SECOND RESTATED ELECTRIC POWER AND ENERGY
SUPPLY AND TRANSMISSION AGREEMENT
between
THE CITY OF GILLETTE, WYOMING
and
BLACK HILLS POWER AND LIGHT COMPANY
Date: February 28, 1995
TABLE OF CONTENTS
Page
1. RECITALS AND DEFINITIONS. . . . . . . . . . . . . . . . . 1
1.1 Recitals . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . 2
2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. SALE OF CAPACITY AND ENERGY . . . . . . . . . . . . . . . 4
3.1 Base Load Capacity Obligation. . . . . . . . . . . . 4
3.2 Base Load Energy Obligation. . . . . . . . . . . . . 4
3.3 Xxxxxxxx'x Capacity and Energy Obligations . . . . . 4
3.4 Inadvertent Energy Account . . . . . . . . . . . . . 5
3.5 Additional Capacity Supplied by Black Hills Without
Agreement. . . . . . . . . . . . . . . . . . . . . . 5
3.6 Capacity and Energy Technicalities . . . . . . . . . 6
3.7 Scheduling and Metering. . . . . . . . . . . . . . . 6
3.8 Coal Agreements. . . . . . . . . . . . . . . . . . . 7
4. POWER AND ENERGY RATE SCHEDULES AND REGULATION. . . . . . 8
5. OTHER SOURCES OF CAPACITY AND ENERGY. . . . . . . . . . . 17
6. POINT OF DELIVERY, FACILITIES, AND METERS . . . . . . . . 18
6.1 Point of Delivery. . . . . . . . . . . . . . . . . . 18
6.2 Calibrate Meters . . . . . . . . . . . . . . . . . . 18
6.3 Rights of Way. . . . . . . . . . . . . . . . . . . . 19
6.4 Facilities to be Provided by Gillette. . . . . . . . 19
7. XXXXXXXX'X PROJECTIONS. . . . . . . . . . . . . . . . . . 20
8. TRANSMISSION CAPACITY AND SERVICES. . . . . . . . . . . . 21
8.1 Definitions. . . . . . . . . . . . . . . . . . . . . 21
8.2 Transmission Capacity to be Furnished by Black
Hills. . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 Transmission Service at 230 kV to be Furnished by
Black Hills for Net Other Sources. . . . . . . . . . 23
8.4 Compensation for 230 kV Transmission Capacity and
Service. . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Transmission Service at 69 KV to be Furnished by
Black Hills for Net Other Sources. . . . . . . . . . 25
8.5.1 Obligation of Black Hills . . . . . . . . . . 25
8.5.2 Obligation of Gillette. . . . . . . . . . . . 25
8.5.3 Coordination. . . . . . . . . . . . . . . . . 25
8.6 Compensation for 69 kV Service . . . . . . . . . . . 26
8.7 Losses . . . . . . . . . . . . . . . . . . . . . . . 26
8.8 Regulation of Rates by FERC. . . . . . . . . . . . . 27
8.9 Scheduling and Metering. . . . . . . . . . . . . . . 30
8.10 Power Factor . . . . . . . . . . . . . . . . . . . . 30
9. IMPOSSIBILITY OF PERFORMANCE. . . . . . . . . . . . . . . 30
10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 31
11. FILING WITH FERC. . . . . . . . . . . . . . . . . . . . . 31
12. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 32
13. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . 33
14. COMPLETE AGREEMENT. . . . . . . . . . . . . . . . . . . . 33
SECOND RESTATED ELECTRIC POWER AND ENERGY SUPPLY
AND TRANSMISSION AGREEMENT
This Second Restated Electric Power and Energy Supply and
Transmission Agreement, dated as of February 28, 1995 ("Agreement"),
is entered into between the City of Xxxxxxxx, a municipal corporation
of Gillette, Wyoming ("Gillette"), and Black Hills Power and Light
Company, an assumed business name of Black Hills Corporation, a South
Dakota corporation ("Black Hills"), as a restatement of the Restated
Electric Power and Energy Supply and Transmission Agreement, dated as
of December 21, 1987 ("First Restated Agreement"), which Agreement
superseded the Electric Power and Energy Supply and Transmission
Agreement, dated as of August 6, 1985 ("Original Agreement").
1. RECITALS AND DEFINITIONS.
1.1 Recitals. Gillette operates a municipal electric
system within its city and therefore requires electric current for its
own uses and for resale to operate that system. Black Hills is
engaged in the business of generation, transmission, distribution and
sale of electric capacity and energy at retail and wholesale for
resale. Black Hills furnishes electric capacity and energy service to
Gillette to be resold in the operation of its municipal electric
system pursuant to the terms and provisions of the First Restated
Agreement, which was accepted for filing with the Federal Energy
Regulatory Commission.
The purpose of this Agreement is to restate the First
Restated Agreement for the purpose, among other things, of modifying
the obligations of each party to furnish the electric capacity and
energy requirements of Gillette and to determine rates charged for
such service. At such time regulatory requirements are satisfied as
set forth in Section 11, this Agreement supersedes and replaces the
First Restated Agreement.
1.2 Definitions. The terms "capacity" and "energy" used
in this Agreement refer to electric capacity and electric energy,
respectively.
"Base Load Capacity" is Black Hills' obligation to furnish
Gillette capacity as set forth in Section 3.1.
"Base Load Energy" is Black Hills' obligation to furnish
Gillette energy as set forth in Section 3.2.
"Date of First Commercial Operation of NS #2" is the first
day of the month during which Black Hills determines that
NS #2 has commenced commercial operation, but for the
purposes of this Agreement shall not be earlier than
September 1, 1995. Such determination shall be made on the
basis of standards of the electric utility industry and in
conformance with Prudent Utility Practice.
"Xxxxxxxx'x Requirements" refers to Xxxxxxxx'x entire
electric capacity and energy requirements needed for local
distribution for resale purposes and for its own use and
shall include Xxxxxxxx'x Successors and Assigns' entire
electric capacity and energy requirements for distribution
within the city limits of Gillette as those limits exist
from time to time; provided, however, that if Gillette
annexes territory, Xxxxxxxx'x requirements will not include
any electric capacity and energy requirements until such
time as Gillette (or its Successors and Assigns) serves such
requirements.
"Xxxxxxxx'x Successors and Assigns" are those persons,
corporations, cooperatives or any other entities to whom
Gillette sells or leases any portion or all of its municipal
electric system or with whom Gillette contracts, the effect
of which allows those persons, corporations or entities to
sell capacity and energy to customers for consumption within
the city limits of Gillette as those limits exist from time
to time.
"NS #2" is the Xxxx Xxxxxxx Unit #2, an 80 MW coal-fired
electric power plant now under construction in Xxxxxxxx
County, Wyoming.
