EXHIBIT 10(b)
RESTATED AND AMENDED
OPERATING AGREEMENT
Among
Central Power and Light Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
West Texas Utilities Company
Central and South West Services, Inc.
January 1, 1998
OPERATING AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
TERM OF AGREEMENT........................... 2
ARTICLE II
DEFINITIONS.............................. 2
2.1 Agent..................................................... 3
2.2 Agreement................................................. 3
2.3 Capacity Commitment....................................... 3
2.4 Capacity Commitment Charge................................ 3
2.5 Central Control Center.................................... 3
2.6 Chief Executive Officer (CEO)............................. 3
2.7 Company................................................... 3
2.8 Company Capability........................................ 3
2.9 Company Demand............................................ 4
2.10 Company Hourly Capability................................. 4
2.11 Company Load Responsibility............................... 4
2.12 Company Operating Capability.............................. 5
2.13 Company Operating Reserve................................. 5
2.14 Company Peak Demand....................................... 5
2.15 Day....................................................... 5
2.16 Decremental Energy Value.................................. 5
2.17 Economic Dispatch......................................... 5
2.18 Energy.................................................... 5
2.19 Generating Unit........................................... 5
2.20 Hour...................................................... 6
2.21 Incremental Energy Cost................................... 6
2.22 Internal Economy Energy................................... 6
2.23 Joint Resource Plan....................................... 6
2.24 Joint Unit................................................ 6
2.25 (a) Margin on Sales.................................. 6
2.25 (b) Margin on Purchases.............................. 6
2.25 (c) Margin on Internal Economy Energy................ 6
2.25 (d) Margin........................................... 7
2.26 Month..................................................... 7
2.27 Operating Committee....................................... 7
2.28 Own Load.................................................. 7
2.29 Parent Company............................................ 7
2.30 Planning Reserve Level.................................... 7
2.31 Pool Energy............................................... 7
2.32 Power..................................................... 8
2.33 Prorated Reserve Level.................................... 8
2.34 Reserve Capacity (Company or System)...................... 8
2.35 System.................................................... 8
2.36 System Capability......................................... 8
2.37 System Demand............................................. 8
2.38 System Load Responsibility................................ 8
2.39 System Operating Capability............................... 9
2.40 System Operating Reserve.................................. 9
2.41 System Peak Demand........................................ 9
i
2.42 Transaction Cost.......................................... 9
2.43 Variable Cost............................................. 9
2.44 Year...................................................... 9
ARTICLE III
OBJECTIVES.............................. 9
3.1 Purpose................................................... 9
ARTICLE IV
AGENT................................. 10
4.1 Responsibility of the Agent............................... 10
4.2 Delegation and Acceptance of Authority.................... 10
4.3 Reporting................................................. 10
ARTICLE V
OPERATING COMMITTEE......................... 11
5.1 Operating Committee....................................... 11
ARTICLE VI
OPERATIONS.............................. 11
6.1 Planning and Authorization of Production Facilities....... 11
6.2 Planning Reserve Levels................................... 12
6.3 Provision to Achieve Planning Reserve Levels.............. 12
6.4 Capacity Sales and Purchases and Reserve Shortfalls....... 13
6.5 Energy Exchanges Among the Companies...................... 13
6.6 Energy Exchange Pricing................................... 13
6.7 Energy Exchanges with Non-Associated Utilities............ 14
6.8 Communications and other Facilities....................... 15
ARTICLE VII
CENTRAL CONTROL CENTER......................... 15
7.1 Central Control Center.................................... 15
7.2 Expenses.................................................. 15
ARTICLE VIII
GENERAL................................ 16
8.1 Regulatory Authorization.................................. 16
8.2 Effect on Other Agreements................................ 16
8.3 Schedules................................................. 16
8.4 Xxxxxxxx.................................................. 16
8.5 Waivers................................................... 17
8.6 Successors and Assigns; No Third Party Beneficiary........ 17
8.7 Amendment................................................. 18
8.8 Independent Contractors................................... 18
8.9 Responsibility and Liability.............................. 18
ii
SCHEDULES
A JOINT UNIT
B COMPANY UNITS THAT ARE NOT JOINT UNITS
C CAPACITY COMMITMENT CHARGE
D PAYMENTS AND RECEIPTS FOR POOL ENERGY EXCHANGES AMONG THE COMPANIES
E PAYMENTS AND RECEIPTS FOR INTERNAL ECONOMY ENERGY EXCHANGES AMONG THE
COMPANIES AND FOR OFF-SYSTEM ENERGY PURCHASES AND SALES
F DISTRIBUTION OF MARGIN FOR INTERNAL ECONOMY ENERGY EXCHANGES AND FOR OFF-
SYSTEM ENERGY PURCHASES AND SALES
G DISTRIBUTION OF OPERATING EXPENSES OF THE CENTRAL CONTROL CENTER
H CAPACITY COMMITMENT UNITS
I PLANNING-RESERVE CRITERIA
J STATEMENT OF PRACTICE REGARDING OFF-SYSTEM ENERGY SALES
K DISTRIBUTION OF CERTAIN TRANSACTION COSTS
iii
RESTATED AND AMENDED
OPERATING AGREEMENT
Among
Central Power and Light Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
West Texas Utilities Company
Central and South West Services, Inc.
