EXECUTION COPY
AMENDED AND RESTATED APPENDIX I ITC AGREEMENT
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This AMENDED AND RESTATED APPENDIX I INDEPENDENT TRANSMISSION COMPANY
AGREEMENT (the "Agreement") is entered into as of this 14th day of February
2003, by and between the MIDWEST INDEPENDENT TRANSMISSION SYSTEM OPERATOR, INC.
("Midwest ISO") and GRIDAMERICA LLC ("GridAmerica"). Midwest ISO and GridAmerica
are jointly referred to as the "Parties" and individually, as a "Party."
BACKGROUND
WHEREAS, the United States Federal Energy Regulatory Commission (together
with any successor agency, "FERC" or "Commission") in Order No. 2000 called for
the formation of regional transmission organizations ("RTOs") to promote the
creation of large electricity markets and to provide reliable, cost-efficient
services to customers;
WHEREAS, Midwest ISO is a FERC approved RTO with an open architecture that
accommodates various forms of independent transmission company ("ITC") in its
operation;
WHEREAS, on April 25, 2002, the Commission issued an order in Docket No.
EL02-65 (99 FERC P. 61,105 (2002)) encouraging the formation of an ITC within
Midwest ISO;
WHEREAS, Union Electric Company, d/b/a AmerenUE, and Central Illinois
Public Service Company, d/b/a AmerenCIPS (together, "Ameren Operating
Companies"), American Transmission Systems, Incorporated ("ATSI"), a subsidiary
of FirstEnergy Corp., and Northern Indiana Public Service Company ("NIPSCO")
wish to comply with Order No. 2000 through the formation of an ITC within
Midwest ISO;
WHEREAS, (i) the Ameren Operating Companies, ATSI, NIPSCO and National Grid
USA ("NGUSA") have executed and delivered that certain Master Agreement dated as
of October 31, 2002 (the "Original Master Agreement") regarding the creation and
operation of GridAmerica as an ITC within Midwest ISO, (ii) NGUSA has caused
GridAmerica to be formed as a limited liability company with GridAmerica
Holdings Inc., (successor to GridAmerica Holdings LLC), an affiliate of NGUSA as
managing member, pursuant to that certain Limited Liability Company Agreement
dated as of October 31, 2002 (the "Original LLC Agreement"), (iii) GridAmerica,
Ameren Operating Companies, ATSI and NIPSCO have executed and delivered that
certain Operation Agreement dated as of October 31, 2002 (the "Original
Operation Agreement") pursuant to which GridAmerica will exercise functional
control over the transmission facilities of the Ameren Operating Companies, ATSI
and NIPSCO that are not currently under the operational control of a FERC
approved RTO; and (iv) the Midwest ISO and GridAmerica have executed and
delivered that certain Appendix I Independent Transmission Company Agreement
dated as of October 31, 2002 (the "Original MISO ITC Agreement");
WHEREAS, on December 19, 2002, the Commission conditionally accepted for
filing, and suspended and made effective subject to refund, future filings and
further orders, the Original Master Agreement, the Original LLC Agreement, the
Original Operation Agreement and the Original MISO ITC Agreement in Docket Nos.
ER02-2233-001 and EC03-14-000 (101 FERC P. 61,320 (2003) (the "FERC Approving
Order");
WHEREAS, the parties to each of the Original Master Agreement, the Original
LLC Agreement and the Original LLC Agreement have agreed to, and have, amended
and restated such Agreements to comply with the requirements of the FERC
Approving Order;
WHEREAS, the Parties desire to set forth the terms and conditions governing
GridAmerica's participation in Midwest ISO as modified as required by the FERC
Approving Order;
NOW, THEREFORE, the Parties hereby agree to amend and restate the Original
MISO ITC Agreement in its entirety as follows:
ARTICLE 1
DEFINITIONS
The terms used in this Agreement shall have the same meaning as in the
Agreement Of Transmission Facilities Owners To Organize The Midwest Independent
Transmission System Operator, Inc. on file with and accepted by the Commission
as Midwest ISO's Rate Schedule FERC No. 1 ("Midwest ISO Agreement") unless
otherwise specified herein.
"Ameren" means Ameren Services Company, individually and as agent for the
Ameren Operating Companies.
"Ameren Operating Companies" has the meaning set forth in the recitals
hereto.
"Ameren Zone" means the RTO pricing zone for which the rates accepted or
approved by FERC for the Ameren Operating Companies shall apply.
"Ameren Zonal Rate" means the rates applicable to the Ameren Zone, as may
be changed from time to time.
"Approval Order" shall mean one or more Final Orders that, collectively,
approve this Agreement and such other agreements as may be necessary or
desirable to create GridAmerica as an ITC within Midwest ISO as to which the
approval of the Commission is required under applicable Law, without
modification or condition, other than any such modifications and conditions as
would not, in the aggregate, cause a Party to fail to realize any material
benefit which it reasonably anticipates from participation in the transactions
contemplated by such Agreements.
"ATSI Zone" means the RTO pricing zone for which rates for ATSI as accepted
or approved by FERC shall apply.
"ATSI Zonal Rate" means the rates applicable to the ATSI Zone, as may be
changed from time to time.
"Authority" has the meaning set forth in Section 18.3 hereof.
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"Confidential Information" means all (i) information that is furnished to a
Recipient by the Disclosing Party or its Representatives, in whatever form, that
may constitute or contain confidential, proprietary or trade secret information,
or which may otherwise be claimed by the Disclosing Party to be of a
market-sensitive, competitive, confidential or proprietary nature, and (ii) all
portions of any analyses, compilations, studies or other documents that include
any of the foregoing information prepared by or for a Recipient. "Confidential
Information" excludes any information that (i) the Disclosing Party notifies the
Recipient in writing is not confidential; (ii) becomes available to the
Recipient on a non-confidential basis from a source other than (a) the
Disclosing Party, its Representatives or another person acting on behalf of the
Disclosing Party, or (b) a party who has confidentiality obligations to the
Disclosing Party; (iii) is or becomes generally available to the public other
than as a result of a disclosure by the Recipient, its Representatives or any
person to whom such Recipient or Representatives disclosed the information; (iv)
was previously known to the Recipient free and clear of any obligation to keep
it confidential; (v) is disclosed to third parties by the Disclosing Party
without restriction or obligation of confidentiality; or (vi) is independently
developed by the Recipient without reference to the Disclosing Party's
Information.
"Consent" shall mean any authorization, consent, opinion, order, approval,
license, franchise, ruling, permit, tariff, rate, certification, exemption,
filing or registration from, by, or with any Governmental Authority, any person
or any governing body of any person.
"Control Date" has the meaning set forth in Section 4.1.3 hereof.
"CPI Index" shall mean the Consumer Price Index for All Urban Consumers
(unadjusted for seasonal variation) for the U.S. City Average as published from
time to time by the U.S. Bureau of Labor Statistics or any successor index (or
any substantially similar index in the event that no successor index is
published) published by such bureau or any successor agency or department.
"Direct Claim" has the meaning set forth in Section 17.6 hereof.
"Disclosing Party" means either GridAmerica, Ameren, ATSI, or NIPSCO, on
the one hand, or Midwest ISO, on the other hand, to the extent either such party
is furnishing the other party with Confidential Information concerning itself or
its affiliate(s).
"Effective Date" has the meaning set forth in Section 2.1 hereof.
"Facilities" mean those transmission facilities over which GridAmerica has
functional control, as set forth on Schedule 1 attached hereto.
"FERC Approving Order" has the meaning set forth in the recitals hereof.
"Final Order" shall mean a final order issued by the Commission approving
this Agreement and such other agreements as may be necessary or desirable to
create GridAmerica as an ITC within Midwest ISO as to which approval of the
Commission is required under applicable Law.
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"FirstEnergy Operating Companies" means The Cleveland Electric Illuminating
Company, Ohio Edison Company, Pennsylvania Power Company, and The Toledo Edison
Company.
"Good Utility Practice" has the meaning set forth in the Midwest ISO
Agreement.
"Governmental Authority" or "Governmental" shall mean a federal, state,
local or foreign governmental authority; a state, province, commonwealth,
territory or district thereof; a county or parish; a city, town, township,
village or other municipality; a district, ward or other subdivision of any of
the foregoing; any executive, legislative or other governing body of any of the
foregoing; any agency, authority, board, department, system, service, office,
commission, committee, council or other administrative body of any of the
foregoing; any court or other judicial body and any officer, official or other
representative of any of the foregoing.
"GridAmerica Integration Costs" has the meaning set forth in Section 13.1
hereof.
"GridAmerica Participants" means Ameren, ATSI, NIPSCO, and National Grid.
"GridAmerica System" has the meaning set forth in Section 4.1.3 hereof.
"GridAmerica Three" means Ameren, ATSI, and NIPSCO.
"Indemnifying Party" has the meaning set forth in Section 17.4 hereof.
"Indemnitee" has the meaning set forth in Section 17.4 hereof.
