Exhibit 10.2
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POWER SUPPLY AGREEMENT
dated as of October 3, 2003
by and between
AMERENENERGY RESOURCES GENERATING COMPANY
And
CENTRAL ILLINOIS LIGHT COMPANY
d.b.a. AMERENCILCO
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.1 Certain Definitions.........................................................................1
Section 1.2 Interpretation..............................................................................4
Section 1.3 Titles and Headings.........................................................................5
ARTICLE II TERM ........................................................................................5
Section 2.1 Term....................................................................................... 5
Section 2.2 Extended Term(s)............................................................................5
ARTICLE III ASSIGNMENT AND MANAGEMENT OF SUPPLY ASSETS............................................................6
Section 3.1 Assignment..................................................................................6
Section 3.2 Limited Irrevocable Agency..................................................................6
Section 3.3 Scope of Agency.............................................................................6
ARTICLE IV SCOPE OF SERVICES......................................................................................6
Section 4.1 Electric Energy.............................................................................6
Section 4.2 Requirements................................................................................7
Section 4.3 Daily and Hourly Scheduling.................................................................7
Section 4.4 Black Start Capability......................................................................8
Section 4.5 Annual Load Plan and Planned Outage Schedule................................................8
Section 4.6 Transmission................................................................................9
ARTICLE V DELIVERY AND BILLING....................................................................................9
Section 5.1 Delivery and Title..........................................................................9
Section 5.2 Measurement................................................................................10
Section 5.3 Billing....................................................................................10
Section 5.4 Records; Inspection........................................................................10
ARTICLE VI COMPENSATION..........................................................................................11
Section 6.1 CILCO Payments.............................................................................11
Section 6.2 AERG Payments..............................................................................11
ARTICLE VII DAMAGES; LIMITATION OF LIABILITY.....................................................................12
Section 7.1 Damages....................................................................................12
Section 7.2 Limitation of Liability....................................................................12
ARTICLE VIII ARBITRATION.........................................................................................13
Section 8.1 Arbitration................................................................................13
Section 8.2 Acknowledgment.............................................................................13
ARTICLE IX FORCE MAJEURE.........................................................................................13
Section 9.1 Force Majeure..............................................................................13
Section 9.2 Consequences of Force Majeure Event........................................................14
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ARTICLE X ASSIGNMENT.............................................................................................14
ARTICLE XI DEFAULT; TERMINATION AND REMEDIES.....................................................................15
Section 11.1 AERG Default..........................................................................15
Section 11.2 CILCO Default.........................................................................15
Section 11.3 Remedies..............................................................................16
Section 11.4 Effect of Termination.................................................................16
Section 11.5 Provisions Surviving Termination......................................................16
ARTICLE XII REPRESENTATIONS AND WARRANTIES.......................................................................16
Section 12.1 Representations and Warranties of AERG................................................16
Section 12.2 Representations and Warranties of CILCO...............................................17
ARTICLE XIII INDEMNIFICATION.....................................................................................18
ARTICLE XIV MISCELLANEOUS........................................................................................18
Section 14.1 Notices...............................................................................18
Section 14.2 Governing Law; Submission to Jurisdiction; Selection of Forum.........................19
Section 14.3 No Third Party Beneficiaries..........................................................19
Section 14.4 Severability..........................................................................19
Section 14.5 Waivers...............................................................................20
Section 14.6 Confidentiality.......................................................................20
Section 14.7 Entire Agreement and Amendments.......................................................20
APPENDICES
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Appendix A System Capacity Requirement
Appendix B Supply Assets to be Assigned to AERG
Appendix C Supply Assets Subject to Irrevocable Agency
Appendix D Strike Price
Appendix E Interruptible Customers
Appendix F Points of Interconnection
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POWER SUPPLY AGREEMENT
----------------------
This Power Supply Agreement ("Agreement") dated as of October 3, 2003, is
entered into by and between AmerenEnergy Resources Generating Company, an
Illinois corporation ("AERG"), and, Central Illinois Light Company, an Illinois
corporation ("CILCO"); (AERG and CILCO are sometimes referred to herein
individually as a "Party" and collectively as the "Parties").
W I T N E S S E T H :
WHEREAS, CILCO is a public utility company as defined in Section 3-105 of
the Illinois Public Utility Act (220 ILCS 5/3-105) and currently is engaged in
the generation, purchase, transmission, distribution and sale of electric energy
in the State of Illinois; and
WHEREAS, CILCO and AERG have entered into a Contribution Agreement,
pursuant to which, AERG will acquire from CILCO certain of CILCO's generation
assets; and
WHEREAS, CILCO has certain other power supply assets, which pursuant to
this Agreement will be assigned to, or managed by, AERG; and
WHEREAS, upon consummation of this Agreement and the Contribution
Agreement, CILCO will require a source of electric energy in order to fulfill
its obligations to provide safe and reliable electric transmission and
distribution services as required by the Illinois Public Utilities Act; and
WHEREAS, AERG will be the owner of certain generation facilities, located
in Illinois, will have access to certain other electric supply assets and will
be engaged in the sale of electric energy, capacity and ancillary services; and
WHEREAS, AERG desires to deliver and sell, and CILCO desires to receive and
purchase, the full requirements of CILCO's System Customers, as defined below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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Section 1.1 Certain Definitions.
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As used in this Agreement, (i) the terms set forth below in this Section
l.1 shall have the respective meanings so set forth and (ii) the terms defined
elsewhere in this Agreement shall have the meanings therein so specified.
"AERG Event of Default" shall have the meaning specified in Section 11.1.
"Affiliate" shall mean with respect to a corporation, partnership or other
entity, each other corporation, partnership, or other entity that directly, or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such corporation, partnership, or other entity.
