Exhibit 10(W)
TRANSITIONAL POWER PURCHASE AGREEMENT
BY AND BETWEEN
SIERRA PACIFIC POWER COMPANY
AND
VALMY POWER LLC
DATED: OCTOBER 16, 2000
ASSET BUNDLE: NORTH VALMY
TABLE OF CONTENTS
Section Page
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1. DEFINITIONS..............................................................................................1
2. TERM.....................................................................................................8
3. SECURITY................................................................................................10
4. SUPPLY SERVICE..........................................................................................11
5. NOTIFICATION............................................................................................14
6. PRICING OF ENERGY AND ANCILLARY SERVICES................................................................15
7. INVOICING AND PAYMENTS..................................................................................16
8. REGULATORY APPROVALS....................................................................................20
9. COMPLIANCE..............................................................................................20
10. INDEMNIFICATION.........................................................................................21
11. LIMITATION OF LIABILITY.................................................................................22
12. FORCE MAJEURE...........................................................................................23
13. DISPUTES................................................................................................24
14. NATURE OF OBLIGATIONS...................................................................................27
15. SUCCESSORS AND ASSIGNS..................................................................................27
16. REPRESENTATIONS.........................................................................................29
17. DEFAULT AND REMEDIES....................................................................................29
18 FACILITY ADDITIONS AND MODIFICATIONS....................................................................30
19. COORDINATION............................................................................................31
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE...........................................................31
21. OUTAGE SCHEDULING.......................................................................................31
22. REPORTS.................................................................................................32
23. COMMUNICATIONS..........................................................................................32
24. NOTICES.................................................................................................33
25. MERGER..................................................................................................34
26. HEADINGS................................................................................................34
27. COUNTERPARTS AND INTERPRETATION.........................................................................34
28. SEVERABILITY............................................................................................34
29. WAIVERS.................................................................................................35
30. AMENDMENTS..............................................................................................35
31. TIME IS OF THE ESSENCE..................................................................................35
32. APPROVALS...............................................................................................36
33. PLR SERVICE.............................................................................................36
34. CONFIDENTIALITY.........................................................................................36
35. CHOICE OF LAW...........................................................................................38
Exhibits Page
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EXHIBIT A ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS..............................................A-1
EXHIBIT B PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE OF
ANCILLARY SERVICES ....................................................................B-1
EXHIBIT C SUPPLIER'S MONTHLY INVOICE....................................................................C-1
EXHIBIT D BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS...................................................D-1
EXHIBIT E YEAR END TRUE-UP INVOICE......................................................................E-1
EXHIBIT F NOTICES, BILLING AND PAYMENT INSTRUCTIONS.....................................................F-1
EXHIBIT G FORM OF AVAILABILITY NOTICE...................................................................G-1
EXHIBIT H FORM OF GUARANTEE.............................................................................H-1
EXHIBIT I COMPANY OBSERVED HOLIDAYS.....................................................................I-1
EXHIBIT J ADJUSTMENTS TO TPPA AMOUNT....................................................................J-1
EXHIBIT K ADJUSTMENTS TO MINIMUM ANNUAL TAKE............................................................K-1
EXHIBIT L ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE......................................................L-1
EXHIBIT M ASSET BUNDLE CONTRACTUAL AND OPERATIONAL CONSTRAINTS..........................................M-1
TRANSITIONAL POWER PURCHASE AGREEMENT
This Agreement is made and entered into as of October 16, 2000 by and between
Sierra Pacific Power Company, a Nevada corporation ("Buyer"), and Valmy Power
LLC, a Delaware limited liability company (the "Supplier"). Buyer and Supplier
are referred to individually as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, Buyer is selling its North Valmy generating station and other assets
associated therewith to NRG Energy, Inc., an affiliate of Supplier (the "Asset
Sale");
WHEREAS, notwithstanding the Asset Sale, Buyer expects that it has been
designated as the Provider of Last Resort ("PLR") for its Nevada retail electric
customers who are unable to obtain electric service from an alternative seller
or who fail to select an alternative seller. The load required to serve such
customers, plus the customers under those wholesale sales agreements existing at
the Effective Date, is referred to herein as Buyer's Transitional Resource
Requirement; and
WHEREAS, as a result of the Asset Sale, Buyer will no longer have its interest
in the North Valmy generating station as a source of supply for its Transitional
Resource Requirement; and
WHEREAS, Supplier has or is willing to secure the necessary resources to provide
a portion of Buyer's Transitional Resource Requirement; and
WHEREAS, Buyer desires to purchase from Supplier and Supplier desires to sell
Energy and Ancillary Services under contract to Buyer; and
NOW, THEREFORE, in consideration of the mutual covenants, representations and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Parties agree as follows:
1. DEFINITIONS
1.1 Format.
1.1.1 References to Articles and Sections herein are
cross-references to Articles and Sections,
respectively, in this Agreement, unless otherwise
stated.
1.1.2 Any parts of this Agreement which are incorporated by
reference shall have the same meaning as if set forth
in full text herein.
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1.2 Definitions. As used in this Agreement, the following terms
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shall have the meanings set forth below:
1.2.1 "Agreement" means this Agreement together with the
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Exhibits attached hereto, as such may be amended from
time to time.
1.2.2 "Adjusted Replacement Cost of Energy" means the
-----------------------------------
Replacement Cost of Energy that will be due from
Supplier after True-up in accordance with the
provisions of Section 7.5. Example determinations of
the Adjusted Replacement Cost of Energy are shown on
Exhibit E.
1.2.3 "Ancillary Services" means those capacity-related
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services as listed in Exhibit B as well as the Energy
component of such services. These services are
defined in Buyer's OATT.
1.2.4 "Asset Bundle" means the North Valmy generating
------------
station and other assets associated therewith
pursuant to the terms of the Asset Sale Agreement.
1.2.5 "Asset Bundle Capacity" means, with respect to each
---------------------
unit listed in Exhibit A, the net generating capacity
(in megawatts ("MW")) of such unit, as modified from
time to time in accordance with Section 5.2, Section
20, and Section 21, and not to exceed at any time the
net capacity for each unit listed in Exhibit A. Asset
Bundle Capacity shall also mean, as the context
requires, the Energy (in megawatt-hours ("MWh")) and
the Ancillary Services which the units would be
capable of producing if they operated at the capacity
level described in the first sentence of this Section
1.2.5.
1.2.6 "Asset Sale" has the meaning set forth in the
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Recitals.
1.2.7 "Asset Sale Agreement" means the Agreement between
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Buyer and Supplier's affiliate, NRG Energy, Inc.,
dated as of October 16, 2000, to purchase Buyer's
Asset Bundle.
1.2.8 "Asset Sale Closing" means the transfer of Buyer's
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ownership of the Asset Bundle through the
consummation of the Asset Sale pursuant to the terms
of the Asset Sale Agreement.
1.2.9 "Average Cost of Delivered Energy" means the total
--------------------------------
cost of Delivered Energy for the Contract Year after
the application of the Annual True-up Mechanism from
Section 7.5 divided by the total Delivered Energy for
the Contract Year. Example determinations of Average
Cost of Delivered Energy are shown on Exhibit E.
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1.2.10 "Availability Notice" means a notice delivered from
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time to time by Supplier to Buyer pursuant to Section
5.2 notifying Buyer of changes in the availability of
the Asset Bundle.
1.2.11 "Business Day" means any day other than Saturday,
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Sunday, and any day that is an observed holiday by
Buyer as shown on Exhibit I.
1.2.12 "Buyer's OATT" means Buyer's then-effective Open
------------
Access Transmission Tariff, as it may be amended,
which as been accepted for filing by the FERC.
1.2.13 "CALPX" means the California Power Exchange and any
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successor entity thereto.
1.2.14 "Confidential Information" has the meaning set forth
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in Section 34.
1.2.15 "Contract Year" means, with respect to the first
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Contract Year, the period beginning on the Effective
Date and, with respect to each subsequent Contract
Year, the period immediately following the end of the
preceding Contract Year, and in each case ending on
the earlier of the date which is twelve (12) months
thereafter or the termination date of this Agreement.
1.2.16 "Control Area" has the meaning set forth in Buyer's
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OATT.
1.2.17 "Control Area Operator" means an entity or
---------------------
organization, and its representatives, which is
responsible for operating and maintaining the
reliability of the electric power system(s) within
the Buyer's Control Area. The Control Area Operator
is also referred to as the transmission operator.
1.2.18 "Credit Amount" shall mean an amount equal to the
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TPPA Amount, plus an additional amount equal to
$40/MWh multiplied by 286 megawatts, multiplied by
the number of hours remaining in this Agreement until
March 1, 2003.
1.2.19 "Delivered Amount" means, with respect to any
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Dispatch Hour, the Energy delivered by Supplier to
Buyer at the designated Point(s) of Delivery during
such Dispatch Hour, whether or not such Energy was
generated by the Asset Bundle, plus any additional
amounts pursuant to Section 4.1.2, Section 4.1.3 and
the Ancillary Services provided by Supplier for Buyer
during any Dispatch Hour pursuant to the terms of
this Agreement.
1.2.20 "Derating" means a reduction to the Asset Bundle
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Capacity.
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1.2.21 "Dispatch Hour" means the prescribed hour(s) when
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Energy is to be delivered by Supplier to Buyer at the
designated Point(s) of Delivery and the prescribed
hour(s) when Ancillary Services are to be provided to
the ISA by Supplier on behalf of Buyer.
1.2.22 "EDU" means electric distribution utility, the
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organization with the responsibility for the
distribution of energy over Buyer's distribution
system to retail end-users.
1.2.23 "Effective Date" means the date that this Agreement
--------------
becomes effective which shall be the date on which
the Closing Date, as defined in the Asset Sale
Agreement, actually occurs; provided, however, that
the Effective Date shall not occur until the FERC has
accepted this Agreement without condition or the
Parties have modified this Agreement as provided in
Section 2.2.2 and the FERC has accepted the modified
Agreement for filing.
1.2.24 "Emergency Condition" shall mean a public declaration
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by the ISA or Control Area Operator that the Control
Area is in danger of imminent voltage collapse or
uncontrollable cascading outages.
1.2.25 "Energy" means electricity (measured in MWh) and
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associated power-producing capacity to be provided by
Supplier to Buyer pursuant to this Agreement. Also
known as "firm energy and associated firm capacity".
1.2.26 "Event of Default" has the meaning set forth in
----------------
Section 17 hereof.
1.2.27 "FERC" means the Federal Energy Regulatory Commission
----
and any successor agency thereto.
1.2.28 "Force Majeure" has the meaning set forth in Section
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12 hereof.
1.2.29 "GAAP" means Generally Accepted Accounting Principles
----
for the United States.
1.2.30 "Good Utility Practice" means the applicable
---------------------
practices, methods, and act:
(i) required by applicable Laws, permits and
reliability criteria, whether or not the
Party whose conduct at issue is a member
thereof, and
(ii) otherwise engaged in or approved by a
significant portion of the United States
electric utility industry during the
relevant time period, which, in the exercise
of reasonable judgement 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,
safety, environmental
5
protection, economy and expediency. 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 practices, methods or acts
generally accepted in the United States
electric utility industry.
1.2.31 "Governmental Authority" means any foreign, federal,
----------------------
state, local, tribal or other governmental,
regulatory or administrative agency, court,
commission, department, board, or other governmental
subdivision, legislature, rulemaking board, tribunal,
arbitrating body, or other governmental authority.
1.2.32 "Gross Replacement Costs of Energy" means Buyer's
---------------------------------
Replacement Cost of Energy prior to adjustment for
the amount that Buyer would have paid for the Energy
if Supplier had delivered the Energy to Buyer.
Example determinations of Gross Replacement Costs of
Energy are shown on Exhibit D.
1.2.33 "Guarantee" has the meaning set forth in Section
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3.1.2 hereof.
1.2.34 "Guarantor" has the meaning set forth in Section
---------
3.1.2 hereof.
1.2.35 "Invoiced Replacement Costs" means the Replacement
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Costs which have been billed to Supplier or
subtracted from payments to Supplier in accordance
with the provisions of Section 4.2 and Section 7.4.
1.2.36 "ISA" means the Mountain West Independent System
---
Administrator, or the regional transmission
organization authorized with the responsibility for
the scheduling and administration of Energy and
Ancillary Services over, through and within the
Transmission System in coordination with other
interconnected entities to provide transmission
services. The ISA is also referred to herein as
transmission administrator.
1.2.37 "ISA's OATT" means the ISA's then-effective Open
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Access Transmission Tariff, as it may be amended,
which as been accepted for filing by the FERC.
1.2.38 "Law" means any law, treaty, code, rule, regulation,
---
order, determination, permit, certificate,
authorization, or approval of an arbitrator, court or
other Governmental Authority which is binding on a
Party or any of its property.
1.2.39 "Limit on Excused Energy" means the amount of energy
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that can be excused under the provisions of Section
12.4 as shown on Exhibit A.
1.2.40 "Market Price of Energy" has the meaning set forth in
----------------------
Section 6.2.1.
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1.2.41 "Minimum Annual Energy Take" has the meaning set
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forth in Section 4.1.2.
1.2.42 "Minimum Hourly Energy Take" has the meaning set
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forth in Section 4.1.3.
1.2.43 "Minimum Investment Grade Rating" of a Person means
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that such Person has a minimum credit rating on its
senior unsecured debt securities of at least two of
the following ratings: (i) BBB as determined by
Standard & Poor's Corporation, (ii) Baa2 as
determined by Xxxxx'x Investors Service, Inc., or
(iii) a comparable rating by another nationally
recognized rating service reasonably acceptable to
Buyer.
1.2.44 "Minimum Tangible Net Worth" means the total book
--------------------------
value of shareholder's equity less the balance of
goodwill, as reported on the latest quarterly balance
sheet prepared in accordance with Generally Accepted
Accounting Principles (GAAP).
1.2.45 "Negotiated Service" has the meaning set forth in the
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wholesale generation tariff filed in FERC Docket No.
ER00-2018-000.
1.2.46 "NERC" means the North American Electric Reliability
----
Council and any successor entity thereto.
1.2.47 "Nonemergency Condition" shall mean the
----------------------
determination, direction or order by the ISA, or
Control Area Operator to Supplier and/or Buyer to
change the Supply Amount which is not a result of or
due to an Emergency Condition. A Nonemergency
Condition includes an insufficiency of Ancillary
Services to securely operate the Control Area.
1.2.48 "Operating Representatives" means the persons
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designated to transmit and receive routine operating
and emergency communications required under this
Agreement.
1.2.49 "Party" has the meaning set forth in the preamble of
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this Agreement.
1.2.50 "Permitted Deratings" means those reductions to the
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Asset Bundle Capacity of which Supplier may notify
Buyer from time to time in an Availability Notice
pursuant to Section 5.2.
1.2.51 "Person" means any natural person, partnership,
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limited liability company, joint venture,
corporation, trust, unincorporated organization, or
governmental entity or any department or agency
thereof.
1.2.52 "Point of Delivery" means the point (s) which has
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(have) been specified as the Interconnection Point(s)
in the Interconnection Agreement
7
between Buyer and Supplier, dated October 16, 2000,
as it may be amended from time to time, as well as
any alternative locations agreed upon pursuant to
Section 4.1.6.
1.2.53 "Price Ceiling of Energy" means the ceiling price of
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Energy as stated in Exhibit B.
1.2.54 "Price Floor of Energy" means the floor price of
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Energy as stated in Exhibit B.
1.2.55 "Provider of Last Resort (PLR)" has the meaning set
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forth in the Recitals.
1.2.56 "PUCN" means the Public Utilities Commission of
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Nevada and any successor entity thereto.
1.2.57 "Recourse Service" has the meaning set forth in the
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wholesale generation tariff filed in FERC Docket No.
ER00-2018-000.
1.2.58 "Replacement Costs" means with respect to a period of
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time, the difference between (a) the actual costs,
including without limitation related penalties and
transmission costs, incurred by Buyer to replace any
shortfall between (1) the Supply Amount and (2) the
Delivered Amounts of Energy, (or in the case of
Ancillary Services the Supplier's schedule of
Ancillary Services) during such period and (b) the
payments the Supplier would have been entitled to in
respect of such shortfall in delivery; provided that
Replacement Costs shall also be subject to the annual
true-up mechanism set forth in Section 7.5.
