SECTION 6.4(b) OF THIS DOCUMENT CONTAINS CONFIDENTIAL PROTECTED INFORMATION -
SUBJECT TO PROTECTIVE ORDER
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Exhibit 10.88
POWER PURCHASE AGREEMENT
BETWEEN
BIG RIVERS ELECTRIC CORPORATION,
AND
LG&E ENERGY MARKETING INC.
July 15 , 1998
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
TABLE OF CONTENTS
Page
Section 1: Definitions......................................................1
Section 2: Effective Date and Termination...................................2
Section 3: Unit Power Sales Agreement.......................................5
Section 4: Big Rivers' Purchases from LEM..................................11
Section 5: Scheduling and Ancillary Services...............................19
Section 6: Metering, Pricing and Billing...................................24
Section 7: Audit Rights....................................................30
Section 8: Cost Determination Changes......................................31
Section 9: Remedies........................................................31
Section 10: Governing Law..................................................33
[Section 11: Reserved].....................................................33
Section 12: Uncontrollable Forces..........................................33
[Section 13: Reserved].....................................................34
[Section 14: Reserved].....................................................35
Section 15: Liability and Indemnity........................................35
Section 16: Entire Agreement...............................................36
Section 17: Continuation of Agreement......................................36
Section 18: General Provisions.............................................38
Exhibit A Points of Delivery For Unit Power
Exhibit B Points of Delivery For Purchases By Big Rivers
Exhibit C Points of Metering
Schedule 3.3(a) Monthly Margin Payment
- i -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
POWER PURCHASE AGREEMENT
BETWEEN
BIG RIVERS ELECTRIC CORPORATION
AND
LG&E ENERGY MARKETING INC.
This POWER PURCHASE AGREEMENT ("Agreement") dated this 15th day of
July , 1998, is between Big Rivers Electric Corporation, a Kentucky rural
electric cooperative ("Big Rivers"), and LG&E Energy Marketing Inc., an Oklahoma
corporation ("LEM"). LEM and Big Rivers are sometimes referred to herein
collectively as "Parties" and individually as "Party."
RECITALS
WHEREAS, Big Rivers and LEM are parties to certain other agreements
as are set forth in the New Participation Agreement dated April 6, 1998 among
Big Rivers, LEM, WKEC, Leaseco, and Station Two Subsidiary ("Participation
Agreement"), which contemplates the execution and delivery of this Agreement;
WHEREAS, Big Rivers and LEM wish to enter into a unit power sales
agreement for the duration of Phase I pursuant to which Big Rivers will sell and
LEM will purchase the net output of each of the Generating Plants (exclusive of
the portion of the net output of Station Two reserved for HMP&L);
WHEREAS, during Phase II, Big Rivers will lease the Tangible Assets
to Leaseco and assign its right to operate Station Two and purchase Station Two
Power to Station Two Subsidiary, and LEM may purchase from Leaseco and Station
Two Subsidiary the net output of each of the Generating Plants (exclusive of the
portion of the net output of Station Two reserved for HMP&L); and
WHEREAS, throughout the Term of this Agreement, Big Rivers wishes to
purchase and LEM wishes to sell firm power in the quantities and in accordance
with the terms specified herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth
in this Agreement, the Parties agree as follows:
Section 1: Definitions
As used herein, the terms set forth in Exhibit X attached to the
Participation Agreement have the meanings set forth therein when used with
initial capitalization, whether singular or plural,
- 1 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
unless that term is also expressly defined in this Agreement, in which event the
definition in this Agreement shall control.
Section 2: Effective Date and Termination
2.1 Term of this Agreement. This Agreement will be effective on the
Effective Date and shall terminate on the earlier of (a) the December 31 of that
Year which is closest to the twenty-fifth (25th) anniversary of the Effective
Date; or (b) the date of a termination of this Agreement pursuant to Section 2.2
or pursuant the relevant provisions of the Guaranty or the Station Two
Agreement.
2.2 Default and Termination.
(a) Subject to the terms and conditions of this Section 2.2 and of
Section 12, the occurrence of any of the following events, unless otherwise
excused pursuant to the terms of this Agreement, shall constitute a default
under this Agreement:
(i) Failure by a Party to make any payments as and when due
hereunder;
(ii) Failure of a Party to perform any material duty imposed
on it by this Agreement;
(iii) Any attempt by a Party to transfer an interest in this
Agreement in breach of Article 16 of the Participation
Agreement;
(iv) Failure of Big Rivers during Phase I to deliver all Unit
Output to LEM in accordance with this Agreement
including without limitation Section 3.2, for more than
30 days, whether or not consecutive, in any 365 day
period;
(v) Failure of LEM to deliver to Big Rivers all amounts of
Power which Big Rivers is entitled to receive from LEM
in accordance with this Agreement for more than 30 days,
whether or not consecutive, in any 365 day period;
(vi) Except with respect to the Chapter 11 Case, any filing
of a petition in bankruptcy or insolvency, or for
reorganization or arrangement under any bankruptcy or
insolvency laws, or voluntarily taking advantage of any
such laws by answer or otherwise or the commencement of
involuntary proceedings under any such laws by a Party
if such proceedings
- 2 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
are not withdrawn or dismissed within 60 days after such
institution (in which case default occurs on the 61st
day after filing);
(vii) Assignment by a Party for the benefit of creditors;
(viii) Allowance by a Party of the appointment of a receiver
or trustee of all or a material part of its property if
such receiver or trustee is not discharged within 60
days after appointment (in which case default occurs on
the 61st day after appointment); or
(ix) Failure, inability or refusal of a Party to cure a
default or breach under (a) during Phase I, the Cost
Sharing Agreement, the Facilities Operating Agreement,
the Transmission Service and Interconnection Agreement
or the Participation Agreement which gives rise to a
termination of such other Phase I Agreement or (b)
during Phase II, the Lease, the Transmission Service and
Interconnection Agreement or the Participation Agreement
which gives rise to a termination of such Phase II
Agreement; or during either Phase I or Phase II, any
termination by a Party of any of the Agreements
described above in breach or default thereof.
Any Party in default under any provision of this Agreement shall be referred to
as the "Defaulting Party" and the other Party shall be referred to as the
"Non-Defaulting Party."
(b) The Non-Defaulting Party shall have the right to give the
Defaulting Party a written notice of default ("Notice of Default"), which shall
describe the default in reasonable detail and state the date by which the
default must be cured, which shall be at least 30 days after receipt of the
Notice of Default, except as to a default under Section 2.2(a)(i) which shall be
3 days after receipt of notice, and under Section 2.2(a)(iii) through (ix),
inclusive, as to which there will be no cure right. If within the 3 day period
with respect to a default under Section 2.2(a)(i) the Defaulting Party cures the
default, or if within the 30 day period with respect to defaults under Section
2.2(a)(ii) (that are not also defaults under Sections 2.2(a)(iii) through
(viii), inclusive) the Defaulting Party cures the default, or if the default
under Section 2.2(a)(ii) is one that cannot in good faith be corrected within
such 30 day period and the Defaulting Party certifies to the Non-Defaulting
Party that it
- 3 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
agrees to cure such default, certifies a reasonable date by which the cure will
be effected, begins to correct the default within the 30 day period and
continues corrective efforts with diligence until a cure is effected, the Notice
of Default shall be inoperative and the rights of the Non-Defaulting Party under
Section 2.2(c) shall not be triggered with respect to such default under Section
2.2(a)(i) or Section 2.2(a)(ii), provided that the cure is effected within the
period allotted or such extension as to which the Parties in good faith consent.
(c) If the Defaulting Party's default is one for which there is no
cure right, or if the Defaulting Party fails or refuses to cure a default for
which a cure right is available hereunder within the period described hereunder,
the Non-Defaulting Party shall have, in addition to any rights such Party may
have by law or otherwise, the right to terminate this Agreement upon 30 days'
notice to the Defaulting Party of its intent to do so. The termination rights
provided for in this Section 2.2 are in addition to, and not in lieu of, any
rights to terminate this Agreement as are set forth in the Guaranty or the
Station Two Agreement, which termination rights shall be cumulative.
(d) Notwithstanding anything contained elsewhere in this Agreement
to the contrary and without extending any period otherwise specified in this
Agreement for cure or remedy, in the event (1) a breach or default by the
Defaulting Party under this Agreement is curable as contemplated in Section
2.2(b) of this Agreement and (2) such breach or default is of such a nature that
it cannot be remedied or cured by repair to or replacement of or construction of
Tangible Assets or properties the use or enjoyment of which are required in
order for the Non-Defaulting Party to enjoy all of its material rights or
interests as contemplated in this Agreement, then such breach or default must be
cured within 180 days after notice thereof is delivered by the Non-Defaulting
Party(s) or the Non-Defaulting Party(s) shall have the right to terminate this
Agreement upon two (2) Business Days prior written notice delivered to the
Defaulting Party. Any re-occurrence of a breach or default of the type described
in the preceding sentence that arises from a common cause or a continuation of
the same event or legal proceeding as the first occurrence following its remedy
or cure by the Defaulting Party shall also be grounds for termination of this
Agreement if not once again cured or remedied within thirty (30) Business Days
after notice thereof delivered by the Non-Defaulting Party. In the event the
breach or default of the type described in the first sentence of this Section
2.2(d) reoccurs more than twice in any consecutive 365-day period, it shall be
deemed to be no longer curable and the Non-Defaulting Party shall be entitled to
exercise its termination rights provided for in (c) above, in addition to all of
its other rights and remedies hereunder.
- 4 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(e) Except as expressly set forth elsewhere in this Section 2.2, in
Section 9 of this Agreement, in Sections 8.2 and 8.3 of the Participation
Agreement, or in any other Operative Document (including without limitation, any
provision of such Operative Document that may permit a Party or any of its
Affiliates to set-off amounts that it may be owed under that document against
amounts that it may owe to the other Party or any of its Affiliates under this
Agreement), the obligations and rights of the Parties under this Agreement shall
be independent and not be affected by either Party's performance or failure to
perform under the Facilities Operating Agreement, the Transmission Services and
Interconnection Agreement, the Cost Sharing Agreement, the Lease, the
Participation Agreement and any other Operative Document or other contract or
agreement contemplated therein. Notwithstanding anything in this Agreement to
the contrary, Big Rivers' failure to purchase required minimum quantities of
Power hereunder shall not constitute a default but shall simply give rise to the
rights of LEM under Section 6.4(b).
(f) Notwithstanding anything contained herein to the contrary,
during Phase I, upon the occurrence of a total condemnation with respect to all
or substantially all of the Assets, which condemnation causes the termination of
the Cost Sharing Agreement, Section 3 of this Agreement (Unit Power Sales) and
all related provisions of this Agreement implementing the Parties' rights and
obligations with respect to the Unit Power Sales Agreement set forth in Section
3 shall be null and void and all remaining provisions of this Agreement shall
remain in full force and effect.
Section 3: Unit Power Sales Agreement
3.1 Phase I Only. The provisions of this Section 3, Unit Power Sales
Agreement, will terminate as of the termination of Phase I. In the event that
the Effective Date of this Agreement is the Phase II Effective Date, the Unit
Power Sales contemplated herein will never occur and this Section 3 will never
become effective.
