EXHIBIT 10.2d
1996 AMENDATORY AGREEMENT
This Agreement, dated as of the 4th day of December, 1996, is entered
into by and between Connecticut Yankee Atomic Power Company ("Connecticut
Yankee" or "Seller") and The United Illuminating Company ("Purchaser")
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as follows:
1. Basic Understandings
Connecticut Yankee was organized in 1962 to provide for the supply of
power to its sponsoring utility companies, including the Purchaser (collectively
the "Purchasers"). It constructed a nuclear electric generating unit, having a
net capability of approximately 582 megawatts electric (the "Unit") at a site in
Haddam Neck, Connecticut. Connecticut Yankee was issued a fullterm, Facility
Operating License for the Unit by the Nuclear Regulatory Commission (which,
together with any successor agencies, is hereafter called the "NRC"), which
license is now stated to expire on June 29, 2007. The Unit has been in
commercial operation since January 1, 1968.
The Unit was conceived to supply economic power on a cost of service
formula basis to the Purchasers. Connecticut
Yankee and the Purchaser are parties to a Power Contract dated as of July 1,
l964 ("Initial Power Contract"). Pursuant to the Initial Power Contract and
other similar contracts (collectively, the "Initial Power Contracts") between
Connecticut Yankee and the other Purchasers, Connecticut Yankee contracted to
supply to the Purchasers all of the capacity and electric energy available from
the Unit for a term of thirty (30) years following January 1, 1968.
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 the other
Purchasers provide for an operative term stated to commence on January 1, 1998
(when the Initial Power Contracts terminate) and extending until a date (the
"End of Term Date") which is 30 days after the later of the date on which the
last of the financial obligations of Connecticut Yankee has been extinguished or
the date on which Connecticut Yankee is finally relieved of any obligations
under the last of the licenses (operating or possessory) which it holds, or
hereafter receives, from the NRC with respect to the Unit. The Additional Power
Contracts also provide, in the event of
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their earlier cancellation, for the survival of the decommissioning cost
obligation and for the applicable provisions thereof to remain in effect to
permit final xxxxxxxx of costs incurred prior to such cancellation.
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 during the service life of the
Unit and is obligated to pay therefor monthly its entitlement percentage of
Connecticut Yankee's cost of service, including decommissioning costs, whether
or not the Unit is operated.
Connecticut Yankee and the Purchaser are also parties to a 1987
Supplementary Power Contract, dated as of April 1, 1987 ("1987 Supplementary
Power Contract"). The 1987 Supplementary Power Contract and other similar
contracts (collectively, the "1987 Supplementary Power Contracts") between
Connecticut Yankee and the other Purchasers restate and supersede earlier
Supplementary Power Contracts and Agreements Amending Supplementary Power
Contracts between Connecticut Yankee and the Purchasers. Pursuant to the 1987
Supplementary Power Contracts, the Purchasers make monthly certain supplementary
payments to Connecticut Yankee during
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the terms of the Initial Power Contracts and Additional Power Contracts.
On December 4, 1996, the board of directors of Connecticut Yankee,
after conducting a thorough review of the economics of continued operation of
the Unit for the remainder of the term of the Facility Operating License for the
Unit in light of other alternatives available to Connecticut Yankee and the
Purchasers, determined that the Unit should be permanently shut down effective
December 4, 1996. The Purchaser concurs in that decision.
As a consequence of the shutdown decision, Connecticut Yankee and the
Purchaser propose at this time to amend the 1987 Supplementary Power Contract
and the Additional Power Contract in various respects in order to clarify and
confirm provisions for the recovery under said contracts of the full costs
previously incurred by Connecticut Yankee in providing power from the Unit
during its useful life and of all costs of decommissioning the Unit, including
the costs of maintaining the Unit in a safe condition following the shutdown and
prior to its decontamination and dismantlement.
Connecticut Yankee and each of the other Purchasers are entering into
agreements which are identical to this Agreement except for necessary changes in
the names of the parties.
