EXHIBIT 10F-1
EXECUTION COPY
POWER PURCHASE AGREEMENT
BETWEEN
DEPERE ENERGY LLC
AND
WISCONSIN PUBLIC SERVICE CORPORATION
NOVEMBER 8, 1995
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PAGE
POWER PURCHASE AGREEMENT
BETWEEN DEPERE ENERGY LLC AND
WISCONSIN PUBLIC SERVICE CORPORATION
TABLE OF CONTENTS
ARTICLE TITLE PAGE
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ARTICLE I: DEFINITIONS. . . . . . . . . . . . . . . . . . . . 3
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 3
ARTICLE II: DESIGN AND CONSTRUCTION OF THE FACILITY . . . . . 12
2.1 The Facility . . . . . . . . . . . . . . . . . . . . 12
2.2 Company Interest in Design Specifications. . . . . . 12
2.3 Approval of Design Specifications. . . . . . . . . . 12
2.4 Approval of Critical Components. . . . . . . . . . . 14
2.5 Construction . . . . . . . . . . . . . . . . . . . . 15
2.6 Construction Milestone Schedule Assurances . . . . . 15
2.7 Delay in Date of Commercial Operation. . . . . . . . 15
2.8 Seller's Responsibility for Design and
Construction . . . . . . . . . . . . . . . . . . . . 17
2.9 Significant Technological Modifications. . . . . . . 17
2.10 Application of Confidentiality Provisions. . . . . . 18
ARTICLE III: OPERATION OF FACILITY. . . . . . . . . . . . . . 18
3.1 Dispatchability. . . . . . . . . . . . . . . . . . . 18
3.2 Operation of Facility. . . . . . . . . . . . . . . . 20
3.3 Obligations of the Parties.. . . . . . . . . . . . . 25
ARTICLE IV: SALE OF ENERGY AND CAPACITY . . . . . . . . . . . 27
4.1 Conditions Precedent to Sale and Purchase. . . . . . 27
4.2 Energy Sale and Purchase . . . . . . . . . . . . . . 28
4.3 Capacity Sale and Purchase . . . . . . . . . . . . . 28
4.4 Performance Standards. . . . . . . . . . . . . . . . 28
4.5 Power Characteristics. . . . . . . . . . . . . . . . 32
4.6 Parallel Operation . . . . . . . . . . . . . . . . . 32
4.7 Power Purchases by Seller. . . . . . . . . . . . . . 33
ARTICLE V: RATES FOR PURCHASE . . . . . . . . . . . . . . . . 33
5.1 Rates for Purchases. . . . . . . . . . . . . . . . . 33
ARTICLE VI: METERING, INSTRUMENTATION AND BILLING . . . . . . 36
6.1 Metering and Instrumentation Devices . . . . . . . . 36
6.2 Billing and Payment. . . . . . . . . . . . . . . . . 37
ARTICLE VII: TESTING AND CAPACITY RATINGS . . . . . . . . . . 37
7.1 Notice of Projected Rating . . . . . . . . . . . . . 37
7.2 Test of Capability . . . . . . . . . . . . . . . . . 38
7.3 Method of Testing and Results. . . . . . . . . . . . 38
7.4 Notification of Testing. . . . . . . . . . . . . . . 38
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ARTICLE TITLE PAGE
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ARTICLE VIII: PRE-OPERATION PERIOD. . . . . . . . . . . . . . 39
8.1 Permits and Approvals. . . . . . . . . . . . . . . . 39
8.2 Schedule, Reports and Inspection . . . . . . . . . . 40
8.3 Facility Design Data . . . . . . . . . . . . . . . . 40
8.4 Fuel Supply. . . . . . . . . . . . . . . . . . . . . 41
8.5 Water Rights . . . . . . . . . . . . . . . . . . . . 41
8.6 Voltage Schedule . . . . . . . . . . . . . . . . . . 41
8.7 Notice of Initial Energizing . . . . . . . . . . . . 41
8.8 Energy Delivered During Testing. . . . . . . . . . . 42
8.9 Preliminary Notice of Commercial Operation . . . . . 42
8.10 Notice of Compliance and Verification Prior
to Commercial Operation. . . . . . . . . . . . . . . 42
ARTICLE IX: DESIGN, INSTALLATION, OPERATION
AND MAINTENANCE OF INTERCONNECTION FACILITIES. . . . . . . . 43
ARTICLE X: FORCE MAJEURE. . . . . . . . . . . . . . . . . . . 43
10.1 Conditions of Excuse From Performance. . . . . . . . 43
10.2 Time Limits. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XI: EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . 44
11.1 List of Default Events . . . . . . . . . . . . . . . 44
11.2 Company Right to Suspend Performance . . . . . . . . 48
11.3 Seller's Right to Suspend Performance. . . . . . . . 48
11.4 Liquidated Damages . . . . . . . . . . . . . . . . . 49
11.5 Limit on Remedy. . . . . . . . . . . . . . . . . . . 53
11.6 No Consequential Damages . . . . . . . . . . . . . . 54
ARTICLE XII: CONDITIONS, REPRESENTATIONS AND WARRANTIES . . . 54
12.1 Conditions . . . . . . . . . . . . . . . . . . . . . 54
12.2 Seller's Warranties and Representations. . . . . . . 57
12.3 The Company Warranties and Representations . . . . . 59
12.4 Opinions of Counsel. . . . . . . . . . . . . . . . . 60
ARTICLE XIII: INDEMNITY AND LIMITATION OF LIABILITY . . . . . 60
13.1 Indemnification by Seller. . . . . . . . . . . . . . 60
13.2 Indemnification by the Company . . . . . . . . . . . 61
13.3 Worker's Compensation. . . . . . . . . . . . . . . . 62
13.4 Joint Negligence . . . . . . . . . . . . . . . . . . 62
13.5 No Partnership . . . . . . . . . . . . . . . . . . . 62
13.6 Responsibility for Employees . . . . . . . . . . . . 62
ARTICLE XIV: INSURANCE. . . . . . . . . . . . . . . . . . . . 63
14.1 Specified Coverages. . . . . . . . . . . . . . . . . 63
14.2 Insurance Certificates . . . . . . . . . . . . . . . 64
14.3 Coverage For Full Term . . . . . . . . . . . . . . . 64
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ARTICLE TITLE PAGE
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14.4 Insurance Proceeds . . . . . . . . . . . . . . . . . 64
ARTICLE XV: TERM. . . . . . . . . . . . . . . . . . . . . . . 64
15.1 Term . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XVI: COMPANY'S OPTION TO PURCHASE . . . . . . . . . . 66
16.1 Option to Purchase Upon Seller Default . . . . . . . 66
16.2 Limit on Option. . . . . . . . . . . . . . . . . . . 67
16.3 Right of First Refusal . . . . . . . . . . . . . . . 67
16.4 Termination. . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XVII: RECORDS . . . . . . . . . . . . . . . . . . . . 69
17.1 Company Records. . . . . . . . . . . . . . . . . . . 69
17.2 Seller Records . . . . . . . . . . . . . . . . . . . 70
ARTICLE XVIII: NOTICES. . . . . . . . . . . . . . . . . . . . 70
18.1 Certain Notices. . . . . . . . . . . . . . . . . . . 70
18.2 Notices in Writing . . . . . . . . . . . . . . . . . 71
18.3 Date of Notification . . . . . . . . . . . . . . . . 71
18.4 Oral Notice in Emergency . . . . . . . . . . . . . . 72
18.5 Primary Contact. . . . . . . . . . . . . . . . . . . 72
ARTICLE XIX: DISPUTE RESOLUTION . . . . . . . . . . . . . . . 72
19.1 Negotiation. . . . . . . . . . . . . . . . . . . . . 72
19.2 Mediation. . . . . . . . . . . . . . . . . . . . . . 72
19.3 Binding Arbitration. . . . . . . . . . . . . . . . . 72
19.4 Deadlines. . . . . . . . . . . . . . . . . . . . . . 73
19.5 Exclusive Procedure. . . . . . . . . . . . . . . . . 73
19.6 Survival of Procedure. . . . . . . . . . . . . . . . 73
19.7 Binding Upon Parties . . . . . . . . . . . . . . . . 74
ARTICLE XX: CONFIDENTIALITY . . . . . . . . . . . . . . . . . 74
20.1 Non-Disclosure to Third Parties. . . . . . . . . . . 74
20.2 Disclosure Permitted . . . . . . . . . . . . . . . . 74
20.3 Survival of Confidentiality. . . . . . . . . . . . . 74
ARTICLE XXI: ASSIGNMENT . . . . . . . . . . . . . . . . . . . 74
21.1 Restriction on Assignment. . . . . . . . . . . . . . 74
21.2 Finance Assignments. . . . . . . . . . . . . . . . . 75
ARTICLE XXII: MISCELLANEOUS . . . . . . . . . . . . . . . . . 77
22.1 Lack of Precedent. . . . . . . . . . . . . . . . . . 77
22.2 Compliance with Laws . . . . . . . . . . . . . . . . 78
22.3 Governing Law. . . . . . . . . . . . . . . . . . . . 78
22.4 Entire Agreement; Amendment. . . . . . . . . . . . . 78
22.5 Modification . . . . . . . . . . . . . . . . . . . . 78
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ARTICLE TITLE PAGE
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22.6 No Implied Waiver. . . . . . . . . . . . . . . . . . 78
22.7 Captions . . . . . . . . . . . . . . . . . . . . . . 79
22.8 Payment of Taxes . . . . . . . . . . . . . . . . . . 79
22.9 Severability . . . . . . . . . . . . . . . . . . . . 79
22.10 No Exclusivity/Dedication of Facilities. . . . . . . 79
22.11 Emission Standards . . . . . . . . . . . . . . . . . 79
22.12 Expenses . . . . . . . . . . . . . . . . . . . . . . 79
22.13 No Reliance. . . . . . . . . . . . . . . . . . . . . 79
22.14 Individual Responsibility. . . . . . . . . . . . . . 80
22.15 Exhibits . . . . . . . . . . . . . . . . . . . . . . 80
22.16 Further Assurances . . . . . . . . . . . . . . . . . 80
22.17 Survival . . . . . . . . . . . . . . . . . . . . . . 80
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Exhibits
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2.1A Site
2.1B Description of Facility
2.4 Critical Components
2.6 Construction Milestone Schedule
5.1 Capacity and Energy Price
7.2 Procedure to Establish Net Demonstrated Capability
9.1 Interconnection Facilities
11.4 Irrevocable Letter of Credit
12.1.2 Sample Calculation of Seller's Phase I Delay Compensation
12.1.3 Sample Calculation of Seller's Phase II Delay
Compensation
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POWER PURCHASE AGREEMENT
BETWEEN DEPERE ENERGY LLC AND
WISCONSIN PUBLIC SERVICE CORPORATION
AGREEMENT, entered into as of the 8th day of November, 1995, by
and between DEPERE ENERGY LLC, a limited liability company with its
headquarters at Xxxxx Corporate Center, 000 Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 (herein called the Seller), and
WISCONSIN PUBLIC SERVICE CORPORATION, with its headquarters at
000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxx (herein called the
Company) (hereinafter the parties hereto are sometimes referred to
collectively as the "Parties", or individually as a "Party").