"Agreement" shall mean this Power Supply Agreement, together with all
Exhibits and Schedules hereto.
"Annual Load Plan" shall have the meaning specified in Section 4.5.
"Bankruptcy" shall mean any case, action or proceeding under any
bankruptcy, reorganization, debt arrangement, insolvency or receivership law or
any dissolution or liquidation proceeding commenced by or against a Person and,
if such case, action or proceeding is not commenced by such Person, such case or
proceeding shall be consented to or acquiesced in by such Person or shall result
in an order for relief or shall remain undismissed for 90 days.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banks in Chicago, Illinois are authorized or obligated by Law or executive
order to close.
"Capacity Charge" shall have the meaning specified in Section 6.1(a).
"Capacity" shall mean the electric load-carrying capability provided by
AERG to CILCO as measured at a Point of Interconnection, expressed in megawatts.
"CILCO Control Area" shall mean an area within the metered boundaries of
the CILCO control area certified by MAIN and recognized by NERC, which
encompasses CILCO's meter-bounded electrical system.
"CILCO Event of Default" shall have the meaning specified in Section 11.2.
"CILCO Service Area" shall mean the geographic area within which CILCO was
lawfully entitled and obligated under the Illinois Public Utility Act to provide
electric power and energy to retail customers as of the Effective Date.
"Contract Year" shall mean, in the case of the First Contract Year, the
period beginning on the Effective Date and ending on December 31 of the calendar
year in which such Effective Date occurs; and, in the case of subsequent
Contract Years, means a calendar year beginning on January 1 and ending on
December 31. First Contract Year refers to the first such period commencing on
the Effective Date; Second Contract Year refers to the calendar year immediately
following such First Contract Year; and so on.
"Contribution Agreement" shall mean that certain Contribution Agreement,
dated as of the date first written above, by and between CILCO and AERG.
"Effective Date" shall mean the date on which occurs the closing of the
transactions contemplated by the Contribution Agreement.
"Electric Energy" shall have the meaning specified in Section 4.1.
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"Emergency Condition" shall mean a condition of the electrical system that
would cause a MAIN Callable Reserve Emergency as described in MAIN Guide 5B or
similar condition as described by any successor reliability organization. The
Callable Reserve requirement of each Reserve Sharing member is located in MAIN
Guide 5A, Appendix A. CILCO's current contingency requirement is approximately
38 megawatts.
"Energy Charge" shall have the meaning specified in Section 6.1(b).
"Extended Term" shall mean any period subsequent to December 31, 2004,
during which time this Agreement is in effect pursuant to Section 2.2.
"FERC" shall mean the Federal Energy Regulatory Commission or any other
successor agency thereto.
"Force Majeure Event" shall have the meaning specified in Section 9.1.
"Governmental Authority" shall mean any nation or government (including any
foreign nation or government), any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including without
limitation any government authority, agency, department, board, commission or
instrumentality of the United States, any state of the United States, or any
political subdivision of any of the foregoing.
"Initial Term" shall have the meaning specified in Section 2.1.
"ISO" shall mean any Person that becomes responsible as an independent
system operator under applicable FERC guidelines for the transmission system
serving CILCO customers and AERG facilities.
"MAIN" shall mean the Mid-America Interconnected Network, Inc., a
reliability council under Section 202 of the Federal Power Act, and the regional
security coordinator under NERC, established pursuant to the MAIN bylaws and
guides, as currently in effect or as amended, or any successor to MAIN.
"MWHRS" shall mean Electric Energy expressed in megawatt-hours.
"NERC" shall mean the North American Electric Reliability Council, or any
successor thereto.
"Network Resources" shall mean Network Resources as defined in CILCO's FERC
Open Access Transmission Tariff ("OATT").
"Person" shall mean any natural person, corporation, partnership, firm,
association, trust, unincorporated organization, Governmental Authority or any
other entity whether acting in an individual, fiduciary or other capacity.
"Planned Outage Schedule" shall mean a schedule for a Planned Outage or
Outages of Generation Units established in accordance with Section 4.5.
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"Planned Outage" shall mean the removal of a Generation Unit from service
to perform work on specific components that is scheduled in accordance with
Section 4.5.
"Point of Interconnection" shall mean the metered points of interconnection
as delineated in Appendix F.
"Requirement of Law" shall mean any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any federal, state, local or other governmental authority or
regulatory body (including those pertaining to electrical, building, zoning,
environmental and occupational safety and health requirements) or an applicable
tariff filed with any federal, state, local or other governmental authority or
regulatory body.
"Strike Price" for a Supply Asset shall be as delineated in Appendix D.
"Summer Month" shall mean each of June, July, August and September.
"System Capacity Requirement" for each month shall be as delineated on
Appendix A hereto, unless adjusted by CILCO pursuant to Section 4.5.
"System Customers" shall mean those customers within the CILCO Service Area
which CILCO is obligated to serve under the Illinois Public Utilities Act.
Section 1.2 Interpretation.
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In this Agreement, unless a clear contrary intention appears:
(i) the singular includes the plural and vice versa;
(ii) the terms "dollars" and "$" shall mean United States dollars;
(iii)reference to any Person includes such Person's successors and assigns
but, in the case of a Party, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(iv) reference to any gender includes the other gender;
(v) reference to any agreement (including this Agreement), document,
instrument or tariff means such agreement, document, instrument or
tariff as amended or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms
hereof;
(vi) reference to any Requirement of Law means such Requirement of Law as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time, including, if applicable, rules and
regulations promulgated thereunder;
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(vii)reference to any Section means such Section of this Agreement, and
references in any Section or definition to any clause means such
clause of such Section or definition;
(viii)"hereunder", "hereof" ,"hereto" and words of similar import shall be
deemed references to this Agreement as a whole and not to any
particular Section or other provision hereof or thereof;
(ix) "including" (and with correlative meaning "include") means including
without limiting the generality of any description preceding such
term;
(x) any rule of construction or interpretation requiring this Agreement to
be construed or interpreted for or against any Party as drafter shall
not apply to the construction or interpretation hereof; and
(xi) relative to the determination of any period of time, "from" means
"from and including", "to" means "to but excluding" and "through"
means "through and including."