"Prudent Utility Practice" at a particular time means any of
the practices, methods and acts, which, in the exercise of
reasonable judgment in light of the facts (including but not
limited to the practices, methods and acts engaged in or
approved by a significant portion of the electric utility
industry prior thereto) known at the time the decision was
made, would be expected to accomplish the desired result at
the lowest reasonable cost consistent with reliability,
safety and expedition. Prudent Utility Practice is not
intended to be limited to the optimal practice, method or
act, to the exclusion of all others, but rather represents a
spectrum of possible practices, methods or acts.
"Total Demand" is the total of Xxxxxxxx'x and Xxxxxxxx'x
Successors and Assigns' highest average demand measured in
kilowatts to satisfy Xxxxxxxx'x Requirements. For the
purpose of measuring demand for transmission service under
Section 8, measurement shall be based on sixty-minute
intervals; and for determining any Unauthorized Overrun
under Exhibit A, measurement shall be based on fifteen-
minute intervals.
Other defined terms and phrases used in this Agreement are
set forth throughout this Agreement where such terms and phrases are
first used.
2. TERM.
The term ("Term") of this Agreement shall comprise an
initial period from the date of this Agreement until and including
June 30, 2012, and shall continue thereafter until and unless
terminated by either party giving to the other party notice in writing
not less than seven years prior to the termination of said initial
period or of any succeeding Contract Year, unless the parties agree in
writing to a shorter notice period. For the purposes of this
Agreement, a "Contract Year" of this Agreement ends the thirtieth day
of every June of the Term.
3. SALE OF CAPACITY AND ENERGY.
3.1 Base Load Capacity Obligation. Black Hills shall sell
and Gillette shall purchase Base Load Capacity in the amount of 23,268
KW during each month of the Term prior to the date of First Commercial
Operation of NS #2 and 23,000 KW commencing on the date of First
Commercial Operation of NS #2 and every month of the Term thereafter.
3.2 Base Load Energy Obligation. Black Hills shall sell
and Gillette shall purchase all energy needs of Gillette measured in
kilowatt hours associated with all kilowatts of Base Load Capacity as
if those kilowatts were the first kilowatts needed from day to day for
Xxxxxxxx'x Requirements.
3.3 Xxxxxxxx'x Capacity and Energy Obligations. Gillette
shall have the obligation to supply firm capacity and energy to be
purchased from others or self-generation for all of that capacity and
energy required to meet that portion of Xxxxxxxx'x Requirements that
are not required to be furnished by Black Hills under Sections 3.1 and
3.2. Nothing herein shall prevent the parties from agreeing from time
to time to cause Black Hills to serve additional capacity and
associated energy to meet Xxxxxxxx'x obligations herein.
3.4 Inadvertent Energy Account. An Inadvertent Energy
Account (hereinafter referred to as "Inadvertent Account") for
overscheduled energy deliveries from each party to this Agreement
(rounded to the nearest megawatt) shall be established. The parties
shall exercise reasonable care to minimize, to the extent practicable,
overscheduled deliveries of electric energy. The parties recognize,
however, that despite their best efforts to prevent overscheduled
deliveries, such deliveries of electric energy may occur. Electric
energy delivered in such event shall be settled by the return of
equivalent energy at times satisfactory to the parties or by such
other equitable arrangements as may be mutually agreed upon.
Gillette shall use its best efforts to include, in its
contracts to purchase power from third parties, provisions to require
those third parties to establish an Inadvertent Account between Black
Hills and those third parties and provisions for settling by the
return of energy by Black Hills to the third parties on Xxxxxxxx'x
account.
3.5 Additional Capacity Supplied by Black Hills Without
Agreement. If, due to the unavailability of a Gillette-supplied
resource that Gillette was required to furnish under Section 3.3,
Black Hills furnishes Gillette capacity to meet a portion of
Xxxxxxxx'x Requirements that was Xxxxxxxx'x obligation to provide
under Section 3.3 without any subsequent agreement to do so, Black
Hills shall charge and Gillette shall pay, on a monthly basis, the
Unauthorized Overrun charge provided for in Exhibit A of this
Agreement. No Unauthorized Overrun charge shall be payable unless the
entity responsible for scheduling a Gillette-supplied resource fails
to meet scheduled energy deliveries as arranged by Black Hills with
the entity responsible for such scheduling. Energy accompanying such
additional capacity will be reflected in the Inadvertent Account.
3.6 Capacity and Energy Technicalities. All capacity and
energy delivered under this Section 3 shall be three phase,
alternating current, approximately 60 hertz, at a nominal voltage of
69,000 volts or such higher voltage as may be agreed to by the
parties.
3.7 Scheduling and Metering. All capacity and energy
including that sold by Black Hills pursuant to Section 3 and that
delivered by Black Hills from Net Other Sources as defined and
provided at Section 8, shall be scheduled by Black Hills for the
purpose of showing compliance with this Agreement and for billing
under Exhibit A. Black Hills shall provide one 69 kV meter and
associated equipment. Gillette shall furnish all other meters and
associated equipment required to measure the portion of the Total
Demand and the portion of the capacity and energy furnished from
sources other than from Black Hills. The associated equipment shall
include (i) equipment allowing Black Hills to monitor and to switch
from Rapid City, South Dakota, such portion or portions of the Total
Demand and the power and energy related portions thereof furnished by
the parties to areas of the Gillette municipal electric system which
are directly connected via Xxxxxxxx'x facilities to Black Hills'
point(s) of delivery set forth in Section 6.1 and (ii) other than
where Black Hills maintains communications with power suppliers for
reasons other than to deliver capacity and energy acquired by
Gillette, communication equipment and services required for Black
Hills to communicate on a 24-hour basis with Xxxxxxxx'x power
suppliers. Gillette shall provide telemetering equipment so as to
allow Black Hills to monitor demand and energy from Xxxxxxxx'x Total
Demand. All equipment furnished by Gillette and its installation
shall be subject to Black Hills' approval. All costs incurred by
Black Hills in scheduling and metering that capacity and energy
furnished by Gillette from sources other than Black Hills shall be
included as a part of the transmission charges made pursuant to
Section 8.4.
3.8 Coal Agreements. Commencing with the date of the
commercial operation of NS #2, coal prices to be paid by Black Hills
to its affiliated coal supplier, Wyodak Resources Development Corp.
("Wyodak Resources"), for the coal supply for Black Hills' interest in
existing coal-fired power plants and NS #2 shall be determined by the
Coal Supply Agreement for Xxxx Xxxxxxx Unit #2, dated as of
February 12, 1993 ("Coal Agreement"), a copy of which is attached
hereto as Exhibit B. The parties agree that, for purposes of Black
Hills' charges to Gillette, the methodology set forth in Exhibit B to
determine the coal prices for the affiliated transactions between
Black Hills and Wyodak Resources will be deemed to result in just and
reasonable prices, will be deemed to yield a fair return to Wyodak
Resources for such sales to its affiliate and will be deemed to result
in charges to Gillette under this Agreement that are not unreasonable
or unjust.
