EXHIBIT 10.27.6
1987 SUPPLEMENTARY POWER CONTRACT
This 1987 Supplementary Power Contract, dated as of the 1st day of
April, 1987, is entered into by and between Connecticut Yankee Atomic
Power Company ("Connecticut Yankee") and Central Vermont Public Serv.
Corp.("Purchaser").
BASIC UNDERSTANDINGS
Connecticut Yankee and the Purchaser are parties to a Power
Contract dated as of July 1, 1964 ("Power Contract"). Pursuant to the
Power Contract and other similar contracts (collectively, the "Power
Contracts") between Connecticut Yankee and its other purchasers
(collectively, with the Purchaser, the "Purchasers"), Connecticut Yankee
supplies to the Purchasers all of the capacity and electric energy
available from the nuclear generating unit owned by Connecticut Yankee
at a site adjacent to the Connecticut River in the Town of Haddam,
Connecticut (the "Unit"). The Power Contracts have a term of thirty
(30) years following January 1, 1968, the date on which the Unit
commenced commercial operation.
Connecticut Yankee and the Purchaser are also parties to an
Additional Power Contract, dated as of April 30, 1984 ("Additional Power
Contract"). The Additional Power Contract and other similar contracts
(collectively, the "Additional Power Contracts") between Connecticut
Yankee and its other purchasers provide for extension of their
respective rights and obligations following the December 31, 1997
termination date of the Power Contract and continuing during the Unit's
service life following January 1, 1998 and termination of all
decommissioning obligations related to the Unit.
Pursuant to the Power Contract and the Additional Power Contract,
the Purchaser is entitled and obligated to take its entitlement
percentage of the capacity and net electrical output of the Unit and the
Purchaser is obligated to make payment of a similar portion of the costs
and expenses related to the Unit during the Unit's service life and
decommissioning.
The Power Contract serves as security for obligations of
Connecticut Yankee and cannot be changed without the concurrence of
other parties. Therefore, Connecticut Yankee and the Purchaser have
been precluded from amending the Power Contract, and Connecticut Yankee
and the Purchaser have entered into the following additional contract
arrangements relating to the Unit (collectively, with other similar
contract arrangements between Connecticut Yankee and the other
Purchasers, the "Supplementary Power Contracts"):
SUPPLEMENTARY POWER CONTRACT, dated as of March 1,1978
AGREEMENT AMENDING SUPPLEMENTARY POWER CONTRACT, dated
August 22, 1980
SECOND AMENDMENT OF THE SUPPLEMENTARY POWER CONTRACT, dated
October 15, 1982
SECOND SUPPLEMENTARY POWER CONTRACT, dated as of April 30, 1984
Pursuant to the Supplementary Power Contracts, the Purchaser makes
monthly supplemental payments to Connecticut Yankee, such payments being
in addition to the payments made pursuant to the Power Contract. These
supplementary payments cover elements of Connecticut Yankee's costs of
owning, operating and maintaining the Unit which are not appropriately
provided for in the Power Contracts. The Supplementary Power Contracts
also contain additional commitments and obligations relating to
ownership, operation and maintenance of the Unit.
NOW THEREFORE, in order to supersede the Supplementary Power
Contracts and to restate herein the terms and conditions contained in
such superseded Supplementary Power Contracts which Connecticut Yankee
and the Purchaser wish to continue and to make the applicable provisions
of this 1987 Supplementary Power Contract effective during the terms of
the Power Contract and the Additional Power Contract, and in
consideration of the understandings recited herein and previously
recited in the Supplementary Power Contracts, and in consideration of
the respective undertakings of the parties to this 1987 Supplementary
Power Contract, Connecticut Yankee and the Purchaser hereby agree as
follows:
1. UNDERTAKINGS BY CONNECTICUT YANKEE
Connecticut Yankee agrees to continue to operate and maintain the
Unit in accordance with the requirements of the Power Contract and
Additional Power Contract and to use its best efforts to meet its future
financing needs at the lowest practicable cost.