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2. Parties' Contractual Commitments
Connecticut Yankee reconfirms its existing contractual obligations to
protect the Unit, to maintain in effect certain insurance and to prepare for and
implement the decommissioning of the Unit in accordance with applicable laws and
regulations. Consistent with public safety, Connecticut Yankee shall use its
best efforts to accomplish the shutdown of the Unit, the protection and any
necessary maintenance of the Unit after shutdown and the decommissioning of the
Unit in a cost-effective manner and shall use its best efforts to ensure that
any required storage and disposal of the nuclear fuel remaining in the reactor
at shutdown and all spent nuclear fuel or other radioactive materials resulting
from operating of the Unit are accomplished consistent with public health and
safety considerations and at the lowest practicable cost. The Purchaser
reconfirms its obligations under its Initial Power Contract, Additional Power
Contract and 1987 Supplementary Power Contract to pay its entitlement percentage
of Connecticut Yankee's costs as deferred payment in connection with the
capacity and net electrical output of the Unit previously delivered by
Connecticut Yankee and agrees that the decision to shut down the Unit described
in Section 1 hereof does not give rise to any cancellation right under
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Section 9 of the Initial Power Contract or Section 10 of the Additional Power
Contract.
Except as expressly modified by this Agreement, the provisions of the
Additional Power Contract and the 1987 Supplementary Power Contract remain in
full force and effect, recognizing that the mutually accepted decision to shut
down the Unit renders moot those provisions which by their terms relate solely
to continuing operation of the Unit.
3. Amendment of Payment Provisions of Additional Power Contract and 1987
Supplementary Power Contract
A. Section 2 of the Additional Power Contract is hereby amended by deleting
the first two paragraphs thereof and by inserting in lieu thereof the following:
This contract shall become effective upon receipt by the
Purchaser of notice that Connecticut Yankee has entered into Additional
Power Contracts, as contemplated by Section 1 above, with each of the
other Purchasers. The operative term of this contract shall commence on
such date as may be authorized by the FERC and shall terminate on the
date (the "End of Term Date") which is the later to occur of (i) 30
days after the date on which the last of the financial obligations of
Connecticut Yankee which constitute elements of the payment calculated
pursuant to Section 7 of this contract has been extinguished by
Connecticut Yankee, or (ii) 30 days after the date on which Connecticut
Yankee is finally relieved of all obligations under the last of any
licenses (operating and/or possessory) which it now holds from, or
which may hereafter be issued to it by, the NRC with respect to the
Unit under applicable provisions of the Atomic Energy Act of 1954, as
amended from time to time (the "Act").
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B. The second paragraph of Section 4 of the Additional Power Contract
is amended by deleting the phrase "Second Supplementary Power Contracts"
wherever it appears and inserting in lieu thereof the phrase "1987 Supplementary
Power Contracts".
C. The first paragraph of Section 7 of the Additional Power Contract is
amended to read as follows:
With respect to each month commencing on or after the
commencement of the operative term of this contract, whether or not
this contract continues fully or partially in effect, the Purchaser
will pay Connecticut Yankee as deferred payment for the capacity and
output of the Unit provided to the Purchaser by Connecticut Yankee
prior to the permanent shutdown of the Unit on December 4, 1996, to the
extent not otherwise paid in accordance with the Power Contract, but
without duplication:
D. The eighth paragraph of Section 7 of the Additional Power Contract is
amended by changing the period at the end to a comma and inserting:
, but including for purposes of this contract:
(i) with respect to each month until the commencement of
decommissioning of the Unit, the Purchaser's entitlement
percentage of all expenses related to the storage or disposal
of nuclear fuel or other radioactive materials, and all
expenses related to protection and maintenance of the Unit
during such period, including to the extent applicable
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all of the various sorts of expenses included in the
definition of "Decommissioning Expenses", to the extent
incurred during the period prior to the commencement of
decommissioning;
(ii) with respect to each month until expenses associated with
disposal of pre-April 7, 1983 spent nuclear fuel have been
fully covered by amounts which have been collected from
Purchasers and paid to a segregated fund as contemplated by
Section 8 of the 1987 Supplementary Power Contract, dated as