W I T N E S S E T H:
WHEREAS, the Company is a public utility which operates a system
for generation and distribution of electric power and distribution
of natural gas, primarily in the State of Wisconsin, for wholesale
and retail sale; and
WHEREAS, Seller proposes to construct, own and/or operate a
facility for the generation of electricity and transfer of
electricity to the Company's electric transmission system, and, at
a later date, the cogeneration and transfer of steam to a paper
mill; and
WHEREAS, the Public Service Commission of Wisconsin ("Commission")
has determined that cogeneration and other non-traditional sources
of power are in the best interest of Wisconsin and must be
considered for integrated resource planning in establishing the
long-term electricity supply policies of Wisconsin. Consistent
therewith, the Company has adopted a "competitive bidding" process
under which competing proposals from all supply side sources
including IPPs and utilities have been evaluated in determining the
least cost generation supply alternatives for meeting the
requirements of its electrical customers with adequate reliability
at reasonable costs; and
WHEREAS, the Parties acknowledge that this Agreement is the result
of a two-stage CPCN process under the regulatory jurisdiction of
the Commission and, as well, is the result of a competitive bidding
process in stage one of that process, which determined the least
cost supply side option for meeting the Company's requirements for
electricity projected at the time of that bid review process; and
that this Agreement and the Facility shall be the subject of the
second stage of that process, and that in stage two, the Commission
will consider all issues subject to its jurisdiction under the
pertinent statutes and regulations associated with its CPCN
authority, which the Commission has not finally determined in stage
one of the CPCN process; and
WHEREAS, the Commission has, in that stage one of the CPCN process,
as the result of the competitive bid process in stage one and the
failure of the Rhinelander Energy Center project, ordered the
Company to negotiate in good faith to attempt to accomplish a power
purchase agreement between Seller and Company which is consistent
with, but in any case not less advantageous to, the Company's
customers than the bid submitted by Seller in that stage one; and
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WHEREAS, the Company and Seller believe that this Agreement is
consistent with and, in any case, no less advantageous to the
Company's customers than the bid submitted by Seller in stage one
of the CPCN process based upon the use of assumptions which are
consistent with the assumptions used by the Company in that stage
one bid evaluation; and
WHEREAS, by the execution of this Agreement the Company does not
intend to represent that as of the execution date of the Agreement
its current forecasted system electric demand is consistent with
the construction of the Facility and the purchase of the power
contemplated by this Agreement but rather expects to provide to
Seller pending the CPCN process and to the Commission in the CPCN
process the Company's best and most current information on the
"need" for the Facility issue; and
WHEREAS, Seller asserts that prior to the execution of this
Agreement, the Company's current forecasted system electric demand
was consistent with the construction of the Facility and the
purchase of the power contemplated by this Agreement and
specifically Seller asserts that (1) at the time the Company filed
its forecasted system electric demand in Advance Plan 6; (2) at the
time that the Company filed its CPCN application for the
Rhinelander Energy Center; (3) throughout the competitive bid
process conducted by the Company and the Commission; (4) at the
time of the Commission's Findings of Fact, Conclusions of Law and
Order, dated December 22, 1994, in Docket No. 6690-CE-156; and
(5) at the time that the Company and Rhinelander Paper Company
announced the cancellation of the Rhinelander Energy Center on
July 21, 1995, the Company's then current forecasted system
electric demand filed with the Commission was consistent with the
construction of the Facility and the purchase of the power
contemplated by this Agreement; and
WHEREAS, Seller has assured the Company that it understands and
appreciates the Company's operating and reliability requirements
and has access to the financial resources, technical knowledge,
operating experience, and fuel supply sufficient to design,
construct, and operate this Facility so as to meet the Company's
requirements; and
WHEREAS, Seller may from time to time require additional electric
services such as Supplementary Power, Maintenance Power, and Back-up
Power, and the Company desires to provide said services to
Seller under the terms and conditions provided herein.
NOW THEREFORE, in consideration of the mutual agreements contained
herein, the Parties agree as follows:
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ARTICLE I: DEFINITIONS
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1.1 Defined Terms
As used in this Agreement, the following terms shall have the
following meanings:
1.1.1 "AGREEMENT" means this Power Purchase Agreement
entered into by Seller and the Company, including
all Exhibits and any subsequent modifications or
amendments thereto.
1.1.2 "AVAILABILITY" shall have the meaning ascribed to
that term in Section 4.4.1.2 of this Agreement.
1.1.3 "BACK-UP POWER" is electric energy supplied by the
Company to replace energy ordinarily generated by
Seller's own generation equipment, which equipment
is not available during an unscheduled (i.e. forced)
outage of that Facility.
1.1.4 "BILLING CYCLE" means the period of time
(approximately 30 days) between monthly meter
readings made pursuant to this Agreement.
1.1.5 "CALENDAR YEAR" means a twelve-month period
beginning January 1 and ending December 31.
1.1.6 "CAPACITY" means the maximum volume of instantaneous
service (electrical power) that Seller is capable of
providing to the Company upon demand.
1.1.7 "CAPACITY PAYMENT" shall have the meaning ascribed
to that term in Section 5.1.1 of this Agreement.
1.1.8 "COMMENCEMENT OF CONSTRUCTION" shall mean the
issuance by Seller of a notice to proceed to the
construction contractor legally obligating Seller to
proceed with and carry out the construction of Phase
I of the Facility.
1.1.9 "COMMERCIAL OPERATION" means that (a) all start-up
and testing operations for Phase I are complete, (b)
a determination has been made by Seller and the
Company that Phase I of the Facility is able to
generate electricity for synchronization with, and
delivery into, the Company's system in accordance
with the terms of this Agreement, (c) the Company
has not notified Seller in writing pursuant to
Section 8.10 hereof that Seller has failed to comply
with all terms and conditions of this Agreement
required to be performed prior to the Date of
Commercial Operation, (d) the Company has inspected
and approved the operation of the Seller's
Interconnection Facilities, which approval shall not
be unreasonably withheld, (e) Seller has provided
the Company at least 60 days notice declaring its
intention to commence deliveries of Energy to the
Company on a specified date and (f) Seller shall
have established the Initial Net Demonstrated
Capability of Phase I of the Facility at the level
and in the manner required by Section 7.2.1.
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1.1.10 "COMMERCIAL OPERATION DEADLINE" means the absolute
deadline for the Date of Commercial Operation, which
shall be July 1, 2002, extended on a day-for-day
basis for (i) delays in the Scheduled Date of
Commercial Operation pursuant to Section 12.1.2,
(ii) delays pursuant to Section 8.1.3, and (iii)
delays due to Force Majeure in accordance with
Section 2.7.1.2(b).
1.1.11 "COMMISSION" means the Public Service Commission of
Wisconsin or any successor thereto.
1.1.12 "COMPANY" shall mean Wisconsin Public Service
Corporation and its successors and assigns in
accordance with this Agreement.
1.1.13 "COMPANY'S INTERCONNECTION FACILITIES" shall
mean those Interconnection Facilities on the
Company's side of the Interconnection Point.
1.1.14 "CONSTRUCTION MILESTONE SCHEDULE" shall have the
meaning ascribed to that term in Section 2.6 of this
Agreement.
1.1.15 "CONTEMPLATED ENERGIZING DATE" shall mean the date
upon which the Interconnection Facilities will be
prepared for initial energizing.
1.1.16 "CONTRACT DEVELOPMENT DEPOSIT" shall have the
meaning ascribed to that term in Section 11.4.3.2(b)
of this Agreement.
1.1.17 "CONTRACT PERFORMANCE DEPOSIT" shall have the
meaning ascribed to that term in Section 11.4.3.2(c)
of this Agreement.
1.1.18 "CONTRACT YEAR" shall mean initially the period
which begins on the Date of Commercial Operation and
ends on the following December 31 and thereafter the
periods which begin on January 1 and end on each
December 31 thereafter with a final year ending on
the Termination Date.
1.1.19 "CONVERSION OUTAGE" shall have the meaning ascribed
to that term in Section 3.2.2.4 of this Agreement.
1.1.20 "CPCN" shall mean a Certificate of Public
Convenience and Necessity issued by the Commission
pursuant to Section 196.491(3), Wis. Stats., and all
associated Commission approvals required for
construction of the Facility.
1.1.21 "CPCN DEVELOPMENT DEPOSIT" shall have the meaning
ascribed to that term in Section 11.4.3.2(a) of this
Agreement.
1.1.22 "CRITICAL COMPONENTS" shall mean those major
components described in Section 2.4 of this
Agreement.
1.1.23 "CURRENT NET DEMONSTRATED CAPABILITY" or "CNDC"
shall have the meaning ascribed to that term in
Section 7.2 of this Agreement.
