
under 5.5 or 5.6,
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(ii) executing all documents necessary and appropriate to the transfer of title
in the Facility to Virginia Power, in the case of an exercise under 5.5, (iii)
providing Virginia Power with good and marketable title to the Facility free and
clear of all liens and encumbrances in the case of an exercise under 5.5, and
(iv) mothballing the Facility in the case of an exercise under 5.6.
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Operator covenants that (i) beginning with the Commercial
Operations Date and at all times thereafter until the termination of this
Agreement, Operator will have a reliable supply of fuel of quality and in
quantity sufficient to meet the energy and Dependable Capacity delivery
requirements hereunder and (ii) Operator shall maintain at least a thirty (30)
Day (at full load) supply of such fuel stored within one (1) mile of the
Facility site. From time to time, as Virginia Power may reasonably request,
Operator shall provide Virginia Power evidence of its compliance with this
obligation, which shall include fuel transportation arrangements, short and long
term fuel procurement strategies and reasonable evidence of executed fuel
contracts (such as memoranda of such contracts). Operator's inventory of coal
and availability of any alternate supplies of fuel will be considered in
determining whether Operator has a reliable supply of fuel.
6.2 Operator covenants that the Facility will be operated
and maintained in accordance with the following:
(a) Operating and maintenance standards
recommended by the Facility's equipment
suppliers.
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(b) Operating procedures developed pursuant to
Section 4.5.
(c) Prudent Utility Practices, including without
limitation, synchronizing, voltage and
reactive power control.
(d) Generally accepted Prudent Electrical
Practices.
(e) Any applicable laws, regulations, permits
and licenses.
6.3 Operator covenants that the Facility will be operated in
accordance with Prudent Utility Practices in such a manner so as not to have an
adverse effect on Virginia Power's voltage level or voltage waveform.
6.4 Operator covenants that the Facility will be operated at
the voltage levels determined pursuant to Section 4.6.
6.5 Operator covenants that the Facility will be designed,
constructed and completed in a good and workmanlike manner, only with materials
and equipment that are new and of utility-grade quality, in such a manner as to
provide a reasonable likelihood that the useful life of the Facility will be at
least equal to the Term and strictly in accordance with (i) the plans and
specifications and accompanying data reviewed by Virginia Power pursuant to this
Agreement, (ii) all applicable laws, rules, regulations, permits and licenses,
(iii) sound engineering and
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construction practices, Prudent Electrical Practices and Prudent Utility
Practices; and (iv) such requirements as Virginia Power may reasonably deem
necessary or desirable in order for the Interconnection Facilities to be
designed and constructed in accordance with sound engineering practices, Prudent
Electrical Practices and Prudent Utility Practices.
6.6 Operator covenants that it shall obtain and maintain the
insurance coverage specified in and in accordance with Article 12 of this
Agreement with respect to the construction and operation of the Facility.
6.7 Operator covenants that Virginia Power shall, on such
notice as is practicable under the circumstances, have access to and the right
to inspect the Facility at reasonable times on a recurring basis as deemed
necessary by Virginia Power including, but not limited to, during construction
of the Facility.
6.8 Operator covenants that, to the extent it does not have a
material adverse effect on Operator's ability to perform under this Agreement,
it shall, (a) at all times, comply with all applicable laws, ordinances, rules
and regulations applicable to it; (b) give all required material notices (and
all notices from Operator to Virginia Power concerning the operations and
availability of the Facility are deemed material), procure and maintain all
governmental permits, licenses and inspections necessary for its performance of
this Agreement; and (c) pay all charges and fees in connection therewith.
6.9 Operator covenants that it shall comply with all
applicable provisions, and successor provisions thereto of Executive Order
11246, as amended; Section 503 of the Rehabilitation Act
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of 1973, as amended; Section 402 of the Vietnam Era Veterans Readjustment
Assistance Act of 1974, as amended; and implementing regulations set forth in 41
C.F.R. Sections 60-1, 60-250, and 60-741 and the applicable provisions relating
to the utilization of small and minority business concerns as set forth in 15
U.S.C. Section 637, as amended. Operator agrees that the equal opportunity
clause set forth in 41 C.F.R. Section 60-1.4 and the affirmative action clauses
set forth in 41 C.F.R. Section 60-250.4 and 41 C.F.R. Section 60-741.4 and the
clauses relating to the utilization of small and minority business concerns set
forth in 15 U.S.C. Section 637(d)(3) and 48 C.F.R. Section 52-219.9 are hereby
incorporated by reference and made a part of this Agreement. If this Agreement
has a value of more than $500,000, Operator shall adopt and comply with a small
business and small disadvantaged business subcontracting plan which shall
conform to the requirements set forth in 15 U.S.C. Section 637(d)(6). The
provisions of this Section 6.9 shall apply to Operator only to the extent that:
(a) such provisions are required of Operator
under existing law,
(b) Operator is not otherwise exempt from said
provisions, and
(c) compliance with said provisions is
consistent with and not violative of 42
U.S.C. Section 2000e et seq., 42 U.S.C.
Section 1981 et seq., or other acts of
Congress.
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6.10 (a) Any fines or other penalties incurred by Operator or
its agents, employees or subcontractors for noncomplitlee by Operator, its
agents, employees, or subcontractors with laws, rules, regulations or ordinances
shall not be reimbursed by Virginia Power but shall be the sole responsibility
of Operator. If fines, penalties or legal costs are assessed against Virginia
Power by any government agency or court due to noncompliance by Operator with
any of the laws, rules, regulations or ordinances referred to in Sections 6.8
and 6.9 above or any other laws, rules, regulations or ordinances with which
compliance is required herein, or if the work of Operator or any part thereof is
delayed or stopped by order of any government agency or court due to Operator's
noncompliance with any such laws, rules, regulations or ordinances, Operator
shall indemnify and hold harmless Virginia Power against any and all fines,
penalties, losses, liabilities, damages, claims, costs, and expenses suffered or
incurred because of the failure of Operator to comply therewith; provided,
however, that damages to Virginia Power resulting from a delay in the Commercial
Operations Date will be covered by Section 13.4 herein. Operator shall also
reimburse Virginia Power for any and all legal or other expenses (including
reasonable attorneys' fees and disbursements) reasonably incurred by Virginia
Power in connection with such fines, penalties,losses, liabilities, damages,
claims, costs or expenses.
(b) Any fines or other penalties incurred by Virginia
Power or its agents, employees or subcontractors for noncompliance by Virginia
Power, its agents, employees, or subcontractors with laws, rules, regulations
or ordinances shall not be reimbursed by
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Operator but shall be the sole responsibility of Virginia Power. If fines,
penalties or legal costs are assessed against Operator by any government agency
or court due to noncompliance by Virginia Power with any of the laws, rules,
regulations or ordinances referred to in Sections 6.8 and 6.9 above or any other
laws, rules, regulations or ordinances with which compliance is required herein,
or if the work of Operator or any part thereof is delayed or stopped by order of
any government agency or court due to Virginia Power's noncompliance with any
such laws, rules, regulations or ordinances, Virginia Power shall indemnify and
hold harmless Operator against any and all fines, penalties, losses,
liabilities, damages, claims, costs and expenses suffered or incurred because of
the failure of Virginia Power to comply therewith. Virginia Power shall also
reimburse Operator for any and all legal or other expenses (including reasonable
attorney's fees and disbursements) reasonably incurred by Operator in connection
with such fines, penalties, losses, liabilities, damages, claims, costs or
expenses.
6.11(a) The Operator hereby represents and warrants:
(1) The Operator is a corporation duly
organized, validly existing and in
good standing under the laws of the
State of Delaware and is qualified
as a foreign corporation in good
standing in Virginia if not
incorporated in Virginia and in each
other jurisdiction where the failure
so to qualify would have a material
adverse effect
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upon the business or financial
condition of the Operator; and the Operator
has all requisite power and authority to
conduct its business, to own its properties,
and to execute, to deliver, and to perform
its obligations under this Agreement.
(2) The execution, delivery and performance by
the Operator of this Agreement have
been duly authorized by all necessary
corporate action, and do not and will not
(i) require any consent or approval of the
Operator's Board of Directors, or
shareholders, other than that which have
been obtained (evidence of which shall be,
if it has not heretofore been, delivered to
Virginia Power), (ii) violate any provisions
of the Operator's corporate bylaws or other
organic documents, any material indenture,
contract or agreement to which it is a party
or by which it or its properties may be
bound, or any law, rule, regulation, order,
writ, judgement, injunction, decree,
determination, or award presently in effect
having applicability to the Operator, or
(iii) result in a breach or constitute a
default under the Operator's corporate
bylaws, other organic documents or other
material indentures, contracts, or
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agreements, and the Operator is not in
default under its corporate bylaws or other
organic documents or other material
indentures, contracts, or agreements to
which it is a party or by which it or its
property may be bound.
(3) No authorizations or approval by any
governmental or other official agency is
necessary for the due execution, delivery
and performance by the Operator of this
Agreement as in effect on the date hereof;
other than those associated with permitting
and licensing the Facility and other than
SEC approvals or no-action letters, the
procurement of which Operator may deem to be
necessary or appropriate.
(4) This Agreement is a legal, valid and
binding obligation of Operator
enforceable in accordance with its terms,
except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the
enforcement of creditors' rights generally
or by general equitable principles,
regardless of whether such enforceability is
considered in a proceeding in equity or at
law.
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(5) There is no pending or, to the best of
Operator's knowledge, threatened action or
proceeding affecting the Operator before any
court, governmental agency or arbitrator
that could reasonably be expected to affect
materially and adversely the financial
condition or operations of the Operator or
the ability of the Operator to perform its
obligations hereunder, or which purports to
affect the legality, validity or
enforceability of this Agreement (as in
effect on the date hereof).
(b) Virginia Power hereby represents and
warrants:
(1) Virginia Power is a corporation duly
organized, validly existing and in good
standing under the laws of the Commonwealth
of Virginia and is qualified as a foreign
corporation in each other jurisdiction where
the failure so to qualify would have a
material adverse effect upon the business or
financial condition of Virginia Power; and
Virginia Power has all requisite power and
authority to conduct its business, to own
its properties, and to execute, to deliver,
and to perform its obligations under this
Agreement.
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(2) The execution, delivery and performance
by Virginia Power of this Agreement have
been duly authorized by all necessary
corporate actions, and do not and will not
(i) require any consent or approval of
Virginia Power's Board of Directors, or
shareholders, other than that which have
been obtained (evidence of which shall be,
if it has not heretofore been, delivered to
Operator); (ii) violate any provisions of
Virginia Power's corporate by-laws or other
organic documents, any material indenture or
financing agreement to which it is a party
or by which it or its properties may be
bound, or any law, rule, regulation, order,
writ, judgment, injunction, decree,
determination or award presently in effect
having applicability to Virginia Power, or
(iii) result in a breach or constitute a
default under Virginia Power's corporate
by-laws, other organic documents or other
material indentures, or financing
agreements, and Virginia Power is not in
default under its corporate by-laws or other
organic documents or other material
indentures or financing agreements to which
it is a party or by which it or its
properties may be bound.
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(3) No authorizations or approval by any
governmental or other official agency is
necessary for the due execution and delivery
by Virginia Power of this Agreement as in
effect on the date hereof.
(4) This Agreement is a legal, valid and
binding obligation of Virginia Power
enforceable in accordance with its terms,
except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the
enforcement of creditors' rights generally
or by general equitable principles,
regardless of whether such enforceability is
considered in a proceeding in equity or at
law.
(5) There is no pending or, to the best of
Virginia Power's knowledge, threatened
action or proceeding affecting Virginia
Power before any court, governmental agency
or arbitrator that could reasonably be
expected to affect materially and adversely
the financial condition or operations of
Virginia Power or the ability of Virginia
Power to perform its obligations hereunder,
or which purports to affect the legality,
validity or
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enforceability of this Agreement
(as in effect on the date hereof).
6.12(a) Operator agrees that upon request of Virginia Power,
Operator shall, at Virginia Power's cost, cause its counsel to issue an opinion
to Virginia Power addressing the representations in Section 6.11(a) and
addressing such further matters as Virginia Power may reasonably request;
provided, however, that where the request for such opinion is in response to a
valid and applicable requirement of a governmental agency with jurisdiction over
Virginia Power, Operator shall assume the cost of the opinion.
(b) Virginia Power agrees that upon the request of Operator,
Virginia Power shall, at Operator's cost, cause its counsel to issue an opinion
to Operator addressing the representations in Section 6.11(b) and addressing
such further matters as Operator may reasonably request.
6.13 Operator agrees that, upon request of Virginia Power, it
shall deliver or cause to be delivered from time to time to Virginia Power
certifications of its officers, accountants, engineers, or agents addressing
such matters as Virginia Power may reasonably request.
(b) Virginia Power agrees that, upon the request of Operator,
it shall deliver or cause to be delivered from time to time to Operator
certifications of its offices, accountants, engineers, or agents addressing such
matters as Operator may reasonably request.
6.14(a) Operator, agrees to preserve and keep in force and
effect its corporate existence and all franchises,
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licenses and permits, material to the
proper conduct of business under this
Agreement, including without limitation
the business of constructing, owning and
operating the Facility.
(b) Virginia Power agrees to preserve and keep
in force and effect its corporate existence
and all franchises, licenses and permits,
material to the proper conduct of business
under this Agreement.
6.15 Operator will keep proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to its business and affairs, in accordance with generally
accepted accounting principles, consistently applied, and will furnish the
following to Virginia Power so long as this Agreement is in effect:
(a) Quarterly Statements. Within sixty (60) Days
after the end of each quarterly fiscal
period (except the last) of each fiscal
year, copies of balance sheets of Operator
as of the close of such period, subject to
changes resulting from year-end adjustments;
prepared in accordance with generally
acceptable accounting principles.
(b) Annual Statements. As soon as available and
in any event within one hundred twenty (120)
Days after the close of each fiscal year of
Operator, copies of balance sheets of
Operator as of the close of such fiscal
year, prepared in accordance with generally
accepted accounting principles.
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(c) Third Party Reports. Operator will allow a
certified public accountant to examine the
books and records of Operator with a view
toward reporting to Virginia Power whether
or not, in the accountant's opinion, (i)
Operator is capable of, and has a financial
condition sufficient to support, continuing
operations as a going concern and (ii)
Operator is able to perform under this
Agreement. In giving its report, the
accountant may advise Virginia Power as to
whether a particular financial condition of
Operator is improving, deteriorating or
stable, but shall not disclose any dollar
amounts. Prior to examining the books and
records of Operator, the certified public
accountant must have entered into a
confidentiality agreement with Operator,
satisfactory to Operator, prohibiting the
accountant from disclosing any information
or giving any report to Virginia Power or
making any statement regarding Operator to
Virginia Power except as permitted by this
Section 6.15(c). Operator will pay all
expenses of the accountant and of his
examination of Operator's books and records.
This Section 6.15(c) does not give Virginia
Power any right for Virginia Power itself to
examine any books or records of Virginia
Power or to receive any information or
report from the accountant other than the
referenced opinions.
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(d) Amortization Schedule. Within thirty (30)
Days after Financial Closing, a copy of the
Operator's amortization schedule resulting
from Financial Closing.
6.16 Operator shall provide Virginia Power copies of any
maintenance evaluations or reports it performs for or obtains from any third
party including those with a financial security interest in or lien on the
Facility. The Operator shall use its best efforts to obtain for Virginia Power
copies of any evaluations or reports generated at the request of such third
parties or performed by an engineer employed by such third party.
6.17 Operator will provide to Virginia Power, on a Monthly
basis, a notarized statement of the quantity and cost of fuel consumed in the
Facility on an aggregate basis.
ARTICLE 7: CONTROL AND OPERATION OF THE FACILITY; DISPATCH
7.1 Prior to the beginning of each operating Day (such Day to
be defined in the operating procedures developed pursuant to Section 4.5)
Operator shall inform the Virginia Power operations center designated in the
interconnection study performed pursuant to Article 8 as to the daily operating
availability and expected maximum generation capability of its Facility,
including, without limitation, any anticipated Forced Outage.
7.2 Operator shall, at least thirty (30) Days prior to the
Commercial Operations Date, submit a written maintenance schedule
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for the first year of the Facility's operations. Thereafter, Operator shall
submit to Virginia Power, in writing, by September 1 of each Year, its desired
Scheduled Outage periods for the next Year. Operator shall not schedule such
maintenance shutdown of its Facility during the Winter Demonstration Period or
during the Summer Demonstration Period of any Year if such shutdown would
decrease the Net Electrical Output of the Facility below the Dependable Capacity
level established by testing pursuant to Article 11 without the prior written
consent of Virginia Power. Operator agrees and understands that Virginia Power
shall not be obligated to grant approval for such periods. Such Scheduled
Outages shall not exceed 18 Days in each Year except that every 5th year up to
39 Days may be scheduled. By October 31 of each Year, Virginia Power shall
notify Operator in writing whether the requested Scheduled Outage periods are
acceptable. If Virginia Power cannot accept any of the requested Scheduled
Outage periods, Virginia Power shall advise Operator of the time period closest
to the requested period when the outage can be scheduled.