4. POWER AND ENERGY RATE SCHEDULES AND REGULATION.
Gillette shall pay Black Hills monthly upon invoices
submitted for all electric capacity and energy supplied hereunder
pursuant to the rates, charges, terms and conditions set forth in
Exhibit A attached hereto and made a part of this Agreement as if
specifically set forth herein and upon all other terms and conditions
in this Agreement. It is understood and agreed that this Agreement
and the rates charged hereunder are subject to the regulatory
jurisdiction of FERC, a regulatory commission of the United States,
pursuant to the Federal Power Act (16 U.S.C. 791a et seq.) and all
rules and regulations pertaining thereto, all as amended from time to
time.
(a) Black Hills and Gillette agree that, except as
provided in Section 4(b) and Section 8 below and as
authorized in Exhibit A, the provisions of this
Agreement and the rate schedules attached as Exhibit A
will not be changed unless Black Hills and Gillette
agree to such a change in writing. The parties have
bargained at arm's length in good faith and on equal
terms for economic benefits to each party which are
closely interrelated and which produce an overall
result which is considered by the parties to be just
and reasonable. Therefore, the parties agree that,
except as provided in Section 4(b) and Section 8
below, in any, proceeding, however initiated, whether
under Section 206 of the Federal Power Act or under
any law or regulation which now is or may hereafter be
applicable, relating to any attempt to alter, change
or amend the rates, charges, penalty provision, terms
and conditions set forth in this Agreement (including
Exhibit A), the standards which relate to the burden
of proof required for FERC or any regulatory body to
alter the terms of a contract without agreement of the
parties thereto as expressed in FPC v. Sierra Pacific
Power Co., 350 U.S. 348 (1956) and United Gas Pipe
Line Co. v. Mobile-Gas Service Corp., 000 X.X. 000
(1956), (commonly referred to as the Sierra-Mobile
doctrine in subsequent case holdings) shall apply with
respect to the parties. However, such standards shall
not prevent FERC from using a "just and reasonable"
standard either sua sponte or pursuant to a complaint
from persons or entities who are not a party to this
Agreement at such times and under such circumstances
as FERC deems appropriate in order to protect the
interests of nonparties. Each of the parties to this
Agreement covenants that it will not encourage any
nonparty through monetary assistance or otherwise to
institute any legal proceeding, including a complaint
under Section 206 of the Federal Power Act to cause
this Agreement to be applied and administered in any
way that would result in any modification of the
charges to be made hereunder.
(b) Except as limited by the provisions of Sections 4(c),
4(d), 4(e) and 4(f) below, Black Hills shall have the
right from time to time for the purpose of
establishing just and reasonable rates and achieving a
reasonable return to Black Hills to make application
unilaterally to FERC under Section 205 of the Federal
Power Act (16 U.S.C. 824d) and pursuant to FERC's
rules and regulations promulgated thereunder for a
change or adjustment in the dollar levels of the rates
and charges set forth in Exhibit A and any superseding
schedule upon delivering a written notice thereof to
Gillette. Any such changes or adjustments shall
become effective on the date specified therein,
subject to suspension or other action duly taken by
FERC, and without final approval by FERC. Except as
limited by Sections 4(c), 4(d), 4(e) and 4(f) below,
Gillette has the right under Section 205 of the
Federal Power Act (16 U.S.C. 824d) and rules and
regulations thereunder to oppose any such change or
adjustment proposed by Black Hills and also has the
right at any time to unilaterally make application to
FERC under Section 206 of the Federal Power Act (16
U.S.C. 824e) and pursuant to FERC's rules and
regulations promulgated thereunder for a change or
adjustment in the dollar levels of the rates and
charges set forth in Exhibit A and any superseding
schedule. The formula to be applied in determining
the Unauthorized Overrun penalty and the Fuel and
Economic Power Adjustment clause in Schedule A shall
not be subject to change under this Section 4(b).
(c) Other than where specifically authorized in Exhibit A,
Black Hills shall not change or adjust or file with
FERC for authority to change or adjust, and Gillette
shall not contest, the dollar levels of the rates and
charges set forth in Exhibit A prior to January 1,
1998; provided, however, that Black Hills may tender a
filing prior to January 1, 1998 that proposes an
effective date of January 1, 1998 or later.
Notwithstanding the previous sentence, if prior to
January 1, 1998, either of the following events
occurs:
(i) the annualized inflation rate for any
consecutive 12-month period ending on the last
day of the month after the date of this
Agreement is 8 percent or more based upon the
Producers Price Index published by the Bureau
of Labor Statistics in its monthly report
entitled "Producers, Prices, and Price
Indexes" (if the publication is discontinued,
a similar publication of the Bureau of Labor
Statistics), or
(ii) any damage occurs after the date of this
Agreement to Black Hills' owned or leased
generating and transmission plant which costs
more than $5,000,000 to repair.
Black Hills may file for an increase to take effect
prior to January 1, 1998, and Gillette may oppose such
increase as provided in Section 4(b).
(d) The parties hereto agree that, in consideration of the
length of this Agreement and the benefits to the
parties arising therefrom, the rates to be charged
during the Term of this Agreement for the furnishing
of capacity and energy shall be based on the following
cost principles, which underlie Black Hills' capacity
and energy rates to Gillette in this Agreement, and
that neither party will propose capacity and energy
rates based on conflicting cost principles:
(i) Black Hills shall be entitled to reflect the
revenues received under the contract dated
March 12, 1975 with Rushmore Electric Power
Cooperative, Inc. and Basin Electric Power
Cooperative, as restated by the Agreement for
Transmission Service and the Common Use of
Transmission Systems, dated as of January 1,
1986 among Black Hills, Rushmore Electric
Power Cooperative, Inc., Basin Electric Power
Cooperative, Tri-County Electric Association,
Inc., Black Hills Electric Cooperative, Inc.
and Butte Electric Cooperative, Inc. ("REC
Contract") as being equivalent to the costs
properly allocable to service under the
contract. If the REC Contract is renegotiated
by the parties thereto, the revenues received
by Black Hills from the new contract for its
transmission system as it exists as of the
date of this Agreement shall be deemed to be
equivalent to the costs properly allocable to
service from the present transmission system,
providing that the revenues received therefor
are not less than that which would have been
received if the REC Contract had not been
renegotiated.
(ii) Black Hills shall continue to assign directly
to any customer or customer group(s) the cost
of transmission facilities which serve that
customer (or group of customers) and over
which energy flows only to such customer(s).