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1.1.24 "DATE OF COMMERCIAL OPERATION" means the date that
"Commercial Operation" commences.
1.1.25 "DESIGN DOCUMENTS" shall mean documents describing
a design of the Facility in sufficient written
detail to identify: (a) the location of all major
equipment and all structures on the Site, including
all Critical Components; (b) the major items of
equipment and components, including all Critical
Components; (c) the relationship and connection of
major components and all major auxiliary systems;
(d) the expected operating, fuel use, and emission
characteristics of the equipment; (e) the control
and monitoring systems; (f) steam delivery and
extraction equipment; (g) fire protection and
related systems meeting National Fire Protection
Association Standard No. 850; and (h) other matters
usually contained in the design of similar projects.
The documents containing such design shall be in the
form of descriptive text, blueprints, charts and
graphs or other appropriate forms, and shall be
those used by Seller in its design of the Facility.
1.1.26 "DESIGN NET CAPABILITY PERFORMANCE CURVE" shall have
the meaning ascribed to that term in Exhibit 7.2 of
this Agreement.
1.1.27 "DESIGN NET HEAT RATE PERFORMANCE CURVE" shall have
the meaning ascribed to that term in Exhibit 7.2 of
this Agreement.
1.1.28 "DESIGN RATING" means the Net Energy Output the
Facility is designed to deliver to the Company over
a one-hour period, given an ambient temperature of
90 degrees Xxxxxxxxxx, 00 percent (%) relative
humidity, and the actual elevation of the Site when
the Facility is in its full output baseload mode of
operation, and as provided in Section 7.2.
1.1.29 "DISCOUNT RATE" shall mean a discount rate equal to
the lesser of (i) 9.5%, or (ii) the Company's pre-tax
economic cost of capital from the Company's last
Commission rate order.
1.1.30 "DISPUTE RESOLUTION PROCESS" shall have the meaning
ascribed to that term in Article XIX of this
Agreement.
1.1.31 "EFFECTIVE DATE" means the date set forth in the
first paragraph of page one of this Agreement.
1.1.32 "EFFECTIVE HOURS OF OPERATION" means the total
number of hours of actual operation of the
combustion turbine, adjusted to reflect twenty (20)
hours for each normal Successful Start and four
hundred (400) hours for each emergency Successful
Start.
1.1.33 "ENERGY" means electric energy expressed in
kilowatt-hours generated by the Facility, delivered
and sold to the Company.
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1.1.34 "ENVIRONMENTAL LAWS" shall mean all federal, state
and local laws, statutes, rules, ordinances,
regulations, orders and requirements relating to:
(a) pollution or the protection of the environment
(including air, surface water, groundwater, soil, land
service or subsurface strata); or (b) disposal,
emissions, discharges, spills, releases or threatened
releases of hazardous substances (as that term is
defined in federal and Wisconsin Law) to the
environment; or (c) the processing, distribution,
transport, treatment, disposal or handling of any
hazardous substance, hazardous material, solid or
hazardous waste, petroleum product, radioactive
material, or substances otherwise regulated on the
basis that they may present a danger to human health
or the environment.
1.1.35 "EXEMPT WHOLESALE GENERATOR" or "EWG" shall mean an
Exempt Wholesale Generator for which an application
for determination has been filed and EWG status has
not been denied by the FERC, provided, however, that
Seller shall be deemed to satisfy the requirements
of an EWG notwithstanding the denial of a request
for determination of EWG status if a subsequent
application is filed as soon as practicable, and EWG
status is thereafter granted.
1.1.36 "FACILITY" means the electric generating facility
that is designed, purchased, constructed, installed,
owned, and operated by the Seller under this
Agreement, as more particularly described in Exhibit
2.1.B hereto.
1.1.37 "FERC" means the Federal Energy Regulatory
Commission or any successor thereto.
1.1.38 "FINAL SPECIFICATIONS" shall have the meaning
ascribed to that term in Section 2.3 of this
Agreement.
1.1.39 "FORCE MAJEURE" means causes beyond the reasonable
control of and which occur without the fault or
negligence of the Party claiming Force Majeure,
including, without limitation, acts of God, wars,
insurrections, riots, explosions, fires, floods,
earthquakes, landslides, lightning, wind, labor
strikes or lockouts, sabotage or other similar
events. Failure of a step-up transformer shall also
be an event of Force Majeure.
Force Majeure specifically does not include:
(a) unavailability of funds or financing; (b) an event
caused by conditions of national or local economics or
markets; (c) delays in obtaining any regulatory
permits or approvals required by Seller;
(d) unavailability of fuel supply except in the case
where such unavailability is caused by the Company's
non-delivery to Seller of natural gas or No. 2 oil
purchased from the Company or transported by the
Company; (e) any delay in construction of the Facility
not itself caused by acts of God, wars, insurrections,
riots, explosions, fires, floods, earthquakes,
landslides, lightning, wind, labor strikes or
lockouts, sabotage or other similar events; and
(f) any failure of equipment which is not directly
caused by acts of God, wars, insurrections, riots,
explosions, fires, floods, earthquakes, landslides,
lightning, wind or sabotage.
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1.1.40 "FORCED OUTAGE HOURS" means the duration from when
the Facility failed to achieve a Successful Start in
response to a Company request or becomes unavailable
due to an outage during its operation after a
Successful Start to the time when the Seller
reasonably demonstrates that the Facility is
available for dispatch by the Company in a manner
reasonably satisfactory to the Company, calculated
in a manner consistent with Sections 3.2.2.2,
4.4.1.4, and 10.1.4.
1.1.41 "INCREMENTAL CAPACITY" means the projected capacity
of the Facility during Phase II which is in excess
of the Initial Net Demonstrated Capability.
1.1.42 "INITIAL NET DEMONSTRATED CAPABILITY" or "INDC"
means the Net Demonstrated Capability of the
Facility during Phase I, established in accordance
with Section 7.2.1 of this Agreement.
1.1.43 "INTERCONNECTION FACILITIES" means all the
materials, equipment and facilities installed and
utilized solely for the purpose of interconnecting
the electrical systems of Seller and the Company
that are necessary for Seller to economically,
reliably and safely deliver Energy from the Facility
to the electrical system of the Company. Materials,
equipment and facilities installed as
Interconnection Facilities and subsequently
incorporated into the electrical system of the
Company shall no longer be considered
Interconnection Facilities for the purposes of this
Agreement.
1.1.44 "INTERCONNECTION POINT" means the physical point or
points at which interconnection is made between the
electrical systems of Seller and the Company, as
more specifically described in Exhibit 9.1 hereto.
In the event that the Interconnection Point shall
consist of more than one physical point, then the
flow of energy across the Interconnection Point
shall at all times be equal to the instantaneous
total net flow of energy across all physical points
which shall constitute such Interconnection Point.
1.1.45 "ISO-CONDITIONS" are defined as 59 degrees
Fahrenheit ambient temperature, sea level and 60
percent (%) relative humidity.
1.1.46 "LAW" shall mean any federal, state or local law,
rule, regulation or governmental requirement of any
kind and the rules, regulations or orders
promulgated thereunder.
1.1.47 "LIQUIDATED DAMAGES" shall have the meaning ascribed
to that term in Section 11.4 of this Agreement.
1.1.48 "MAINTENANCE POWER" is electric energy supplied by
the Company during scheduled outages of Seller's
Facility.
1.1.49 "MAJOR OVERHAUL" shall have the meaning ascribed to
that term in Section 3.2.2.2 of this Agreement.
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1.1.50 "MANUFACTURER'S MAINTENANCE REQUIREMENTS" means the
minimum time period required for Scheduled Routine
Maintenance, and the maximum time which can elapse
between periods of Scheduled Routine Maintenance,
without endangering the Facility or its operator(s),
increasing the likelihood of Forced Outages or other
operational problems, or shortening the useful life
of the Facility or any component thereof, determined
in accordance with Prudent Electrical Practices and
the manufacturer's specifications for the Facility.
1.1.51 "METERING DEVICE" means an instrument or instruments
used for a purpose described in Section 6.1.1.
1.1.52 "METERING POINT" means the point on the 138 KV side
of the 13.8-138 KV step up transformer(s) where the
Metering Device(s) are located.
1.1.53 "MMBTU" means one million (1,000,000) British
Thermal Units.
1.1.54 "NAMEPLATE RATING" means the Net Energy Output the
Facility is designed to deliver to the Company over
a one-hour period, given International Standard
Organization referenced conditions ("ISO-Conditions")
corrected to the Referenced Site Conditions of the
Facility, when the Facility is in its full output
baseload mode of operation.
1.1.55 "NET DEMONSTRATED CAPABILITY" means the maximum
capacity expressed in kilowatts that the Facility's
generators can sustain under the method of testing
set forth in Article VII less any capacity utilized
for the Facility's Station Use and any losses
between the Facility and the Interconnection Point.
1.1.56 "NET DEMONSTRATED HEAT RATE" shall have the meaning
ascribed to that term in Exhibit 7.2.
1.1.57 "NET ENERGY OUTPUT" means the gross electrical
output from the generators less Station Use and any
losses between the Facility and the Interconnection
Point, measured at 138 KV.
1.1.58 "NICOLET PAPER MILL" shall mean the paper mill in
DePere, Wisconsin, owned as of the Effective Date by
International Paper Company, at which the Facility
will be located.
1.1.59 "OFF-PEAK HOURS" shall be all hours that are not
On-Peak Hours.
1.1.60 "OFF-PEAK MONTHS" shall be those months of the
Calendar Year that are not On-Peak Months.
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1.1.61 "ON-PEAK HOURS" refers to those hours Monday through
Friday from 9:00 a.m. to 7:00 p.m., except Holidays.
1.1.62 "ON-PEAK MONTHS" shall be the months of January,
July, August and December of each Calendar Year,
except as otherwise agreed to by the Parties.