"ITC Agreements" means (i) the Amended and Restated Master Agreement dated
as of February 14, 2003 by and among GridAmerica, GridAmerica Holdings Inc., the
GridAmerica Three and NGUSA, (ii) the Amended and Restated Limited Liability
Company Agreement of GridAmerica dated as of February 14, 2003 and entered into
by GridAmerica Holdings Inc. and (iii) the Amended and Restated Operation
Agreement dated as of February 14, 2003 by and among GridAmerica and the
GridAmerica Three, in each case as the same may be amended, modified or
otherwise supplemented and in effect from time to time.
"Law" shall mean any applicable constitutional provision, statute, act,
code, law, regulation, rule, ordinance, order, decree, ruling, proclamation,
resolution, judgment, decision, declaration or interpretive or advisory opinion
of a Governmental Authority.
"Make-Ready Arrangements" shall mean the arrangements, contractual or
otherwise, made by or entered into by GridAmerica and/or Midwest ISO pursuant to
which GridAmerica or Midwest ISO, as the case may be, acquires such systems,
personnel, services, intellectual property and other assets as are required for
GridAmeria to serve as an Independent Transmission Company within Midwest ISO
and for GridAmerica or Midwest ISO, as the case may be, to perform its
obligations under the Delineation of Functions.
"Member" has the meaning set forth in the Midwest ISO Agreement.
"Midwest ISO OATT" has the meaning set forth in Section 4.1.5 hereof.
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"NDTO" means a non-divesting transmission owner that has signed an
Operation Agreement with GridAmerica.
"NIPSCO Zone" means the RTO pricing zone for which rates for NIPSCO as
accepted or approved by the Commission shall apply.
"NIPSCO Zonal Rate" means the rates applicable to the NIPSCO Zone, as may
be changed from time to time.
"OASIS" has the meaning set forth in Section 6.1 hereof.
"Order" shall mean any writ, judgment, decree, injunction or similar order
of any Governmental Authority (in each such case, whether preliminary or final).
"Order No. 2000" means the order of FERC set forth in Regional Transmission
Organizations, Order No. 2000, FERC Stats and Regs (Regulations Preambles) P.
31,089 (1999), order on reh'g, Order No. 2000-A, FERC Stats and Regs
(Regulations Preambles) P. 31,092 (2000).
"Owners" has the meaning set forth in the Midwest ISO Agreement.
"Performance Manager" has the meaning set forth in Section 12.1 hereof.
"Recipient" means GridAmerica, Ameren, ATSI, or NIPSCO, on the one hand, or
Midwest ISO, on the other hand, to the extent such Party is receiving
Confidential Information of the Disclosing Party.
"Reliability Coordination Service" has the meaning set forth in Section
4.2.1 hereof.
"Reliability Coordinator" has the meaning set forth in Section 4.2.3
hereof.
"Representatives" means principals, partners, officers, directors,
employees, agents, and other representatives, experts and advisors, including
without limitation, attorneys, independent accountants, consultants, and
financial advisors, and Representatives of such Representatives.
"Required Consent" shall mean with respect to GridAmerica, any required
consent or approval of the Securities and Exchange Commission under the Public
Utility Holding Company Act of 1935, as amended, and any Consents that a member
of the GridAmerica Three notifies GridAmerica and Midwest ISO in writing prior
to December 31, 2002 are a precondition to its participation in GridAmerica.
"RTO" has the meaning set forth in the recitals hereto.
"RTO Services" mean those services and functions which taken together
enable Ameren, ATSI, and NIPSCO to comply fully with Order No. 2000, and shall
include the transmission services described in, and to be provided by Midwest
ISO under, this Agreement.
"Third Party Claim" has the meaning set forth in Section 17.4 hereof.
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"Transmission System" has the meaning set forth in the Midwest ISO
Agreement.
"Users" has the meaning set forth in the Midwest ISO Agreement.
ARTICLE 2
FILING, EFFECTIVE DATE, SERVICE DATE, TERM, AND TERMINATION
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2.1 The GridAmerica Participants, on behalf of GridAmerica, and Midwest
ISO shall jointly file with FERC for approval of this Agreement as soon as
practicable following the execution hereof. This Agreement shall become
effective upon the date the FERC shall have issued the Approval Order (the
"Effective Date"). Each Party shall use its best efforts to gain FERC approval
of this Agreement on an expedited basis and agrees to provide support for the
model set forth in this Agreement in public fora and elsewhere. If the FERC
accepts and generally approves this Agreement but requires a compliance filing
by either of the Parties, the Parties shall evaluate whether such required
compliance filing materially changes or frustrates the intent of this Agreement.
The Parties agree to negotiate in good faith to establish new terms and
conditions that place the Parties in the same position as bargained for in this
Agreement. In the event that the Parties cannot reach an agreement within 30
days of FERC action on new terms and conditions, or the new terms and conditions
are not subsequently accepted by the FERC, the GridAmerica Participants and
GridAmerica may withdraw its application to join Midwest ISO upon thirty days
written notice.
2.2 Subject to Sections 2.4 and 2.5, this Agreement shall remain in effect
following the Effective Date for an initial term ending at midnight Carmel,
Indiana time on the fifth anniversary of the Control Date, which initial term
shall be automatically extended from year to year unless either Party shall have
given the other six months written notice of termination prior to the end of the
initial term, or at the end of any renewal term if such notice is given at least
six months prior to the term then ending; provided, however, that (i) if at the
time such notice of termination is given by either Party, applicable provisions
in the Midwest ISO Transmission Owners Agreement governing the right of a
"Transmission Owner" thereunder to withdraw from Midwest ISO specify a different
minimum time for notice of withdrawal (whether longer or shorter) from Midwest
ISO, such different minimum time shall apply under this Agreement and (ii) if
GridAmerica (x) has not acquired transmission facilities of any NDTO and (y)
ceases to function as an ITC, whether by reason of its dissolution, the
withdrawal of all of the NDTOs participating in GridAmerica as contemplated by
this Agreement and as permitted by the ITC Agreements or otherwise, then the
term of this Agreement shall end at the close of business on the day GridAmerica
ceases to function as an ITC.
2.3 Notwithstanding anything to the contrary set forth in this Agreement,
if (a) ownership of all or a substantial portion of any NDTO or its transmission
facilities is changed as a result of sale, merger, or acquisition involving a
party other than an affiliate of such NDTO or (b) any NDTO exercises its right
to withdraw from GridAmerica set forth in Section 5.7(a) or Section 5.7(b) of
the Master Agreement or Section 5.1 of the Operation Agreement or (c)
GridAmerica acquires transmission facilities of any NDTO, then such new owner or
such NDTO or GridAmerica, as the case may be, may, subject to the terms and
conditions set forth in the ITC Agreements, withdraw its facilities from
GridAmerica; provided, however, that, unless the
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Commission shall otherwise approve, upon the effectiveness of such withdrawal,
such new owner, NDTO or GridAmerica, as the case may be, shall automatically be
and become a member of Midwest ISO for a term ending no earlier than the fifth
anniversary of the Control Date, or such later date as to which the term of this
Agreement shall have been extended pursuant to Section 2.2 hereof, and otherwise
having the same rights and obligations as a member "Transmission Owner" under
the Midwest ISO Transmission Owners Agreement. Midwest ISO agrees to support the
membership of any such new owner, NDTO or GridAmerica, as the case may be, in
Midwest ISO as contemplated by the immediately preceding sentence.
2.4 Notwithstanding anything to the contrary set forth in this Agreement,
GridAmerica has the right to withdraw from Midwest ISO upon 30 days written
notice, subject to FERC approval, if other Midwest ISO Owners or ITCs withdraw
from Midwest ISO where either: a) GridAmerica is no longer directly
interconnected with a remaining Midwest ISO member; or b) a material portion of
the transmission facilities under Midwest ISO's operational control are removed
by Midwest ISO members.
2.5 If GridAmerica withdraws from Midwest ISO, GridAmerica will remain
responsible for all financial obligations it incurs under the Midwest ISO
Agreement and Midwest ISO OATT before the date of its withdrawal.
2.6 Should, upon the withdrawal of GridAmerica from the Midwest ISO, the
NDTOs remain in the Midwest ISO either in another ITC or as Owners, GridAmerica
will not be liable to the Midwest ISO for the shares of the unamortized
GridAmerica Integration Costs applicable to those NDTOs that remain in Midwest
ISO.