THIS RESTATED AND AMENDED OPERATING AGREEMENT, hereinafter called
Agreement, is made and entered into as of the 1st day of January, 1998 by and
among Central Power and Light Company, hereinafter called CPL; Public Service
Company of Oklahoma, hereinafter called PSO; Southwestern Electric Power
Company, hereinafter called SWEPCO; West Texas Utilities Company, hereinafter
called WTU; and Central and South West Services, Inc., hereinafter called CSWS;
all of whose common stock is wholly owned by Central and South West Corporation,
and supersedes the Restated and Amended Operating Agreement dated October 1,
1993.
WHEREAS, CPL, PSO, SWEPCO, and WTU are the owners and operators of
interconnected electric generation, transmission, and distribution facilities
with which they are engaged in the business of generating, transmitting, and
selling electric Power and Energy to the general public and to other electric
utilities; and
WHEREAS, the Companies achieve economic benefits for their customers
through operation as a single interconnected system and through coordinated
planning, construction, operation and maintenance of their electric supply
facilities; and
WHEREAS, CSWS is qualified to act as Agent for the Companies;
NOW, THEREFORE, the parties hereto mutually agree as follows:
ARTICLE I
TERM OF AGREEMENT
1.1 This Agreement shall become effective on such date as is established by
the Federal Energy Regulatory Commission. This Agreement shall continue in force
and effect for a period of ten (10) Years from the effective date hereinabove
described, and continue from Year to Year thereafter until terminated by one or
more of the parties upon three (3) Years written notice to the other parties.
1.2 This Agreement is intended to cover only the acquisition, disposition,
planning, design, construction, operation and maintenance of the Generating
Units and is not to affect those matters that are the subject of orders of the
United States Securities and Exchange Commission authorizing certain cost
allocation methods for CSWS xxxxxxxx.
ARTICLE II
DEFINITIONS
For the purposes of this Agreement and of Schedules A through K which are
attached hereto and made a part hereof, the following definitions shall apply:
2.1 Agent for the Companies shall be CSWS.
2.2 Agreement shall be this Agreement including all attachments and
schedules applying hereto and any amendments made hereafter.
2.3 Capacity Commitment shall be generating capacity committed by a Company
to provide capability to enable another Company to attain its Planning or
Prorated Reserve Level, whichever shall be lower.
2.4 Capacity Commitment Charge shall be the charge made by a Company
supplying a Capacity Commitment to the Company receiving the Capacity
Commitment.
2.5 Central Control Center shall be a center operated by the Agent for the
optimal utilization of System resources for the supply of Power and Energy.
2.6 Chief Executive Officer (CEO) shall be the Chief Executive Officer of
Central and South West Corporation or the CEO's designee.
2.7 Company shall be any one of the Central and South West Corporation
operating companies and Companies shall be the Central and South West
Corporation operating companies collectively.
2.8 Company Capability shall be:
(a) The sum of the Company net plant capability in megawatts; plus
(b) The megawatt amount of purchases and exchanges without reserves,
under contract from other systems; less
(c) The megawatt amount of sales and exchanges without reserves,
under contract to other systems.
2.9 Company Demand shall be:
(a) The clock-hour demand in megawatts of a Company's system
represented by the simultaneous hourly input in megawatt-hours
from all sources into the system of a Company; less
(b) The sum of the simultaneous hourly output in megawatt-hours to
other systems (exclusive of any wholesale requirements
obligations of the Company).
2.10 Company Hourly Capability for a Company shall be:
(a) The megawatt amount of dependable capability of the Company's
generating units on line, including its shares of Joint Units and
its shares of units owned jointly with non-associated entities,
during the Hour; plus
(b) The megawatt amount of capability committed to the Company by
other Companies or non-associated suppliers during the Hour; less
(c) The megawatt amount of capability committed by the Company to
other Companies or non-associated purchasers during the Hour;
less
(d) Any capability required to provide operating reserves.
2.11 Company Load Responsibility shall be as follows:
(a) Company Peak Demand; less
(b) the difference between Company Peak Demand and Company Demand at
the time of System Peak Demand; less
(c) The megawatt-hour output of the Company served on an
interruptible basis during the hour of Company Peak Demand; plus
(d) The contractual amount of sales and exchanges with reserves
during the period to other systems; less
(e) The contractual amount of purchases and exchanges with reserves
during the period from other systems.
2.12 Company Operating Capability shall be the dependable net capability in
megawatts of Generating Units of a Company carrying load or ready to take load.
2.13 Company Operating Reserve shall be the excess of Company Operating
Capability over Company Demand expressed in megawatts.