1.1.63 "OUTSTANDING DEBT" shall mean all amounts due to any
Project Lender and secured by the Facility,
including, without limitation, principal and
interest due on any amounts advanced by any Project
Lender; any cost, fee, penalty, premium or other
amount due in connection with such amounts or the
prepayment thereof; and any cost, fee, penalty,
premium or other amount due in connection with the
termination of any interest swap, cap, collar or
other interest rate protection arrangement associated
with such amounts.
1.1.64 "PHASE I" shall mean the development, ownership,
operation and maintenance of a simple cycle
combustion turbine electric generating facility, as
more fully described in Exhibit 2.1.B.
1.1.65 "PHASE II" shall mean the development, ownership,
operation and maintenance of a combined cycle
combustion turbine electric generating facility,
incorporating some or all of the components of Phase
I of the Facility, as more fully described in
Exhibit 2.1.B.
1.1.66 "PHASE II COMMENCEMENT OF CONSTRUCTION" shall mean
the issuance by Seller of a notice to proceed to the
construction contractor legally obligating Seller to
proceed with and carry out the construction of Phase
II of the Facility.
1.1.67 "PHASE II COMMERCIAL OPERATION DEADLINE" means the
absolute deadline for the Phase II Date of
Commercial Operation, which shall be January 1,
2006, extended on a day-for-day basis for (i) delays
in the Scheduled Date of Commercial Operation
pursuant to Section 12.1.3, (ii) delays pursuant to
Section 8.1.3 and (iii) delays due to Force Majeure
in accordance with Section 2.7.1.4(b).
1.1.68 "PHASE II CONTRACT PERFORMANCE DEPOSIT" shall have
the meaning ascribed to that term in Section
11.4.3.2(d) of this Agreement.
1.1.69 "PHASE II DATE OF COMMERCIAL OPERATION" is the first
day Energy is delivered to the Company on or after
the completion of construction of Phase II of the
Project.
1.1.70 "PHASE II INITIAL NET DEMONSTRATED CAPABILITY" or
"Phase II INDC" means the Net Demonstrated
Capability of the Facility during Phase II,
established in accordance with Section 7.2.2 of this
Agreement.
1.1.71 "PHASE II SCHEDULED DATE OF COMMERCIAL OPERATION"
shall mean the first day of the twenty-ninth (29th)
month after the necessary permits and approvals are
received to commence construction for Phase II
(including, but not limited to, the CPCN for Phase
II), extended on a day-for-day basis for (i) delays
in the Phase II
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Scheduled Date of Commercial Operation pursuant to
Section 12.1.3, (ii) delays in the Phase II Scheduled
Date of Commercial Operation pursuant to Section
15.1.1.5, (iii) delays pursuant to Section 8.1.3 and
(iv) delays due to Force Majeure or a good-faith
invocation of the Dispute Resolution Process.
1.1.72 "PRACTICES IN THE INDEPENDENT POWER INDUSTRY" means
those practices, methods, and equipment, as changed
from time to time, that are commonly used in prudent
electrical engineering and operations to construct,
operate, and maintain equipment for the generation
and delivery of electricity comparable to the
Facility by independent power producers, lawfully
and with efficiency and dependability, and that are in
accordance with national safety codes dealing with
electrical engineering for the safe production of
electricity.
1.1.73 "PREVENTION ACTIVITIES" are those activities
referenced in Section 3.2.4.1(b) of this Agreement.
1.1.74 "PROJECT LENDER" shall mean any financial
institution or other creditor providing any
financing or refinancing from time to time in
connection with the development, construction,
ownership, operation, maintenance or improvement of
the Facility.
1.1.75 "PROJECT MANAGER" shall have the meaning ascribed to
that term in Section 19.1 of this Agreement.
1.1.76 "PRUDENT ELECTRICAL PRACTICES" means those
practices, methods, and equipment, as changed from
time to time, that are commonly used in prudent
electrical engineering and operations to construct,
operate, and maintain equipment for the generation
and delivery of electricity, lawfully and with
efficiency and dependability, and that are in
accordance with national safety codes dealing with
electrical engineering for the safe production of
electricity, and shall include Practices in the
Independent Power Industry to the extent that such
practices, methods and equipment are more stringent
than Prudent Electrical Practices.
1.1.77 "PUHCA" means the Public Utility Holding Company
Act, as amended from time to time.
1.1.78 "PURPA" means the Public Utility Regulatory Policies
Act of 1978, as amended from time to time.
1.1.79 "QUALIFYING FACILITY" shall have the meaning set
forth in PURPA and in Part 292 of the rules and
regulation of the FERC under PURPA.
1.1.80 "REFERENCED SITE CONDITIONS" are defined as 59
degrees Fahrenheit ambient temperature, the
elevation of the Facility with respect to sea level
and 60 percent (%) relative humidity.
1.1.81 "RULES" are such Rules, Regulations and Orders
promulgated by the Commission as shall be in effect
from time to time.
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1.1.82 "SCHEDULED DATE OF COMMERCIAL OPERATION" shall mean
the first day of the twenty-seventh (27th) month
after approval of the CPCN by the Commission,
extended on a day-for-day basis for (i) delays in
the Scheduled Date of Commercial Operation pursuant
to Section 12.1.2, (ii) delays in the Scheduled Date
of Commercial Operation pursuant to Section
15.1.1.2, (iii) delays pursuant to Section 8.1.3,
and (iv) delays due to Force Majeure or a good-faith
invocation of the Dispute Resolution Process.
1.1.83 "SCHEDULED ROUTINE MAINTENANCE" shall have the
meaning ascribed to that term in Section 3.2.2.1 of
this Agreement.
1.1.84 "SELLER" shall mean DePere Energy LLC and its
successors and assigns in accordance with this
Agreement.
1.1.85 "SELLER'S INTERCONNECTION FACILITIES" shall
mean those Interconnection Facilities on
Seller's side of the Interconnection Point.
1.1.86 "SENIOR EXECUTIVE" shall have the meaning ascribed
to that term in Section 19.1 of this Agreement.
1.1.87 "SITE" shall mean the parcel of real estate,
described in Exhibit 2.1.A, in the City of DePere,
Wisconsin, to be transferred from International
Paper Company and owned or leased by Seller and on
which the Facility will be constructed and operated.
1.1.88 "STARTING RELIABILITY" means the total number of
Successful Starts for delivery of Energy to the
Company divided by the total number of requested
Facility starts by the Company.
1.1.89 "STATION USE" means the kilowatts and the
kilowatt-hours of electricity which are used by
Seller solely for the purposes of excitation and
operation of the Facility.
1.1.90 "SUCCESSFUL START" means causing the Facility's
combustion turbine generator to achieve electrical
synchronization with the Company's system within
plus or minus fifteen (15) minutes of the time
requested by the Company, provided the Seller has
received the minimum notice required by Section
3.1.6. hereof for non-emergency situations, and, in
addition, during Phase II, the electrical
synchronization of the Facility's steam turbine
generator with the Company's system within a
reasonable time after electrical synchronization of
the Facility's combustion turbine generator with the
Company's system. Successful Start shall also
include any Facility start requested by the Company
if the request is subsequently withdrawn within two
(2) hours and fifteen (15) minutes before Seller
would have been required to achieve electrical
synchronization with the Company's system.
1.1.91 "SUPPLEMENTARY POWER" is electric energy supplied by
Company regularly used by Seller in addition to (a)
any electric energy generated by Seller's Facility
itself, and/or (b) provided by the Company as either
Back-up Power or Maintenance Power.
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1.1.92 "SYSTEM EMERGENCY" means a condition on or affecting
the Company system which is likely to result in
disruption of safe, adequate and continuous electric
service to the Company customers or could endanger
life or property, which condition is materially
adversely affected by the continued deliveries of
Energy from the Facility.
1.1.93 "TECHNOLOGICAL MODIFICATION" shall have the meaning
ascribed to that term in Section 2.9 of this
Agreement.
1.1.94 "TERM" shall mean the period of time during which
the Agreement is in effect and is described in
Article XV of this Agreement.
1.1.95 "TERMINATION DATE" shall have the meaning ascribed
to that term in Section 15.1.1 of this Agreement.
1.1.96 "TRANSFER INTEREST" shall have the meaning ascribed
to that term in Section 16.3.2 of this Agreement.
1.1.97 "UNSCHEDULED OUTAGE" means an interruption in the
generation and delivery of Energy under the
Agreement which interruption was not previously
scheduled by Seller pursuant to Section 3.2.2
hereof.
ARTICLE II: DESIGN AND CONSTRUCTION OF THE FACILITY
----------------------------------------------------
2.1 The Facility
The Company and Seller agree that the long-term electric
supply contemplated under this Agreement shall be provided by
an electric generation Facility, constructed in two phases,
which Facility shall be located at the Site described in
Exhibit 2.1.A., and shall have a projected Nameplate Rating
of 179,841 KW in Phase I and a projected Nameplate Rating of
237,246 KW in Phase II. The Facility shall have the
conceptual design characteristics set forth in Exhibit 2.1.B,
together with all support equipment, structures and
facilities other than the Company's Interconnection
Facilities. Interconnection Facilities are addressed in
Article IX of this Agreement.
2.2 Company Interest in Design Specifications
Because the Company has certain rights in the Facility under
this Agreement in certain circumstances, and because the
Company is relying upon the reliability of the Facility over
the life of this Agreement as one of the material reasons the
Company is entering into this Agreement in this form, Seller
acknowledges and agrees the Company has a material interest
in the specifications for, and construction of, the Facility.
2.3 Approval of Design Specifications
2.3.1 Seller, after the Effective Date, under a schedule
to be established within ninety (90) days of the
Effective Date, shall produce conceptual documents
for Phase I of the Facility and shall provide the
Company with copies of the conceptual
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documents for its review and information upon their
completion. Seller, under a schedule to be
established within ninety (90) days after receipt of
the CPCN, shall produce Design Documents for Phase I
of the Facility and shall provide the Company with
copies of the Design Documents for its review and
information upon their completion. The Company shall
notify Seller within thirty (30) working days after
receipt of the Design Documents of any objections and
suggested improvements or other comments the Company
has based upon a good-faith evaluation of the design
with respect to the reasonable reliability of the
Facility consistent with Prudent Electrical
Practices, and its impact on the Company's system.