3.2 Purchase of Unit Output. During Phase I, Big Rivers will sell to LEM
and LEM will purchase from Big Rivers the Unit Output under the terms and
conditions set forth in this Agreement from the generating units that constitute
the Generating Plants. Big Rivers is obligated to sell the Unit Output only when
the dedicated generating units are operational. LEM is entitled to all Unit
Output including, but not limited to, the Generating Plants' capability to
provide generation-based Ancillary Services. Big Rivers agrees to direct the
Operator of the Generating Plants (during Phase I) to use its commercially
reasonable efforts, consistent with Prudent Utility Practice to maximize the
amount of Unit Output available for sale to LEM, and consistent with Big Rivers'
obligations and rights under the Facilities Operating Agreement and the Station
Two Agreement, Big Rivers agrees it will not interfere with the Operator's
attempts, consistent with Prudent Utility Practice and Big Rivers' rights and
obligations under the
- 5 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Facilities Operating Agreement and the Station Two Agreement, to maximize the
efficiency and output of the Generating Plants. Big Rivers, through its
Operator, will deliver Unit Output to LEM at the Points of Delivery specified in
Exhibit A with the output of each Generating Plant to be delivered to its
respective Point of Delivery.
3.3 Payments Due. LEM's sole payment obligations with respect to the Unit
Output to be purchased by it pursuant to this Unit Power Sales Agreement, and
Big Rivers' sole entitlement to payment for such Unit Output, is as set forth in
this Section 3.3 as adjusted pursuant to Section 6.6, if applicable.
(a) Initial Fixed Payment; Annual Fixed Payments; Monthly
Margin Payments.
(i) LEM shall pay to Big Rivers on the Phase I Effective
Date an Initial Fixed Payment of $57.0 million as
adjusted pursuant to Section 9.3 of the Participation
Agreement (PP Price adjustment).
(ii) Beginning on the second anniversary of the Phase I
Effective Date and each subsequent Year during Phase
I, LEM shall pay Big Rivers an Annual Fixed Payment
of $31.5 million as adjusted pursuant to Section 9.3
of the Participation Agreement (PP Price adjustment),
as follows: LEM shall pay the Annual Fixed Payments
in equal monthly installments of $2,625,000 as
adjusted pursuant to Section 9.3 of the Participation
Agreement, with the first monthly installment to be
paid on the second anniversary of the Phase I
Effective Date and each remaining monthly installment
to be paid on the first day of each calendar month up
to and including the first day of the calendar month
in which Phase I terminates; provided that, if the
first installment is due on a day other than the
first day of the month, LEM shall prorate that
installment by the ratio that the remaining number of
days in the month bears to the total number of days
in that month. If Phase II commences prior to the
second anniversary of the Phase I Effective Date, LEM
shall be entitled to a refund of the Initial Fixed
Payment prorated by the ratio that the remaining
number of days until the second anniversary of the
Phase I Effective Date bears to the total number of
days between the Phase I Effective Date and the
second anniversary of the Phase I Effective Date. If
Phase II commences after the second anniversary of
the Phase I Effective Date and Phase I terminates on
a day other than the last day of a month, LEM shall
be entitled to a refund of the installment of the
Annual Fixed Payment paid for such month prorated by
the ratio that the remaining number of days
- 6 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
in the month bears to the total number of days in that
month. If Big Rivers elects to reduce the Contract
Limits pursuant to Section 4.3(e) of this Agreement, the
Annual Fixed Payment provided for in this Section 3.3(a)
as adjusted pursuant to Section 9.3 of the Participation
Agreement shall be increased effective on January 1 of
the Year in which the reduction becomes effective to an
amount equal to the product of the Annual Fixed Payment
as adjusted pursuant to Section 9.3 of the Participation
Agreement multiplied by the sum of one (1) plus the
CCAP. The monthly installment of the Annual Fixed
Payment due on such January 1 and on the first day of
each month during the remainder of Phase I shall be
adjusted accordingly. The Parties acknowledge that Big
Rivers may elect to reduce the Contract Limits under
Section 4.3(e) of this Agreement on more than one
occasion, and that the Annual Fixed Payment and
associated monthly installments shall be adjusted as
provided in this Section 3.3(a) on each such occasion.
Subject to the right of set-off provided for in Section
9.3 of this Agreement or in any other Operative Document
(which shall not be an abatement), except as expressly
provided in Section 3.3(a)(iv) or Section 12.2 of this
Agreement, Section 16.3 of the Transmission Service and
Interconnection Agreement and Section 9.1.2 and 9.2.2 of
the Cost-Sharing Agreement, and except as provided in
the Station Two Agreement, there is to be no abatement
in the obligation of LEM to make the payments specified
in this Section 3.3(a) and in Section 3.3(b), regardless
of the actual Unit Output of the Generating Plants or
whether there has been any damage or destruction of any
portion or all of the Tangible Assets.
- 7 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(iii) LEM shall also pay to Big Rivers a Monthly Margin
Payment during Phase I as follows: The first Monthly
Margin Payment shall be due from LEM to Big Rivers on
the second occurrence of a 25th day of a month after the
Effective Date, and a Monthly Margin Payment will be due
from LEM to Big Rivers on each 25th day of the month
thereafter until and including the earlier of January
25, 2012 (at which time no further Monthly Margin
Payments will accrue), or the 25th day of the month
immediately preceding the Phase II Effective Date. Each
Monthly Margin Payment is due in the amount set forth in
the Schedule of Monthly Margin Payments attached to this
Agreement as Schedule 3.3(a); provided, that if the
Effective Date occurs on other than the first day of a
month, then the Monthly Margin Payment applicable to the
month in which the Effective Date occurs will be the
amount designated on Schedule 3.3(a) for the month in
which the Effective Date occurred, multiplied by the
ratio of (A) the number of days between the Effective
Date and the last day of the month to (B) the total
number of days in that month. In the event the Term
shall end prior to January 25, 2012, but on a date other
than the last day of a month, then LEM shall pay to Big
Rivers a prorated share of the Monthly Margin Payment
for the month in which the Term ended based on the ratio
by which the number of days in that month through and
including the date on which the Term ended bears to the
total number of days in that month.
(iv) Notwithstanding any provisions of Section 3.3(a)(iii)
to the contrary, in the event during Phase I: (A)
this Agreement shall be terminated but the Station
Two Agreement shall thereafter continue in effect,
then so long as the Station Two Agreement shall
continue in effect (through January 25, 2012 in
accordance with Schedule 3.3(a)), LEM shall continue
to pay to Big Rivers a portion of the Monthly Margin
Payments equal to (x) the relevant Monthly Margin
Payment, multiplied by (y) a fraction, the numerator
of which is the amount determined by subtracting from
312 the total number of megawatts of capacity from
Station Two that are reserved for use by Henderson
during that month, and the denominator of which is
the amount determined by
- 8 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
subtracting from 1771 the total number of megawatts of
capacity from Station Two that are reserved for use by
Henderson during that month, and (B) the Station Two
Agreement shall be terminated but this Agreement shall
thereafter continue in effect, then the Monthly Margin
Payments that shall thereafter be owing by LEM to Big
Rivers shall be reduced by the amount established by
multiplying (x) by (y), as described in Subclause (A),
above. No cessation or modification of the Monthly
Margin Payments pursuant to this Subsection 3.3(a)(iv)
shall constitute or be construed as a waiver or bar to
any right of Big Rivers to seek to recover any damages
resulting from any breach or default by LEM hereunder,
or by any other LG&E Party under any of the other
Operative Documents, to which Big Rivers otherwise would
be entitled.
(v) Notwithstanding anything contained in Section
3.3.(a)(iv) of this Agreement to the contrary, upon
any termination of the Station Two Agreement that
would otherwise result in a reduction in the Monthly
Margin Payments pursuant to that Section 3.3(a)(iv),
such reduction shall be suspended, and the relevant
Monthly Margin Payments shall once again become
payable by LEM hereunder, if, within 60 days after
the termination of the Station Two Agreement, Big
Rivers shall have taken such actions, in compliance
with Section 13.8 of the Station Two Agreement, as
shall be necessary to prevent the LG&E Parties (or
any of them) from having the right, pursuant to
Section 13.8 of that agreement, to an abatement
against the Annual Fixed Payments or the Rental
Payments (as applicable) due by them to Big Rivers,
to a reimbursement of the Initial Fixed Payment or
Initial Rental Payment, to a reduction in the
Contract Limits, or to terminate any of the Operative
Documents other than the Station Two Agreement, each
as contemplated in Section 13.8 of that agreement;
provided, that in the event those LG&E Parties shall
at any time thereafter have the immediate right to
take any of the foregoing actions or exercise any of
the foregoing rights or remedies in accordance with
Section 13.8, then the provisions of this Subsection
3.3(a)(v) shall no longer suspend operation of
Subsection 3.3(a)(iv)(B).
- 9 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(vi) Big Rivers agrees with LEM that LEM shall have the
right to set-off against the Monthly Margin Payments
that may become due and owing to Big Rivers
hereunder, at any time following the second
anniversary of the Effective Date, the monthly
installments of principal and interest that may be
due and owing by Big Rivers to LEM under the
Promissory Note (LEM Advances) in accordance with the
terms and conditions of such note, and any such
set-off by LEM shall be deemed to satisfy its
obligations to Big Rivers hereunder with respect to
the Monthly Margin Payments (or any portions thereof)
so set-off.
(vii) (1) If the Monthly Margin Payment has been adjusted
pursuant to Section 3.3(a)(iv)(B) of this Agreement and
Big Rivers is permitted pursuant to the Station Two
Power Sales Agreement (as defined in the Station Two
Agreement) to purchase energy or capacity from Station
Two, then: (A) Big Rivers will sell to LEM and LEM will
buy Bundled Ancillary Services (as defined in Section
3.3(a)(vii)(3) below) for resale to Henderson Union for
the benefit of Alcan and (B) the Monthly Margin Payment
will be reduced by an amount equal to the amount due to
Big Rivers from LEM for such services during that month;
provided, however, that LEM will continue to make
payments to Big Rivers in the same amount as the
regularly scheduled Monthly Margin Payment that is
otherwise due pursuant to the Operative Documents
(taking into consideration, inter alia, any adjustment
required by Section 3.3(a)(iv)) and Big Rivers will
accept such payment as payment, in full, of the amount
owed to Big Rivers by Leaseco for the Monthly Margin
Payment then due and by LEM for the services described
above for such month. Pursuant to this paragraph, Big
Rivers must provide such services to LEM in the same
quantities as LEM is required to provide such services
to Henderson Union to meet the requirements of Alcan.
(2) If the Monthly Margin Payment has been adjusted
pursuant to Section 3.3(a)(iv)(A) of this Agreement,
then (A) Big Rivers will sell to LEM and LEM will buy
Bundled Ancillary Services (as defined in Section
3.3(a)(vii)(3) below) for resale to Green River Electric
for the benefit of
- 10 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Southwire and (B) the Monthly Margin Payment will be
reduced by an amount equal to the amount due to Big
Rivers from LEM for such services during that month;
provided, however, that Leaseco will continue to make
payments to Big Rivers in the same amount as the
regularly scheduled Monthly Margin Payment that is
otherwise due pursuant to the Operative Documents
(taking into consideration, inter alia, any adjustment
required by Section 3.3(a)(iv)) and Big Rivers will
accept such payment as payment, in full, of the amount
owed to Big Rivers by Leaseco for the Monthly Margin
Payment then due and by LEM for such month (regardless
of whether LEM's actual amount due that month for
Bundled Ancillary Services exceeds the amount paid by
Leaseco during that month pursuant to this Section
3.3(a) during that month). Pursuant to this paragraph,
Big Rivers must provide such services to LEM in the same
quantities as LEM must provide such services to Green
River Electric to meet the power requirements of
Southwire.