Section 1.3 Titles and Headings.
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Section and Appendix titles and headings in this Agreement are inserted for
convenience of reference only and are not intended to be a part of, or to affect
the meaning or interpretation of, this Agreement.
ARTICLE II
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TERM
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Section 2.1 Term.
----
This Agreement shall have a term commencing on the Effective Date and
ending on December 31, 2004 (the "Initial Term"), unless earlier terminated as
provided in this Agreement.
Section 2.2 Extended Term(s).
----------------
This Agreement may be extended beyond the Initial Term by the mutual
written agreement of the parties.
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ARTICLE III
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ASSIGNMENT AND MANAGEMENT OF SUPPLY ASSETS
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Section 3.1 Assignment.
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On the Effective Date CILCO shall permanently assign to AERG all of CILCO's
rights and obligations under the Supply Assets listed in Appendix B. To the
extent the Parties fail to obtain the necessary consents required to accomplish
assignment from CILCO to AERG, of any Supply Asset listed on Appendix B, such
Supply Asset shall be deemed to be listed on Appendix C, and subject to the
provisions of Section 3.2.
Section 3.2 Limited Irrevocable Agency.
--------------------------
CILCO hereby appoints AERG as its exclusive, limited agent to manage all of
CILCO's rights and obligations under the Supply Assets listed in Appendix C.
Such agency is irrevocable for the duration of the Term and is coupled with an
interest under this Agreement.
Section 3.3 Scope of Agency.
---------------
For the Supply Assets listed in Appendix C, AERG, in its sole discretion,
shall have sole and exclusive rights to schedule, nominate and otherwise manage
volumes deliverable from, or any other rights associated with, such assets. AERG
shall pay the amounts described in Section 6.2 for use of the Supply Assets
during the term. AERG, in its sole discretion, may take any actions on behalf of
CILCO as may be reasonably necessary to implement this Agreement; provided,
however that any such actions shall not materially adversely affect any rights
and obligations CILCO may have under the Supply Assets related to periods
subsequent to the Term of this Agreement; and provided further, that AERG's
limited agency shall not create or result in the imposition of any other duties
of AERG to CILCO, including any duties which may otherwise arise by operation of
law. Notwithstanding anything to the contrary in this Agreement, AERG shall not
be liable to CILCO except in cases of negligence or willful misconduct and only
to the extent consistent with the limitation of damages in Article VII.
ARTICLE IV
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SCOPE OF SERVICES
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Section 4.1 Electric Energy.
---------------
All electric energy provided by AERG under this Agreement ("Electric
Energy") shall be in the form of three-phase alternating current having a
nominal frequency of approximately sixty cycles per second and a harmonic
content consistent with the requirements of the Institute of Electrical and
Electronic Engineers Standard No. 519.
6
Section 4.2 Requirements.
------------
(a) AERG shall provide and CILCO shall receive firm electric power and
energy in the quantities set forth below. CILCO shall be responsible for all
transmission services applicable to transactions under this Agreement.
(b) Commencing on the Effective Date through December 31, 2004, and
subject to Article IX and Section 4.4 of this Agreement, CILCO shall purchase
and AERG shall provide the System Capacity Requirement and all Electric Energy
requirements for its System Customers from AERG.
(c) In each year, CILCO shall be entitled to purchase associated energy up
to the level of, and ancillary services consistent with, the System Capacity
Requirement purchased in that year under this Agreement.
(d) CILCO shall use any Electric Energy and Capacity purchased under this
Agreement to serve only its System Customers, and CILCO shall not resell to
non-tariffed customers any Electric Energy provided by AERG under the terms of
this Agreement. As part of the Annual Load Planning process pursuant to Section
4.5 of this Agreement, CILCO shall report to AERG its actual and expected System
Customer obligations.
(e) CILCO, consistent with the terms and conditions of any special
contracts and its Illinois Commerce Commission Tariff, shall, upon the request
of AERG, immediately curtail deliveries of Electric Energy to its interruptible
customers as delineated on Appendix E.. To the extent CILCO fails to comply with
such a request of AERG, AERG shall be excused from performing hereunder and
shall not be liable for any damages under Article VII or otherwise. If an
interruptible customer is eligible under CILCO's tariff to "buy through" an
interruption and elects to do so, CILCO shall purchase such "buy through" power
from AERG at prevailing market prices.
(f) CILCO, consistent with prudent utility practice, shall maintain and
operate the Supply Assets delineated in Appendix C. To the extent CILCO fails to
provide capacity and Energy from such Supply Assets pursuant to Section 3.3,
AERG shall be excused from performance hereunder and shall not be liable for any
damages under Article VII or otherwise.
Section 4.3 Daily and Hourly Scheduling.
---------------------------
(a) By 9:00 a.m. on any day during the Term, CILCO shall provide AERG with
its best estimate of the Electric Energy requirements by hour for its System
Customers for the next day. CILCO shall provide hourly updates to such best
estimate throughout each day.