7.3 Virginia Power shall have the right, upon twelve
(12)months prior written notice, to revise (but not to increase the number of)
the months during which Operator shall not, unless mutually agreed, schedule a
maintenance shutdown, but Virginia Power shall not exercise such right in a
manner which deprives Operator of maintenance periods as designated in this
Agreement.
7.4 Each Party shall keep complete and accurate records and
all other data required by each of them for the purposes of proper
administration of this Agreement in accordance with the following guidelines:
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(a) All such records shall be maintained for a
minimum of five (5) years after the creation
of such record or data and for any
additional length of time required by
regulatory agencies with jurisdiction over
the Parties; provided, however, that
Operator shall not dispose of or destroy any
such records even after the five (5) years
without thirty (30) Days prior notice to
Virginia Power.
(b) Operator shall maintain an accurate and
up-to-date operating log at the Facility
with records of: (i) real and reactive power
production for each clock hour; (ii) changes
in operating status, Scheduled Outages and
forced outages; and (iii) any unusual
conditions found during operation or
inspections.
(c) Either Party shall have the right from time
to time, upon fourteen (14) Days written
notice to the other Party, to examine the
records and data of the other Party relating
to this Agreement any time during the period
the records are required to be maintained.
(d) Operator shall provide Virginia Power with
Facility performance and events data to be
submitted Quarterly in accordance with
current
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NERC and Generating Availability Data
Systems (GADS) reporting standards.
7.5 Virginia Power agrees to Dispatch the Facility so that the
Facility is operated at no less than its Minimum Operation Level, except to the
extent Virginia Power has the right to Dispatch the Facility offline and except
to the extent that the Facility is being so ramped down to begin an outage or
ramped up to initiate a start-up. Operator shall operate the Facility and
control its output manually whenever it is being Dispatched below 50% of its
Dependable Capacity or above 100% of its Dependable Capacity. Virginia Power
shall have the right to control the output of the Facility pursuant to Automatic
Generation Control when it is being Dispatched at or above 50% of its Dependable
Capacity and at or below 100% of its Dependable Capacity. Virginia Power and
Operator will include Dispatch procedures (including without limitation
consideration of technical matters that could affect safety, reliability,
efficiency or life of the Facility, such as, without limitation, minimum
loadings and unit ramp rates) in the manual to be developed pursuant to Section
4.5. Operator agrees to operate the Facility consistent at all times with
Virginia Power's Dispatch of the Facility and the terms of this Agreement;
provided, however, that Virginia Power shall not be obligated to purchase or
receive, and may require Operator to reduce or cease energy deliveries in
accordance with the terms of this Agreement; and provided, further that this
Section 7.5 shall not relieve Virginia Power of its obligation to make capacity
payments as and when required hereunder. In particular, Operator shall comply
with Virginia Power's Dispatch orders when:
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(a) Notwithstanding the provisions of Section
7.8 hereof, in Virginia Power's sole
opinion, a condition exists which presents a
physical threat to any persons or property;
or
(b) Subject to the provisions of Section 7.8
hereof, it is necessary to construct,
install, maintain, repair, replace, remove,
investigate, inspect or test any part of the
Facility or the Interconnection Facilities,
or any other affected part of Virginia
Power's system.
Virginia Power will make a reasonable effort to notify and coordinate such
reductions with Operator. With respect to Section 7.5(b) above, Virginia Power
shall provide Operator with at least forty-eight (48) hours prior notice when
practicable. Any reduction required of Operator pursuant to subsection (a) above
shall be implemented and completed as soon as possible consistent with Prudent
Utility Practices.
7.6 Except as allowed by Section 7.5(a), Virginia Power shall
Dispatch the Facility in accordance with the Design Limits and the following
notice provisions:
(a) On Friday of each week, Virginia Power will
provide Operator with a projected schedule
of operations for the following week. The
actual operating level will be determined
by the requirements for
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operation in accordance with Dispatch
and/or Automatic Generation Control and may
be substantially different than the schedule
provided in accordance with this Section.
(b) Virginia Power will provide Operator with
five (5) minutes notice of changes in
operating levels to be achieved by the
Facility in accordance with the Design
Limits, except that when the Facility is
operated with Automatic Generation Control,
pursuant to the terms hereof, Virginia Power
shall not be required to provide such
notice.
Operator agrees to comply with the notices received from Virginia Power pursuant
to (a) and (b) above.
7.7 Operator shall employ qualified personnel for monitoring
the Facility and for coordinating operations of the Facility with Virginia
Power's system. Operator shall ensure that such personnel are on duty at all
times, twenty-four (24) hours a Day and seven (7) Days a week.
7.8 The Parties recognize that Virginia Power is a member of
NERC and that, to ensure continuous and reliable electric service, Virginia
Power operates its system in accordance with the operating criteria and
guidelines of NERC. If an Emergency is declared, Virginia Power's operations
center will notify Operator's
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personnel and, if requested by Virginia Power, Operator shall use all reasonable
efforts, in the Operator's sole judgment, to comply with Virginia Power's
request during such Emergency, consistent with the capability of the Facility at
the time and under the circumstances. Without limiting the foregoing, Virginia
Power's operations center may require Operator's personnel to raise or lower
production of energy generated by the Facility to maintain safe and reliable
load levels and voltages on Virginia Power's transmission and/or distribution
system; provided, however, any changes in the level of the Net Electrical Output
required of Operator hereunder shall be implemented in a manner consistent with
safe operating procedures and within the Facility's Design Limits.
7.9 Operator shall cooperate with Virginia Power in
establishing Emergency plans, including without limitation, recovery from a
local or widespread electrical blackout; voltage reduction in order to effect
load curtailment; and other plans which may arise. The Operator shall make
technical references available concerning start-up times, black-start
capabilities (if applicable) and minimum load-carrying ability.
7.10 If Operator has a Scheduled Outlee, and such Scheduled
Outage occurs or would occur coincident with an Emergency, Operator shall make
all good faith efforts to reschedule the outage or, if the outage has begun, to
expedite the completion thereof.
7.11 Operator shall operate the Facility with its speed
governors, voltage regulators and, subject to Section 7.5, Automatic Generation
Control (AGC) equipment operable whenever the Facility is connected to or
operated in parallel with the Virginia Power system pursuant to Virginia Power's
Dispatch rights;
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provided, however, that Operator shall not be required to go off line or cease
operating the Facility because the AGC equipment does not operate.
7.12 In the event of failure of the AGC equipment to operate,
Virginia Power will endeavor to Dispatch the Facility by alternative means over
the operating range controlled by the AGC equipment. The use of such alternative
means of Dispatch will be used until the failure of the AGC equipment is
corrected. Operator will use its best efforts to correct the failure of their
AGC equipment as soon as possible.
ARTICLE 8: INTERCONNECTION
8.1 Operator shall be responsible for the design,
construction, installation, maintenance and ownership of the Facility (which as
defined herein includes without limitation auxiliaries and interconnection
equipment on Operator's side of the Interconnection Point).
8.2 If it is determined in the interconnection study performed
by Virginia Power pursuant to Section 8.5 that the Virginia Power-owned metering
facilities (which will include current and potential transformers and
telemetering equipment) should be installed on Operator's property then: (i)
Virginia Power shall provide the Operator with the metering equipment, (ii)
Operator shall be required to install such metering equipment and (iii) such
installation shall be done as prescribed by Virginia Power.
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8.3 Virginia Power shall be responsible and shall pay for the
design, construction, installation (except as provided herein), maintenance and
ownership of the Interconnection Facilities.
8.4 By December 31, 1990, Operator shall provide to Virginia
Power the data required in Exhibit A attached hereto, including proposed
performance dates and a proposed schedule which shall be consistent with
milestone dates provided in Section 5.3 of this Agreement. Virginia Power shall
have the right to comment on and suggest revisions to Operator's proposed
schedule; provided, however, that if Virginia Power has not responded within 30
Days of its receipt thereof, it will be deemed to have no comments or revisions.
All site plans and one-line diagrams provided shall be certified by an engineer
licensed by the state in which the Facility is located. Operator shall update
the proposed schedule in its monthly progress reports provided to Virginia Power
pursuant to Section 4.2 hereof; provided, however, that any changes in the
proposed schedule shall be consistent with the milestone dates provided in
Section 5.3 hereto. Virginia Power shall have the right to evaluate the
reasonableness of the schedule and monitor progress of the development of the
Facility to assess whether Operator will meet the Anticipated Commercial
Operations Date. Operator shall comply with all reasonable requests of Virginia
Power to modify the proposed schedule if Virginia Power reasonably believes such
changes are necessary for Operator to have the Commercial Operations Date occur
within fifteen (15) Days prior to or fifteen (15) Days after the Anticipated
Commercial Operations Date; provided, however, that if Virginia Power has not
responded
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within 30 Days of its receipt of the schedule, it will be deemed to have no
comments or revisions.
8.5 Virginia Power shall perform an interconnection study
within one hundred and twenty (120) Days of Operator's completion of the
requirements of Section 8.4 above. The interconnection study shall, at a
minimum, (i) determine the Interconnection Point and the time required to
complete the Interconnection Facilities and (ii) designate the Virginia Power
operations center that will coordinate the operation of the Facility. The
Interconnection Facility design shall be consistent with Prudent Utility
Practices considering the functional one-line diagram and site plan provided to
Virginia Power pursuant to Section 8.4.
8.6 Within thirty (30) Days of receipt of the interconnection
study, Operator agrees: (i) to grant to Virginia Power all necessary rights of
way and easements, including adequate and continuing access rights on property
of Operator, to install, operate, maintain, replace and/or remove the
Interconnection Facilities located on property of Operator; and (ii) to provide
a site plan drawing showing the Facility's grid system tied to the site property
lines and switchyard for the purpose of the transmission line survey. No later
than one hundred and twenty (120) Days prior to commencement of construction of
the Interconnection Facilities, Operator shall execute any documents as Virginia
Power may require to record such rights of way and easements. Consideration for
such grants, deeds or documents shall be the execution of this Agreement and no
other consideration shall be required. Operator agrees that rights of way and
easements shall survive termination or expiration of this Agreement.
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8.7 When Operator has completed the requirements of Section
8.6 above, Virginia Power shall engineer and construct the Interconnection
Facilities in accordance with the design determined in the interconnection study
performed pursuant to Section 8.5. Failure by Virginia Power to complete the
Interconnection Facilities within the time period determined pursuant to Section
8.8 shall not be considered a default of this Agreement if such failure can
reasonably be attributed to any of the following:
(a) Events beyond Virginia Power's reasonable
control, including without limitation, time
delays incident to the SCC's granting of any
required certificate(s) of convenience and
necessity, time constraints associated with
the procurement of necessary equipment.
(b) The failure of Operator to execute in time
sufficient for Virginia Power to complete
the Interconnection Facilities grants,
deeds, or documents as Virginia Power may
require to record rights of way, easements,
or other grants in accordance with Section
8.6.
(c) Failure of Operator to provide by the
required dates technical data necessary for
Virginia Power to perform interconnection.
8.8 Subject to the provisions of Section 8.7 above, Virginia
Power shall be obligated to have the Interconnection
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Facilities completed no later than 120 Days prior to the Anticipated Commercial
Operations Date and shall endeavor to have such facilities completed 180 Days
prior to the Anticipated Commercial Operations Date if the interconnection study
shows such earlier date to be practicable. Virginia Power's obligation is
expressly conditioned on Operator's submission of data in a timely manner as
required under this Agreement, in form and substance meeting reasonable
standards and expectations of Virginia Power and supportive of the
interconnection. Upon 18 months prior notice by Operator, Virginia Power will
endeavor to complete the Interconnection Facilities at a date requested by
Operator that is more than 180 Days prior to the Anticipated Commercial
Operations Date. If, at the request of Operator, Virginia Power completes the
Interconnection Facilities more than 180 Days prior to Anticipated Commercial
Operations Date, Operator will pay Virginia Power's standard facilities charge
for the use of such Interconnection Facilities atlehe monthly rate specified in
Section IV E.4 of the Terms and Conditions on file with the SCC from the date
such facilities are completed until 180 Days prior to the Commercial Operations
Date.
8.9 Virginia Power reserves the right to modify or expand its
requirements for protective devices to conform with Prudent Electrical Practices
and Prudent Utility Practices and to ensure safe uninterrupted operation of its
electrical system.
8.10 Each Party shall notify the other in advance of any
changes to its system that will affect the proper coordination of protective
devices on the two systems.
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ARTICLE 9: METERING
9.1 (a) Virginia Power shall own and maintain all meters and
metering devices (including remote terminal units) used to measure, for payment
purposes, the delivery to Virginia Power of the Facility's Net Electrical Output
and Dependable Capacity. Nothing in this Agreement shall prevent Operator,
solely for Operator's purposes, from installing Operator-owned and maintained
meters and metering devices in addition to Virginia Power owned and maintained
meters and metering devices.
(b) If any tests under Section 9.2 show that the meters
fail to meet the accuracy requirements provided in the SCC's regulations
(or in the absence thereof are more than two percent (2%) fast or slow), the
Parties shall review all pertinent metering and other records and attempt to
determine actual deliveries of electricity. Virginia Power shall make offsetting
adjustments in all monthly statements and other records and in all previous
energy and capacity payments for any known or agreed upon period of inaccuracy.
In the absence of such knowledge or agreement, Virginia Power shall make such
adjustment for the second half of the period since the most recent meter test.
Virginia Power or Operator shall make such payment to the other as is necessary
to effectuate such adjustment by adjusting the appropriate payments during the
next monthly billing statement and payment cycle. Any such meters or associated
metering equipment of Virginia Power shall be promptly replaced, repaired, or
readjusted by Virginia Power.
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9.2 All Virginia Power-owned meters and metering equipment
used to determine the Net Electrical Output and Dependable Capacity delivered to
Virginia Power shall be sealed, and the seals opened only by Virginia Power
personnel when the meters are to be inspected, tested, or adjusted; Virginia
Power shall give Operator prior written notice thereof and Operator shall have
the right to be present. Virginia Power will test the meter(s) in accordance
with the provisions for meter testing set forth in Virginia Power's approved
Terms and Conditions for Supplying Electricity as filed with the SCC at the time
the test is performed.
9.3 Operator shall provide at its expense:
(a) For the purpose of telemetering, a
telecommunication circuit to the operations
center designated by Virginia Power;
(b) A voice telephone extension for the purpose
of accessing Virginia Power's dial-up
metering equipment and for communicating
with the designated Virginia Power
operations center;
(c) An extension of Virginia Power's system
operations center's PBX system in the
control room of the Facility;
(d) Equipment to transmit and receive telecopies
for purposes of generation scheduling,
Dispatch orders and coordination of
switching.
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Each of the items provided by Operator in accordance with this Section 9.3 shall
be subject to the approval of Virginia Power, which approval shall not be
unreasonably withheld.
9.4 Operator shall test and adjust its Automatic Generation
Control System in accordance with Prudent Utility Practices and the results of
such tests shall be reported to Virginia Power.
ARTICLE 10: COMPENSATION, PAYMENT, AND BILLINGS
10.1 The Operator shall be compensated for the Net Electrical
Output of the Facility on a cents per kWh basis at a rate equal to the Energy
Purchase Price. The Energy Purchase Price is composed of the Base Fuel
Compensation Price, the Fuel Compensation Price or the discounted Fuel
Compensation Price, as applicable, as determined in Sections 10.2 - 10.13 below,
multiplied by the Heat Rate and then increased by the variable O&M Price
specified in Section 10.14. The Input/Output curve coefficients in the formula
specified in Section 1.20 are A = 2.26117 x 10(8), B = 7.64063 x 10(3) and C =
4.27130 x 10(-3) and shall remain fixed for the term of the Agreement.
The Facility is composed of 1 generating
unit with Input/Output curve coefficients as
follows:
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INPUT/OUTPUT CURVE COEFFICIENTS:
Unit No. A B C
- -------- --------------- --------------- ----------------
1 2.26117 x 10(8) 7.64063 x 10(3) 4.27130 x 10(-3)
10.2 The Base Fuel Compensation Price (BFCP) shall be the
initial price Virginia Power will pay the Operator for the fuel portion of the
Energy Purchase Price. The Base Fuel Compensation Price, effective October 1,
1989 for energy received from the Facility, shall be based on a delivered fuel
cost of 163.0c./million Btus. The Base Fuel Compensation Price shall be subject
to adjustment only as specified herein.
10.3 For the purpose of this Section, the following terms,
whether in the singular or in the plural, shall have the meaning stated below:
(a) Base Eastern Bituminous Coal Index (BEBCI) -
The Eastern Bituminous Coal Index for the
second Calendar Quarter of 1989. Using the
definitions specified herein, it is
designated (EBCI)(2,1989) and is equal to
147.7 cents per million Btu as of the
Execution of this Agreement.