2. SUPPLEMENTARY PAYMENT TO PAYMENTS UNDER THE POWER CONTRACT
With respect to each month, the Purchaser will pay to Connecticut
Yankee the amount, if any, by which (i) the Purchaser's entitlement
percentage of the sum of (a) Connecticut Yankee's total operating
expenses for the month with respect to the Unit and (b) an amount equal
to one-twelfth (1/12) of the composite percentage for such month of the
net Unit investment, EXCEEDS (ii) the amount payable by the Purchaser
for the month pursuant to the second paragraph of Section 7 of the Power
Contract.
For the purposes of determining the amount, if any, to be paid
pursuant to this Section 2, the following shall apply:
Connecticut Yankee's "operating expenses" shall include all amounts
properly chargeable to operating expense accounts, less any applicable
credits thereto, in accordance with the Uniform System of Accounts (the
"Uniform System") prescribed by the Federal Energy Regulatory Commission
for Class A or Class B Public Utilities and Licensees; provided, that
for purposes of this Supplementary Power Contract, the accrual of
depreciation shall be computed on the basis of a term ending May 26,
2004.
Included in the Unit's monthly operating expenses until fully
recovered shall be an amount equal to one-thirty sixth (1/36) of the
interest expense accrued from April, 1983 to October, 1986, inclusive,
on the amount due from Connecticut Yankee to the U.S. Department of
Energy for disposal of prior spent nuclear fuel and associated high
level radioactive material.
Also included in the Unit's operating expenses shall be an expense
accrual for materials and supplies which are anticipated to remain at
the end of the Unit's operating life, with payment of such accruals
being determined in accordance with the following formula:
1/M times ( Im -Rm ) = Em
where: "M" equals the total number of months beginning with the billing
month and ending on May 26, 2004, inclusive;
"Im" equals the gross book value of inventory as shown on
Connecticut Yankee's books of account at the end of the month
prior to the billing month;
"Rm" equals the total accumulated amortization reserve for
materials and supplies at the end of the Unit's useful life, as
shown on Connecticut Yankee's books of account for the month
prior to the billing month; and
"Em" equals the monthly operating expense accrual to be credited
to the accumulated reserve for the billing month.
Also included in the Unit's operating expenses shall be an expense
accrual for nuclear fuel which is anticipated to remain unburned in the
reactor core at the end of the Unit's operating life, with payment of
such accruals being determined in accordance with the following formula:
1/M times (If-Rf) = Ef
where: "M" equals the total number of months beginning with the billing
month and ending on May 26, 2004, inclusive;
"If" equals the gross book value of the unburned fuel remaining
in the reactor core at the end of the month during which the Unit
most recently shut down for refueling. The value of the unburned
fuel in the core shall be before any new fuel is added to the
core pursuant to refueling;
"Rf" equals the accumulated amortization reserve for the unburned
final core value, as shown on Connecticut Yankee's books of
account for the month prior to the billing month; and
"Ef" equals the monthly fuel amortization expense accrual for the
billing month.
If in any month the earnings, after deducting associated costs,
from investment of the segregated fund created pursuant to Section 8 of
this 1987 Supplementary Power Contract for disposal of prior spent
nuclear fuel and associated high level radioactive material exceed or
are insufficient to meet Connecticut Yankee's interest obligations to
the U.S. Department of Energy in regard to such disposal costs, then an
appropriate adjustment will be made to the Unit's operating expenses for
the month to reflect the net amount of such excess or deficiency.
"Net Unit investment" shall be determined in accordance with the
provisions of Section 7 of the Power Contract, except that for purposes
of this 1987 Supplementary Power Contract, (i) net Unit investment shall
include construction work in progress only to the extent allowed by the
Federal Energy Regulatory Commission, (ii) in determining net Unit
investment, the accumulated provision for depreciation shall not include
any amounts specifically allowed by the Federal Energy Regulatory
Commission to be excluded, (iii) net Unit investment shall include the
amount of Connecticut Yankee's obligation for the principal balance and
accrued interest due to the U.S. Department of Energy in regard to
disposal of prior spent nuclear fuel and associated high level
radioactive material, as shown on Connecticut Yankee's books of account,
to the extent that such amount has not been funded pursuant to Section 8
of this 1987 Supplementary Power Contract, (iv) net Unit investment
shall include, in addition to all other amounts which may be includable
therein under said Section 7, but without duplication, the aggregate
amount properly chargeable at the time in accordance with the Uniform
System to Connecticut Yankee's nuclear fuel accounts (other than nuclear
fuel in process), less the balance at the time of the accumulated
provision for amortization of the cost of nuclear fuel (excluding any
amounts specifically permitted by the Federal Energy Regulatory
Commission), and (v) net Unit investment shall be reduced by the reserve
for materials and supplies and unburned nuclear fuel remaining at the
end of the Unit's useful life, all as determined in accordance with the
Uniform System.
