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Exhibit 10.15
Contract No. 01PB-10758
REMARKETING ADDENDUM TO THE 1996 AGREEMENTS
EXECUTED BY THE
BONNEVILLE POWER ADMINISTRATION
AND
GOLDEN NORTHWEST ALUMINUM, INC.,
GOLDENDALE ALUMINUM COMPANY, AND
NORTHWEST ALUMINUM COMPANY
TABLE OF CONTENTS
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SECTION PAGE
1. TERM ......................................................................... 2
2. DEFINITIONS................................................................... 3
3. EXHIBITS...................................................................... 4
4. REMARKETING DUE TO NEW AND PRIOR CURTAILMENTS................................. 4
5. REMARKETING UNDER THIS ADDENDUM............................................... 4
6. REVENUES FROM REMARKETING..................................................... 5
7. BENEFITS TO BPA FROM REMARKETING.............................................. 6
8. QUALIFIED EXPENDITURES........................................................ 7
9. CONSENT OF UNITED STEEL WORKERS OF AMERICA.................................... 9
10. NOTICES....................................................................... 9
11. UNDERLYING PROVISIONS......................................................... 10
12 FEDERAL POWER SERVICE AFTER SEPTEMBER 30, 2006................................ 10
13. SIGNATURES ................................................................... 10
EXHIBIT A: MONTHLY AMOUNTS AVAILABLE FOR REMARKETING
This REMARKETING ADDENDUM is executed by the UNITED STATES OF AMERICA,
Department of Energy, acting by and through the BONNEVILLE POWER
ADMINISTRATION ("BPA"), GOLDEN NORTHWEST ALUMINUM, INC. ("Golden
Northwest"), GOLDENDALE ALUMINUM COMPANY ("GAC"), and NORTHWEST ALUMINUM
COMPANY ("NAC"). Golden Northwest and NAC are Corporations organized
under the laws of the State of Oregon. GAC is a Corporation organized
under the laws of the State of Delaware. GAC and NAC are collectively
referred to as the "Companies."
RECITALS
GAC, a subsidiary of Golden Northwest, operates an aluminum smelter and
related facilities (the "Goldendale Smelter") in Klickitat County,
Washington. NAC, a subsidiary of Golden Northwest, operates an aluminum
smelter and related facilities (the "Northwest Smelter") in Wasco
County, Oregon.
BPA supplies electric power to the Goldendale Smelter under Block Power
Sales Agreement, Contract No. 95MS-94854, and to the Northwest Smelter
under Block
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Power Sales Agreement, Contract No. 95MS-94862 (the "1996 Agreements").
Effective on October 1, 2001, BPA will supply electric power to Golden
Northwest for use at the Goldendale Smelter and/or the Northwest Smelter
under a Block Power Sales Agreement, Contract No. 00PB-12197
(Subscription Agreement), between BPA and Golden Northwest. The amount
of power available under the Subscription Agreement is not sufficient to
meet all of the power needs of the smelters.
The Companies have no right under the 1996 Agreements to sell Federal
power. However, the 1996 Agreements provide, subject to certain
limitations and restrictions, for BPA to remarket power not delivered to
the Companies for use in smelter operations, with the dollar amount by
which the proceeds of such remarketing exceed the contract price for the
power payable to the Companies.
The Companies desire that BPA remarket power made available by the
Companies under their 1996 Agreements to BPA and use the Net Proceeds
for electric power to enhance Golden Northwest's and the Companies'
abilities to operate their smelters for the long-term through, among
other things, the development of cost effective sources of power so as
to maintain employment and economic vitality in the communities in which
they operate.
Due to the volatility in current power markets, the notice provisions
and other restrictions and limitations in the 1996 Agreements reduce
significantly the price that BPA can obtain for remarketed electric
power. The mutual cooperation of the parties, as reflected in this
Addendum, is appropriate to allow for an enhanced price for the
remarketed power.