1.2.59 "Supply Amount" means, with respect to each Dispatch
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Hour, the amount of Energy and Ancillary Services,
not to exceed the Asset Bundle Capacity for such
Dispatch Hour, requested by Buyer to be delivered by
Supplier during any Dispatch Hour. The Supply Amount
for any Dispatch Hour shall be determined pursuant to
Section 5.1.
1.2.60 "Total Amount of Energy Replaced" means the summation
-------------------------------
of Replacement Energy as shown on Exhibit E.
1.2.61 "TPPA Amount" means the amount paid by Buyer to
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Supplier in consideration of this Agreement.
1.2.62 "Transitional Resource Requirement" or "TRR" means
---------------------------------
the Energy and loss compensation necessary for Buyer
to meet its obligations as a Provider of Last Resort
(PLR) for Nevada and under those wholesale sales
agreements existing at the Effective Date.
8
1.2.63 "Transmission System" means the facilities used to
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provide transmission service within Buyer's Control
Area in accordance with Buyer's OATT or the ISA's
OATT, as may be applicable.
1.2.64 "WSCC" means the Western Systems Coordinating Council
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and any successor entity thereto.
2. TERM
2.1 Term. Unless terminated earlier pursuant to the terms of this
----
Agreement, the term of this Agreement shall commence on the
Effective Date and continue until the earlier of the effective
date of an order by a Governmental Authority terminating
Buyer's PLR responsibility, or March 1, 2003. Supplier shall
provide service under this Agreement commencing on the first
hour on the day after the Effective Date.
2.2 Termination.
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2.2.1 Except pursuant to Sections 2.2.2 or 17.4, this
Agreement may not be terminated without the explicit
prior written approval of Buyer.
2.2.2 If, prior to the Asset Sale Closing, the FERC or any
other Governmental Authority places conditions on or
requires revisions of this Agreement which have a
material adverse effect on Supplier or Buyer, the
Parties agree to negotiate in good faith those
amendments to the Agreement reasonably needed to
preserve the bargain between the Parties. If the
Parties fail to negotiate mutually acceptable
amendments to this Agreement within sixty (60) days
of such action by the FERC or other Governmental
Authority, either Party may terminate the Agreement
after first notifying the other Party in writing at
least ten (10) Business Days prior to the termination
date; provided that neither Party may exercise a
right of termination pursuant to this Section 2.2.2
after the Asset Sale Closing.
2.2.3 This Agreement may be terminated with the mutual
agreement of the Parties.
2.2.4 This Agreement also may be terminated at Buyer's
unilateral discretion after the Effective Date
subject to Section 2.3 provided FERC has accepted the
wholesale generation tariff filed in FERC Docket No.
ER00-2018-000 on terms and conditions that do not
have a material adverse effect on the business,
operations or financial condition of the Purchased
Assets, as defined in the Asset Sale Agreement.
If within seven (7) days from the date of receipt by
Supplier from Buyer of the FERC's order in Docket No.
ER00-2018-000, Supplier does not provide to Buyer its
written, reasonable determination and rationale that
such FERC order has resulted in a material adverse
effect, as stated in the first paragraph of this
Section 2.2.4, such FERC order
9
shall be deemed automatically acceptable to Supplier.
If Supplier timely submits its determination but
Buyer disagrees with Supplier's determination
regarding the effect of such FERC order, the
disagreement shall be subject to resolution pursuant
to Section 13 of this Agreement, in which case this
Agreement shall remain in effect until a final
determination to the contrary is made pursuant to
Section 13.
2.2.5 Any termination of this Agreement pursuant to this
Section 2 shall not take effect until FERC either
authorizes the termination or accepts a written
notice of termination.
2.3 Effect of Termination.
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2.3.1 Adjustment of TPPA Amount. If the Effective Date of
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this Agreement is before June 1, 2001, the TPPA
Amount shall be adjusted to equal (1) the TPPA Amount
multiplied by (2) 100% plus the sum of the monthly
adjustments from Exhibit J for each month or portion
thereof between the Effective Date and June 1, 2001.
An example calculation is shown on Exhibit J.
If the Effective Date of this Agreement is after June
1, 2001, the TPPA Amount shall be adjusted to equal
(1) the TPPA Amount multiplied by (2) 100% minus the
sum of the monthly adjustments from Exhibit J for
each month or portion thereof between June 1, 2001
and the Effective Date. An example calculation is
shown on Exhibit J.
If this Agreement is terminated before March 1, 2003,
Supplier shall pay to Buyer an amount, in accordance
with the provisions of Section 7, equal to the TPPA
Amount which existed before any adjustment in
accordance with the first or second paragraph of this
Section 2.3.1, multiplied by the sum of the monthly
adjustments for each month or portion thereof between
the date on which this Agreement is terminated and
March 1, 2003. An example calculation is shown on
Exhibit J.
2.3.2 Any default or termination of this Agreement shall
not release either Party from any applicable
provisions of this Agreement with respect to:
2.3.2.1 The payment of liquidated damages pursuant
to Sections 4.2, 12, 17, 18, or 21.
2.3.2.2 Indemnity obligations contained in Section
10, to the extent of the statute of
limitations period applicable to any third
party claim.
2.3.2.3 Limitation of liability provisions contained
in Section 11.
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2.3.2.4 Payment of any unpaid amounts in respect of
obligations arising prior to or resulting
from termination.
2.3.2.5 For a period of one (1) year after the
termination date, the right to raise a
payment dispute and the resolution thereof
pursuant to Section 13.
2.3.2.6 The resolution of any dispute submitted
pursuant to Section 13 prior to, or
resulting from, termination.
3. SECURITY
3.1 Supplier Certification; Guarantee. As a condition of Buyer's
---------------------------------
execution of, and continuing compliance with, this Agreement,
Supplier shall at Supplier's option comply with the provisions
of either Section 3.1.1 or Section 3.1.2.
3.1.1 Supplier Certification. Supplier shall (a) provide a
----------------------
certificate from a duly authorized corporate officer
of Supplier certifying that, as of the Effective
Date, Supplier has a credit rating equal to or higher
than the Minimum Investment Grade Rating; or (b) post
a letter of credit in a form reasonably acceptable to
Buyer in the amount of the Credit Amount from a
financial institution with each of: (i) a credit
rating of A2 or better from Xxxxx'x Investors
Service, Inc., (ii) a credit rating of A or better
from Standard & Poor's Corporation, and (iii) a
Minimum Tangible Net Worth ("MTNW") of one (1)
billion dollars.
3.1.2 Guarantee. In the alternative to the provisions of
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Section 3.1.1, the Supplier may provide a corporate
guarantee, in form and substance as set forth in
Exhibit H, made by an entity (the "Guarantor") that:
3.1.2.1 has a credit rating equal to or higher than
the Minimum Investment Grade Rating,
together with a certificate from a duly
authorized corporate officer of such
Guarantor certifying that, as of the
Effective Date, such Guarantor has a credit
rating equal to or higher than the Minimum
Investment Grade Rating; or
3.1.2.2 has a MTNW of no less than one (1) billion
dollars, together with a certificate from a
duly authorized corporate officer of such
Guarantor certifying that, as of the
Effective Date, such Guarantor has a MTNW of
no less than one (1) billion dollars; or
3.1.2.3 posts a letter of credit in a form
reasonably acceptable to Buyer in the amount
of the Credit Amount from a financial
institution with each of: (i) a credit
rating of A2 or better from Xxxxx'x
Investors Service, Inc., (ii) a credit
rating of A or better from Standard & Poor's
Corporation, and (iii) a Minimum Tangible
Net Worth ("MTNW") of one (1) billion
dollars.
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3.2 Compliance.
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3.2.1 Reporting. If at any time during the term of this
---------
Agreement, Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc. or another nationally
recognized firm downgrades the credit rating of
Supplier, the Guarantor, or the financial institution
that issued the letter of credit, as applicable, then
Supplier shall provide Buyer with written notice of
such change of circumstance within two (2) Business
Days of any such change. In the event such a
downgrade also constitutes an Event of Default
pursuant to Section 17, the requirements of this
Section 3.2.1 are in addition to, and not in lieu of,
the requirements of Section 17.
4. SUPPLY SERVICE
4.1 Obligations of the Parties.
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4.1.1 Supply Amount. Supplier shall be required to provide the
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Supply Amount in any Dispatch Hour. As provided in Section
5.1, Buyer shall make reasonable efforts to ensure that the
Supply Amount is no greater than necessary to satisfy Buyer's
TRR.
4.1.1.1 With the Buyer's prior consent, not to be
unreasonably withheld or delayed, Supplier shall be
entitled to generate or otherwise procure the Supply
Amount from sources other than the Asset Bundle.
4.1.1.2 Supplier shall deliver the Supply Amount to Buyer
during the Dispatch Hour on a continuous basis at the
Point(s) of Delivery and shall schedule the Supply
Amount in accordance with the Buyer's OATT or the
ISA's OATT, as applicable.
4.1.1.3 The Buyer at its sole discretion shall designate the
allocation of the Supply Amount between Energy and
Ancillary Services in accordance with the
notification provisions of Section 5.
4.1.1.3.1 The Parties recognize that operation of the
Asset Bundle is subject to, and thus the
Supply Amount at times may be limited by,
the operational parameters of the Asset
Bundle. The Parties further recognize that
the consolidation of two or more generating
units into an Asset Bundle precludes
contractual provisions addressing such
operational parameters in a matter normally
applied to Energy purchases from specified
generating units. Consequently, Supplier
will have the
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right to raise concerns regarding the
effect of such operational parameters upon
Buyer's day-ahead requests, and Buyer will
make good faith efforts to alleviate
Supplier's concerns.
4.1.1.3.2 The Parties further recognize that the
Asset Bundle also is subject to the
contractual and operating constraints set
forth in Exhibit M.
4.1.2 Minimum Annual Energy Take. The Buyer shall accept a
--------------------------
minimum annual energy take during each Contract Year.
The Minimum Annual Energy Take shall be set forth on
Exhibit A.
4.1.2.1 Buyer's Obligation to Take. If Buyer is
--------------------------
unwilling to accept the Minimum Annual
Energy Take for any Contract Year, as may
be adjusted pursuant to Section 4.1.2.2,
the difference (in MWh) between the Supply
Amount of Energy (including consideration
for Energy that would have been taken but
was unavailable due to Permitted Deratings
or Force Majeure, as well as the Total
Amount of Energy Replaced) and the Minimum
Annual Energy Take shall be billed at the
Price Ceiling of Energy less the Price
Floor of Energy. An example of the monthly
determination of the amount of Energy to be
credited against the Minimum Annual Energy
Take is shown on Exhibit L.
4.1.2.2 Adjustments to Minimum Annual Energy Take.
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Buyer shall have the right to reduce the
Minimum Annual Energy Take if the number of
customers taking electric service from
Buyer falls below the number of customers
on December 31, 2000./1/ Adjustments will
be applicable, on a pro rata basis, on the
first (1st) day of the month immediately
following Supplier's receipt of Buyer's
notice of adjustment. Buyer shall provide
supporting data in reasonable detail to
support its calculations. An example of the
calculation of a revised Minimum Annual
Energy Take is shown on Exhibit K.
4.1.3 Minimum Hourly Energy Take. The Buyer shall accept a
--------------------------
Minimum Hourly Energy Take for any Dispatch Hour if
the Supply Amount, or a portion thereof, is provided
to Buyer from the Asset Bundle. The Minimum Hourly
Energy Take is stated in Exhibit A.
4.1.3.1 Buyer's Obligation to Take. If Buyer is
--------------------------
unwilling to accept the Minimum Hourly
Energy Take, the difference (in MWh)
--------------------------------
/1/ If the retail markets are opened to competition prior to December 31, 2000,
the date immediately preceding the date on which the markets are opened will be
substituted for December 31, 2000.
13
between the Supply Amount of Energy
(including consideration for Energy that
would have been taken but was unavailable
due to Permitted Deratings or Force
Majeure, as well as the Total Amount of
Energy Replaced) and Minimum Hourly Energy
Take shall be billed at the Price Ceiling
of Energy less the Price Floor of Energy.
4.1.4 Supplier Rights to Output. Supplier may sell to
-------------------------
others any portion of the Asset Bundle Capacity in
excess of the Supply Amount.
4.1.5 Point(s) of Delivery. Supplier shall deliver, and
--------------------
Buyer shall take delivery of, the Supply Amount of
Energy at the Point(s) of Delivery. Subject to
Section 4.1.6.2, Supplier shall be responsible for
all costs associated with delivery of the Supply
Amount of Energy to the Point(s) of Delivery.
4.1.6 Alternative Points of Delivery. For any Dispatch
------------------------------
Hour, either Party may designate one or more
alternative Points of Delivery, subject to the other
Party's prior approval and consistent with Buyer's
OATT or the ISA's OATT, as applicable, such approval
not to be unreasonably withheld or delayed.
4.1.6.1 If Supplier has designated an alternative
Point of Delivery, Supplier shall be
responsible for all costs of delivery to
such alternative Point of Delivery.
4.1.6.2 If Buyer has designated an alternative
Point of Delivery, Buyer shall be
responsible for all costs of delivery to
such alternative Point of Delivery.
4.1.7 Fuel. Buyer shall have no responsibility for any fuel
----
procurement or fuel transportation costs or
activities associated with the Asset Bundle during
the term of this Agreement.
4.1.8 Resale. Except as provided in the next sentence, the
------
Supply Amount may be resold by Buyer only as
necessary to satisfy Buyer's TRR. If, after
submitting the day-ahead request of the Supply Amount
pursuant to Section 5.1, the Buyer determines the
Supply Amount requested exceeds Buyer's actual TRR,
then the Buyer also shall resell at wholesale that
amount of Energy in excess of Buyer's actual TRR as
necessary to balance its load and resources.
4.1.9 Right to Review. Buyer and Supplier each shall have
---------------
the right to review during normal business hours the
relevant books and records of the other Party to
confirm the accuracy of such as it pertains to
transactions under this Agreement. The review shall
be consistent with standard business practices and
shall follow reasonable notice to the other Party.
Reasonable notice for a review of the previous
month's records shall be at least a twenty-four (24)
hour period from a Business
14
Day to a subsequent Business Day. If a review is
requested of other than the previous month's records,
then notice of that request shall be provided with a
minimum of seven (7) calendar days written notice by
the requesting Party. The notice shall specify the
period to be covered by the review. The Party
providing records can make reasonable requests that
the receiving Party keep the records confidential,
and the receiving Party shall take reasonable steps
to accommodate such requests.
4.2 Liquidated Damages.
------------------
4.2.1 If the Delivered Amount of Energy is less than the
Supply Amount of Energy in any Dispatch Hour during a
month, and Replacement Costs computed in respect of
such month are greater than zero, then Supplier shall
reimburse Buyer for such Replacement Costs. If
Supplier's schedule of Ancillary Services is less
than the Supply Amount of Ancillary Services in any
Dispatch Hour during a month, Supplier shall
reimburse Buyer for such Replacement Costs for the
difference between Supplier's schedule and the Supply
Amount of Ancillary Services. An example of the
methodology used to calculate Replacement Costs is
provided in Exhibit D.
4.2.2 Supplier also shall be responsible for any costs
incurred by Buyer associated with a violation of
reliability criteria (including but not limited to
imbalance costs or penalties) due to a deviation
between the Supply Amount and Delivered Amount.
4.2.3 The Parties recognize and agree that the payment of
such amounts by Supplier pursuant to this Section 4.2
is an appropriate remedy in the event of such a
failure and that any such payment does not constitute
a forfeiture or penalty of any kind, but rather
constitutes actual costs to Buyer under the terms of
this Agreement.
4.3 Supplier Operating Representative. Supplier shall provide and
---------------------------------
maintain a twenty-four (24) hour seven (7) day per week
communication link with Buyer's control center and with
Buyer's schedulers. Supplier's operating representatives shall
be available to address and make decisions on all operational
matters under this Agreement on a twenty-four (24) hour seven
(7) day per week basis.
5. NOTIFICATION
5.1 Scheduling Notification. Buyer shall provide Supplier with a
-----------------------
day-ahead request of the Supply Amount one (1) hour prior to
when day-ahead bids are due to the CALPX. Buyer shall make
reasonable efforts to ensure that the day-ahead request of the
Supply Amount is no greater than that amount then projected to
be necessary to satisfy Buyer's TRR. In addition, for each
day-ahead request, the change in the Supply Amount from one
(1) hour to the next hour shall be no greater than the ramping
capability of the units within the Asset Bundle as shown
15
in Exhibit A.