of April 1, 1987, between Connecticut Yankee and the
Purchaser, as amended (the "1987 Contract"), the Purchaser's
entitlement percentage of previously uncollected expenses
associated with disposal of such prior spent nuclear fuel,
as determined in accordance with Section 10 of the 1987
Contract; and
(iii)with respect to each month until End of License Term, the
Purchaser's entitlement percentage of monthly amortization
of (a) the amount of any unamortized deferred expenses, as
permitted from time to time by the Federal Energy Regulatory
Commission or its successor agency, plus (b) the remaining
unamortized amount of Connecticut
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Yankee's investment in plant, nuclear fuel and materials and
supplies and other assets. Such amortization shall be
accrued at a rate sufficient to amortize fully such
unamortized deferred expenses and Connecticut Yankee's
investments in plant, nuclear fuel and materials and
supplies or other assets over a period extending to June 29,
2007, provided, that if during any calendar month ending on
or before December 31, 2000 either of the following events
shall occur: (a) Connecticut Yankee shall become insolvent
or (b) Connecticut Yankee shall be unable, from available
cash or other sources, to meet when due during such month
its obligations to pay principal, interest, premium (if any)
or other fees with respect to any of its indebtedness of
money borrowed, then Connecticut Yankee may adjust upward
the accrual for amortization of the unrecovered investment
for such month to an amount not exceeding the applicable
maximum level specified in Appendix A hereto, provided that
concurrently therewith the net Unit investment shall be
reduced by an amount equal to the amount of such adjustment.
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As used herein, "End of License Term" means June 29, 2007 or such
later date as may be fixed, by amendment to the NRC Facility
Operating License for the Unit, as the end of the term of the
Facility Operating License.
E. The definitions in Section 7 of the Additional Power contract
and in Section 3 of the 1987 Supplementary Power Contract of "Total
Decommissioning Costs" and "Decommissioning Expenses" are hereby
amended to read as follows:
"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),
during the Decommissioning Period, the Decommissioning Expenses
for the month, to the extent such Decommissioning Expenses are
not paid with funds from such reserve, plus (z) Decommissioning
Tax Liability for such month. It is understood (i) that funds
received pursuant to clause (x) 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
applicable regulatory requirements, 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 of the NRC for permanent cessation of operation of a
nuclear facility and any other activities reasonably related
thereto, including provision for the interim storage of spent
nuclear fuel.
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"Decommissioning Expenses" shall include all expenses of
decommissioning the Unit, and all expenses relating to ownership
and protection of the Unit during the Decommissioning Period, and
shall also include the following:
(1) All costs and expenses of any NRC-approved method of
removing the Unit from service, including without
limitation: dismantling, mothballing and entombment of the
Unit; removing nuclear fuel and other radioactive material
to temporary and/or permanent storage sites; construction,
operation, maintenance and dismantling of a spent fuel
storage facility; 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 the
Decommissioning Period, or accrued during such period,
including without limiting the
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generality of the foregoing, taxes (other than taxes on or
in respect of income), charges, license fees, excises and
assessments, casualties, health care costs, pension benefits
and other employee benefits, surety bond premiums and
insurance premiums.
F. Section 7 of the Additional Power Contract and Section 3 of the 1987
Supplementary Power Contract are each hereby amended by adding the following new
paragraph after the definition of "Decommissioning Tax Liability":
"Decommissioning Period" shall mean the period commencing with the
notification by Connecticut Yankee to the NRC of a decision of the
board of directors of Connecticut Yankee to cease permanently the
operation of the Unit for the purpose of producing electric energy and
ending with the date when Connecticut Yankee has completed the
decommissioning of the Unit and the restoration of the site and has
been relieved of all its obligations under the last of any licenses
issued to it by the NRC.
G. The first sentence of Section 8 of the Additional Power Contract is
hereby amended to read as follows:
Connecticut Yankee will xxxx the Purchaser, no later than ten
(10) days after the end of any month, for all amounts payable by the
Purchaser with respect to such particular month pursuant to Section 7
hereof.