BPA is willing to modify the remarketing notice requirements in the 1996
Agreements to enhance the value of the remarketed power to enhance
Golden Northwest's and the Companies' abilities to maintain long-term
operations, to avoid or to mitigate the adverse impacts on the
Companies' employees and their local communities of changing operating
levels due to volatile electric power markets, and to obtain the assured
monetary benefits for BPA under this Addendum. Golden Northwest's
separate agreement with the United Steel Workers of America on the use
of Proceeds from Remarketing under this Addendum demonstrates that this
Addendum satisfies this purpose of avoiding or mitigating such adverse
impacts.
The Parties desire to agree on the use of proceeds from Remarketing and
to define the limited terms upon which the Companies may be entitled to
the Net Proceeds from such Remarketing.
THEREFORE, BPA, Golden Northwest, GAC, and NAC agree:
1. TERM
This Addendum takes effect on the date signed by the Parties (the
"Effective Date"), and shall continue in effect until the earlier of the
date on which all Net Proceeds have been paid by BPA to the Companies
for the purposes specified herein, or 2400 hours on September 30, 2010.
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2. DEFINITIONS
Capitalized terms in this Addendum shall have the meanings defined below
or in context, or, if not defined in this Addendum, the meanings defined
in the 1996 Agreements.
(a) "1996 Agreements" means the Block Power Sales Agreements,
Contract Nos. 95MS-94854 and 95MS-94862, between BPA and GAC and
between BPA and NAC, respectively.
(b) "Addendum" means this Remarketing Addendum To The 1996
Agreements, Contract No. 01PB-10758.
(c) "Affiliates" for Golden Northwest includes the Companies, and for
BPA includes its Power Business Line.
(d) "Net Proceeds" means the amount by which revenues from the
Remarketing of Excess Firm Energy for the months of January
through September 2001, exceed the revenues from the IP-96 rate
applicable to such amounts of Excess Firm Energy, less the BPA
benefits for such months from Remarketing as specified in
sections 7(b) and 7(c) below, plus the interest cost that BPA
avoids as a result of such Net Proceeds, as calculated in section
6 of this Addendum.
(1) "Goldendale Net Proceeds" means Net Proceeds from the
Remarketing of Excess Firm Energy available under Contract
No. 95MS-94854.
(2) "Northwest Net Proceeds" means Net Proceeds from the
Remarketing of Excess Firm Energy available under Contract
No. 95MS-94862.
(e) "New Curtailments" means monthly amounts of Plant Load at the
Goldendale Smelter and the Northwest Smelter that are available
for Remarketing under this Addendum. Such amounts are as
specified in Exhibit A.
(f) "Party" or "Parties" means BPA, Golden Northwest, GAC, and/or
NAC.
(g) "Prior Curtailments" means curtailments other than New
Curtailments.
(h) "Qualified Expenditures" means those expenditures identified in
section 8 of this Addendum, the incurrence of which entitles
either Company or its designee to the payment of Net Proceeds.
For purposes of this definition, the word incurrence is deemed to
be the earlier of payment by the Company or when recorded as an
obligation on the Company's financial statements under generally
accepted accounting principles.
(i) "Remarketing" or "Remarket" means the retention by BPA of Excess
Firm Energy and sales of Excess Firm Energy under this Addendum
and any agreement entered into pursuant to this Addendum.
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(j) "Remarketing Transaction" means the specific amounts and
durations of Excess Firm Energy that a Company has requested BPA
to Remarket under this Addendum and the terms and conditions of
each such sale.
3. EXHIBITS
Exhibit A (Monthly Amounts Available for Remarketing) is attached hereto
and made a part of this Addendum.