2.14 Company Peak Demand for a period shall be the highest Company Demand
for any Hour during the period.
2.15 Day shall be a calendar day.
2.16 Decremental Energy Value shall be the cost that a buying Company
avoids by reducing the generation of Energy from its Company Operating
Capability or by reducing its purchase of Energy from others.
2.17 Economic Dispatch shall be the distribution of total generation
requirements among alternative sources for System economy with due consideration
of incremental generating costs, incremental transmission losses, and System
security.
2.18 Energy shall be work and shall be expressed in megawatt-hours (MWH).
2.19 Generating Unit shall be an electric generator, together with its
prime mover and all auxiliary and appurtenant devices and equipment designed to
be operated as a unit for the production of electric Power and Energy. The above
is to include equipment necessary for connection to the transmission system.
2.20 Hour shall be a clock-hour.
2.21 Incremental Energy Cost shall be the variable cost which a selling
Company incurs in order to supply Energy for resale.
2.22 Internal Economy Energy shall be Energy supplied and sold by one
Company to another Company, under Economic Dispatch, to meet a portion of the
purchasing Company's Own Load that could otherwise be supplied internally by the
purchasing Company.
2.23 Joint Resource Plan shall be the formal documented plan developed from
time to time for all future Generating Units and other power supply and demand
management resources.
2.24 Joint Unit shall be any Generating Unit jointly owned by two or more
of the Companies.
2.25 (a) Margin on Sales shall be the difference between: (1) the revenue
from off-System Energy sales made pursuant to Section 6.7 and (2) the selling
Companies' Incremental Energy Cost incurred in making such sales.
2.25 (b) Margin on Purchases shall be the difference between (1) the buying
Companies' Decremental Energy Value avoided as a result of off-System Energy
purchases made pursuant to Section 6.7 and (2) payments for off-System Energy
purchases made pursuant to Section 6.7.
2.25 (c) Margin on Internal Economy Energy shall be the difference between
(1) the buying Companies' Decremental Energy Value avoided as the result of
receiving Internal Economy Energy and (2) the selling Companies' Internal
Economy Energy Cost incurred in supplying Internal Economy Energy.
2.25 (d) Margin for a given period shall be the sum of the amounts
developed in accordance with Sections 2.25 (a), 2.25 (b) and 2.25 (c).
2.26 Month shall be a calendar Month.
2.27 Operating Committee shall be the organization established pursuant to
Section 5.1 and whose duties are more fully set forth therein.
2.28 Own Load shall be Energy required to meet Company Demand plus Energy
associated with sales or exchanges with reserves less Energy associated with
purchases or exchanges with reserves.
2.29 Parent Company shall be Central and South West Corporation.
2.30 Planning Reserve Level shall be the megawatt amount of required
Reserve Capacity for a Company, expressed as a percentage of its forecasted
Company Load Responsibility.
2.31 Pool Energy shall be the Energy supplied and sold by one Company to
another Company to enable the purchasing Company to meet a portion of its Own
Load that such other Company cannot or does not plan to serve with its other
resources. There shall be two categories of Pool Energy. Emergency Pool Energy
shall be the Energy required by a Company that becomes deficient because of an
unplanned occurrence (such as a generator unit trip or a missed load forecast).
Planned Pool Energy shall be the Energy required by a Company to meet portions
of its Own Load when it determines that (a) it will be short of capacity when
planning for future operations or (b) such Energy can be taken to economic
advantage.
2.32 Power shall be the rate of doing work and shall be expressed in
megawatts (MW).
2.33 Prorated Reserve Level shall be a percentage reserve level for each
Company that when divided by that Company's Planning Reserve Level gives the
same quotient as that for all other Companies.
2.34 Reserve Capacity (Company or System) shall be that amount in megawatts
by which Company or System Capability exceeds Company or System Load
Responsibility.
2.35 System shall be the coordinated Generating Units of the Companies.
2.36 System Capability shall be the arithmetical sum in megawatts of the
individual Company Capabilities.
2.37 System Demand shall be the arithmetical sum of the Companies'
clock-hour demand in megawatts represented by:
(a) The simultaneous hourly input in megawatt-hours from all sources
into the System; less
(b) The sum of the simultaneous hourly outputs in megawatt-hours to
other systems (exclusive of any wholesale requirements
obligations of the Companies).
2.38 System Load Responsibility shall be as follows:
(a) System Peak Demand; less
(b) The megawatt-hour output of the Companies served on an
interruptible basis during the Hour of System Peak Demand; plus
(c) The arithmetic sum in megawatts of all of the Companies'
contractual amount of sales and exchanges with reserves during
the period to other systems; less
(d) The arithmetic sum in megawatts of all the Companies' contractual
amount of purchases and exchanges with reserves during the period
from other systems.
2.39 System Operating Capability shall be the arithmetical sum in megawatts
of the individual Company Operating Capabilities.
2.40 System Operating Reserve shall be the arithmetical sum of the
individual Company Operating Reserves, expressed in megawatts.