(3) The Bundled Ancillary Services are (A) those
services described by Big Rivers in Schedules 3, 4, 5,
and 6 of the Open Access Transmission Service Tariff
attached as Exhibit 1 to the Transmission Services and
Interconnection Agreement, or (B) such services that the
FERC determines transmission providers must provide in
lieu of or as extensions of the services described in
subpart (A) of this sentence.
(b) Operating Pass-Through Costs. In addition to amounts due under
Section 3.3(a), throughout Phase I, LEM shall pay to Big Rivers an amount each
month equal to the Operating Pass-Through Costs. Billing and payment of the
Operating Pass-Through Costs is to be made in accordance with Section 6.5.
Section 4: Big Rivers' Purchases from LEM
4.1 Power Sales to Big Rivers. During the Term of this Agreement, Big
Rivers will purchase from LEM, and LEM will sell to Big Rivers, Power in amounts
as follows (where each of the following are independent and cumulative):
(a) Base Power. During the Term of this Agreement, LEM shall be
obligated to supply to Big Rivers and Big Rivers shall be
- 11 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
obligated to purchase at a cost equal to the amounts set forth in Section 6.2(d)
from LEM Base Power as follows:
(i) in each hour,
(A) no less than the Minimum Requirement;
(B) no more than the Maximum Hourly Power Purchase
Amount; and
(ii) in each Year or Partial Year,
(A) no less than the Minimum Annual Power Purchase
Amount; and
(B) no more than the Maximum Annual Power Purchase
Amount.
All deliveries of Base Power shall be made at the Points of Delivery
as set forth in Exhibit B.
(b) Oglethorpe, Hoosier & HMP&L Power. During the Term of this
Agreement, LEM shall provide and Big Rivers shall purchase from LEM all its
requirements for Oglethorpe Power, HMP&L Power and Hoosier Power at a cost equal
to the amounts set forth in Sections 6.2(a) through (c). As used in this
Agreement, Big Rivers' requirements for Oglethorpe Power, HMP&L Power and
Hoosier Power shall constitute the amount of Power which Big Rivers, at a given
moment, sells to Oglethorpe, HMP&L or Hoosier (as applicable) pursuant to the
Oglethorpe Contract, the HMP&L Contract and the Hoosier Contracts, respectively.
Unless LEM has provided written consent, Big Rivers will not amend, extend or
renew any of the contracts pursuant to which it provides Oglethorpe Power, HMP&L
Power or Hoosier Power or assign, waive or limit any of its rights or interests
pursuant to such contracts throughout the remainder of their terms (and any
extensions thereto). To the extent that Big Rivers, under the terms of such
contracts, has any existing rights to extend or renew such contracts, Big Rivers
shall not extend or renew such contracts without LEM's prior consent, and Big
Rivers agrees to so extend or renew those contracts upon the request of LEM and
in accordance with the terms of these contracts; provided, however, that Big
Rivers shall have no obligation to extend such contracts for any period beyond
the end of the Term. Big Rivers agrees to perform each and every obligation for
which it is responsible under the Hoosier Contracts, HMP&L Contract and the
Oglethorpe Contract and to fully enforce all of its rights under those
agreements. Without limiting the foregoing sentences, Big Rivers agrees to use
commercially reasonable efforts (which shall not include a requirement to engage
the services of any collection agency or institute litigation) to collect all
amounts due to Big Rivers for Oglethorpe Power, Hoosier Power and HMP&L Power,
and to assign to LEM without cost collection rights and all such receivables not
collected within 120 days, so that LEM shall be entitled to attempt to collect
the same for its own account. LEM will deliver, or arrange for
- 12 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
delivery of, all Oglethorpe Power at either (a) the interconnection between the
TVA and Big Rivers systems or (b) the point or points connecting the Georgia
Integrated Transmission System and the TVA transmission system or other
transmission system or systems from or through which the capacity and energy
subject to the Oglethorpe Contract is delivered; all HMP&L Power at Henderson's
161 kV interconnection and the 69kV interconnections with Big Rivers; and all
Hoosier Power at the 161 kV interconnection between Hoosier and Big Rivers. All
of the foregoing deliveries shall be according to the rates, terms and
conditions of Big Rivers' Open Access Transmission Tariff to the extent delivery
of such power utilizes Big Rivers' Transmission System; provided, that such Open
Access Transmission Tariff exists and continues to exist during all applicable
periods, or that transmission access is provided on a non-discriminatory basis
under another cost-based transmission tariff on terms comparable to those under
which Big Rivers provides transmission service to itself. LEM shall indemnify
and hold Big Rivers harmless from and against any and all liabilities, losses,
claims, damages, costs and expenses (including reasonable attorneys' fees)
suffered or incurred by Big Rivers as a result of (i) any breach by Big Rivers
of any of its obligations under the Hoosier Contracts, the Oglethorpe Contract,
or the HMP&L Contract which result from any failure by LEM to perform its
obligations hereunder, (ii) any and all reasonable costs incurred by Big Rivers
in enforcing its rights under the Hoosier Contracts, the Oglethorpe Contract, or
the HMP&L Contract, (iii) any and all reasonable costs incurred by Big Rivers in
collecting (or attempting to collect) amounts due to Big Rivers for Hoosier
Power, Oglethorpe Power, or HMP&L Power and (iv) any and all reasonable costs
incurred by Big Rivers in exercising its rights, upon the prior request of LEM,
to extend or renew the Hoosier Contracts, the Oglethorpe Contract or the HMP&L
Contract.
(c) Generation-Based Ancillary Services. During the Term of this
Agreement, Big Rivers shall be entitled to receive from LEM those
generation-based Ancillary Services which constitute Transmission Support
Services, dispatch, Load Following, reactive power support and operating reserve
services as specified in Section 5 of this Agreement; and such generation-based
services as Big Rivers is required to provide to meet ECAR automatic reserve
requirements. As specified in this Agreement, certain generation-based Ancillary
Services and certain Load Following services will be provided by LEM to Big
Rivers without adjustment to the Power Value Amount; and additional
generation-based Ancillary Services and Load Following services will be
available at a cost equal to the amounts set forth in Section 6.2(f).
Notwithstanding any other provision of this Agreement, LEM shall be required to
provide the services identified in this Section 4.1(c) only to the extent that
such services can be provided from the Generating Plants, consistent with
Prudent Utility Practice and any applicable limitations on the use of Station
Two
- 13 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
power, and shall be excused in the event that an Uncontrollable Force prevents
LEM from providing such services from the Generating Plants to the extent such
Uncontrollable Force affects such Generating Plants. Notwithstanding the
preceding sentence, to the extent feasible, LEM may elect, at its sole
discretion, to meet its obligations under this Section 4.1(c) using whatever
resources it chooses.
4.2 Additional Provisions Regarding Member Power. During the Term of this
Agreement, Big Rivers shall supply all of the Members' Requirements for Member
Power and shall not amend any Member Contract to permit any Member to acquire
its requirements for Power to serve its non-Smelter customers from any Person
other than Big Rivers except as specifically provided in this Section 4.2.;
provided that Henderson Union and Green River Electric, (x) subject to Section
4.4, may enter into agreements with LEM to purchase Power needed to serve any or
all Smelter Requirements, and with any supplier to purchase Energy after
December 31, 2000 necessary to meet the Smelters' Tier 3 Energy requirements,
and (y) are permitted to resell power in accordance with the LEM/Henderson Union
Agreement and the LEM/Green River Agreement, respectively and in accordance with
the Agreements for Electric Service between those Members and the Smelters. In
the event that Big Rivers defaults under a Member Contract and such default
could be cause for termination of such Member Contract, then, notwithstanding
any other provision of this Agreement, Big Rivers agrees to permit (but not
require) LEM, in LEM's sole discretion, to attempt to cure such default. If a
Member terminates a Member Contract as a result of a default by Big Rivers
(regardless of whether LEM attempts to cure that default), but which default is
not the direct result of an act or omission by any LG&E Party, then a "Minimum
Requirement Revision Event" will be deemed to have occurred and thereafter, the
Minimum Requirement shall be the Minimum Hourly Power Purchase Amount. Big
Rivers acknowledges and agrees that any failure or refusal of any Member to
purchase Power from Big Rivers by reason of Big Rivers' breach or default under
any Member Contract is not an excusable cause for failure of Big Rivers to meet
the Minimum Requirement or Minimum Annual Power Purchase Amount and therefore at
any time at which Big Rivers fails to meet its Minimum Requirement or Minimum
Annual Power Purchase Amount LEM will be entitled to the minimum payments
contemplated in Section 6.4(b). Big Rivers may enter into a contract for the
sale or resale of Power purchased from LEM to any non-Member or for the purchase
or sale of Power from or to Parties other than LEM without limitation provided
that nothing in this sentence shall be construed to alter in any manner LEM's
obligations to supply or Big Rivers' obligation to purchase Power as otherwise
set forth herein.
4.3 Base Power Contract Limits. Throughout the Term of this Agreement,
Base Power is subject to the following Contract Limits:
- 14 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(a) Minimum Hourly Power Purchase Amount. During any hour through
December 31, 2000, the Minimum Hourly Power Purchase Amount is 272
megawatt-hours of Base Power and during any hour of any Year between January 1,
2001 and December 31, 2010 (inclusive), the Minimum Hourly Power Purchase Amount
is 297 megawatt-hours of Base Power. During any hour during the Year 2011, the
Minimum Hourly Power Purchase Amount is 517 megawatt hours of Base Power, and
during any hour of any Year following December 31, 2011, the Minimum Hourly
Power Purchase Amount is 600 megawatt-hours of Base Power.
(b) Minimum Annual Power Purchase Amount is as follows:
(i) During each full Year during the period beginning on the
Effective Date through December 31, 2000, the Minimum
Annual Power Purchase Amount is 2,687,750
megawatt-hours of Base Power.
(ii) During each full Year during the period beginning on
January 1, 2001 through December 31, 2010(inclusive),
the Minimum Annual Power Purchase Amount is 2,902,285
megawatt-hours of Base Power.
(iii) During the Year 2011, the Minimum Annual Power Purchase
Amount is 3,699,741 megawatt-hours of Base Power and
during each Year following December 31, 2011, the
Minimum Annual Power Purchase Amount is 4,300,000
megawatt-hours.
(iv) During any Partial Year, the Minimum Annual Power
Purchase Amount is the Minimum Annual Power Purchase
Amount for that Year, multiplied by a fraction whose
numerator is the number of days in such Partial Year and
whose denominator is 365.