4. REMARKETING DUE TO NEW AND PRIOR CURTAILMENTS
Beginning on the Effective Date, BPA and the Companies will not enter
into new remarketing transactions, agreements or sales, pursuant to
sections 18 of their 1996 Agreements with BPA, of any Excess Firm Energy
made available due to New Curtailments. All such remarketing sales of
Excess Firm Energy made available due to New Curtailments, and
agreements or transactions with respect to New Curtailments shall be
subject to the terms of this Addendum. All remarketing transactions,
agreements or sales of Excess Firm Energy made available due to Prior
Curtailments shall continue to be subject to the terms of the 1996
Agreements and any other existing agreements regarding such prior
transaction. Remarketing with respect to Prior Curtailments shall not be
subject to this Addendum whether or not deliveries of Excess Firm Energy
and/or payment for such Excess Firm Energy from Prior Curtailments
occurs on or after the Effective Date.
5. REMARKETING UNDER THIS ADDENDUM
(a) AMOUNTS AVAILABLE FOR REMARKETING
The monthly amounts available for Remarketing under this Addendum
are as specified in Exhibit A. A Company may request that BPA
Remarket the Excess Firm Energy to one or more Qualified
Purchasers identified by the Company. The Company shall notify
BPA of the amount and minimum duration of Excess Firm Energy to
be Remarketed and identify each Qualified Purchaser that has
agreed to purchase some or all of the Excess Firm Energy under
specified terms and conditions for agreed-upon amounts and
durations. With reasonable advance notice, within one (1) hour of
BPA receiving the Company's request, BPA shall either: (i) agree
to enter into the Remarketing Transaction as requested by the
Company; or (ii) notify the Company of its election to substitute
purchasers as provided in section 5(b).
(b) RIGHTS TO STEP IN FRONT OF A REMARKETING TRANSACTION
BPA may elect to substitute itself or another Qualified
Purchaser with public preference for the Qualified Purchaser(s)
identified by the Company as the purchaser under the Remarketing
Transaction(s). BPA may elect to make such substitution only if
BPA or the Qualified Purchaser(s) with public preference agrees
at that time in writing with the Company to perform all of the
obligations of the purchaser under the Remarketing
Transaction(s) according to its terms.
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(c) DISPOSITION OF REMARKETING REVENUES
If the amount of Net Proceeds is greater than zero in any month,
then BPA shall retain such Net Proceeds, subject to the terms of
this Addendum. If the amount of Net Proceeds is less than zero in
any month, then the Company at whose request BPA entered into the
Remarketing Transaction shall pay to BPA the deficit no later
than the time that payment of the Company's power bill from BPA
is due.
(d) TREATMENT OF TAKE-OR-PAY OBLIGATION UNDER THE 1996 AGREEMENTS
During the months of January through September 2001, the
Companies will not be billed for their Take-or-Pay Obligations
under the 1996 Agreements, because such Take-or-Pay Obligations
have been accounted for in the definition of "Net Proceeds",
section 2(d). For the month of December 2000, the Companies shall
be relieved of their Take-or-Pay Obligations for amounts not
scheduled to the Companies.
6. NET PROCEEDS FROM REMARKETING
(a) NET PROCEEDS FOR GAC AND NAC ACCOUNTED FOR SEPARATELY
Net Proceeds attributable to GAC shall be accounted for
separately from Net Proceeds attributable to NAC. In order to
encourage the Companies to make Qualified Expenditures, BPA will
add to the Goldendale Net Proceeds and Northwest Net Proceeds the
interest cost that BPA avoids due to availability of such
Proceeds as calculated pursuant to section 6(b) below. Net
Proceeds shall be deemed received by BPA on the date that BPA
actually receives good funds from a Qualified Purchaser under
Remarketing Transaction, or, if BPA has elected to substitute
itself as purchaser under a Remarketing Transaction, on the
twentieth (20th) day of the month following the month during
which such Excess Firm Energy would have been delivered to the
Company if such Excess Firm Energy were not subject to a
Remarketing Transaction.
(b) CALCULATION OF INTEREST RATE
The balance of Net Proceeds not paid out by BPA shall be credited
with interest each month of the BPA Fiscal Year (FY). Such
interest shall be calculated as one-twelfth (1/12) of the annual
fixed rate. Such annual fixed rate is equal to the Benchmark
10-year U.S. Treasury rate (as reported in the Wall Street
Journal) on October 1, or the first following business day of
each such FY.