5.2 Availability Notification.
-------------------------
5.2.1 No later than 5:00 a.m. (Pacific Time) of each day,
Supplier shall deliver to Buyer an Availability
Notice in the form set forth in Exhibit G.
5.2.2 Availability Notices shall provide, for the
ninety-six (96) hour period starting at 6:00 a.m.
(Pacific Time) that day, Supplier's hourly projection
of the unavailability or derating ("Derating") of the
Asset Bundle compared to the Asset Bundle Capacity
figures stated for each unit in Exhibit A. Each
Availability Notice also shall contain, as
applicable:
(a) the units which are subject to a Derating;
(b) the magnitude of the Derating;
(c) the hours during which the Derating is expected
to apply;
(d) the cause of the Derating;
(e) the extent, if any, to which the Derating is
attributable to a Permitted Derating; and
(f) the projected Asset Bundle Capacity for each
unit during the period covered by the
Availability Notice, pursuant to Section
5.2.4 below.
5.2.3 If and to the extent a Derating is the result of one
or more of the following causes, it shall be a
Permitted Derating:
(a) approved planned outages pursuant to Section
21;
(b) response to an Emergency Condition as described
in Section 20; or
(c) subject to the limitations expressed in Section
12.5, a Force Majeure event.
5.2.4 In respect of any Dispatch Hour, the Asset Bundle
Capacity of each unit shall be the Asset Bundle
Capacity figure stated in Exhibit A minus any
Permitted Derating applicable during such hour.
5.2.5 Neither the Asset Bundle Capacity nor the Supply
Amount shall be reduced by Deratings which are not
Permitted Deratings. Supplier shall be responsible
for all Replacement Costs, pursuant to Section 4.2.1,
caused by Deratings that are not Permitted Deratings.
16
6. PRICING OF ENERGY AND ANCILLARY SERVICES
6.1 Overview. The price of Energy paid by Buyer to Supplier shall
--------
be based upon a designated hourly market price, subject to
monthly floor, monthly ceiling, and annual true-up provisions.
The Price Floor of Energy will ensure that Supplier will
receive an average price for Energy for each month which is
not less than the price stated in Exhibit B. The Price Ceiling
of Energy provision provides that the average price of Energy
paid to Supplier each month and for each year shall not exceed
the price stated in Exhibit B.
6.2 Price of Energy.
---------------
6.2.1 Market Price of Energy. In respect of any Dispatch
----------------------
Hour, the designated Market Price of Energy shall be
the North of Path 15 ("NP 15") hourly market-clearing
price in the day-ahead market from the CALPX as
published at the following Web Site (or its successor
web site)
xxxx://xxx.xxxxx.xxx/xxxxxx/xxxxx_xxxxxx_xxxxxxxx_
--------------------------------------------------
trading.html. Should this hourly market in the day-
------------
ahead market not exist for the entire term, the
Parties shall agree upon a similar market price
index.
6.2.2 Price Floor of Energy. The Price Floor of Energy is
---------------------
stated in Exhibit B and shall not change during the
term of this Agreement.
6.2.3 Price Ceiling of Energy. The Price Ceiling of Energy
-----------------------
is stated in Exhibit B and shall not change during
the term of this Agreement.
6.3 Pricing of Ancillary Services. The price of the capacity
-----------------------------
component of Ancillary Services is stated in Exhibit B. The
price of Ancillary Services shall not change during the term
of the Agreement. Supplier shall make available to Buyer and
Buyer shall offer to pass through the Energy portion of
Ancillary Services with respect to the Supply Amount to the
ISA, or Control Area Operator, at the Price Ceiling of Energy
(plus expected direct transaction costs). The net proceeds
shall be credited to the Supplier pursuant to Section 7.
6.4 Price Revisions. The Parties waive any and all rights to seek
---------------
to revise the provisions of this Agreement, including the
prices stated, pursuant to Sections 205 and/or 206 of the
Federal Power Act.
6.5 Recourse Service. Buyer agrees not to purchase Recourse
----------------
Service during the term of the Agreement. However, Buyer is
permitted to purchase Negotiated Service during the term of
the Agreement.
17
7. INVOICING AND PAYMENTS
7.1 Invoicing and Payment. On or before the tenth (10th) day of
---------------------
each month, Supplier shall send to Buyer an invoice setting
forth the Supply Amount, Delivered Amount, the Market Price of
Energy pursuant to Section 6.2.1 for each Dispatch Hour in the
previous month, any amount due in accordance with Section 7.13
and the total due from Buyer. The invoice shall be calculated
based upon data available to Supplier and shall be in
accordance with this Section 7 and Exhibit C. Buyer shall
promptly notify Supplier if Buyer in good faith disputes any
portion of the invoice, stating in reasonable detail the
reason for the dispute.
7.2 Monthly Invoice Calculation. On each monthly invoice, Supplier
---------------------------
shall calculate the following amounts:
7.2.1 The Delivered Amount in respect of each Dispatch Hour
multiplied by the corresponding Market Price of
Energy pursuant to Section 6.2.1, summed over the
billing period;
7.2.2 Sum of the Delivered Amounts in respect of all
Dispatch Hours of the billing period multiplied by
the Price Ceiling of Energy;
1.1.1 Sum of the Delivered Amounts in respect of all
Dispatch Hours of the billing period multiplied by
the Price Floor of Energy;
7.2.3 For each Dispatch Hour of the billing period, the
shortfall, if any, between the Supply Amount and the
Delivered Amount (and in the case of Ancillary
Services the shortfall between the Supply Amount of
Ancillary Services and Supplier's schedule of
Ancillary Services);
7.2.4 The Supply Amount of Ancillary Service for each
dispatch hour multiplied by the price of Ancillary
Services as stated in Exhibit B; and
7.2.5 The Delivered Amount of Energy related to Ancillary
Services for each dispatch hour multiplied by the
Price Ceiling of Energy as stated in Exhibit B.
7.2.6 If applicable, any amount to be calculated in
accordance with Section 7.13.
7.3 Supplier's Invoice. Supplier will invoice the lesser of the
------------------
amounts calculated in Sections 7.2.1 and 7.2.2, provided that
if the amount calculated in Section 7.2.1 is less than the
amount calculated in Section 7.2.3, Supplier shall invoice
Buyer the amount calculated in Section 7.2.3. Supplier shall
also include in its invoice the amounts calculated in Sections
7.2.5, 7.2.6 and 7.2.7. If the Delivered Amount exceeds the
Supply Amount, Buyer shall not be obligated to pay for the
excess amount. Buyer shall pay Supplier for the amounts
invoiced pursuant to Section 7.2.6 upon Buyer's receipt of
payment from ISA or Control Area Operator. Examples of this
monthly invoice calculation (and annual true-up process) are
18
contained in Exhibit C.
7.4 Buyer's Invoice. In the event any shortfall occurs pursuant to
---------------
Section 7.2.4 or payment is due to Buyer pursuant to Section
7.13, Buyer shall within ten (10) Business Days of receipt of
Supplier's invoice deliver to Supplier a Buyer's invoice
detailing any Replacement Costs or other payment due. Buyer
shall provide supporting data in reasonable detail to support
its calculations of Replacement Costs. Supplier shall promptly
notify Buyer if Supplier in good faith disputes any portion of
the invoice, stating in reasonable detail the reason for the
dispute. If the Buyer's invoice results in an amount due from
Supplier to Buyer, Buyer may offset such amount from its
payment of Supplier's corresponding invoice. Buyer shall have
the right to adjust the invoices issued in accordance with
this Section 7.4 if Buyer incurs Replacement Costs that were
not known when earlier invoices were issued. Adjusted invoices
shall be issued within thirty (30) days of the date on which
the additional Replacement Costs become known. Buyer shall
provide supporting data in reasonable detail to support its
calculations of Replacement Costs. Supplier shall promptly
notify Buyer if Supplier in good faith disputes any portion of
the invoice, stating in reasonable detail the reason for the
dispute. If the Buyer's adjusted invoice results in an amount
due from Supplier to Buyer, Buyer may offset such amount from
its payment of Supplier's corresponding invoice.
7.5 Annual True-Up Mechanism for Energy.
-----------------------------------
7.5.1 The annual true-up mechanism will provide adjustments
among the Parties with respect to each Contract Year
in the following scenarios:
(a) If (i) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year is less
than or equal to (ii) the Market Price of
Energy for each hour pursuant to Section
6.2.1 multiplied by the Delivered Amount of
Energy for each hour during the Contract
Year, Supplier shall subtract (x) the amount
invoiced by Supplier for Energy pursuant to
Section 7.3 summed of over the Contract Year
from (y) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year. If the
difference calculated in accordance with the
preceding sentence is greater than or equal
to zero, Buyer shall pay the difference to
Supplier. If the difference is less than
zero, Supplier shall refund the difference
to Buyer.
(b) If (i) the Price Ceiling of Energy
multiplied by the hourly Delivered Amount of
Energy summed over the Contract Year is
greater than or equal to (ii) the Market
Price of Energy for each hour pursuant to
Section 6.2.1 multiplied by the Delivered
Amount of Energy for each hour during the
Contract Year, Supplier shall
19
subtract (x) the amount invoiced by Supplier
for Energy pursuant to Section 7.3 summed of
over the Contract Year from (y) the Market
Price of Energy multiplied by the hourly
Delivered Amount of Energy summed over the
Contract Year. If the difference calculated
in accordance with the preceding sentence is
greater than or equal to zero, Buyer shall
pay the difference to Supplier. If the
difference is less than zero, Supplier shall
refund the difference to Buyer.
(c) If Buyer incurred Replacement Costs for
energy during the Contract year, Supplier
shall multiply the Total Amount of Energy
Replaced during the Contract Year by the
Average Cost of Delivered Energy after
true-up as determined in accordance with
Section 7.5.1 (a) or 7.5.1 (b). If the
amount so obtained is greater than the sum
of the monthly Gross Replacement Costs of
Energy from Buyer's Invoices for the
Contract Year, the Adjusted Replacement Cost
of Energy for the Contract Year shall be
zero. If the amount so obtained is less than
the sum of the monthly Gross Replacement
Costs of Energy from Buyer's Invoices for
the Contract Year, the Adjusted Replacement
Cost of Energy for the Contract Year shall
be the sum of the monthly Gross Replacement
Costs of Energy less the amount obtained in
accordance with the first sentence of this
Section 7.5.1(c).
If the Adjusted Replacement Cost of Energy
is greater than the sum of the monthly
Invoiced Replacement Costs of Energy from
Buyer's Invoices for the Contract Year,
Supplier shall pay the difference to Buyer.
If the sum of the monthly Invoiced
Replacement costs of Energy is greater than
the Adjusted Replacement Cost of Energy,
Buyer shall pay the difference to Seller.
7.5.2 True-up adjustments will be calculated by Supplier
within twenty (20) days after each Contract Year.
Examples of the true-up calculations and invoice form
are set forth in Exhibit E. Interest shall be
calculated pursuant to 18 CFR Section 35.19a and
shall be included in the true-up invoice. Invoices
for true-up adjustments shall be submitted by
Supplier within thirty (30) days after the end of the
Contract Year. Payments for such invoices shall be
due from Buyer thirty (30) days from receipt of the
true-up invoice.
7.6 Invoice Disagreements. Should there be a good faith dispute
---------------------
over any invoice, the Parties shall promptly seek resolution
pursuant to Section 13. Pending resolution of the invoice
dispute, payment shall be made or offsets or credits taken, as
applicable, based upon the undisputed portion of the invoice.
20
7.7 Adjustments. Upon resolution of the dispute, the prevailing
-----------
Party shall be entitled to receive the disputed amount, as
finally determined to be payable along with interest
(calculated pursuant to 18 C.F.R. (S)35.19a through the date
of payment. No invoice (or payment covered thereby) shall be
subject to adjustment unless notice or request for adjustment
is given within one (1) year of the date payment thereunder
was due.
7.8 Method of Payment. Subject to Sections 7.3, 7.6 and 7.7, Buyer
-----------------
shall remit all amounts due by wire or electronic fund
transfer, pursuant to Supplier's invoice instructions, no
later than thirty (30) days after receipt of the invoice.
7.9 Overdue Payments. Overdue payments shall bear interest from
----------------
and including, the due date to the date of payment on the
unpaid portion calculated pursuant to 18 C.F.R.(S)35.19a.
7.10 Buyer Right to Offset. Buyer shall have the right to offset
---------------------
any amounts Supplier owes to Buyer, including Replacement
Costs (except for such amounts disputed in good faith by
Supplier), against the amounts owed by Buyer to Supplier.
7.11 Taxes. Each Party shall pay ad valorem and other taxes
-----
attributed to its facilities and services provided. Supplier
shall not include any taxes of any kind in its invoices to
Buyer. The prices of Energy and Ancillary Services shall not
change during the term of this Agreement as a result of any
changes in local, state or federal taxes, fees or levies.
7.12 Late Invoices. If either Party submits an invoice outside of
-------------
the time deadlines set forth herein, that Party shall not
forfeit its rights to collect the amounts due thereunder,
provided that such invoice is no more than six (6) months
late, and provided that changes to invoices remain subject to
the deadline in Section 7.7.
7.13 Termination Prior to March 1, 2003. Notwithstanding any other
----------------------------------
provision herein, in the event that this Agreement is
terminated before March 1, 2003 and as a result of such
termination Buyer is entitled to a payment in accordance with
Section 2.3.1, Supplier shall include an amount calculated in
accordance with Section 2.3.1 and Exhibit J, to be paid by
Supplier to Buyer in the next monthly invoice submitted to
Buyer following such termination.
8. REGULATORY APPROVALS
8.1 This Agreement will be filed with the FERC and any other
appropriate regulatory agencies by the appropriate Party as
may be required.
9. COMPLIANCE
9.1 Each Party shall comply with all relevant Laws and shall, at
its sole expense, maintain in full force and effect all
relevant permits, authorizations, licenses, and other
authorizations material to the maintenance of facilities and
the performance of obligations under this Agreement.
21
9.2 Each Party and its representatives shall comply with all
relevant requirements of any authorized Control Area Operator,
ISA, and/or EDU to ensure the safety of its employees and the
public, and to ensure electric system reliability and
integrity, material to the performance of this Agreement.
9.3 Buyer and Supplier shall perform or cause to be performed,
their obligations under this Agreement in all material
respects in accordance with Good Utility Practices. Supplier
covenants and agrees that as of the Effective Date it shall
(a) have the right to control the operation of the Asset
Bundle (b) be willing and able to perform its obligations
under this Agreement.
10. INDEMNIFICATION
10.1 To the fullest extent permitted by law, a Party to this
Agreement ("the Indemnifying Party") shall indemnify, defend
and hold harmless the other Party, its parent, affiliates, and
successors and agents (each an "Indemnified Party") from and
against any and all claims, demands, suits, obligations,
payments, liabilities, costs, judgments, damages, losses or
expenses asserted by third parties against an Indemnified
Party and arising out of, relating to, or resulting from the
Indemnifying Party's breach of, or the negligent performance
of its obligations under this Agreement.
10.1.1 Such indemnity shall also extend to actual courts
costs, attorneys' fees, expenses and other
liabilities incurred in the defense of any claim,
action or proceeding, including negotiation,
settlement, defense and appeals, to which this
indemnification obligation applies. In furtherance of
the foregoing indemnification and not by way of
limitation thereof, the Indemnifying Party hereby
waives any defense it otherwise might have against
the Indemnified Party under applicable workers'
compensation laws.
10.1.2 In claims against any Indemnified Party by an agent
of the Indemnifying Party, or anyone directly or
indirectly employed by them or anyone for whose acts
they may be liable, the indemnification obligation
under this Section 10 shall not be limited by a
limitation on amount or type of damages, compensation
or benefits payable by or for the Indemnifying Party
or a subcontractor under workers' or workmen's
compensation acts, disability benefit acts or other
employee benefit acts.
10.1.3 Such indemnity shall also extend to all costs and
expenses incurred by the Indemnified Party in any
action or proceeding to enforce the provisions of
this Agreement, but only if and to the extent the
Indemnified Party prevails in such action or
proceeding.
10.2 No Negation of Existing Indemnities; Survival. Each Party's
---------------------------------------------
indemnity
22
obligations hereunder shall not be construed to negate,
abridge or reduce other rights or obligations or indemnity
which would otherwise exist at law or equity. The obligations
contained herein shall survive any termination, cancellation,
or suspension of this Agreement to the extent that any third
party claim is commenced during the applicable statute of
limitations period.