(c) Maximum Hourly Power Purchase Amount. During any hour through
December 31, 2000, the Maximum Hourly Power Purchase Amount is not more than 572
megawatt-hours of Base Power and during any hour of any Year between January 1,
2001 and December 31, 2010 (inclusive), the Maximum Hourly Power Purchase Amount
is not more than 597 megawatt-hours of Base Power. During any hour during the
Year 2011, the Maximum Hourly Power Purchase Amount is not more than 717
megawatt-hours of Base Power, and during any hour of any Year following December
31, 2011, the Maximum Hourly Power Purchase Amount is not more than 800
megawatt-hours of Base Power.
- 15 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(d) Maximum Annual Power Purchase Amount is as follows:
(i) During each full Year during the period beginning on the
Effective Date through December 31, 2000, the Maximum
Annual Power Purchase Amount is 5,112,750
megawatt-hours of Base Power.
(ii) During each full Year during the period beginning on
January 1, 2001 through December 31, 2010(inclusive),
the Maximum Annual Power Purchase Amount is 5,327,285
megawatt-hours of Base Power.
(iii) During the Year 2011, the Maximum Annual Power Purchase
Amount is 6,321,741 megawatt-hours of Base Power and
during each Year following December 31, 2011, the
Maximum Annual Power Purchase Amount is 7,008,000
megawatt-hours of Base Power.
(iv) During any Partial Year, the Maximum Annual Power
Purchase Amount is the Maximum Annual Power Purchase
Amount for that Year, multiplied by a fraction whose
numerator is the number of days in such Partial Year and
whose denominator is 365.
(e) Reduction in Contract Limits. At any time during the Term of
this Agreement, subsequent to the later to occur of the Effective Date or
December 31, 1998, Big Rivers may decrease the Contract Limits by giving written
notice to LEM of its election to decrease the Contract Limits, subject to the
following:
(i) Any such reduction (pursuant to this Section 4.3(e))
shall be made as a uniform decrease, measured in
megawatt-hours, to all the Contract Limits in all
Years, such that upon a change in the Contract Limits
that is required by Section 4.3(a) through (d), the
changed Contract Limits will be adjusted downward
prior to becoming effective by the cumulative number
of megawatt-hour reductions elected pursuant to this
Section 4.3(e) (assuming such election is effective,
consistent with the other requirements of this
Section 4.3(e), as of the date the new Contract
Limits designated in Section 4.3(a), (b), (c) and (d)
become effective).
- 16 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(ii) Any such reduction (pursuant to this Section 4.3(e))
shall remain effective for the balance of the Term of
this Agreement;
(iii) Any notice of a reduction (pursuant to this Section
4.3(e)) shall not become effective until the expiration
of two consecutive Years after it is given (for example
a notice given in 2001 shall result in Contract Limit
reductions starting January 1, 2004);
(iv) The cumulative amount of Contract Limit reductions
(pursuant to this Section 4.3(e)) during the Term of the
Agreement shall not exceed 72 megawatts;
(v) No annual reduction (pursuant to this Section 4.3(e))
shall exceed 12 megawatts; and
(vi) Any reduction (pursuant to this Section 4.3(e)) of
the Minimum Annual Power Purchase Amount shall not
result in a Minimum Annual Power Purchase Amount
which is less than 102% of actual requirements for
Base Power for the Year prior to the effective date
of the reduction (notwithstanding any adjustments for
Partial Years); provided, that in the event that any
notice of a reduction specifies a reduction in the
Minimum Annual Power Purchase Amount greater than is
permitted pursuant to this Section 4.3(e)(vi), the
Minimum Annual Power Purchase Amount shall be reduced
each year by the maximum amount permissible until
such time as the Minimum Annual Power Purchase Amount
has been reduced to the full extent specified in such
notice of reduction.
(f) The Contract Limits shall be subject to further adjustments as
provided in the Station Two Agreement.
(g) Notwithstanding anything in this Agreement to the contrary, Base
Power shall not include Hoosier Power, Oglethorpe Power or HMP&L Power.
4.4 Exclusivity.
(a) In consideration of Big Rivers' agreements as set forth herein,
LEM agrees that during the Term of this Agreement, Big Rivers shall be the
exclusive distributor (through the Members) of
- 17 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Power furnished directly or indirectly to end-users located, or for use within
the boundaries of the Members' Franchised Service Territories; provided that Big
Rivers shall not be the exclusive distributor with respect to Power to be
supplied, directly or indirectly, to meet the Smelter Requirements. LEM and its
Affiliates will not, directly or indirectly, sell or furnish, or offer or agree
to sell or furnish, Power to or for the benefit or account of any such end user,
other than Power to be supplied by LEM to certain Members to meet the Smelter
Requirements, except through Big Rivers' exclusive distributorship in accordance
with this Agreement, as otherwise expressly permitted by this Agreement, or as
expressly permitted in the Station Two Agreement. Notwithstanding the foregoing:
(i) LEM or its Affiliates shall be permitted to sell,
directly or indirectly, to the Members any Power
required to serve the Smelter Requirements during the
Term of this Agreement;
(ii) LEM or its Affiliates shall be permitted to sell Power,
directly or indirectly, to the Smelters to the extent
that the Smelters are free to purchase such Power from
entities other than the Members under applicable Law and
any agreement existing between any Smelter and any
Member; and
(iii) LEM or its Affiliates shall be permitted (but not
required) to sell to Big Rivers for resale to the
Members, or to the Members (to the extent the Members
are permitted by law and contract to purchase from a
Person other than Big Rivers), Power required by the
Members to enable the Members to supply Power to certain
of their non-Smelter industrial customers.
(b) Big Rivers agrees that until December 31, 2011, it will not,
directly or indirectly, sell or furnish, or offer or agree to sell or furnish,
Power to Henderson Union for sale to Alcan, or to Alcan, other than with respect
to the portions of Tier 3 Energy which Henderson Union is explicitly permitted
to purchase from a supplier other than LEM, unless the obligation of LEM (during
Phase I) or Leaseco (during Phase II) to pay Monthly Margin Payments to Big
Rivers under this Agreement or the Lease has terminated, or unless and for the
period that LEM or Leaseco (as applicable) has failed to pay such Monthly Margin
Payments in breach of this Agreement or the Lease. The provisions of this
Section 4.4(b) shall survive any termination of this Agreement for any reason
and shall continue to be binding on Big Rivers for so long as the Lease or the
Station Two Agreement shall continue in force and effect, and then only in the
event Big Rivers
- 18 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
continues to receive the Monthly Margin Payments (or portions thereof) in
accordance with the Lease.
(c) Big Rivers agrees that until December 31, 2010, it will not,
directly or indirectly, sell or furnish, or offer or agree to sell or furnish,
Power to Green River for sale to Southwire, or to Southwire, other than with
respect to the portions of Tier 3 Energy which Green River is explicitly
permitted to purchase from a supplier other than LEM, unless the obligation of
LEM (during Phase I) or Leaseco (during Phase II) to pay Monthly Margin Payments
to Big Rivers under this Agreement or the Lease has terminated or unless and for
the period that LEM or Leaseco (as applicable) has failed to pay such Monthly
Margin Payments in breach of this Agreement or the Lease. The provisions of this
Section 4.4.(c), shall survive any termination of this Agreement for any reason
and shall continue to be binding on Big Rivers for so long thereafter as the
Lease or the Station Two Agreement shall continue in force and effect, and then
only in the event Big Rivers continues to receive the Monthly Margin Payments
(or portions thereof) in accordance with the Lease.
Section 5: Scheduling and Ancillary Services
5.1 Projected Monthly Schedules. At least 30 days prior to the expected
Effective Date and each October 1 thereafter during the Term of this Agreement,
Big Rivers shall submit to LEM in writing the projected monthly amounts of Base
Power, Oglethorpe Power, HMP&L Power, Hoosier Power, Transmission Support
Services and other generation-based Ancillary Services it expects to require
during the following Partial Year or Year. Such projections shall represent a
good faith estimate by Big Rivers of its anticipated requirements hereunder;
provided, that such estimates shall not be binding and shall be used by LEM for
planning and information purposes only. The estimates by Big Rivers shall be for
all Power and generation-based Ancillary Services to be purchased by Big Rivers
pursuant to this Agreement, with a gross up for average annual transmission
losses associated with Base Power. Big Rivers shall have full freedom of
schedule, subject to the provisions of Section 5.1 and 5.3 and the Contract
Limits.
5.2 SEPA Contract. At least 30 days prior to the expected Effective Date
and each October 1 thereafter during the Term of this Agreement, Big Rivers
shall submit to LEM a schedule showing the amount of Power Big Rivers wishes to
have delivered to it under the SEPA Contract during each month ("SEPA Schedule")
of the following Partial Year or Year. LEM shall act as Big Rivers' agent for
the scheduling of Power under the SEPA Contract and shall have the right to
determine (consistent with the provisions of the SEPA Contract) the timing of
deliveries of such Power during each month; provided, however, for purposes of
the administration of this contract, such
- 19 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
deliveries shall be deemed, after-the-fact, to have occurred consistent with the
SEPA Schedule and, to the maximum extent allowable under the SEPA Contract,
during hours of the Members' demand on Big Rivers' system.
5.3 Daily Preschedules. Big Rivers shall preschedule all deliveries of
Power no later than 9:00 a.m., Central Time, on the Business Day immediately
preceding the day or days of delivery, or as otherwise mutually agreed by the
Parties' dispatchers and schedulers. Big Rivers' preschedule shall specify for
each hour of each day scheduled its best estimate of its requirements for Base
Power, Oglethorpe Power, HMP&L Power, Hoosier Power, Transmission Support
Services and other generation-based Ancillary Services as Big Rivers is entitled
to receive pursuant to this Agreement. Big Rivers shall provide its preschedule
to LEM and the operator responsible for the dispatch and real-time control of
the Generating Plants. Following receipt of Big Rivers' preschedule, LEM shall
provide its own preschedule to the operator responsible for the dispatch and
real-time control of the Generating Plants specifying for each hour of each day
scheduled its best estimate of its requirement for Unit Output. Within three
hours of receipt of Big Rivers' preschedule, LEM will provide Big Rivers with a
schedule showing the Point(s) of Delivery at which Big Rivers' Base Power,
Oglethorpe Power, HMP&L Power, Hoosier Power and other scheduled services will
be delivered. The Parties shall make reasonable efforts to minimize changes in
Big Rivers' and LEM's preschedules and delivery schedules, but such changes
shall be accommodated by the Parties up to 30 minutes prior to the hour of
delivery.