(b) Eastern Bituminous Coal Index (EBCI) - The
average cost of coal (including the impact
of any applicable tax credit, e.g. the
Virginia Tax Credit) purchased for Virginia
Power's in-system coal fired stations (which
excludes Mt. Storm)
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reported in cents per million Btu for the
Calendar Quarter in question. The index is
calculated using the weighted average
delivered cost of solid fuel, in c./million
Btu, reported on FERC Form 423. The EBCI
shall be abbreviated as EBCI(q,y) where q is
the Calendar Quarter and y is the year.
10.4 At least two (2) weeks prior to the Initial
Synchronization Date and at least two (2) weeks prior to the beginning of each
subsequent Calendar Quarter thereafter, the Fuel Compensation Price that will be
effective during that next subsequent Calendar Quarter shall be calculated as
follows:
EBCI(q-2,y)-1
Fuel Compensation Price = ---------------------- X BFCP
BEBCI-1
Thus, if the Fuel Compensation Price were being determined for the first
Calendar Quarter of 1990, the numerator of the above equation would be
EBCI(3,1989).
10.5 THIS SECTION IS NOT USED.
10.6 Operator may, with at least two (2) weeks prior written
notice, specify, revise, or revoke a discount to the Fuel Compensation Price to
be used in the following Calendar Month. This discount shall then be applied
against the Fuel Compensation Price as calculated herein, and the resultant
price will be used in lieu of the Fuel Compensation Price for the purposes of
payments and Dispatch, whereas the non-discounted Fuel Compentleion Price shall
continue to be calculated in accordance with this Article 10. This discount will
be effective, in the form specified in the
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Operator's notice, until Operator provides further notice as specified in this
Section 10.6, except, however, that such discount shall be effective for at
least one Calendar Month. The resultant discounted Fuel Compensation Price shall
not exceed the non-discounted Fuel Compensation Price calculated in accordance
with this Article 10.
10.7 Opportunities to redetermine the BEBCI, the EBCI, and/or
the fuel component of the Base Fuel Compensation Price shall begin on the third
July 1 after the signing of this Agreement and every third July 1 thereafter
("Redetermination Date"). Either Party may submit written notice to the other
Party requesting such redetermination no less than four (4) Calendar Months
prior to the Redetermination Date. Such written notice shall include any
proposed change(s) and the basis for such change(s). The Parties shall then
enter into good faith negotiations for the purpose of revising the BEBCI, the
EBCI, and/or the Base Fuel Compensation Price to reflect more accurately the
prices then prevailing in the market for prudent purchases of Solid Fuel. If
such redetermination is not complete within thirty (30) Days after the
Redetermination Date, either Party may submit the matter to binding arbitration
as discussed in Sections 10.8 through 10.13, below.
10.8 The location of arbitration shall be in Richmond,
Virginia, unless otherwise mutually agreed. The method of arbitration shall be:
(a) The Parties shall agree upon a single
arbitrator with knowledge of and experience
in the matter of Solid Fuel and the
procurement and use of Solid
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Fuel in electric power plants or the
electric utility industry, or, if the
Parties cannot agree;
(b) Each Party shall designate one arbitrator
and the individuals so designated shall
jointly select a third arbitrator, or, if
this arbitrator selection process fails;
(c) Either Party may request the American
Arbitration Association to appoint the
arbitrator(s), who shall be a specialist(s)
in the matter of solid fuel.
10.9 Either Party may submit a written statement of its position
to the arbitrator(s) and the other Party within thirty (30) Days of
appointment. The other Party shall then have no more than twenty (20) Days to
provide the arbitrator(s) and the other Party with a written response to such
statement. These statements shall be the sole subject of the arbitration,
except, however that the matters subject to arbitration shall be limited to:
(a) A determination of a new Base Fuel
Compensation Price based on the fair market
price(s) which a prudent purchaser would pay
for Solid Fuel to be delivered and used
during the Month of the Redetermination
Date; and/or
(b) A determination of appropriate indices to
adjust the Base Fuel Compensation Price in
the
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future so as to track the fair market
price(s) in the future for Solid Fuel in
such a facility following the
Redetermination Date.
10.10 In the redetermination of the Base Fuel Compensation Price,
the arbitrators shall:
(a) Consider a fair market price for Solid Fuel
delivered to power generation facilities
within Virginia Power's certificated service
area during the Month of the Redetermination
Date using both price quotes referenced in
fuel contracts and prices received on either
a contract or spot basis during the twelve
(12) Month period preceding the
Redetermination Date;
(b) Consider prices referenced pursuant to
Section 10.10(a) above only when such prices
apply for volumes in excess of 6,000 tons
per Month for use in a fully Dispatchable
Facility with a generating capacity of no
less than 100 MW and located within Virginia
Power's service territory;
(c) Consider prices specified for Solid Fuel
only when such Solid Fuel is of similar
quality and characteristics as Solid Fuel
used in
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pulverized coal boilers in Virginia Power's
service territory; and
(d) Not consider prices specified for solid fuel
for which either Party has an economic
interest in the determination of the revised
Base Fuel Compensation Price or in the
consideration of the revised indices.
10.11 In the redetermination of indices to govern future price
adjustments, the arbitrator(s) shall:
(a) Consider indices that are similar in
operation and intent to the indices
specified herein reflecting increases and
decreases in average delivered Solid Fuel
prices, and which rely on objective, average
price data for those fuels;
(b) Consider indices that take into account the
delivered cost to fully dispatchable Solid
Fuel fired electric generating facilities
with capacity ratings of at least 100 MW
located in Virginia Power's service
territory;
(c) Consider indices that use data that is
verifiable by independent third parties and
updated regularly; and
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(d) Not consider indices that use solid fuel
data when such solid fuels are not of
similar quality and characteristics as Solid
Fuel used in pulverized coal boilers in
Virginia Power's service territory.
10.12 The decisions of the arbitrator(s) on the matters
presented shall be rendered within thirty (30) Days following the submissions,
if any, of the Parties. The Base Fuel Compensation Price and/or the associated
indices established in accordance with this Article 10 shall be binding on the
Parties, and shall be enforced before any court of competent jurisdiction and,
upon application to such court, shall be enforced by an appropriate judicial
order. If the arbitration is conducted by one arbitrator, the Parties shall bear
the expenses of arbitration equally. If the arbitration is conducted by three
arbitrators, each Party shall bear the expenses of the arbitrator appointed by
itself and the Parties shall bear the expenses of the third arbitrator equally.
All other expenses incurred by either Party shall be borne by the Party
incurring the expenses.
10.13 Following the decision of the arbitrator(s), the Base
Fuel Compensation Price, the Base Solid Fuel Index, and the Solid Fuel Index as
defined herein shall be replaced in accordance with those decisions, and
adjustments to the Fuel Compensation Price shall thereafter be performed as if
such decisions had been included in this Agreement. The effective date of
changes determined by such redeterminations shall be one week after the
completion of such redetermination.
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10.14 Virginia Power shall also pay Operator, on a per kWh
basis, a variable operation and maintenance adjustment. This O&M Price shall be
0.3333 cents/kWh and shall be increased or decreased, as appropriate, on April
1, 1990 and on each April 1 thereafter by the percent change in the Gross
National Product Implicit Price Deflator (GNPIPD) for the previous Year as
specified by the Bureau of Labor Statistics. Should the index specified herein
be discontinued, an index specified by the appropriate government agency as the
replacement index, if any, shall be used. If no replacement index is specified,
a new index which most accurately reflects changes for the applicable cost
component shall be substituted by mutual agreement of the Parties. In the event
thetlerties fail to agree, such matter will be submitted to arbitration under
the rules of the American Arbitration Association. If the basis of the
calculation of the index specified herein is substantially modified, the index
as modified will continue to be used unless another index is substituted by
mutual agreement of the Parties. In the event the Parties fail to agree, such
matter will be submitted to arbitration under the rules of the American
Arbitration Association. A change in the base year reporting basis, minor
changes in weighing, and minor changes in benchmarks shall not be construed as
substantial modification to the index and the affected values shall be
re-established in accordance with the instructions issued by the appropriate
government agency.
10.15 The Operator shall be paid for Dependable Capacity on a
Monthly basis (with payments actually to be made periodically
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pursuant to the schedule determined pursuant to Section 10.17) as follows:
(a) If pursuant to Section 14.3 Virginia Power
is required to make payments for Dependable
Capacity prior to the Commercial Operations
Date, Virginia Power will pay $20.8570/kW
per Month multiplied by the Estimated
Dependable Capacity specified in Section
11.1 for the Applicable Period.
(b) If there is an event of Force Majeure that
causes a deferral of the Commercial
Operations Date, other than an event of
Force Majeure prior to the Commercial
Operations Date described in Section 14.3,
Virginia Power will not be required to pay
for Dependable Capacity prior to the
Commercial Operations Date. In such event,
however, the applicable $/kW per Month
payments for Dependable Capacity shown in
(c), below, shall be those that would have
applied if the Commercial Operations Date
had occurred on the date it would have
occurred but for the Force Majeure event.
(Thus, for example, if there had been an 18
Month deferral of the Commercial Operations
Date, Operator would be paid the Monthly
price shown for Agreement Year 2 for the
first six Months following the Commercial
Operations Date, then the price shown for
Agreement Year 3 for the following twelve
Months, and so on.)
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Further, the drop in payments shown in (c),
below, occurring at the end of Agreement
Year 20 shall be deferred for a period of
time equal to the deferral of the Commercial
Operations Date due to the event of Force
Majeure described above (the "Deferral
Period") in the following manner:
(i) for each Month of Agreement Year 21
as is necessary to equal the
Deferral Period, the $/kW per Month
shown in (c) below for Agreement
Year 20, increased by two percent
(2%), shall apply (the "Revised
Agreement Year 21 Payments") rather
than the $/kW per Month shown for
Agreement Year 21;
(ii) for each Month of Agreement Year 22,
as necessary, together with the
Months from Agreement Year 21, to
equal the Deferral Period, the
Revised Agreement Year 21 Payments,
again increased by two percent (2%),
should apply, rather than the $/kW
per Month shown for Agreement Year
22;
(iii) in the event Virginia Power has not
exercised its right to terminate
this Agreement for a Force Majeure
delay of the Commercial Operations
Date that extended for more than 18
months, the same procedure shall be
followed to calculate the applicable
$/kW per Month for subsequent
Agreement Years
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until an amount of time equal to the
Deferral Period has passed; and
(iv) thereafter, the applicable $/kW per
Month shall revert to those shown in
(c) below, as originally stated
(such that, for example, if there
had been a ten Month Force Majeure
deferral and a ten Month payment
adjustment pursuant to (i), above,
the $/kW per Month for Agreement
Year 21 would then apply for two
Months and then the price shown in
Agreement Year 22 would apply for
the successive twelve Months, and so
on.)
(c) Subject to Section 10.15(6), commencing with
the Commercial Operations Date and
continuing for twenty-five (25) Agreement
Years from the Commercial Operations Date,
Virginia Power will pay the Capacity
Purchase Price specified below multiplied by
the Dependable Capacity during the relevant
Month. The equivalent hourly Capacity
Purchase Price used in this Section 10.15
and in Article 18 is also specified below.
AGREEMENT YEAR $/kW per month $/kWh
-------------- -------------- -----
1 20.8570 0.02857
2 21.3836 0.02929
3 21.9236 0.03003
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4 22.4771 0.03079
5 23.0447 0.03157
6 23.6266 0.03237
7 24.2231 0.03318
8 24.8348 0.03402
9 25.4619 0.03488
10 26.1048 0.03576
11 26.7639 0.03666
12 27.4397 0.03759
13 28.1326 0.03854
14 28.8429 0.03951
15 29.5712 0.04051
16 30.3179 0.04153
17 31.0834 0.04258
18 31.8682 0.04366
19 32.6729 0.04476
20 33.4979 0.04589
21 18.6680 0.02557
22 19.0150 0.02605
23 19.3750 0.02654
24 19.7500 0.02705
25 20.1400 0.02759
26 20.5428 0.02814
27 20.9537 0.02871
28 21.3728 0.02928
29 21.8003 0.02986
30 22.2363 0.03046
31 22.6810 0.03107
32 23.1346 0.03169
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(d) For each hour (rounded to the nearest hour)
where Operator fails, after two (2) oral
notifications from Virginia Power (second
notification to be provided not less than
fifteen (15) minutes from first
notification), to operate within plus/equal
to 5% of the Dispatch level specified by
Virginia Power, pursuant to Section 7.5 and
7.6, then, the deviation (measured in kWh)
shall be applied as follows:
(1) Each Agreement Year shall have a
"Non-Reduction Amount" equal to the
product of (i) 610 hours per kW
(plus an additional 710 hours per kW
in Agreement Year 1), times (ii) the
average of the Dependable Capacity
in the previous Agreement Year (or
the Estimated Dependable Capacity in
Agtleement Year 1). The Hourly
Capacity Payment Reduction Table
shown in Section 10.15(d)(2) shall
not apply to the Non-Reduction
Amount kWh.
(2) After Operator has utilized the
Non-Reduction Amount kWh in an
Agreement Year, as the Non-Reduction
Amount kWh may be increased by
Operator, from time to time,
according to the provisions of
Section 10.15(d)(3), Virginia Power
may reduce,
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according to the Hourly Capacity
Payment Reduction Table shown below,
the payments made to the Operator
for Dependable Capacity. The
reductions are disproportionately
higher than the actual difference in
kWh. Such reductions shall be
calculated in accordance with the
following formula where; A =
Dependable Capacity; B = Dispatch
level during the period subject to
reduction; C = Net Electrical Output
during the period subject to
reduction; D = the number of hours
subject to reduction; E = the
appropriate Penalty Reduction Factor
from the Hourly Capacity Payment
Reduction Table; F = kWh of the
subject Capacity Payment reduction;
G = Hourly Capacity Purchase Price
in Section 10.15(c):
[|1 - (C / B)| + E] x D x A = F
Note, the expression |1 - (C / B)|
is the Dispatch Deviation, which is
a mathematical absolute value.
F x G = Amount that Operator's
Capacity Payment is reduced
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The following example is provided to
illustrate the aforementioned
calculation. The example has these
assumptions:
A - Dependable Capacity = 200,000 kW
B - Dispatch Level = 100,000 kW
C - Net Electrical Output = 85,000
kW
The 7 hour time period in this
example is in July of Agreement Year
1 between 6:00 PM and 1:00 AM the
following day; therefore,
D - number of hours subject to
reduction = 4 On-Peak Hours and 3
Off-Peak Hours
E - appropriate Penalty Reduction
Factor = 0.07 for On-Peak Hours and
0.04 for Off-Peak Hours
F - MWH subject Capacity Payment
reduction = determined by
calculation
G - Hourly Capacity Purchase Price =
$0.02857/kWh
Reduction for On-Peak Hours
[|1 - (C / B)| + E] x D x A =
F [|1 - (85000 / 100000)| + .07] x
4 x 200000 = 176000
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F x G = Amount that Operator's
Capacity Payment is reduced 176000 x
$0.02857 = $5,028.32 (On-Peak Hours
reduction)
Reduction for Off-Peak Hours [|1 -
(C / B)| + E] x D x A =
F [|1 - (85000 / 100000)| + .04] x
3 x 200000 = 114000
F x G = Amount that Operator's
Capacity Payment is reduced 114000 x
$0.02857 = $3,256.98 (Off-Peak Hours
reduction)
Total Reduction to payments for
Dependable Capacity $5,028.32 +
$3,256.98 = $8,285.30
HOURLY CAPACITY PAYMENT REDUCTION TABLE
Demonstration Period
Hourly Payment Reduction
On-Peak Hour Off-Peak Hour
- --------------------------------------------------------------------------------
Dispatch Deviation + 0.07* Dispatch Deviation + 0.04*
Non-Demonstration Period
Hourly Payment Reduction
On-Peak Hour Off-Peak Hour
- --------------------------------------------------------------------------------
Dispatch Deviation + 0.03* Dispatch Deviation + 0.01*
* Penalty Reduction Factor
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(3) There shall be a tracking account,
denominated "the Availability Bank," so that
Operator may use unutilized Non-Reduction
Amount kWh ("Credits") in some Agreement
Years to increase the Non-Reduction Amount
in subsequent Agreement Years; provided,
however, that (i) Credits which were
recorded more than five (5) Agreement Years
preceding the current Agreement Year will
expire and may not be used; (ii) Credits
will be applied on a first-in, first-out
basis; and (iii) such Credits used to
increase the Non-Reduction Amount in a
single Agreement Year shall never exceed the
product of 610 hours per kW times the
average of the Dependable Capacity in the
previous Agreement Year. With the consent of
Virginia Power, which shall not be
unreasonably withheld, Operator may convert
Credits on a one-for-one basis to increase
Scheduled Outage hours above the levels
specified in Section 7.2, subject to the
notice and scheduling provisions of that
section. Once Credits are thus converted,
they shall be deducted from the Availability
Bank. In no event will Virginia Power be
required to make any cash payment for any
Credits or positive balance in the
Availability Bank.