ARTICLE 3
STRUCTURE OF RTO ARRANGEMENT
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3.1 GridAmerica will become an ITC within Midwest ISO pursuant to the
terms and conditions of this Agreement. GridAmerica will be treated as an Owner
under the Midwest ISO Agreement to the extent it owns transmission facilities
within Midwest ISO. GridAmerica will represent the NDTOs with respect to the
governance and activities of Midwest ISO. The NDTOs will have the same rights
and voting authority as Owners under the Midwest ISO Agreement. Nothing in this
Agreement will preclude the NDTOs or any of their affiliates from participating
in appropriate Midwest ISO matters. Although this Agreement, and the
relationship between GridAmerica and Midwest ISO as set forth herein,
incorporates certain provisions of the Midwest ISO Agreement, any incorporation
of the terms of the Midwest ISO Agreement herein shall not make GridAmerica an
obligor under that agreement, nor shall incorporation of such terms make
GridAmerica in any way a party to the Midwest ISO Agreement. References to the
Midwest ISO Agreement in this Agreement shall mean the Midwest ISO Agreement and
the Appendices thereto as the same exist on the date hereof and as the same may
be amended from time to time but only if and not until such amendments, insofar
as affecting this Agreement or the rights, entitlements or obligations of
GridAmerica, are also documented hereunder pursuant to Section 19.2 hereof.
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3.2 With respect to its supply of RTO Services under this Agreement,
not-withstanding any other provision of this Agreement, Midwest ISO shall not
discriminate against GridAmerica vis-a-vis other Midwest ISO Members (including
without limitation Owners or other ITCs) or Users to which it supplies identical
or substantially similar services.
3.3 Except to the extent inconsistent with the terms of this Agreement or
as otherwise provided herein, the same procedures and protocols described in
Appendix E to the Midwest ISO Agreement shall govern and apply to the
relationship of the Parties and the provision of RTO Services by Midwest ISO
hereunder, to the same extent as if GridAmerica were an Owner for purposes of
such Appendix E.
ARTICLE 4
TRANSMISSION FACILITIES OPERATED BY GRIDAMERICA
SUBJECT TO THE DIVISION OF FUNCTIONS SET FORTH IN
SCHEDULE 5 TO THIS AGREEMENT AND TO CERTAIN PROTOCOLS
SET FORTH IN VARIOUS SCHEDULES TO THIS AGREEMENT
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4.1 Functional Control, Reliability, Provision of Regional Transmission
Service.
4.1.1 GridAmerica will exercise functional control over the
Facilities. The NDTOs will file applications with the Commission for approval of
the transactions contemplated by this Agreement and the ITC Agreements.
4.1.2 After receiving authorization to exercise functional control
over the Facilities, GridAmerica will cede to Midwest ISO those functions set
forth in Schedule 5 to this Agreement that are to be performed by Midwest ISO.
GridAmerica shall perform those functions set forth in Schedule 5 to this
Agreement that are to be performed by GridAmerica as an ITC, and will also, for
a transition period not to extend beyond the earlier to occur of the
implementation of standard market design and Midwest ISO's Day Two congestion
management systems, perform as contractor to Midwest ISO, certain of the
functions to be performed by Midwest ISO, as described on Schedule 5. All
functions set forth in Schedule 5 that are to be performed by GridAmerica as
contractor to Midwest ISO shall be performed under the supervision of Midwest
ISO pursuant to protocols to be agreed between the Parties. Schedule 5 to this
Agreement sets forth the "Delineation of Functions" approved by FERC in Alliance
Companies, 99 FERC P. 61,105 (2002); TransLink, 99 FERC P. 61,106 (2002). The
Parties recognize that, prior to full operations pursuant to the Delineation of
Functions in Schedule 5, (i) the development of the GridAmerica systems and
assets must be completed and integrated into the Midwest ISO systems and (ii)
the Parties must agree on procedures for implementing the Delineation of
Functions. Following complete integration of systems, service over the
Facilities will be provided under the Midwest ISO OATT.
4.1.3 Each of Midwest ISO and GridAmerica shall promptly notify the
other in writing of the satisfaction of all applicable legal requirements,
system readiness, and systems integration necessary for GridAmerica and Midwest
ISO to assume their respective responsibilities under the Delineation of
Functions (each a "Notification of Readiness"). On the first day of the month
following the receipt of such Notifications of Readiness, but no sooner
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than the fifth day following the date of receipt of the last such Notification
of Readiness (the "Control Date"), GridAmerica and Midwest ISO shall assume
their respective responsibilities under the Delineation of Functions over the
facilities constituting the GridAmerica transmission system ("GridAmerica
System"). Midwest ISO will thereafter exercise its delineated functions over the
Facilities and the GridAmerica System consistent with its responsibilities under
Article Three, Section l.A of the Midwest ISO Agreement. Anything in this
Section 4.1.3 or otherwise in this Agreement to the contrary notwithstanding,
the occurrence of the Control Date shall be postponed and shall not occur:
(a) unless and until the Commission shall have issued an Approval
Order and (unless waived by the Parties) none of the Final Orders comprising the
Approval Order is subject to possible rehearing and each Party requiring any
Required Consent shall have received the same, or shall have waived the
requirement that it shall have received the same, and such Required Consent
shall: (i) be in form and substance which would not, in the reasonable judgment
of such Party, and when considered in light of the Approval Order and all other
Required Consents (A) cause such Party to fail to realize any material benefit
which it reasonably anticipates from the transactions contemplated by this
Agreement and the ITC Agreements or (B) impose any conditions or requirements
which could reasonably be expected to have a material and adverse effect on such
Party's or any of its affiliates' current or planned operations or business
activities or its or their prospects; and (ii) be in full force and effect.
(b) unless and until the Make-Ready Arrangements shall be in
place and shall be reasonably satisfactory in form and substance to each of
GridAmerica and Midwest ISO.
(c) unless and until the Parties shall have agreed on procedures
for implementing the Delineation of Functions as contemplated by Section 4.1.2
hereof.
(d) unless and until Midwest ISO shall have made (i) a one-time
payment equal to the amount of the actual costs (including appropriately
allocated internal costs) incurred by National Grid USA (and/or its affiliates)
and the GridAmerica Three as may be reasonably necessary or appropriate for
GridAmerica to obtain such services and acquire such rights to intellectual
property or other assets as are required for GridAmerica to serve as an ITC
within Midwest ISO as contemplated by the ITC Agreements and to perform its
obligations under the Delineation of Functions, as the same may be amended,
modified or otherwise supplemented by mutual agreement of the parties prior to
the Control Date and (ii) a one-time payment to reimburse the GridAmerica Three
for their actual costs (including appropriately allocated internal costs)
incurred in the development of Alliance RTO, such payments to be made as
directed by GridAmerica; provided, however, that the aggregate amount required
to be paid by Midwest ISO pursuant to this paragraph (d) shall not exceed
$36,200,000. All amounts to be paid by Midwest ISO pursuant to this Section
4.1.3(d) shall be supported by documentation submitted to Midwest ISO with
GridAmerica's Notification of Readiness.
(e) unless and until Midwest ISO shall have refunded to Ameren,
with interest, the $18,000,000 payment made by Ameren to leave Midwest ISO
pursuant to the terms of settlement approved in Illinois Power Co., 95 FERC P.
61,183, order on reh'g., 96 FERC P. 61,206 (2001).
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(f) if there shall be in effect any Order or Law restraining,
enjoining or otherwise prohibiting or making illegal the consummation of the
transactions contemplated by this Agreement, the MISO License Agreement or the
ITC Agreements.
4.1.4 GridAmerica shall share GridAmerica's procurement plan for
obtaining third party services and intellectual property and other assets that
are required for GridAmerica to serve as an ITC within Midwest ISO as
contemplated by this Agreement and to perform its obligations under the
Delineation of Functions. GridAmerica will confer with Midwest ISO prior to
entering into any contract with a third party vendor that will result in
expenditures of $500,000 or more for which GridAmerica will seek recovery
pursuant to Section 4.1.3(d).
4.1.5 On and after the Control Date, Midwest ISO shall have
responsibility for the reliability of the GridAmerica System consistent with its
responsibilities under the Delineation of Functions and Article Three, Section
I.B of and Appendices B and E to the Midwest ISO Agreement. Should the
Commission modify the delineation of functions between ITCs and RTOs, the
parties agree to negotiate to effectuate the Commission's intent with respect to
such modified delineation of functions.
4.1.6 On and after the Control Date, GridAmerica and Midwest ISO will
provide transmission service over the Grid America System and in the Ameren,
ATSI, and NIPSCO Zones on a nondiscriminatory basis under, and in accordance
with, the Delineation of Functions and the Midwest ISO Open Access Transmission
Tariff on file with FERC or any successor tariff (the "Midwest ISO OATT"),
subject to and in accordance with the provisions and limitations of Sections
3.3, 11 and 13 hereof Midwest ISO shall administer the Midwest ISO OATT.
4.1.7 Following the Control Date, Midwest ISO shall offer within the
Ameren, ATSI, and NIPSCO Zones, as part of the Midwest ISO OATT, all such
ancillary services as are required by FERC to be offered under the Midwest ISO
Tariff. Midwest ISO shall obtain such services from providers in a manner that
minimizes cost, consistent with its reliability responsibilities and other
obligations under this Agreement. In obtaining such ancillary services, Midwest
ISO shall afford no undue preference or disadvantage to any generation supplier.