H. Section 8 of the Additional Power Contract and Section 4 of the 1987
Supplementary Power Contract are each amended to delete the name "The
Connecticut Bank and Trust Company, National Association" and substitute "Fleet
National Bank".
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I. Section 5 of the 1987 Supplementary Power Contract is amended to read as
follows:
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 pursuant to Section 3
under clause (x) of the definition of "Total Decommissioning
Costs".
J. Section 10 of the Additional Power Contract is amended to read as
follows:
10. Cancellation of Contract.
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If either
(i) the Unit is damaged to the extent of being completely or
substantially completely destroyed, or
(ii) the Unit is taken by exercise of the right of eminent
domain or a similar right or power,
then and in any such case, the Purchaser may cancel the
provisions of this contract, except that in all cases other
than those described in clause (ii) above, the Purchaser
shall be obligated to continue to make the payments of Total
Decommissioning Costs and the other payments required by
Section 7 and the provisions of that Section and the related
provisions of this contract shall remain in full force and
effect until the End of Term Date, it being recognized that
the costs which Purchaser is required to pay pursuant to
Section 7 represent deferred payments in connection with
power heretofore delivered by Connecticut Yankee hereunder.
Such cancellation shall be effected by written notice given
by the Purchaser to Connecticut Yankee. In the event of such
cancellation, all continuing obligations of the parties
hereunder as to subsequently incurred
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costs of Connecticut Yankee other than the obligations of
the Purchaser to continue to make the payments required by
Section 7 shall cease forthwith. Notwithstanding the
foregoing, the applicable provisions of this contract shall
continue in effect after the cancellation hereof to the
extent necessary to permit final xxxxxxxx and adjustments
hereunder with respect to obligations incurred through the
date of cancellation and the collection thereof. Any dispute
as to the Purchaser's right to cancel this contract pursuant
to the foregoing provisions shall be referred to arbitration
in accordance with the provisions of Section 13.
Notwithstanding anything in this contract elsewhere
contained, the Purchaser may cancel this contract or be
relieved of its obligations to make payments hereunder only
as provided in the next preceding paragraph of this Section
10. Further, if for reasons beyond Connecticut Yankee's
reasonable control, deliveries are not made as contemplated
by this contract, Connecticut Yankee shall have no liability
to the Purchaser on account of such nondelivery.
K. Section 2 of the 1987 Supplementary Power Agreement is amended to change
the date in the definitions of "operating expenses" and "M" from May 26, 2004"
to "June 29, 2007".
5. Effective Date
This Agreement shall become effective upon receipt by the Purchaser of
notice that Connecticut Yankee has entered into 1996 Amendatory Agreements, as
contemplated by Section 1 hereof, with each of the other Purchasers.
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6. Interpretation
The interpretation and performance of this Agreement shall be in accordance
with and controlled by the laws of the State of Connecticut.
7. Addresses
Except as the parties may otherwise agree, any notice, request, xxxx or
other communication from one party to the other relating to this Agreement, 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 in the manner as provided in this Section.
8. Corporate Obligations
This Agreement is the corporate act and obligation of the parties
hereto.
9. Counterparts
This Agreement 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
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same instrument. Any signature page of this Agreement may be detached from any
counterpart without impairing the legal effect of any signatures thereon, and
may be attached to another counterpart of this Agreement identical in form
hereto but having attached to it one or more signature pages.
IN WITNESS WHEREOF, the parties have executed this Amendatory Agreement by their
respective duly authorized officers as of the day and year first named above.
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By /s/ Xxxx X. Xxxxx
--------------------------------------
Its Vice President and Treasurer
Address: 000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
THE UNITED ILLUMINATING COMPANY
By /s/ Xxxxx X. Xxxxx
--------------------------------------
Its Group Vice President
Address: 000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
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Appendix A to
1996 Amendatory Agreement
Maximum Amortization Schedule
If the event occurs during the
twelve months ending: Maximum Amortization Accrual:
December 31, 1997 $100,000,000.00
December 31, 1998 $ 80,000,000.00
December 31, 1999 $ 40,000,000.00
December 31, 2000 $ 20,000,000.00
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