"Composite percentage" shall be computed as of the last day of each
month ("the computation date"), and for any month the composite
percentage shall be that computed as of the last day of the previous
month. "Composite percentage" as of a computation date shall be the sum
of (i) fifteen percent (15%) multiplied by the ratio which the equity
investment with respect to the Unit, as of such date, is to the total
capital as of such date; plus (ii) the "effective interest rate" per
annum of each principal amount of long-term debt outstanding on such
date for money borrowed with respect to the Unit (including the amount
of Connecticut Yankee's obligation to the U.S. Department of Energy in
regard to disposal of prior spent nuclear fuel and associated high level
radioactive material which is included in net Unit investment),
multiplied by the ratio which such principal amount is to total capital
as of such date; plus (iii) the "effective dividend rate" per annum of
each series of preferred stock outstanding as of such date with respect
to the Unit multiplied by the ratio which the amount at which such
preferred stock would be reflected on a balance sheet of Connecticut
Yankee is to total capital as of such date. The "effective interest
rate" of each principal amount of long-term debt referred to in clause
(ii) will reflect the annual interest requirements and to the extent
applicable, amortization of issuance expenses and discounts and premiums
and sinking fund call premiums, and expenses and discounts, refunding
and retirement expenses and discounts and premiums, and all other
expenses applicable to the issue of such indebtedness. The "effective
dividend rate" of each series of preferred stock referred to in clause
(iii) will reflect the annual dividend requirements, and to the extent
applicable, amortization of issuance expenses and discounts and
premiums, sinking fund call premiums and expenses and discounts,
refunding and retirement expenses and discounts and premiums, and all
other expenses applicable to each such issue of preferred stock.
"Equity investment" as of any date shall consist of the sum of (i)
all amounts theretofore paid to Connecticut Yankee for all common
capital stock theretofore issued, plus all amounts paid to Connecticut
Yankee by any of its common stockholders as capital contributions or
advances, less the sum of any amounts paid by Connecticut Yankee to its
common stockholders in the form of stock retirements, repurchases or
redemptions, return of capital or repayments of such contributions or
advances; plus (ii) any credit balance in the capital surplus account
not included under (i) and in the retained earnings account on the books
of Connecticut Yankee as of such date.
"Total capital" as of any date shall be the equity investment with
respect to the Unit, plus the total of the amount which would be
reflected on a balance sheet of Connecticut Yankee for all long-term
debt and preferred stock then outstanding with respect to the Unit.
"Uniform System" shall mean the Uniform System of Accounts
prescribed by the Federal Energy Regulatory Commission (or any successor
governmental authority) for Class A and Class B Utilities and Licensees,
as said system may be amended from time to time.
3. DECOMMISSIONING PAYMENT
For each month the Purchaser will pay Connecticut Yankee an amount
equal to the Purchaser's entitlement percentage of the Total
Decommissioning Costs for the month with respect to the Unit.
(a) "Total Decommissioning Costs" for any month shall mean the sum of
(x) an amount equal to all accruals in such month to any reserve as from
time to time established by Connecticut Yankee and approved by its board
of directors, to provide for the ultimate payment of the Decommissioning
Expenses of the Unit plus (y) Decommissioning Tax Liability for such
month. It is understood (i) that such funds may be held by Connecticut
Yankee or by an independent trust or other separate fund, as determined
by said board of directors, (ii) that, upon compliance with Section 7
hereof, the amount, custody and/or timing of such accruals may from time
to time during the term hereof be modified by said board of directors in
its discretion or to comply with applicable statutory or regulatory
requirements or to reflect changes in the amount, custody or timing of
anticipated Decommissioning Expenses, and (iii) that the use
of the term "to decommission" herein encompasses compliance with all
requirements (other than those relating to spent nuclear fuel) of the
Nuclear Regulatory Commission or its successors (the "NRC") for
permanent cessation of operation of a nuclear facility and any other
activities reasonably related thereto.