(b) The estimates provided pursuant to Section 4.3(a) shall be non-binding
and shall not limit AERG's obligations to meet CILCO's requirements as otherwise
provided herein; provided, however, to the extent CILCO fails to notify AERG of
any significant changes to CILCO's best estimates, CILCO shall be responsible
for any related imbalance charges or costs incurred by AERG and AERG shall not
be liable to CILCO for any damages otherwise payable under Article VII.
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Section 4.4 Black Start Capability.
----------------------
CILCO shall prepare and maintain a written plan setting forth the
procedures that would be used to restart the Generation Units after a
system-wide blackout. CILCO shall provide a copy of such plan to AERG for its
review and approval (which shall not be unreasonably withheld or delayed) as to
its overall feasibility (after such approval, the "Black Start Plan"). CILCO
shall provide for system restoration in accordance with the Black Start Plan. In
addition, CILCO may request that AERG implement a test of such plan from time to
time. AERG shall cooperate with CILCO, or any other entity performing the
restoration function, in integrating the Black Start Plan into a system
restoration plan and shall participate in training and restoration drills. In
the event that system restoration is necessary, AERG shall use commercially
reasonable efforts to respond to all directions from the entity performing the
restoration.
Section 4.5 Annual Load Plan and Planned Outage Schedule.
--------------------------------------------
(a) On or before (i) the Effective Date, in the case of the First Contract
Year, and (ii) the September l immediately preceding the commencement of any
subsequent Contract Year, CILCO shall deliver to AERG a written load plan (the
"Annual Load Plan") for such Contract Year, which shall set forth (A) the
maximum hourly peak load expected in each week in each calendar month (or
portion of a calendar month) during such Contract Year, (B) the expected
requirements for the ancillary services in each calendar month (or portion of a
calendar month) during such Contract Year and (C) the average of maximum load
day, average of average load day and average of minimum load day data for each
of the following time periods in each calendar month (or portion of a calendar
month) during such Contract Year: (1) the weekday NERC on-peak period (5x16);
(2) the weekday off-peak period (5x8); (3) the weekend off-peak period (2x24);
and (4) any holiday off-peak period (1x24).
(b) Following the receipt of an Annual Load Plan, AERG may request that
representatives of CILCO meet with its representatives for purposes of
discussing and reviewing such Annual Load Plan. In any event, AERG shall, within
thirty days of its receipt of an Annual Load Plan, (i) communicate the
availability of the Generation Units to be used by CILCO in meeting its MAIN/ISO
reliability and reporting requirements for the Contract Year and (ii) provide
CILCO with a Planned Outage Schedule. In connection with the development of the
Annual Load Plan and the Planned Outage Schedule for a Contract Year, CILCO and
AERG may discuss and agree upon specific terms and values associated with the
implementation of voluntary curtailment actions for the Contract Year in
question. Such terms and values may be adjusted by agreement of the Parties as
appropriate during the applicable Contract Year.
(c) To the extent CILCO anticipates that due to load growth or other
factors the System Capacity Requirement will be insufficient to meet actual
system load, CILCO by September 1 of that year preceding any Contract Year may
request that the System Capacity Requirement be increased by up to 4% for any
Contract Year. For any amounts in excess of the System Capacity Requirement as
adjusted pursuant to this Section 4.5, CILCO may request additional capacity and
such capacity and any associated energy deliveries will be provided by AERG at
mutually agreeable market prices.
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(d) To the extent CILCO experiences a loss of System Customer load due to
such customer's opting for unbundled delivery services, CILCO may request up to
a 10% reduction in System Capacity Requirement in any Contract Year. Such
reduction shall be permanent and AERG shall have no obligation to provide System
Capacity Requirement, Electric Energy and ancillary services above the reduced
amount. Nothing in this section shall limit CILCO's ability to request and
increase in the System Capacity Requirement under Section 4.5(c) of up to 4% in
any subsequent year.
(e) AERG shall be responsible for all operation and maintenance of the
Generation Units transferred under the Contribution Agreement and shall bear all
costs and liabilities related thereto.
(f) CILCO shall designate AERG's Generation Units as Network Resources for
each Contract Year in respect to an Annual Load Plan. Notwithstanding any such
designation, such Generation Units may or may not be used by AERG, at AERG's
sole discretion, to meet CILCO's requirements for Electric Energy.
(g) AERG shall undertake to schedule and/or adjust Planned Outages of
Generation Units for a Contract Year in accordance with Prudent Utility Practice
and so as to schedule such outages during non Summer Months and/or low use
periods and to minimize Planned Outages during the Summer Months.
(h) Upon request of AERG, CILCO shall provide weekly updates to AERG
regarding an Annual Load Plan to reflect any changes in expectations or
circumstances. AERG shall provide to CILCO, at a minimum, weekly updates
regarding Generation Unit status, condition, and availability.
Section 4.6 Transmission.
------------
(a) CILCO shall schedule the transmission within the CILCO Control Area of
Electric Energy delivered by AERG to CILCO for CILCO's System Customers.
(b) The Parties acknowledge that this Agreement provides only for delivery
by AERG of Electric Energy to the Points of Interconnection and each Party is
responsible for obtaining and scheduling any necessary transmission services.
ARTICLE V
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DELIVERY AND BILLING
--------------------
Section 5.1 Delivery and Title.
------------------
Electric Energy purchased by CILCO from AERG shall be delivered by AERG to
CILCO, and title to, and risk of loss for, such Electric Energy shall pass to
CILCO at any Point of Interconnection with CILCO's transmission system.
9
Section 5.2 Measurement.