The NDTOs shall maintain those schedules in the Open Access Transmission Tariffs
permitting the provision of ancillary services and nothing in this Agreement
shall preclude an NDTO from self-supplying any necessary ancillary services.
Moreover, nothing in this Agreement shall preclude GridAmerica (consistent with
FERC policy and on behalf of the NDTOs) or the NDTOs from participating in any
competitive ancillary services markets that may be created within Midwest ISO.
4.1.8 On and after the Control Date, Midwest ISO will perform
congestion management functions with respect to the GridAmerica System
consistent with its responsibilities under Attachment K of the Midwest ISO OATT
or any other FERC approved congestion management plan that may be administered
by Midwest ISO from time to time.
4.1.9 Legal and equitable title to the respective properties
comprising the GridAmerica System, including all land and land rights, and to
all the Facilities or any facilities with GridAmerica may hereafter build or
acquire, shall remain with the respective NDTOs or
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their affiliates (unless the NDTOs or such affiliates transfer title to another
entity) and is not changed by this Agreement. The NDTOs or their affiliates
shall retain all rights incident to such legal and equitable title, including,
but not limited to, the right, subject to applicable federal or state regulatory
approvals and third party rights, to build, acquire, sell, dispose of, use as
security or convey any part of such property, or use such property for purposes
other than providing transmission services (such as the use of such property for
telecommunications purposes), provided that the exercise of any such rights
shall not impair the reliability of the Transmission System.
4.2 Reliability Coordination Service.
4.2.1 On and after the Control Date, Midwest ISO will be the
Reliability Coordinator for the Ameren, ATSI, and NIPSCO Zones, and shall enter
into any such arrangements as are necessary to perform this function. Midwest
ISO shall supply the service specified in Schedule 2 to this Agreement
("Reliability Coordination Service") together, in conjunction with, and as a
part of, the reliability coordination function performed by Midwest ISO under
the Midwest ISO Agreement.
4.2.2. If appropriate, GridAmerica may take actions to preserve the
security of the GridAmerica System before requesting assistance from Midwest
ISO. GridAmerica shall inform Midwest ISO of any such actions and coordinate
such actions with Midwest ISO.
4.2.3 Notwithstanding any other provision of this Agreement, Midwest
ISO may intercede and direct appropriate actions in its role as the regional
reliability coordinator (the "Reliability Coordinator"). If such Midwest ISO
action is disputed by GridAmerica, Midwest ISO's position shall control pending
resolution of the dispute.
4.2.4 Without limiting Midwest ISO's general obligation under this
Agreement to ensure non-discriminatory service to GridAmerica, Midwest ISO shall
take no discriminatory action in carrying out Reliability Coordination Service
which would advantage the transmission transactions scheduled on the system(s)
of any other Midwest ISO Members, Owners, other ITCs or Users over transactions
scheduled on the GridAmerica System.
ARTICLE 5
PREEXISTING OBLIGATIONS
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5.1 GridAmerica and Midwest ISO will execute agency agreements in
substantially the same form as Appendix G to the Midwest ISO Agreement, for
transmission service provided over distribution facilities owned and operated
within the Ameren, ATSI, and NIPSCO Zones by the Ameren Operating Companies, the
FirstEnergy Operating Companies, or NIPSCO. Notwithstanding any other provision
in Appendix G, the agency authorization shall not be construed as authorizing
Midwest ISO to enter into any agreement that creates any liability, cost or
other obligation to be borne by the owners or by the GridAmerica Three or Grid
America that is not expressly set forth in the Midwest ISO OATT.
5.2 Midwest ISO agrees to assume all rights and obligations under the
Ameren, ATSI, and NIPSCO OATT agreements entered into prior to the Control Date,
including, but not limited
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to agreements for network integration service, firm point-to-point transmission
service, and generator interconnection service. A list of such agreements is
attached as Schedule 3 to this Agreement.
5.3 Midwest ISO will comply with all obligations to provide transmission
service incurred by the Ameren Operating Companies, the FirstEnergy Operating
Companies, and NIPSCO pursuant to agreements with third parties entered into
prior to the effective date of the Ameren, ATSI, and NIPSCO OATTs. Midwest ISO
may satisfy these obligations, in whole or in part, through the agreement for
network integration service between Midwest ISO and the Ameren Operating
Companies, the FirstEnergy Operating Companies, and NIPSCO. A list of such
agreements is attached as Schedule 4 to this Agreement. Such agreements shall
continue to be performed according to their terms until such time as those
agreements may be modified by the Commission; provided, however, that after a
transition period of six years from the Control Date, all such loads shall be
served directly under the Midwest ISO OATT unless the Commission orders
otherwise. The Parties shall commence negotiations to address conversion to the
Midwest ISO after the transition period within three years of the Control Date.
5.4 Midwest ISO acknowledges that Ameren, ATSI, and NIPSCO have certain
obligations to transmission customers as a result of orders issued by the FERC
or other Governmental Authorities. GridAmerica will identify such obligations to
Midwest ISO prior to the Control Date. To the extent that GridAmerica is unable
to perform such obligations following the Control Date, Midwest ISO will use its
best efforts to perform such obligations on GridAmerica's behalf, consistent
with the Midwest ISO Agreement and the Midwest ISO Tariff. Nothing in this
Section 5.4 shall be construed as relieving Ameren, ATSI, the FirstEnergy
Operating Companies or NIPSCO, as the case may be, of these obligations to
transmission customers.
5.5 Nothing in this Article 5 requires Midwest ISO to assume obligations
for transmission service provided outside of the Ameren, ATSI, and NIPSCO Zones
or to perform any act prohibited by law.
ARTICLE 6
SCHEDULING, ATC AND OASIS
-------------------------
6.1 In order to provide for the performance by GridAmerica of its tagging
and scheduling functions in accordance with the Delineation of Functions and the
integration of those functions with the functions to be performed by Midwest
ISO, Midwest ISO shall provide GridAmerica with access to and the right to use
its automated scheduling system maintained and hosted by Midwest ISO and having
the functionality and performance characteristics described on Schedule 6 under
the heading "Scheduling System."
6.2 On or before the Control Date, Midwest ISO shall implement and shall
thereafter maintain an Open Access Same-time Information System or Systems
("OASIS") or successor system(s) pursuant to the Midwest ISO OATT. The OASIS
shall conform to the requirements for such systems as specified by FERC.
12
6.3 On and after the Control Date, GridAmerica and Midwest ISO shall
review and approve, as appropriate, requests for service and schedule
transmission transactions occurring over the GridAmerica System in the manner
set forth in the Delineation of Functions. GridAmerica and Midwest ISO shall
also determine available transmission capability for the GridAmerica System in
the manner set forth in the Delineation of Functions. In order to provide for
the performance by GridAmerica of its AFC functions in accordance with the
Delineation of Functions and the integration of those functions with the
functions to be performed by Midwest ISO, (i) Midwest ISO shall make available
to GridAmerica the data and other services described on Schedule 6 under the
heading "AFC System - Midwest ISO Obligations" and (ii) GridAmerica shall
design, implement, host and maintain an automated AFC system having the
functionality and performance characteristics described on Schedule 6 under the
heading "AFC System - GridAmerica Obligations." GridAmerica agrees that Midwest
ISO shall be a permitted licensee of any third party software or other
intellectual property included in the GridAmerica AFC system and any agreements
with vendors in respect of any components of the GridAmerica AFC system shall be
freely assignable to MISO at no cost (other than ongoing payments under such
agreements that would be the obligation of GridAmerica in the absence of any
such assignment).
ARTICLE 7
RATINGS AND TRANSMISSION MAINTENANCE
------------------------------------
7.1 On and after the Control Date, GridAmerica shall provide to Midwest
ISO ratings and operating procedures for the Facilities that make up the
GridAmerica System subject to dispute resolution as set forth in Appendix D to
the Midwest ISO Agreement if Midwest ISO disagrees. GridAmerica's position shall
prevail pending resolution of the dispute.
7.2 On and after the Control Date, GridAmerica may set its own
transmission maintenance and outage schedules (subject to dispute resolution
pursuant to Section 12 hereof if Midwest ISO objects to such schedules).
GridAmerica shall coordinate such transmission maintenance and outage schedules
with Midwest ISO as described in the Delineation of Functions. With regard to
disputes concerning such schedules, GridAmerica's position shall prevail pending
resolution of the dispute, unless Midwest ISO, acting in its role as Reliability
Coordinator under Section 4.2 hereof, determines that system security is
involved, in which case Midwest ISO's determination shall prevail pending
resolution of the dispute. GridAmerica shall maintain the Facilities in
accordance with Good Utility Practice. In order to provide for the performance
by GridAmerica of its outage scheduling functions in accordance with the
Delineation of Functions, Midwest ISO agrees to design and implement those
changes to its outage scheduler described on Schedule 6 under the heading
"Outage Scheduler".