(b) "Decommissioning Expenses" shall include:
(1) All costs and expenses of any NRC-approved method of removing the
Unit from service, including without limitation, dismantling,
mothballing, entombment, removing radioactive material (excluding spent
nuclear fuel) to temporary and/or permanent storage sites,
decontaminating, restoring and supervising the site, and any costs and
expenses incurred in connection with proceedings before governmental
authorities relating to any authorization to decommission the Unit or
remove the Unit from service;
(2) All costs of labor and services, whether directly or indirectly
incurred, including without limitation, services of foremen, inspectors,
supervisors, surveyors, engineers, security personnel, counsel and
accountants, performed or rendered in connection with the
decommissioning of the Unit and the removal of the Unit from service,
and all costs of materials, supplies, machinery, construction equipment
and apparatus acquired or used (including rental charges for machinery,
equipment or apparatus hired) for or in connection with the
decommissioning of the Unit and the removal of the Unit from service,
and all administrative costs, including services of counsel and
financial advisers, of any applicable independent trust or other
separate fund; it being understood that any amount, exclusive of
proceeds of insurance, realized by Connecticut Yankee as salvage on any
machinery, construction equipment and apparatus, the cost of which was
charged to Decommissioning Expense, shall be treated as a reduction of
the amounts otherwise chargeable on account of the costs of
decommissioning of the Unit; and
(3) All overhead costs applicable to the Unit during its decommissioning
period, including, without limiting the generality of the foregoing,
taxes (other than taxes on or in respect of income), charges, licenses,
excises and assessments, casualties, surety bond premiums and insurance
premiums.
(c) "Decommissioning Tax Liability" for any month shall be an amount
established by Connecticut Yankee and approved by its board of directors
to meet possible income tax obligations, which amount shall not exceed:
the amount to be included in the clause (x) portion of Total
Decommissioning Costs for such month multiplied by a fraction whose
numerator is equal to the combined highest applicable statutory Federal
and state marginal income tax rate and whose denominator is equal to one
minus the combined highest statutory Federal and state marginal income
tax rate.
Without limiting the generality of the foregoing, any other amounts
expended or to be paid with respect to decommissioning of the Unit or
removal of the Unit from service shall constitute part of the
Decommissioning Expenses if they are, or when paid will be, either (i)
properly chargeable to any account related to decommissioning of a
nuclear generating unit in accordance with the Uniform System of
Accounts applicable to Connecticut Yankee or generally accepted
accounting principles as then in effect, or (ii) properly chargeable to
decommissioning of a nuclear generating unit in accordance with then
applicable regulations of the NRC or the FERC or any other regulatory
agency having jurisdiction.
4. DECOMMISSIONING PAYMENT BILLING
Connecticut Yankee will xxxx the Purchaser, as soon as practicable
after the end of each month, for all amounts payable by the Purchaser
with respect to the particular month pursuant to Section 3 hereof. Such
bills will be rendered in such detail as the Purchaser may reasonably
request and may be rendered on an estimated basis subject to corrective
adjustments in subsequent billing periods. All bills shall be due and
payable when rendered and any amount remaining unpaid 15 days following
the date of receipt of bills shall bear interest at an annual rate equal
to 2% in excess of the current prime rate then in effect at the
principal office in Hartford, Connecticut of The Connecticut Bank and
Trust Company, National Association, from the due date to the date
payment is received by Connecticut Yankee.
5. DECOMMISSIONING FUND
Connecticut Yankee agrees to pay to, or cause to be paid to, the
Connecticut Yankee Trust or any successor trust approved by the board of
directors of Connecticut Yankee all funds collected hereunder for the
purpose of decommissioning the Unit or removing the Unit from service.