-----------
The amount of Electric Energy delivered by AERG to CILCO under this
Agreement during a given hour shall be determined by:
(a) taking the total Electric Energy delivered by or on behalf of AERG for such
hour from (x) outside the CILCO Control Area to an interconnection with the
CILCO transmission system, as established by scheduled deliveries of such
Electric Energy at such interconnection, for delivery into the CILCO Control
Area, and (y) Generation Units in the CILCO Control Area, as established by
readings from meters at such facilities, less (z) the amount of Electric Energy
delivered by AERG to CILCO during the period covered by a Force Majeure Event
which is not obtained or supplied through AERG's Supply Assets or other
generation capacity; and
(b) subtracting from the total under Section 5.2(a) the amount of scheduled
deliveries of Electric Energy (grossed-up for line losses, if not already so
grossed-up) delivered by or on behalf of AERG for such hour to (x) an
interconnection between the CILCO transmission system and the transmission
system of a third party, for delivery outside of the CILCO Service Area and (y)
non-CILCO customers in CILCO's Service Area.
Section 5.3 Billing.
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(a) Within fifteen days after the end of each calendar month, AERG shall
render an invoice to CILCO setting forth (i) all amounts due to AERG pursuant to
this Agreement for the immediately preceding calendar month and (ii) all amounts
remaining unpaid from previous calendar months. Any amounts due to CILCO from
AERG shall, at AERG's option, be credited on the invoice or paid to CILCO under
the same terms specified herein for CILCO's payments to AERG. Failure by AERG to
render such invoice within the fifteen-day period shall not preclude AERG from
subsequently rendering an invoice for the relevant calendar month.
(b) Subject to the provisions of Section 5.4, CILCO shall pay any balance
set forth in any invoice under Section 5.3(a) by Automated Clearing House
("ACH") transfer of immediately available funds to the account specified in the
invoice within ten days after receipt of the invoice.
(c) If CILCO disputes any amount in any invoice issued by AERG, the amount
not in dispute shall be timely paid by CILCO, and any disputed amount which is
ultimately determined to have been payable shall be paid within ten (10) days
following such determination. Any dispute which is not promptly resolved by
mutual agreement of the Parties shall be resolved in accordance with the
provisions of Section 8.1.
Section 5.4 Records; Inspection.
-------------------
(a) Each Party shall keep and maintain all records as may be necessary or
useful in performing or verifying any calculations or charges made pursuant to
this Agreement or in verifying such Party's performance hereunder. All such
records shall be retained by each Party for at least three calendar years
following the calendar year in which such records were created. Each Party shall
make such records available to the other Party for inspection and copying, at
the other Party's expense, upon reasonable notice during such Party's regular
business hours. Each
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Party and its agents, including auditors, shall have the right, upon thirty days
written notice prior to the end of an applicable three calendar year period, to
request copies of such records. Each Party shall provide such copies, at the
other Party's expense, within thirty days of receipt of such notice or shall
make such records available to the other Party and its agents, including
auditors, in accordance with the foregoing provisions of this Section 5.4.
(b) Each of the Parties, as well as their respective representatives,
shall have the right, at their sole expense, upon reasonable notice and during
normal working hours, to examine the records of the other Party to the extent
reasonably necessary to verify the accuracy of any statement, charge or
computation relating to charges under this Agreement.
ARTICLE VI
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COMPENSATION
------------
Section 6.1 CILCO Payments
--------------
CILCO shall pay to AERG, each calendar month during the Initial Term, the
following amounts:
(a) an amount equal to $7,235/MW x System Capacity Requirement (the
"Capacity Charge");
(b) an amount equal to $17.05/MWHR x actual MWHRS taken by CILCO as
measured in accordance with Section 5.2 of this Agreement (the "Energy Charge");
(c) an amount reflecting any mutually agreed to pricing for additional
capacity purchased, and energy delivered, in excess of the System Capacity
Requirement pursuant to Section 4.5(c); and
(d) for each ancillary service required to be provided by AERG to CILCO, a
rate equivalent to the rate in the corresponding Schedule of CILCO's
FERC-approved Ancillary Service Tariff ("AST"), or any successor tariff, in
accordance with the following:
- ---------------------------------------------------------------------------------------------- -----------------------
AST Ancillary Services Corresponding AST
Schedule
- ---------------------------------------------------------------------------------------------- -----------------------
Reactive Power Supply and Voltage Control from Generation Sources Schedule 2
- ---------------------------------------------------------------------------------------------- -----------------------
Regulation and Frequency Response Service Schedule 3
- ---------------------------------------------------------------------------------------------- -----------------------
Energy Imbalance Service Schedule 4
- ---------------------------------------------------------------------------------------------- -----------------------
Retail Energy Imbalance Service Schedule 4A
- ---------------------------------------------------------------------------------------------- -----------------------
Operating Reserve - Spinning Reserve Service Schedule 5
- ---------------------------------------------------------------------------------------------- -----------------------
Operating Reserve - Supplemental Reserve Service Schedule 6
- ---------------------------------------------------------------------------------------------- -----------------------
Section 6.2 AERG Payments
-------------
AERG shall pay to CILCO, each calendar month during the Initial Term, an
amount equal to the applicable Strike Price for any particular Supply Asset, as
delineated in Appendix D,
11
multiplied by the total MWHRS requested and delivered during such calendar month
from that Supply Asset.
ARTICLE VII
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DAMAGES; LIMITATION OF LIABILITY
--------------------------------
Section 7.1 Damages.
-------
If AERG fails to deliver up to the System Capacity Requirement, as adjusted
pursuant to Section 4.5, then, as the sole and exclusive remedy for such
failure, AERG shall pay to CILCO an amount representing (i) the excess, if any
between the cost of cover and the amount AERG would have been entitled to charge
CILCO for such Electric Energy under this Agreement, plus (ii) any commercially
reasonable charges, expenses or commissions incurred necessarily by CILCO
directly in connection with effecting cover, less (iii) expenses saved in
consequence of AERG's breach. Notwithstanding the foregoing: (i) AERG shall not
be liable for the failure to deliver Electric Energy under this Agreement if
AERG's performance is excused under Article III, Section 4.5 or Article IX; and
(ii) under no circumstances shall AERG's liability for damages exceed $30
million, in the aggregate, for any contract year, or portion thereof.