ARTICLE 8
CONSTRUCTION AND PLANNING; BEST PRACTICES CONSULTANCY
-----------------------------------------------------
8.1 On and after the Control Date, and until the implementation of
planning processes and protocols pursuant to Section 8.2 of this Agreement,
GridAmerica shall plan the GridAmerica System in coordination with Midwest ISO
consistent with the Delineation of
13
Functions and the provisions and protocols provided for in Appendix B to the
Midwest ISO Agreement. Midwest ISO has the same obligations and responsibilities
to GridAmerica that Midwest ISO has to Owners under Appendix B of the Midwest
ISO Agreement.
8.2 The Parties agree to develop and implement streamlined coordinated
planning processes and protocols which grant GridAmerica, as a fully independent
ITC, greater discretion and authority to plan its system to meet customer needs
than is currently granted to Owners under Appendix B to the Midwest ISO
Agreement. To the extent required by applicable law, any such plan shall be
approved by FERC prior to implementation.
8.3 Notwithstanding any other provisions of this Article 8, GridAmerica
shall use commercially reasonable efforts to construct transmission facilities
as directed by Midwest ISO consistent with the provisions of Article Four,
Section I.C of the Midwest ISO Agreement.
8.4 For a period of one year following the Control Date, GridAmerica will
provide a consultancy service to Midwest ISO to assist Midwest ISO in the
development of transmission best practices and will provide Midwest ISO with
advice on enhancing existing assets, asset management and replacement, lifetime
asset rating enhancements, safety matters, latest technology applications, real
time monitoring capability and rating, matters relating to maintenance of
facilities and outage optimization, both before and during implementation of day
ahead and real time markets.
ARTICLE 9
RESPONSIBILITY FOR GENERATOR INTERCONNECTION SERVICE
----------------------------------------------------
On and after the Control Date, GridAmerica shall be responsible for
generator interconnection service within the Ameren, ATSI, and NIPSCO Zones and
shall have the right to establish the terms and conditions thereof, provided
that FERC has approved GridAmerica's procedures and form of agreement for such
interconnection service. Until FERC approval of such procedures and form of
agreement, on and after the Control Date, Midwest ISO's interconnection
protocols shall govern GridAmerica's provision of generator interconnection
service within the Ameren, ATSI, and NIPSCO Zones, except to the extent provided
in Section 5.2. The Parties also recognize that the Commission has issued a
Notice of Proposed Rulemaking regarding generator interconnection agreements and
procedures in Docket No. RM02-1 and intend that GridAmerica will fully comply
with FERC's policy on generator interconnections.
ARTICLE 10
Market and Other Monitoring, Penalties
--------------------------------------
10.1 On and after the Control Date, Midwest ISO, in accordance with FERC
policy and directives, will conduct market monitoring within the Ameren, ATSI,
and NIPSCO Zones consistent with the terms of Article 8 of the Midwest ISO
Agreement.
14
10.2 On and after the Control Date, Midwest ISO shall impose and collect
penalties within the Ameren, ATSI, and NIPSCO Zones as currently provided in
Article 8 of the Midwest ISO Agreement and the Midwest ISO OATT.
ARTICLE 11
RATES AND REVENUE DISTRIBUTION
------------------------------
11.1 In a Section 205 rate case to be filed prior to the operation of
GridAmerica within the Midwest ISO, Midwest ISO will support the recovery of
lost revenues of each of the GridAmerica Three resulting from the elimination of
multiple zonal transmission rate charges and the corresponding revenue
allocation consistent with the treatment of other Owners and ITCs. The Parties
will immediately commence and participate in a collaborative process with the
Owners and other Midwest ISO stakeholders regarding such lost revenues and
distribution method necessary to achieve these goals. Nothing herein shall be
construed as a waiver of any of the Parties' rights to file with FERC for
changes to the Midwest ISO pricing and revenue distribution protocols.
GridAmerica reserves the right to proffer as part of such filing, individually
or with other companies, the Alliance rate design endorsed by FERC in its April
25, 2002 Order on Petition for Declaratory Order in Docket Nos. EL02-65-000, et
al. Nothing in this Agreement will preclude GridAmerica or the NDTOs from
participating in or protesting any such FERC filings and proceedings.
11.2 On and after the Control Date, Midwest ISO shall distribute to
GridAmerica or the NDTOs (at the election of GridAmerica or the NDTOs) on a
monthly basis any amounts due to GridAmerica or the NDTOs which result from the
provision of transmission service under the Midwest ISO OATT, consistent with
Appendix C to the Midwest ISO Agreement and this Agreement. GridAmerica may take
no unilateral action which interferes with or affects the revenue distribution
provided for in Appendix C of the Midwest ISO Agreement or which interferes with
the collection by Midwest ISO of the revenues due it for services it provides or
arranges pursuant to the Midwest ISO OATT, unless such action by GridAmerica has
been approved by the FERC. GridAmerica shall have periodic (no more frequently
than quarterly) audit rights with respect to revenue distribution and shall be
entitled to have any discrepancies resolved within 90 days of the identification
of the problem.
11.3 Rate and Tariff Term Dovetailing.
11.3.1 On and after the Control Date, Midwest ISO shall charge the Ameren,
ATSI, and NIPSCO Zonal Rates for all applicable transactions under the Midwest
ISO OATT. In the development of regional rates, Midwest ISO shall use the
Ameren, ATSI, and NIPSCO Zonal Rates as an input to the rate calculations.
11.3.2 Midwest ISO will support the use of the existing Ameren, ATSI, and
NIPSCO OATT rates and rate design for use within the Ameren, ATSI, and NIPSCO
Zones, respectively, and will permit Ameren, ATSI, and NIPSCO, at their option,
to convert their OATT rates for network integration service to a formula rate or
a stated rate. Midwest ISO will support the use of Ameren, ATSI, and NIPSCO's
rate structure for operations within Midwest ISO to the greatest extent
possible.
15
11.3.3 To facilitate competition in wholesale power markets, Midwest ISO
will either discount its total charges in the Midwest ISO OATT for Drive-Out and
Drive-Through Service or make a Section 205 application with the FERC to lower
the cap on its total charges in the Midwest ISO OATT for Drive-Out and
Drive-Through Service. The new cap on its total charges for Drive-Out and
Drive-Through Service, whether achieved by discount or application to the FERC,
will be formulated to provide flexibility for the Midwest ISO to maximize
revenue while minimizing the charges applicable to this service. The GridAmerica
and the NDTOs may intervene in and/or protest the Section 205 filing described
in this section.
ARTICLE 12
PERFORMANCE MANAGEMENT; DISPUTE RESOLUTION
------------------------------------------
12.1 Each of GridAmerica and Midwest ISO shall designate a senior executive
to serve as performance manager (the "Performance Manager") under this Agreement
and who shall have overall responsibility for the quality of performance by such
Party of its functions pursuant to the Delineation of Functions. The Performance
Managers shall meet at least quarterly to review the respective performance by
each Party of its functions under the Delineation of Functions, the compliance
or lack of compliance with any of the performance standards setout in Schedule 6
and any other matters relating to the quality of performance by the Parties, and
based on such review shall agree on any necessary remedial action and/or methods
to improve performance. In order for such quarterly reviews to be successful,
GridAmerica and Midwest ISO agree to freely exchange performance data and other
information helpful for the evaluation and improvement of performances.
12.2 In order to facilitate the performance by each of GridAmerica and
Midwest ISO under this Agreement, (i) each Party shall prepare and implement
appropriate disaster recovery plans, (ii) will cooperate in the design and
implementation of appropriate testing and trialing protocols, and (iii) Midwest
ISO will provide for necessary training on its systems and will provide a
customer care capability on a twenty-four hour per day, seven days per week
basis.
12.3 Any dispute as to any matter not governed by the terms of the Midwest
ISO OATT and arising under or in connection with this Agreement between or among
GridAmerica and Midwest ISO, any Owner, or any other Member shall be subject to
the same dispute resolution procedures as are set forth in Appendix D to the
Midwest ISO Agreement.
ARTICLE 13
PROVISIONS REGARDING COSTS
--------------------------
13.1 In consideration of GridAmerica's performance of (a) its functions as
an ITC set forth in the Delineation of Functions, Midwest ISO will compensate
GridAmerica in the amount of $9,500,000 per year, (b) its functions performed as
a contractor to Midwest ISO set forth in the Delineation of Functions, Midwest
ISO will compensate GridAmerica in the amount of $1,000,000 per year for each
year or part thereof during which GridAmerica performs such functions as set
forth in Section 4.1.2 hereof and (c) the consultancy services to be provided
pursuant to Section 8.4 for the one year period following the Control Date, and
the resulting cost
16
savings to Midwest ISO, Midwest ISO will compensate GridAmerica in the amount of
$1,500,000 per year. For each twelve month period following the Control Date,
Midwest ISO will pay GridAmerica one-twelfth of the aggregate amount of
compensation payable to GridAmerica for such twelve month period on the 15th day
of each month during such twelve month period, which amount shall be subject to
adjustment as follows:
13.1.1 GridAmerica's annual compensation shall be adjusted to reflect
changes in the CPI Index as follows:
(a) No adjustment shall be made unless on any anniversary of the
Control Date, the CPI Index on such anniversary is at least 103% of the CPI
Index on the Control Date.