6. DURATION OF DECOMMISSIONING PAYMENTS
The Purchaser's obligation to make payment of its entitlement
percentage of Total Decommissioning Costs shall, whether or not the Unit
is operated or operable and notwithstanding any earlier termination of
the service life of the Unit and cancellation of the Power Contract or
Additional Power Contract, remain in full force and effect until the
completion of decommissioning of the Unit, it being recognized that such
costs represent deferred payments in connection with power theretofore
delivered by Connecticut Yankee; provided, however, that the payment of
Total Decommissioning Costs shall cease upon the taking of the Unit by
exercise of the right of eminent domain or similar right or power.
7. AMENDMENT OF DECOMMISSIONING PAYMENT PROVISIONS
Upon authorization by Connecticut Yankee's board of directors of
uniform amendments to all the 1987 Supplementary Power Contracts
identical to this 1987 Supplementary Power Contract, Connecticut Yankee
shall have the right to amend the provisions hereof relating to
decommissioning payments by serving an appropriate statement of such
amendment upon the Purchaser and filing the same with the Federal Energy
Regulatory Commission (or such other regulatory agency as may have
jurisdiction in the premises) in accordance with the provisions of
applicable laws and any rules and regulations thereunder, and such
amendment shall thereupon become effective on the date specified
therein, subject to any suspension order duly issued by such agency.
All other amendments to this 1987 Supplementary Power Contract shall be
by mutual agreement, evidenced by a written amendment signed by the
parties hereto.
8. SEGREGATED FUND FOR DISPOSAL OF PRIOR SPENT NUCLEAR FUEL AND
ASSOCIATED HIGH LEVEL RADIOACTIVE MATERIAL
Connecticut Yankee agrees to pay to, or cause to be paid into, any
segregated fund approved by the board of directors of Connecticut Yankee
funds collected under this 1987 Supplementary Power Contract for the
purpose of disposing of prior spent nuclear fuel and associated high
level radioactive material. Funds previously collected by Connecticut
Yankee from the Purchaser for the purpose of disposing of prior spent
nuclear fuel and associated high level radioactive material shall also
be paid into any such segregated fund. Connecticut Yankee further
agrees that any funds collected from the Purchaser to meet such disposal
costs which are not used for that purpose will be refunded to the
Purchaser at the time final payment of such disposal costs is made to
the U.S. Department of Energy.
9. SUPPLEMENTARY PAYMENT TO PAYMENTS UNDER THE ADDITIONAL
POWER CONTRACT
With respect to each month commencing on or after the effective
date of service under the Additional Power Contract, the Purchaser will
pay to Connecticut Yankee the amount by which (i) the Purchaser's
entitlement percentage of the sum of (a) Connecticut Yankee's total
operating expenses for the month with respect to the Unit and (b) an
amount equal to one-twelfth (1/12) of the composite percentage for such
month of the net Unit investment, EXCEEDS (ii) the amount payable by the
Purchaser for the month pursuant to Section 7 of the Additional Power
Contract.
For the purposes of determining the amount, if any, to be paid
pursuant to this Section 9, the definitions set forth in Section 2 of
this 1987 Supplementary Power Contract shall apply.
10. SUPPLEMENTARY PAYMENTS UPON TERMINATION OF THE UNIT'S
SERVICE LIFE
In addition to all amounts otherwise payable by the Purchaser
pursuant to the Power Contract and Additional Power Contract, the
Purchaser will be obligated to pay to Connecticut Yankee, whether or not
the Unit is operated or operable and notwithstanding any earlier
termination of the service life of the Unit and cancellation of the
Power Contract or Additional Power Contract, the Purchaser's entitlement
percentage of expenses associated with disposal of prior spent nuclear
fuel. Such spent nuclear fuel expenses will be billed and paid in the
same manner as decommissioning payments pursuant to Sections 4 and 6
hereof.
11. ARBITRATION
In case any dispute shall arise as to the interpretation or
performance of this 1987 Supplementary Power Contract which cannot be
settled by mutual agreement, such dispute shall be submitted to
arbitration. The parties shall if possible agree upon a single
arbitrator. In case of failure to agree upon an arbitrator within 15
days after the delivery by either party to the other of a written notice
requesting arbitration, either party may request the American
Arbitration Association to appoint the arbitrator. The arbitrator,
after opportunity for each of the parties to be heard, shall consider
and decide the dispute and notify the parties in writing of his
decision. Such decision shall be binding upon the parties, and the
expenses of the arbitration shall be borne equally by them.
