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Amended And Restated Power Sales Contract

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Sectors: Services
Effective Date: December 18, 1998
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AMENDED AND RESTATED POWER SALES CONTRACT


THIS AMENDED AND RESTATED POWER SALES CONTRACT (the "Contract") is made and entered into this 18th day of December 1998 (the "Contract Date"), by and between SOUTHERN ENERGY CANAL, L.L.C., a Delaware limited liability company ("Seller") and MONTAUP ELECTRIC COMPANY, a Massachusetts corporation ("Purchaser"). Seller and Purchaser are referred to herein individually as a "Party" and collectively as the "Parties."


RECITALS:


A. Seller is a party to that certain Asset Sale Agreement dated May 15, 1998 (the "Asset Sale Agreement") between Seller (as successor by assignment to Southern Energy New England, L.L.C.) and Canal Electric Company ("CEC") providing for the sale of Canal Unit 1 from CEC to Seller.


B. Purchaser is a party to that certain Power Contract between Purchaser and CEC dated December 1, 1965 (the "Original Contract") for the sale of 25% of the capacity and energy from Canal Unit I to Purchaser, and CEC is a party to Power Contract s dated December 1, 1965 with each of Boston Edison Company, Commonwealth Electric Company and Cambridge Electric Light Company and New England Power Company (the "Other Purchasers' Original Contracts"), each of which is substantially identical to the Original Contract and provides for the sale of 25% of the capacity and energy to each of the other purchasers.


C. In connection with the closing of the Asset Sale Agreement, CEC has assigned the Original Contract and the Other Purchasers' Original Contracts to Seller effective as of the closing, and the Parties hereto desire to enter into this Contract t o amend, restate, supersede and replace the Original Contract, effective on the closing of the Asset Sale Agreement.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties hereto mutually covenant and agree as follows:


1 . Definitions


"Affiliate" means any other entity (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such entity. For purposes of the foregoing, "control" means the direct or indirect ownership of more than seventy percent of the outstanding capital stock or other equity interest having ordinary voting power.


"Asset Sale Agreement" has the meaning set forth in Recital A.


"Base Amount" has the meaning set forth in Section 5(a).


"Bid Procedures" means the bid procedures agreed to by Seller and the Contract Purchasers Committee from time to time for bidding Canal Unit I to the ISO consistent with the then effective Operational Characteristics.


"Business Day" means any day other than a Saturday, Sunday or a Holiday that is observed on a weekday. If any performance date referenced in this Contract is not a Business Day, such performance date shall be the next succeeding Business Day.


"Canal Unit I" means Unit I at the Canal Station in Sandwich, Massachusetts.


"CEC" means Canal Electric Company, formerly known as Plymouth County Electric Company.


"Commonwealth/Cambridge" means collectively, Commonwealth Electric Company and Cambridge Electric Company. Commonwealth/Cambridge shall be deemed to be one Contract Purchaser.


"Contract Costs" means the costs Purchaser incurs under and in connection with this Contract.


"Clean Air Act" means the federal environmental statute enacted at 42 U.S.C.A. 7401 et seq. to regulate and control air pollution.


"Contract" means this Amended and Restated Power Sales Contract between Seller and Purchaser.


"Contract Date" means the date of this Contract.


"Contract Parties" means Seller and the Contract Purchasers.


"Contract Purchasers" means Purchaser and the Other Purchasers.


"Contract Purchasers Committee" means the standing committee of representatives of the Contract Purchasers and Seller established pursuant to Section 3 of this Contract.


"Contract Year" means a calendar year during the term of this Contract; provided, however, the first Contract Year shall begin on the Effective Date and end on December 31, 1999, and the last Contract Year shall end on the expiration of the term of t his Contract.


"Creditworthiness Criteria" means an entity which has a credit rating of at least "BBB-," from the Standard & Poor's Rating Group (a division of McGraw Hill), or its successor ("S&P") or an equivalent rating from Moody's Investor Services, Inc. or it s successor ("Moody's"). The Creditworthiness Criteria may be satisfied by the delivery of collateral security for the obligations of a Party hereunder in the form of (i) a guarantee in form and substance reasonably satisfactory to the other Party from an entity that meets the Creditworthiness Criteria, or (ii) a direct-pay, irrevocable, standby letter of credit from a major U.S. commercial bank having a credit rating of at least "A" from S&P or "A-2" from Moody 7 s; each in an amount, form and substance reasonably approved by the other Party.


"CTC" or "Contract Termination Charges" shall have the meaning set forth in that certain settlement filed by Purchaser with FERC in Docket Nos. ER97-2800 et al, which settlement FERC approved with conditions on December 19, 1997.


"Defaulting Party" shall have the meaning set forth in Section 27(a).


"Delivery Point" means the point where capacity, energy and ancillary services generated by Canal Unit I are delivered to the NEPOOL PTF.


"Demand Charge" shall have the meaning set forth in Section 5.


"Edison" means Boston Edison Company.


"Effective Date" has the meaning set forth in Section 2(a).