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(e) To the extent that the Initial Dependable
Capacity for the first Summer Period as
determined by testing pursuant to Section
11.6 is set below the Estimated Dependable
Capacity for the Summer Period as specified
in Section 11.1, Operator shall pay to
Virginia Power within thirty (30) Days of
the test $18.00 per Kw for the difference as
liquidated damages for the detrimental
impact upon Virginia Power's generation
planning.
(f) To the extent that the Initial Dependable
Capacity for the first Winter Period as
determined by testing pursuant to Section
11.6 is set below the Estimated Dependable
Capacity for the Winter Period as specified
in Section 11.1, Operator shall pay to
Virginia Power within thirty (30) Days of
the test $18.00 per Kw for the difference as
liquidated damages for the detrimental
impact upon Virginia Power's generation
planning.
(g) If, as a result of any Summer Demonstration
Period or Winter Demonstration Period
testing done pursuant to Article 11, the
Facility's Dependable Capacity is set at a
level less than the lower of (A) 90% of the
Initial Dependable Capacity established in
the first Summer Period (if for a Summer
Period) or first Winter Period (if for a
Winter Period) or (B) the Dependable
Capacity set
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in the immediately preceding Summer Period
(if for a Summer Period) or immediately
preceding Winter Period (if for a Winter
Period), then Operator shall, in addition to
any other liabilities due hereunder, pay to
Virginia Power, within thirty (30) Days of
such testing, an amount equal to $40.00 per
kW of such deficit (in 1989 dollars,
escalated by the percentage change in the
Gross National Product Implicit Price
Deflator beginning on April 1, 1990 and on
each April 1 thereafter), as liquidated
damages for the detrimental impact of such
lower Dependable Capacity on Virginia
Power's generation planning.
10.16 Operator shall pay Virginia Power an amount reflecting
all reasonable costs incurred by Virginia Power for meter reading and billing.
The monthly meter reading and billing charge per meter shall equal the basic
customer charge in the Rate Schedule under which the Operator lerchases
electricity from Virginia Power in effect at the time the meter is read.
10.17 Meters shall be read, and bills rendered, according to
the meter reading and billing schedule established by Virginia Power. Such
Schedule normally results in twelve (12) readings per year. Payment for the
energy, or energy and Dependable Capacity, delivered to Virginia Power, during
the billing period shall be made within twenty-eight (28) Days of the meter
reading date. Interest at the Interest Rate shall accrue on the outstanding
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payments due Operator commencing on the twenty-ninth (29) Day after the meter
reading date. However, any amounts due Virginia Power, including amounts arising
from cases where Operator, at the same site, sells to and purchases from
Virginia Power, or other amounts due Virginia Power arising out of this
Agreement, may (at Virginia Power's sole discretion) be offset against the
amounts due to Operator. In such event, the net result shall be paid to the
appropriate Party within twenty-eight (28) days of the meter reading date.
Operator agrees that its purchase of electricity from Virginia Power will be on
a rate schedule approved by the SCC and such schedule may change from time to
time and the terms and conditions of such changed schedule will supersede any
provisions herein that are in conflict.
Payment to Virginia Power shall be made by check to the following address:
Virginia Power
P.O. Box 26019
Richmond, Virginia 23260-6019
Payment to Operator shall be made by check to the following address:
SEI Birchwood, Inc.
100 Ashford Center North, Ste. 400
Atlanta, GA 30338
Either Party may, by written notice to the other, change the address to which
such payments are to be sent.
10.18 The Parties agree that Virginia Power will be
substantially damaged in amounts that will be difficult or impossible to
determine if the Facility:
(a) Is not in-service by the Anticipated
Commercial Operations Date.
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(b) Is not capable of achieving the original
Estimated Dependable Capacity set forth in
Section 11.1.
(c) Cannot maintain Dependable Capacity of at
least ninety (90) percent of the Initial
Dependable Capacity level established by
testing as determined pursuant to Section
11.6.
Therefore, to the limited extent set forth in this Agreement,
the Parties have agreed on sums which the Parties agree are reasonable as
liquidated damages for such occurrences. It is further understood and agreed
that the payment of the liquidated damages is in lieu of any and all damages for
such occurrences which would otherwise be owing to Virginia Power. Operator
hereby waives any defense as to the validity of any liquidated damages stated in
this Agreement as they may appear on the grounds that such liquidated damages
are void as penalties .
ARTICLE 11: TESTING AND CAPACITY RATINGS
11.1 Operator's Estimated Dependable Capacity is 198 MW for
the Summer Period and 202 MW for the Winter Period.
11.2 The Dependable Capacity level for which the Operator will
be paid the Capacity Purchase Price shall be determined for each Summer and
Winter Period by testing as set forth in this Article 11.
11.3 When the Facility is ready to establish the Commercial
Operations Date, the Operator shall notify Virginia Power that it
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is ready to attempt a Commercial Operations Test of the Dependable Capacity of
the Facility and such Test shall be initiated and monitored by Virginia Power
within fourteen (14) days of Virginia Power's receipt of such notification.
11.4 If Operator is not satisfied with the results of the
attempted Commercial Operations Test, Operator may request additional tests to
establish the Commercial Operations Date with at least three (3) Business Days
notice provided to Virginia Power between tests, but Operator will not be paid
for capacity for the time period(s) between tests to establish the Commercial
Operations Date.
11.5 When the Operator is satisfied with a test to establish
the Commercial Operations Date, the Operator shall provide written notice to
Virginia Power that it has designated such test as the Commercial Operations
Test and shall set the Initial Dependable Capacity for the appropriate Summer or
Winter Period at any level up to the tested level but such level shall not
exceed one-hundred ten (110)% of the Estimated Dependable Capacity level for the
appropriate Summer Demonstration Period or Winter Demonstration Period.
11.6 In addition to the Commercial Operations Test, Initial
Dependable Capacity for the Summer Demonstration Period and Winter Demonstration
Period shall be determined by testing as follows:
a) The Commercial Operations Test shall constitute
the Initial Dependable Capacity for the
appropriate Summer Demonstration Period or
Winter
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Demonstration Period in which such Test
occurs.
b) Within the first 14 Days of the Summer
Demonstration Period or Winter Demonstration
Period that follows the Summer Demonstration
Period or Winter Demonstration Period in
which the Commercial Operations Date
occurred, Operator shall perform a test of
the Initial Dependable Capacity for such
Period. The Operator may request a maximum
of two (2) tests during such 14 Day period.
11.7 After the Initial Dependable Capacity level has been
established for both the Summer Demonstration Period or Winter Demonstration
Period pursuant to testing in accordance with Section 11.6, Operator may request
additional test(s) for Dependable Capacity rating each Summer Demonstration
Period and Winter Demonstration Period throughout the Term of this Agreement and
such test(s) will be performed and monitored within the first fourteen (14) days
of each Summer Demonstration Period and Winter Demonstration Period. The
Operator may request a maximum of two (2) tests within the fourteen (14) Day
period for each Summer Demonstration Period or Winter Demonstration Period.
11.8 Upon completion of such Summer Demonstration Period or
Winter Demonstration Period test(s), Operator shall notify Virginia Power to
reset the Dependable Capacity level at any level up to the tested level but not
to exceed one-hundred ten percent
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(110%) of the Estimated Dependable Capacity level specified in Section 11.1, and
payment for Dependable Capacity shall be adjusted accordingly effective the day
after such testing is complete.
11.9 In addition to Operator requested tests, Virginia Power
may require tests of the Dependable Capacity throughout the Term of this
Agreement as follows:
(a) Once per Demonstration Period at Virginia
Power's sole discretion, except (i) during a
Scheduled Outage period, (ii) during a
Forced Outage period of which Virginia Power
has been notified or (iii) during any outage
which is due to a Force Majeure event and
(b) At any time Operator fails two (2)
consecutive times to operate within
plus/equal to 5% of the operating level
prescribed by Virginia Power, pursuant to
Section 7.6.
For tests pursuant to Section 11.9(a), Operator may, at its sole discretion,
request one additional test within seven (7) Days of the Virginia Power required
test if Operator is not satisfied with the results of the Virginia Power
required test. Upon completion of such test, Operator shall set the Dependable
Capacity at any level up tlethe tested capacity, except that the Operator may
not set the Dependable Capacity at any level in excess of one hundred and ten
percent (110%) of the Estimated Dependable Capacity as specified in Section
11.1. Payments for Dependable Capacity shall be adjusted
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accordingly, effective the day after any such testing is performed pursuant to
this Section 11.9.
11.10 Testing of the Dependable Capacity shall be in
accordance with procedures established by Virginia Power in accordance with
Prudent Utility Practices. Any test during the Summer Demonstration Period
Demonstration Period shall be a twelve (12) hour test at maximum output and
during the Winter Demonstration Period Demonstration Period shall be a six (6)
hour test at maximum output. Any test that is affected by a Forced Outage will
not count as a test made pursuant to Section 11.7 or 11.9. Subject to the
provisions of this Agreement, at the end of any test, Operator may set the
Dependable Capacity at any level up to the average of the hourly Net Electrical
Output during the period of the test.
ARTICLE 12: INSURANCE
12.1 Operator shall obtain and maintain the following policies
of insurance, provided that amounts of coverage listed below shall be adjusted
every five (5) years to reflect changes in the Gross National Product Implicit
Price Deflator beginning on April 1, 1995:
(a) During the Term of this Agreement, Worker's
Compensation insurance which complies with
the laws of the Commonwealth of Virginia, or
any other applicable jurisdiction and
Employers' Liability Insurance with limits
of at least $1,000,000;
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(b) During the Term of this Agreement,
Comprehensive or Commercial General
Liability insurance with bodily injury and
property damage combined single limits of at
least $5,000,000 per occurrence. Such
insurance shall include, but not necessarily
be limited to, specific coverage for
contractual liability encompassing the
indemnification provisions in Article 13 (to
the extent commercially available), broad
form property damage liability, personal
injury liability, explosion and collapse
hazard coverage, products/completed
operations liability, and, where applicable,
watercraft protection and indemnity
liability;
(c) During the Term of this Agreement,
Comprehensive Automobile Liability insurance
with bodily injury and property damage
combined single limits of at least
$5,000,000 per occurrence covering vehicles
owned, hired or non-owned;
(d) During the Term of this Agreement, Excess
Umbrella Liability Insurance with a single
limit of at least $5,000,000 per occurrence
in excess of the limits of insurance
provided in subparagraphs (a), (b), and (c)
above; and
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(e) Through the Commercial Operations Date,
Builders' Risk Insurance on an "all risk"
basis on a completed value form with
"extended coverage" and "soft expense
coverage" on an "agreed amount" basis.
12.2 The amounts of insurance required in Section 12.1 above
may be satisfied by the Operator purchasing primary coverage in the amounts
specified or by buying a separate excess Umbrella Liability policy together with
lower limit primary underlying coverage. Operator may elect to self-insure the
coverage required under the Agreement only if such self-insurance is guaranteed
by Southern Electric International Inc. The structure of the coverage is the
Operator's option, so long as the total amount of insurance meets Virginia
Power's requirements.
12.3 The coverage requested in Section 12.1 above and any
Umbrella or Excess coverage should be "occurrence" form policies to the extent
available at commercially reasonable terms and reasonable rates. In the event
Operator has "claims-made" form coverage, Operator must obtain prior approval of
all "claims-made" policies from Virginia Power which approval shall not be
unreasonably withheld.
12.4 Operator shall cause its insurers to amend its
Comprehensive or Commercial General Liability and, if applicable, Umbrella or
Excess Liability policies with endorsement items substantially in the form of
items (a) through (e); and to amend Operator's Workers' Compensation and Auto
Liability policies with endorsement item (e):
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(a) Virginia Power, its directors, officers, and
employees are additional Insureds under this
Policy as to liability arising from the
operations of Operator;
(b) This insurance is primary with respect to
the interest of Virginia Power, its
directors, officers, and employees and any
other insurance maintained by them is excess
and not contributory with this insurance;
(c) The following Cross Liability clause is made
a part of the policy: "In the event of
claims being made by reason of (i) personal
and/or bodily injuries suffered by any
employee or employees of one insured
hereunder for which another insured
hereunder is or may be liable, or (ii)
damage to property belonging to any insured
hereunder for which another insured is or
may be liable, then this policy shall cover
such insured against whom a claim is made or
may be made in the same manner as if
separate policies have been issued to each
insured hereunder, except with respect to
the limits of insurance";
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(d) Insurer hereby waives all rights of
subrogation against Virginia Power, its
officers, directors and employees; and
(e) Notwithstanding any provision of the policy,
this policy may not be canceled,
non-renewed, or materially changed by the
insurer without giving thirty (30) Days
prior written notice to Virginia Power;
provided, however, that such notice may be
ten (10) days in the event of nonpayment of
premiums. All other terms and conditions of
the policy remain unchanged.
12.5 Operator shall cause its insurers or agents to provide
Virginia Power with certificates of insurance (or in the case of self-insurance,
with an officer's certificate) evidencing the policies and endorsements or
coverage listed above. Failure of Virginia Power to obtain certificates of
insurance does not relieve Operator of the insurance requirements set forth
herein. Failure to obtain the insurance coverage required by this Article 12
shall in no way relieve or limit Operator's obligations and liabilities under
other provisions of this Agreement.
ARTICLE 13: LIABILITY, NONCOMPLIANCE AND GUARANTEES
13.1 In addition to the other indemnities provided for in this
Agreement, Operator and Virginia Power agree to indemnify and hold each other
harmless from and against all claims, demands,
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losses, liabilities, expenses, damages and costs (including reasonable
attorneys' fees and disbursements) for personal injury, bodily injury, or death
to persons and damage to each other's property or facilities or the property of
any other person, entity, or corporation to the extent arising out of, resulting
from or caused by their negligence, gross negligence, reckless, willful or
intentional acts, or omissions in connection with this Agreement.
13.2 (1) In the event any claim, action, suit or proceeding is made or
brought by any third party against a Party indemnified under this Agreement,
with respect to which an indemnifying Party may have liability under this
Section 13.2, the indemnifying Party shall be entitled to participate in, and,
to the extent that it shall wish, jointly with any other indemnifying Party, to
assume the defense, with independent counsel reasonabllesatisfactory to such
indemnified Party, provided that in assuming the defense of any such third party
claim, action, suit or proceeding, the indemnifying Party acknowledges in
writing to the indemnified Party that the indemnifying Party shall thereafter be
liable for any fines, penalties, losses, liabilities, damages, claims, costs and
expenses, and to the extent herein provided any legal or other expenses
(including reasonable attorneys' fees and disbursements) with respect to such
claim, action, suit or proceeding.
(2) If the indemnifying Party elects to assume the defense of
any such third-party claim, the indemnifying Party may contest, pay, settle or
compromise any such claim on such terms and conditions as the indemnifying Party
may determine. After notice from the indemnifying Party to such indemnified
Party of its
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election so to assume the defense thereof, the indemnifying Party shall not be
liable to such indemnified Party for any legal or other expenses incurred after
the date of receipt of such notice by the indemnified Party, other than
reasonable costs of investigation subsequently incurred by such indemnified
Party in connection with the defense thereof. The indemnified Party shall have
the right to employ its own counsel and such counsel may participate in such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified Party, when and as incurred, unless (i) the employment of
counsel by such indemnified Party has been authorized in writing by the
indemnifying Party, (ii) the indemnified Party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying Party and the
indemnified Party in the conduct of the defense of such action, (iii) the
indemnifying Party shall not in fact have employed independent counsel
reasonably satisfactory to the indemnified Party to assume the defense of such
action and shall have been so notified by the indemnified Party, or (iv) the
indemnified Party shall have reasonably concluded and specifically notified the
indemnifying Party either that there may be specific defenses available to it
which are different from or additional to those available to the indemnifying
Party or that such claim, action, suit or proceeding involves or could have a
material adverse effect upon it beyond the scope of this Agreement. If clause
(ii), (iii) or (iv) of the preceding sentence shall be applicable, then counsel
for the indemnified Party shall have the right to direct the defense of such
claim, action, suit or proceeding on behalf of the
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indemnified Party and the reasonable fees and disbursements of such counsel
shall constitute legal or other expenses hereunder.
(3) If the indemnifying Party does not elect to assume the
defense of any such claim, the indemnified Party may engage independent counsel
selected by the indemnified Party to assume the defense and may contest, pay,
settle or compromise any such claim on such terms and conditions as the
indemnified Party may determine. The fees and disbursements of such counsel
shall constitute legal or other expenses hereunder.
