Wholesale Power Supply And Services Contract

WHOLESALE POWER SUPPLY AND SERVICES CONTRACT
BETWEEN TEXAS NEW MEXICO POWER COMPANY
AND
CAP ROCK ELECTRIC COOPERATIVE, INC.


This WHOLESALE POWER SUPPLY AND SERVICES CONTRACT ("Contract") is entered into as of April 16, 1997, by and between TEXAS NEW MEXICO POWER COMPANY, a Texas corporation ("TNP"), and CAP ROCK ELECTRIC COOPERATIVE, INC., a Texas corporation ("Cap Rock"). (TNP and Cap Rock each being referred to herein as a "Party" or jointly as the "Parties").


RECITALS:
WHEREAS, Cap Rock operates an electric cooperative for the purpose of providing electric power to its customers ("Customers"); and


WHEREAS, Cap Rock desires to reduce its total costs for electric power by entering into new electric power supply arrangements; and


WHEREAS, TNP is engaged in the business of managing and marketing electric power and utilizing its management skills and techniques to reduce electric power costs for its customers;


NOW THEREFORE, in consideration of the recitals and the covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:


1. DEFINITIONS


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1.1 "ANCILLARY SERVICES" are defined in the ERCOT Operating Guide as the same may be amended from time to time.


1.2 "CAP ROCK DEMAND" means the requirements for electric power imposed on Cap Rock's System by Cap Rock's customers in Cap Rock's Hunt-Collin Division measured in KW as an average over 30 minute intervals.


1.3 "CAP ROCK ENERGY" has the meaning in Section 3.2.


1.4 "CONTRACT INTEREST RATE" means the lesser of: (a) the then effective prime rate for large U.S. Money Center Commercial Banks, published under "Money Rates" by the Wall Street Journal plus two percent or (b) the maximum applicable non-usurious rate in the State of Texas.


1.5 "CUSTOMERS" has the meaning in the Recitals.


1.6 "TNP" has the meaning in the introductory paragraph.


1.7 "ENERGY PAYMENT" has the meaning in section 3.2.


1.8 "ERCOT" means the Electric Reliability Council of Texas.


1.9 "Energy Price" has the meaning in Section 3.3.


1.10 "FIRM" means not subject to interruption in the absence of Force Majeure.


1.11 "FORCE MAJEURE" has the meaning in Section 10.1


1.12 "GOVERNMENTAL REGULATIONS" means any law. statute. ordinance, or regulation, or any change to any existing law, statute, ordinance or regulation, which is promulgated, enacted or imposed by any local, state or federal government, agency or authority including, without limitation, any environmental law, statute, ordinance or regulation but excluding any Taxes.


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1.13 "KV" means kilovolt or one thousand volts.


1.14 "KW" means kilowatt or one thousand watts.


1.15 "MWH" means megawatt hour or one megawatt or energy for one
hour.


1.16 "POINT OF DELIVERY" has the meaning in Section 2.3.


1.17 "PRUDENT ELECTRIC INDUSTRY PRACTICES" means any of the reasonably prudent practices, methods, and acts engaged in or approved by a significant portion of the wholesale electric power industry during the relevant time period, or any of the practices methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition.


1.18 "REGULATORY COSTS" means any assessments, charges, fees or costs incurred by a Party or for which a Party is liable as a result of Governmental Regulations and which directly affect the cost of electric power delivered to Cap Rock under this Contract, whether from ownership, generation, transmission or the purchase, sale or delivery of electric power or fuel, excluding taxes. "Regulatory Costs" excludes the costs which a Party incurs in the conduct of its business in general, whether or not this Contract exists. 1.19 "Swindell Substation" means the Swindell electric substation located in Hunt County, Texas at the interconnection of the Cap Rock System and the Texas Municipal Power System transmission system.


1.20 "SYSTEM" means Cap Rock's Hunt-Collin electric transmission and distribution system.