12. REGULATION
This 1987 Supplementary Power Contract, and all rights, obligations
and performance of the parties hereunder, are subject to all applicable
state and Federal law and to all duly promulgated orders and other duly
authorized action of any governmental authority having jurisdiction.
13. ASSIGNMENT
This 1987 Supplementary Power Contract shall be binding upon and
shall inure to the benefit of, and may be performed by, the successors
and assigns of the parties, except that no assignment, pledge or other
transfer of this 1987 Supplementary Power Contract by either party shall
operate to release the assignor, pledgor or transferor of any of its
obligations under this 1987 Supplementary Power Contract unless consent
to the release is given in writing by the other party, or, if the other
party has theretofore assigned, pledged or otherwise transferred its
interest in this 1987 Supplementary Power Contract, by the other party's
assignee, pledgee or transferee, or unless such transfer is incident to
a merger or consolidation with, or transfer of all or substantially all
of the assets of the transferor to, another Purchaser which shall, as
part of such succession, assume all the obligations of the transferor
under this contract.
14. RIGHT OF SET OFF
The Purchaser shall not be entitled to set off against the payments
required to be made by it under this 1987 Supplementary Power Contract
(i) any amounts owed to it by Connecticut Yankee or (ii) the amount of
any claim by it against Connecticut Yankee. However, the foregoing
shall not affect in any other way the Purchaser's rights and remedies
with respect to any such amounts owed to it by Connecticut Yankee or any
claim by it against Connecticut Yankee.
15. INTERPRETATION
The interpretation and performance of this 1987 Supplementary Power
Contract shall be in accordance with and controlled by the law of the
State of Connecticut.
16. ADDRESSES
Except as the parties may otherwise agree, any notice, request,
xxxx or other communication from one party to the other, relating to
this 1987 Supplementary Power Contract, or the rights, obligations or
performance of the parties hereunder, shall be in writing and shall be
effective upon delivery to the other party. Any such communication
shall be considered as duly delivered when mailed to the respective post
office address of the other party shown following the signatures of such
other party hereto, or such other post office address as may be
designated by written notice given as provided in this Section.
17. CORPORATE OBLIGATIONS
This 1987 Supplementary Power Contract is the corporate act and
obligation of the parties hereto, and any claim hereunder against any
stockholder, director or officer of any party, as such, is expressly
waived.
18. USAGE OF DEFINED TERMS
Except where otherwise specifically provided herein, the usage in
this 1987 Supplementary Power Contract of terms which are defined in the
Power Contract and Additional Power Contract shall be deemed to be in
accordance with the definitions thereof in the Power Contract.
19. COUNTERPARTS
This 1987 Supplementary Power Contract may be executed in any
number of counterparts and each executed counterpart shall have the same
force and effect as an original instrument and as if all the parties to
all of the counterparts had signed the same instrument. Any signature
page of this 1987 Supplementary Power Contract may be detached from any
counterpart without impairing the legal effect of any signatures
thereon, and may be attached to another counterpart of this 1987
Supplementary Power Contract identical in form hereto but having
attached to it one or more signature pages.
20. EFFECTIVENESS
This 1987 Supplementary Power Contract shall become effective sixty
days after the date upon which this 1987 Supplementary Power Contract
shall have been filed with the Federal Energy Regulatory Commission,
subject to any suspension order duly issued by the Federal Energy
Regulatory Commission. At such time as this 1987 Supplementary Power
Contract becomes effective it shall supersede and cancel the previous
Supplemental Power Contracts between Connecticut Yankee and the
Purchaser, except that this 1987 Supplementary Power Contract shall not
affect the obligation to pay any sums of money due with respect to any
prior period under the terms of any such previous Supplementary Power
Contracts.
IN WITNESS WHEREOF, the parties have executed this 1987
Supplementary Power Contract by their respective officers duly
authorized as of the 1st day of April, 1987.
CONNECTICUT YANKEE ATOMIC POWER
COMPANY
By _________________________________
Its
Address: X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
CENTRAL VERMONT PUBLIC SERVICE
CORPORATION
By _________________________________
Xxxxxx X. Xxxx
Its President and C.E.O.
Address: 00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