2.41 System Peak Demand for a period shall be the highest System Demand for
any hour during the period.
2.42 Transaction Cost shall be the sum of the charges assessed against any
one or more of the Companies for transmission services related to Internal
Economy Energy exchanges and off-System Energy purchases and sales, other than
such charges allocated among the Companies pursuant to the Distribution of
Certain Transaction Costs procedure set forth in Schedule K.
2.43 Variable Cost shall be a Company's incremental generation cost or
purchased energy cost.
2.44 Year shall be a calendar Year.
ARTICLE III
OBJECTIVES
3.1 Purpose
The purpose of this Agreement is to provide the contractual basis for the
coordinated planning, construction, operation and maintenance of the System to
achieve optimal economies, consistent with reliable electric service, reasonable
utilization of natural resources, and environmental requirements.
ARTICLE IV
AGENT
4.1 Responsibility of the Agent
The Companies hereby designate CSWS as their Agent for the purpose of:
(a) coordinating the acquisition, disposition, planning, design,
construction, operation and maintenance of the Generating Units
of the Companies, including any Joint Units; and
(b) supervising the design, construction, operation and maintenance
of the Central Control Center.
4.2 Delegation and Acceptance of Authority
The Companies hereby delegate to the Agent and the Agent hereby accepts
responsibility and authority for the duties listed in Section 4.1 and elsewhere
in this Agreement. Except as herein expressly established otherwise, the Agent
shall perform each of those duties in consultation with the Operating Committee.
The Agent shall also perform each of those duties in accordance with the
standards of conduct described in 18 C.F.R. Section 37.4.
4.3 Reporting
The Agent shall provide periodic summary reports of its activities under
this Agreement to the Companies and shall keep the Companies and the Operating
Committee currently informed of situations or problems that may materially
affect the outcome of these activities. Furthermore, the Agent agrees to report
to the Companies or to the Operating Committee in such additional detail as is
requested regarding specific issues or projects under its supervision as Agent.
ARTICLE V
OPERATING COMMITTEE
5.1 Operating Committee
The Operating Committee is the organization established to ensure the
coordinated operation of the System by making recommendations to the CEO
regarding operations under this Agreement. The Operating Committee members will
be designated by the CEO and shall include a chairperson and at least one member
from the Agent and from each Company. Operating Committee decisions shall be by
a majority vote of those present and shall be in the form of recommendations to
the CEO. However, any member not present may vote by proxy. In any non-unanimous
decision the principles of the difference shall be reported to the CEO. The
chairperson shall vote only in case of a tie.
ARTICLE VI
OPERATIONS
6.1 Planning and Authorization of Production Facilities
(a) Each Company shall forecast the amount of generating capability
required to meet its Company Load Responsibility and its Planning
Reserve Level in future Years.
(b) A current Joint Resource Plan will be maintained that will state
the current forecasted System Load Responsibility including the
Planning Reserve Level and the required resources.
(c) All Generating Units placed in service after the date of this
Agreement shall be in accordance with the then current Joint
Resource Plan. Joint Units shall be authorized by the Board of
Directors of the Parent Company prior to the commencement of
detailed engineering of the units.
(d) For the purpose of this Agreement, the Generating Units listed in
Schedule B are not Joint Units.
(e) The organization designated by the CEO shall be responsible for
the staffing, operation and maintenance of each Generating Unit.
6.2 Planning Reserve Levels
The Operating Committee shall periodically review the Planning Reserve
Level for each Company and recommend any modifications of such to the CEO.
6.3 Provision to Achieve Planning Reserve Levels
(a) Each Company shall own or have available to it under contract
such generating capability and other facilities as are necessary
to supply its Company Load Responsibility plus its Planning
Reserve Level.
(b) The Joint Resource Plan shall be periodically reviewed and
adjusted to provide the Companies their required Planning Reserve
Levels. Any Company with Reserve Capacity in excess of its
Planning Reserve Level for a future Year shall commit such excess
capacity to Companies with insufficient Reserve Capacity to meet
their Planning Reserve Level during that Year or any portion
thereof. The deficit Companies shall make payments to the excess
Companies in respect of each Month of the Year to which the
commitment applies in the amount of the Capacity Commitment
Charge in accordance with Schedule C. In the event that the
System Capability, including outside capacity purchases, is
insufficient to meet such Planning Reserve Levels, the System
Capability shall be allocated to provide each Company its
Prorated Reserve Level.
(c) The ownership percentages in future Joint Units are established
in accordance with Schedule A, but may be reallocated in the
Joint Resource Plan by recommendation of the Operating Committee
and authorization by the CEO.
6.4 Capacity Sales and Purchases and Reserve Shortfalls
(a) The Agent shall coordinate and assist the Companies in making
off-System capacity sales and purchases.
(b) The System Reserve Capacity shall be at the disposal of any
Company requiring such capacity. Should the System be short of
capacity as a result of an emergency and be unable to purchase
the deficit, each Company shall take such actions as are
necessary to bring System load and generation into balance.