(b) On the anniversary of the Control Date on which the CPI
Index is at least 103% of the CPI Index on the Control Date, GridAmerica's
annual compensation shall be adjusted by multiplying the amount of GridAmerica's
compensation in the immediately preceding year by the sum of one plus the
percentage increase in the CPI Index on such anniversary over the CPI Index on
the Control Date.
(c) Thereafter, GridAmerica's annual compensation shall be
adjusted on each subsequent anniversary of the Control Date by multiplying the
amount of GridAmerica's compensation in the immediately preceding year by the
sum of one plus the percentage increase in the CPI Index on such anniversary
date over the CPI Index on the first day of such preceding year.
13.1.2 GridAmerica will implement any necessary modifications to its
operations to support Midwest ISO's locational marginal pricing and other
aspects of standard market design on aunified, region-wide market basis. If as a
result of the foregoing, there is a material change in the functions performed
by GridAmerica, and as a result, either GridAmerica believes that its
compensation should be increased or Midwest ISO believes that its compensation
should be decreased as a result of changes in such functions, either Party, by
written notice to the other may request that the amount of GridAmerica's annual
compensation be the subject of good faith negotiations; provided, however, that
if the Parties are not able to agree, either Party shall have the right to
commence an appropriate proceeding before the FERC to establish whether
GridAmerica's compensation should be changed the amount of any appropriate
change.
13.1.3 In performing functions as contractor to Midwest ISO, GridAmerica
will, to the degree practicable, locate personnel in Midwest ISO's Carmel,
Indiana, facility at no additional cost to Midwest ISO.
13.2 Midwest ISO will make no special assessment or other allocation to
GridAmerica or other Midwest ISO Owners or ITCs of capital costs associated with
the development and implementation of a standard market design. In the event
that a standard market design is required by the FERC or otherwise proposed by
Midwest ISO, Midwest ISO will present its proposal to recover the costs of
development and implementing the standard market design to its stakeholders. The
recovery mechanism proposed by Midwest ISO, including any Section 205
application to the FERC, must provide for recovery of standard market design
costs from all
17
market participants through a user based mechanism consistent with Midwest ISO
Schedule 10. GridAmerica and the NDTOs may intervene in or protest any such
filing or FERC proceeding.
13.3 Midwest ISO will make no special assessment or other allocation to
GridAmerica or other Midwest ISO Owners or ITCs of capitalized costs associated
with the integration of the Southwest Power Pool, its transmission owners or
members into Midwest ISO. Midwest ISO will recover such costs under Midwest ISO
Schedule 10.
ARTICLE 14
INCLUSION OF ADDITIONAL FACILITIES BY GRIDAMERICA
-------------------------------------------------
In the event that GridAmerica acquires or otherwise operates transmission
facilities not identified in Schedule 1 to this Agreement, such facilities shall
not be deemed "Facilities" or become part of the "GridAmerica System" unless
GridAmerica so chooses to designate or assign such facilities, such designation
or assignment may occur on a case-by-case basis or on a continuous basis at
GridAmerica's option. In no event, however, shall any such facilities be deemed
to be "Facilities" or become part of the "GridAmerica System" unless they are
located in or electrically interconnected to Midwest ISO systems.
ARTICLE 15
CHANGES OR AMENDMENTS TO THIS AGREEMENT
---------------------------------------
This Agreement may not be amended or changed without the written agreement
of the Parties and acceptance by FERC, as required.
ARTICLE 16
GENERAL RESPONSIBILITIES
------------------------
16.1 On and after the Control Date, Midwest ISO shall have with respect to
its relationship with GridAmerica, and performance of RTO Services contemplated
by this Agreement, all those responsibilities to GridAmerica, which Midwest ISO
has to other ITC within Midwest ISO, as well as all other obligations of Midwest
ISO set forth in Article Three, Sections III and IV of the Midwest ISO
Agreement.
16.2 Midwest ISO and its directors, officers, employees, contractors and
agents shall, at all times, adhere to the Standards of Conduct set forth in
Appendix A to the Midwest ISO Agreement.
16.3 GridAmerica will be subject to Article Four, Section II of the Midwest
ISO Agreement in the same manner as an Owner.
16.4 On and after the Control Date, GridAmerica shall be subject to Midwest
ISO's Enforcement Authority in the same manner as an Owner under Article Three,
Section V of the Midwest ISO Agreement.
18
16.5 On and after the Control Date, Midwest ISO shall maintain on its
website a listing of all members of GridAmerica holding "Class A Units" and the
number of "Class A Units" held by such member. GridAmerica shall promptly notify
Midwest ISO of any issuance of "Class A Units" and any conversion of "Class B
Units" into "Class A Units."
ARTICLE 17
ASSUMPTION OF LIABILITY
-----------------------
17.1 Midwest ISO shall assume liability for any injury or damage to persons
or property arising from Midwest ISO's own acts or neglect, including the acts
or neglect of its Representatives and contractors, and shall release, indemnify
and hold harmless GridAmerica from and against all damages, losses, claims,
demands, suits, recoveries, costs and expenses, court costs, attorney fees, and
all other obligations by or to third parties, arising from Midwest ISO's gross
negligence or willful misconduct in the performance of its duties under this
Agreement, except in cases where, and only to the extent that, the gross
negligence or willful misconduct of GridAmerica or its Representatives or
contractors contributes to the claimed injury or damage.
17.2 GridAmerica shall assume liability for any injury or damage to persons
or property arising from its own acts or neglect, including the acts or
negligence of its Representatives or contractors, and shall indemnify and hold
harmless Midwest ISO from any damages, losses, claims, demands, suits,
recoveries, costs and expenses, court costs, attorney fees, and all other
obligations by or of third parties, arising from GridAmerica's gross negligence
or willful misconduct in performing its duties under this Agreement, except in
cases where, and only to the extent that, the gross negligence or willful
misconduct of Midwest ISO or its Representatives or contractors contributes to
the claimed injury or damage. For purposes of Article Two, Section VIII(C) of
the Midwest ISO Agreement, GridAmerica and the NDTOs shall be treated as Owners.
Nothing in this Agreement shall preclude GridAmerica from seeking
indemnification or recovery from its NDTOs.
17.3 GridAmerica shall not be liable to Midwest ISO for any action taken at
the direction of Midwest ISO, except in cases of the failure to comport with
good business practice or gross negligence or willful misconduct of GridAmerica.
17.4 If a Party (or its Representative(s) or contractor(s)) entitled to
indemnification or assumption of liability by the other Party under this
Agreement (an "Indemnitee") receives written notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any person or entity who is not a Party to this Agreement or any affiliate of
a Party to this Agreement (a "Third Party Claim") with respect to which
indemnification or assumption of liability is to be sought from the other Party
(an "Indemnifying Party"), the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than thirty
(30) days after the Indemnitee's receipt of written notice of such Third Party
Claim. Such notice shall describe the nature of the Third Party Claim in
reasonable detail. The Indemnifying Party will have the right to participate in
or, by giving written notice to the Indemnitee, to elect to assume the defense
of, any Third Party Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, and the
19
Indemnitee will cooperate in good faith and may participate in such defense at
such Indemnitee's own expense.
17.5 If within ten (10) calendar days after an Indemnitee provides written
notice to the Indemnifying Party of any Third Party Claim, the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 17.4, the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that the Indemnitee may assume its own
defense by giving written notice to the Indemnifying Party, and the Indemnifying
Party will be liable for all reasonable expenses thereof, (i) if the Indemnitee
at any time reasonably determines that there may be a conflict between the
positions of the Indemnifying Party and of the Indemnitee in conducting the
defense of any Third Party Claim, or that there may be legal defenses available
to any Indemnitee different from or in addition to those available to the
Indemnifying Party; or (ii) if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty (20)
calendar days (unless waiting twenty (20) calendar days would prejudice the
Indemnitee's rights) after receiving notice from the Indemnitee that the
Indemnitee believes the Indemnifying Party has failed to take such steps. If,
within ten (10) calendar days after an Indemnitee has provided written notice to
the Indemnifying Party of any Third Party Claim, the Indemnifying Party has not
given written notice to the Indemnitee that such Indemnifying Party has elected
to assume the defense of such Third Party Claim, the Indemnifying Party shall be
liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of any
Third Party Claim. If the Indemnifying Party desires to enter into a settlement
of any Third Party Claim, and such settlement would neither (i) lead to
liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification or
assumption of liability by the other Party hereunder, or (ii) reasonably be
construed as an admission of culpability or liability by the Indemnitee or
expected to create an adverse precedent which could undermine the Indemnitee's
defense of or position with respect to any future claims by third parties; then,
in such event, the Indemnifying Party will give written notice to the Indemnitee
to that effect. If the Indemnitee fails to consent to such settlement within ten
(10) business days after its receipt of such notice, the Indemnitee may assume
or continue the defense of such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses paid or
incurred by the Indemnitee up to the date of such notice. Notwithstanding the
foregoing, the Indemnitee shall have the right to pay, compromise, or settle any
Third Party Claim at any time, provided that in such event the Indemnitee shall
waive any right to indemnify or assumption of liability hereunder unless the
Indemnitee shall have first sought the consent of the Indemnifying Party in
writing to such payment, settlement, or compromise and such consent was either
obtained or was unreasonably withheld or delayed, in which event no claim for
indemnification or assumption of liability with respect thereto shall be waived.