The Parties agree that it would be difficult, if not impossible, to prove
the amount of damages suffered in the event of a breach of this Agreement, and
that in the event of such a breach, AERG would pay to CILCO the amounts
specified in this Section 7.1 as liquidated damages and not as a penalty. The
Parties agree that such sums make a reasonable forecast of probable actual loss,
because of the difficulty in estimating with exactness the damage that might
result.
Section 7.2 Limitation of Liability.
-----------------------
In no event or under any circumstances shall either Party (including such
Party's Affiliates and such Party's and such Affiliates' respective directors,
officers, employees and agents) be liable to the other Party (including such
Party's Affiliates and such Party's and such Affiliate's respective directors,
officers, employees and agents) for any special, incidental, exemplary,
indirect, punitive or consequential damages or damages in the nature of lost
profits, whether such loss is based on contract, warranty or tort (including
intentional acts, errors or omissions, negligence, indemnity, strict liability
or otherwise). Subject to Section 7.1, which may further limit the recovery of
damages, a Party's liability under this Agreement shall be limited to direct,
actual damages, and all other damages at law or in equity are waived.
12
ARTICLE VIII
------------
ARBITRATION
-----------
Section 8.1 Arbitration.
-----------
Any dispute or need for interpretation arising out of this Agreement shall
be submitted to binding arbitration by one arbitrator who has not previously
been employed by either Party, has knowledge of and experience with the
competitive electric power sales industry and does not have a direct or indirect
interest in either party or the subject matter of the arbitration. Such
arbitrator shall either be as mutually agreed by the parties within twenty (20)
business days after written notice from either Party requesting arbitration, or
failing agreement, shall be selected under the expedited rules of the American
Arbitration Association.
Either Party may initiate arbitration by written notice to the other Party
and the arbitration shall be conducted according to the following: (a) the
arbitrator shall be limited to selecting only one of the two final proposals
submitted by the Parties; (b) each Party shall divide equally the cost of the
arbitrator and the hearing and each Party shall be responsible for its own
expenses and those of its counsel and representatives; (c) the arbitrator shall
issue the decision within sixty (60) days of selection and such decision shall
include an explanation to the parties of the decision in a written opinion; (d)
the hearing shall be conducted on a confidential basis without continuance or
adjournment; and (e) evidence concerning the financial position or
organizational make-up of the parties, any offer made or the details of any
negotiation prior to arbitration and the cost of the parties of their
representatives and counsel shall not be permissible.
Section 8.2 Acknowledgment.
--------------
Each Party understands and agrees that it shall not be able to bring a
lawsuit concerning any dispute that may arise under this Agreement which is
covered by the arbitration provision, other than to compel arbitration or to
enforce an arbitration award.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Section 9.1 Force Majeure.
-------------
AERG and CILCO shall not be liable for or on account of any damage, loss
(including profit from operations), injury or expense that may be occasioned by
any failure, interruption or delay in the delivery or receipt of power and
energy hereunder, when such failure, interruption or delay is due to (a) AERG's
compliance with any Emergency Condition procedure of the ISO or (b) forces
beyond the reasonable control of the Party experiencing the difficulty,
including, but not limited to, fires, strikes, labor stoppages, epidemics,
floods, earthquakes, lightening storms, ice, acts of God, riots, civil
disturbances, civil war, invasion, insurrection, military or usurped power, war,
sabotage, explosions, failure of suppliers of materials or fuel, inability to
obtain or ship material, fuel or equipment because of the effect of similar
causes on suppliers or carriers,
13
or restraint by government agencies prohibiting or failing to approve acts
necessary to performance hereunder or permitting any such act only subject to
unreasonable conditions (collectively, "Force Majeure Events"); provided,
however, that upon learning of any failure, interruption or delay of the
forgoing type, the Party experiencing the difficulty shall make diligent effort
to notify the other Party of the failure, interruption or delay and shall use
due, and in its judgment, practicable diligence to remove the cause or causes
thereof; and provided further, that AERG or CILCO shall not be required by the
foregoing provisions to settle a strike or labor negotiations except in the best
judgment of the Party experiencing the difficulty such settlement seems
advisable.
Section 9.2 Consequences of Force Majeure Event.
-----------------------------------
During a Force Majeure Event:
(a) AERG shall continue to have the obligation to supply Electric Energy;
(b) if AERG is unable to provide Electric Energy to CILCO during such
period using its existing generation capacity and Supply Assets, it shall supply
such energy at prevailing "market rates;"
(c) CILCO's obligation to pay the Capacity Charge under Section 6.1(a)
shall continue as and when such charges are due pursuant to this Agreement; and
(d) to the extent CILCO is required as a result of a Force Majeure Event
to procure additional capacity to satisfy MAIN requirements, and such additional
capacity is procured by AERG;
(i) during the first 120 consecutive days while any such requirement
is imposed CILCO shall pay AERG an amount equal to the capacity charge
incurred for such additional capacity, less the Capacity Charge due to AERG
for the same time period, but only to the extent such amount is greater
than zero;
(ii) thereafter, CILCO shall pay to AERG an amount equal to AERG's
cost for obtaining such additional capacity.