6.5 Energy Exchanges Among the Companies
The Agent shall schedule the Energy output of System Capability to obtain
the lowest cost of Energy for serving System Demand consistent with each
Company's operating and security constraints, including voltage control,
stability loading of facilities, operating guides as recommended by the
Operating Committee and approved by the CEO, fuel commitments, environmental
requirements, and continuity of service to customers.
6.6 Energy Exchange Pricing
For the purpose of pricing Energy exchange among the Companies, System
resources shall be utilized to serve System requirements in the following order:
a) Those Generating Units which are designated not to be operated in
the order of lowest to highest Variable Cost due to Company
operating constraints shall be allocated to the Company requiring
the Generating Unit.
(b) The lowest Variable Cost generation of each Company's Hourly
Capability shall first be allocated to serve its Own Load.
c) The next lowest Variable Cost portion of each Company's remaining
Hourly Capability shall be allocated to serve Pool Energy
requirements of Companies under System Economic Dispatch. Pool
Energy shall be priced in accordance with Schedule D.
(d) The next lowest Variable Cost portion of each Company's remaining
Hourly Capability shall be used to supply Internal Economy Energy
to Companies under System Economic Dispatch. Internal Economy
Energy shall be priced in accordance with Schedule E.
6.7 Energy Exchanges with Non-Associated Entities
The Agent shall coordinate and direct off-System purchases of Energy
necessary to meet System requirements or improve System economy, after Internal
Economy Energy transactions have been effected. The Agent shall coordinate and
direct off-System sales of Energy available after meeting all of the
requirements of the System including the Energy associated with contractual
requirements for off-System capacity sales. Such off-System Energy purchases or
sales shall be implemented by decremental or incremental System Economic
Dispatch as appropriate. Any Margin on off-System Energy sales or purchases made
to improve System economy shall be distributed to the Companies in accordance
with Schedule F. Price quotations for such Energy sales shall be determined in
accordance with Schedule J.
6.8 Communications and other Facilities
The Companies shall provide communications and other facilities necessary
for:
(a) The metering and control of the generating and transmission
facilities;
(b) The dispatch of electric Power and Energy; and
(c) For such other purposes as may be necessary for optimum operation
of the System.
ARTICLE VII
CENTRAL CONTROL CENTER
7.1 Central Control Center
The Agent shall provide and operate a Central Control Center adequately
equipped and staffed to meet the requirements of the Companies for efficient,
economical and reliable operation as contemplated by this Agreement.
7.2 Expenses
All expenses for operation of the Central Control Center shall be paid by
the Agent and billed monthly to each Company in accordance with Schedule G.
ARTICLE VIII
GENERAL
8.1 Regulatory Authorization
This Agreement is subject to certain regulatory approvals and each Company
and the Agent shall diligently seek all necessary regulatory authorization for
this Agreement.
8.2 Effect on Other Agreements
This Agreement shall not modify the obligations of any Company under any
agreement between that Company and others not parties to this Agreement in
effect at the date of this Agreement, nor shall it modify any agreement between
or among the Companies under any transmission tariff or other agreement filed
with the Federal Energy Regulatory Commission.
8.3 Schedules
The basis of compensation for the use of facilities and for the Power and
Energy provided or supplied by a Company to another Company or Companies under
this Agreement shall be in accordance with arrangements agreed upon from time to
time among the Companies. Such arrangements shall be in the form of Schedules,
each of which, when signed by the parties thereto and approved or accepted by
appropriate regulatory authority, shall become a part of this Agreement.
8.4 Xxxxxxxx
Bills for services rendered hereunder shall be calculated in accordance
with applicable Schedules, and shall be issued on or before the tenth working
Day of the Month following that in which such service was rendered and shall be
payable on or before the twentieth Day of such Month. After the thirtieth Day,
interest shall accrue on any balance due until paid at the latest rate approved
by the United States Securities and Exchange Commission for loans among
Companies in the Central and South West System. Xxxxxxxx in good faith disputed
and paid shall be deemed to have been paid under protest.
8.5 Waivers
Any waiver at any time by a Company of its rights with respect to a default
by any other Company under this Agreement shall not be deemed a waiver with
respect to any subsequent default of similar or different nature, nor shall it
prejudice its right to deny waiver of similar default to a different Company.
8.6 Successors and Assigns; No Third Party Beneficiary
This Agreement shall inure to and be binding upon the successors and
assigns of the respective parties hereto, but shall not be assignable by any
party without the written consent of the other parties, except upon foreclosure
of a mortgage or deed of trust. Nothing expressed or mentioned or to which
reference is made in this Agreement is intended or shall be construed to give
any person or corporation other than the parties hereto any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained, expressly or by reference, or any Schedule hereto, this
Agreement, any such Schedule and any and all conditions and provisions hereof
and thereof being intended to be and being for the sole and exclusive benefit of
the parties hereto, and for the benefit of no other person or corporation.