(4) The indemnified Party and the indemnifying Party, as the
case may be, shall be kept fully informed of such claim, action, suit or
proceeding at all stages thereof whether or not such party is represented by its
own counsel.
13.3 Within sixty (60) Days after the effective date of this
Agreement, Operator shall provide to Virginia Power security in the form of an
irrevocable letter of credit, or a surety bond containing features reasonably
similar to a letter of credit, either of which must be issued by an institution
reasonably acceptable to Virginia Power in form and substance reasonably
acceptable to Virginia Power in an amount equal to $7,272,000 ($36.00 per kW for
the Estimated Dependable Capacity for the Winter Demonstration Period Period
specified in Section 11.1). The letter of credit or surety bond shall provide
for draws by Virginia Power on a monthly basis and must permit presentation at a
bank located in Richmond, Virginia for immediately available funds. The letter
of credit or surety bond provided pursuant to this Section will
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terminate, or in the case of a surety bond may be cancelled by Operator, on the
later of the Commercial Operations Date or the issuance of the security pursuant
to 13.5.
13.4 If the Commercial Operations Date has not occurred on or before
the Anticipated Commercial Operations Date, then commencing the Day after
the Anticipated Commercial Operations Date and continuing each Day for three
hundred and sixty (360) Days or until the Commercial Operations Date, Virginia
Power shall be entitled to draw upon the letter of credit provided in Section
13.3 above at a rate of $3.00 per kW per month of Estimated Dependable Capacity
of such security as liquidated damages for the detrimental impact of such
delayed availability of Dependable Capacity on Virginia Power's generation
planning; provided, however, that Virginia Power may not draw on such security
if the Commercial Operations Date occurs within 15 Days after the Anticipated
Commercial Operations Date; but provided, further, that if the Commercial
Operations Date has not occurred on or after the sixteenth Day after the
Anticipated Commercial Operations Date, Virginia Power will be entitled to draw
upon such letter of credit for the period commencing on the Anticipated
Commercial Operations Date.
13.5 Commencing with the Commercial Operations Date, Operator shall
provide and maintain, at Operator's sole expense, security as described in
Section 13.6, in an amount equal to $7,272,000 ($36.00 per kW for the Estimated
Dependable Capacity for the Winter Demonstration Period Period pursuant to
Section 11.1). Such security shall be maintained throughout the Term of this
Agreement
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and may be used to offset any amounts Operator may owe Virginia Power.
13.6 Security provided pursuant to Section 13.5 above shall consist of
an irrevocable direct pay letter of credit, or a surety bond containing features
reasonably similar to a letter of credit, either of which must be issued by an
institution reasonably acceptable to Virginia Power, in form and substance
acceptable to Virginia Power, shall provide for draws by Virginia Power on a
monthly basis and must permit presentation at a bank located in Richmond,
Virginia for immediately available funds; provided, however, that in lieu of
such letter of credit or surety bond, upon the prior approval of Virginia Power
(which approval shall be in Virginia Power's sole discretion), Operator may
provide one of the following:
(a) Power plant performance insurance (if available on
commercially reasonable terms) provided in a form
and by an insurer acceptable to Virginia Power; or
(b) A corporate guarantee issued by Southern Electric
International, Inc.
13.7 Virginia Power shall have an exclusive right of first
refusal to purchase or lease any Transfer Interest (as hereinafter defined) on
the terms and conditions set forth as follows; provided, however, (i) if
Operator arranges for a single steam buyer, Operator may grant such steam buyer
a right of first refusal to purchase any Transfer Interest, which right shall be
prior to Virginia Power's right of first
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refusal, or (ii) if Operator arranges for two or more steam buyers, Operator may
grant such steam buyers a right of first refusal to purchase any Transfer
Interest, which right shall be prior to Virginia Power's right of first refusal,
only upon the prior written consent of Virginia Power, which may be withheld in
Virginia Power's sole absolute discretion. Any such right of first refusal
granted to the steam buyer under Section 13.7 shall require the stele buyer to
continue operating the Facility in accordance with the provisions of this
Agreement:
(a) "Transfer Interest" shall include the right,
title or interest in the Facility, or any
part thereof, held by Operator.
(b) If the steam buyer has been granted a right
of first refusal as set forth above, the
Operator shall offer the Transfer Interest
to the steam buyer in accordance with the
terms of the steam buyer's right of first
refusal. If the steam buyer waives its right
with respect to the Transfer Interest or the
steam buyer does not have a right of first
refusal, then if Operator ever desires (i)
to dispose of such Transfer Interest (other
than non-material transfers in the ordinary
course of business) or (ii) if Operator
receives a bona fide offer to purchase or
lease a Transfer
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Interest, which offer Operator is prepared
to accept, Operator shall give notice
thereof in writing to Virginia Power (the
"Notice"). The Notice shall (iii) specify
the terms under which Operator is prepared
to dispose of the Transfer Interest,
including the purchase price of the Transfer
Interest or (iv) include a copy of the
acceptable offer received, as the case may
be.
(c) For a period of ninety (90) Days after
receipt by Virginia Power of the Notice,
Virginia Power shall have the right to
exercise its right of first refusal with
respect to the Transfer Interest by giving
written notice thereof to Operator.
(d) If Virginia Power elects not to exercise its
right of first refusal pursuant to the
foregoing provisions, or if the 90 Day
period in Subsection 13.7(c) above expires,
then for a period of one year thereafter,
Operator shall be free to transfer such
Transfer Interest at a price no lower and on
terms not more favorable to the purchaser
than those offered in the Notice. If the
Transfer Interest is not fully consummated
within one year of the earlier of the date
Virginia Power elected not to acquire the
Transfer Interest or the expiration of the
90 Day period in Section 13.7(c) above,
Operator agrees that
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Virginia Power's right of first refusal to
purchase or lease the Facility, or any part
thereof, shall continue on the terms and
conditions set forth herein. Operator shall
insure that by the terms of such transfer,
the transferee shall agree that Virginia
Power's right of first refusal to purchase
or lease the Facility or any part thereof
shall continue on the terms and conditions
contained herein with respect to any
transfer by such transferee.
(e) If Virginia Power elects to exercise its
right of first refusal with respect to the
Transfer Interest, Virginia Power will use
its best efforts to fully consummate its
acquisition of the Transfer Interest within
150 Days after Virginia Power notifies
Operator that it intends to exercise its
right of first refusal.
(f) (i) Prior to Initial Synchronization,
(x) except as set forth
hereafter, Operator may
sell or issue, and any
holder of any equity
interest may sell, an
equity interest in Operator
to any person or entity,
and Virginia Power shall
have no right of first
refusal or consent so long
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as upon the consummation of
such sale or issuance, SEI
Birchwood, Inc. would not
hold less than a fifty
percent (50%) equity
interest in the Operator,
and
(y) with respect to the sale or
issuance of any general
partnership interest,
Virginia Power shall have
the right to determine in
its reasonable judgment,
exercised in good faith,
whether the proposed
general partner will have
the financial capability
and requisite business
expertise to function as
general partner of the
Operator. If Virginia
Power shall not advise the
Operator of its
determination within ten
Days of its receipt of a
notice advising it of the
proposed general partner,
Virginia Power shall be
deemed to have consented to
such general partner.
(ii) From and after Initial
Synchronization,
(w) Operator may sell or issue
limited partnership
interests to any person or
entity, and Virginia Power
shall have no right of
first refusal or consent
with respect to any such
sale or issuance so long as
upon the consummation of
such sale or issuance, no
holder of any equity
interest in the Operator
would hold a
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greater equity interest
than SEI Birchwood, Inc.;
(x) any holder of a limited
partnership interest may
transfer such interest to
any other person or entity
and Virginia Power shall
have no right of first
refusal or consent so long
as upon the consummation of
such sale or issuance, no
holder of any equity
interest in the Operator
would hold a greater equity
interest than SEI
Birchwood, Inc.; and
(y) any holder of a general
partnership interest may
sell such interest to any
person, subject to Virginia
Power's right of first
refusal; provided, however,
Virginia Power shall not
have such a right of first
refusal if the Facility
would lose its QF status
under PURPA or if any
holder of any equity
interest in the Facility
would become subject to
regulation under the
Public Utility Holding
Company Act of 1935 as a
result of its interest in
the Facility; provided,
further, if Virginia Power
is not able to exercise its
right of first refusal
because of the terms of the
preceding proviso, it shall
have the right to determine
in its reasonable
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judgment, exercised in good
faith, whether the proposed
general partner has the
financial capability and
requisite business
expertise to function as
general partner of the
Operator and if Virginia
Power so determines that
the proposed general
partner does not have such
expertise, then the sale
shall not occur; and
(z) if Virginia Power shall
acquire a right to exercise
its right of first refusal
pursuant to Section
13.7(f)(ii), 13.7(w),
13.7(x) or 13.7(y),
Virginia Power shall
exercise such right of
first refusal in accordance
with the procedures set
forth in Sections 13.7(c)
through (e) (it being
agreed that for the
purposes of this Section
13.7(ii)(z), the term
"Transfer Interest" used in
13.7(c) through (e) shall
refer to the equity
interest being
transferred).
(g) Any sale of any Transfer Interest shall not
extinguish Virginia Power's right of first
refusal with respect to any portion of the
Facility or the Operator, as the case may
be, not transferred pursuant to such sale.
Any lease of any Transfer Interest shall not
extinguish Virginia Power's
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right of first refusal with respect to any
extensions of such lease or with respect to
any other leases, sales or other
dispositions of any Transfer Interest.
Operator agrees that it will ensure that the
terms of any transfer (other than a transfer
to Virginia Power) of all or a portion of
its interest in the Facility provides for
the continued operation of the Facility in
accordance with and under the terms of this
Agreement. Any transfer (other than a
transfer to Virginia Power) which results in
a transfer of management control over the
operation of the Facility shall require the
transferee's acceptance of an assignment of
the transferor's obligations under this
Agreement with respect to the operation of
the Facility pursuant to Section 17.1 of
this Agreement. Operator will not
consolidate with or be a Party to a merger
with any other corporation; provided,
however, that:
(1) Any wholly owned subsidiary of
Operatolemay merge, consolidate or
exchange shares with or into
Operator so long as, in any such
merger or consolidation, Operator
shall be the surviving or continuing
corporation;
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(2) Operator may consolidate or merge
with any other corporation if (i)
the successor formed by or resulting
from such consolidation or merger
shall be a solvent corporation
organized under the laws of the
United States of America or a state
thereof or the District of Columbia,
(ii) after giving effect to such
merger or consolidation, no default
under this Agreement shall exist,
(iii) such successor or transferee
corporation shall expressly assume
in writing the due and punctual
performance and observance of all
the terms, covenants, agreements and
conditions of this Agreement and
shall furnish Virginia Power an
opinion of independent counsel to
the surviving corporation to the
effect that each of the corporations
participating in such consolidation
or merger or transfer of assets was,
at the time thereof, duly created,
validly existing, in good standing
and otherwise in compliance with the
applicable provisions of the
corporation laws of its respective
state of incorporation, that the
surviving corporation is duly
incorporated, validly existing and
in good standing, that the
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surviving corporation has all
requisite power and authority to
assume and perform this Agreement,
that such assumption and performance
have been duly authorized by all
necessary corporate action on the
part of the surviving corporation
and that compliance by the surviving
corporation with the terms of this
Agreement will not conflict with, or
result in any breach of any of the
provisions of, or constitute a
default under, any agreement to
which it is a party, or result in
the creation or imposition of a lien
upon the property of the surviving
corporation.
(h) Notwithstanding the foregoing provisions of
this Section 13.7, Virginia Power agrees
that its right of first refusal as set forth
in this Agreement shall not apply to any
grant by Operator of any lien or security
interest in any Transfer Interest to any of
the Lenders.
(i) In the event that pursuant to Section
13.7(ii) above, Virginia Power refuses to
consent to Operator's granting of a right of
first refusal to multiple steam buyers and
Virginia Power exercises its right to first
refusal under this Section, Virginia Power
agrees to assume Operator's obligations to
such steam
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buyers in proportion to the Transfer
Interest Virginia Power obtains pursuant to
its exercise of that right.
(j) The Operator covenants and agrees to sign,
execute and deliver, or cause to be signed,
executed and delivered, and to do or make,
or cause to be done or made, upon the
written request of Virginia Power, any and
all agreements, instruments, papers, deeds
or acts supplemental, confirmatory or
otherwise, as may be reasonably necessary
for the purpose of or in connection with
Virginia Power's right of first refusal
established hereby.
13.8 Notwithstanding any other provision of this Agreement,
neither Party shall be liable to the other Party for indirect, incidental or
consequential damages (including, without limitation, replacement capacity or
energy) under, arising out of, due to or in connection with such Party's
performance or nonperformance of this Agreement or any of its obligations
herein, whether based on contract, tort (including without limitation
negligence), strict liability, warranty or otherwise. Operator and Virginia
Power agree that liquidated damages represent an approximation of actual damages
and are not consequential damages.
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ARTICLE 14: FORCE MAJEURE
14.1 Notwithstanding any other provision of this Agreement,
including without limitation Section 5.3, neither Party shall be responsible or
liable for or deemed in breach or default hereof because of any delay in the
performance of, or inability to perform, its respective obligations hereunder
due solely to circumstances beyond the reasonable control of the Party
experiencing such delay, or inability to perform, including, but not limited to,
acts of God; unusually severe weather conditions; strikes or other labor
difficulties; war; riots; requirements, actions or failures to act on the part
of governmental authorities preventing performance; inability despite due
diligence to obtain required licenses, permits and approvals; Change of Law;
failure or faulty design of major equipment which could not reasonably be
detected through Standard Quality Assurance/Quality Control procedures;
accident; or fire (such causes hereinafter called "Force Majeure"); provided
that:
(a) The non-performing Party gives the other
Party, within seventy-two (72) hours of the
non-performing Party becoming aware of the
occurrence, written notice describing the
particulars of the occurrence;
(b) The suspension of performance is of no
greater scope and of no longer duration than
is required by the Force Majeure;
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(c) The non-performing Party uses its best
efforts to remedy its inability to perform;
(d) When the non-performing Party is able to
resume performance of its obligations under
this Agreement, that Party shall give the
other Party written notice to that effect;
(e) The Force Majeure was not caused by or
connected with any negligent or intentional
acts, errors, or omissions, or failure to
comply with any law, rule, regulation, order
or ordinance or for any breach or default of
this Agreement; and
(f) The Force Majeure was not attributed to
normal wear and tear of power generation
materials and equipment.
14.2 The term Force Majeure does not include (i)
governmental action that affects the cost of Operator's supply of fuel or any
alternate supplies of fuel or the demand for Operator's products or, (ii)
changes in market conditions that affect the cost or availability of Operator's
supply of fuel or any alternate supplies of fuel or the demand for Operator's
products. In addition, Force Majeure when applied to Operator does not include
unavailability of equipment, inability to obtain or renew permits, labor
strikes or slowdowns of Operator's employees specifically following the
Commercial Operations Date, or failure or
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unavailability of Operator's transmission or distribution capability, unless
same is caused by an occurrence which would fit the definition of Force Majeure
in this Article 14.
14.3 If Operator fails to achieve the Commercial Operations
Date within fifteen (15) Days of the Anticipated Commercial Operations Date due
solely to a Force Majeure experienced by Virginia Power, then Virginia Power
will commence making capacity payments based on the Estimated Dependable
Capacity in accordance with 10.15(a), notwithstanding the fact that the Facility
has not achieved the Commercial Operations Date by such date. After the
Commercial Operations Date, if Virginia Power experiences a Force Majeure that
renders it unable to accept delivery of energy and Dependable Capacity from
Operator, Virginia Power will continue to make payments to Operator as provided
in Article 10. After the Commercial Operations Date, if Operator experiences a
Force Majeure that renders it unable to deliver any or all of the energy and
Dependable Capacity to Virginia Power, Virginia Power will not be required to
make payments as provided in Article 10 for any such energy or Dependable
Capacity not delivered by Operator due to such Force Majeure.
14.4 In no event will any condition of Forceleajeure extend
(i) the deadline for Operator posting security pursuant to this Agreement or
(ii) the Term of this Agreement. If any condition of Force Majeure delays a
Party's performance for a time period greater than eighteen (18) months, the
Party not delayed by such Force Majeure may terminate this Agreement, without
further obligation, or extend such period at its sole discretion if the
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Party delayed by such Force Majeure is exercising due diligence in its efforts
to cure the condition of Force Majeure.
ARTICLE 15: TAXES AND CLAIMS FOR LABOR AND MATERIALS
15.1 All present or future federal, state, municipal or other
lawful taxes applicable by reason of the sale by Operator of energy or
Dependable Capacity shall be paid by Operator.