(c) BPA PAYMENTS OF NET PROCEEDS TO GAC
BPA shall owe and pay Goldendale Net Proceeds to or at the
direction of GAC only to the extent and in the dollar amount that
GAC or its designee has made or incurred the obligation to make
Qualified Expenditures identified in this Addendum. BPA shall pay
to GAC or its designee from Goldendale Net Proceeds held by BPA
an amount equal to such Qualified Expenditures within twenty (20)
days after GAC requests Net Proceeds from BPA and provides to BPA
documentation to show that GAC or its designee has incurred
Qualified
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Expenditures. If the amount of Qualified Expenditures exceeds the
Goldendale Net Proceeds, then BPA shall pay only the amount of
Goldendale Net Proceeds held by BPA on the date payment of such
Net Proceeds is due. BPA shall pay additional Goldendale Net
Proceeds in respect of such Qualified Expenditure if and only to
the extent that BPA subsequently receives additional Goldendale
Net Proceeds. BPA shall, in no event, owe or pay to GAC or its
designee under this Addendum any amounts in excess of the
Goldendale Net Proceeds actually received by BPA plus BPA's
avoided interest cost added to such Net Proceeds. BPA shall in no
event owe or pay to GAC or its designee under this Addendum any
amounts in excess of Qualified Expenditures incurred by GAC or
its designee.
(d) BPA PAYMENTS OF NET PROCEEDS TO NAC
BPA shall owe and pay Northwest Net Proceeds to or at the
direction of NAC only to the extent and in the dollar amount that
NAC or its designee has made or incurred the obligation to make
Qualified Expenditures identified in this Addendum. BPA shall pay
to NAC or its designee from Northwest Net Proceeds held by BPA an
amount equal to such Qualified Expenditures within twenty (20)
days after NAC requests Northwest Net Proceeds from BPA and
provides to BPA documentation to show that NAC or its designee
has incurred Qualified Expenditures. If the amount of Qualified
Expenditures exceeds the Northwest Net Proceeds, then BPA shall
pay only the amount of Northwest Net Proceeds held by BPA on the
date payment of the Proceeds is due. BPA shall pay additional
Northwest Net Proceeds in respect of such Qualified Expenditure
if and only to the extent that BPA subsequently receives
additional Northwest Net Proceeds. BPA shall, in no event, owe or
pay to NAC or its designee under this Addendum any amounts in
excess of the Northwest Net Proceeds actually received by BPA
plus BPA's avoided interest cost added to such Northwest Net
Proceeds. BPA shall in no event owe or pay to NAC or its designee
under this Addendum any amounts in excess of Qualified
Expenditures incurred by NAC or its designee.
(e) END OF BPA PAYMENT OBLIGATIONS
BPA shall have no obligation to pay to any Party to this Addendum
or to any other person Net Proceeds as a result of Qualified
Expenditures or any other expenditures made after the date of
termination of this Addendum, and the Net Proceeds accounts shall
be extinguished on that date. BPA will retain any amounts
remaining in such accounts on the date of termination.
7. ASSURED MONETARY BENEFITS TO BPA FROM REMARKETING
The assured monetary benefits from Remarketing Transactions to be
retained by BPA are described as follows:
(a) BPA ASSURED MONETARY BENEFITS FOR REMARKETING DECEMBER 2000
ENERGY
For the balance of December 2000 the Companies will curtail Plant
Load to a level at which BPA is providing a total of 25
megawatthours (MWh) per hour
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during all hours to GAC under Contract No. 95MS-94854. Such
curtailment will produce 34,000 MWh of flat energy that is
retained by BPA and not subject to Remarketing under this
Agreement. If such curtailment during December 2000, is less than
34,000 MWh, then the Companies agree to delay the restart of
operations beginning October 1, 2001, until the 34,000 MWh amount
has been achieved.