8.7 Amendment
It is contemplated by the parties that it may be appropriate from time to
time to change, amend, modify or supplement this Agreement or the Schedules
which are attached to this Agreement to reflect changes in operating practices
or costs of operations or for other reasons. This Agreement may be changed,
amended, modified or supplemented by an instrument in writing executed by all of
the parties.
8.8 Independent Contractors
It is agreed among the Companies that by entering into this Agreement the
Companies shall not become partners, but as to each other and to third persons,
the Companies shall remain independent contractors in all matters relating to
this Agreement.
8.9 Responsibility and Liability
The liability of the parties shall be several, not joint or collective.
Each party shall be responsible only for its obligations, and shall be liable
only for its proportionate share of the costs and expenses as provided in this
Agreement, and any liability resulting herefrom. Each party hereto will defend,
indemnify, and save harmless the other parties hereto from and against any and
all liability, loss, costs, damages, and expenses, including reasonable
attorney's fees, caused by or growing out of the gross negligence, willful
misconduct, or breach of this Agreement by such indemnifying party.
IN WITNESS WHEREOF, each of the Companies has caused this Agreement and the
attached Schedules to be signed in its name and on its behalf by its President
attested by its Secretary, both being duly authorized, and CSWS has caused this
Agreement and the attached Schedules to be signed in its name and on its behalf
by its Chief Executive Officer attested by its Secretary, both being duly
authorized. This Agreement and attached Schedules shall become effective on such
date as is established by the Federal Energy Regulatory Commission.
CENTRAL POWER AND LIGHT COMPANY
Attest
By /s/
Secretary President
PUBLIC SERVICE COMPANY OF OKLAHOMA
Attest
By /s/
Secretary President
SOUTHWESTERN ELECTRIC POWER COMPANY
Attest
By /s/
Secretary President
WEST TEXAS UTILITIES COMPANY
Attest
By /s/
Secretary President
CENTRAL AND SOUTH WEST SERVICES, INC.
Attest
By /s/
Secretary Chief Executive Officer
SCHEDULE A
JOINT UNIT
9.1 Purpose
The purpose of this Schedule is to provide the basis for the Companies'
participation in Joint Units.
9.2 Ownership
(a) Every Joint Unit shall be owned by the Companies participating in the
Joint Unit as tenants in common. Ownership shares in each Joint Unit shall be
allocated insofar as practical to achieve a Prorated Reserve Level for all
Companies participating in the unit. The allocation shall be recommended by the
Operating Committee and authorized by the CEO prior to the time the unit is
authorized by the Board of Directors of the Parent Company. However, each
Company shall own at least fifty (50) megawatts of each Joint Unit unless
otherwise agreed to by the Operating Committee. Each Company shall be
responsible for its pro rata share of the costs of construction of the unit and
shall contribute such funds to the Agent as billed.
(b) When a new Joint Unit is installed at a site already occupied by one or
more existing Generating Units the Agent, in consultation with the Operating
Committee, shall identify any existing facilities that will be common to the new
Joint Unit and the portion of the common facilities to be allocated to the new
Joint Unit. The owners of the new Joint Unit shall compensate the owners of the
existing common facilities for the use of those common facilities.
9.3 Contracts
The Companies shall execute a joint ownership agreement for each Joint
Unit, such agreement to set out all of the rights and obligations of the parties
relating to the specific Joint Unit, including the allocation of fuel costs, the
allocation of other operation costs and the allocation of maintenance costs
among the owners.
SCHEDULE B
COMPANY UNITS THAT ARE NOT JOINT UNITS
10.1 Purpose
The purpose of this Schedule is to list the Generating Units, to be placed
in service after the date of the original Operating Agreement dated September
28, 1983, which are not Joint Units.
10.2 Company Units That Are Not Joint Units
The Company units that are not Joint Units are as follows:
South Texas Project Unit Number 1 - CPL
South Texas Project Unit Number 2 - CPL
Dolet Hills Unit Number 1 - SWEPCO
Xxxxxx Unit Number 1 - SWEPCO
SCHEDULE C
CAPACITY COMMITMENT CHARGE
11.1 Purpose
The purpose of this Schedule is to establish the basis for Capacity
Commitments between the Companies and the rates for the Capacity Commitment
Charge and associated Energy.
11.2 Basis for Capacity Commitment
A committing Company shall make available to a receiving Company unit
capacity consisting of a portion of the output of one or more specific
Generating Units. The receiving Company shall be entitled to receive Energy from
the specified Generating Unit(s) up to an amount equal to an annual load factor
of sixty (60) percent or such other amount as is mutually agreeable.
11.3 Provisions for Capacity Commitment Charge
The monthly Capacity Commitment Charge for each specific Generating Unit(s)
from which capacity is committed shall be an amount not to exceed the result of
the following formula:
A = (1/12) (B) (C/D) (E)
Where:
A = Monthly Capacity Commitment Charge for the specified unit to be
due each month regardless of the availability of the specific unit.