If mutual agreement is not reached on what design is
consistent with this Agreement when the design is
premised on the Facility being constructed and
operated using Prudent Electrical Practices, the
disputed issues shall be submitted to the Dispute
Resolution Process. If the objections of the
Company are affirmed in whole or in part by the
Dispute Resolution Process, and if Seller does not
modify the Facility design in accordance with the
results of the Dispute Resolution Process as soon as
is reasonably practical (which time period shall be
determined within the Dispute Resolution Process),
the Company may terminate this Agreement without any
liability whatsoever to the Seller. If mutual
agreement is reached regarding the Design Documents,
or if Seller modifies the documents in accordance
with the decision of the Dispute Resolution Process,
Seller shall promptly proceed with developing
detailed engineering specifications ("Final
Specifications") and a vendor selection process for
Phase I of the Facility.
2.3.2 Seller, after the Effective Date, under a schedule
consistent with achieving the Phase II Date of
Commercial Operation in accordance with this
Agreement (which schedule shall be established at
least 36 months prior to the Phase II Scheduled Date
of Commercial Operation, or if mutual agreement is
not reached with respect to such schedule, within
the time period determined by the Dispute Resolution
Process), shall produce Design Documents for Phase
II of the Facility and shall provide the Company
with copies of the Design Documents for its review
and information upon their completion. The Company
shall notify Seller within thirty (30) working days
after receipt of the Design Documents of any
objections and suggested improvements or other
comments the Company has based upon a good-faith
evaluation of the design with respect to the
reasonable reliability of the Facility consistent
with Prudent Electrical Practices, and its impact on
the Company's system. If mutual agreement is not
reached on what design is consistent with this
Agreement when the design is premised on the
Facility being operated using Prudent Electrical
Practices, the disputed issues shall be submitted to
the Dispute Resolution Process. If the objections
of the Company are affirmed in whole or in part by
the Dispute Resolution Process, and if Seller does
not modify the Facility design in accordance with
the results of the Dispute Resolution Process as
soon as is reasonably practical (which time period
shall be determined within the Dispute Resolution
Process), the Company may terminate this Agreement
with respect to its obligation to purchase the
Incremental Capacity of the Facility without any
liability whatsoever to the Seller, in which case
Seller shall not proceed with the development of
Phase II without the Company's prior authorization;
provided, however, that the rights and obligations
of the Parties with respect to Phase I of the
Facility shall be unaffected by such termination.
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Notwithstanding anything herein to the contrary, the
Company shall have the right to have the terms of
this Agreement revised to require Seller to modify
the Design Documents for Phase II of the Facility to
reflect any improvements suggested by the Company,
which would constitute Technological Modifications
(as defined in Section 2.9 hereof) and which are
based on technological developments occurring after
the Effective Date, under such terms as will assure
Seller the recovery of its costs for such
improvements, and as will hold Seller harmless from
any additional risks or operating costs associated
with the improvements, and as will achieve an
equitable sharing between the Parties of the
benefits of the improvements. If mutual agreement
is reached regarding the Design Documents, or if
Seller modifies the documents in accordance with the
decision of the Dispute Resolution Process, Seller
shall promptly proceed with developing detailed
engineering specifications ("Final Specifications")
and a vendor selection process for Phase II of the
Facility.
2.4 Approval of Critical Components
Seller shall disclose to the Company the Final Specifications
and recommended vendors for the Critical Components for Phase
I and Phase II of the Facility sufficiently in advance of
making a request for proposal from potential vendors so that
the Company will have fifteen (15) days to provide comments
regarding such specifications or proposed vendors.
Components and material which will be considered Critical
Components are more specifically described and listed in
Exhibit 2.4.
2.4.1 The Company shall have the same objection rights
regarding the Critical Components of Phase I as is
established in Section 2.3.1 for the design of Phase
I. If an objection of the Company regarding
Critical Components based upon reliability concerns
is affirmed by the Dispute Resolution Process and if
Seller does not modify the Critical Components in
accordance with the results of the Dispute
Resolution Process as soon as is reasonably
practical (which time period shall be determined
within the Dispute Resolution Process), then the
Company shall have the right to terminate the
Agreement without any liability whatsoever to the
Seller.
2.4.2 The Company shall have the same objection rights
regarding the Critical Components of Phase II as is
established in Section 2.3.2. for the design of
Phase II. If an objection of the Company regarding
Critical Components based upon reliability concerns
is affirmed by the Dispute Resolution Process and if
Seller does not modify the Critical Components in
accordance with the results of the Dispute
Resolution Process as soon as is reasonably
practical (which time period shall be determined
within the Dispute Resolution Process), then the
Company shall have the right to terminate the
Agreement with respect to the Incremental Capacity
of the Facility without any liability whatsoever to
the Seller; provided, however, that the rights and
obligations of the Parties with respect to Phase I
of the Facility shall be unaffected by such
termination.
2.4.3 The award of any bid on a Critical Component (other
than the award of a bid on the combustion turbine to
Westinghouse Electric Corp.) shall be subject to the
Company's approval, provided, however, that (a) if
bids are obtained from at least
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three (3) independent bidders with reasonable
qualifications, the Company may not withhold its
approval for all competing bids; (b) notice of
disapproval and the reasons therefor must be given to
Seller within 10 days; and (c), in any event, approval
must not be unreasonably withheld with respect to any
bid.
2.5 Construction
Seller shall construct the Facility substantially in
accordance with the Design Documents, the Final
Specifications, applicable building codes and standards and
good engineering and construction practices. Seller shall
bear the sole responsibility and costs for complying with all
legal requirements associated with constructing the Facility,
including all environmental requirements.
2.6 Construction Milestone Schedule Assurances
The Construction Milestone Schedule for the Facility is set
forth in Exhibit 2.6. Seller shall provide the Company
written notice of the date upon which it meets each milestone
in the Construction Milestone Schedule. Timeliness in
meeting dates and milestones for construction of the Facility
is of the essence under this Agreement.
2.6.1 Seller shall, consistent with Prudent Electrical
Practices, include in contracts with vendors,
contractors and service providers, reasonable and
customary warranties and other enforceable
commitments to timely and competent performance
consistent with the Construction Milestone Schedule,
including performance bonds where appropriate,
required for maintenance of the Construction
Milestone Schedule.
2.6.2 Seller will submit its application for a CPCN to the
Commission at the earliest reasonable date after the
Effective Date which is consistent with the
regulations or operating procedures of the
Commission and is timely and consistent with meeting
the Construction Milestone Schedule. Except as
otherwise provided herein, the Date of Commercial
Operation shall occur on or before the Scheduled
Date of Commercial Operation, but in any case not
later than the Commercial Operation Deadline.
2.6.3 Seller shall submit its application for a CPCN (if
required) and an air permit for Phase II by
September 1, 2001. Except as otherwise provided
herein, the Phase II Date of Commercial Operation
shall occur on or before the Phase II Scheduled Date
of Commercial Operation, but in any case not later
than the Phase II Commercial Operation Deadline.
2.7 Delay in Date of Commercial Operation
2.7.1 Force Majeure Delays.
2.7.1.1 If an event in the Construction Milestone
Schedule is delayed due to an event of Force
Majeure or a good-faith invocation of the
Dispute Resolution Process, the Scheduled Date
of Commercial Operation and all milestone
dates subsequent to the event so delayed in
the portion of the
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Construction Milestone Schedule pertaining to
Phase I shall be extended, but by no more than
that reasonable amount of time commensurate with
the delay caused by the event, and not beyond the
Commercial Operation Deadline except as
provided in Section 2.7.1.2. Seller shall take
reasonable and prudent steps to offset or minimize
the effects of any delays.
2.7.1.2 If an event of Force Majeure or a good-faith
invocation of the Dispute Resolution Process
would delay the Date of Commercial Operation
to a date after the Commercial Operation
Deadline, the Company shall have the option
to:
(a) Terminate this Agreement pursuant to Section
11.1, in which case the Company shall not be
entitled to any Liquidated Damages or other
damages or compensation with respect to such
termination.
(b) Grant Seller a day-for-day extension of the
Commercial Operation Deadline equal to the
duration of the Force Majeure or good-faith
invocation of the Dispute Resolution Process,
up to a maximum of one hundred and eighty-three
(183) days, in which case, the Company
shall be entitled to collect Liquidated
Damages in the event that the Date of
Commercial Operation has not occurred by the
Commercial Operation Deadline, as so extended.
2.7.1.3 If an event in the Construction Milestone
Schedule with respect to Phase II is delayed
due to an event of Force Majeure or a good-faith
invocation of the Dispute Resolution Process,
the Phase II Scheduled Date of Commercial
Operation and all milestone dates subsequent to
the event so delayed in the portion of the
Construction Milestone Schedule pertaining to
Phase II shall be extended, but by no more than
that reasonable amount of time commensurate with
the delay caused by the event, and not beyond the
Phase II Commercial Operation Deadline except as
provided in Section 2.7.1.4. Seller shall take
reasonable and prudent steps to offset or minimize
the effects of any delays.
2.7.1.4 If an event of Force Majeure or a good-faith
invocation of the Dispute Resolution Process
would delay the Phase II Date of Commercial
Operation to a date after the Phase II
Commercial Operation Deadline, the Company
shall have the option to:
(a) Terminate this Agreement pursuant to Section
11.1 with respect to the Incremental Capacity
of the Facility; provided, however, that the
rights and obligations of the Parties with
respect to Phase I of the Facility shall be
unaffected by such termination, in which case
the Company shall not be entitled to any
damages or other compensation with respect to
such termination.
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(b) Grant Seller a day-for-day extension of the
Phase II Commercial Operation Deadline equal
to the duration of the Force Majeure or good-faith
invocation of the Dispute Resolution
Process, up to a maximum of one hundred and
eighty-three (183) days, in which case, the
Company shall be entitled to purchase the
Facility in accordance with Section 11.4.1.3
in the event that the Phase II Date of
Commercial Operation has not occurred by the
Phase II Commercial Operation Deadline, as so
extended.