(iii) Black Hills shall reflect the revenues
received under the contract dated September 9,
1994 ("MDU Contract") with Montana-Dakota
Utilities Co. as a revenue credit against the
Black Hills cost of service as if being
equivalent to the costs properly allocable to
service under the contract. If the MDU
Contract is renegotiated by the parties
thereto, the revenues received by Black Hills
from the new contract shall be deemed to be
equivalent to the costs properly allocable to
service from the new contract, providing that
the revenues received therefor are not less
than that which would have been received if
the MDU Contract had not been renegotiated.
(iv) Black Hills shall reflect the unamortized
Wyodak Power Plant and Rushmore Power Plant
acquisition adjustments as a rate base
addition and shall continue to amortize such
acquisition adjustments at a rate no greater
than $154,000 per year in the Black Hills cost
of service until completely amortized.
(v) Black Hills may maintain an energy charge at a
level no lower than $0.0222 per kWh, before
application of the Fuel and Economic Power
Adjustment clause in Exhibit A. If the energy
charge is higher than the level of
appropriately allocated energy costs plus base
and adjusted fuel costs, the overage will be
reflected as a credit to Gillette under the
demand charge.
(vi) The Basic Service Charge will be set no lower
than $5,400 per month.
(vii) The cost of coal to fuel Black Hills' interest
in power plants to be included in the cost of
service shall be determined by the Coal
Agreement, attached as Exhibit B to this
Agreement.
(viii) The parties agree that Black Hills' decision
to construct NS #2 was prudent and that NS #2
is used and useful for Black Hills to fulfill
its obligations under this Agreement.
(e) In consideration of the mutual benefits herein
contained, including the moratorium at Section 4(c),
and in view of the fact that the parties have agreed
to the moratorium, the parties do hereby agree to the
Fuel and Economic Power Adjustment clause in Exhibit A
notwithstanding the fact that they recognize that in
allowing the Variable Costs, as defined therein, to be
included in "F", the clause is not in strict
conformance with 18 CFR 35.14.
(f) In consideration of this Agreement, including the
moratorium at Section 4(c), Gillette waives all of its
rights to refunds due Gillette from Black Hills
because Variable Costs, as defined in Exhibit A, were
included and will continue to be included in "F" in
determining rate adjustments to charges made under the
fuel clause in Exhibit A of the Original Agreement.
When requested by Black Hills, Gillette agrees to sign
and deliver to Black Hills any documentation
reasonably requested by Black Hills to establish this
waiver with FERC.
In the event that regulatory jurisdiction over this
Agreement and/or rates charged by Black Hills to Gillette is vested in
any governmental body other than the FERC, this provision and the
rights of Black Hills and Gillette as set forth herein shall be
subject to applicable regulatory laws, regulations and rules of such
governmental body.
5. OTHER SOURCES OF CAPACITY AND ENERGY.
Except for Xxxxxxxx'x obligation to purchase the Base Load
Capacity and the Base Load Energy from Black Hills pursuant to
Sections 3.1 and 3.2, nothing herein prevents Gillette from
contracting with others for capacity and energy under this Agreement.
If Gillette enters into contracts from other sources, Gillette shall
keep Black Hills currently informed of the current status of those
arrangements.
6. POINT OF DELIVERY, FACILITIES, AND METERS.
6.1 Point of Delivery. Black Hills shall deliver the
electric capacity and energy to be sold by Black Hills to Gillette
under this Agreement at 69,000 volts or higher to the point of
delivery where the facilities of Black Hills now interconnect to the
facilities of Gillette, presently located near the corner of Warlow
Drive and Xxxxxx Avenue, City of Gillette, Wyoming, and/or at any
future points of delivery upon which the parties may agree.
6.2 Calibrate Meters. Black Hills shall test and
calibrate the meters and recording devices by comparison with accurate
standards at intervals of not more than twelve (12) months, and Black
Hills shall notify Gillette of its intention to make such tests so
that agents of Gillette can have the opportunity of witnessing the
tests. Black Hills shall also make special meter tests at any time at
Xxxxxxxx'x request. The cost of tests on each meter shall be borne by
the party furnishing that meter. Black Hills will calibrate the
meters and recording devices as closely as practicable to the
condition of one hundred percent (100%) accuracy (zero error), but, if
any meter or recording device tested is found to be more than two
percent (2%) in error, either fast or slow, proper correction shall be
made of previous readings for the period of time the meter was in
service since last tested or from the time that it can be ascertained
the meter was in error, but in no case shall readings be adjusted for
a period of more than six months immediately preceding the discovery
of the error. If any meter or recording device shall fail to register
for any period, Gillette and Black Hills shall agree as to the amount
of electric capacity and energy furnished, and Black Hills shall
render a xxxx therefor.
6.3 Rights of Way. Gillette shall provide Black Hills
without cost a suitable location and rights of way for necessary lines
and equipment immediately adjacent to the point(s) of delivery set
forth in Section 6.1 for the purpose of fulfilling this Agreement.
All equipment installed by and at the cost of Black Hills shall remain
Black Hills' property and Black Hills shall have the right to inspect,
repair or remove the same at its discretion and at its own cost.
6.4 Facilities to be Provided by Gillette. Gillette shall
install and maintain at its own expense all other facilities on
Xxxxxxxx'x side of the point of delivery which are necessary for the
proper reception of electric capacity and energy and for its use
beyond such point including all facilities for the transformation of
capacity and energy from the delivery voltage set forth in Section
6.1. Gillette shall provide or arrange for facilities and continuous
staff in order to provide continuous information to and from Black
Hills' system control to accommodate Gillette supplied resources.
Gillette shall also provide facilities necessary for Gillette or Black
Hills to cause load curtailment on those portions of the Gillette
municipal electric system which are directly connected via Xxxxxxxx'x
facilities, to Black Hills' point(s) of delivery set forth in Section
6.1 as required by Prudent Utility Practice. Such facilities shall
meet approved standards of construction and be of such types as will
not interfere with other service rendered by Black Hills.
7. XXXXXXXX'X PROJECTIONS.
On the first day of each and every September thereafter,
Gillette shall furnish Black Hills a written forecast for a period of
five calendar years following such dates for which the forecasts are
being furnished setting forth the following information:
(a) Xxxxxxxx'x capacity and energy needs by season;
(b) anticipated sources to meet the capacity and energy
needs in the months when the sources are reasonably
expected to be available and the anticipated
transmission path;
(c) copies of contracts on which Gillette plans to rely to
fulfill its obligation to furnish capacity and energy
for Xxxxxxxx'x Requirements, pricing information to be
deleted from those contracts at Xxxxxxxx'x discretion;
and
(d) transmission facilities, existing or to be
constructed, over which Xxxxxxxx'x capacity and energy
needs are expected to be delivered.
Gillette shall use its best efforts in formulating the
forecasts to achieve as reliable a forecast as reasonably possible.