15.2 Operator will promptly pay and discharge all lawful
taxes, assessments and governmental charges or levies imposed upon it or upon or
in respect of all or any part of its property or business, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials which, if unpaid, might become a lien or charge
upon any of its property; provided, however, that Operator shall not be required
to pay any such tax, assessment, charge, levy, account payable or claim if (i)
the validity, applicability or amount thereof is being contested in good faith
by appropriate actions or proceedings which will prevent the forfeiture or sale
of any property of Operator or any material interference with Operator's use
thereof and (ii) Operator shall set aside on its books reserves deemed by it to
be adequate with respect thereto.
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ARTICLE 16: CHOICE OF LAW
16.1 This Agreement shall be interpreted, construed and
governed by the laws for the Commonwealth of Virginia. The Parties hereby submit
to the jurisdiction of courts located in, and venue is hereby stipulated to be
in Richmond, Virginia.
ARTICLE 17: MISCELLANEOUS PROVISIONS
17.1 (a) Neither Operator nor Virginia Power may
assign this Agreement except with the prior
written consent of the other Party, which
consent shall not be unreasonably withheld,
provided that:
(1) the assignee shall expressly assume the
assignor's obligations hereunder;
(2) no such assignment shall impair any security
granted by Operator to Virginia Power
hereunder;
(3) unless expressly agreed to by the other
Party, no assignment shall release or
discharge assignor from any of its
obligations or liabilities hereunder in the
event its assignee fails to perform such
obligations or satisfy such liabilities; and
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(4) the assignee has reasonably demonstrated
that it is capable of fulfilling, or has a
plan in place to fulfill, the assignor's
obligations under this Agreement.
(b) Notwithstanding the provisions of Section 17.1(a),
Operator may in its sole discretion, without the
prior written consent of Virginia Power, assign all
of its rights, titles and interests under this
Agreement:
(1) prior to the Commercial Operations Date to
any affiliated corporation of Operator or to
any entity of which Operator is a partner or
shareholder provided that (x) such assignee
shall expressly assume Operator's
obligations hereunder and (y) no such
assignment shall impair any security granted
by Operator to Virginia Power hereunder;
provided, further, that notwithstanding the
provisions of Section 17.1(a)(3), upon such
assignment, the then Operator shall be
released and discharged from any and all
obligations and liabilities under this
Agreement;
(2) to any one or more Lenders; provided,
however, that any consent, opinion or other
documents required from Virginia Power by
such Lender will be on terms and conditions
reasonably acceptable to Virginia Power; and
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(3) for the purpose of any sale-leaseback of the
Facility.
(c) Virginia Power shall not acquire any rights of first
refusal or offer purchase rights under Section 13.7
in the event of, due to or resulting from, an
assignment of this Agreement by Operator pursuant to
either Section 17.1(b)(1) or Section 17.1(b)(2).
17.2 This Agreement, including the appendices and/or Exhibits
hereto, can be amended only by agreement between the Parties in writing.
17.3 The failure of either Party to insist in any one or more
instances upon strict performance of any provisions of this Agreement, or to
take advantage of any of its rights hereunder, shall not be construed as a
waiver of any such provisions or the relinquishment of any such right or any
other right hereunder, which shall remain in full force and effect.
17.4 The headings contained in this Agreement are used solely
for convenience and do not constitute a part of the Agreement between the
Parties hereto, nor should they be used to aid in any manner in the construction
of this Agreement.
17.5 This Agreement is intended solely for the benefit of, and
shall be binding upon, the Parties hereto and their respective successors and
assigns. Nothing in this Agreement shall be construed to create any duty to, or
standard of care with reference to, or any liability to, or any recourse
against, any person or entity not a Party to this Agreement, including without
limitation
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any affiliate of any Party. Without limiting the generality of the foregoing,
Virginia Power expressly agrees that it will have no recourse against any
partner or security holder of Operator, or against any partner or security
holder of any such partner or security holder of Operator, or against any
officer, employee, director or agent of any of them, for any of Operator's
duties or obligations under this Agreement.
17.6 This Agreement shall not be interpreted or construed to
create an association, joint venture, or partnership between the Parties or to
impose any partnership obligation or liability upon either Party. Neither Party
shall have any right, power or authority to enter into any Agreement or
undertaking for, or act on behalf of, or to act as or be an agent or
representative of, or to otherwise bind, the other Party.
17.7 Cancellation, expiration or earlier termination of this
Agreement shall not relieve the Parties of obligations that by their nature
should survive such cancellation, expiration or termination, including without
limitation warranties, remedies, promises of indemnity and confidentiality.
17.8 All terms and conditions of the Confidentiality Agreement
between Virginia Power and Operator dated as of June 21, 1990 shall survive and
remain in effect during the Term of this Agreement and the cancellation,
expiration or earlier termination of this Agreement shall not relieve the
Parties of obligations under such Confidentiality Agreement that by their nature
should survive such cancellation, expiration or termination.
17.9 Notwithstanding any other provision of this Agreement,
the exercise or non-exercise of any power, judgment,
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duty, right, privilege, discretion, option, action, consent or approval
hereunder or in any way pertinent hereto shall be reasonable and in good faith.
17.10 As soon as available, but no later than thirty (30) days prior
to Financial Closing, Operator shall provide Virginia Power with (i)
copies of proposed financing documents sufficient to permit Virginia Power to
provide the legal opinions and consents needed for Financial Closing, and (i)
forms of the legle opinions and consents needed for Financial Closing; all
containing terms and conditions consistent with this Agreement. Within ninety
(90) days after the Financial Closing Operator shall provide Virginia Power with
a copy of the executed financing documents which shall contain terms and
conditions consistent with this Agreement.
17.11 OPERATOR AND EACH OF ITS AGENTS, EMPLOYEES, OFFICERS, DIRECTORS,
SUCCESSOR AND ASSIGNS, AND EACH PERSON OR ENTITY CONTROLLED BY, UNDER COMMON
CONTROL WITH OR CONTROLLING IT, HEREBY DISCLAIMS ANY AND ALL EXPRESS, IMPLIED OR
STATUTORY WARRANTIES CONCERNING THE FACILITY, ANY PERFORMANCE, OR ANY
FACILITIES, EQUIPMENT OR OTHER DEVICES CONSTRUCTED, INSTALLED, OPERATED OR
REPAIRED, BY ANY ONE OR MORE OF THEM, INCLUDING WITHOUT LIMITATION ANY AND ALL
WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
AVAILABILITY, QUALITY, QUANTITY OR OTHERWISE.
17.12 Virginia Power and Operator agree that the rights and remedies
set forth in this Agreement are exclusive and in lieu of all other remedies. No
right or remedy provided in this Agreement for any action, set of circumstances,
decision or other event or occurrence may be expanded or added to in any suit,
action or proceeding of any nature whatsoever, whether the claim underlying
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such suit, action or proceeding is based on contract, tort (including without
limitation negligence), strict liability, warranty or otherwise.
ARTICLE 18: STATUTORY AND REGULATORY CHANGES
18.1 The Parties recognize and hereby agree that if any
federal, state or municipal government or regulatory authority, including
without limitation the SCC, should for any reason enter an order, modify its
rules, or take any action whatsoever, having the effect of disallowing Virginia
Power the recovery from its customers of all or any portion of the payments for
Dependable Capacity hereunder in excess of the sum of: (x) $6.00 per kW per
Month in 1989 dollars as escalated by the Gross National Product Implicit Price
Deflator beginning April 1, 1990, and continuing each April until termination of
this Agreement; plus (y) an amount in each Month equal to the product of the Net
Electrical Output for that Month multiplied by the non-firm energy payment
specified in Virginia Power's Schedule 19, supplements thereto and reissues and
replacements thereof, on file with the SCC and in effect from time to time,
including additions to or escalations of such payments whether included in
Schedule 19 or referenced therein; such amount in excess being hereinafter
referred to as the Disallowance (except where such disallowance is due to
Virginia Power's failure to seek recovery or comply with procedural requirements
governing recovery of such costs), then:
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(a) If the Disallowance occurs before the
twentieth anniversary of the Commercial
Operations Date, Virginia Power shall
continue to pay for Dependable Capacity at
the Capacity Purchase Price set forth in
Article 10 through the twentieth anniversary
of the Commercial Operations Date. Payments
for Dependable Capacity beginning on the
twentieth anniversary of the Commercial
Operations Date shall not exceed the amount
unaffected by the Disallowance. Further,
Virginia Power may, at its option, beginning
on the twentieth anniversary of the
Commercial Operations Date withhold up to
seventy-five (75) percent of the payments
for Dependable Capacity until the sooner of
(i) the twenty-first anniversary of the
Commercial Operations Date or (ii) the Day
the entire amount of the Disallowance is
repaid with interest at the Interest Rate
minus two percentage points from the date
each part of the Disallowance was paid to
Operator. In the event that such withholding
does not fully repay the Disallowance and
accrued interest by the twenty-first
anniversary of the Commercial Operations
Date, then Operator shall pay the remainder
to Virginia Power within twenty eight (28)
Days after the twenty-first anniversary of
the Commercial Operations Date in a lump
sum; provided, however, that if Operator
demonstrates to Virginia Power that it is
unable
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to borrow funds (without recourse to
partners in, or shareholders of, Operator or
affiliates of either, as described more
fully in Section 17.5 of this Agreement),
sufficient to make such lump sum payment at
all or on terms that would permit continued
operation of the Facility by Operator at a
profit, then the Term of this Agreement
shall be automatically extended for an
additional five (5) Years. The Capacity
Purchase Price and equivalent hourly
Capacity Purchase Price applicable to such
extension period shall be those set out in
Section 10.15(b) of this Agreement for
Agreement Years 26, 27, 28, 29 and 30 and
all other terms and conditions of this
Agreement shall continue and be in full
force and effect.
(b) If the Disallowance occurs after the
twentieth anniversary of the Commercial
Operations Date, all future payments for
Dependable Capacity shall not exceed the
amount unaffected by the Disallowance.
Further, the Operator shall repay the full
amount of the Disallowance with interest by
the earlier of (i) one year from the date of
such Disallowance or (ii) the expiration of
this Agreement; provided, however, that if
Operator demonstrates to Virginia Power that
it is unable to borrow funds (without
recourse to partners in, or shareholders of,
Operator or affiliates of either,
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as described more fully in Section 17.5 of
this Agreement), sufficient to make such
lump sum payment at all or on terms that
would permit continued operation of the
Facility by Operator at a profit, then the
Term of this Agreement shall be
automatically extended for an additional
five (5) Years. The Capacity Purchase Price
and equivalent hourly Capacity Purchase
Price applicable to such extension period
shall be those set out in Section 10.15(b)
of this Agreement for Agreement Years 26,
27, 28, 29 and 30 and all other terms and
conditions of this Agreement shall continue
and be in full force and effect.
(c) On the twentieth (20th) anniversary of the
Commercial Operations Date or thereafter,
Operator shall have the option to propose
any or all of the following actions: (i)
repay any total disallowance, including
without limitation interest, and renegotiate
a lower purchase price for the Facility's
capacity; or (ii) transfer ownership of the
Facility to Virginia Power in full
settlement of all of Operator's duties and
obligations under this Agreement, including
without limitation any duties or obligations
under this Section 18.1.
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The Parties obligate themselves to use all good faith efforts to establish, if
practicable, an appeal and overruling of the Disallowance or a superseding
order, approval of modified rules or tariffs, or other action so as to allow
timely resumption of full, or failing that, adjusted payments hereunder.
18.2 Operator agrees that if there is a Disallowance which
Operator chooses to repay under Section 18.1(b)(ii) over an extended Term (which
was extended pursuant to the proviso to Section 18.2(b)), then Operator will
provide, prior to the date on which the Term would have expired absent such sum,
in addition to any other security posted under this Agreement, a letter of
credit, or a surety bond containing features reasonably similar to a letter of
credit, either of which must: (i) be issued by an institution reasonably
acceptable to Virginia Power, (ii) be in form and substance reasonably
acceptable to Virginia Power, (iii) provide for draws by Virginia Power on a
monthly basis, and (iv) permit presentation at a bank located in Richmond,
Virginia for immediately available funds in the amount of such disallowance for
the remaining term of this Agreement, which letter of credit shall be maintained
until the earlier of the termination of this Agreement or the date by which the
disallowance has belen recovered by Virginia Power pursuant to Section 18.1 at
which time the letter of credit or surety bond provided pursuant to this Section
will terminate, or in the case of a surety bond may be cancelled by Operator.
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ARTICLE 19: COORDINATION OF COMMUNICATIONS
19.1 Each Party agrees to coordinate with the other Party all
press, news, or other releases to private or public media groups that relate to
the Facility or this Agreement and to allow the other Party to review such
releases in advance of release; further each Party agrees to comply with all
reasonable requests of the other Party as to the content or manner of
publication of such releases.
19.2 Operator agrees to allow Virginia Power, at Virginia
Power's option, to accompany Operator and/or participate in any discussions or
filings with the FERC or the SCC.
ARTICLE 20: OPTION TO PURCHASE
20.1(a) Virginia Power shall have the option to purchase the
Facility at either (i) the end of the original Term, or (ii) the end of any
extended Term if the Term is extended pursuant to Section 18.1(a) or 18.1(b), at
a price determined pursuant to Section 20.2, which price Virginia Power shall
pay to Operator in immediately available funds in a lump sum at the end of the
Term. If Virginia Power believes that it may wish to exercise such option,
Virginia Power shall give notice to Operator at least forty-eight (48) Months
prior to the end of the Term. Upon Operator's receipt of such notice, Operator
and Virginia Power shall commence the appraisal procedure set forth in section
5.5(f) to determine the fair market value of the Facility. If Virginia Power
decides to exercise such option, it shall give Operator notice of its decision
at least thirty-six (36) Months prior to the end of the Term. If Virginia Power
declines to exercise such
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option, or does not give Operator notice thirty-six (36) Months prior to the end
of the Term, the option shall expire. If Virginia Power exercises the option on
a timely basis prior to the end of the initial Term, and thereafter the Term is
extended pursuant to Section 18.1, Virginia Power shall automatically be deemed
not to have exercised its option prior to the end of the initial Term, but its
option to purchase the Facility at the end of the extended Term under this
Section 20.1 shall be reinstated, to be exercised in the manner and on the
schedule set out above as though the extended Term were part of the initial
Term. If Virginia Power exercises the option at the end of the initial or any
extended Terms on a timely basis but has not received all necessary approvals
from governmental or other official agencies prior to the end of the Term, then
Virginia Power will be deemed not to have exercised the option and shall have no
further right to purchase the Facility under this Article 20.
(b) In the event Virginia Power does not exercise its
option in Section 20.1(a) above, Operator may require Virginia Power to provide,
and Virginia Power shall provide, transmission services at compensatory,
nondiscriminatory rates, subject to approval by the appropriate authority, to
Operator sufficient for Operator to wheel the energy generated by the Facility
to any other utility outside of Virginia Power's control area with which
Virginia Power is directly interconnected, so long as such transmission service
does not adversely affect the reliability of Virginia Power's service to its
retail and wholesale customers.
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20.2 The purchase price to be paid by Virginia Power for the
Facility, if Virginia Power exercises its option to purchase the Facility
pursuant to this Article 20, shall be the fair market value of the Facility,
determined by an appraiser appointed pursuant to the procedure set forth in
Section 5.5(f) above, the appraiser having taken into account the condition of
the Facility as of the date of the Event of Default, determined in current Year
dollars as of the date Virginia Power notifies Operator that Virginia Power may
wish to exercise such option, as escalated by changes to the Gross National
Product Implicit Price Deflator (GNPIPD) from the month in which Virginia Power
gives such notice to the month in which the purchase is consummated; plus the
following (determined at the end of the Term):
(i) an amount equal to the federal, state and local taxes payable
as a result of the sale and transfer of the Facility to
Virginia Power (including those resulting from the payment
pursuant to this (i));
(ii) any and all amounts payable by Operator (x) to terminate any
and all obligations and liabilities of Operator, or (y) in
connection with the assumption by Virginia Power of, and the
release of Operator from, any and all obligations and
liabilities of Operator, or (z) a combination of x and y; and
(iii) all other costs, expenses and other amounts payable by
Operator in connection with Virginia Power's purchase of the
Facility pursuant to this Article 20 (including Operator's
costs of operating and maintaining the Facility
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from the end of the Term until Virginia Power's purchase is
consummated, if applicable).
20.3 Operator shall cooperate with Virginia Power in Virginia
Power's exercise of its rights under this article by (i) providing to Virginia
Power all the documentation necessary and appropriate to the determination of
the purchase price, (i) executing all documents necessary and appropriate to the
transfer of title in the Facility to Virginia Power, (iii) providing Virginia
Power with good and marketable title to the Facility free and clear of all liens
and encumbrances, and (iv) maintaining the Facility in reasonable operating
condition until title has been transferred to Virginia Power.