10.3 Indemnification Procedures.
--------------------------
10.3.1 Any Party seeking indemnification under this Agreement shall
give the other Party notice of such claim promptly but in any
event on or before thirty (30) days after the Party's actual
knowledge of such claim or action. Such notice shall describe
the claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the claim that has been, or may be
sustained by, said Party. To the extent that the other Party
will have been actually and materially prejudiced as a result
of the failure to provide such notice, such notice will be a
condition precedent to any liability of the other Party under
the provisions for indemnification contained in this
Agreement.
10.3.2 In any action or proceeding brought against an Indemnified
Party by reason of any claim indemnifiable hereunder, the
Indemnifying Party may, at its sole option, elect to assume
the defense at the Indemnifying Party's expense, and shall
have the right to control the defense thereof and to determine
the settlement or compromise of any such action or proceeding.
Notwithstanding the foregoing, an Indemnified Party shall in
all cases be entitled to control its defense in any action if
it:
(i) may result in injunctions or other equitable remedies
in respect of the Indemnified Party which would
affect its business or operations in any materially
adverse manner;
(ii) may result in material liabilities which may not be
fully indemnified hereunder; or
(iii) may have a significant adverse impact on the business
or the financial condition of the Indemnified Party
(including a material adverse effect on the tax
liabilities, earnings or ongoing business
relationships of the Indemnified Party) even if the
Indemnified Party pays all indemnification amounts in
full.
10.3.3 Subject to Section 10.3.2, neither Party may settle or
compromise any claim for which indemnification is sought under
this Agreement without the prior consent of the other Party;
provided, however, said consent shall not be unreasonably
withheld or delayed.
11. LIMITATION OF LIABILITY
11.1 Responsibility for Damages: Except as otherwise provided
--------------------------
herein or to the extent
23
of the other Party's negligence or willful misconduct, each
Party shall be responsible for all physical damage to or
destruction of the property, equipment and/or facilities owned
by it and its affiliates and any physical injury or death to
natural Persons resulting therefrom, regardless of who brings
the claim and regardless of who caused the damage, and shall
not seek recovery or reimbursement from the other Party for
such damage; provided, that in any such case the Parties will
exercise Due Diligence to remove the cause of any disability
at the earliest practicable time.
11.2 No Consequential Damages: To the fullest extent permitted by
------------------------
law and notwithstanding other provisions of this Agreement, in
no event shall a Party, or any of its Agents, be liable to the
other Party, whether in contract, warranty, tort, negligence,
strict liability, or otherwise, for special, indirect,
incidental, multiple, consequential (including but not limited
to lost profits or revenues and lost business opportunities),
or punitive damages related to or resulting from performance
or nonperformance of this Agreement or any activity associated
with or arising out of this Agreement. For purposes of
clarification, Replacement Costs shall not be considered
consequential or incidental damages under this Section 11.2.
In addition, this limitation on liability shall not apply with
respect to claims pursuant to Section 10 hereof.
11.3 Survival: The provisions of this Section 11 shall survive any
--------
termination, cancellation, or suspension of this Agreement.
12. FORCE MAJEURE
12.1 An event of "Force Majeure" shall be defined as any
interruption or failure of service or deficiency in the
quality or quantity of service or any other failure to perform
any of its obligations hereunder to the extent such failure
occurs without fault or negligence on the part of that Party
and is caused by factors beyond that Party's reasonable
control, which by the exercise of reasonable diligence that
Party is unable to prevent, avoid, mitigate or overcome,
including:
(i) acts of God or the public enemy, such as storms,
flood, lightning, and earthquakes,
(ii) failure, threat of failure, or unscheduled withdrawal
of facilities from operation for maintenance or
repair, and including unscheduled transmission and
distribution outages,
(iii) sabotage of facilities and equipment,
(iv) civil disturbance,
(v) strike or labor dispute,
(vi) action or inaction of a court or public authority, or
24
(vii) any other cause of similar nature beyond the
reasonable control of that Party.
12.2 Economic hardship of either Party shall not constitute Force
Majeure under this Agreement. Notwithstanding this, if Buyer
suffers an event of Force Majeure it shall be relieved of its
obligation to take delivery of, or otherwise pay for, Energy
and Ancillary Services under this Agreement for the duration
of the event of Force Majeure. In addition, if Buyer is unable
to have Energy and Ancillary Services delivered from the
Point(s) of Delivery to its service territory due to an outage
on the Transmission System, that shall be considered a Force
Majeure event and shall relieve Buyer of performance for the
extent of the event.
12.3 In the event of a Force Majeure, neither Party shall be
considered in default under this Agreement or responsible to
the other Party in tort, strict liability, contract or other
legal theory for damages of any description, and affected
performance obligations shall be extended by a period equal to
the term of the resultant delay, but in no event shall exceed
the term of the Agreement, provided that the Party relying on
a claim of Force Majeure:
(i) provides prompt written notice of such Force Majeure
event to the other Party, giving an estimate of its
expected duration and the probable impact on the
performance of its obligations hereunder;
(ii) exercises all reasonable efforts to continue to
perform its obligations under this Agreement;
(iii) expeditiously takes action to correct or cure the
event or condition excusing performance so that the
suspension of performance is no greater in scope and
no longer in duration than is dictated by the
problem; provided, however, that settlement of
strikes or other labor disputes will be completely
within the sole discretion of the Party affected by
such strike or labor dispute;
(iv) exercises all reasonable efforts to mitigate or limit
damages to the other Party; and
(v) provides prompt notice to the other Party of the
cessation of the event or condition giving rise to
its excuse from performance.
12.4 Notwithstanding the above provisions, a Force Majeure event
shall excuse Supplier from its obligation to deliver the
Supply Amount pursuant to Section 4 of this Agreement only for
the first forty-eight (48) hours of the Force Majeure event;
provided that such forty-eight (48) hour limit shall not apply
to the extent the Force Majeure event is an outage on the
Transmission System. After such twenty-four (24) hour period,
Supplier must either deliver the Supply Amount at the Point(s)
of Delivery or pay liquidated damages pursuant to Section 4.2
of this Agreement.
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12.5 If Supplier has notified Buyer of an event of Force Majeure,
and if Supplier so requests, Buyer will attempt to replace the
Supply Amount that is not excused in accordance with Section
12.4 with Energy or Ancillary Services from another Asset
Bundle. However, Buyer's inability to acquire such replacement
Energy or Ancillary Services shall not excuse Supplier from
Supplier's obligation to deliver the Supply Amount not
otherwise excused in accordance with Section 12.4
13. DISPUTES
13.1 Any action, claim or dispute which either Party may have
against the other arising out of or relating to this Agreement
or the transactions contemplated hereunder, or the breach,
termination or validity thereof (any such claim or dispute, a
"Dispute") shall be submitted in writing to the other Party.
The written submission of any Dispute shall include a concise
statement of the question or issue in dispute together with a
statement listing the relevant facts and documentation that
support the claim.
13.2 The Parties agree to cooperate in good faith to expedite the
resolution of any Dispute. Pending resolution of a Dispute,
the Parties shall proceed diligently with the performance of
their obligations under this Agreement.
13.3 The Parties shall first attempt in good faith to resolve any
Dispute through informal negotiations by the Contract
Representatives. In the event that the Contract
Representatives are unable to satisfactorily resolve the
Dispute within thirty (30) days from the receipt of notice of
the Dispute, either Party may by written notice to the other
Party refer the Dispute to its respective senior management
for resolution as promptly as practicable. If the Parties'
senior management are unable to resolve the Dispute within
forty-five (45) days from the date of such referral,
thereafter the Parties may agree in writing to extend the time
period of such senior management negotiations. In the event
the Parties' senior management do not resolve the dispute
within the prescribed or extended time period, either Party
may initiate arbitration through the serving and filing of a
demand for arbitration and the Parties expressly agree that
arbitration in accordance with this Section 13 shall be the
exclusive means to further resolve any Dispute and hereby
irrevocably waive their right to a jury trial with respect to
any Dispute, provided that at any time:
13.3.1 A request made by a Party for provisional remedies
requesting preservation of the Parties' respective
rights and obligations under the Agreement may be
resolved by a court of law located in the County of
the principal place of business of Buyer.
13.3.2 Nothing in this Agreement shall preclude, or be
construed to preclude, any Party from filing a
petition or complaint with the FERC or PUCN with
respect to any arbitrable Dispute over which said
agency has jurisdiction. In such case, the other
Party may request the FERC or PUCN, as applicable, to
reject or to waive jurisdiction. If jurisdiction is
26
rejected or waived with respect to all or a portion
of the Dispute, the portion of the Dispute not so
accepted by the FERC or PUCN, as applicable, shall be
resolved through arbitration in accordance with this
Agreement. To the extent that the FERC or PUCN, as
applicable, asserts or accepts jurisdiction over the
Dispute, the decision, finding of fact or order of
FERC shall be final and binding, subject to judicial
review under the Federal Power Act or Nevada Revised
Statutes and subject to the provisions of Section
2.2.2. Any arbitration proceedings that may have
commenced with respect to the Dispute prior to the
assertion or acceptance of jurisdiction by the FERC
or PUCN, as applicable, shall be terminated to the
extent the FERC or PUCN accepts or asserts
jurisdiction over such Dispute.
13.4 Unless otherwise agreed by the Parties, any arbitration
initiated under this Agreement shall be conducted in
accordance with the following:
13.4.1 Arbitrations shall be held within the County of the
principal place of business of Buyer.
13.4.2 Except as otherwise modified herein, the arbitration
shall be conducted in accordance with the "Commercial
Arbitration Rules" of the American Arbitration
Association ("AAA") then in effect.
13.4.3 Arbitration shall be conducted by one neutral
arbitrator who shall be selected pursuant to the AAA
rules and the following:
13.4.3.1 The Parties agree that the list of potential
arbitrators provided by the AAA shall, if
available, contain twenty (20) candidates,
and at least fifty percent (50%) of the
candidates shall be members of the AAA
National Energy Panel.
13.4.3.2 The Parties also agree that each shall be
allowed to strike the names of five
candidates before ranking the remaining
candidates and returning the list to the AAA
in accordance with the Commercial
Arbitration Rules. If the Parties are unable
to agree on an arbitrator, such arbitrator
shall be appointed by the AAA.
13.4.3.3 The arbitrator shall not have any current or
past substantial business, financial, or
personal relationships with either Party (or
their Affiliates) and shall not be a vendor,
supplier, customer, employee, consultant, or
competitor to either of the Parties or their
Affiliates.
13.4.3.4 The arbitrator shall be authorized only to
interpret and apply the provisions of this
Agreement or any related agreements entered
into under this Agreement and shall have no
power to modify or change any provision of
this Agreement. The arbitrator shall have no
authority to award punitive or multiple
damages or
27
any damages inconsistent with this
Agreement. The arbitrator shall within
thirty (30) days of the conclusion of the
hearing, unless such time is extended by
agreement of the Parties, notify the Parties
in writing of his or her decision, stating
his or her reasons for such decision and
separately listing his or her findings of
fact and conclusions of law. Judgment on the
award may be entered in any court having
jurisdiction.
13.5 The Parties shall proceed with the arbitration expeditiously,
and the arbitration shall be concluded within five (5) months
of the filing of the demand for arbitration pursuant to this
Section 13 in order that the decision may be rendered within
six (6) months of such filing, unless the arbitrator extends
such time at the request of a Party upon a showing of good
cause or upon agreement of the Parties.
13.6 Any arbitration proceedings, decision or award rendered
hereunder and the validity, effect and interpretation of any
arbitration agreement shall be governed by the Federal
Arbitration Act of the United States, 9 U.S.C. (S)(S)1 et
seq.
13.7 The decision of the arbitrator shall be final and binding on
both Parties and may be enforced in any court having
jurisdiction over the Party against which enforcement is
sought.
13.8 The fees and expenses of the arbitrator shall be shared by the
Parties equally, unless the decision of the arbitrator shall
specify some other apportionment of such fees and expenses.
All other expenses and costs of the arbitration shall be borne
by the Party incurring the same.
14. NATURE OF OBLIGATIONS
14.1 Except where specifically stated in this Agreement to be
otherwise, the duties, obligations, and liabilities of the
Parties shall be several, not joint or collective. The
provisions of this Agreement shall not be construed to create
an association, trust, partnership, or joint venture; to
impose a trust or partnership duty, obligation, or liability
or agency relationship on or with regard to either Party.
14.2 Nothing in this Agreement nor any action taken hereunder shall
be construed to create any duty, liability, or standard of
care to any person not a Party to this Agreement. Each Party
shall be individually and severally liable for its own
obligations under this Agreement.
14.3 By this Agreement, neither Party dedicates any part of its
facilities or the service provided under this Agreement to the
public.
15. SUCCESSORS AND ASSIGNS
15.1 This Agreement may be assigned, without express written
consent of the other Party, as follows:
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15.1.1 Buyer may assign this Agreement or assign or delegate
its rights and obligations under this Agreement, in
whole or in part, if such assignment is made to an
affiliate, parent, subsidiary, successor or any
party, provided that such assignee operates all or a
portion of the PLR or if such assignment is required
by Law or applicable regulations.
15.1.2 Buyer also may assign this Agreement as provided in
Section 11.5 of the Asset Sale Agreement; provided
that such assignment is to an entity that (a) has the
right to control the operation of the Asset Bundle;
and (b) is willing and able to perform its
obligations under this Agreement.
15.2 Supplier may, without the consent of Buyer, assign, transfer,
pledge or otherwise dispose of its rights and interests
hereunder to a trustee, lending institution, or any Person for
the purposes of financing or refinancing the Asset Bundle,
including upon or pursuant to the exercise of remedies under
such financing or refinancing, or by way of assignments,
transfers, conveyances of dispositions in lieu thereof;
provided, however, that no such assignment or disposition
shall relieve or in any way discharge Supplier or such
permitted assignee from the performance of its duties and
obligations under this Agreement. Buyer agrees to execute and
deliver such documents as may be reasonably necessary to
accomplish any such assignment, transfer, conveyance, pledge
or disposition of rights hereunder for purposes of the
financing or refinancing of the Asset Bundle, so long as
Buyer's rights under this Agreement are not thereby materially
altered, amended, diminished or otherwise impaired.
15.3 Either Party may, without the consent of the other Party,
assign this Agreement to a successor to all or substantially
all of the assets of such Party by way of merger,
consolidation, sale or otherwise, provided such successor
assumes and becomes liable for all of such Party's duties and
obligations hereunder including Section 3 hereof.
15.4 Except as stated above, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned
by either Party, including by operation of law, without the
prior written consent of the other Party, said consent not to
be unreasonably withheld. Any assignment of this Agreement in
violation of the foregoing shall be, at the option of the
non-assigning Party, void.
15.5 Except as set forth above, no assignment or transfer of rights
or obligations under this Agreement by a Party shall relieve
said Party from full liability and financial responsibility
for the performance thereof after any such transfer or
assignment unless and until the transferee or assignee shall
agree in writing to assume the obligations and duties of said
Party under this Agreement and the other Party has consented
in writing to such assumption; said consent not to be
unreasonably withheld.
15.6 This Agreement and all of the provisions hereof are binding
upon, and inure to the benefit of, the Parties and their
respective successors and permitted assigns.
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16. REPRESENTATIONS
16.1 Representations of the Parties. The Parties represent and
------------------------------
warrant each to the other as follows:
16.1.1 Incorporation. Buyer is a corporation duly
-------------
incorporated, validly existing and in good standing
under the laws of the State of Nevada. Supplier is a
limited liability company duly organized, validly
existing and in good standing under the laws of the
State of Delaware. Both Buyer and Supplier have all
requisite corporate power and authority to own, lease
and operate their material assets and properties and
to carry on their business as now being conducted.
16.1.2 Authority. The Party has full corporate power and
---------
authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory
approvals, to carry out the actions required of it by
this Agreement. The execution and delivery of this
Agreement and the transactions contemplated hereby
have been duly and validly authorized by all
necessary corporate action required on the part of
the Party. The Agreement has been duly and validly
executed and delivered by the Party and, assuming
that it is duly and validly executed and delivered by
the other Party, constitutes a legal, valid and
binding agreement of the Party.
16.1.3 Compliance With Law. The Party represents and
-------------------
warrants that it is not in violation of any
applicable Law, or applicable regulation, which
violation could reasonably be expected to materially
adversely affect the other Party's performance of its
obligations under this Agreement. The Party
represents and warrants that it will comply with all
Laws, and regulations applicable to its compliance
with this Agreement, non-compliance with which would
reasonably be expected to materially adversely affect
either Party's performance of its obligations under
this Agreement.