8. TRANSMISSION CAPACITY AND SERVICES.
8.1 Definitions. For the purpose of this Section 8, the
following capitalized terms shall have the respective meanings as
follows:
(a) "Additional 69 kV Facilities" are those transformation
and/or transmission lines and related facilities which
Black Hills determines under Prudent Utility Practice
are necessary from time to time to increase the
capacity of the Existing 69 kV Facilities to serve its
other customers and Gillette under this Agreement and
any other contracts and obligations.
(b) "Black Hills' Bulk Transmission System" is all of the
230 kV and larger transmission lines in which Black
Hills has complete or partial ownership, leasehold or
other rights, both now and from time to time during
the Term, and all terminal facilities of said
transmission lines, and 69 kV and 230 kV step-up
transformation facilities from Black Hills' owned and
leased generation.
(c) "East-West Ties" are those interconnections between
the transmission systems in the western part of the
United States and the transmission systems in the
eastern part of the United States which cannot be
interconnected without a DC converting facility.
(d) "Existing 69 kV Facilities" are the Existing 69 kV
Transmission Line and 70 MVA Transformer.
(e) "Existing 69 kV Transmission Line" shall mean the
present 69 kV transmission line and related facilities
from the Wyodak Substation to Gillette now used by
Black Hills to deliver capacity and energy to
Gillette.
(f) "Other Sources" are capacity and energy provided by
Gillette to meet its capacity and energy obligations
under Section 3.3.
(g) "Net Other Sources" is all capacity and energy
scheduled for Xxxxxxxx'x Requirements from Other
Sources regardless of whether it was scheduled or
delivered over Black Hills' Bulk Transmission System
or other systems; provided, Net Other Sources shall
not include capacity and energy from Gillette owned
generation delivered from that generation internal to
Xxxxxxxx'x distribution system.
(h) "70 MVA Transformer" is the transformer in the Wyodak
Substation of which 48 megawatts is owned by
PacifiCorp and 22 megawatts is owned by Black Hills.
(i) "PacifiCorp" is an Oregon corporation which operates
its electric utility division under the name of
Pacific Power & Light Company.
(j) "Wyodak Substation" is the substation located near the
Wyodak 330 MW electric generating plant east of
Gillette in Xxxxxxxx County, Wyoming.
8.2 Transmission Capacity to be Furnished by Black Hills.
During the Term, Black Hills shall maintain capacity in the Black
Hills' Bulk Transmission System capable of causing that portion of
Xxxxxxxx'x Requirements which Gillette is required to furnish under
Section 3.3 and may acquire from Net Other Sources under this
Agreement and which Gillette may cause to be delivered at 230,000
volts to any of the interconnections of Black Hills' Bulk Transmission
System as they exist from time to time west of the East-West Ties to
be available at 230,000 volts at the Wyodak Substation or other
substations which hereafter may be constructed in the vicinity of
Gillette and which are a part of Black Hills' Bulk Transmission
System.
8.3 Transmission Service at 230 kV to be Furnished by
Black Hills for Net Other Sources. During the Term, Gillette shall
cause its electric capacity and energy acquired from Net Other Sources
to be delivered west of the East-West Ties at 230,000 volts to Black
Hills' Bulk Transmission System to the extent such Net Other Sources
are located such that delivery can be accomplished. At this time the
interconnections so located are the Wyodak Substation and the
interconnection of Black Hills' Bulk Transmission System with the
Western Area Power Administration ("WAPA") at Xxxxxxx, Nebraska.
Because Black Hills' Bulk Transmission System is integrated with other
systems in the vicinity of Gillette and performs an electrical
function in causing such capacity and energy to be delivered to
Gillette on a firm basis, capacity and energy from Net Other Sources
which Gillette, or others from whom Gillette has contracted, causes to
be delivered to the Wyodak Substation or other substations which may
be hereafter constructed and interconnected to Xxxxxxxx'x electrical
system, whether a part of the Black Hills' Bulk Transmission System or
not, shall be considered for the purposes of this Section 8.3 and the
compensation at Section 8.4 as having been delivered by Gillette to
Black Hills' Bulk Transmission System and from which Black Hills in
turn has delivered such capacity and energy to Gillette. During the
Term, Black Hills shall cause electric capacity and energy from Net
Other Sources which is delivered pursuant to this Section 8.3 to be
delivered at 230,000 volts to Gillette at the Wyodak Substation or
other substations hereafter constructed which are interconnected to
Black Hills' Bulk Transmission System and Xxxxxxxx'x electrical system.
8.4 Compensation for 230 kV Transmission Capacity and
Service. Gillette shall pay Black Hills monthly upon invoices submitted
for the transmission service on Black Hills' Bulk Transmission System
and for reserving firm transmission capacity on Black Hills' Bulk
Transmission System during the Term as provided in Sections 8.2 and 8.3
an amount of $1.60 per kilowatt month times the greater of (i) 16,288
KW, (ii) the highest kilowatt demand of capacity (other than any self
generation internal to Xxxxxxxx'x system) recorded as received by
Gillette for Xxxxxxxx'x Requirements during the Term in excess of
23,268 KW prior to the Date of First Commercial Operation of NS #2 and
23,000 KW commencing on the Date of First Commercial Operation of NS #2
and thereafter, and (iii) that capacity in excess of 23,268 KW prior to
the Date of First Commercial Operation of NS #2 and 23,000 KW commencing
on the Date of First Commercial Operation of NS #2 and thereafter
scheduled for Gillette, during any one hour period during that calendar
month. All determinations of amounts of capacity under this Section 8.4
shall be adjusted for losses under Section 8.7. Payment of each monthly
xxxx shall be due and paid at the same time and under the same procedures
for the payment for capacity and energy purchased by Gillette from Black
Hills.
8.5 Transmission Service at 69 KV to be Furnished by Black
Hills for Net Other Sources.
8.5.1 Obligation of Black Hills. Until such time
that Black Hills either constructs Additional 69 kV Facilities or
under Prudent Utility Practice requires Additional 69 kV Facilities to
deliver the Net Other Sources capacity and energy at 69,000 volts to
Gillette, Black Hills shall furnish Gillette transformation and
transmission service to deliver to Gillette at 69,000 volts at the
points of delivery referenced in Section 6.1 capacity and energy
acquired by Gillette from Net Other Sources. Black Hills shall give
Gillette adequate lead notice before Additional 69 kV Facilities are
to be constructed or are required so as to give Gillette the
opportunity to provide facilities as provided at Section 8.5.2.
8.5.2 Obligation of Gillette. Gillette shall
furnish the facilities or contract with others so that after Black
Hills' obligation under Section 8.5.1 terminates, Gillette will cause
capacity and energy from Net Other Sources to be transformed and
delivered from Black Hills' Bulk Transmission System to Gillette.
8.5.3 Coordination. With just and reasonable
sharing of costs under established regulatory principles, Black Hills
shall coordinate its system with facilities furnished by Gillette or
others to accommodate the delivery of Net Other Sources capacity and
energy as provided at Section 8.5.2.