ARTICLE 21: REGULATORY CHANGES
21.1 Operator's agreement to the provisions of this transaction is
based on current law, on Operator's understanding of best available control
technology (BACT) requirements and environmental regulations as of the time (the
"Response Date") of Operator's response to Virginia Power's letter dated March
27, 1990, and that the equipment that formed the basis upon which the emissions
and efficiency characteristics set forth in Operator's response constituted BACT
and environmental compliance as of such Response Date. In the event and to the
extent that any such governmental requirements become more onerous than on the
Response Date, either through the enactment of Federal, state or local
legislation, through the promulgation of regulations by any
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governmental or other official agency or through any other action by any
governmental or other official agency: (a) Virginia Power shall allow the
Operator the right through December 31, 1990 to terminate this Agreement without
any liability to either Party by providing notice to Virginia Power prior to
December 31, 1990. Upon such termination of the Agreement by the Operator,
Virginia Power shall immediately release or return to Operator any and all
security provided by Operator hereunder, including without limitation under
Article 13; and (b) Virginia Power (at any time during the Term, whether before
or after December 31, 1990) will not, solely because the Facility is not owned
by Virginia Power, discriminate between the Facility and any other generating
unit, facilities or agreements in which Virginia Power has an interest or from
which it receives or will receive capacity or energy, when taking any action
with regard to either or both the allocation or creation of emissions allowances
or otherwise with regard to complying with BACT requirements or other
environmental regulations.
ARTICLE 22: Entirety
22.1 This Agreement and the Exhibit A attached hereto aee
intended by the Parties as the final expression of their agreement and is
intended also as a complete and exclusive statement of the terms of their
agreement with respect to the Net Electrical Output and Dependable Capacity sold
and purchased hereunder and the manner of operation and maintenance of the
Facility. All prior written or oral understandings, offers or other
communications of every kind
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pertaining to the sale of energy and Dependable Capacity hereunder to Virginia
Power by Operator are hereby abrogated and superseded.
138
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the 13th day of July, 1990.
VIRGINIA ELECTRIC AND POWER COMPANY SEI BIRCHWOOD, INC.
By: /s/ Larry W. Ellis By: /s/ Gilbert B. Waldman
---------------------------------- -------------------------------------
Senior Vice President-Power
Title: Operations and Planning Title: Vice President
------------------------------- ----------------------------------
139
EXHIBIT A
DATA REQUIRED TO PERFORM INTERCONNECTION STUDY
1. Electrical one-line of the Facility.
2. Explanation of proposed equipment protection and control scheme (may be
shown functionally on the one-line).
3. Site plan showing plant layout, property lines, access roads and
switchyard boundaries.
4. Preliminary equipment layout and arrangement for switchyard and
generator step-up transformer (GSU).
5. Estimated GSU impedance +/- 20 percent.
6. GSU connection and winding.
7. Estimated generator reactances +/- 20 percent.
8. Estimated generator kilowatt rating +/- 10 percent.
9. Estimated generator kilovar rating +/- 10 percent.
10. Explanation of proposed excitation system.
11. Estimated station auxiliary load +/- 20 percent.
12. Requirements for construction and start-up power.
13. Project schedule (I-J or bar chart format) including but not limited
to the following milestones:
- QF status obtained.
- Engineering 30% complete
- One-line approved
- Financial Closing
- Major licenses/permits
- Major material procurement
- Start construction
- Engineering 70% complete
- Utility technical submittals complete
- Operating procedures finalized
- Start test and start-up
- Roll turbine
- Initial synchronizing date
- Capacity test complete
- Commercial operation
Data submitted in a preliminary or estimated form shall be updated
within 30 days after final equipment arrangements and specifications are
established.
140
BIRCHWOOD POWER PARTNERS, L.P.
CONSENT TO ASSIGNMENT
141
VIRGINIA ELECTRIC AND POWER COMPANY
CONSENT TO ASSIGNMENT
---------------------
This CONSENT TO ASSIGNMENT OF AGREEMENT (the "Consent to Assignment"),
dated as of May 23, 1994, is made among (i) VIRGINIA ELECTRIC AND POWER COMPANY,
a Virginia public service corporation ("Virginia Power"), (ii) BIRCHWOOD POWER
PARTNERS, L.P., a Delaware limited partnership (the "Assignor"), and (iii)
CREDIT SUISSE, as Security Agent (together with its successors and assigns in
such capacity, the "Assignee") for the benefit of the Secured Parties (the
"Secured Parties") referred to in the Credit Line Deed of Trust, Assignment and
Security Agreement dated as of May 18, 1994 from the Assignor to Lawyers Title
Insurance Corporation as trustee for the Assignee (as amended, supplemented or
otherwise modified from time to time, the "Mortgage and Assignment"). Virginia
Power, Assignor, and Assignee are herein referred to individually as a "Party"
and collectively as the "Parties". Capitalized terms used herein shall have the
meaning specified in the POWER PURCHASE AND OPERATING AGREEMENT between Assignor
and Virginia Power dated as of July 13, 1990, as amended, supplemented or
otherwise modified from time to time (the "Power Purchase Agreement") unless
otherwise defined herein. As used in this Consent to Assignment, "Assignee" may
also mean (i) the trustee for the Assignee under the Mortgage and Assignment and
(ii) any entity directly or indirectly wholly owned by the Assignee or one or
more Secured Parties which is created for the sole purpose of holding interests
in the Facility or in the Assignor pursuant to an exercise of rights hereunder
or under the Mortgage and Assignment or the Loan Agreement or Security Documents
hereinafter referred to, provided, however, there shall only be one Assignee at
any one time.
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RECITALS
--------
A. Pursuant to the Power Purchase Agreement, Virginia Power has agreed
to purchase electricity and capacity from the Facility and Operator has agreed
to provide exclusively to Virginia Power all of the Facility's electrical
generation other than that necessary for the Facility's operation. Pursuant to
the Assignment and Assumption Agreement dated as of May 18, 1994, among SEI
Birchwood, Inc., the Assignor, and Virginia Power, all right, title, interest,
and obligations of SEI Birchwood, Inc. in, to, and under the Power Purchase
Agreement have been assigned to, and have been accepted and assumed by, the
Assignor (who has succeeded to SEI Birchwood, Inc. as the "Operator" thereunder)
with the consent of Virginia Power.
B. Assignor and Assignee have informed Virginia Power that Assignor has
entered into a Loan and Reimbursement Agreement dated as of May 18, 1994 (as
amended, supplemented, or otherwise modified from time to time, the "Loan
Agreement") among the Assignor, the Lenders (as defined in the Loan Agreement),
the Co-Agents named therein, and Credit Suisse, as Issuing Bank and as
Administrative Agent, in order to finance the acquisition, construction, and
initial operation of the Facility, and is securing the payment of the Secured
Obligations (as defined in the Loan Agreement) by, among other things,
mortgaging the Facility to Assignee and assigning to Assignee all of Assignor's
right, title, and interest in, to, and under the Power Purchase Agreement
pursuant to the Mortgage and Assignment.
C. Assignor and Assignee have informed Virginia Power that the Loan
Agreement requires that Virginia Power will deliver this Consent to Assignment
as a condition, among others, to making loans and otherwise extending credit to
Assignor thereunder.
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D. Virginia Power and Assignor are parties to a Right of First Refusal
Agreement dated as of May 23, 1994, and recorded in the real estate records of
the County of King George, Virginia (the "First Refusal Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Parties hereto agree as
follows:
DEFINITIONS
-----------
"Equity Interest" is any partnership interest or other equity
interest in Operator.
"Lump Sum Amount" is any Disallowance that remains unpaid
under Section 18.1(a) of the Power Purchase Agreement after the exercise by
Virginia Power of its offset rights.
"Monetary Obligations" shall mean, on any date of calculation
under this Consent to Assignment, any monetary amounts remaining unpaid to the
Secured Parties under the Mortgage and Assignment on such date of calculation
or, in the event Assignee acquires title to the Facility, all such amounts which
would have remained unpaid on such date of calculation if Assignee had not
acquired title to the Facility.
"Monetary Default" is an Event of Default which has resulted
from Assignor not paying to Virginia Power amounts due under the Power Purchase
Agreement.
"Scrap Purchaser" shall mean any person who acquires the
Facility or any part thereof from Assignee in accordance with Section 9(d) of
this Consent to Assignment.
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"Transferee" shall mean a person who (i) is either an
experienced power plant operator, legally permitted to operate the Facility, or
shall have agreed for the Term to engage the services of another person who is
an experienced power plant operator legally permitted to operate the Facility,
(ii) shall have assumed in writing for the benefit of Virginia Power the
obligations of "Operator" under the Power Purchase Agreement, (iii) shall have
cured, or made arrangements reasonably satisfactory to Virginia Power for the
curing of, all material defaults under the Power Purchase Agreement previously
notified by Virginia Power to Assignee (other than defaults not susceptible of
being cured) and paid all amounts if any, then due and payable by Assignor to
Virginia Power under the Power Purchase Agreement up to but not exceeding the
then undrawn amount of the security required to be provided to Virginia Power
pursuant to Section 13.3 or 13.5, as the case may be, of the Power Purchase
Agreement.
1. Consent to Assignment. Virginia Power hereby consents to the
assignment of all of Assignor's right, title, and interest in, to and under the
Power Purchase Agreement by Assignor to Assignee as security for the Secured
Obligations of Assignor. Except as expressly provided herein, neither the giving
of this Consent to Assignment nor such assignment or any of the terms of this
Consent to Assignment, such assignment, the Mortgage and Assignment, the Loan
Agreement, or any of the Security Documents shall modify Assignor's obligations,
or excuse Assignor from fully performing its obligations, under the Power
Purchase Agreement.
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2. Notice of Assignor's Defaults and Termination. (a) Notwithstanding
anything in the Power Purchase Agreement to the contrary, for so long as there
are any Monetary Obligations, Virginia Power shall provide to Assignee a copy of
any notice of default sent to Assignor pursuant to the Power Purchase Agreement.
Such notices shall be in writing and shall be deemed to be given when sent in
accordance with the provisions of Article 3 of the Power Purchase Agreement.
Failure of Virginia Power to provide such notice to Assignee shall not
constitute a breach of this Consent to Assignment. Assignee agrees that Virginia
Power shall have no liability to Assignee for such failure whatsoever; provided,
however, that no claim for rescission or termination of the Power Purchase
Agreement by Virginia Power shall be binding upon Assignee without the giving of
such notice to Assignee and the expiration of the applicable cure period, if
any, from the date of such notice. Assignee may make any payment or perform any
act required under the Power Purchase Agreement to be made or performed by
Assignor, with the same effect as if made or performed by Assignor, but Assignee
shall be under no obligation to make any payment or to perform any such act
except to the extent set forth in Section 9 of this Consent to Assignment. If
Assignee or Assignor fails to cure any default under the Power Purchase
Agreement within the applicable cure period, if any, such cure period to
commence upon the later date upon which such notices are delivered by Virginia
Power to Assignor and Assignee, Virginia Power shall have all of its rights and
remedies with respect to such default and right of termination as set forth in
the Power Purchase Agreement.
(b) All notices and other communications provided for in this
Consent to Assignment shall be addressed (unless and until such other address is
specified in a notice to the sending party delivered in conformity with
subsection (a) of this Section 2) as follows:
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Assignee:
---------
Credit Suisse
Tower 49
12 E. 49th Street
New York, New York 10017
Attn: Project Finance
Telecopy: 212-238-5390
Virginia Power:
---------------
Delivered by U.S. mail:
Virginia Electric and Power Company
Post Office Box 26666
Richmond, Virginia 23261
Delivered by hand or courier:
Virginia Electric and Power Company
One James River Plaza, First Floor
701 East Cary Street
Richmond, Virginia 23219
In each case:
Attention: Manager Capacity Acquisition
Telecopy: (804) 771-3005
3. No Previous Assignment. Except as set forth above, Virginia Power
warrants and represents to Assignee that it has not consented to any assignment,
transfer or hypothecation of the Power Purchase Agreement.
4. Payments. Assignor hereby requests and Virginia Power agrees that
all payments to be made by Virginia Power with respect to the Power Purchase
Agreement shall be paid directly to Assignee at its address set forth in Section
2 above for deposit into the Project Control Account (Account No. ___________)
(or, upon not less than thirty (30) days prior written notice to Virginia Power
from Assignee, to such other person or entity or other address for the project
control account as may be specified in writing by Assignee). Assignor agrees
that all payments made by Virginia Power to Assignee, and in the event that
Assignee requests Virginia Power to make payments directly to
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another specified person or entity as set forth above, any and all payments made
by Virginia Power pursuant to such request, shall in each case fully satisfy and
discharge Virginia Power's obligations to make such payments pursuant to the
Power Purchase Agreement as if paid to Assignor. Assignor hereby releases and
agrees to indemnify and hold harmless Virginia Power from any and all liability
for making payments to or as directed by Assignee in accordance herewith.
5. Acknowledgment of Assignee's Obligations and Rights. Assignee shall
have no obligation to Virginia Power under the Power Purchase Agreement until
such time as it expressly assumes the Assignor's obligations under such Power
Purchase Agreement in accordance with Section 9 of this Consent to Assignment.
Upon notification by Assignee to Virginia Power of the occurrence and
continuance of an event of default under the Loan Agreement, Assignee shall have
the right to take possession of the Facility and, prior to commercial operation
of the Facility, complete construction of the Facility and operate the same and,
after commercial operation of the Facility, operate the same.
6. Representations. Virginia Power represents and warrants as follows:
(a) Virginia Power is a public service corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and is in good standing in all places where
necessary in light of the business it conducts and the properties it
owns.
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(b) Each of the Power Purchase Agreement and this Consent to
Assignment has been duly executed and delivered and constitutes a valid
and binding obligation of Virginia Power.
(c) Virginia Power is not in default in the performance of any
of its obligations under the Power Purchase Agreement.
7. No Present Defaults. Virginia Power acknowledges that as of the date
hereof Virginia Power has no knowledge of any default by Assignor in any respect
in the performance of any provision of the Power Purchase Agreement.
8. Additional Provisions. (a) Notwithstanding the provisions of Section
13.7 of the Power Purchase Agreement and the First Refusal Agreement, the
Parties hereby acknowledge and agree that the only transfer of a Transfer
Interest which is not subject to Virginia Power's right of first refusal (other
than a merger or consolidation permitted by Section 13.7(g)(1) or (2) of the
Power Purchase Agreement, and a grant by Operator of a prior right of first
refusal to a steam buyer) is a grant by Assignor of any lien or security
interest to Assignee or future Lenders. Any foreclosure or similar action with
respect to such lien or security interest shall be governed by Section 9 of this
Consent to Assignment.
(b) The Parties agree that Assignor and Assignee shall be the
only parties to receive notices under the Power Purchase Agreement and this
Consent to Assignment and that notice to Assignee shall be sufficient notice to
the Secured Parties. The Secured Parties shall exercise any rights hereunder
only through the Assignee (including any trustee or other entity referred to in
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the last sentence of the first paragraph of this Consent and Agreement) as
their agent.
(c) The Parties hereby acknowledge and agree that the word
"Operator" is substituted for the words "Virginia Power" on the twenty-sixth
line of Section 6.15(c) of the Power Purchase Agreement.
(d) The Parties hereby acknowledge and agree that the
reference to "Section 10.15(6) on the first line of Section 10.15(c) of the
Power Purchase Agreement is changed to "Section 10.15(b)".
(e) Virginia Power hereby acknowledges that Assignor has
satisfied the conditions set forth in clauses (a), (b), (e), (i), (j), and (k)
of Section 2.3 of the Power Purchase Agreement.
(f) The Parties agree that the reference to Section "10.15(b)"
in the last sentence of Section 18.1(a) of the Power Purchase Agreement should
be to "Section 10.15(c)".
9. Right of First Refusal. (a) Notwithstanding the provisions of
Section 13.7 of the Power Purchase Agreement and the First Refusal Agreement,
Assignee agrees that if it acquires a Transfer Interest, or an Equity Interest
which results in a transfer in management control over the operation of the
Facility, through an exercise of rights pursuant to any security, pledge, deed
of trust, deed in lieu of foreclosure, or otherwise in connection with the
financing of the Facility, that it will, upon such acquisition of a Transfer
Interest, expressly assume in writing for the benefit of Virginia Power the
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Power Purchase Agreement and agree to perform all of the obligations of the
"Operator" under the Power Purchase Agreement as modified by the terms of this
Consent to Assignment, including but not limited to Section 9(c), and upon such
acquisition of such Equity Interest it will expressly assume in writing for the
benefit of Virginia Power and agree to perform all obligations of the transferor
of such Equity Interest under the Power Purchase Agreement. Virginia Power
agrees not to exercise its right of first refusal pursuant to Section 13.7 of
the Power Purchase Agreement or the First Refusal Agreement with respect to such
acquisitions.