17.6 Any claim by an Indemnitee under this Article 17 which does not result
from a Third Party Claim (a "Direct Claim") will be asserted by giving the
Indemnifying Party reasonably prompt written notice thereof, stating the nature
of such claim in reasonable detail and indicating the estimated amount, if
practicable (provided that such estimate shall in no event
20
limit the amount which the Indemnitee is entitled to recover under this Article
17, but in any event not later than thirty (30) calendar days after the
Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party will
have a period of thirty (30) calendar days within which to respond to such
Direct Claim. If the Indemnifying Party does not respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the
Indemnitee may seek enforcement of its rights under this Agreement.
17.7 If the amount of any loss or damages recoverable under this Article
17, at any time subsequent to the making of a payment in respect thereof, is
reduced by recovery, settlement, or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement, or payment by or
against any other entity, the amount of such reduction, less any costs,
expenses, or premiums incurred in connection therewith (together with interest
thereon from the date of payment thereof at the prime rate as published in The
Wall Street Journal) will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any indemnity payment, the Indemnifying Party
will, to the extent of such indemnity payment, be subrogated to all rights of
the Indemnitee against any third party in respect of the claim to which the
payment relates; provided, however, that until the Indemnitee recovers full
payment of its loss or damages, any and all claims of the Indemnifying Party
against any such third party on account of said payment are hereby made
expressly subordinated and subjected in right of payment to the Indemnitee's
rights against such third party. Without limiting the generality or effect of
any other provision hereof, each such Indemnitee and Indemnifying Party will
duly execute upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights.
17.8 A failure to give timely notice as provided in this Article 17 will
not affect the rights or obligations of any Party hereunder except if, and only
to the extent that, as a result of such failure, the Party which was entitled to
receive such notice was actually prejudiced as a result of such failure.
ARTICLE 18
CONFIDENTIALITY
---------------
18.1 Each Party acknowledges the importance to the other Party of
preserving the confidentiality of the Confidential Information and that a
Disclosing Party will comply with this Article 18 in furnishing Confidential
Information to a Recipient in connection with the matters contemplated by this
Agreement.
18.2 The Recipient shall treat all Confidential Information as the
proprietary, sensitive and strictly confidential information of a Disclosing
Party, and shall not reveal, divulge or disclose any Confidential Information,
at any time or for any reason, to any person or entity, except to the
Representatives of such Recipient who have a need to know such Confidential
Information for the purposes authorized in this Agreement; provided that such
Representatives have been advised and instructed by such Recipient that the
Confidential Information is and is to be treated as strictly confidential in
accordance with this Agreement. The Recipient shall safeguard the Confidential
Information at least to the same extent that it would its own
21
proprietary, sensitive, and confidential information. The Recipient will
instruct all of its Representatives to maintain the confidentiality of all
Confidential Information and will be responsible for any breach of any
obligation set forth in this Article 18 that is caused by any of them.
18.3 Notwithstanding the foregoing provisions of Section 18.2, the
Recipient may disclose Confidential Information to the extent but only to the
extent (a) expressly approved by the Disclosing Party in writing or (b) required
by law, a court, or a governmental authority (each, an "Authority"), but only if
(i) the Recipient attempts to notify the Disclosing Party as far in advance as
practicable prior to making disclosure of its intent to disclose Confidential
Information and of the content and mode of communication of the disclosure, and
(ii) the Recipient cooperates with the Disclosing Party's efforts to obtain a
protective order protecting the Confidential Information from disclosure. In
addition, if disclosure is required by an Authority, the Recipient to the extent
practicable, will (a) promptly notify the Disclosing Party of the circumstances
surrounding the requirement, (b) consult with the Disclosing Party on the
advisability of taking legally available steps to resist or narrow the request
or requirement, and (c) disclose such Confidential Information only after using
all reasonable efforts to comply with clauses (a) and (b) and after cooperating
with the Disclosing Party's reasonable efforts to obtain a protective order or
other reliable assurance that confidential treatment will be accorded to any
portion of the Confidential Information designated for such treatment by the
Disclosing Party. If such protective order or other assurance is not obtained,
the Recipient will furnish only that portion of the Confidential Information
that is required, and will seek, to the extent reasonable under the
circumstances, to obtain assurances that confidential treatment will be accorded
to the Confidential Information by the party(ies) to whom the Recipient is
required to disclose. Anything in this Agreement to the contrary
notwithstanding, a Recipient may disclose Confidential Information to FERC;
provided such disclosure relates to FERC's evaluation or consideration of
matters contemplated by this Agreement and provided that the Recipient seeks to
the maximum extent permitted by law and by FERC's regulations to compel FERC to
keep the information confidential.
18.4 All Confidential Information delivered by a Disclosing Party to a
Recipient pursuant to this Agreement shall be and remain the property of the
Disclosing Party, and such Confidential Information shall be promptly returned
to the Disclosing Party upon request or the termination of this Agreement.
Promptly after performing its obligations under the preceding sentence, the
Recipient will, upon request, furnish the Disclosing Party with a certificate
executed by an officer, certifying such return. That portion of the Confidential
Information that may be found in analyses, compilations, studies or other
documents prepared by or for a Recipient and all Confidential Information that
is oral will be kept by the Recipient subject to the terms of this Agreement or
destroyed. Neither the Recipient nor any of its Representatives shall use the
Confidential Information for any purpose whatsoever except to consider, evaluate
or effectuate matters or services contemplated by this Agreement.
18.5 The obligations of the Parties under this Article 18 shall survive the
termination of this Agreement and shall remain binding for a period of two (2)
years thereafter; provided, however, that a Recipient's obligations under
Section 18.2 with respect to any trade secrets or other proprietary information
that are clearly and conspicuously identified as such by the Disclosing Party at
the time of disclosure and under the third sentence of Section 18.4 shall
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continue, without limitation, and nothing in this Section 18.5 shall limit or be
construed to limit the term of protection of any laws otherwise protecting such
Confidential Information under intellectual property laws.
18.6 Although each of the Parties hereby agrees to use reasonable efforts
to include in Confidential Information furnished to the other Party data and
information believed by it to be relevant to the discussions, consideration and
effectuation, if any, of any actions or matters contemplated by this Agreement,
each Party hereby disclaims and does not make hereby any express or implied
representation or warranty concerning the accuracy or completeness of any
Confidential Information, and no Disclosing Party shall have liability to a
Recipient for Recipient's use of any Confidential Information of the Disclosing
Party. In addition, determination of the amount of Confidential Information to
be disclosed resides solely with the Disclosing Party and disclosure of
information of any nature shall not obligate the Disclosing Party to disclose
any further Confidential Information.
18.7 No license to a Party, under any trademark, patent, copyright or other
intellectual property right is either granted or implied by the conveying of
Confidential Information to such Party. None of the Confidential Information
which may be disclosed or exchanged by the Parties shall constitute any
representation, warranty, assurance, guarantee or inducement by any Party to the
other Parties of any kind, and, in particular, with respect to the
non-infringement of trademarks, patents, copyrights, or any other intellectual
property rights, or other rights of third persons.
18.8 Midwest ISO shall not use or display any logo, tradename, trademark,
service mark or other intellectual property of GridAmerica or the GridAmerica
Three without the prior written consent of GridAmerica to such use or display.
Any use or display by Midwest ISO of any logo, tradename, trademark, service
mark or other intellectual property of GridAmerica shall be deemed to be
pursuant to a non-exclusive, non-transferable, non-assignable license to use
such item solely as consented to by GridAmerica, which license will terminate
upon any termination of this Agreement, and shall in no way be construed to mean
that Midwest ISO has acquired any ownership interest therein. Other issues
related to intellectual property will be addressed in certain of the agreements
described in the Participation Agreement dated July 3, 2002.
ARTICLE 19
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
19.1 In order to induce Midwest ISO to enter into this Agreement,
GridAmerica hereby represents and warrants that the statements contained in this
Section 19.1 are true and correct.
(a) GridAmerica is a Delaware limited liability company, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full power and authority to own, lease, use
and operate its properties and to conduct its business as and where owned,
leased, used, operated and conducted.