16.1.4 Representations of Both Parties. The representations
-------------------------------
in this Section 16 shall continue in full force and
effect for the term of this Agreement.
17. DEFAULT AND REMEDIES
17.1 An Event of Default hereunder shall be deemed to have occurred
upon a Party's (Defaulting Party) failure to comply with any
material obligation imposed upon it by this Agreement.
Examples of an Event of Default include, but are not limited
to the following:
(i) Failure to make any payments due under this
Agreement;
(ii) Failure to deliver the Supply Amount for a period of
five (5) consecutive days;
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(iii) Failure to follow the directions of a Control Area Operator,
ISA, EDU, WSCC, NERC, PUCN, FERC, or any successor thereto
where following such directions is required hereunder;
(iv) Supplier not being in compliance with Section 3; and
(v) Failure of the Guarantor to be in compliance with the terms of
the Guarantee delivered under Section 3.1.2.
17.2 An Event of Default shall be excused:
17.2.1 In the event such Event of Default was caused by
Force Majeure provided that the Party claiming a
Force Majeure complies with the requirements of
Section 12; and
17.2.2 In the event such Event of Default was caused by
transmission and distribution outages or disruptions.
17.3 Unless excused, in an Event of Default the Non-Defaulting
Party shall be entitled to provide written notice (or verbal
notice in case of emergency followed by written notice) of the
Event of Default to the Defaulting Party and to specify a cure
period, which cure period shall be a minimum of thirty (30)
days.
17.4 If an Event of Default is not cured by the Defaulting Party
during the cure period specified by the Non-Defaulting Party,
the Non-Defaulting Party shall be entitled to those remedies
which are not inconsistent with the terms of this Agreement,
including termination and the payment of liquidated damages. A
Defaulting Party shall not be liable to the Non-Defaulting
Party for any punitive, consequential or incidental damages.
For purposes of clarification, Replacement Costs shall not be
considered consequential or incidental damages under this
Section 17.4.
17.5 Notwithstanding this Section 17, liquidated damages shall be
paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.
18. FACILITY ADDITIONS AND MODIFICATIONS
18.1 Supplier shall be entitled to make additions and modifications
to the Asset Bundle subject to the following:
18.1.1 To the extent additions and modifications interfere
with the operation of the Asset Bundle in providing
the Supply Amount to Buyer beyond the limits for
planned outages set forth in Section 21, liquidated
damages shall be paid to Buyer pursuant to Section
4.2.
18.1.2 Supplier shall use reasonable efforts to minimize any
adverse impact on Buyer during the course of making
such additions and modifications.
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18.1.3 Such additions and modifications shall be conducted
in accordance with Good Utility Practice, and all
applicable Laws, regulations, reliability criteria
and the Interconnection Agreement between Buyer and
Supplier, dated October 16, 2000, as it may be
amended from time to time.
18.2 Supplier shall seek Buyer's prior written approval for all
Supplier's additions or modifications to the Asset Bundle
which might reasonably be expected to have an adverse effect
upon Buyer with respect to operations or performance under
this Agreement.
19. COORDINATION
19.1 Upon knowledge thereof, each Party shall promptly give notice
to the other Party of any labor dispute which is delaying or
threatens to delay the timely performance of this Agreement,
which shall include a description of the general nature of the
dispute.
20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE
20.1 Buyer and Supplier shall comply with any applicable
requirement of any Governmental Authority, NERC, WSCC, ISA,
Control Area Operator, transmission operator, EDU or any
successor of any of them, regarding the reduced or increased
generation of the Asset Bundle in the event of an Emergency
Condition or Nonemergency Condition.
20.2 Supplier shall not be obligated to deliver the Supply Amount
and no liquidated damages shall become due, if the Supply
Amount is reduced in the event of an Emergency Condition or a
Nonemergency Condition.
20.3 Each Party shall provide prompt verbal notice to the other
Party of any Emergency Condition or Nonemergency Condition.
20.4 Either Party may take reasonable and necessary action to
prevent, avoid or mitigate injury, danger, damage or loss to
its own equipment and facilities, or to expedite restoration
of service; provided, however, that the Party taking such
action shall give the other Party prior notice if at all
possible before taking any action. However, this Section 20.4
shall not be construed to supersede Sections 20.2 and 20.3.
21. OUTAGE SCHEDULING
21.1 Supplier shall request Buyer's approval prior to any
inspections, proposed planned outages or other non-forced
outages (all hereinafter referred to as "planned outages") of
the Asset Bundle so as to minimize the impact on the
availability of the Asset Bundle. Under no circumstances shall
Supplier conduct a planned outage without the express prior
consent of Buyer pursuant to this Section 21.
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21.2 Planned Outages.
---------------
21.2.1 Within sixty (60) days following the Effective Date
of this Agreement and on or before October 1 of each
Contract Year, Supplier shall provide Buyer with a
schedule of proposed planned outages for the period
beginning on the date of such proposed schedule for
the following twelve (12) months. The proposed
planned outage schedule will designate days for each
unit in which the Asset Bundle Capacity will be
reduced in part or total for each such unit. Each
proposed schedule shall include all applicable
information, including but not limited to the
following: Month, day and time of requested outage;
facilities impacted (such as Unit and description);
duration of outage; purpose of outage; amount of
capacity (in MWs) which is derated; other conditions
and remarks; and name of contact and phone number.
21.2.2 Buyer shall promptly review Supplier's proposed
schedule and shall either require modifications or
approve the proposed schedule. Supplier shall use its
best efforts to accomplish all planned outages in
accordance with the approved schedule. Supplier shall
be responsible to Buyer for Replacement Costs (i) if
any outage period exceeds its approved schedule,
provided that changes to the approved schedule may be
requested by either Party and each Party shall make
reasonable efforts to accommodate such changes,
provided further the Buyer shall have no obligation
to agree to Supplier's revisions to the approved
planned outage schedule; and (ii) if Supplier
conducts a planned outage without the consent of
Buyer as provided herein.
22. REPORTS
22.1 Supplier shall promptly provide Buyer with copies of any
orders, decrees, letters or other written communications to or
from any Governmental Authority asserting or indicating that
Supplier and/or its Asset Bundle is in violation of Laws which
relate to Supplier, or operations or maintenance of the Asset
Bundle and which may have an adverse effect on Buyer. Supplier
shall use reasonable efforts to keep Buyer appraised of the
status of any such matters.
23. COMMUNICATIONS
23.1 Supplier's Operating Representatives shall be available
twenty-four (24) hours per day for communications with the
Control Area Operator and/or the ISA and Buyer to facilitate
the operations contained in this Agreement.
23.2 Supplier shall, at its expense, maintain and install real-time
communications equipment at the Asset Bundle to maintain
communications between personnel on site at the Asset Bundle,
Buyer and the Control Area Operator at all times. Supplier
shall provide at its expense:
33
(i) Ringdown voice telephone lines, and
(ii) Equipment to transmit to and receive telecopies from
Buyer and the Control Area Operator.
23.3 Supplier shall immediately report to Buyer any "Abnormal
Condition" that has or may occur, and provide all pertinent
information, including but not limited to the following:
(i) A description of the "Abnormal Condition" and the
actions to be taken to alleviate the "Abnormal
Condition";
(ii) The expected duration including the beginning and
ending time of the "Abnormal Condition"; and
(iii) The amount of any adjustment to the current (real
time) level of Energy and Ancillary Services.
23.4 Cause of the Condition.
----------------------
23.4.1 An "Abnormal Condition" shall include without
limitation any conditions that, to Supplier's
knowledge, have or are reasonably likely to:
(i) Adversely affect Supplier's ability to
provide Energy and Ancillary Services to
Buyer;
(ii) Cause an unplanned reduction in the amount
of delivery of Energy and Ancillary Services
to Buyer; or
(iii) Cause an unplanned isolation of the Asset
Bundle from the transmission system.
23.5 Supplier shall immediately notify Buyer after such "Abnormal
Condition" has been alleviated.
24. NOTICES
24.1 All notices hereunder shall, unless specified otherwise, be in
writing and shall be addressed, except as otherwise stated
herein, to the Parties as set forth in Exhibit F.
24.2 All written notices or submittals required by this Agreement
shall be sent either by hand-delivery, regular first class
U.S. mail, registered or certified U.S. mail postage paid
return receipt requested, overnight courier delivery,
electronic mail or facsimile transmission and will be
effective and deemed to have been received on the date of
receipt personally, on the date and time as documented by
method of delivery if during normal business hours or on the
next succeeding Business Day, or on the third (3rd) Business
Day following deposit with the U.S. mail if sent regular first
class U.S. mail.
34
sent regular first class U.S. mail.
24.3 Notices of an Event of Default pursuant to Section 17 and or
Force Majeure pursuant to Section 12 may not be sent by
regular first class U.S. mail.
24.4 Any payments required to be made under this Agreement shall be
made to the Party as set forth in Exhibit F.
24.5 Each Party shall have the right to change, at any time upon
written notice to the other Party, the name, address and
telephone numbers of its representatives under this Agreement
for purposes of notices and payments.
25. MERGER
25.1 The Agreement contains the entire agreement and understanding
between the Parties with respect to all of the subject matter
contained herein, thereby merging and superseding all prior
agreements and representations by the Parties with respect to
such subject matter.
25.2 In the event of any conflict between this Agreement and the
Asset Sale Agreement, the terms of the Asset Sale Agreement
shall govern.
26. HEADINGS
26.1 The headings or section titles contained in this Agreement are
inserted solely for convenience and do not constitute a part
of this Agreement between the Parties, nor should they be used
to aid in any manner in the construction of this Agreement.
27. COUNTERPARTS AND INTERPRETATION
27.1 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
27.2 In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue
of authorship of any of the provisions of this Agreement.
27.3 Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context
requires otherwise.
27.4 The word "including" in this Agreement shall mean "including
without limitation".
28. SEVERABILITY
35
28.1 If any term, provision or condition of this Agreement is held
to be invalid, void or unenforceable by a court or
Governmental Authority of competent jurisdiction and such
holding is subject to no further appeal or judicial review,
then such invalid, void, or unenforceable term, provision or
condition shall be deemed severed from this Agreement and all
remaining terms, provisions and conditions of this Agreement
shall continue in full force and effect, unless, however, the
effect of the severance would vitiate the intent of the
Parties hereto, as determined by either Party in its
reasonable discretion.
28.2 The Parties shall endeavor in good faith to replace such
invalid, void, or unenforceable provisions with a valid and
enforceable provision which achieves the purposes intended by
the Parties to the greatest extent permitted by law.
29. WAIVERS
29.1 No failure or delay on the part of a Party in exercising any
of its rights under this Agreement or in insisting upon strict
performance of provisions of this Agreement, no partial
exercise by either Party of any of its rights under this
Agreement, and no course of dealing between the Parties shall
constitute a waiver of the rights of either Party under this
Agreement. Any waiver shall be effective only by a written
instrument signed by the Party granting such waiver, and such
shall not operate as a waiver of, or estoppel with respect to,
any subsequent failure to comply therewith.
30. AMENDMENTS
30.1 The Parties shall negotiate in good faith to determine
necessary amendments, if any, to this Agreement, provided that
in negotiating such amendments the Parties shall attempt, in
good faith, to reasonably preserve the bargain initially
struck in this Agreement if any Governmental Authority, FERC,
any state or the PUCN, implements a change in any Law or
applicable regulation that materially affects or is reasonably
expected to materially affect Buyer's PLR service under this
Agreement.
30.2 The Parties shall meet to discuss the impact of any changes in
Buyer's OATT or the ISA's OATT, as applicable, or any rule or
practice of NERC, WSCC, or any other Governmental Authority on
the terms of this Agreement upon request by either Party
during the term of this Agreement.
30.3 In the event that it is deemed necessary to amend this
Agreement, the Parties will attempt to agree upon such
amendment and will submit such mutually agreed upon
amendment(s) to the FERC for filing and acceptance.
30.4 Amendments to this Agreement shall be in writing and shall be
executed by an authorized representative of each Party.
31. TIME IS OF THE ESSENCE
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31.1 Time is of the essence of this Agreement and in the
performance of all of the covenants and conditions hereof.
32. APPROVALS
32.1 Each Party's performance under this Agreement is subject to
the condition that all requisite governmental and regulatory
approvals for such performance are obtained in form and
substance satisfactory to the other Party in its reasonable
discretion. Each Party shall use best efforts to obtain all
required approvals and shall exercise due diligence and shall
act in good faith to cooperate and assist each other in
acquiring any regulatory approval necessary to effectuate this
Agreement. Further, the Parties agree to reasonably support
the other Party in any associated regulatory proceedings,
including by being a witness on behalf of the other Party.
32.2 Notwithstanding Section 30.1, prior to the submission of this
Agreement to the FERC, Buyer shall provide Supplier final
versions of Exhibits B, C, D, E, F, J, K, and L, which shall
be substantially in the form of Exhibits B, C, D, E, F, J, K,
and L attached hereto as of the date of execution of this
Agreement, if such exhibits are modified as required to be
consistent with orders of the FERC in Docket No. ER00-2018-000
with regard to pricing of the Asset Bundle Capacity. Upon
acceptance by Supplier, such acceptance not to be unreasonably
withheld, such final versions of Exhibits B, C, D, E, F, J, K,
and L shall replace the initial versions of such exhibits and
shall be incorporated as a part of this Agreement.
32.3 This Agreement is made subject to present or future state or
federal laws, regulations, or orders properly issued by state
or federal bodies having jurisdiction.
32.4 The Parties hereto agree to execute and deliver promptly, at
the expense of the Party requesting such action, any and all
other and further instruments, documents and information which
may reasonably be necessary or appropriate to give full force
and effect to the terms and intent of this Agreement.
33. PLR SERVICE
33.1 The Agreement is premised on Buyer providing PLR service.
Notwithstanding anything to the contrary contained herein, if
Nevada retail electricity restructuring (including
implementation of retail customer choice of electricity
suppliers) is delayed beyond the Effective Date of this
Agreement, the Parties shall continue to perform this
Agreement in all respects pursuant to the terms and conditions
hereof as if Buyer was the PLR and Buyer's retail and
wholesale customers shall be considered as the TRR.
34. CONFIDENTIALITY
34.1 Confidential Information. Certain information provided by a
------------------------
Party (the "Disclosing Party") to the other Party (the
"Receiving Party") in connection with the negotiation or
performance of this Agreement may be considered confidential
and/or proprietary (hereinafter referred to as "Confidential
Information") by the
37
Disclosing Party. To be considered Confidential Information
hereunder, such information must be clearly labeled or
designated by the Disclosing Party as "confidential" or
"proprietary" or with words of like meaning. If disclosed
orally, such information shall be clearly identified as
confidential and such status shall be confirmed promptly
thereafter in writing.
34.2 Treatment of Confidential Information. The Receiving Party
-------------------------------------
shall treat any Confidential Information with at least the
same degree of care regarding its secrecy and confidentiality
as the Receiving Party's similar information is treated within
the Receiving Party's organization. The Receiving Party shall
not disclose the Confidential Information of the Disclosing
Party to third parties (except as stated hereinafter) nor use
it for any purpose other than the negotiation or performance
of this Agreement, without the express prior written consent
of the Disclosing Party. The Receiving Party further agrees
that it shall restrict disclosure of Confidential Information
as follows:
34.2.1 Disclosure shall be restricted solely to its agents
as may be necessary to enforce the terms of this
Agreement after advising those agents of their
obligations under this Section 34.2.
34.2.2 In the event that the Receiving Party is requested,
pursuant to or as required by applicable Law or by
legal process, to disclose any Confidential
Information, the Receiving Party shall provide the
Disclosing Party with prompt notice of such request
or requirement in order to enable Disclosing Party to
seek an appropriate protective order or other remedy
and to consult with Disclosing Party with respect to
Disclosing Party taking steps to resist or narrow the
scope of such request or legal process. The Receiving
Party agrees not to oppose any action by the
Disclosing Party to obtain a protective order or
other appropriate remedy. In the absence of such
protective order, and provided that the Receiving
Party is advised by its counsel that it is compelled
to disclose the Confidential Information, the
Receiving Party shall:
(i) furnish only that portion of the
Confidential Information which the Receiving
Party is advised by counsel is legally
required; and
(ii) use its commercially reasonable best
efforts, at the expense of the Disclosing
Party, to ensure that all Confidential
Information so disclosed will be accorded
confidential treatment.