2.8 Seller's Responsibility for Design and Construction
Actions or inactions by the Company, or rights of the Company
under this Agreement, to review, comment upon or approve the
design, vendors, contractors or construction of the Facility
shall not constitute a warranty or representation by the
Company that a design, vendor, contractor or mode of
construction consistent with such comments or lack of
comments shall cause the Facility to operate in conformance
with the requirements of this Agreement and no action or
inaction by the Company regarding its rights to review,
comment upon or approve designs, specifications, vendors or
contractors shall operate to diminish in any respect the
obligation of Seller, and the liability of Seller established
otherwise under this Agreement, to provide Capacity and
Energy consistent with the terms of this Agreement.
2.9 Significant Technological Modifications
During the Term of this Agreement, developments in electric
generation technology may permit a modification to the
Facility which would cause it to operate in a materially more
efficient manner, i.e., which would increase the efficiency
of converting BTUs of fuel into KWH of electricity by more
than three (3) percent (%) (herein "Technological
Modification"), provided, however, that the implementation of
Phase II of the Facility shall not itself be considered to be
a Technological Modification for purposes of this paragraph,
but pursuant to Section 2.3.2 hereof, the Company may request
a Technological Modification to Phase II. Seller shall not
make any material modification to the Facility, including a
modification in the nature of a Technological Modification to
the Facility without the prior consent of the Company, which
consent shall not be unreasonably withheld. If the
modification constitutes a Technological Modification, the
Company shall have a right to have the terms of this
Agreement revised to require Seller to make the Technological
Modification to the Facility under such terms as will assure
Seller the recovery of its costs for the Technological
Modification and as will hold Seller harmless from any
additional risks or operating costs associated with the
modification, and as will achieve an equitable sharing
between the Parties of the benefits of the Technological
Modification. The Company shall have the right to propose a
Technological Modification for the Facility which Seller
agrees to consider in good faith. The Parties agree to
pursue good-faith negotiations to accomplish revisions to the
terms of this Agreement to ensure Seller's recovery of its
costs and to achieve an equitable sharing of the enhanced
benefits of the proposed Technological Modification, as set
forth above. If the Parties are unable to reach mutual
agreement, the Company shall have the right to invoke the
Dispute Resolution Process of Article XIX of this Agreement.
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2.10 Application of Confidentiality Provisions
The confidentiality provisions of Article XX shall apply to
all information provided by either Party to the other Party
under this Article II or any other provisions of this
Agreement.
ARTICLE III: OPERATION OF FACILITY
-----------------------------------
3.1 Dispatchability
In addition to the Company's rights to reduce energy
deliveries pursuant to Section 3.2.4.1 and except during
Scheduled Routine Maintenance, Major Overhauls, and the
Conversion Outage pursuant to Section 3.2.2, the Company
shall have the right, to fully dispatch the Facility second
by second using remote automatic generation control, within
the design limits of the Facility, and subject to the
following notices:
3.1.1 The Company shall provide Seller with the type of
information utilized by the Company for its own
facilities regarding potential scheduling of
operation of the Facility as such information
becomes available.
3.1.2 By the last Friday of each month, the Company will
provide Seller with a projected schedule of
operations for the following month.
3.1.3 By Friday of each week, the Company will provide
Seller with a projected schedule of operations for
the following week. This schedule shall include for
each day of the week on an hour-by-hour basis the
periods during which the Company expects to dispatch
the Facility.
3.1.4 By 10:00 a.m. of each day, the Company will provide
Seller with its best estimate of the expected
Facility dispatch schedule for the twenty-four (24)
hours beginning 8:00 a.m. of the following day,
including start time, shutdown time and hourly
generation levels. The Company shall inform Seller
of any changes in the following day's Facility
dispatch schedule as soon as is reasonably
practical.
3.1.5 Notwithstanding any estimated schedule provided by
the Company, the actual dispatch schedule will be
determined by system operating requirements and
economic dispatch considerations, and may differ
substantially from the estimated schedule. In no
event shall the Company be liable to Seller for any
discrepancy between the actual dispatch schedule and
the projected schedule or any Seller costs or
damages arising directly or indirectly therefrom.
3.1.6 The Company will provide Seller with at least two
(2) hours oral notice, followed by written or
electronic confirmation within one (1) hour, of a
request to accomplish start up of the Facility under
normal operating conditions. Under electrical
system emergency conditions, the Company may request
a start up of the Facility as soon as possible. Any
oral notice or request shall be confirmed
electronically or in writing within one (1) hour.
The Seller shall use its reasonable
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---- ----
best efforts in responding to the Company's request to
expedite the start up of the Facility.
3.1.7 Upon oral notice by the Company of a request to shut
down the Facility, Seller shall shut down the
Facility according to the schedule requested by the
Company, using reasonable shut down ramp rates and
procedures, and in a manner consistent with the
technical capabilities of the Facility and the need
to provide continuity in the supply of steam to
Seller's thermal energy customer consistent with the
time required to bring the auxiliary boiler from a
warm condition to the pressure and temperature
necessary to provide steam from the auxiliary
boiler. Any oral notice or request shall be
confirmed electronically or in writing as soon as is
practical, but in any event within one (1) hour.
3.1.8 Notwithstanding anything in this Section 3.1 to the
contrary, the Company shall not dispatch the
Facility in a manner that would cause it to exceed
the following operating limitations, or such
alternate operating limitations as may be allowed
under Seller's air permit for the Facility, provided
that Seller shall not seek air permits which require
more restrictive operating limits than provided in
(a) and (b) below:
(a) Prior to the Phase II Date of Commercial
Operation, the Facility shall not be operated
more than two thousand (2,000) hours in any
consecutive twelve (12) month period, of which
not more than four hundred (400) hours shall
be at or below fifty percent (50%) of CNDC,
and not more than eight hundred (800) hours
shall be at or below seventy-five percent
(75%) of CNDC.
(b) Following the Phase II Date of Commercial
Operation, the Facility shall not be operated
more than eight thousand, three hundred and
twenty-two (8,322) hours in any consecutive
twelve (12) month period, of which not more
than one thousand, four hundred (1,400) hours
shall be at or below sixty percent (60%) of
CNDC, and not more than three thousand, nine
hundred (3,900) hours shall be at or below
seventy-five percent (75%) of CNDC.
(c) If, as a result of energy sales to third
parties, the Company is unable to dispatch the
Facility without exceeding the limits set
forth in this Section 3.1.8, Seller shall
reimburse the Company for the incremental cost
of energy to replace Energy that the Facility
would have been able to deliver to the Company
if Seller had not delivered energy to a party
other than the Company.
3.1.9 The combustion turbine's primary fuel is to be
natural gas with no. 2 oil (with a maximum sulfur
content of 0.05 percent) to serve as the backup
fuel. Use of no. 2 oil is intended only when
natural gas is not available. Seller shall give the
Company prior notice of its intention to operate the
Facility using no. 2 oil. The Company shall have
the right to supply natural gas to the Facility in
accordance with Section 5.1.3.4.
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3.1.10 Seller shall provide the Company notice as soon as
is reasonably practical of the Seller's schedule for
the delivery of energy to a party other than the
Company. During any hour that the Facility is
delivering Energy to the Company at the Company's
request, Seller shall not deliver energy from the
Facility, other than energy from capacity of the
Facility in excess of the CNDC, to a party other
than the Company without the Company's prior
approval, which approval shall not be unreasonably
withheld.
3.2 Operation of Facility
3.2.1 The Facility shall be operated and maintained by
Seller in accordance with Prudent Electrical
Practices, manufacturers' specifications and
recommendations, and otherwise in a manner to assure
that Capacity and Energy is reliably delivered in
the manner required by this Agreement. Seller shall
establish and at all times maintain operating
procedures and records, of a type which are
consistent with utility record keeping practices for
similar facilities regarding the operation and
maintenance of the Facility. Such records may be
audited by the Company. Seller shall employ
qualified personnel for operating the Facility and
for coordinating operations of the Facility with the
Company system. Seller shall ensure that adequate
personnel to perform its obligations under this
Agreement are on duty at all times, 24 hours a day
and 7 days a week. Other than when the Facility is
unavailable, due to Scheduled Routine Maintenance or
Major Overhauls as established pursuant to Sections
3.2.2.1 and 3.2.2.2, the Facility shall to the
limit of its net capabilities be available all of
the total On-Peak Hours and Off-Peak Hours.
3.2.2 Maintenance
3.2.2.1 Routine Maintenance. Seller shall
-------------------
maintain the Facility in accordance with
Prudent Electrical Practices. The Company
shall inform Seller on or before September
1st of each Calendar Year of the schedule
for Scheduled Routine Maintenance to be
conducted by Seller, which shall include
normal overhauls, for the Facility and
Seller's Interconnection Facilities for
the following Calendar Year; provided,
however, the Company will not schedule,
and Seller may not conduct, Scheduled
Routine Maintenance during On-Peak Months
or On-Peak Hours (if, with respect to
On-Peak Hours, it is practical to
accomplish such Scheduled Routine
Maintenance only during Off-Peak Hours),
unless otherwise agreed to by the Parties
in writing. The schedule for Scheduled
Routine Maintenance of the Facility
proposed by the Company shall be
consistent with the Manufacturer's
Maintenance Requirements.
(a) Either Party may request a change to the
schedule for Scheduled Routine
Maintenance, and the Party receiving such
a request shall not unreasonably refuse to
grant it.
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Page 21 of 82
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(b) If the Facility experiences an Unscheduled
Outage during an Off-Peak Month, Seller
may reschedule Scheduled Routine
Maintenance to coincide with the
Unscheduled Outage and treat the
Unscheduled Outage time as if it were
Scheduled Routine Maintenance.