(b) BPA ASSURED MONETARY BENEFITS FOR REMARKETING JANUARY
2001 ENERGY
For each Remarketing Transaction of Excess Firm Energy made
available during January 2001, the assured monetary benefits from
Remarketing that will be excluded from Net Proceeds shall be the
amount calculated by multiplying the lesser of the following by
the gross revenues from each such Remarketing Transaction:
(Price per MWh divided by $520) x 0.125
or
0.50
(c) BPA ASSURED MONETARY BENEFITS FOR REMARKETING FEBRUARY THOROUGH
SEPTEMBER 2001 ENERGY
BPA shall exclude from Net Proceeds $85,300,000 of the gross
revenues for Remarketing Excess Firm Energy made available during
the months of February through September 2001.
8. QUALIFIED EXPENDITURES
Qualified Expenditures under this Addendum shall be limited to
expenditures incurred for one of three purposes identified in sections
8(a), (b), and (c), which are:
(a) Expenditures or costs related to curtailing production at the
Goldendale Smelter or the Northwest Smelter, including:
(1) Compensation, benefits and other expenditures related to
employee layoffs, maintaining additional employees not
required for operations at the reduced level and/or job
reassignments as a result of reduced smelter operating
levels. By separate agreement, Golden Northwest has agreed
with the United Steel Workers of America to maintain
minimum employment levels and/or Special Supplemental
Payments to its employees. BPA, Golden Northwest, and the
Companies intend that all expenditures pursuant to that
agreement are Qualified Expenditures.
(2) The cost of cancellation penalties or other costs of
reducing obligations for alumina or other materials, costs
associated with covering product delivery obligations that
cannot be met from the Companies' operating
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capacity during the curtailment and other costs directly
associated with the shutdown.
(3) Expenditures on fixed operating and other fixed costs
directly related to operations within the Pacific
Northwest that cannot be reduced as operating levels are
reduced and on debt service, whether or not paid during a
curtailment, (including scheduled repayments of principal
and interest and redemption or retirement of debt).
(b) Expenditures or costs incurred pursuant to plans subject to the
approval of the United Steel Workers of America, which approval
shall not be unreasonably withheld, delayed, or conditioned, to
secure a future power supply and enhance operations of the
facilities of Golden Northwest or the Companies, including:
(1) Expenditures incurred for the planning, licensing, siting,
acquisition and/or construction of conventional or
renewable resources to provide power for future Company
operations and expenditures to purchase or otherwise
obtain power from any seller after October 1, 2001, that
is in addition to the power made available by BPA to
Golden Northwest under the Subscription Agreement. The
parties understand and agree that the expenditures under
this section 8(b)(1) will be not less than the lesser of
the dollar amount of:
$100 million
or
$62 million + [({$96 million x JanPrice / $520} -- JanBenefits) x 0.45];
where "JanPrice" is equal to the weighted (by MWh) average
price obtained for Remarketed Excess Firm Energy made
available in January 2001, and "JanBenefits" is equal to
the assured monetary benefits excluded from Net Proceeds
pursuant to Section 7(b) of this Addendum.
(2) Expenditures to upgrade the facilities of Golden Northwest
or the Companies to achieve energy conservation, operating
efficiencies, environmental benefits, or to preserve jobs
at the facilities.
(c) Payment of tax liabilities (including any interest and penalties)
created by this Addendum, including:
(1) An allowance for income taxes in an amount equal to any
income tax liability of Golden Northwest, GAC, or NAC that
results from the payment of Net Proceeds by BPA to GAC or
NAC in respect of a Qualified Expenditure that is not
fully deductible for tax purposes in the year incurred.
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(2) Any other obligation to pay taxes as a result of this
Addendum or a Remarketing Transaction entered into under
this Addendum.
(d) Upon request by BPA, the Companies shall provide BPA a
non-binding estimate of amounts to be spent under sections 8(a),
8(b), and 8(c) above, and the timing of when such expenditures
will occur.