34.3 Excluded Information. Confidential Information shall not be
--------------------
deemed to include the following:
34.3.1 information which is or becomes generally available
to the public other than as a result of a disclosure
by the Receiving Party;
34.3.2 information which was available to the Receiving
Party on a non-
38
confidential basis prior to its disclosures by the
Disclosing Party; and
34.3.3 information which becomes available to the Receiving
Party on a non-confidential basis from a person other
than the Disclosing Party or its representative who
is not otherwise bound by a confidentiality agreement
with Disclosing Party or its agent or is otherwise
not under any obligation to Disclosing party or its
agent not to disclose the information to the
Receiving Party.
34.4 Injunctive Relief Due to Breach. The Parties agree that
-------------------------------
remedies at law may be inadequate to protect each other in the
event of a breach of this Section 34, and the Receiving Party
hereby in advance agrees that the Disclosing Party shall be
entitled to seek and obtain, without proof of actual damages,
temporary, preliminary and permanent injunctive relief from
any court or Governmental Authority of competent jurisdiction
restraining the Receiving Party from committing or continuing
any breach of this Section 34.
35. CHOICE OF LAW
35.1 This Agreement and the rights and obligations of the Parties
shall be construed and governed by the Laws of: (i) the State
of Nevada as if executed and performed wholly within that
state; and (ii) the Federal Power Act, to the extent the
rights and obligations of the Parties are covered by such act.
39
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representative on the date set forth below.
SIERRA PACIFIC POWER COMPANY VALMY POWER LLC
By: By:
----------------------- --------------------
Xxxxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxxxxx
Title: Senior Vice President, General Title: President
Counsel, and Corporate Secretary
Date: October 16, 2000 Date: October 16, 2000
40
EXHIBIT A
VALMY BUNDLE
ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS
ASSET BUNDLE: VALMY
===================================================================================================
UNIT NET SUMMER NET RAMP RATE MINIMUM HOURLY
CAPABILITY (MW) WINTER CAPABILITY(MW) (MW)/HOUR ENERGY TAKE (MW)
---------------------------------------------------------------------------------------------------
Valmy Unit 1 127 127 100 45
Valmy Unit 2 134 134 80 55
Winnemucca 14 17 17
Battle Mt. 1-4 7 8 8
---------------------------------------------------------------------------------------------------
Total 282 286 205 100
===================================================================================================
Minimum Annual Energy Take: 2,130,000 MWh
For purposes of this Exhibit A, the summer months shall consist of June through
September, and the winter months shall consist of the months of January through
May and the months of October through December.
A-1
EXHIBIT B
VALMY BUNDLE
ENERGY AND ANCILLARY SERVICES PRICES
Energy Prices*
-------------
Price Floor of Energy: $ 19.63 per MWh
Price Ceiling of Energy: $ 36.77 per MWh
Ancillary Service Prices*
------------------------
Regulation and Frequency Response:
On-Peak: $31.08 per MW-reserved per hour
Off-Peak: $17.76 per MW-reserved per hour
Operating Reserve - Spinning Reserve:
On-Peak: $31.08 per MW-reserved per hour
Off-Peak: $17.76 per MW-reserved per hour
Operating Reserve - Supplemental Reserve:
On-Peak: $5.50 per MW-reserved per hour
Off-Peak: $3.14 per MW-reserved per hour
The On-Peak periods shall consist of Hour Ending (HE) 0700 through HE 2200 PPT,
Monday through Saturday. The Off-Peak periods shall consist of HE 0100 through
HE 0600, HE 2300 and HE 2400 PPT, Monday through Saturday; HE 0100 through HE
2400 PPT Sunday and additional Off-Peak days (holidays) as designated annually
by WSCC.
*SUBJECT TO FERC APPROVAL
------------------------
B-1
EXHIBIT C
VALMY BUNDLE
SUPPLIER'S MONTHLY INVOICE
A Price Ceiling of Energy $ 36.77 /MWh
B Price Floor of Energy $ 19.63 /MWh
MONTH 1 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Capacity
---- -------------- ------------ --------------- ----------------- ---------------- ---------------------
(C - D) (D x F) (C x F)
1 282 282 - 40.00 $ 11,280.00 $ 11,280.00
2 282 282 - 40.00 11,280.00 11,280.00
3 282 222 60 40.00 8,880.00 11,280.00
4 282 222 60 40.00 8,880.00 11,280.00
5 152 142 10 30.00 4,260.00 4,560.00
6 182 182 - 30.00 5,460.00 5,460.00
7 272 252 20 20.00 5,040.00 5,440.00
8 282 282 - 20.00 5,640.00 5,640.00
9 282 282 - 20.00 5,640.00 5,640.00
10 282 282 - 25.00 7,050.00 7,050.00
-----------------------------------------------------------------------------------------------------------------------------------
2,580 2,430 150 $ 73,410.00 $ 78,910.00
I. Sum of (Delivered Energy times corresponding
hourly Market Price) Sec 7.2.1 $ 73,410.00
IT. Sum of (Asset Bundle Capacity times corresponding
hourly Market Price) $ 78,910.00
J. Sum of hourly Delivered Energy multiplied by the Price
Ceiling of Energy Sec 7.2.2 $ 89,351.10
JT. Sum of hourly Asset Bundle Capacity multiplied by
the Price Ceiling of Energy $ 94,866.60
K. Sum of hourly Delivered Energy multiplied by the Price Floor
of Energy Sec 7.2.3 $ 47,700.90
KT. Sum of hourly Asset Bundle Capacity multiplied
by the Price Floor of Energy $ 50,645.40
L. Invoiced Amount Energy Sec 7.3 (K less than I less than J) $ 73,410.00
M. Theoretical Amount for Expected Performance (KT less than IT less than JT) $ 78,910.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------
N O P Q R S
Dispatch Schedule of Ancillary Supplier Capacity Price of Price x Ancillary Price x Schedule
Ancillary Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(N - O) (O x Q) (N x Q)
1 - - - 17.76 $ - $ -
2 - - - 17.76 - -
3 - - - 31.08 - -
4 - - - 31.08 - -
C-1
EXHIBIT C
VALMY BUNDLE
SUPPLIER'S MONTHLY INVOICE
5 30 30 - 31.08 932.40 932.40
6 - - - 31.08 - -
7 - - - 31.08 - -
8 - - - 31.08 - -
9 - - - 31.08 - -
10 - - - 31.08 - -
-----------------------------------------------------------------------------------------------------------------------------------
30 30 - $ 932.40 $ 932.40
T. Invoiced Amount - Ancillary Service Capacity - Regulation and
Frequency Response Sec 7.2.5 $ 932.40
U. Theoretical Amount for Expected Performance $ 932.40
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------
V W X Y Z AA
Dispatch Schedule of Ancillary Supplier Capacity Price of Price x Ancillary Price x Schedule
Ancillary Capacity
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(V - W) (W x Y) (V x Y)
1 - - - 17.76 $ - $ -
2 - - - 17.76 - -
3 - - - 31.08 - -
4 - - - 31.08 - -
5 80 80 - 31.08 2,486.40 2,486.40
6 80 60 20 31.08 1,864.80 2,486.40
7 - - - 31.08 - -
8 - - - 31.08 - -
9 - - - 31.08 - -
10 - - - 31.08 - -
-----------------------------------------------------------------------------------------------------------------------------------
160 140 20 $ 4,351.20 $ 4,972.80
AB. Invoiced Amount Ancillary Service Capacity Spinning Reserve Sec 7.2.5 $ 4,351.20
AC. Theoretical Amount for Expected Performance $ 4,972.80
MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
-----------------------------------------------------------
AD AE AF AG AH AI
Dispatch Schedule of Ancillary Capacity Price of Price x Ancillary Price x Schedule
Ancillary Capacity Supplier
Hour Capacity (MW) Supplied (MW) Shortfall (MW) Services ($/MW) Capacity Supplied of Ancillary Services
---- ------------- ------------- -------------- --------------- ----------------- ---------------------
(AE x AG) (AD x AG)
1 - - - 3.14 $ - $ -
2 - - - 3.14 - -
3 - - - 5.50 - -
4 - - - 5.50 - -
5 10 10 - 5.50 55.00 55.00
6 10 10 - 5.50 55.00 55.00
7 10 10 - 5.50 55.00 55.00
C-2
EXHIBIT C
VALMY BUNDLE
SUPPLIER'S MONTHLY INVOICE
8 - - - 5.50 - -
9 - - - 5.50 - -
10 - - - 5.50 - -
-----------------------------------------------------------------------------------------------------------------------------------
30 30 - $ 165.00 $ 165.00
AJ. Invoiced Amount - Ancillary Service Capacity - Supplemental
Reserve Sec 7.2.5 $ 165.00
AK. Theoretical Amount for Expected Performance $ 165.00
MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------
AL AM AN AO AP AQ
Schedule of Ancillary Price x
Dispatch Ancillary Energy Supplier Price Ceiling of Ancillary Price x Schedule
Hour Energy (MWh) Supplied (MWh) Shortfall (MWh) Energy ($/MWh) Energy Supplied of Ancillary Energy
---- ----------- -------------- --------------- -------------- --------------- -------------------
(AL AM) (AM x AO) (AL x AO)
1 - - - 36.77 $ - $ -
2 - - - 36.77 - -
3 - - - 36.77 - -
4 - - - 36.77 - -
5 40 40 - 36.77 1,470.80 1,470.80
6 30 10 20 36.77 367.70 1,103.10
7 10 10 - 36.77 367.70 367.70
8 - - - 36.77 - -
9 - - - 36.77 - -
10 - - - 36.77 - -
-----------------------------------------------------------------------------------------------------------------------------------
80 60 20 $ 367.70 $ 2,206.20 $ 2,941.60
AR. Invoiced Amount - Ancillary Services Energy Sec 7.2.6 $ 2,206.20
AS. Theoretical Amount for Expected Performance $ 2,941.60
MONTH 1 - TOTAL INVOICE AMOUNT Sec 7.3 (L + T + AB + AJ + AR) $ 81,064.80
====================================================================================================================================
MONTH 2 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ----------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 282 282 - 40.00 $ 11,280.00 $ 11,280.00
2 282 282 - 40.00 11,280.00 11,280.00
3 282 222 60 40.00 8,880.00 11,280.00
4 282 222 60 50.00 11,100.00 14,100.00
C-3
EXHIBIT C
VALMY BUNDLE
SUPPLIER'S MONTHLY INVOICE
5 152 142 10 50.00 7,100.00 7,600.00
6 182 182 - 50.00 9,100.00 9,100.00
7 272 252 20 30.00 7,560.00 8,160.00
8 282 282 - 30.00 8,460.00 8,460.00
9 282 282 - 30.00 8,460.00 8,460.00
10 282 282 - 35.00 9,870.00 9,870.00
-----------------------------------------------------------------------------------------------------------------------------------
2,580 2,430 150 $ 93,090.00 $ 99,590.00
I. Sum of (Delivered Energy times corresponding hourly
Market Price) Sec 7.2.1 $ 93,090.00
IT. Sum of (Asset Bundle Capacity times corresponding
hourly Market Price) $ 99,590.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling
of Energy Sec 7.2.2 $ 89,351.10
JT. Sum of hourly Asset Bundle Capacity multiplied by the
Price Ceiling of Energy $ 94,866.60
K. Sum of hourly Delivered Energy multiplied by the Price Floor of
Energy Sec 7.2.3 $ 47,700.90
KT. Sum of hourly Asset Bundle Capacity multiplied by
the Price Floor of Energy $ 50,645.40
L. Invoiced Amount Energy Sec 7.3 (I greater than J) $ 89,351.10
M. Theoretical Amount for Expected Performance (IT greater than JT) $ 94,866.60
MONTH 3 - ENERGY
----------------
C D E F G H
Dispatch Asset Bundle Delivered Supplier Market Price Market Price x Market Price x
Hour Capacity (MWh) Energy (MWh) Shortfall (MWh) of Energy ($/MWh) Delivered Energy Asset Bundle Cap.
---- -------------- ------------ --------------- ----------------- ---------------- -----------------
(C - D) (D x F) (C x F)
1 282 282 - 30.00 $ 8,460.00 $ 8,460.00
2 282 282 - 20.00 5,640.00 5,640.00
3 282 222 60 20.00 4,440.00 5,640.00
4 282 222 60 20.00 4,440.00 5,640.00
5 152 142 10 15.00 2,130.00 2,280.00
6 182 182 - 15.00 2,730.00 2,730.00
7 272 252 20 15.00 3,780.00 4,080.00
8 282 282 15.00 4,230.00 4,230.00
9 282 282 15.00 4,230.00 4,230.00
10 282 282 15.00 4,230.00 4,230.00
-----------------------------------------------------------------------------------------------------------------------------------
2,580 2,430 150 $ 44,310.00 $ 47,160.00
I. Sum of (Delivered Energy times corresponding hourly
Market Price) Sec 7.2.1 $ 44,310.00
IT. Sum of (Asset Bundle Capacity times corresponding
hourly Market Price) $ 47,160.00
J. Sum of hourly Delivered Energy multiplied by the Price Ceiling
of Energy Sec 7.2.2 $ 89,351.10
JT. Sum of hourly Asset Bundle Capacity multiplied by
the Price Ceiling of Energy $ 94,866.60
C-4
EXHIBIT C
VALMY BUNDLE
SUPPLIER'S MONTHLY INVOICE
K. Sum of hourly Delivered Energy multiplied by the Price Floor of
Energy Sec 7.2.3 $ 47,700.90
KT. Sum of hourly Asset Bundle Capacity multiplied by the
Price Floor of Energy $ 50,645.40
L. Invoiced Amount - Energy Sec 7.3 (I less than K) $ 47,700.90
M. Theoretical Amount for Expected Performance (IT less than KT) $ 50,645.40
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
C-5
EXHIBIT D
VALMY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ENERGY
----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 60 35.00 100.00 2,200.00
4 60 30.00 50.00 1,850.00
5 10 30.00 50.00 350.00
6 0 na 0.00 0.00
7 20 25.00 0.00 500.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-------------------------------------------------------------------------------------------------------------
150 $ 4,900.00
X. Xxxxx Replacement Cost of Energy $ 4,900.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 78,910.00
G. Actual Supplier's Invoice Amount 73,410.00
---------------
H. Avoided Payment to Supplier (F - G) $ 5,500.00
I. Invoiced Replacement Cost - Energy (E less than H) $ 0.00
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------
J K * L * M
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(J x K) + L
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
--------------------------------------------------------------------------------------------------------------
0 $ 0.00
X. Xxxxx Replacement Cost of Ancillary Capacity - $ 0.00
Regulation & Frequency Response
O. Theoretical Supplier's Invoice Amount for Expected Performance $ 932.40
P. Actual Supplier's Invoice Amount 932.40
Q. Avoided Payment to Supplier (O - P) $ 0.00
R. Invoiced Replacement Cost - Ancillary Capacity (N = Q) $ 0.00
D-1
EXHIBIT D
VALMY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------
S T * U * V
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(S x T) + U
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 40.00 100.00 900.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
------------------------------------------------------------------------------------------------------------
20 $ 900.00
X. Xxxxx Replacement Cost of Ancillary Capacity - Spinning Reserve $ 900.00
X. Theoretical Supplier's Invoice Amount for Expected Performance $4,972.80
Y. Actual Supplier's Invoice Amount 4,351.20
Z. Avoided Payment to Supplier (X - Y) $ 621.60
AA. Invoiced Replacement Cost - Ancillary Capacity (W greater than Z) $ 278.40
MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
---------------------------------------------------
AB AC * AD * AE
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Capacity (MW) of Capacity ($/MW) of Capacity Cost of Capacity
---- ------------- ------------------ ----------- ----------------
(AB x AC) + AD
1 0 na $ 0.00 $ 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 0 na 0.00 0.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
------------------------------------------------------------------------------------------------------------
0 $ 0.00
AF. Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve $ 0.00
AG. Theoretical Supplier's Invoice Amount for Expected Performance $165.00
AH. Actual Supplier's Invoice Amount 165.00
----------------
AI. Avoided Payment to Supplier (AG - AH) $ 0.00
D-2
EXHIBIT D
VALMY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
AJ. Invoiced Replacement Cost - Ancillary Capacity (AF = AI) $ 0.00
MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------
AK AL * AM * AN
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy ** Cost of Energy
---- ------------ ----------------- ------------ --------------
(AK x AL) + AM
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 0 na 0.00 0.00
4 0 na 0.00 0.00
5 0 na 0.00 0.00
6 20 40.00 20.00 820.00
7 0 na 0.00 0.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
------------------------------------------------------------------------------------------------------------
20 $ 820.00
AO. Gross Replacement Cost of Ancillary Energy $ 820.00
AP. Theoretical Supplier's Invoice Amount for Expected Performance $2,941.60
AQ. Actual Supplier's Invoice Amount 2,206.20
AR. Avoided Payment to Supplier (AP - AQ) $ 735.40
AS. Invoiced Replacement Cost - Ancillary Energy (AO greater than AR) $ 84.60
MONTH 1 - TOTAL INVOICE AMOUNT (I + R + AA + AJ + AS) $ 363.00
============================================================================================================
MONTH 2 - ENERGY
----------------
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 60 40.00 200.00 2,600.00
4 60 55.00 100.00 3,400.00
5 10 48.00 200.00 680.00
6 0 na 0.00 0.00
7 20 35.00 300.00 1,000.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
------------------------------------------------------------------------------------------------------------
150 $7,680.00
D-3
EXHIBIT D
VALMY BUNDLE
BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
X. Xxxxx Replacement Cost of Energy $ 7,680.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 94,866.60
G. Actual Supplier's Invoice Amount 89,351.10
H. Avoided Payment to Supplier (F - G) $ 5,515.50
I. Invoiced Replacement Cost - Energy (E greater than H) $ 2,164.50
MONTH 3 - ENERGY
A B * C * D
Dispatch Replacement Replacement Cost Replacement Cost Gross Replacement
Hour Energy (MWh) of Energy ($/MWh) of Energy Cost of Energy
---- ------------ ----------------- --------- --------------
(A x B) + C
1 0 na $ 0.00 0.00
2 0 na 0.00 0.00
3 60 22.00 100.00 1,420.00
4 60 18.00 50.00 1,130.00
5 10 18.00 0.00 180.00
6 0 na 0.00 0.00
7 20 18.00 50.00 410.00
8 0 na 0.00 0.00
9 0 na 0.00 0.00
10 0 na 0.00 0.00
-------------------------------------------------------------------------------------------------------------------
150 $ 3,140.00
X. Xxxxx Replacement Cost of Energy $ 3,140.00
F. Theoretical Supplier's Invoice Amount for Expected Performance $ 50,645.40
G. Actual Supplier's Invoice Amount 47,700.90
--------------------
H. Avoided Payment to Supplier (F - G) $ 2,944.50
I. Invoiced Replacement Cost - Energy (E greater than H) $ 195.50
For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.