5.4 Redispatch. If delivery of Big Rivers' Power requirements, amounts of
Power scheduled to be provided by LEM to Green River Electric and Henderson
Union to meet the Smelter Requirements and LEM's off-system sales at LEM's
specified Points of Delivery is not consistent with operation of Big Rivers'
Transmission System in accordance with Prudent Utility Practice, or is not
consistent with allowing all requested, otherwise feasible wheeling transactions
to occur in Big Rivers' system, then, to the extent consistent with Prudent
Utility Practice, LEM will permit Big Rivers to direct redispatch of the
Generating Plants as needed (i) to maintain Firm Point-to-Point Transmission
Service and Network Integration Transmission Service, including the transmission
of Member Power to the Members' Franchised Service Territories, under emergency
conditions, and (ii) to permit additional Firm Point-to-Point Transmission
Service and Network Integration Transmission Service to be scheduled over
congested transmission paths. LEM shall modify the specified Points of Delivery
to allow Big Rivers' Transmission System to operate in accordance with Prudent
Utility Practice, provided that such redispatch permits LEM to continue to meet
its energy delivery commitments. Big Rivers shall pay LEM the incremental cost,
if any,
- 20 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
of such redispatch, with such cost to be as quoted by Big Rivers or its Operator
(during Phase I) or Leaseco (during Phase II) at the time the redispatch service
is requested. Big Rivers' obligation pursuant to the preceding sentence is not
to be subsumed by or diminished by LEM's separate obligation during Phase I to
pay the Operating Pass-Through Costs, but rather requires that throughout the
Term, Big Rivers, not LEM or any of its Affiliates, bear the cost of redispatch;
provided, that LEM or any of its Affiliates shall be required to pay any
increased transmission charge assessed by Big Rivers reflecting the incremental
cost of such redispatch where that entity's use of the Transmission System
necessitates such redispatch to create the additional transmission capacity used
by it. The quoted charge for such redispatch shall be calculated by Big Rivers
or its Operator (during Phase I), and by Leaseco (during Phase II), in a manner
consistent with the FERC's policies for the calculation of redispatch costs.
5.5 Load Following.
(a) Metering. In order to facilitate the provision of Load Following
services, LEM, at its sole expense, shall install, or cause to have installed,
and cause to be monitored, metering and telemetry equipment, which may include
the use of loss compensators, and which in combination with existing metering
equipment, if any, is of metering grade accuracy, for measuring power flows at
each of the Points of Delivery identified in Exhibit A.
(b) Load Following.
(i) LEM will provide all of Big Rivers' Load Following
requirements with respect to Member Power, without
adjustment to the Power Value Amount for the applicable
period, subject to the following conditions:
(A) LEM shall not be obligated to provide Load
Following services for Big Rivers, that, when
combined with the provision of Base Power
requirements (after adjustment for the SEPA
Contract pursuant to Section 5.2), would exceed
the Maximum Hourly Power Purchase Amount at any
time; and
(B) LEM shall not be obligated to provide Load
Following services for loss of generation under
the control of Big Rivers, or any third-party
resource serving Big Rivers, other than from the
Generating Plants; and
- 21 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(C) LEM shall not be obligated to provide Load
Following services for any of Big Rivers' loads
that are added to the Big Rivers' system after
1996, and that require Load Following services
that are materially different than the
aggregate of all loads that were served by Big
Rivers as of December 31, 1996 exclusive of the
Smelter Requirements.
(ii) During the Term of this Agreement, LEM will provide all
of Big Rivers' Load Following requirements, if any, with
respect to Oglethorpe Power, Hoosier Power and HMP&L
Power without adjustment to the Power Value Amount for
the applicable period.
(iii) Any additional amounts of Load Following required by Big
Rivers for the load of its Members that it serves or any
transmission customer serving load within Big Rivers'
control area shall be supplied to Big Rivers by LEM with
a corresponding adjustment to the Power Value Amount
equivalent to the LEM rates for such Load Following
Service, in accordance with in Section 6.2(f).
5.6 Operating Reserves. LEM will maintain sufficient spinning and
non-spinning reserves consistent with reliability guides, principles, and
responsibilities set forth in ECAR documents and guides and NERC criteria to
support that portion of the Base Power that is consumed in Big Rivers' control
area, and such other spinning and non-spinning reserves as may be required
pursuant to the Oglethorpe Contract, HMP&L Contract and Hoosier Contracts, each
on terms in accordance with this Agreement. With respect to use of the
Generating Plants by Big Rivers pursuant to this Section 5.6, there will be no
adjustment to the Power Value Amount for the applicable period.
5.7 Reactive Power. LEM shall provide in any hour from its entitlement to
the Unit Output of the Generating Plants, at Big Rivers' request and without
adjustment to the Power Value Amount, an amount of megavars for Control Area
operations up to the electrical net output of such Generating Plants in such
hour, multiplied by 0.329 but in no event an amount of megavars equal to less
than 608 megawatts multiplied by 0.329. For example, if the electrical output of
such Generating Plants in an hour is 1000 MW, up to 329 megavars will be so
provided. Subject to the above aggregate limit, Big Rivers shall be entitled to
request and receive an amount of megavars up to the maximum net dependable
capacity of the Generating Plant unit expressed
- 22 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
in megawatts multiplied by 0.329 from any specific unit of any Generating Plant
specified by Big Rivers and in operation during the hour; provided that Big
Rivers will identify the specific Generating Plant unit required to produce
megavars only if such specification is necessitated by localized voltage
problems. The current maximum net dependable capacity of each Generation Plant
unit, expressed in megawatts, is set forth in Exhibit 6 of the Transmission
Service and Interconnection Agreement. However, the Parties shall at all times
use the then applicable maximum net dependable capacity of the Generation Plant
units, which amount may change from time to time over the course of this
Agreement; provided, that in the event that two or more Generating Plant units
are off-line and Big Rivers is experiencing low voltage problems, the Operator
of the Generating Plants will, without adjustment in the Power Value Amount,
operate the Generating Plant units down to the design lagging power factor
without a loss of megawatt output, but only to the extent necessary to produce
an amount of megavars equal to .329 multiplied by the net output of the
Generating Plants that would exist if the units that are off-line at the time
the calculation was made are operating. At any time, any additional megavars
requested by Big Rivers in excess of .329 multiplied by the net output of the
Generating Plants, assuming no units are off-line, if available from the
Generating Plants without loss of megawatt output capabilities, shall be
provided to Big Rivers from LEM at LEM's rates for sale of reactive power set
forth in its tariff for the sale of ancillary services (as filed with FERC and
revised from time-to-time). LEM may also elect (but is not obligated) to
provide, in any hour at Big Rivers' request, megavars in such quantities that
their production adversely impacts the Generating Plants' capability to produce
megawatts at the rated lagging power factor, but shall do so only at the rate
set forth in LEM's tariff for the sale of ancillary services (as filed with FERC
and revised from time-to-time) or such other rates as FERC may accept for
filing.
5.8 Transmission Support Services. Upon Big Rivers' request, LEM shall
obtain and provide from the Generating Plants, to the extent available from the
Generating Plants, to all users of Big Rivers' Transmission System and to Big
Rivers, in its capacity as both a Transmission System user when requiring
Ancillary Services in excess of the level of such services otherwise provided in
this Agreement, and to meet Big Rivers' own Ancillary Services requirements to
third-parties as a transmission services provider, any generation-based
Ancillary Services that the FERC requires from time to time to be provided by a
transmission provider similarly situated to Big Rivers and owning and operating
the Generating Plants ("Transmission Support Services"). A request by Big Rivers
for Transmission Support Services of the type that cannot be physically provided
by a generator located outside of Big Rivers' Control area shall be given first
priority by LEM relative to other uses of the Generating Plants. Such
generation-based Ancillary Services shall be provided at such rates as LEM
- 23 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
establishes, subject to any applicable regulatory policies, for such
generation-based Ancillary Services, and LEM will charge such amounts to Big
Rivers by adjustment to the Power Value Amount. Neither Big Rivers nor any
third-party user of Big Rivers' Transmission System shall be required to
purchase such Ancillary Services from LEM to the extent they are able to provide
those services themselves or acquire them from an alternative supplier.
5.9 System Logs. All deliveries shall be made in accordance with the
Parties' schedules which are in effect 30 minutes prior to each hour of
delivery, except deliveries associated with Load Following service which shall
reflect the integrated amount accumulated over the hour and shall be deemed to
be made during the hours and in the amounts as accounted for in LEM's and Big
Rivers' system logs. If scheduled deliveries are interrupted due to an
Uncontrollable Force as defined in Section 12, such schedules shall be adjusted
to reflect actual deliveries.
Section 6: Metering, Pricing and Billing
6.1 Metering. The amounts of Unit Output, Oglethorpe Power, HMP&L Power,
Hoosier Power and Base Power delivered during the prior month and the
Transmission Support Services and other services provided pursuant to Section
4.1(c) that are provided during the prior month shall be metered at the Points
of Delivery and at the Points of Metering and, on a monthly basis, reported by
Big Rivers to LEM in accordance with Section 12 of the Transmission Service and
Interconnection Agreement. Such information will be used as a basis for
determining the Power Value Amount, as defined in Section 6.2. Pursuant to
Section 6.5, Big Rivers will issue a statement to LEM once per month, and LEM
will issue a statement to Big Rivers once per month, each based on such metered
information. LEM shall be entitled to have a representative present when meters
are read or to institute other reasonable measures to verify meter readings.
Disputes concerning the accuracy of meter reading will be subject to the dispute
resolution, mediation and arbitration provisions applicable to this Agreement as
set forth in the Participation Agreement.
6.2 In addition to such amounts which Big Rivers may be obligated to pay
to LEM pursuant to Sections 8 and 9.2, Big Rivers will pay to LEM each month the
"Power Value Amount," which equals the sum of the following:
(a) An amount equal to Big Rivers' total revenues actually collected
for Oglethorpe Power sold to Oglethorpe by Big Rivers during the prior month
(exclusive of any revenue received by Big Rivers from Oglethorpe pursuant to
Section 5.3 of the Oglethorpe Contract).
- 24 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(b) An amount equal to Big Rivers' total revenues actually collected
for Hoosier Power sold to Hoosier by Big Rivers during the prior month.
(c) An amount equal to Big Rivers' total revenues actually collected
for HMP&L Power sold to HMP&L by Big Rivers during the prior month.
(d) An amount equal to the Base Power Price for such month as
determined pursuant to Section 6.4.
(e) An amount equal to the redispatch costs incurred by Big Rivers
pursuant to Section 5.4 during the prior month.
(f) An amount based upon the quantity of generation-based Ancillary
Services, ECAR reserves or Transmission Support Services provided by LEM to Big
Rivers during the prior month in excess of the type and quantity of such
services which are explicitly to be provided pursuant to this Agreement without
adjustment to the Power Value Amount, priced in accordance with LEM's rates for
such services.
(g) To the extent that Big Rivers purchases from a third-party ECAR
automatic reserves or generation-based emergency services necessary to support
operation of its Transmission System, the Power Value Amount shall be reduced by
an amount equal to Big Rivers' actual cost of such purchases during the prior
month; provided that ECAR automatic reserves or generation-based emergency
services shall not be purchased in amounts greater than the minimum amount
required under ECAR regulations.
6.3 Base Power Rates.
(a) Base Power. During the first Partial Year through December 31,
2001, the rate per megawatt-hour of Base Power is $18.917. For the balance of
the Term of this Agreement, the following rates per megawatt-hour for Base Power
apply:
2002 $19.117
2003 $19.217
2004 $19.317
2005 $19.417
2006 $19.517
2007 $19.717
2008 $20.017
2009 $20.327
2010 $20.627
2011 $20.947
2012 $20.267
2013 $20.587
- 25 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
2014 $20.917
2015 $21.247
2016 $21.587
2017 $21.927
2018 $22.277
2019 $22.627
2020 $22.987
2021 $23.357
2022 $23.717
2023 $24.082
2024 $24.452
(b) Base Power Rate Adjustments. Prior to February 1 of the Years
2004, 2011 and 2018, the Parties shall perform the following calculations:
Let Pn represent the rate for Base Power for year n as defined in Section
6.3(a).