(b) The Parties agree that any subsequent transfer by Assignee
of any interest in the Facility, or of any Equity Interest which results in a
transfer in management control over operation of the Facility, acquired by
Assignee through an exercise of rights pursuant to any security, pledge, deed of
trust, deed in lieu of foreclosure, or otherwise, in connection with the
financing of the Facility shall be subject to Virginia Power's right of first
refusal set forth in Section 13.7 of the Power Purchase Agreement as modified by
this Consent to Assignment and, in the event of a transfer by Assignee of any
interest in the Facility that is not to Virginia Power, such transfer shall be
to a Transferee or to a Scrap Purchaser as those terms are defined in this
Consent to Assignment. Virginia Power will consent to an assignment of the Power
Purchase Agreement to a Transferee or Scrap Purchaser in the event that Virginia
Power either does not exercise its right of first refusal or does not acquire
such interest in the Facility pursuant to its right of first refusal.
(c) For a period not to exceed eighteen (18) months after
Assignee acquires title to the Facility and assumes the Power Purchase
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Agreement, Assignee's obligation to cure Events of Default which occurred prior
to Assignee's assumption of the Power Purchase Agreement shall be suspended.
Virginia Power agrees that during such period it will not terminate the Power
Purchase Agreement as the result of Events of Default which occurred prior to
Assignee's assumption of the Power Purchase Agreement. In no event shall
Assignee be obligated to cure any such Event of Default that is not susceptible
of being cured. During such eighteen (18) month period, Assignee shall perform
all other obligations of Operator under the Power Purchase Agreement.
Prior to the expiration of the eighteen (18) month period
referred to above, Assignee shall either (i) except as set forth in the next
sentence, transfer the Facility to a Transferee or a Scrap Purchaser, which
transfer shall be subject to Virginia Power's right of first refusal set forth
in Section 13.7 of the Power Purchase Agreement, or (ii) give notice to Virginia
Power that it will continue to operate the Facility in accordance with the terms
of the Power Purchase Agreement until there are no Monetary Obligations. If
Assignee has elected to transfer the Facility to a Transferee or a Scrap
Purchaser in accordance with (i) above, and within the eighteen (18) month
period referred to above, such Transferee or Scrap Purchaser has executed a
letter of intent with Assignee in relation to such transfer, the eighteen (18)
month period referred to above shall be extended under the same terms, if
necessary, to consummate the sale to such Transferee or Scrap Purchaser, for up
to an additional six (6) month period after the date on which Virginia Power
notifies Assignee that it does not elect to exercise its right of first refusal,
or the date Virginia Power notifies Assignee that it has failed to obtain
necessary FERC, SCC or other governmental or regulatory approval with respect to
the consummation of the sale to Virginia Power. Upon either notice from Assignee
that Assignee has elected to continue to operate the Facility in
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accordance with the terms of the Power Purchase Agreement until there are no
Monetary Obligations, or the expiration of such eighteen (18) month period
without Assignee having informed Virginia Power of Assignee's election to either
operate the Facility or transfer the Facility to a Transferee or a Scrap
Purchaser, or the expiration of such time periods set forth in this Section 9 to
transfer the Facility to a Transferee or a Scrap Purchaser, Assignee and
Virginia Power shall have all of their respective rights and resume performance
of all of their respective obligations under the Power Purchase Agreement except
as set forth below.
Notwithstanding the preceding provision of this subparagraph
(c), if prior to foreclosure Assignee shall have informed Virginia Power that
operating the Facility in accordance with the terms of the Power Purchase
Agreement would result in a negative cash flow (taking in to account operating
expenses, any capital expenditures necessary to insure performance under the
Power Purchase Agreement and regularly scheduled debt service which would have
been due and owing to the Secured Parties if Assignee had not acquired title to
the Facility), then if requested by Assignee, Assignee's and Virginia Power's
obligations under the Power Purchase Agreement shall be suspended for up to
eighteen (18) or twenty-four (24) months after Assignee acquires title to the
Facility, as applicable in accordance with the immediately preceding paragraph
(and no liability shall accumulate as a result thereof) until (i) Assignee
notifies Virginia Power that Assignee will continue to operate the Facility in
accordance with the terms of the Power Purchase Agreement until there are no
Monetary Obligations, (ii) Assignee transfers the Facility to a Transferee or a
Scrap Purchaser, which transfer shall be subject to Virginia Power's right of
first refusal set forth in Section 13.7 of the Power Purchase Agreement, as
modified by this Consent to Assignment, or (iii) the expiration of such
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eighteen (18) or twenty-four (24) month period as applicable without Assignee
informing Virginia Power of Assignee's election either to operate the Facility
in accordance with the terms of the Power Purchase Agreement or to transfer the
Facility to a Transferee or a Scrap Purchaser, at which time Assignee and
Virginia Power shall have all of their respective rights and resume performance
of all of their respective obligations under the Power Purchase Agreement except
as set forth below.
If at the time that Assignee acquires title to the Facility
there are any outstanding Events of Default by the Assignor under the Power
Purchase Agreement, or if there ever is a Disallowance whether before or after
Assignee acquires title to the Facility, then upon Assignee's notice to Virginia
Power that it has elected to continue to operate the Facility in accordance with
the terms of the Power Purchase Agreement until there are no Monetary
Obligations, or the expiration of the time periods set forth above, Assignee's
obligation to cure any Monetary Default, and its obligation to pay a Lump Sum
Amount, shall be suspended, and Virginia Power shall not exercise any remedies
against Assignee available to it under the Power Purchase Agreement or otherwise
relating to any Monetary Default or Lump Sum Amount unless Assignee has breached
its obligations under Section 9(e) of this Consent to Assignment.
Notwithstanding the foregoing, nothing in this Section 9(c) shall relieve
Assignee of liability for any Event of Default under the Power Purchase
Agreement occurring after Assignee has assumed the obligations under the Power
Purchase Agreement, or prevent Virginia Power from exercising its offset rights
pursuant to Section 18.1(a) of the Power Purchase Agreement. In addition, if at
the time that Assignee acquires title to the Facility, there are outstanding
liabilities to Virginia Power from Assignor which are not the result of a
Monetary Default or Disallowance, Virginia Power shall have the right to draw
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the amount available to be drawn, up to the amount of such outstanding
liabilities, under the letter of credit initially provided by Assignor pursuant
to Section 13.5 of the Power Purchase Agreement and upon such draw all such
liabilities shall be deemed canceled as to Assignee.
If Assignee transfers the Facility to a Transferee prior to
the expiration of the applicable eighteen (18) or twenty-four (24) month period
provided in this subparagraph (c), the Transferee shall, within one year of the
effective date of such transfer, either (i) elect to cure all Monetary Defaults
and pay all Lump Sum Amounts to Virginia Power or (ii) elect not to cure all
Monetary Defaults and pay all Lump Sum Amounts to Virginia Power (in which case
the Transferee's obligations to cure all Monetary Defaults and pay all Lumps Sum
Amounts to Virginia Power shall be suspended and Virginia Power shall not
exercise any remedies against the Transferee relating to such Monetary Defaults
and Lump Sum Amounts unless the Transferee breaches the Transferee Agreement
(hereinafter defined)) If the Transferee makes the election in clause (ii)
above, it shall agree (the "Transferee Agreement") that upon the 25th
anniversary of the Commercial Operations Date, it shall offer to convey the
Facility to Virginia Power without any representations or warranties for the
price of $1.00 and, if within the time constraints set forth in Article 13.7 of
the Power Purchase Agreement Virginia Power accepts such offer, the Transferee
shall agree to convey the Facility without any representations and warranties to
Virginia Power within the time constraints set forth in Article 13.7 of the
Power Purchase Agreement. Upon such conveyance by Assignee to a Transferee, all
liability of the Assignee for any uncured Monetary Defaults and unpaid Lump Sum
Amounts shall terminate, and upon such conveyance by a Transferee to Virginia
Power for the price of $1.00 all liability of the Transferee for any uncured
Monetary Defaults and unpaid Lump Sum Amounts shall terminate.
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Notwithstanding the foregoing, nothing in this paragraph shall relieve the
Transferee of liability for any Event of Default under the Power Purchase
Agreement occurring after the Transferee has assumed the obligations under the
Power Purchase Agreement.
Following the expiration of the applicable eighteen (18)
months or twenty-four (24) months period referred to above in this Section 9(c),
provided that prior to the expiration of such period Assignee shall have cured
all Monetary Defaults and paid all Lump Sum Amounts to Virginia Power, Assignee
shall be free to transfer the Facility to a Transferee. Such transfer shall be
subject to Virginia Power's right of first refusal set forth in Section 13.7 of
the Power Purchase Agreement, as modified by this Consent to Assignment.
(d) In the event that Assignee transfers the Facility to a
Scrap Purchaser, such Scrap Purchaser shall agree, as a condition to such
acquisition, to enter into an agreement with Virginia Power (the "Assumption
Agreement") providing that the Scrap Purchaser shall not generate, or cause to
be generated, electrical energy at its present location from that portion of the
Facility that is to be acquired by the Scrap Purchaser, without first assuming
in writing the Power Purchase Agreement and agreeing to perform the obligations
of Operator thereunder for a term equal to the term that was remaining at the
time such Scrap Purchaser acquired the Facility. The Assumption Agreement shall
(i) provide that Virginia Power shall be entitled to injunctive relief to
enforce its rights under the Assumption Agreement, (ii) provide Virginia Power
the right to sue for specific performance of the Scrap Purchaser's obligations
under the Assumption Agreement, and (iii) state that the Scrap Purchaser waives
any right it may have to claim that Virginia Power has an adequate remedy at law
for failure to comply with its obligation under
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the Assumption Agreement. The Power Purchase Agreement will be an attachment
to the Assumption Agreement.
(e) The Parties agree that if Assignee acquires title to the
Facility pursuant to the exercise of rights pursuant to any security, pledge,
deed of trust, deed in lieu of foreclosure, or otherwise in connection with the
financing of the Facility, and does not transfer the Facility to a Transferee or
to a Scrap Purchaser, then (unless all Monetary Defaults have been cured and all
Lump Sum Amounts have been paid by Assignee within the applicable eighteen (18)
months or twenty-four (24) months period provided in Section 9(c) above),
Assignee shall offer to convey the Facility to Virginia Power at the time there
are no Monetary Obligations without any representations or warranties for a
price of $1.00, and in the event that there still are Monetary Obligations at
the end of the twenty-fifth year after the Commercial Operations Date, Virginia
Power may, at its sole option, elect to purchase the Facility for a price equal
to the Monetary Obligations, or extend the term of the Power Purchase Agreement
for an additional period of time, and then at the time there are no Monetary
Obligations, Virginia Power shall be entitled to purchase the Facility for
$1.00. The Capacity Purchase Price and the equivalent hourly Capacity Purchase
Price applicable to such extension period (through the 31st anniversary of the
Commercial Operations Date if necessary) shall be those set out in Section
10.15(c) of the Power Purchase Agreement. If within the time constraints set
forth in Article 13.7 of the Power Purchase Agreement, Virginia Power accepts
any such offer or elects to exercise any such option to purchase the Facility as
set forth above, Assignee shall convey the Facility without any representations
or warranties to Virginia Power within the time constraints set forth in Article
13.7 of the Power Purchase Agreement, as modified by Section 9
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of this Consent to Assignment. Upon any conveyance of the Facility pursuant to
this Section 9(e), all liability of the Assignee for any unpaid Monetary
Defaults and Lump Sum Amounts shall terminate. Notwithstanding the foregoing, if
the Assignee has acquired title to the Facility as aforesaid, Virginia Power
shall have the right at its sole option to allow the Power Purchase Agreement to
terminate without an extension (except during any period during which it is
exercising its right or option to purchase the Facility pursuant to this Section
9(e) of this Consent to Assignment). In addition, nothing herein is intended to
create an obligation on the part of Virginia Power to purchase the Facility.
(f) Virginia Power and Assignee shall have no further
obligations, duties or liabilities to each other under the Power Purchase
Agreement (beyond those which accrued prior to the occurrence of the events set
forth in (i) through (iii) below) upon the earliest to occur of (i) the
conveyance of the Facility to Virginia Power for $1.00, (ii) passage of ninety
(90) days from the date Assignee offered to convey the Facility to Virginia
Power for $1.00 without Virginia Power accepting such offer, or (iii) the
consummation of a sale of the Facility, consistent with the terms of this
Consent to Assignment, from Assignee to a Transferee or Scrap Purchaser.
(g) Assignee hereby agrees to give Virginia Power written
notice prior to exercising any rights to acquire any Transfer Interest or Equity
Interest. Virginia Power's waiver of its right of first refusal as set forth in
this Section 9 is contingent on Assignee providing such prior written notice.
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(h) So long as Virginia Power is in the process of exercising
its right of first refusal under Section 13.7 of the Power Purchase Agreement as
modified by this Consent, the Power Purchase Agreement as so modified, shall
continue in full force and effect.
(i) Virginia Power hereby acknowledges that the provision of
Article 17.5 of the Power Purchase Agreement shall apply to any entity expressly
assuming the obligations of the Operator under the Power Purchase Agreement.
(j) Notwithstanding anything to the contrary in Section 13.7
of the Power Purchase Agreement or in the First Refusal Agreement, any election
by Virginia Power to exercise its right of first refusal with respect to
transfers to or by Assignee shall be made within ninety (90) days after Assignee
notifies Virginia Power of a proposed transfer subject to Virginia Power's right
of first refusal, and such exercise must be consummated within one hundred and
fifty (150) days after notice from Virginia Power that it elects to exercise
such right unless (subject to the provisions set forth in the next sentence) the
failure to consummate the applicable transfer to Virginia Power within such one
hundred and fifty (150) days period arises out of the failure of Virginia Power
to obtain necessary FERC, SCC or other governmental or regulatory approval with
respect to such consummation. Provided that Virginia Power has used during the
one hundred and fifty (150) days period referred to in the preceding sentence,
and continues to use, its best efforts to obtain all such governmental or
regulatory approvals as soon as possible and so long as Virginia Power
reasonably believes that such approvals (including approval of the purchase
price proposed by Virginia Power) will be obtained, then such one
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hundred and fifty (150) days period referred to in the previous sentence shall
be extended for the time necessary to obtain such approvals (but in no event
longer than an additional one hundred and twenty (120) days unless all such
approvals have been obtained within such additional period, in which case
Virginia Power shall in no event have more than sixty (60) days from the date
the last such approval is obtained to consummate such transfer to Virginia
Power).
(k) Virginia Power's rights under this Consent to Assignment
shall not apply to the extent its exercise of such rights would violate
applicable law.
10. Limitation of Liability. Except as otherwise expressly provided
herein, it is hereby agreed and acknowledged that Virginia Power shall not have
any direct contractual obligations to Assignee, and Assignee hereby acknowledges
that, in connection with lending arrangements with Assignor, Assignee has not
relied upon any representations of or statements (oral or written) by Virginia
Power, except as provided herein and in the Power Purchase Agreement. In
addition, Assignee agrees that in no event shall Virginia Power be liable for
any claims, losses, expenses or damages whatsoever other than the liability
Virginia Power may have to Assignee hereunder, or to Assignor and its permitted
successors and assigns, including Assignee, under the Power Purchase Agreement.
11. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the permitted successors and assigns of each of the Parties hereto.
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12. Captions. The captions or headings at the beginning of each Section
are for the convenience of the Parties only and are not a part of this Consent
to Assignment.
13. GOVERNING LAW. THIS CONSENT TO ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN THE COMMONWEALTH OF VIRGINIA.
14. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by all of the Parties.
15. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
16. Counterparts. This Consent to Assignment may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute but one and the same agreement.
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17. Inconsistent Provisions. In the event of any conflict or
inconsistency between the Power Purchase Agreement, the First Refusal Agreement,
and this Consent to Assignment, the terms and conditions of this Consent to
Assignment shall control.
18. Termination. This Consent to Assignment shall terminate at the
earlier to occur of (i) the termination of the Power Purchase Agreement or (ii)
the date on which no amount remains unpaid under the Loan Agreement and all
commitments to make loans or otherwise extend credit under the Loan Agreement
have terminated.
19. Order of Recordation. Assignor and Assignee agree that Assignor
will record the Right of First Refusal Agreement dated as of May 23, 1994,
between Assignor and Virginia Power, after recordation of the deed to the
property on which the Facility is located and prior to the recordation of any
lien related to the Loan Agreement.
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IN WITNESS WHEREOF, each of Virginia Power, Assignor and Assignee has
duly executed this Consent to Assignment as of the date first above written.
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ Gary L. Edwards
-------------------------------------
Name: Gary L. Edwards
Title: Manager-Capacity Acquisition
BIRCHWOOD POWER PARTNERS, L.P.,
by SEI Birchwood, Inc.,
a General Partner
By: /s/ Mark S. Lynch
-------------------------------------
Name: Mark S. Lynch
Title: Vice President
CREDIT SUISSE, as Agent
By: /s/ Tony K. Muoser
-------------------------------------
Name: Tony K. Muoser
Title: Member of Senior Management
By: /s/ Bruce W. Hurd
-------------------------------------
Name: Bruce W. Hurd
Title: Associate