"Energy" shall have the meaning assigned to such term by the Restated NEPOOL Agreement.


"Energy Charge" shall have the meaning set forth in Section 6.


"Emissions Allowances" means NOx Emission Allowances and SO2, Allowances.


"Emissions Charge" shall have the meaning set forth in Section 7.


"Existing NOx Allowances" shall have the meaning set forth in Section 7.


"Event of Default" shall have the meaning set forth in Section 27(a).


"Fuel means number six (No. 6) fuel oil.


"Fuel Procurement Policy" means the policy established by Seller and approved by the Contract Purchasers Committee to procure Fuel for Canal Unit 1.


"FERC" means Federal Energy Regulatory Commission.


"Good Utility Practice" means any of the practices, methods or acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods and acts that in the exercise of reasonable judgment in light of the facts known at the time a decision was made, could have been expected to accomplish the desired result at reasonable cost consistent with reliability, safety and expedition and giving due regard for the compliance with applicable law and the requirements of governmental agencies having jurisdiction and the rules, regulations and procedures of NEPOOL and the ISO. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a spectrum of acceptable practices,, methods or acts.


"Hearing" shall have the meaning set forth in Section 23(b).


"Holiday" means New Year's Day, President's Day, Patriot's Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day, the day following Thanksgiving Day, and Christmas Day.


"Installed Capacity" shall have the meaning assigned to such term by the Restated NEPOOL Agreement.


"Interest Rate" means, for any date, two (2) percent over the per annum rate of interest equal to the prime lending rate as may from time to time be published in The Wall Street Journal under "Money Rates"; provided, however, that the Interest Rate s hall never exceed the maximum lawful rate permitted by applicable law.


"ISO" means ISO New England, Inc., the independent system operator for the New England region, and its successors and assigns.


"Market Implementation Date" means the effective date of the implementation of the bid-based market for energy in NEPOOL.


"Mediation Notice" shall have the meaning set forth in Section 23(a).


"NEPCO" means New England Power Company.


"NEPOOL" means the New England Power Pool, and its successors and assigns.


"NEPOOL Defined Products" means any electrical generation-related products established by NEPOOL which may be produced by Canal Unit 1, including without limitation, Installed Capacity, Operable Capacity, Energy, Ten Minute Spinning Reserve, Ten Minute Nonspinning Reserve, Thirty Minute Operating Reserve and Automatic Generation Control, as such terms are defined by the Restated NEPOOL Agreement.


"NEPOOL PTF" means the NEPOOL Pool Transmission Facilities, as defined by the Restated NEPOOL Agreement.


"New Contract Purchasers" means Purchaser and the Other Purchasers which enter into an Other Purchasers' New Contract, from time to time.


"Non-Defaulting Party" shall have the meaning set forth in Section 27(a)(iii).


"NOx Emission Allowance" means an authorization under Massachusetts air quality regulations to emit one ton of nitrogen oxides during the period May 1 through September 30 of any given year.


"NOx Season" means the months of May through September of each year.


"Operational Characteristics" means the operating characteristics of Canal Unit I as set forth in the NEPOOL NX-12(a) report or any similar report delivered by Seller to the Contract Purchasers seasonally, as revised from time to by Seller to reflect changes in the actual physical operating characteristics of Canal Unit I or as agreed to by the Contract Purchasers Committee in accordance with Section 3(b)(ii).


"Original Contract" has the meaning set forth in Recital B.


"Other Purchasers" means Commonwealth/Cambridge, Edison and NEPCO and their respective successors and permitted assigns.


"Other Purchasers' New Contracts" means any agreement between Seller and any of the Other Purchasers which terminates, amends or replaces such Other Purchaser's Original Contract.


"Other Purchasers' Original Contracts" has the meaning set forth in Recital B.


"Party" and collectively the "Parties" refers to Seller and/or Purchaser.


"Purchaser" means Montaup Electric Company and its successors and permitted assigns.


"Restated NEPOOL Agreement" means the NEPOOL Agreement dated December 31, 1996, as amended from time to time.


"RFP" means a request for proposal as defined in Section 25(b) hereof.


"SCR" means selective catalytic reduction equipment and process installed on Canal Unit 1.


"SCR Amount" shall have the meaning set forth in Section 5(b).


"SCR Operation Date" means the date the SCR becomes operational for Canal Unit 1.


"Seller" means Southern Energy Canal, L.L.C, and its successors and assigns.


"Senior Officers Committee" means a committee of senior officers of each Contract Party established in accordance with Section 23(a).


"SO2 Allowance" means an authorization under the Clean Air Act to emit one ton of sulfur dioxide on an annual basis.


2. Effective Date; Assignment and Amendment


(a) This Contract shall become effective upon the closing of the Asset Sale Agreement (the "Effective Date"). If the Effective Date does not occur on or before December 31, 1998, Purchaser shall have the right to terminate this Agreement and resume service under the Original Contract if Purchaser gives Seller written notice of such termination by January 5, 1999.