Define Qn = 9.52x + 7.25y + 3.23 where, for each year n of 2004, 2011, and
2018:
x = The ratio of the value of the Coal Index (DRI Price of Coal
to Electric Utilities - National) at January 1 of year n to
the value at January 1 of the seventh preceding year; and
y = The ratio of the value of the Labor Index (DRI Unit Labor
Cost - National) at January 1 of year n to the value at
January 1 of the seventh preceding year.
(i) 2004 Adjustment
(A) If Q2004 is less than 16.69, then set F2004 =
Q2004 / 16.69
(B) If Q2004 is greater than 35.32, then set F2004 =
Q2004 / 35.32
(C) If neither determination (1) or (2) is made, then
set F2004 = 1.0.
(D) The adjusted rate for Base Power, P'n for each
year n from 2004 through 2010 shall be determined
as P'n = Pn o F2004
- 26 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(ii) 2011 Adjustment
(A) If Q2011 is less than 20.66 o F2004, then set
F2011 = Q2011 / 20.66
(B) If Q2011 is greater than 43.73 o F2004, then set
F2011 = Q2011 / 43.73
(C) If neither determination (1) or (2) is made, then
set F2011 = F2004
(D) The adjusted rate for Base Power, P'n for each
year n from 2011 through 2017 shall be determined
as P'n = Pn o F2011
(iii) 2018 Adjustment
(A) If Q2018 is less than 25.59 o F2004 o F2011, then
set F2018 = Q2018 / 25.59
(B) If Q2018 is greater than 54.15 o F2004 o F2011,
then set F2018 = Q2018 / 54.15
(C) If neither determination (1) or (2) is made, then
set F2018 = F2004 o F2011
(D) The adjusted rate for Base Power, P'n, for each
year n from 2018 through the Term of this
Agreement shall be determined as P'n = Pn o F2018
(iv) Base Power rate adjustments will be effective on January
1 of the Year the calculation is performed.
(c) In the event that the Effective Date does not occur on or before
December 31, 1998 then Section 6.3(a) will be modified, effective January 1,
1999, and on each January 1 thereafter until the Effective Date occurs (after
which time the Section will remain fixed in the form then current), subject to
an earlier termination of the Participation Agreement, as follows: each Year
stated will be increased by one, such that the rate in the first Partial Year
that the Agreement is in effect and through the three calendar years immediately
following the first Partial Year will be $18.917 and the remainder of the rates
will become effective in the corresponding Year indicated after such
modification is made.
- 27 -
SECTION 6.4(b) OF THIS DOCUMENT CONTAINS CONFIDENTIAL PROTECTED INFORMATION -
SUBJECT TO PROTECTIVE ORDER
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
6.4 Calculation of the Base Power Price
(a) Base Power Price. For the purposes of Section 6.2(d), the Base
Power Price is equal to the sum of (i) the Base Power rates established in
Sections 6.3 multiplied by the number of megawatt-hours of Base Power delivered
to Big Rivers during the prior month and (ii) such other amount as determined
pursuant to Section 6.4(b). Base Power delivered to Big Rivers during the prior
month shall be determined as the total metered load delivered by Big Rivers to
Members during the prior month at the Points of Metering as set forth in Exhibit
C, plus the total megawatt-hours of Base Power Big Rivers scheduled from LEM
during the previous month for resale to third parties other than Members metered
at the applicable Point(s) of Delivery as set forth in Exhibit B, plus average
annual transmission losses imputed to Power delivered by Big Rivers to the
Members and Power delivered for resale to third parties (with such losses to be
equal to the effective annual loss rate applied to transmission service during
the same period, as calculated pursuant to the Transmission Service and
Interconnection Agreement), minus any purchases from SEPA or other third-parties
delivered through the Points of Metering. In no event shall the amount of Power
priced in accordance with this Section 6.4 exceed the amount of Base Power
available pursuant to Section 4.1(a).
(b) Minimum Power Purchase Obligation.
[*REDACTED. Omitted pursuant to confidential treatment request.
Material filed separately with SEC.]
- 28 -
SECTION 6.4(b) OF THIS DOCUMENT CONTAINS CONFIDENTIAL PROTECTED INFORMATION -
SUBJECT TO PROTECTIVE ORDER
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
[* REDACTED. Omitted pursuant to confidentiality request.
Material filed separately with SEC.]
6.5 Billing and Payment. Big Rivers and LEM shall reconcile all monthly
amounts due and owing other than the Initial Fixed Payment or Annual Fixed
Payment as soon after the month's end as detailed information is available. Each
month, Big Rivers shall bill LEM for the Operating Pass-Through Costs due
pursuant to Section 3.3(b) within two days of receipt of an invoice for such
Operating Pass-Through Costs from its Operator, if any, and, separately, for any
other amounts due hereunder, if any, and LEM shall bill Big Rivers for the Power
Value Amount and any other amounts due hereunder, if any, after adjusting for
the credits set forth in Section 6.6 which may apply for that month. Each Party
shall bill the other by facsimile (with the original of such bill transmitted to
LEM or to Big Rivers, as applicable, by certified mail) for amounts owing
pursuant to this Section 6 or as otherwise specified in this Agreement. Payment
shall be made for the amount of such bill, including any disputed amounts, by
electronic wire transfer by the later of 15 days after facsimile receipt of such
bill or the last Business Day of the month except with respect to the Operating
Pass-Through Costs which LEM shall pay no later than the Monthly Payment Date;
provided, however, Big Rivers shall not be required to pay any amounts under
this Section 6.5 to LEM unless all Operating Pass-Through Costs due and owing by
LEM to Big Rivers, and for which LEM has been properly billed, shall have first
been paid in full. Payments rendered to Big Rivers with respect to the Operating
Pass-Through Costs shall be made to (not applicable) or such other financial
institution or account number as Big Rivers and its Operator may specify from
time to time in writing. Payments rendered to Big Rivers with respect to other
than the Operating Pass-Through Costs shall be made to Farmers Bank of
Henderson, Kentucky, ABA No. 083900538 for the credit of Big Rivers General
Fund, Account No. 1085559, or such other financial institution or account number
as Big Rivers may specify from time to time in writing. Payments rendered to LEM
shall be made to PNC Bank, Kentucky, ABA No. 083000108, for the credit of LG&E
Marketing, Inc., Account No. 3100532665, or such other financial institution or
account number as LEM may specify from time to time in writing. Simple interest
shall accrue on any unpaid amounts or any credits at a rate equal to the
- 29 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Default Rate during the period, if any, of delinquency or outstanding credit.
6.6 Credits.
(a) At the end of Year 2011, LEM shall credit Big Rivers' account
$2,610,557 and at the end of each Year following December 31, 2011, LEM shall
credit Big Rivers' account $4,110,750.
(b) In the event that any credit due to Big Rivers for any Year
pursuant to subparagraph (a) above (a "Load Reduction Credit") exceeds the Power
Value Amount during the final month of such Year (as determined pursuant to
Section 6.6(a)), then, LEM shall, at Big Rivers' option either (i) pay to Big
Rivers, within thirty (30) days after receiving a request from Big Rivers, an
amount equal to the difference between the Load Reduction Credit for such Year
and the Power Value Amount due for the final month of such Year or (ii) apply
the excess credit against the Power Value Amount due during subsequent months
until the excess credit has been reduced to zero.
(c) With respect to any year for which LEM owes to Big Rivers
pursuant to Section 9.6 of the Participation Agreement a Transmission Use
Credit, LEM shall, on February 1 of the following year, credit to Big Rivers'
account the full amount of such Transmission Use Credit, which credit will
satisfy LEM's obligations under Section 9.6 of the Participation Agreement.
(d) [Reserved]
(e) On the first day of each month beginning with the first month
following the Effective Date and continuing for fifty-five (55) months, LEM
shall credit Big Rivers' account $89,000.
Section 7: Audit Rights
During the Term of this Agreement, each Party may review accounting
records and supporting documents of the other Party relevant to the
determination of any rate charged pursuant to this Agreement which is not fixed,
of amounts of Power, Load Following service or generation-based Ancillary
Services provided or received together with the loads and resources involved in
such service, and of average loss rates applied hereunder during the prior
thirty-six months, provided that each Party may conduct no more than one such
audit during any consecutive six month period. If a Party believes there are any
errors in the determination of a bill including prices, it shall pay the full
amount of such bill and the Parties shall meet to review the accounting records
and supporting documents and agree on any adjustments that may be appropriate.
If the Parties agree that the billing is incorrect, a corrected bill shall be
prepared and the
- 30 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
difference between the incorrect bill and corrected bill, including simple
interest at a rate equal to the Default Rate for the period of under or
overpayment. Each Party shall take all steps reasonably available to secure the
confidentiality of the other Party's accounting records and supporting documents
and shall use them only for the purpose of confirming the accuracy of billings
under this Agreement. Disclosure of accounting records and supporting documents
to the other Party is not intended to, and shall not be interpreted to, waive a
Party's right to maintain that such records and supporting documents are
privileged, confidential, proprietary, or otherwise protected from disclosure to
the public. In the event such information is required in a legal or regulatory
proceeding, the Party affected shall advise the other Party of the requirement
to disclose such information prior to disclosing it and at the Party's request
shall ask that the confidentiality of any such information be maintained.
Section 8: Cost Determination Changes
The cost methodologies utilized for pricing purposes in this Agreement and
the rates and rate formulae specified herein shall remain in effect through the
Term of this Agreement and neither Party shall petition the FERC or any other
governmental agency pursuant to the provisions of Section 205 or 206 of the
Federal Power Act or any other provision of law to amend such methodologies or
formulae absent the agreement in writing of the other Party or support such a
petition filed by any third party. Notwithstanding the foregoing, if a tax on
plant emissions should be enacted, LEM may increase the Power Value Amount to
reasonably reflect the increased cost associated with the Power sold to Big
Rivers hereunder due to the imposition of such tax.
Section 9: Remedies
9.1 Rights and Remedies Cumulative. A Party's right to damages or other
relief resulting from a breach on the part of any other Party under this
Agreement accrues as of the first day of the breach without regard to whether
such breach leads to a default under Section 2.2(a). Upon the breach by either
Party of its obligations under this Agreement, whether or not such breach is or
becomes a default for purposes of Section 2.2(a), the other Party shall have all
of the rights and remedies available hereunder, under any other agreement
between the Parties as otherwise applicable, and under all applicable laws, all
of which rights and remedies shall be cumulative and nonexclusive to the extent
permitted by law; provided, however, that:
(a) neither Party shall be entitled to recover any loss of earnings,
revenues (except as provided in Sections 2.2 or 9.2 of this Agreement),
indirect, consequential, incidental or special damages (except as provided in
Section 15.2);
- 31 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
(b) LEM's exclusive right and remedy for Big Rivers' failure to
utilize the Minimum Requirements or the Minimum Annual Power Purchase Amount of
Base Power hereunder shall be the remedy set forth in Section 6.4(b);
(c) except as provided in Sections 2.2 and 15.2 of this Agreement, a
Party's sole right to damages for a failure by the other Party to deliver Power
as required by this Agreement shall be the remedies and rights set forth in
Section 9.2; and
(d) the provisions of Subsection 9.1(a), above, shall not bar or
constitute any waiver of any claim by Big Rivers for any Monthly Margin Payments
as its damages arising by reason of a default by LEM under this Agreement;
provided, that nothing contained herein shall be deemed to be an admission by
LEM that the loss of such payments by Big Rivers is or shall be an actual or
direct damage incurred by Big Rivers arising out of such a default by LEM.