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(b) Subject to the receipt by GridAmerica and the GridAmerica Three
of any Required Consents, GridAmerica has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of GridAmerica. This Agreement has been duly
executed and delivered by GridAmerica and, subject to the receipt by GridAmerica
and its affiliates of any Required Consents required by it or any of them,
constitutes the legal, valid and binding obligation of GridAmerica, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(c) Neither the execution and delivery of this Agreement by
GridAmerica nor the consummation of the transactions contemplated hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its certificate of organization or it limited liability
company agreement; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a
default) under, require any consent under, or entitle any person (with
the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of GridAmerica, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which GridAmerica is a party, the effect
of which will have or is reasonably likely to have, a material adverse
effect on the business, properties, condition (financial or otherwise)
or results of operations of GridAmerica.
(d) Subject to the receipt by GridAmerica or any of the GridAmerica
Three of any Required Consents, all authorizations of and exemptions, actions or
approvals by, and all notices to or filings with, any federal Governmental
Authority that are required to have been obtained or made by GridAmerica or any
of the GridAmerica Three, as the case may be, in connection with the execution
and delivery of this Agreement have been obtained or made and are in full force
and effect, and all conditions of any such authorizations, exemptions, actions
or approvals have been complied with.
19.2 No later than 40 days after the Commission issues one or more Final
Orders, GridAmerica shall notify Midwest ISO in writing whether or not such
Final Orders constitute an Approval Order.
19.3 In order to induce GridAmerica to enter into this Agreement, Midwest
ISO hereby represents and warrants that the statements contained in this Section
19.3 are true and correct.
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(a) Midwest ISO is a Delaware non-stock corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with full power and authority to own, lease, use and operate its
properties and to conduct its business as and where owned, leased, used,
operated and conducted.
(b) Midwest ISO has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of Midwest ISO. This Agreement has been duly executed and
delivered by Midwest ISO and, subject to the receipt by Midwest ISO of any
Required Consents required by it, constitutes the legal, valid and binding
obligation of Midwest ISO, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
(c) Neither the execution and delivery of this Agreement by Midwest
ISO nor the consummation of the transactions contemplated hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its articles of incorporation; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a
default) under, require any consent under, or entitle any person (with
the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Midwest ISO, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which Midwest ISO is a party, the effect
of which will have or is reasonably likely to have, a material adverse
effect on the business, properties, condition (financial or otherwise)
or results of operations of Midwest ISO.
(d) All authorizations of and exemptions, actions or approvals by,
and all notices to or filings with, any federal Governmental Authority that are
required to have been obtained or made by Midwest ISO in connection with the
execution and delivery of this Agreement have been obtained or made and are in
full force and effect, and all conditions of any such authorizations,
exemptions, actions or approvals have been complied with.
19.4 No later than 40 days after the Commission issues one or more Final
Orders, Midwest ISO shall notify GridAmerica in writing whether or not such
Final Orders constitute an Approval Order.
19.5 During the term of this Agreement and for a period of 12 months after
the termination hereof, each Party agrees, that without the prior written
consent of the other Party, it
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will not solicit for employment any employees of such other Party; provided
however, that this limitation shall not prevent solicitations addressed to the
public generally or preclude a Party from considering for employment employees
of the other Party who initiated contact with such Party or who responded to any
such general solicitation.
ARTICLE 20
MISCELLANEOUS
-------------
20.1 The obligations of the Parties shall be binding on and inure to the
benefit of their respective heirs, successors, assigns, and affiliates.
20.2 This Agreement constitutes the Parties' entire agreement concerning
the subject matter hereof and may be amended or modified only by a subsequent
agreement in writing. A waiver, discharge, amendment, modification, or
termination of this Agreement or any provision hereof, shall be valid and
effective only if in writing and executed by both Parties. A written waiver of a
right, remedy or obligation under a provision of this Agreement will not
constitute a waiver of the provision itself, a waiver of any succeeding right,
remedy or obligation under the provision, or a waiver of any other right,
remedy, or obligation under this Agreement. Any delay or failure by a Party in
enforcing any obligation or in exercising any right or remedy shall not operate
as a waiver of it or affect that Party's right later to enforce the obligation
or exercise the right or remedy, and a single or partial exercise of a right of
remedy by a Party does not preclude any further exercise of it or the exercise
of any other right or remedy of that Party.
20.3 If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable in any respect or with
respect, such provision in all other respects and the remaining provisions of
this Agreement, shall nevertheless continue in full force and effect without
being impaired or invalidated and shall be enforced to the full extent permitted
by law.
20.4 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same instrument.
20.5 Every notice, consent or approval required or permitted under this
Agreement shall be valid only if in writing, delivered personally or by mail,
confirmed telefacsimile. or commercial courier, and sent by the sender to each
other Party at its address or number below, or to such other address or number
as each Party may designate by notice to the other Party. A validly given
notice, consent or approval will the effective when received if delivered
personally or by telefacsimile, or commercial courier, or certified mail with
return receipt requested, postage prepaid.
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If to GridAmerica, to:
Nick Winser
Senior Vice President
National Grid USA
25 Research Drive
Westborough, MA 01582
(508) 389-2855
If to Midwest ISO, to:
Midwest Independent transmission System Operator, Inc.
701 City Center Drive
Carmel, IN 46032
Attention: James P. Torgerson, President and CEO
Fax No.: (317) 249-5945
20.6 This Agreement shall be construed and enforced according to the laws
of the State of New York (other than the choice of law provisions thereof),
except to the extent preempted by the federal law of the United States of
America.
20.7 As used in this Agreement, the words "herein," "hereof and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular article, section, paragraph, or other subdivision. Unless the
context of this Agreement otherwise requires, (a) words of any gender will be
deemed to include each other gender; (b) words using the singular or plural
number will also include the plural or singular number, respectively; (c) the
terms or "Section" or "subparagraph" will refer to the specified Section or
subparagraph of this Agreement; (d) the term "or" will mean "and/or"; and. (e)
the headings of the sections of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or to affect its
construction.
20.8 If a Recipient breaches or threatens to breach any of its obligations
contained in Article 18 of this Agreement, the Disclosing Party of the pertinent
Confidential Information will be deemed to be irreparably harmed and entitled to
seek the issuance of a temporary restraining order or preliminary injunction
enforcing this Agreement, and to judgment for damages caused by breach, and to
any other remedies provided by applicable law. The non-breaching Party shall
also be entitled to recover its attorneys' fees and costs incurred as a result
of such breach.
20.9 Neither Party may assign its rights or obligations under this
Agreement without the prior written consent of the other Party, which consent
shall not be unreasonably withheld, except that (i) GridAmerica may assign its
rights and obligations hereunder without such consent to any successor entity by
reason of a merger, consolidation, reorganization. sale of assets, spin-off,
foreclosure or other transaction, as a result of which substantially all of the
Facilities are acquired by such successor; and (ii) Midwest ISO may assigns its
rights and obligations hereunder without such consent to any successor entity by
reason of a merger, consolidation, reorganization, sale of assets, spin-off,
foreclosure or other transaction, as a result of which substantially all of the
assets of Midwest ISO are acquired by such successor.
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20.10 The Parties hereto acknowledge and agree that in the performance of
their respective duties and obligations hereunder they are acting as independent
contractors of each other, and neither Party shall represent that an
employer/employee, partnership, joint venture, or agency relationship exists
between them or between GridAmerica any Owner or other Member, nor shall either
Party have the power nor will either Party represent that it has the power to
bind the other Party hereto to any contract or agreement.
20.11 Upon the reasonable request of the other Party, each Party hereto
agrees to take any and all such actions as are necessary or appropriate to give
effect to the terms set forth in this Agreement and are not inconsistent with
the terms hereof.
20.12 This Agreement shall not be construed, interpreted, or applied in
such a manner as to cause GridAmerica to be in material breach, anticipatory or
otherwise, of any agreement (in effect on the Effective Date) between
GridAmerica and one or more third parties for the joint ownership, operation,
sharing (including costs, responsibilities and/or revenues) or maintenance of
any electrical facilities covered by this Agreement. GridAmerica shall discuss
with Midwest ISO any material conflict between any such third-party joint
agreement and this Agreement raised by a third party to such joint agreement,
but the resolution of such a conflict shall be and remain within the sole
discretion of GridAmerica; provided, however, that GridAmerica shall, if
otherwise unresolved, utilize available remedies and dispute resolution
procedures to resolve such conflict, including, but not limited to, submitting
such conflict to FERC for resolution; provided, further, that in no event shall
GridAmerica enter into a resolution of such conflict which would impair the
reliability of the Transmission System.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
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MIDWEST INDEPENDENT TRANSMISSION SYSTEM
OPERATOR, INC.
By: \s\ James P. Torgerson
-------------------------------------
Name: James P. Torgerson
Title: President and CEO
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GRIDAMERICA LLC
By: \s\ Nicholas P. Winser
-----------------------------------
Name: Nicholas P. Winser
Title: Chief Executive Officer
30