EXHIBIT E
VALMY BUNDLE
YEAR END TRUE-UP INVOICE
A Price Ceiling of Energy $ 36.77 /MWh
B Price Floor of Energy $ 19.63 /MWh
EXAMPLE 1
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 2,430 $ 73,410.00 $ 89,351.10 $ 47,700.90 $ 73,410.00
2 2,430 93,090.00 89,351.10 47,700.90 89,351.10
3 2,430 44,310.00 89,351.10 47,700.90 47,700.90
D-4
EXHIBIT E
VALMY BUNDLE
YEAR END TRUE-UP INVOICE
4 2,820 118,440.00 103,691.40 55,356.60 103,691.40
5 2,820 107,160.00 103,691.40 55,356.60 103,691.40
6 2,620 99,560.00 96,337.40 51,430.60 96,337.40
7 2,820 112,800.00 103,691.40 55,356.60 103,691.40
8 2,820 107,160.00 103,691.40 55,356.60 103,691.40
9 2,280 88,920.00 83,835.60 44,756.40 83,835.60
10 2,820 101,520.00 103,691.40 55,356.60 101,520.00
11 2,820 126,900.00 103,691.40 55,356.60 103,691.40
12 2,520 100,800.00 92,660.40 49,467.60 92,660.40
------------------------------------------------------------------------------------------------------------------------------------
Total 31,630 $ 1,174,070.00 $ 1,163,035.10 $620,896.90 $ 1,103,272.40
(Total of Column D) greater than (Total of Column E) therefore Annual True-up
-----------------------------------------------------------------------------
calculated under Section 7.5.1(a)
---------------------------------
H. Annual True-up - Delivered Energy (Total E - Total G) $59,762.70
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total E / Total C) $36.77
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ $ 0.00
2 150 7,680.00 2,164.50
3 150 3,140.00 195.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
Total 450 $ 16,546.50 $ 15,720.00 $ 0.00 $ 2,360.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 2,360.00
Total Annual True-up * (H + O) $62,122.70
====================================================================================================================================
EXAMPLE 2
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 2,430 $ 73,410.00 $ 89,351.10 $ 47,700.90 $ 73,410.00
2 2,430 93,090.00 89,351.10 47,700.90 89,351.10
3 2,430 44,310.00 89,351.10 47,700.90 47,700.90
E-2
EXHIBIT E
VALMY BUNDLE
YEAR END TRUE-UP INVOICE
4 2,820 107,160.00 103,691.40 55,356.60 103,691.40
5 2,820 95,880.00 103,691.40 55,356.60 95,880.00
6 2,620 89,080.00 96,337.40 51,430.60 89,080.00
7 2,820 101,520.00 103,691.40 55,356.60 101,520.00
8 2,820 95,880.00 103,691.40 55,356.60 95,880.00
9 2,280 79,800.00 83,835.60 44,756.40 79,800.00
10 2,820 90,240.00 103,691.40 55,356.60 90,240.00
11 2,820 115,620.00 103,691.40 55,356.60 103,691.40
12 2,520 90,720.00 92,660.40 49,467.60 90,720.00
-----------------------------------------------------------------------------------------------------------------------------
Total 31,630 $ 1,076,710.00 $ 1,163,035.10 $ 620,896.90 $ 1,060,964.80
(Total of Column E) (greater than) (Total of Column D) therefore Annual True-up calculated under Section 7.5.1(b)
H. Annual True-up - Delivered Energy (Total D - Total G) $ 15,745.20
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $34.04
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 2,164.50
3 150 3,140.00 195.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
Total 450 $ 15,318.35 $ 15,720.00 $ 401.65 $ 2,360.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ 1,958.35
Total Annual True-up * (H + O) $ 17,703.55
====================================================================================================================================
EXAMPLE 3
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
(A x C) (B x C)
1 2,430 $ 73,410.00 $ 89,351.10 $ 47,700.90 $ 73,410.00
E-3
EXHIBIT E
VALMY BUNDLE
YEAR END TRUE-UP INVOICE
2 2,430 93,090.00 89,351.10 47,700.90 89,351.10
3 2,430 44,310.00 89,351.10 47,700.90 47,700.90
4 2,820 90,240.00 103,691.40 55,356.60 90,240.00
5 2,820 84,600.00 103,691.40 55,356.60 84,600.00
6 2,620 73,360.00 96,337.40 51,430.60 73,360.00
7 2,820 73,320.00 103,691.40 55,356.60 73,320.00
8 2,820 67,680.00 103,691.40 55,356.60 67,680.00
9 2,280 50,160.00 83,835.60 44,756.40 50,160.00
10 2,820 56,400.00 103,691.40 55,356.60 56,400.00
11 2,820 50,760.00 103,691.40 55,356.60 55,356.60
12 2,520 40,320.00 92,660.40 49,467.60 49,467.60
-----------------------------------------------------------------------------------------------------------------------------------
Total 31,630 $ 797,650.00 $ 1,163,035.10 $ 620,896.90 $ 811,046.20
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated under Section 7.5.1(b)
------------------------------------------------------------------------------------------------------
H. Annual True-up - Delivered Energy (Total D - Total G) $ (13,396.20)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total D / Total C) $25.22
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 2,164.50
3 150 3,140.00 195.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
Total 450 $ 11,348.17 $ 15,720.00 $ 4,371.83 $ 2,360.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (2,011.83)
Total Annual True-up * (H + O) $ (15,408.03)
====================================================================================================================================
EXAMPLE 4
---------
C D E F G
Delivered Market Price x Price Ceiling x Price Floor x Supplier's Invoiced
Month Energy (MWh) Delivered Energy Delivered Energy Delivered Energy Amount - Energy
----- ------------ ---------------- ---------------- ---------------- ---------------
E-4
EXHIBIT E
VALMY BUNDLE
YEAR END TRUE-UP INVOICE
(A x C) (B x C)
1 2,430 $ 73,410.00 $ 89,351.10 $ 47,700.90 $ 73,410.00
2 2,430 93,090.00 89,351.10 47,700.90 89,351.10
3 2,430 44,310.00 89,351.10 47,700.90 47,700.90
4 2,820 50,760.00 103,691.40 55,356.60 55,356.60
5 2,820 47,940.00 103,691.40 55,356.60 55,356.60
6 2,620 41,920.00 96,337.40 51,430.60 51,430.60
7 2,820 42,300.00 103,691.40 55,356.60 55,356.60
8 2,820 39,480.00 103,691.40 55,356.60 55,356.60
9 2,280 29,640.00 83,835.60 44,756.40 44,756.40
10 2,820 33,840.00 103,691.40 55,356.60 55,356.60
11 2,820 33,840.00 103,691.40 55,356.60 55,356.60
12 2,520 30,240.00 92,660.40 49,467.60 49,467.60
------------------------------------------------------------------------------------------------------------------------------------
Total 31,630 $560,770.00 $1,163,035.10 $620,896.90 $ 688,256.20
(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
under Section 7.5.1(b)
H. Annual True-up - Delivered Energy (Total F - Total G) $ (67,359.30)
I. Average Cost of Delivered Energy after True-up ($/MWh) (Total F / Total C) $19.63
J K L M N
Replacement Replacement Energy Gross Replacement Adjusted Replacement Invoiced Replacement
Month Energy (MWh) x Average Cost Cost of Energy Cost of Energy Cost of Energy
----- ------------ -------------- -------------- -------------- --------------
(I x J)
1 150 $ 4,900.00 $ 0.00
2 150 7,680.00 2,164.50
3 150 3,140.00 195.50
4 0 0.00 0.00
5 0 0.00 0.00
6 0 0.00 0.00
7 0 0.00 0.00
8 0 0.00 0.00
9 0 0.00 0.00
10 0 0.00 0.00
11 0 0.00 0.00
12 0 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
Total 450 $ 8,833.50 $15,720.00 $ 6,886.50 $ 2,360.00
O. Annual True-up - Replacement Costs (Total N - Total M) $ (4,526.50)
Total Annual True-up * (H + O) $ (71,885.80)
====================================================================================================================================
* Positive Total Annual True-up is indicative of a payment from Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment from Supplier
to Buyer.
EXHIBIT F
NOTICES, BILLING AND PAYMENT INSTRUCTIONS
Supplier:
--------
a) Agreement Notices: Name and Address
----------------- -------------------
Phone:
-------------------------------------
Fax:
---------------------------------------
b) Payment Check: Name and Address
------------- -------------------
c) Payment Wire Transfer: Bank:
--------------------- ------------------------------
ABA #:
-------------------------------------
For: Supplier's Name
--------------------
Account No:
--------------------------------
For:
---------------------------------------
d) Invoices: Name and Address
-------- -------------------
Phone:
-------------------------------------
Fax:
---------------------------------------
e) Operating Notifications:
-----------------------
i) (Management, if required)
ii) Pre-Schedule: Phone:
-----------------------------
Fax:
---------------------------------------
iii) Real Time: Phone:
-----------------------------
Fax:
---------------------------------------
iv) Monthly Checkout Phone:
-------------------------------------
Person: Fax:
-------------------------------
F-6
Buyer:
-----
a) Agreement Notices:
-----------------
Address: Xxxx Xxxxxxxxx
Manager, Resource Contracts
Nevada Power Company
0000 Xxxx Xxxxxx Xxxxxx, X/X 00X
Xxx Xxxxx, Xxxxxx 00000
Phone: 702/000-0000
Fax: 702/227-2455
E-mail: xxxxxxxxxx@xxxx.xxx
b) Invoices:
--------
US Post Office: (Via Certified Mail) Overnight Delivery
--------------- ------------------
Address: Nevada Power Company
Attn: Xxxxx Xxxxx Attn: Xxxxx Xxxxx
X.X. Xxx 000, M/S 20 0000 Xxxx Xxxxxx Xxx., X/X 00
Xxx Xxxxx, Xxxxxx 00000 Xxx Xxxxx, Xxxxxx 00000
Telephone: 702/000-0000
Fax: 702/367-5096
E-mail: xxxxxx@xxxx.xxx
c) Schedules:
---------
i) Pre-Schedule: Primary Name: Xxxx Xxxxxxxxxxx Phone: 702/000-0000
E-mail: xxxxxxxxxxxx@xxxx.xxx
Alternate Name: Xxx Xxxxxxxx Phone: 702/000-0000
E-mail: xxxxxxxxx@xxxx.xxx
Fax: 702/000-0000
ii) Real Time: Phone: 702/000-0000
Fax: 702/000-0000
iii) Monthly Checkout: Xxxxx Xxxxx Phone: 702/000-0000
Fax: 702/000-0000
E-mail: xxxxxx@xxxx.xxx
d) Control Area/Transmission:
-------------------------
i) Reliability Dispatch: Phone: (000) 000-0000
Fax: (000) 000-0000
ii) Transmission Dispatch: Phone: (000) 000-0000
Fax: (000) 000-0000
F-7
EXHIBIT G
FORM OF AVAILABILITY NOTICE*
Date of Notice:
Time of Notice:
Supplier:
Name of Supplier's
Representative:
Buyer:
Asset Bundle:
Availability Dates (96 hours
total):
A B C D E F G
Available from Permitted Asset Bundle Available Total Derating Permitted
Availability Hour Valmy Unit Total Derating of Derating of Capacity of from Valmy of Valmy Derating of
Date Ending 1 (MW) Valmy Xxxx 0 (XX) Xxxx 0 (MW) Xxxx 0 (XX) Xxxx 0 (XX) Xxxx 0 (XX) Xxxx 0 (XX)
---- ------ ------ ----------------- ----------- ----------- ----------- ----------- ------------
(A (greater (___ - A) (C) (greater (A - C) (E (greater (___ - E) (B (greater
than) or = __) than) or = B) than) or = ___) than) or = F)
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
0100
0200
0300
0400
0500
0600
0700
:
(96 hours total)
:
300
400
500
H I** J
Asset Bundle Alternative Cause and Expected Duration of
Capacity of Point(s) of Deratings and Identification
Unit 2 (MW) Delivery of Permitted Deratings
----------- -------- ----------------------
(G - E)
* The Parties' operational personnel shall develop a similar form for the
other generating units in the bundle.
** The Parties' operational personnel shall develop the necessary procedure to
document requests and responses to utilize Alternative Point(s) of Delivery.
G-1
EXHIBIT H
FORM OF GUARANTEE
This Guaranty is entered into as of October 16, 2000 by NRG
Energy, Inc., a Delaware corporation ("Guarantor"), on behalf of Valmy Power
LLC, a Delaware limited liability company ("Supplier"), in favor of and for the
benefit of Sierra Pacific Power, a Nevada corporation ("SPPC"). SPPC is
sometimes referred to herein as "Beneficiary".
WHEREAS, Supplier and SPPC are entering into a Transitional
Power Purchase Agreement dated as of October 16, 2000 2000 (the "TPPA") by which
Supplier has agreed to sell and SPPC has agreed to buy Energy and Ancillary
Services (as defined in the TPPA) produced by the North Valmy generating station
being sold by SPPC; and
WHEREAS, it is a condition to the obligation of SPPC to enter
into the TPPA for Guarantor to guaranty the Supplier's obligations under the
TPPA in an amount not to exceed the Credit Amount (as defined in the TPPA) (the
"Guarantied Obligations").
1. Guaranty. Guarantor irrevocably and unconditionally
guaranties, as primary obligor and not merely as surety, the due and punctual
payment in full of all Guarantied Obligations (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C.(SS) 362(a)).
In the event that all or any portion of the Guarantied
Obligations is paid by Supplier, the obligations of Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) is rescinded or
recovered directly or indirectly from the Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations (to the extent such payments,
in the aggregate, do not exceed the Credit Amount).