9.2 Failure to Deliver Power. From time to time, but not more frequently
than once each month, LEM may invoice Big Rivers for its damages arising from
any failure of Big Rivers to deliver to LEM that Unit Output which through the
willful or negligent action of Big Rivers, or through any voluntary or
involuntary bankruptcy proceeding involving Big Rivers, was withheld from LEM or
delivered other than as directed by LEM in breach of this Agreement, except as
such failure may be excused by an Uncontrollable Force or made impossible due to
LEM's own negligence or willful act or omission. From time to time, but not more
frequently than once each month, Big Rivers may invoice LEM for its damages
arising from any failure of LEM to deliver in accordance with this Agreement
Base Power, Oglethorpe Power, HMP&L Power, Hoosier Power or any of the services
to which Big Rivers is entitled pursuant to Section 4.1(c) except as such
failure may be excused by an Uncontrollable Force or made impossible due to Big
Rivers' own negligence or willful act or omission. In each of the preceding
circumstances in which damages are due, such damages shall equal the damaged
Party's reasonably incurred replacement Power costs (including costs of any
related Ancillary Services). An invoice rendered in accordance with this Section
9.2 shall be paid, in full, by the receiving party within 30 days of its
receipt.
9.3 Offsets. In addition to the rights and remedies described above and
elsewhere in this Agreement, but subject to the limitations set forth in
Sections 9.1(a), (b) and (c), above, Big Rivers and LEM each agree that if Big
Rivers, on the one hand, or LEM, on the other hand, ("X") shall fail to make
any payment or shall fail to perform any obligation under this Agreement, then
the other Party ("Y") or any of its Affiliates will have the right (but not the
obligation) without prior notice to X to perform such obligations and set-off
the costs of
- 32 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
such performance or the amount of any such past due payment owing to Y against
any obligation of Y or any of its Affiliates owing to X or any of its Affiliates
hereunder or, during Phase II, under any of the other Operative Documents.
Section 10: Governing Law
This Agreement shall be subject to and be construed under the laws of the
Commonwealth of Kentucky, exclusive of choice of law provisions.
[Section 11: Reserved]
Section 12: Uncontrollable Forces
12.1 Neither Party to this Agreement shall be considered to be in default
in performance of any obligation hereunder if failure of performance shall be
due to an Uncontrollable Force. The term "Uncontrollable Force" means any cause
beyond the control of the Party affected, including, but not limited to, flood,
earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance,
labor disturbance, sabotage, and restraint by court order or public authority
(other than any filing of a petition in bankruptcy or reorganization or
arrangement under any bankruptcy or insolvency laws), which by exercise of due
foresight such Party could not reasonably have been expected to avoid, and to
the extent that by exercise of due diligence it shall be unable to overcome. A
Party shall not, however, be relieved of liability for failure of performance if
such failure is due to causes arising out of removable or remediable causes
which it fails to remove or remedy with reasonable dispatch. Furthermore, no
Party claiming an Uncontrollable Force shall be relieved or excused by reason of
such Uncontrollable Force from any payment obligation it may have. Any Party
rendered unable to fulfill any obligation by reason of an Uncontrollable Force
shall exercise due diligence to remove such inability with all reasonable
dispatch. Nothing contained herein, however, shall be construed to require a
Party to prevent or settle a strike against its will. Notwithstanding anything
in this Section 12 to the contrary, (a) any obligation of Big Rivers to purchase
Power under this Agreement (or to make any payment based on a deemed delivery of
Power pursuant to Section 6.4(b)) shall be excused to the extent, and only to
the extent, that LEM's failure to provide such Power is excused pursuant to this
Section 12 and (b) subject to Section 4.1(c), LEM's failure to supply Power to
Big Rivers pursuant to this Agreement shall not be excused under this Section 12
unless such Uncontrollable Force prevents LEM from supplying such Power not only
from the Generating Plants but also from any other resource or supply.
- 33 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
12.2 Notwithstanding anything contained elsewhere in this Agreement to the
contrary and without extending any period otherwise specified in this Agreement
for remedy, in the event (1) Big Rivers fails to deliver or is prevented from
delivering to LEM the Unit Output as is required pursuant to Section 3 of this
Agreement or is restrained from permitting one or more of the Generating Plants
to be operated, (2) such failure or restraint is caused by an Uncontrollable
Force which is of such a nature that it cannot be remedied or cured by repair to
or replacement of or construction of tangible assets or properties the use or
enjoyment of which are required in order for LEM to receive those amounts of
Unit Output to which it is entitled under this Agreement, then such failure of
performance or restraint must be remedied within 180 days after notice thereof
is delivered by LEM or LEM shall have the right to reduce its Annual Fixed
Payment obligations under Section 3.3(a) as follows. For each month following
the 180th day after the commencement of such Uncontrollable Force and continuing
until such time as the failure of performance or restraint is remedied (prorated
for each partial month), LEM's Annual Fixed Payment obligation for such month
under Section 3.3(a) shall be equal to the Annual Fixed Payment amount due under
Section 3.3(a) during such month multiplied by the ratio of AR to UOP (provided
that if AR divided by UOP is equal to or greater than 1 it shall be deemed to
equal 1), where each of AR and UOP are measured in megawatt-hours and AR is set
equal to the amount of Unit Output actually received by LEM from Big Rivers at
the Points of Delivery, as specified in Exhibit A, during such month and UOP is
the average monthly Unit Output as determined over the shorter of (i) the 12
full months immediately preceding the commencement of such Uncontrollable Force
or (ii) all of the months between the Effective Date and up to and including the
last full month immediately preceding the commencement of such Uncontrollable
Force. Following the occurrence and remedy of a failure of performance or
restraint of the type described in the first sentence of this Section 12.2, any
re-occurrence of the failure of performance or restraint that arises from a
common cause or a continuation of the same event or legal proceeding as the
first occurrence shall also be grounds for LEM to reduce the payment due in
Section 3.3(a) in the same manner as described in the preceding sentence, but
which right of reduction shall be effective thirty (30) Business Days after
notice of the failure of performance or restraint delivered by LEM to BREC and
only if such failure of performance or restraint is not cured within such 30 day
period.
12.3 Nothing in this Section 12 relieves LEC of its obligations to
indemnify Big Rivers pursuant to Section 9 of the Guaranty Agreement.
[Section 13: Reserved]
- 34 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
[Section 14: Reserved]
Section 15: Liability and Indemnity
15.1 General Indemnity. Each Party shall indemnify and save the other
Party and the directors, officers, and employees of such other Party harmless
from liability, loss, damage, claim, costs, and expenses (including attorneys'
fees) on account of injury to persons (including death) or damage or destruction
of property, occasioned by the negligence, whether active or passive, or willful
misconduct of such indemnifying Party and its officers, directors, employees, or
contractors in the performance of this Agreement; provided, however, that:
(a) Each Party shall be solely responsible to its own employees for
all claims or benefits due for injuries occurring in the course of their
employment or arising out of any workers compensation law. Neither Party shall
seek reimbursement or subrogation from the other Party for any benefits paid to
the employees of either Party pursuant to any workers compensation law except as
necessary to prevent double recovery by the employee.
(b) Neither Party and its directors, officers, and employees shall
be liable for any loss of earnings, revenues (except as provided in Sections 2.2
or 9.2 of this Agreement), indirect, consequential, incidental or special
damages (except as provided in Section 15.2), or injury which may occur to the
other Party as a result of outages in delivery of services hereunder by reason
of any cause whatsoever, including negligence.
15.2 Indemnity With Respect to Customer Claims. Each Party shall indemnify
and save the other Party, and its directors, officers, and employees harmless
for any liability, loss, claim, cost (including attorneys' fees) for any claims
made by the indemnified Party's electric service customers as a result of any
failure of the indemnifying Party to provide electric Power contemplated by this
Agreement for any reason or any cause whatsoever including the willful or
negligent act of the indemnifying Party or its breach of this Agreement, or any
of the Operative Documents, except to the extent that the indemnifying Party's
failure to provide Power is excused pursuant to Section 12 or is the result of
the negligent or willful actions or omissions of the indemnified Party or its
agents or employees. Further, neither Party shall have any indemnification
obligation with respect to claims made by the other Party's electric service
customers pursuant to any agreement or amendment entered into by such other
party after the Effective Date, unless the Party from whom indemnification is
sought has agreed to such new contract or
- 35 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
amendment, in writing, which consent shall not be unreasonably withheld.
Section 16: Entire Agreement
16.1 The Parties' obligations pursuant to this Agreement will be further
governed by the Participation Agreement and the other Operative Documents to the
extent indicated therein. The requirements of the Participation Agreement and
the other Operative Documents and this Agreement are to be interpreted to be in
accord wherever possible, but in the event of a direct conflict between the
requirements of the Participation Agreement and the other Operative Documents
and this Agreement, the provisions of this Agreement govern.
16.2 This Agreement and such applicable portions of the Participation
Agreement and the other Operative Documents constitutes the entire agreement of
the Parties hereto with respect to the transaction addressed herein and
supersedes all prior agreements, whether oral or written. This Agreement may be
amended only by a written document signed by both Parties hereto.
Section 17: Continuation of Agreement
17.1 Big Rivers recognizes and acknowledges that the RUS, the Members and
the LG&E Parties have in good faith entered into the transactions to which this
Agreement and the other Operative Documents relate and have agreed to consummate
those transactions in specific reliance upon the fact that the transactions
contemplated in the Operative Documents shall continue for the stated Term
(i.e., approximately 25 years). Big Rivers has informed the RUS, the Members and
the LG&E Parties that Big Rivers has in good faith entered into this Agreement
in reliance upon and with the specific intent of continuing this transaction
through the stated Term (i.e., approximately 25 years). In order to enable Big
Rivers to comply with certain requirements of the KPSC related to approval of
its proposed rates, and to provide additional assurances of its good faith and
commitment, and without in any way intending to reduce or otherwise avoid
abiding by this Agreement throughout its stated Term (i.e., approximately 25
years), and without any implication by any of the Parties that Big Rivers is or
would be entitled to attempt to reduce or otherwise avoid the terms of this
Agreement, Big Rivers additionally commits and undertakes that for the period
prior to January 1, 2012, in the event of any filing by Big Rivers of a petition
or similar filing for bankruptcy or reorganization or arrangement under any
federal or state bankruptcy or insolvency or similar Law, or the commencement of
involuntary proceedings against Big Rivers under any such Law, neither Big
Rivers nor its successors or assigns, if any, shall file, direct the filing of,
join in, consent to, or otherwise support any other party to any such
proceedings in a
- 36 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
motion, complaint, pleading, statement, testimony or otherwise make any attempt
to terminate, reject or modify this Agreement (other than in accordance with its
terms) under Section 365 of the United States Bankruptcy Code, 11 U.S.C. ss.