B = 0.1712 (fixed charge rate for the committing Company).
C = Committing Company's total dollar investment, at original cost, in
the specific Generating Unit as of December 31 of the year prior to
the year of the Capacity Commitment.
D = Rated net dependable capability of the specific Generating Unit in
megawatts.
E = Megawatts of capacity committed from the specified unit.
11.4 Provision for Energy Charge
The rate for Energy received by a receiving Company from specified unit(s)
shall be the Variable Cost of Energy produced from each specified unit(s) plus
ten (10) percent of such costs or three (3) xxxxx per kilowatt-hour, whichever
is less.
SCHEDULE D
PAYMENTS AND RECEIPTS FOR POOL ENERGY EXCHANGES
AMONG THE COMPANIES
12.1 Purpose
The purpose of this Schedule is to provide the basis for determining
payments and receipts among the Companies for Pool Energy exchanges.
12.2 Hourly Calculations
The payments and receipts of Section 12.3 are calculated Hourly, but are
accumulated and billed Monthly among the Companies
12.3 Receipts and Payments
A selling Company shall receive from a purchasing Company one hundred and
ten percent (110%) of the selling Company's Incremental Energy Cost for Pool
Energy sold. A purchasing Company shall pay for Pool Energy received one hundred
and ten percent (110%) of its portion of the aggregate of the selling Companies'
Incremental Cost for Pool Energy. Where Pool Energy is purchased simultaneously
by more than one Company, these charges shall be pro rated in proportion to the
megawatt-hours of Pool Energy purchased by each buyer.
SCHEDULE E
PAYMENTS AND RECEIPTS FOR INTERNAL
ECONOMY ENERGY EXCHANGES AMONG THE COMPANIES AND
FOR OFF-SYSTEM ENERGY PURCHASES AND SALES
13.1 Purpose
The purpose of this Schedule is to provide the basis for determining
payments and receipts among the Companies for Internal Economy Energy exchanges
and for off-System Energy purchases and sales made to improve System economy.
13.2 Hourly Calculations
The payments of Section 13.3 and receipts of Section 13.4 shall be
calculated Hourly, but are accumulated and billed Monthly among the Companies.
13.3 Payments
A purchasing Company shall pay its Decremental Energy Value for Internal
Economy Energy purchased and off-System Energy purchased to improve System
economy.
13.4 Receipts
A selling Company shall receive its Incremental Energy Cost for Internal
Economy Energy sold and off-System Energy sold to improve System economy.
SCHEDULE F
DISTRIBUTION OF MARGIN FOR INTERNAL
ECONOMY ENERGY EXCHANGES AND FOR OFF-SYSTEM
ENERGY PURCHASES AND SALES
14.1 Purpose
The purpose of this Schedule is to establish the basis for distributing
among the Companies the Margin resulting from Internal Economy Energy exchanges
and for off-System Energy purchases and sales made to improve System economy.
14.2 Distribution of Margin
Any Margin remaining from Internal Economy Energy exchanges and off-System
Energy purchases and sales made to improve System economy after deducting any
Transaction Cost incurred in the period to which the Margin relates shall be
distributed to the Companies in proportion to the relative magnitude of the sums
for each Company of the Energy generated or not generated by such Company in
order to participate in Internal Economy Energy exchanges or such off-System
purchases or sales.
SCHEDULE G
DISTRIBUTION OF OPERATING EXPENSES
OF THE CENTRAL CONTROL CENTER
15.1 Purpose
The purpose of this Schedule is to provide a basis for the distribution
among the Companies of the costs incurred by the Agent in operating the Central
Control Center.
15.2 Costs
Costs for the purpose of this Schedule shall include all costs incurred in
maintaining and operating the Central Control Center including, among others,
such items as salaries, wages, rentals, the cost of materials and supplies,
interest, taxes, depreciation, transportation, travel expenses, consulting, and
other professional services.
15.3 Distribution of Costs
All costs shall be billed by Agent to the Companies in proportion to the
average of the maximum Company Peak Demands experienced during the three
previous calendar Years with the following exception. In the event the Central
Control Center makes a study or performs a special service in which all
Companies are not thus proportionately interested, any resulting cost shall be
distributed to the interested parties in accordance with the standard procedures
of Agent authorized by the United States Securities and Exchange Commission.
SCHEDULE H
CAPACITY COMMITMENT UNITS
16.1 Purpose
The purpose of this Schedule is to identify the Generating Units of the
Companies from which Capacity Commitments shall be made pursuant to Section 6.3
in accordance with Schedule C.
16.2 Commitment Units
Listed below are the Generating Units from which each of the Companies
shall commit Capacity to other Companies pursuant to Section 6.3. Capacity
Commitments shall be made from the first listed unit of the committing Company
unless or to the extent that such unit is not expected to be available during
the commitment period. In such event, Capacity Commitments shall be made from
the second listed unit of the committing Company.