(b) Purchaser hereby consents to the assignment of the Original Contract by CEC to Seller, and the Parties hereby amend and restate in its entirety the Original Contract. Such assignment, amendment and restatement shall be effective on the Effective Date. Purchaser acknowledges and agrees that it is not aware of any claims against CEC under the Original Contract and Seller shall have no liability for any claims or demands of Purchaser under the Original Contract or this Contract arising with respect to acts or omissions prior to the Effective Date.


(c) If FERC has not issued a final non-appealable order acceptable to Purchaser, in its sole discretion, approving Purchaser's recovery of Contract Costs as just and reasonable pursuant to the provisions of Purchaser's CTC by the Reopener Date, t hen within five (5) Business Days after the Reopener Date, Purchaser may deliver written notice to Seller requiring the Parties to amend the terms of this Contract so that the charges to Purchaser will be computed in accordance with the terms of the Original Contract. As used herein the Reopener Date" shall be July 3 1, 1999, however, if FERC has issued an order that is acceptable to Purchaser but is not final and non-appealable by such date, the Reopener Date shall be automatically extended for sixty (60) days. Such amendment of this Contract shall also require that the Parties will make payments to each other as necessary to true-up any charges from the Effective Date of this Contract until the effective date of any such amendment as compared to charges under the Original Contract for such period. Purchaser shall diligently seek to obtain an order from FERC approving the recovery of Contract Costs as just and reasonable pursuant to the provisions of Purchaser's CTC.


(d) Notwithstanding Sections 5 and 6 below, if the Effective Date occurs before January 1, 1999, CEC shall bill Purchaser in accordance with the Original Contract for service provided between the Effective Date and January 1, 1999, and Seller will recover from CEC such portion of the charges as are, attributable to service between the Effective Date and January 1, 1999. Seller will use reasonable efforts to have CEC perform all accountings required under the Original Contract after January 1, 1999.


3. Contract Purchasers Committee


(a) For the mutual advantage of the Contract Parties, a Contract Purchasers Committee shall be established consisting of one (1) representative from each of the Contract Purchasers and one (1) representative from Seller. The New Contract Purchasers shall each have the right to vote and any Other Purchasers shall have the rig ht to attend meetings but shall only have the right to vote on matters which require each such Other Purchaser's consent under such Other Purchaser's Original Contract. The Purchaser and Seller shall each appoint to the Contract Purchasers Committee officers or representatives that have the authority to act on behalf of their respective Parties to the extent required under the terms of this Contract. The Contract Purchasers Committee shall meet at least once every six months during the ten-n at such times as may be announced by Seller. Each member of the Contract Purchasers Committee shall have the right to call a meeting on at least ten (10) Business Days prior notice to the other members of the Contract Purchasers Committee.


(b) The approval of the Contract Purchasers Committee, which approval shall not be unreasonably withheld, is required for the following:


(i) a change in the Bid Procedures shall require the unanimous approval of the Contract Purchasers Committee; provided, however, any change which has or may have a material adverse effect on Canal Unit I shall require the written approval of Seller, which shall not be unreasonably withheld;


(ii) Seller's change in the Operational Characteristics shall require the unanimous approval of the Contract Purchasers Committee, except any change required, in Seller's reasonable judgment, to adhere to Good Utility Practice;


(iii) Seller's scheduling of any planned outage for routine maintenance and overhauls if such planned outage is scheduled during a time other than the spring or fall shall require the approval of a majority of the Contract Purchasers Committee; Seller shall consult with the Contract Purchasers Committee regarding all planned outages including the planned outage to install the SCR for Canal Unit 1. Seller shall keep the Contract Purchasers Committee informed of the outage schedule for the SCR, and changes thereto which in Seller's reasonable judgment are necessary or prudent to install the SCR shall not require approval of the Contract Purchasers Committee;


(iv) any change to the Fuel Procurement Policy shall require the unanimous approval of the Contract Purchasers Committee;


(v) the acquisition and disposition of NOx Emission Allowances and SO, Allowances for Canal Unit I shall require the approval of a majority of the Contract Purchasers Committee (to the extent acquisitions are approved, Seller may acquire Emission Allowances from Contract Purchasers in accordance with Section 7(g)); provided, however, Seller shall not be liable for the failure of the Contract Purchasers Committee to approve the acquisition of NOx Emission Allowances and/or SO, Allowances sufficient for the operation of Canal Unit 1;


(vi) the appointment of an agent by Seller pursuant to Sections 8 and 9 which is not an Affiliate of Seller shall require the approval of a majority of the Contract Purchasers Committee;


(vii) instituting a material capital addition or other action for which approval of the Contract Purchasers Committee is required pursuant to Section 9 shall require the approval of a majority of the Contract Purchasers Committee.


(c) Seller's representative shall have the night to attend all Contract Purchasers Committee meetings but shall not have the power to vote except in the case of a deadlock on a matter which Seller determines should be resolved to comply with Good Utility Practice. In the event an Affiliate of Seller becomes a Contract Purchaser (as
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