3.2.2.2 Major Overhauls. For the purpose of
---------------
examination and repair of all internal
rotating and stationary components from
the inlet of the combustion turbine to the
exhaust of the combustion turbine,
or other non-routine maintenance required
pursuant to vendors' specifications or
otherwise required under Prudent
Electrical Practices ("Major Overhauls"),
Seller may have up to four-hundred and
ninety-five (495) hours in a 60-month
consecutive period for Major Overhauls,
and not in excess of five (5) Major
Overhaul periods during the Term of this
Agreement, and in any case, Major
Overhauls shall not occur any more
frequently than thirty-six (36) months
between such Major Overhauls. If Major
Overhauls cause the Facility not to be
available for more than 495 hours in a
60-month consecutive period, then such
hours of non-availability shall not in
and of themselves constitute a breach
of this Agreement by Seller but shall
be treated as Forced Outage Hours.
Major Overhauls shall be scheduled by
Seller by September 1 for the Calendar
Year following the notice date, and shall
be scheduled in Off-Peak Months. The
limitations on the scheduling of Major
Overhauls set forth in this
Section 3.2.2.2 are based on the
assumption that the Facility will be
operated as an intermediate load facility,
with no more than 5500 Effective Hours of
Operation annually, following the Phase II
Date of Commercial Operation. If the
Facility is actually operated for more
than 5500 Effective Hours of Operation in
any year, then the limitations on the
scheduling of Major Overhauls set forth in
this Section 3.2.2.2 shall be revised
based on the actual levels of dispatch of
the Facility, Prudent Electrical
Practices, and the Manufacturer's
Maintenance Requirements. To the extent
that the limitations on the scheduling of
Major Overhauls are revised due to the
delivery of energy from the Facility to a
party other than the Company, Seller shall
reimburse the Company for the incremental
cost of replacement power that results
from the revised limitation.
3.2.2.3 Duration of Maintenance. All maintenance
-----------------------
periods shall be of a duration which is no
longer than that reasonably necessary to
carry out the required maintenance
activities. Seller shall provide the
Company with a minimum of four (4) hours
notice of the expected cessation of
maintenance activities and shall promptly
inform the Company of the completion of
such activities.
3.2.2.4 Phase II Conversion Outage. Seller shall
--------------------------
have the one-time right to conduct an
extended conversion outage (the
"Conversion Outage") of up to four (4)
months in duration in order to implement
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conversion of the Facility from Phase I to
Phase II operation. The Conversion Outage
shall be considered a Major Overhaul for
purposes of Sections 3.2.1 and 4.4.1.2,
but shall not be considered a Major
Overhaul for purposes of Section 3.2.2.2.
Seller and the Company shall cooperate to
coordinate the scheduling of the
Conversion Outage.
3.2.3 Coordination. Seller and the Company shall
------------
coordinate the operation and maintenance of the
Facility with the operation of the Company system
and shall cooperate to minimize adverse impacts on
either the Facility or the Company system. As soon
as practical the Parties shall meet to discuss what
procedures are practical to accomplish the foregoing
and shall prepare a manual describing such
procedures to accomplish coordination, including:
3.2.3.1 Communication procedures between operating
personnel.
3.2.3.2 Billing and meter test schedules and
coordination.
3.2.3.3 Access procedures for the Company right of
access to the Facility.
3.2.3.4 Emergency procedures to cover unit trips
and other equipment failures.
3.2.3.5 Access to file information which is, by
the terms of this Agreement, available to
the other Party.
3.2.4 System Emergencies
3.2.4.1 Suspension of Deliveries. The Company
------------------------
shall not be obligated to purchase or
receive Energy and may require Seller to
reduce Energy deliveries or may disconnect
from the Facility at any time, from time
to time, if:
(a) A System Emergency condition or situation
exists; or
(b) The Company reasonably determines that
such reduction or disconnection is
necessary in order to permit the Company
to construct, install, repair, replace,
remove, investigate or inspect any part of
its electrical system that affects the
Facility (herein "Prevention Activities").
3.2.4.2 Timing of Prevention Activities. The
-------------------------------
Company shall make reasonable efforts to
undertake Prevention Activities during
Off-Peak Periods. The Company shall make
all reasonable efforts to notify and
coordinate such reductions or
disconnections with Seller, and, with
respect to Prevention Activities, the
Company shall provide Seller at least 48
hours prior notice. Any reduction or
disconnection required of Seller,
hereunder, shall be implemented in a
manner
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consistent with safe operating procedures,
and shall be for as short a duration as is
reasonably possible. The Company shall
promptly inform Seller of the cessation of
the condition causing the reduction or
disconnection and shall promptly resume
acceptance of Energy deliveries from the
Facility.
3.2.5 Corrective Action.
-----------------
3.2.5.1 In the event that the Company reasonably
determines that any equipment comprising
the Facility is not being operated or
maintained in accordance with this Section
3.2 or Section 3.1, it may so notify
Seller of such failure in writing. Within
7 days of the date of such notification or
within a reasonable time period if more
than 7 days is required for corrective
action, Seller shall either bring its
operating and maintenance practices into
conformity with the operating and
maintenance requirements set forth herein,
or, if Seller disagrees with the Company's
determination, the dispute shall be
submitted to the Dispute Resolution
Process. If the determination of the
Company is affirmed in whole or in part by
the Dispute Resolution Process, Seller
shall modify its operating and maintenance
practices in accordance with the results
of the Dispute Resolution Process within
7 days of the date of notification of the
results of such process, or within a
reasonable time period if more than 7 days
is required for corrective action.
3.2.5.2 In the event that Seller's operating and
maintenance practices are not modified to
the extent required under Section 3.2.5.1,
the Company may, at its sole discretion,
(i) cease making payments for Capacity
and/or accepting deliveries of Energy from
Seller until Seller has modified its
operating and maintenance practices as
provided therein, or (ii) (a) make or
arrange for a third party to make the
necessary changes; (b) manage or arrange
for a third party to manage and operate
the Facility until such time as the
Company receives adequate assurances of
Seller's ability to reassume its
responsibilities hereunder; or, (c) if
Seller refuses to cooperate with (a) or
(b), or if (a) or (b) are attempted and do
not achieve compliance with the operating
or maintenance standards contemplated by
this Agreement, then the Company may
declare Seller in default and exercise the
Company's rights under this Agreement.
The Company's full costs under (a) or (b)
shall be credited against Capacity and
Energy charges due hereunder until
recovered in the immediately following
Billing Cycles and any remaining Capacity
and Energy charges shall be paid to
Seller. During any period when the
Company is exercising its rights under (a)
or (b), it shall (x) operate and maintain
the Facility, or cause the Facility to be
operated and maintained, in accordance
with Prudent Electrical Practices; (y)
exercise, or cause to be exercised, the
same standard of care in the operation and
maintenance of the Facility as is
exercised with respect to
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---- ----
comparable electric generating facilities
owned by the Company, and (z) perform, or
cause to be performed, all of Seller's
obligations under any permit or legal
regulation or requirement pertaining to
the Facility, and any other agreement
pertaining to the Facility, including, but
not limited to, any thermal energy sale
agreement or fuel supply agreement,
provided, however, that the Company shall
not be obligated to perform any of
Seller's obligations under any agreement
until it has been provided with a copy of
the agreement, and provided further that
any such obligations under any thermal
energy sale agreement (I) do not impose
greater obligations on the Company than
would have been imposed on Seller if it
had continued to perform the agreement,
(II) include pricing provisions for the
energy component of the thermal energy
price which escalate on the basis of
generally accepted indices, and (III)
include pricing provisions for the fixed
component which do not decline over time.
Disputes regarding operation and
maintenance of the Facility shall be
subject to the Dispute Resolution Process.
3.2.6 Company Right of Access to Facility. With three (3)
-----------------------------------
working days' notice, the Company shall have a right
to go onto Seller's premises at the Facility to
review records pursuant to Section 17.2, to ask
reasonable questions, to inspect the Facility or to
review the construction, testing, operation or
maintenance of the Facility. Such entry by the
Company or its agents shall be subject to the
condition that the Company, its agents, contractors,
and employees shall observe and comply with all
applicable safety rules of Seller. Seller shall
provide an orientation presentation for all
personnel of the Company potentially having a need
to enter Seller's premises in accordance with this
Agreement. In addition, Seller may impose
reasonable confidentiality obligations with respect
to Seller's trade secrets upon the Company and its
agents, employees and contractors in accordance with
Article XX, and the Company shall make such
confidentiality obligations conditions of employment
of such employees, agents, and contractors.
3.2.7 Fire Prevention Practices. Throughout the Term,
-------------------------
Seller shall cause the Facility to meet the National
Fire Protection Association Standard No. 850,
"Recommended Practices for Fire Prevention for
Electric Generating Facilities" or its successor
standard.
3.2.8 Steam Contracts.
---------------
3.2.8.1 All contracts between Seller and its
customers for the sale and purchase of
steam from the Facility shall be in a form
which permits the assignment to, or the
assumption by, the Company of the
contracts in the event that the Company
becomes the owner or operator of the
Facility under the terms of this
Agreement.
3.2.8.2 During Phase II, during any period (except
during testing pursuant to Exhibit 7.2)
when (a) the Facility's steam cycle is in
operation at design conditions pursuant to
a dispatch request from the Company
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that does not require the Facility to
curtail steam exports to Nicolet Paper
Mill in order to meet such dispatch
request, and (b) Nicolet Paper Mill is in
operation, but substantially all of the
steam requirements of Nicolet Paper Mill,
up to a maximum of 143,000 pounds per
hour at 175 psig saturated (or an
equivalent quantity of steam), are not
procured from the Facility, the Energy
Payment shall be calculated based upon
a steam export equal to the lesser of
(i) 143,000 pounds per hour at 175 psig
saturated or (ii) Nicolet Paper Mill's
actual total steam demand.
3.2.8.3 During Phase II, during any period when
Section 3.2.8.2 is not applicable and the
Facility's steam cycle is in operation at
design conditions pursuant to dispatch
requests from the Company (except during
testing pursuant to Exhibit 7.2), the
Energy Payment shall be calculated based
upon a steam export equal to 128,000
pounds per hour at 175 psig saturated.