COMPANY UNIT NAME RATING(MW) YEAR INSTALLED
CPL X. X. Xxxxx #2 341 1976
Laredo #3 101 1975
XXX Xxxxxxxxx #0 000 0000
Xxxxxxxxx #1 457 1974
SWEPCO Xxxx Xxx #5 344 1974
Xxxxxx #3 351 0000
XXX Xxxx Xxxxxxx #0 204 1977
Fort Phantom #1 158 1974
SCHEDULE I
PLANNING-RESERVE CRITERIA
17.1 Purpose
The purpose of this Schedule is to identify the criteria which shall be
used by the Companies in determining their respective Planning Reserve Levels
for purposes of determining their respective Capacity Commitment obligations
17.2 Planning Reserve Criteria
The Planning Reserve Level for each of the Companies shall be equal to 15%
of Company Load Responsibility.
SCHEDULE J
STATEMENT OF PRACTICE
REGARDING OFF-SYSTEM
ENERGY SALES
18.1 Purpose
The purpose of this Schedule is to identify the basis upon which price
quotations for energy sales to a non-associated entity made to improve System
economy will be determined when any such non-associated entity makes a request
of a Company or the Agent to purchase System Energy. The prices for sales made
shall be set by negotiation or in accordance with filed rate schedules of the
Companies and may include standard industry adders.
18.2 Determination of Energy Price Quotations
The CSW Central Control Center will predispatch System Energy requirements
based upon an estimate of on-line System generation and such System Energy
requirements. Any request for the purchase of System Energy will result in a
price quotation based upon the incremental running cost of the
next-least-costly-to-operate System Generating Unit (that will be available to
make the sale requested during the time period that is the subject of the
request by the non-associated entity) after System needs have been met. In
determining whether a Generating Unit will be available to make a requested
sale, the matters listed in Section 6.5 and the availability of adequate
transmission capacity on the System and on the systems of other utilities shall
be considered.
SCHEDULE K
DISTRIBUTION OF CERTAIN TRANSACTION COSTS
19.1 Purpose
The purpose of this Schedule is to provide a basis for the distribution
among the Companies of certain charges assessed by non-associated entities
against one or more of the Companies for transmission service related to
transactions contemplated by the Agreement.
19.2 Fixed Transaction Costs
For purposes of this Schedule, Fixed Transaction Costs shall consist of
transmission service charges that are not computed based on specific schedules
that vary on an hour-by-hour basis or that are not computed for specific firm
transmission service reservations between Companies dependent on the level of
reservation.
19.3 Distribution of Fixed Transaction Costs
All Fixed Transaction Costs shall be billed to the Companies in proportion
to their maximum Company Peak Demands experienced during the previous calendar
Year less interruptible loads served during the peak hour.
19.4 Directly Assigned Transaction Costs
For purposes of this Schedule, Directly Assigned Transaction Costs shall
consist of transmission service charges due to non-associated entities that are
not Fixed Transaction Costs and that are associated with the receipt by a
Company of Pool Energy, Energy produced from a Joint Unit, Energy associated
with a Capacity Commitment and off-System Energy purchased with reserves to meet
the requirements of the receiving Company.
19.5 Distribution of Directly Assigned Transaction Costs
All Directly Assigned Transaction Costs shall be billed to the Companies in
accordance with the following implementation steps:
1) Directly Assigned Transaction Costs due to non-associated
entities shall be paid by the Company receiving the xxxx. Where
two or more Companies are jointly receiving such Energy for which
a consolidated transmission service xxxx is rendered, the
involved Companies will be responsible for the charges in
proportion to their megawatt-hour (MWH) share of such Energy.
2) Should a non-associated entity render a xxxx for Directly
Assigned Transaction Costs that does not separately attribute
such costs to particular Pool Energy, Joint Unit, Capacity
Commitment or off-System Energy purchased with reserves
transactions, the terms and conditions of the contracts, tariffs
or ERCOT practices on which the charges are based will be used to
determine which Companies will be responsible for such Energy
transaction charges.
3) When losses are required to be paid in kind, and the responsible
Company provides Energy (to the scheduling Company) sufficient to
cover the losses to be returned, such payments shall not be
considered as Directly Assigned Transaction Costs. When the
responsible Company chooses to pay the cost associated with the
scheduling Company's returning the losses on behalf of the
System, such Directly Assigned Transaction Costs shall be
determined as the product of the losses paid back (in MWH) and
the scheduling Company's average monthly fuel cost for the Month
in which the losses are returned.
4) On a calendar Month basis, according to transaction date, the
total Directly Assigned Transmission Costs for which each Company
is responsible and the total Directly Assigned Transmission Costs
paid by each Company shall be tabulated. For a given Month, an
adjustment shall be made in an appropriate CSW Money Pool account
for each Company by an amount equal to the difference between the
total Directly Assigned Transaction Costs paid by the Company and
the Directly Assigned Transaction Costs for which the Company is
responsible.