ARTICLE X
---------
ASSIGNMENT
----------
Neither Party may assign its rights or obligations under this Agreement without
the prior written consent of the other Party, which shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, a Party may assign this
Agreement and all of its rights and obligations hereunder to any Affiliate or to
any third party in connection with the transfer or sale of all or substantially
all of its business, or to which it may transfer all or substantially all of its
assets to which this Agreement relates, or in the event of its merger,
consolidation, change in control or similar transaction, without obtaining the
prior written consent of the other party,
14
provided that the assigning party remains liable under this Agreement and that
the third party assignee or surviving entity assumes in writing all of its
obligations under this Agreement.
ARTICLE XI
----------
DEFAULT; TERMINATION AND REMEDIES
---------------------------------
Section 11.1 AERG Default.
------------
The occurrence and continuation of any of the following events or
circumstances at any time during the Initial Term or any Extended Term, except
to the extent caused by or resulting from an act or omission of CILCO in breach
of this Agreement, shall constitute an event of default by AERG ("AERG Event of
Default"):
(a) AERG fails to pay any sum due from it hereunder on the due date
thereof and such failure is not remedied within 10 Business Days after receipt
of written notice thereof from CILCO,
(b) AERG's Bankruptcy; or
(c) AERG fails in any material respect to perform or comply with any other
obligation in this Agreement, which failure materially and adversely affects
CILCO, and if reasonably capable of remedy, is not remedied within 60 days after
CILCO has given written notice to AERG of such failure and requiring its remedy;
provided, however, that if such remedy cannot reasonably be cured within such
60-day period, such failure shall not constitute a AERG Event of Default if AERG
has promptly commenced and is diligently proceeding to cure such default.
Section 11.2 CILCO Default.
-------------
The occurrence and continuation of any of the following events or
circumstances at any time during the Initial Term or any Extended Term, except
to the extent caused by, or resulting from, an act or omission of AERG in breach
of this Agreement, shall constitute an event of default by CILCO ("CILCO Event
of Default"):
(a) CILCO fails to pay any amount due from it pursuant to Section 5.3(b)
hereof on the due date thereof and such failure is not remedied within 10
Business Days after receipt of written notice thereof from AERG;
(b) CILCO's Bankruptcy; or
(c) CILCO fails in any material respect to perform or comply with any
other obligation in this Agreement, which failure materially and adversely
affects AERG, and if reasonably capable of remedy, is not remedied within 60
days after AERG has given written notice to CILCO of such failure and requiring
its remedy; provided, however, that if such remedy cannot reasonably be cured
within such 60-day period, such failure shall not constitute a
15
CILCO Event of Default if CILCO has promptly commenced and is diligently
proceeding to cure such default.
Section 11.3 Remedies.
--------
If an Event of Default has occurred, the non-defaulting Party, in its sole
discretion, may take one or more of the following actions:
(a) proceed pursuant to the dispute resolution procedures set forth in
Article VIII; or
(b) by 60 days advance written notice to the defaulting Party, the
non-defaulting Party may terminate this Agreement and seek damages.
In the case of an Event of Default or a termination of this Agreement, the
rights and remedies provided for in this Agreement shall be the exclusive
remedies available to the Parties, and all other rights and remedies existing at
law or in equity are waived.
Section 11.4 Effect of Termination.
---------------------
Upon the termination of this Agreement, all rights and obligations under
the Supply Assets listed in Appendices B and C shall be re-assigned and revert
back to CILCO.
Section 11.5 Provisions Surviving Termination.
--------------------------------
The provisions of Section 5.4 (Records; Inspection) and Article VII
(Damages; Limitation of Liability), Article XI (Default; Termination and
Remedies) Article XIII (Indemnification) and Section 14.6 (Confidentiality)
shall survive any termination of this Agreement.
ARTICLE XII
-----------
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 12.1 Representations and Warranties of AERG.
--------------------------------------
AERG hereby makes the following representations and warranties to CILCO:
(a) AERG is a corporation duly organized, validly existing and in good
standing under the laws of Illinois and has the legal power and authority to own
its properties, to carry on its business as now being conducted and to enter
into this Agreement and carry out the transactions contemplated hereby and
perform and carry out all covenants and obligations on its part to be performed
under and pursuant to this Agreement;
(b) the execution, delivery and performance by AERG of this Agreement have
been duly authorized by all necessary corporate action;
16
(c) the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
provisions of this Agreement do not and will not conflict with or constitute a
breach of or a default under any of the terms, conditions or provisions of any
legal requirements, or any organizational documents, agreement, deed of trust,
mortgage, loan agreement, other evidence of indebtedness or any other agreement
or instrument to which AERG is a party or by which it or any of its property is
bound, or result in a breach of or a default under any of the foregoing;
(d) this Agreement constitutes the legal, valid and binding obligation of
AERG 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;
(e) there is no pending, or to the knowledge of AERG, threatened action or
proceeding affecting AERG before any Governmental Authority, which purports to
affect the legality, validity or enforceability of this Agreement; and
(f) AERG has all necessary approvals from Governmental Authorities for it
to perform its obligations under this Agreement.
Section 12.2 Representations and Warranties of CILCO.
---------------------------------------
CILCO hereby makes the following representations and warranties to AERG:
(a) CILCO is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois and has the legal power and
authority to own its properties, to carry on its business as now being conducted
and to enter into this Agreement and carry out the transactions contemplated
hereby and perform and carry out all covenants and obligations on its part to be
performed under and pursuant to this Agreement;
(b) the execution, delivery and performance by CILCO of this Agreement
have been duly authorized by all necessary corporate action;
(c) the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
provisions of this Agreement do not and will not conflict with or constitute a
breach of or a default under any of the terms, conditions or provisions of any
legal requirements, or its articles of incorporation or bylaws, or any deed of
trust, mortgage, loan agreement, other evidence of indebtedness or any other
agreement or instrument to which CILCO is a party or by which it or any of its
property is bound, or result in a breach of or a default under any of the
foregoing;
(d) this Agreement constitutes the legal, valid and binding obligation of
CILCO 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;
17
(e) there is no pending, or to the knowledge of CILCO, threatened action
or proceeding affecting CILCO before any Governmental Authority, which purports
to affect the legality, validity or enforceability of this Agreement; and
(f) CILCO has all necessary approvals from Governmental Authorities for it
to perform its obligations under this Agreement.