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1.21 "TAXES" shall include, without limitation, any and all federal, state or local taxes imposed on or measured by sales, use, gross receipts, consumption or other similar taxes or franchise fees, but shall not include any taxes imposed on net income or net worth for the privilege of doing business or exercising a franchise.


1.22 "TERM" has the meaning in Section 2.5.


2. TERMS AND CONDITIONS


2.1 POWER SUPPLY. During the Term and subject to the limitations set forth in this Contract: (i) TNP shall cause sufficient capacity to be made available, and sufficient power and energy be delivered, to Cap Rock at the Point of Delivery on a Firm basis to satisfy Cap Rock's Demand, (ii) TNP shall have the sole right and obligation to satisfy all of Cap Rock's Demand at the Point of Delivery (so long as TNP has satisfied its contractual requirements to Cap Rock), and (iii) Cap Rock shall accept and pay TNP for all energy which is delivered to Cap Rock by TNP at the Point of Delivery, to satisfy Cap Rock's Demand. Cap Rock and its Customers shall use the energy made available by TNP under this Agreement to meet Cap Rock's Demand and not for resale to persons or entities other than Cap Rock or its customers.


2.2 RELIABILITY CRITERIA. TNP shall supply electric power to Cap Rock in accordance with ERCOT reliability criteria. TNP shall comply with all ERCOT Operating Guides applicable to generation, scheduling, delivery, metering and telemetering of demand and energy as the same are in effect from time to time.


2.3 POINT OF DELIVERY. The Point of Delivery for capacity made available and energy delivered under this Contract shall be delivered to the high side of the transformer at the Swindell Substation located in Hunt County, Texas.


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2.4 METERING. The meter shall be placed on the low side of the transformer at the Swindell Substation. A meter that compensates for transformer losses will be used.


2.5 TERM. The term of this Contract ("Term") shall commence at 12:01 A.M. on June 1, 1997 and shall expire at 11:59 P.M. on May 31, 1999, unless extended by mutual agreement or as otherwise terminated pursuant to this Agreement.


2.6 LOAD CONTROL AREA REQUIREMENTS. The Parties agree to incorporate the load of the Hunt-Collin division of Cap Rock into the TNP load control area for the Term of this Contract. All capital costs and expenses associated with required RTUs will be the responsibility of Cap Rock. All telephone line charges for telemetry between the RTU(s) and TNP's load control area will be shared 50%-50% by the Parties.


2.7 EMERGENCY TIES. The Parties recognize that Cap Rock currently has a normally open emergency interconnection point with TMPA near the City of Farmersville and is contemplating another with the City of Greenville. It is Cap Rock's intent to use these and any future interconnection points solely to accommodate mutual backup energy arrangements with other utilities in the event of system emergencies. Cap Rock agrees to coordinate with and inform TNP system operators of any intent to utilize such interconnection point(s) to receive or-deliver energy.


3. COMPENSATION, PRICING AND CHARGES


3.1 COMPONENTS. TNP's compensation for the power supply and other services it provides to Cap Rock under this Contract shall be the total of the following components:


1. Energy - the result of (a) The Energy Price (Section
3.3) times (b) the Energy Amount (Section 3.2)


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2. Substation Lease Payment - if any (Section 3.4): and


3. Planned Transmission Service Charges (Section 3.5).


4. 50% of telephone line charges for telemetry between
the RTUs and TNP's control center.


3.2 ENERGY AMOUNT. For each month, the Energy Amount shall be the metered KWH.


3.3 ENERGY PRICE. The Energy Price per KWH for the energy delivered to the Cap Rock system is dependent upon the monthly load factor. The load factor shall be determined by dividing the metered KWH for the month by the product of the metered KW and the number of hours in the monTh. The prices shall be according to the following:


MONTHLY LOAD FACTOR PRICE PER KWH
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LESS THAN 40% 2.833(CENT)
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40% TO 45% 2.756(CENT)
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45% TO 50% 2.695(CENT)
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50% TO 55% 2.645(CENT)
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55% TO 60% 2.603(CENT)
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MORE THAN 603% 2.567(CENT) ...