8.6 Compensation for 69 kV Service. During that time
Black Hills is furnishing 69 kV wheeling service for Net Other Source
capacity as provided in Section 8.5.1, Gillette shall pay Black Hills
monthly (at the same time and under the same procedures for payment
under Section 8.4) for the 230/69 kV transformation and 69 kV
delivery, including the stand-by ability to transform and deliver, of
Net Other Sources capacity and associated energy a wheeling charge
equal to $0.40 per KW-month times the greater of (i) 16,288 KW,
(ii) the highest kilowatt demand of capacity (other than any self
generation location internal to Xxxxxxxx'x system) recorded as
received by Gillette at 69 kV during any one hour period that month
and (iii) the highest kilowatt demand of capacity from Net Other
Sources, delivered by Black Hills at 69 kV during any one hour period
during the Term prior to the billing month. All determinations of
amounts of capacity under this Section 8.6 shall be adjusted for
losses under Section 8.7.
8.7 Losses. To compensate for transmission losses,
including transformation losses where metered at 69 kV, the demand
received, but not less than that scheduled for Gillette, from Net
Other Sources shall be multiplied by:
(i) for capacity from Net Other Sources metered at 69 kV,
1.05 during all times the Wyodak Plant is operating
and 1.07 during all times the Wyodak Plant is not
operating; or
Ev for capacity from Net Other Sources metered at 230 kV,
1.025 during all times the Wyodak Plant is operating
and 1.055 during all times the Wyodak Plant is not
operating,
with the product thereof to constitute the quantity of capacity for
which payment is to be made. To compensate for transformation losses,
the demand from Other Sources external to Gillette which are not
delivered over Black Hills' Bulk Transmission System but which Black
Hills transforms and delivers at 69 kV under Section 8.4 shall be
multiplied by 1.015 if metered at 69 kV, with the product to
constitute the quantity of transformed capacity received by Gillette
under the provisions of Section 8.6.
8.8 Regulation of Rates by FERC.
The rates and facilities charges imposed pursuant to
Sections 8.4 and 8.6 are subject to the regulatory jurisdiction of
FERC pursuant to the Federal Power Act (16 U.S.C. 791(a) et seq.)
and all rules and regulations pertaining thereto, all as amended from
time to time.
Black Hills shall have the right from time to time for the
purpose of establishing just and reasonable rates and achieving a
reasonable return to Black Hills for the transmission and
transformation service rendered to Gillette for capacity from Other
Sources from Black Hills' Bulk Transmission System, the 230/69 kV
transformation, and Black Hills' 69 kV transmission system, and for
reserving long-term firm transmission and transformation capacity in
its transmission system for Gillette to make application unilaterally
to FERC under Section 205 of the Federal Power Act (16 U.S.C.
824(d)) and pursuant to FERC's rules and regulations promulgated
thereunder for a change or adjustment in the dollar levels of the
rates and charges set forth in Sections 8.4 and 8.6 and any
superseding rates upon delivering a written notice thereof to
Gillette. Any such changes or adjustments shall become effective on
the date specified therein, subject to suspension or other action duly
taken by FERC, and without final approval by FERC. Gillette has the
right under Section 205 of the Federal Power Act (16 U.S.C. 824(d))
and rules and regulations thereunder to oppose any such change or
adjustment proposed by Black Hills and also has the right at any time
to unilaterally make application to FERC under Sections 206 or 211 of
the Federal Power Act (16 U.S.C. 824(e) and 824(j)) and pursuant to
FERC's rules and regulations promulgated thereunder for a change or
adjustment in the dollar levels of the rates and charges set forth in
Sections 8.4 and 8.6 and any superseding rate or for an order
requiring Black Hills to provide other transmission services.
The rates to be charged for the transmission and
transformation service and capacity shall be based on the following
cost allocation principles which underlie the presently effective
rates in Sections 8.4 and 8.6:
(a) Black Hills shall continue to assign directly to any
customer or customer group(s) the cost of transmission
facilities which serve that customer (or group of
customers) and over which energy flows only to such;
(b) the capacity and energy from Net Other Sources (as
defined for determining compensation at Section 8.4)
shall be considered to have been delivered over the
entire Black Hills' Bulk Transmission System other
than that portion referred to in (a) above, regardless
of whether the capacity and energy from Net Other
Sources is actually delivered to Gillette partially or
wholly over the transmission systems of others; and
(c) Black Hills shall not be entitled to reflect the cost
allocation principles set forth at Sections 4(d)(i)
and (iv) for the purpose of determining just and
reasonable rates for the obligations undertaken by
Black Hills under Sections 8.3 and 8.5.
In the event that regulatory jurisdiction over this
Agreement and/or rates charged by Black Hills to Gillette are vested
in any governmental body other than FERC, this provision and the
rights of Black Hills and Gillette as set forth herein shall be
subject to applicable regulatory laws, regulations and rules of such
governmental body.
8.9 Scheduling and Metering. All scheduling and metering
shall be as set forth in Section 3.7 of this Agreement.
8.10 Power Factor. The power factor of Xxxxxxxx'x load at
the point of delivery of power from Net Other Sources shall not be
less than 95% lagging or 95% leading at the time of the maximum
demand. Gillette shall install power factor corrective equipment on
its system so as to raise the power factor of its load at that point
to at least 95% lagging or 95% leading. In the event Gillette fails
to maintain a power factor of not less than 95% lagging and does not
install corrective equipment to raise its power factor as stipulated
above, the maximum monthly demand for power from Other Sources will be
increased by multiplying by 95% and dividing by the power factor
expressed in percent. This adjustment shall not apply for
demonstrated power factors above 95% lagging.
9. IMPOSSIBILITY OF PERFORMANCE.
Black Hills shall not be liable for failure of delivery of
electric capacity and energy, and Gillette shall not be liable for
failure to take or receive electric capacity and energy, where either
of such failures is due to an Act of God, governmental regulations,
governmental interference, court or commission orders, acts of the
public enemy, strikes or labor difficulties on the system of either
party hereto or of others, accidents, fire, explosion, mob violence,
droughts, floods, freeze-ups, weather conditions, failure of equipment
or, without limitation of the foregoing, any other cause beyond the
reasonable control of the party in default.
10. INDEMNIFICATION.
Neither party to this Agreement shall be liable for any loss
or damage to property or injury to or death of persons, whether
suffered by the other party, its agents or employees, or by any third
person, persons or corporation(s), resulting from the location, use or
operation of electrical or other equipment located on its side of the
point of delivery including the failure of any electrical equipment
caused by defects or inadequate capacity or from electric capacity and
energy present therein, and each party agrees to indemnify and save
the other party harmless from all such loss, damages, injuries or
death.