(e) Notwithstanding the disbursement by BPA of Goldendale Net
Proceeds or Northwest Net Proceeds under this section 8, BPA will
have the right, subject to reasonable notice, to conduct limited
audits of GAC and NAC for the sole purpose of confirming that
obligations were actually made or incurred for Qualified
Expenditures. GAC and NAC agree to make available to BPA at GAC
and/or NAC offices any and all documentation necessary to conduct
such an audit. Any disbursements found by such an audit not to
have been supported by Qualified Expenditures shall be disallowed
and GAC and/or NAC shall, within 30 days of such finding, pay BPA
an amount equal to such disallowed disbursements. Such funds
shall be used to restore the Net Proceeds account(s).
9. CONSENT OF UNITED STEEL WORKERS OF AMERICA
No amendment to section 8 of this Addendum shall become effective
without the prior written consent of the United Steel Workers of
America.
10. NOTICES
Any notice required under this Addendum shall be in writing and shall be
delivered: (a) in person; (b) by a nationally recognized delivery
service; or (c) by United States Certified Mail. Notices are effective
when received. Any Party may change its address for notices by giving
notice of such change consistent with this section.
If to Golden Northwest, GAC, or NAC: If to BPA:
Golden Northwest Aluminum, Inc. Bonneville Power Administration
8000 NE. Parkway Drive, Suite 300 P.O. Box 3621
Vancouver, WA 98662-6744 905 NE. 11th Avenue
Attn: Gerald F. Miller Portland, OR 97208-3621
VP, Energy and Government Attn: Sydney D. Berwager -- PT-6
Affairs Account Executive
Phone: 360-944-9755 Phone: 503-230-5657
FAX: 360-944-9930 FAX: 503-230-3681
E-Mail: goldendaleal@earthlink.net E-Mail: sdberwager@bpa.gov
11. UNDERLYING PROVISIONS
Unless otherwise specified in this Addendum, all administrative and
operational provisions required to perform this Addendum shall be those
contained in the Subscription Agreement, including applicable
provisions, if any, related to delivery, scheduling, billing, payments,
metering, access to facilities, dispute resolution, uncontrollable
forces, continuity of services, and contract interpretation. Except as
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expressly provided herein, the 1996 Agreements shall remain in full
force and effect and shall be unmodified.
12. FEDERAL POWER SERVICE AFTER SEPTEMBER 30, 2006
Golden Northwest, GAC, and NAC, each agrees that it will not argue in
any legal or political forum that it has a statutory right to, or should
be allocated under current statutes, any direct service of Federal power
after September 30, 2006.
13. SIGNATURES
The signatories represent that they are authorized to enter into this
Addendum on behalf of the Party for whom they sign.
UNITED STATES OF AMERICA GOLDEN NORTHWEST ALUMINUM, INC.
U.S. Department of Energy
Bonneville Power Administration
By /s/ By /s/ BRETT WILCOX
---------------------------- ---------------------------------------
Account Executive
Name Name Brett Wilcox
-------------------------- -------------------------------------
(Print/Type) (Print/Type)
Date 12/29/00 Date 12/29/00
--------------------------- -------------------------------------
GOLDENDALE ALUMINUM COMPANY NORTHWEST ALUMINUM COMPANY
By /s/ BRETT WILCOX By /s/ BRETT WILCOX
---------------------------- ---------------------------------------
Name Brett Wilcox Name Brett Wilcox
-------------------------- -------------------------------------
(Print/Type) (Print/Type)
Date 12/29/00 Date 12/29/00
--------------------------- -------------------------------------
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EXHIBIT A
MONTHLY AMOUNTS AVAILABLE FOR REMARKETING
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DEMAND (MW) HLH ENERGY (MWH) LLH ENERGY (MWH)
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JANUARY 259 107,744 84,952
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FEBRUARY 258 99,072 74,304
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MARCH 225 97,200 70,200
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APRIL 290 116,000 92,510
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MAY 367 152,672 41,656
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JUNE 367 152,672 111,568
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JULY 367 152,672 120,376
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AUGUST 367 158,544 114,504
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SEPTEMBER 367 146,800 117,440
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