ARTICLE XIII
------------
INDEMNIFICATION
---------------
Each Party shall indemnify and hold harmless the other Party, its officers,
directors, agents and employees from and against any and all claims, demands,
actions, losses, liabilities, expenses (including reasonable legal fees and
expenses), suits and proceedings of, from or brought by any third party of any
nature whatsoever for personal injury, death or property damage to each other's
property or facilities or personal injury, death or property damage to third
parties caused by the negligence or willful misconduct of the indemnifying Party
that arise out of or are in any manner connected with the performance of this
Agreement, except to the extent such injury or damage is attributable to the
negligence or willful misconduct of, or breach of this Agreement by, the Party
seeking indemnification hereunder. Title, and all risk relating to, all Electric
Energy purchased by CILCO under this Agreement shall pass to CILCO at the
respective Points of Interconnection. CILCO shall indemnify AERG for liability
from Electric Energy once sold and delivered at such Points of Interconnection,
and AERG shall indemnify CILCO for liability from Electric Energy prior to its
delivery at such Points of Interconnection.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
Section 14.1 Notices.
-------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given if (i) delivered in person (to the individual
whose attention is specified below) or via facsimile (followed immediately with
a copy in the manner specified in clause (ii) hereof), (ii) sent by prepaid
first-class registered or certified mail, return receipt requested, or (iii)
sent by recognized overnight courier service, as follows:
to CILCO:
Central Illinois Light Company
300 Liberty Street
Peoria, Illinois 61602-1404
Attention: General Counsel
18
to AERG:
AmerenEnergy Resources Generating Company
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, Missouri 63103
Attention: General Counsel
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner. All notices and other communications
hereunder shall be deemed effective either (i) the day of receipt when delivered
by hand, facsimile or overnight courier; or (ii) three Business Days from the
date deposited in the mail in the manner specified above.
Section 14.2 Governing Law; Submission to Jurisdiction; Selection of Forum.
-------------------------------------------------------------
This agreement shall be governed by, and construed in accordance with, the
laws of the State of Illinois, without regard to its principles of conflicts of
laws. Subject to Article VII, each party hereto agrees that it shall bring any
action or proceeding in respect of any claim arising out of or related to this
Agreement or any ancillary document or the transactions contained in or
contemplated hereby or thereby, whether in tort or contract or at law or in
equity, exclusively in a court of the State of Illinois (the "Chosen Courts")
and (i) irrevocably submits to the exclusive jurisdiction of the chosen courts,
(ii) waives any objection to laying venue in any such action or proceeding in
the chosen courts, (iii) waives any objection that the chosen courts are an
inconvenient forum or do not have jurisdiction over any party and (iv) agrees
that service of process upon a Party in any such action or proceeding shall be
effective if notice is given in accordance with Section 13.1 of this Agreement.
Section 14.3 No Third Party Beneficiaries.
----------------------------
This Agreement is intended to be solely for the benefit of the Parties and
their successors and permitted assigns and is not intended to and shall not
confer any rights or benefits on any third party not a signatory hereto. The
Parties' successors and permitted assigns shall be bound by the provisions of
this Agreement.
Section 14.4 Severability.
------------
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof or thereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefore in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
19
Section 14.5 Waivers.
-------
The failure of either Party hereto to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of a Party thereafter to enforce each and every such provision. A waiver under
this Agreement must be in writing and state that it is a waiver. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
Section 14.6 Confidentiality.
---------------
Each Party agrees that it will treat in confidence all documents, materials
and other information marked "Confidential" or "Proprietary" by the disclosing
Party ("Confidential Information") which it shall have obtained during the
course of the negotiations leading to, and its performance of, this Agreement
(whether obtained before or after the date of this Agreement). As used herein,
the term "Confidential Information" shall not include any information which (i)
is or becomes available to a Party from a source other than the other Party,
(ii) is or becomes available to the public other than as a result of disclosure
by the receiving Party or its agents or (iii) is required to be disclosed under
applicable law or judicial, administrative or regulatory process, but only to
the extent it must be disclosed.
Section 14.7 Entire Agreement and Amendments.
-------------------------------
This Agreement supersedes all previous representations, understandings,
negotiations and agreements, either written or oral, between the Parties or
their representatives with respect to the supply and delivery of Electric Energy
and constitutes the entire agreement of the Parties with respect thereto.
[SIGNATURE PAGE FOLLOWS]
20
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Power Supply Agreement as of the date first
above written.
CENTRAL ILLINOIS LIGHT COMPANY, an
Illinois corporation d.b.a. AMERENCILCO
By: /s/ G.L. Rainwater
------------------------------------
Name: G.L. Rainwater
Title: President
AMERENENERGY RESOURCES GENERATING
COMPANY, an Illinois corporation
By: /s/ Daniel F. Cole
------------------------------------
Name: Daniel F. Cole
Title: President
21
Appendix A
System Capacity Requirement
22
Appendix B
Supply Assets to be Assigned to AERG
23
Appendix C
Supply Assets Subject to Irrevocable Agency
24
Appendix D
Strike Price
25
Appendix E
Interruptible Customers
26
Appendix F
Points of Interconnection
27