11. FILING WITH FERC.
Black Hills shall cause this Agreement to be filed with FERC
as required by the Federal Power Act and rules and regulations
relating thereto. Gillette shall sign a letter of concurrence to be
filed with FERC. Both parties agree to use best efforts to achieve
the acceptance by FERC of this Agreement for filing. This Agreement
shall not be in full force and effect nor shall any rights or
obligations of either party arise herefrom until this Agreement has
been permitted by FERC to become effective as a rate schedule without
amendment under the rules and regulations relating hereto.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
This Agreement shall not be assignable by either party without the
written consent of the other party except (i) to a successor in the
operations of its properties by reason of a merger, consolidation,
sale or foreclosure where substantially all such properties are
acquired by such a successor or (ii) to a loaning agency, entity or
institution for security purposes. Nothing herein shall prohibit
Gillette from becoming a participant in a governmental joint powers
board where governmental entities have joined together for mutual
benefit, but in that event this Agreement and Xxxxxxxx'x benefits and
obligations therein remain with Gillette only or a successor referred
to in (i). The obligations of the parties under this Agreement shall
survive and be binding on the parties during the entire Term
notwithstanding that Gillette sells or leases its municipal electric
system or a part thereof or executes other contracts the effect of
which causes entities other than Gillette (Xxxxxxxx'x Successors and
Assigns) to sell capacity and energy to customers for consumption
within the city limits of Gillette. Any of Xxxxxxxx'x Successors and
Assigns shall be entitled to the benefits of this Agreement and shall
be bound by the obligations herein. Any creation by Gillette of
Xxxxxxxx'x Successors and Assigns shall not relieve Gillette from its
obligations in this Agreement.
13. NOTICE.
Notice required to be given hereunder shall be deemed to
have been given if mailed, postage prepaid, to Black Hills
Corporation, P. 0. Xxx 0000, Xxxxx Xxxx, Xxxxx Xxxxxx 00000 on behalf
of Black Hills; and City of Xxxxxxxx, P. 0. Xxx 0000, Xxxxxxxx,
Xxxxxxx 00000 on behalf of Gillette. Either party may from time to
time change its mailing address for the purpose of receiving notice by
notifying the other party in writing of such change.
14. COMPLETE AGREEMENT.
At the time that this Agreement has been accepted for filing
and/or approved by FERC, this Agreement cancels and supersedes the
First Restated Electric Power and Energy Supply and Transmission
Agreement dated December 21, 1987. This Agreement constitutes the
complete and full agreement between the parties.
This Agreement is executed as of the day and year recited in
the first paragraph hereof and each of the officers executing this
Agreement represents that this Agreement has been approved and
authorized by their respective governing bodies as required by law
applicable thereto and that by such execution that authority to such
officer has been legally authorized and delegated by the respective
governing bodies of the parties.
CITY OF XXXXXXXX
By /c/Xxxxx X. Xxxxx
ATTEST Its Mayor
Clerk
(OFFICIAL SEAL)
BLACK HILLS POWER AND LIGHT
COMPANY
ATTEST By /c/Xxxxxxx X. Xxxx
Its President and Chief
Operating Officer
Its Secretary
(OFFICIAL SEAL)
EXHIBIT A
ELECTRIC SERVICE AGREEMENT
APPLICABLE
To the City of Gillette, Wyoming ("Gillette") for its service
requirements, provided under Agreement with Black Hills Power and
Light Company ("Black Hills"), for resale purposes and for its own
uses. Capitalized terms used herein shall have the same meaning
as defined in the Agreement to which this is attached as Exhibit
A.
CHARACTER OF SERVICE
Alternating current, 60 hertz, three phase, at the voltage of
Black Hills' transmission line which is a part of Black Hills'
existing interconnected transmission system.
MONTHLY BASIS OF BILLING
(a) Prior to the Date of First Commercial Operation of
NS #2:
Basic Service Charge $5,400 per month
Billing Demand Charge $11.46 per kilowatt of the
Billing Demand
Billing Energy Charge 2.22 per kilowatt hour of
Billing Energy
(b) From the Date of First Commercial Operation of NS #2
through December 31, 1996:
Basic Service Charge $5,400 per month
Billing Demand Charge $15.44 per kilowatt of the
Billing Demand
Billing Energy Charge 2.22 per kilowatt hour of
Billing Energy
(c) January 1, 1997 and thereafter:
Basic Service Charge $5,400 per month
Billing Demand Charge $14.57 per kilowatt of the
Billing Demand
Billing Energy Charge 2.22 per kilowatt hour of
Billing Energy
If the MDU Contract or any amended or substitute
agreement thereof is not approved or accepted for
filing by the Federal Energy Regulatory Commission for
any reason, this paragraph (c) shall not go into
effect and the rates under paragraph (b) above shall
continue to be in effect after December 31, 1996.
The Basic Service Charge is a given charge per month
to compensate Black Hills for the costs associated
with service which do not vary depending upon the
level of demand and energy provided by Black Hills.
BILLING DEMAND
The Billing Demand shall be 23,268 KW prior to the First
Date of Commercial Operation of NS #2 and 23,000 KW
commencing on the First Date of Commercial Operation and
thereafter for the balance of the Term.
Power Factor - The power factor of Xxxxxxxx'x load at the
point of delivery shall not be less than 95% lagging or 95%
leading at the time of the City's maximum demand during the
month. If the power factor of the City's load at the point
of delivery is found to be below 95% lagging or 95% leading
at the time of the maximum demand, the City shall install
power factor corrective equipment on its system so as to
raise the power factor of its load at that point to at least
95% lagging or 95% leading.
In the event the City fails to maintain a power factor of
not less than 95% lagging and does not install corrective
equipment to raise its power factor as stipulated above, the
monthly billing demand will be increased by multiplying by
95% and dividing by the power factor expressed in per cent.
This adjustment shall not apply for demonstrated power
factors above 95% lagging.
BILLING ENERGY
Billing Energy shall be measured in kilowatt hours as
provided in Section 3.2 of the Agreement.
PENALTY PROVISIONS -- UNAUTHORIZED OVERRUN
Unauthorized Overrun is subject to a penalty provision.
Unauthorized Overrun occurs when Black Hills furnishes
Xxxxxxxx capacity that was Xxxxxxxx'x obligation to serve
under Section 3.3.
The purpose of this penalty is to provide economic incentive
to comply with the terms and conditions set forth in the
Agreement for service rendered hereunder. The level of the
penalty charge set herein shall be 3 times the monthly
Demand Charge applied to the amount of the Unauthorized
Overrun.