Subject to the other provisions of this Section 1, upon
failure of Supplier to pay any of the Guarantied Obligations when and as the
same shall become due, Guarantor will upon demand pay, or cause to be paid, in
cash, to SPPC, an amount equal to the aggregate of the unpaid Guarantied
Obligations to the extent due. In the event Guarantor fails to pay the
Guarantied Obligations, each and every default in the payment shall give rise to
a separate cause of action and separate causes of action may be brought
hereunder as each such cause of action arises.
2. Expenses. The Guarantor agrees to reimburse SPPC for all
reasonable costs and expenses (including, without limitation, the reasonable
fees and expenses of legal counsel) in connection with (i) any default by
Guarantor hereunder and any enforcement or collection proceeding resulting
therefrom, including, without limitation, all manner of participation in or
other involvement with bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings of or involving the Guarantor, judicial or
regulatory proceedings of or involving the Guarantor and workout, restructuring
or other negotiations or proceedings of or involving the Guarantor (whether or
not the workout, restructuring or transaction contemplated thereby is
consummated) and (ii) the enforcement of this Section 2.
3. Guaranty Absolute; Continuing Guaranty. The obligations of
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the
H-3
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, Guarantor agrees that: (a) this Guaranty is a guaranty of
payment when due and not of collectibility; (b) the obligations of Guarantor
hereunder are independent of the obligations of Supplier under the TPPA and a
separate action or actions may be brought and prosecuted against Guarantor
whether or not any action is brought against the Supplier and whether or not the
Supplier is joined in any such action or actions; and (c) Guarantor's payment of
a portion, but not all, of the Guarantied Obligations shall in no way limit,
affect, modify or abridge Guarantor's liability for any portion of the
Guarantied Obligations that has not been paid. This Guaranty is a continuing
guaranty and shall be binding upon Guarantor and its successors and assigns.
4. Actions by Beneficiary. The Beneficiary may from time to
time, without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any limitation, impairment or
discharge of Guarantor's liability hereunder, (a) renew, extend, accelerate or
otherwise change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guaranty or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security hereafter held by
or for the benefit of the Beneficiary in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Beneficiary may have against any
such security, and (f) exercise any other rights available to SPPC under the
TPPA.
5. No Discharge. This Guaranty and the obligations of
Guarantor hereunder shall be valid and enforceable and shall not be subject to
any limitation, impairment or discharge for any reason (other than payment in
full of the Guarantied Obligations), including without limitation the occurrence
of any of the following, whether or not Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations, (b) any waiver or modification
of, or any consent to departure from, any of the terms or provisions of any
other guaranty or security for the Guarantied Obligations, (c) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect, (d) the application of
payments received from any source to the payment of indebtedness other than the
Guarantied Obligations, even if the Beneficiary might have elected to apply such
payment to any part or all of the Guarantied Obligations, (e) any failure to
perfect or continue perfection of a security interest in any collateral which
secures any of the Guarantied Obligations, (f) any defenses, set-offs or
counterclaims which the Supplier may assert against the Beneficiary in respect
of the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction (other than the right to set off or recoup
overdue undisputed payments due from Beneficiary under the TPPA), and (g) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of Guarantor as an obligor
in respect of the Guarantied Obligations.
6. Waivers for the Benefit of Beneficiary. Guarantor waives,
for the benefit of Beneficiary, until the Guarantied Obligations are paid in
full: (a) any right to require the Beneficiary, as a
H-4
condition of payment or performance by Guarantor, to (i) proceed against the
Supplier, any other guarantor of the Guarantied Obligations or any other Person,
(ii) proceed against or exhaust any security held from the Supplier, any other
guarantor of the Guarantied Obligations or any other Person, or (iii) pursue any
other remedy in the power of the Beneficiary; (b) any defense arising by reason
of the incapacity, lack of authority or any disability or other defense of the
Supplier including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Guarantied Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of the Supplier from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (d) (i) any
principles or provisions of law, statutory or otherwise, that are or might be in
conflict with the terms of this Guaranty and any legal or equitable discharge of
Guarantor's obligations hereunder, (ii) the benefit of any statute of
limitations affecting Guarantor's liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that the Beneficiary protect, secure,
perfect or insure any lien on any property subject thereto; (e) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guaranty; and
(f) to the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guaranty.
7. Waiver of Rights Against Supplier. Guarantor waives any
claim, right or remedy, direct or indirect, that Guarantor now has or may
hereafter have against the Supplier or any of its assets in connection with this
Guaranty or the performance by Guarantor of its obligations hereunder, in each
case whether such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise and including without limitation (a) any
right of subrogation, reimbursement or indemnification that Guarantor now has or
may hereafter have against the Supplier, (b) any right to enforce, or to
participate in, any claim, right or remedy that the Beneficiary now has or may
hereafter have against the Supplier, and (c) any benefit of, and any right to
participate in, any collateral or security hereafter held by the Beneficiary.
Guarantor further agrees that, to the extent the waiver or agreement to withhold
the exercise of its rights of subrogation, reimbursement and indemnification as
set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification Guarantor may have against the Supplier or against any
collateral or security shall be junior and subordinate to any rights the
Beneficiary may have against Supplier, to all right, title and interest the
Beneficiary may have in any such collateral or security, and to any right the
Beneficiary may have against such other guarantor.
8. Representations and Warranties of Guarantor. Guarantor
represents and warrants to SPPC as follows:
(a) Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Guarantor has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
(b) Guarantor has the corporate power and authority to execute and
deliver this Guaranty and to consummate the transactions contemplated hereby.
The execution and delivery of this Guaranty and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Guarantor, and no other corporate proceedings on the part
of Guarantor, including the approval of its shareholders, are necessary to
authorize this Guaranty or to consummate the transactions so contemplated. This
Guaranty has been duly and validly executed and delivered by Guarantor and
H-5
constitutes a valid and binding agreement of Guarantor, enforceable against
Guarantor in accordance with its terms.
(c) There are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or (to Guarantor's
knowledge) threatened against Guarantor or its subsidiaries that could
reasonably be expected to have a material adverse effect on the consolidated
financial condition, operations or business taken as a whole of it and its
subsidiaries.
(d) The representations and warranties made herein will remain
true until Guarantor has fulfilled all obligations to pay in full the Guaranteed
Obligations.
9. Set Off. In addition to any other rights the Beneficiary
may have under law or in equity, if any amount shall at any time be due and
owing by Guarantor to the Beneficiary under this Guaranty, the Beneficiary is
authorized at any time or from time to time, without notice (any such notice
being expressly waived), to set off and to appropriate and to apply any
indebtedness of the Beneficiary owing to Guarantor and any other property of
Guarantor held by the Beneficiary to or for the credit or the account of
Guarantor against and on account of the Guarantied Obligations and liabilities
of Guarantor to the Beneficiary under this Guaranty.
10. Disputes. Any action, claim or dispute arising out of or
relating to this Guaranty (any such action, claim or dispute, a "Dispute") shall
be submitted in writing to the other Party. In the event Guarantor and SPPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either Guarantor or SPPC may initiate
arbitration through the serving and filing of a demand for arbitration.
Guarantor and SPPC expressly agree that such arbitration shall be the exclusive
means to further resolve any Dispute and hereby irrevocably waive their right to
a jury trial with respect to any Dispute, provided that at any time a request
made for provisional remedies requesting preservation of respective rights and
obligations under the Guaranty may be resolved by a court of law located in the
County of the principal place of business of SPPC. Arbitration shall be
conducted in accordance with Sections 13.4, 13.5, 13.6, 13.7, and 13.8 of the
TPPA.
11. Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall in any event be effective without the
written concurrence of SPPC and, in the case of any such amendment or
modification, Guarantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
12. Miscellaneous. It is not necessary for Beneficiary to
inquire into the capacity or powers of Guarantor or Supplier or the officers,
directors or any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiary by this
Guaranty are cumulative and shall be in addition to and independent of all
rights, powers and remedies given to Beneficiary by virtue of any statute or
rule of law or in the TPPA. Any forbearance or failure to exercise, and any
delay by Beneficiary in exercising, any right, power or remedy hereunder shall
not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
In case any provision in or obligation under this Guaranty
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
H-6
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
This Guaranty shall inure to the benefit of Beneficiary and
its respective successors and assigns.
13. Notices. All notices, requests, demands, waivers, consents
and other communications hereunder shall be in writing, shall be delivered
either in person, by telegraphic, facsimile or other electronic means, by
overnight air courier or by mail, and shall be deemed to have been duly given
and to have become effective (a) upon receipt if delivered in person or by
telegraphic, facsimile or other electronic means, (b) one (1) business day after
having been delivered to an air courier for overnight delivery or (c) three (3)
business days after having been deposited in the U.S. mails as certified or
registered mail, return receipt requested, all fees prepaid, directed to the
parties at the following addresses:
If to Guarantor, addressed to: Xxxxx X. Xxxx, Treasurer
NRG Energy, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxxxxxx, XX 00000
Facsimile:
---------------
If to SPPC, addressed to: Xxxxxxx X. Xxxxxxxx
Nevada Power Company
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered by its officers thereunto duly authorized as of the
date first written above.
NRG ENERGY, INC.
By:
----------------------
Xxxxx X. Xxxxxxxxxxx
Title: President
Address: 000 Xxxxxxxxx
Xxx., Xxxxx 0000
Xxxxxxxxxxx, XX
00000
H-7
EXHIBIT I
COMPANY OBSERVED HOLIDAYS
New Year's Day January 1st
President's Day Third Monday in February
Memorial Day (observed) Last Monday in May
Independence Day July 4th
Labor Day First Monday in September
Nevada Day Last Friday in October
Thanksgiving Day Fourth Thursday in November
Thanksgiving Friday Friday after Thanksgiving
Christmas Day December 25th
Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.
I-1
EXHIBIT J
VALMY BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
Monthly Monthly
Month Adjustment Month Adjustment
----------------------------------------- --------------------------------------------------
Mar-01 3.4% Mar-02 3.4%
Apr-01 4.4% Apr-02 4.4%
May-01 4.0% May-02 4.0%
Jun-01 4.3% Jun-02 4.3%
Jul-01 5.0% Jul-02 5.0%
Aug-01 5.0% Aug-02 5.0%
Sep-01 4.9% Sep-02 4.9%
Oct-01 5.1% Oct-02 5.1%
Nov-01 5.0% Nov-02 5.0%
Dec-01 5.1% Dec-02 5.1%
Jan-02 5.1% Jan-03 5.1%
Feb-02 4.6% Feb-03 4.6%
Example 1 - Effective Date of Agreement is April 15, 2001
A. TPPA Amount: $ 15,000,000
B C D
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
------------------------------------------------------------------------------------
(B x C)
Apr-01 4.4% 50.0% 2.2%
May-01 4.0% 100.0% 4.0%
------------------------------------------------------------------------------------
Total 6.2%
E. Total of Monthly Applicable Adjustments 6.2%
F Adjusted TPPA Amount (A x (1+D)) $ 0
=====================================================================================================================
Example 2 - Effective Date of Agreement is September 15, 2001
G. TPPA Amount: $ 15,000,000
H I J
Monthly Applicable Applicable
Month Adjustment Portion * Adjustment
--------------------------------------------------------------------------------
J-1
EXHIBIT J
VALMY BUNDLE
ADJUSTMENTS TO TPPA AMOUNT
(H x I)
Jun-01 4.3% 100.0% 4.3%
Jul-01 5.0% 100.0% 5.0%
Aug-01 5.0% 100.0% 5.0%
Sep-01 4.9% 50.0% 2.5%
-------------------------------------------------------------
Total 16.8%
K. Total of Monthly Applicable Adjustments 16.8%
L Adjusted TPPA Amount (G x (1-K)) $ 12,480,000
================================================================================
Example 3 - Termination Date of December 31, 2002
M. TPPA Amount: $ 15,000,000
N O P
Monthly Applicable Applicable
Month Adjustment Portion ** Adjustment
-------------------------------------------------------------
(N x O)
Jan-03 5.1% 100.0% 5.1%
Feb-03 4.6% 100.0% 4.6%
-------------------------------------------------------------
Total 9.7%
Q. Total of Monthly Applicable Adjustments 9.7%
R Payment Amount (M x Q) $ 1,455,000
================================================================================
* The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer were made divided by the
number of days in the month.
** The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer would have been made divided
by the number of days in the month.
J-2
EXHIBIT K
VALMY BUNDLE
ADJUSTMENTS TO MINIMUM ANNUAL TAKE
A B C D E F
Base Number Base Energy Sales per Current Number Adjusted Energy
Class * of Customers Sales (MWh) Customer (MWh) of Customers Sales (MWh)
------------------------------------------------------------------------------------------------------------------------------------
(C / B) (D x E) **
Residential 475,000 5,800,000 12 470,000 5,738,947
Commercial 65,000 2,800,000 43 60,000 2,584,615
Industrial 1,000 4,900,000 800 3,600,000
Street Lighting 5 130,000 5 130,000
Other Retail 50 600,000 50 600,000
Wholesale 5 850,000 5 850,000
------------------------------------------------------------------------------------------------------------------------------------
541,060 15,080,000 530,860 13,503,563
G. Adjustment to Minimum Annual Take (F / C) 89.55%
H. Minimum Annual Take from Exhibit A (MWh) 2,130,000
I. Revised Minimum Annual Take (MWh) (G x H) 1,907,415
J K
Month During Applicable Min.
Contract Year Annual Take (MWh)
--------------------------------------------------
1 2,130,000
2 2,130,000
3 2,130,000
4 2,130,000
5 1,907,415
6 1,907,415
7 1,907,415
8 1,810,500
9 1,810,500
10 1,704,000
11 1,704,000
12 1,704,000
--------------------------------------------------
Total 22,975,245
L. Minimum Take for Contract Year (MWh) (Total of K / 12) 1,914,604
* As reported on Buyer's FERC Form 1
K-2
EXHIBIT K
VALMY BUNDLE
ADJUSTMENTS TO MINIMUM ANNUAL TAKE
** Adjusted Energy Sales for the remaining Industrial, Street Lighting, Other
Retail, and Wholesale customers will be based upon actual sales during the base
period.
K-3
EXHIBIT L
VALMY BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
A B C D E * F G **
Dispatch Supply Delivered Permitted Force Replacement Applicable
Hour Amount (MWh) Energy (MWh) Derating(MWh) Majeure(MWh) Energy(MWh) Energy (MWh)
----------------------------------------------------------------------------------------------------------------------
(C+D+E+F)
1 282 282 282
2 282 282 0
3 282 282 282
4 282 282 282
5 282 282 282
6 282 262 20 282
7 282 262 20 282
8 282 262 20 282
9 282 282 282
10 282 282 282
11 282 282 282
12 282 282 282
13 282 0 282 282
14 282 0 282 282
15 282 0 282 282
16 282 0 282 282
17 282 232 30 262
18 282 282 282
19 282 282 282
20 282 282 282
21 282 282 282
22 282 282 282
23 282 282 282
24 252 252 252
25 232 232 232
26 202 202 202
27 232 202 30 232
28 252 252 252
29 282 282 282
30 282 282 282
31 282 282 282
32 282 282 282
33 282 282 282
34 282 282 282
35 282 282 282
36 282 282 282
----------------------------------------------------------------------------------------------------------------------
total 9,912 8,644 70 1,128 50 9,892
L-1
EXHIBIT L
VALMY BUNDLE
ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
* Includes energy excused because of Supplier's and Buyer's events of Force
Majeure
** G cannot be greater than B
L-2
EXHIBIT M
ASSET BUNDLE CONTRACTUAL AND OPERATING CONSTRAINTS
1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean
that portion of the Asset Bundle Capacity that has been designated as
being subject to contractual and operational constraints in accordance
with the provisions of this Exhibit M.
2. Section 4.1.4 of the Agreement, which addresses Supplier's right to
Asset Bundle Capacity in excess of the Supply Amount, shall not be
applicable to Constrained Capacity.
3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
Agreement, which addresses Buyer's notifications to Supplier, shall not
be deemed to include Constrained Capacity unless Buyer's schedules
specifically designate Constrained Capacity as being applicable to the
schedules.
4. The Asset Bundle Capacity described in the following table shall be
deemed Constrained Capacity for the designated Asset Bundles.
----------------------------------------------------------------------------------------------------
Source of Capacity Annual Limit Monthly Limit Daily Limit
----------------------------------------------------------------------------------------------------
Winnemucca and 100 hours at max.
Battle Mt. 1-4 capacity for each
(25 MW) unit* None None
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
* Buyer is attempting to raise the operating limits on these generating units.
If Buyer is successful, the higher limits will be applicable to this Exhibit M.
M-2