101, et seq., as it subsequently may be amended, modified or supplemented or any
other similar, applicable federal or state bankruptcy or insolvency Laws (the
"Insolvency Assurance"). Thereafter, Big Rivers shall continue the Insolvency
Assurance unless and until the RUS, in the exercise of its discretion, were to
consent to any of the foregoing. In all events and throughout the Term, each of
the RUS, the Members and the LG&E Parties shall be entitled to rely upon the
specific provisions of this Agreement, including but not limited to the stated
Term (i.e., approximately 25 years), and shall be entitled to take whatever
actions may prove to be necessary or appropriate to maintain the benefit of
their bargain in the event that Big Rivers ever attempts to cause the rejection
or termination of this Agreement (other than in accordance with its terms) in a
subsequent bankruptcy or reorganization proceeding or otherwise.
17.2 LEM recognizes and acknowledges that the RUS, the Members and Big
Rivers have in good faith entered into the transactions to which this Agreement
and the other Operative Documents relate, and have agreed to consummate those
transactions in specific reliance upon the fact that the transaction
contemplated in the Operative Documents shall continue for the stated Term
(i.e., approximately 25 years). LEM has informed the RUS, the Members and Big
Rivers that LEM has in good faith entered into this Agreement in reliance upon
and with the specific intent of continuing this transaction through the stated
Term (i.e., approximately 25 years). In order to facilitate the approval of the
proposed rates of Big Rivers and to provide additional assurances of its good
faith and commitment, and without in any way intending to reduce or otherwise
avoid abiding by this Agreement throughout its stated Term (i.e., approximately
25 years), and without any implication by any of the Parties that LEM is or
would be entitled to attempt to reduce or otherwise avoid the terms of this
Agreement, LEM additionally commits and undertakes that for the period prior to
January 1, 2012, in the event of any filing by LEM of a petition or similar
filing for bankruptcy or reorganization or arrangement under any federal or
state bankruptcy or insolvency or similar Law, or the commencement of
involuntary proceedings against LEM under any such Law, neither LEM nor its
successors or assigns, if any, shall file, direct the filing of, join in,
consent to, or otherwise support any other party to any such proceedings in a
motion, complaint, pleading, statement, testimony or otherwise make any attempt
to terminate, reject or modify this Agreement (other than in accordance with its
terms) under Section 365 of the United States Bankruptcy Code, 11 U.S.C. ss.
101, et seq., as it subsequently may be amended, modified or supplemented or any
other similar, applicable federal or state bankruptcy or insolvency Laws (the
"Insolvency Assurance").
- 37 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Thereafter, LEM shall continue the Insolvency Assurance unless and until the
RUS, in the exercise of its discretion, were to consent to any of the foregoing.
In all events and throughout the Term, each of the RUS, the Members and Big
Rivers shall be entitled to rely upon the specific provisions of this Agreement,
including but not limited to the stated Term (i.e., approximately 25 years), and
shall be entitled to take whatever actions may prove to be necessary or
appropriate to maintain the benefit of their bargain in the event that LEM ever
attempts to cause the rejection or termination of this Agreement (other than in
accordance with its terms) in a subsequent bankruptcy or reorganization
proceeding or otherwise.
17.3 Nothing in this Section 17 shall modify, reduce or diminish: (i) the
rights of the RUS under the New RUS Loan Documents (as defined in that certain
New RUS Loan Agreement between Big Rivers and the RUS to be executed and
delivered on the Effective Date); or (ii) the rights of the mortgagees under the
New RUS Mortgage (as defined in said New RUS Loan Agreement); including without
limitation, any right to withhold consent with respect to any sale or
disposition of Big Rivers' property except on terms acceptable to the RUS and/or
such mortgages; but subject, the case of (i) and (ii) above, in all cases to the
Non-Disturbance Agreement of even date herewith among Big Rivers, RUS, AMBAC and
the LG&E Parties.
17.4 The provisions of this Section 17 shall survive any expiration or
termination of this Agreement for any reason and shall continue to be binding on
the Parties.
Section 18: General Provisions
18.1 Notices. All provisions set forth in the Participation Agreement with
respect to notices (Section 21.1) shall apply hereto.
18.2 Waiver. The failure of a Party to insist on the strict performance of
any provision of this Agreement or to exercise any right, power or remedy upon a
breach of any provision of this Agreement shall not constitute a waiver of any
provision of this Agreement or limit the Party's right thereafter to enforce any
provision or exercise any right.
18.3 Amendment and Modification. No amendment or modification of this
Agreement shall be valid unless made in writing and duly executed by the
Parties.
18.4 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the Commonwealth of Kentucky but without
giving effect to the conflict of law rules of such jurisdiction.
- 38 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
18.5 Further Assurances. Each Party shall take from time to time, for no
additional consideration, such actions and execute such additional instruments
as may be reasonably (a) necessary to implement and carry out the intent and
purpose of this Agreement or (b) desirable but not necessary to implement and
carry out the intent and purpose of this Agreement without incurring material
cost.
18.6 Survival of Terms and Conditions. The provisions of this Agreement
related to the recovery of damages sustained hereunder and the exercise of
remedies generally shall survive its termination to the full extent necessary
for their enforcement and the protection of the Party in whose favor they run.
18.7 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Parties and their respective successors and permitted assigns.
18.8 Time of the Essence. A material consideration of the Parties entering
into this Agreement is that the Parties will make all required payments as and
when due and will perform all other obligations under this Agreement in a timely
manner. Except as otherwise specifically provided in this Agreement, time is of
the essence of each and every provision of this Agreement.
18.9 Counterparts. This Agreement may be executed in counterparts, both of
which taken together shall constitute a single agreement.
18.10 Dispute Resolution. The Parties agree that any disputes arising with
respect to this Agreement shall be resolved in accordance with Section 15 of the
Participation Agreement.
18.11 Construction. This Agreement was the product of negotiations between
the Parties, and therefore the rule of contract construction that an agreement
shall be construed against the drafter shall not be applied to this Agreement.
- 39 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed in their respective names by their respective officers thereunder
duly authorized.
LG&E Energy Marketing Inc.
By /s/ John R. McCall
-----------------------------------
Title: Vice President and Secretary
Big Rivers Electric Corporation
By /s/ Michael H. Core
-----------------------------------
Title: President and CEO
- 40 -
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
EXHIBIT A
POINTS OF DELIVERY FOR UNIT POWER
The Points of Delivery at which Big Rivers may deliver and LEM shall
accept all Unit Output from the Generating Plants hereunder shall be at the
following generating plant disconnect switches for the high voltage side of the
unit step up transformer in amounts up to the net plant capacity at any time.
PLANTS
Robert D. Reid
Reid Gas Turbine
D.B. Wilson
Kenneth C. Coleman
Robert D. Green
Henderson Municipal Power and Light
- Station Two
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
EXHIBIT B
POINTS OF DELIVERY FOR PURCHASES BY BIG RIVERS
The Points of Delivery at which LEM may deliver and Big Rivers shall
accept all Base Power hereunder shall be as follows:
A. At the following generating plant disconnect switches for high
voltage side of the unit step up transformer in amounts up to the net
plant capacity at any time:
PLANTS
Robert D. Reid
Reid Gas Turbine
D.B. Wilson
Kenneth C. Coleman
Robert D. Green
Henderson Municipal Power and Light - Station Two
B. At the points of interchange between the Big Rivers Electric
Corporation system and the following entities in amounts not to exceed 80%
of the then-effective transfer capability of each individual point of
delivery:
Tennessee Valley Authority
Shawnee Plant
Marshall (2)
Barkley (3) (SEPA)
Paradise
Southern Illinois Power Cooperative
Morganfield
Livingston County
Louisville Gas and Electric Company
Cloverport
Kentucky Utilities Company
Hardinsburg
D.B. Wilson
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
Southern Indiana Gas and Electric Company
Henderson County Substation
Hoosier Energy Rural Electric Cooperative
Kenneth C. Coleman
C. At any new point of interchange that may be established during
the Term of this Agreement in amounts equal to 50% of the then-effective
transfer capability.
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
EXHIBIT C
POINTS OF METERING
The Points of Metering, which are those points at which Big Rivers
delivers Power to the Members, shall be as set forth below.
GREEN RIVER ELECTRIC
All 27 rural delivery points are metered at 12,470 volts
Industrials' delivery point metering voltage
- ACMI 13,800 volts
- Commonwealth Aluminum #1 13,800 volts
- Commonwealth Aluminum #2 13,800 volts
- Commonwealth Aluminum #3 13,800 volts
- Alcoa-Hawesville Works 13,800 volts
- Kimberly-Clark #1 161,000 volts
- Kimberly-Clark #2 161,000 volts
- Willamette #1 12,470 volts
- Willamette #2 12,470 volts
- Willamette #3 12,470 volts
- Worldsource #1 13,800 volts
- Worldsource #2 13,800 volts
HENDERSON UNION ELECTRIC
14 rural delivery points are measured at 12,470 volts
1 rural delivery point is measured at 25,000 volts
Industrials' delivery point metering voltage
- Accuride 12,470 volts
- Black Diamond Mine 7,200 volts
- C.R. Mining 69,000 volts
- Cardinal River Resources 7,200 volts
- Dotiki #3 12,470 volts
- Hudson Foods #1 25,000 volts
- Hudson Foods #2 25,000 volts
- KBA #1 4,160 volts
- KBA #2 4,160 volts
- Lodestar Energy 69,000 volts
- Peabody Breckenridge 69,000 volts
- P&M Mine 69,000 volts
- Patriot Mine 69,000 volts
- Smith Coal 69,000 volts
- Valley Grain 12,470 volts
- Victory Processing 7,200 volts
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
JACKSON PURCHASE ELECTRIC
All 23 rural delivery points are metered at 12,470 volts
Industrials' delivery point metering voltage:
- Shell Oil 4,160 volts
MEADE COUNTY ELECTRIC
All 14 rural delivery points are metered at 12,470 volts
No industrial delivery points
POWER PURCHASE AGREEMENT BETWEEN
BIG RIVERS ELECTRIC CORPORATION AND LG&E ENERGY MARKETING INC.
POWER PURCHASE AGREEMENT (Schedule 3.3(a))
MONTHLY MARGIN PAYMENTS
Monthly
Margin
Payment
($1,000's)
- --------------------------------------------------------------------------------
1998 $2,276
- --------------------------------------------------------------------------------
1999 $2,276
- --------------------------------------------------------------------------------
2000 $2,276
- --------------------------------------------------------------------------------
2001 $2,219
- --------------------------------------------------------------------------------
2002 $2,202
- --------------------------------------------------------------------------------
2003 $1,448
- --------------------------------------------------------------------------------
2004 $1,423
- --------------------------------------------------------------------------------
2005 $1,419
- --------------------------------------------------------------------------------
2006 $1,410
- --------------------------------------------------------------------------------
2007 $1,418
- --------------------------------------------------------------------------------
2008 $1,397
- --------------------------------------------------------------------------------
2009 $1,384
- --------------------------------------------------------------------------------
2010 $1,363
- --------------------------------------------------------------------------------
2011 $643
- --------------------------------------------------------------------------------