FUEL AND ECONOMIC POWER ADJUSTMENT
For each month in which the cost of the fuel and purchased
economic power per kWh of Sales during the second calendar
month preceding the billing month exceeds or is less than
"A" as defined below, the energy charge shall be increased
or decreased, respectively by the following Adjustment
Factor:
Adjustment Factor = Fm - Fb ; Fb/Sb = A/kWh
Sm Sb
Where: "F" is the expense of fossil (including fuel from
company-owned or controlled sources) and nuclear fuel and
purchased economic power in the base (b) and current (m)
periods; "S" is the kWh sales in the base and current
periods; and "A" is (i) 1.087 prior to the First Date of
Commercial Operation of NS #2, and (ii) 1.035 on the First
Date of Commercial Operation of NS #2 and thereafter, all as
defined below:
(a) Fuel and purchased economic power costs (F) shall be
the cost of:
(i) Fossil and nuclear fuel consumed in Black
Hills' owned plants, and Black Hills' share of
fossil and nuclear fuel consumed in jointly
owned or leased plants.
(ii) The actual identifiable fossil and nuclear
fuel costs associated with energy purchased
for reasons other than identified in paragraph
(iii) following. Fuel costs included in
Variable Costs are allowed by paragraph (vi)
following.
(iii) The total cost of the purchase of economic
power, as defined herein, if the reserve
capacity of Black Hills is adequate
independent of all other purchases where non-
fuel charges are included in either Fb or Fm.
(iv) Energy charges for any purchase if the total
amount of energy charges incurred for the
purchase is less than Buyer's total avoided
variable costs.
(v) Less the cost of fossil and nuclear fuel
recovered through all intersystem sales
(including sales to Montana-Dakota Utilities
Co. under the MDU Contract).
(vi) Notwithstanding anything in 18 CFR 35.14 to
the contrary, the Variable Costs paid by Black
Hills to Pacific Power & Light Company under
the Power Sales Agreement between Black Hills
and Pacific dated December 31, 1983 and
designated as Pacific Power & Light Company
Rate Schedule FERC No. 236.
(b) KWh sales(s) as used herein shall be the sum of (a)
net generation, (b) purchases, (c) interchange-in,
less (d) intersystem sales (including sales to
Montana-Dakota Utilities Co. under the MDU Contract),
and (e) losses at 3.5 percent.
If the MDU Contract or any amended or substitute agreement
thereof is not approved or accepted for filing by the
Federal Energy Regulatory Commission for any reason, "A" in
the above formula will continue to be 1.035 on the First
Date of Commercial Operation of NS #2 and thereafter.
Said Adjustment Factor shall be rounded to the nearest 0.001
cents for billing purposes and applied to each kWh delivered.
For the purposes of the Fuel and Economic Power Adjustment
herein, the following definitions apply:
"Economic power" is capacity and energy purchased over a
period of 12 months or less where the total cost of the
purchase is less than Black Hills' total avoided variable
cost.
"Total cost of the purchase" is all charges incurred in
buying economic capacity and having such power delivered to
Black Hills' system. The total cost includes, but is not
limited to, capacity or reservation charges, energy charges,
adders, and any transmission or wheeling charge associated
with the purchase.
"Total avoided variable cost" is all identified and
documented variable costs that would have been incurred by
Black Hills had a particular purchase not been made. Such
costs include, but are not limited to, those associated with
fuel, startup, shutdown or any purchases that would have
been made in lieu of the purchase made.
The system reserve capacity criteria by which Black Hills'
system operator decides whether a reliability purchase is
required is as follows:
(i) Black Hills is not a member of any power pool.
For both long-range planning and for daily
operations, Black Hills' system operator
determines that a reliability purchase is
required when it is necessary to increase its
available resources to an amount equal to the
total of its projected on-system firm peak
load demand plus the yield of its largest base
load generation source.
(ii) Prior to the day NS #2 goes into commercial
operation, Black Hills' largest base load
generation source is its 20 percent leasehold
interest in the Wyodak Plant which yields
Black Hills 64 MW. When NS #2 goes into
commercial operation, Black Hills' largest
base load generation source is its interest in
the Xxxx Xxxxxxx 2 Plant which yields Black
Hills 80 MW.
(iii) When Black Hills' largest base load generation
is not in service, Black Hills has reserve
capacity it can call upon from PacifiCorp
under the Reserve Capacity Integration
Agreement, dated as of May 5, 1987 between
PacifiCorp and Black Hills.
(iv) When Black Hills' largest base load generation
is not in service and Black Hills unexpectedly
loses additional generation or firm purchase
contract sources, or any combination thereof,
Black Hills then will purchase additional
power and energy for reliability purposes.
Reserve capacity shall be deemed adequate if, at the time a
purchase was initiated, Black Hills' system reserve capacity
criteria was projected to be satisfied for the duration of
the purchase without the purchase at issue.
The total cost of the purchase must be projected to be less
than total avoided variable cost, at the time a purchase was
initiated, before any nonfuel purchase charge may be
included in Fm.
Black Hills shall make a credit to Fm after a purchase
terminates if the total cost of the purchase exceeds the
total avoided variable cost. The amount of the credit shall
be the difference between the total cost of the purchase and
the total avoided variable cost. This credit shall be made
in the first adjustment period after the end of the
purchase. If Black Hills fails to make the credit in the
first adjustment period after the end of the purchase, it
shall, when making the credit, also include in Fm interest
on the amount of the credit. Interest shall be calculated
at the rate required by 18 CFR 35.19a(a)(2)(iii), and
shall accrue from the date the credit should have been made
under this paragraph until the date the credit is made.
If a purchase is made of more capacity than is needed to
satisfy Black Hills' system reserve capacity criteria
because the total costs of the extra capacity and associated
energy are less than Black Hills' total avoided variable
costs for the duration of the purchase, the charges
associated with the non-reliability portion of the purchase
may be included in F.
INCOME TAX ADJUSTMENT
At any time prior to January 1, 1998 that Black Hills incurs
the burden of any state income tax or the federal corporate
income tax rates applicable to Black Hills are changed from
the current rate of 35 percent, the Energy Charge shall be
adjusted to reflect the increase or the decrease in the tax
costs as properly allocated to Xxxxxxxx under the same
allocation factors as used to determine the Energy Charge;
provided, no bills or rates will be increased by this tax
adjustment without filing with the Federal Energy Regulation
Commission under laws, rules and regulations relating
thereto. In consideration of the moratorium at Section 4(c)
and this Agreement, Xxxxxxxx agrees that such adjustments
shall be made and shall not object to or oppose such
adjustments. Any income tax changes effective after
December 31, 1997 shall be taken into account in determining
just and reasonable rates under Section 4(b).
RIGHTS FOR CHANGE IN RATES
The rights and limitations for changes in rates are set
forth in Section 4 of the Agreement.
PAYMENT
Bills will be rendered monthly, due upon presentation, and
paid by wire transfer (or similar method providing Black
Hills readily available dollars on the date paid) within
fifteen (15) days after the xxxx is received by Xxxxxxxx.
TERMS AND CONDITIONS
Service will be rendered under the Company's Standard Rules
and Regulations.