This Section 3.2.8.3 shall terminate
immediately, and for the remainder of the
Term of this Agreement (including renewal
terms), upon Seller's execution of a
contract to supply substantially all of
the steam requirements of Nicolet Paper
Mill, up to at least 143,000 pounds per
hour at 175 psig saturated (or an
equivalent quantity of steam).
3.3 Obligations of the Parties.
3.3.1 Seller's Obligations.
3.3.1.1 Prudent Electrical Practices
The Facility and Seller's Interconnection
Facilities shall be operated and maintained
in accordance with Prudent Electrical
Practices with respect to synchronizing,
voltage and reactive power control.
3.3.1.2 Permits and Approvals
Seller will, at its expense, acquire and
maintain in effect throughout the Term of
this Agreement all permits and approvals, as
required pursuant to Section 8.1 of this
Agreement.
3.3.1.3 Qualification of Facility or Exempt
Wholesale Generator
At all times, the Facility shall meet the
qualifications of a "Qualifying Facility"
within the meaning of PURPA, or the Seller
shall meet the qualifications of an Exempt
Wholesale Generator within the meaning of
PUHCA, and/or any applicable rules and
regulations of the FERC promulgated
thereunder, and Seller will make no
modifications, alterations or other
changes to its Facility or in the
operations of the Facility or other
facilities of Seller which would cause
the Facility to fail
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to meet the criteria for such a
qualification which may be in effect from
time to time during the Term of this
Agreement.
3.3.1.4 Fuel Supply
Seller will procure a supply of fuel
necessary to meet its obligations under
the Agreement in accordance with
Section 8.4. Seller further warrants and
represents that any fuel oil used to
operate the Facility shall not emit more
than .30 pounds of sulfur dioxide per
MMBTU. This Agreement shall not be
construed or interpreted as creating an
obligation on the part of the Company to
arrange for or otherwise supply to Seller
the fuel requirements of Seller except as
otherwise specifically provided in
Section 5.1.3.
3.3.1.5 Steam Contracts
All contracts between Seller and its
customers for the sale and purchase of
steam from the Facility are in a form
which permits the assignment to, or the
assumption by, the Company of the contracts
in the event that the Company becomes the
owner or operator of the Facility under the
terms of this Agreement.
3.3.1.6 Fair Labor Standards Act
Seller is and shall be for the duration of
this Agreement in compliance with all
applicable requirements of the Fair Labor
Standards Act of 1938, as amended, including
without limitation the Regulations and
Orders of the Administrator of the Wage and
Hour Division issued under Section 14.
3.3.2 The Company's Obligations.
3.3.2.1 Prudent Electrical Practices
The Company shall operate and maintain the
Company's Interconnection Facilities in
accordance with Prudent Electrical Practices
with respect to synchronizing, voltage and
reactive power control.
3.3.2.2 Permits and Approvals
The Company will acquire and maintain in
effect throughout the Term of this Agreement
all permits and approvals required to
construct, operate and maintain the
Company's Interconnection Facilities. The
Company further warrants and represents that
it will diligently cooperate with Seller in
providing such information or taking such
actions as may be reasonably required to
support Seller's permit applications
necessary to construct, operate and maintain
the Facility. Seller agrees to reimburse
the Company for its reasonable costs
incurred in carrying out its obligation
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to cooperate to the extent such cooperation
exceeds the Company's existing obligations
as a public utility.
3.3.2.3 Fair Labor Standards Act
The Company is and shall be for the duration
of this Agreement in compliance with all
applicable requirements of the Fair Labor
Standards Act of 1938, as amended, including
without limitation the Regulations and
Orders of the Administrator of the Wage and
Hour Division issued under Section 14
thereof.
ARTICLE IV: SALE OF ENERGY AND CAPACITY
----------------------------------------
4.1 Conditions Precedent to Sale and Purchase
The Company's obligation to commence the purchase of Energy
and Capacity under this Agreement is contingent upon Seller's
submittal to the Company of documents, certificates or other
evidence, at least sixty (60) days before the Date of
Commercial Operation (excluding any item which, by its
nature, is not available sixty (60) days before the Date of
Commercial Operation), demonstrating all of the following:
4.1.1 Seller has the right to operate the Facility and
deliver Capacity and Energy for the Term of the
Agreement.
4.1.2 The Facility, if operated with Prudent Electrical
Practices, can be expected to have a useful life at
least equal to the Term of the Agreement.
4.1.3 Phase I of the Facility is being constructed
pursuant to terms of this Agreement.
4.1.4 The Facility is a Qualifying Facility, the Seller is
an Exempt Wholesale Generator, or the Facility and
the Seller are otherwise not subject to rate
regulation (except, if Seller is an Exempt Wholesale
Generator, wholesale rate regulation pursuant to the
Federal Power Act).
4.1.5 Certificates of Insurance.
4.1.6 Seller has received all necessary permits and
approvals described in Section 8.1.
4.1.7 All information needed for the Company to perform
its interconnection study, and design, construct and
install the Company's Interconnection Facilities in
accordance with Article IX.
4.1.8 Compliance with all requirements of Article VIII,
Pre-Operation Period, in accordance with the
schedule set forth therein.
4.1.9 Seller has provided all rights-of-way and easements
required pursuant to Section 12.2.7.
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4.1.10 Compliance with Environmental Laws.
4.2 Energy Sale and Purchase
4.2.1 Seller agrees to make available and sell to the
Company and the Company agrees to accept and
purchase from Seller the Energy output of the
Facility up to, but not to exceed the CNDC at the
price, subject to dispatch and curtailment rights
and to the other terms and conditions, set forth in
this Agreement, commencing with the Date of
Commercial Operation and ending upon termination of
the Agreement.
4.2.2 During any Billing Cycle after the Phase II
Commercial Operation Date in which Seller sells
energy or capacity from the Facility to any party
other than the Company during periods when the
Facility is not dispatched by the Company, Seller
agrees to compensate the Company for the impact on
the Company resulting from such sale by reducing the
Company's Capacity Payment in accordance with the
following formula:
RCP = OCP x [1 - (MWS divided by TMWH)]
Where:
RCP = the revised Capacity Payment for the
Billing Cycle.
OCP = the original Capacity Payment for the
Billing Cycle.
MWS = MWH sold to a third party during the
Billing Cycle.
TMWH = the total number of net MWH generated by
the Facility during the Billing Cycle.
4.3 Capacity Sale and Purchase
Seller agrees to sell and the Company agrees to purchase
Capacity equal to the CNDC as determined pursuant to Exhibit
7.2, subject to terms and conditions of this Agreement,
commencing with the Date of Commercial Operation and ending
upon termination of the Agreement. Seller shall not sell
Capacity from the Facility to a third party except in excess
of one hundred and five percent (105%) of INDC. Seller
agrees it will not sell Capacity in excess of one hundred
and five percent (105%) of INDC without first offering such
Capacity to the Company on the same terms and conditions as
provided in this Agreement.
4.4 Performance Standards
4.4.1 Availability
4.4.1.1 In the event that the Availability of the
Facility is less than ninety-three percent
(93%) during any Calendar Year during
Phase I or Phase II or greater than
ninety-five percent (95%) during any
Calendar Year during Phase II, the
Capacity Payment that would
-133-
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otherwise be due under this Agreement for
the following Calendar Year shall be
multiplied by an adjustment factor
determined by one of the following
formula:
(a) In the event the Availability is greater
than ninety-five percent (95%) during any
Calendar Year during Phase II,
Adjustment Factor = 1.0753 x Availability
(b) In the event the Availability is less than
ninety-three percent (93%) and greater
than or equal to ninety percent (90%)
during any Calendar Year during Phase I or
Phase II,
Adjustment Factor = 1.0753 x Availability
(c) In the event the Availability is less than
ninety percent (90%) and greater than or
equal to eighty-five percent (85%) during
any Calendar Year during Phase I or
Phase II,
Adjustment Factor = (2.355 x Availability)
- 1.152
(d) In the event the Availability is less
than eighty-five percent (85%) and greater
than seventy percent (70%) during any
Calendar Year during Phase I or Phase II,
Adjustment Factor = (5.670 x Availability)
- 3.967
(e) In the event that the Availability of the
Facility is less than or equal to seventy
percent (70%) during any Calendar Year
during Phase I or Phase II, the Capacity
Payment that would otherwise be due under
this Agreement for the following Calendar
Year shall be reduced to zero.
4.4.1.2 Availability is defined as total hours in
the twelve (12) month period less hours of
outages due to an event of Force Majeure,
Scheduled Routine Maintenance hours, Major
Overhaul hours, and Forced Outage Hours in
the twelve (12) month period, divided by
the total hours in the twelve (12) month
period less hours of outages due to an
event of Force Majeure and Major Overhaul
hours, and is expressed in the following
formula:
A = (HR - FMH - MOH - SRMH - FOH) divided by
(HR - FMH - MOH)
Where:
------
A = Availability
HR = Hours in the year
FMH = Force Majeure hours
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MOH = Major Overhaul hours
SRMH = Scheduled Routine Maintenance hours
FOH = Forced Outage Hours
4.4.1.3 In the event that Seller fails to maintain
a minimum Availability equal to
eighty-five percent (85%) (a) during any
two (2) Calendar Years during any five (5)
Calendar Year period, or (b) during any
five (5) Calendar Years during the initial
Term of this Agreement, the Company may
declare the Seller to be in default under
this Agreement. For purposes of this
Section 4.4.1.3, in calculating the
Availability of the Facility during any
Calendar Year in which the Facility is
unavailable as of the beginning of the
Calendar Year due to a Forced Outage which
commenced during the preceding Calendar
Year, hours during the subsequent Calendar
Year during which the Forced Outage
continues shall be included in the
calculation for the preceding Calendar
Year, and shall be excluded from the
calculation for the subsequent Calendar
Year. In such a case, the formula set
forth in Section 4.4.1.2 shall be
calculated by including the hours during
which such Forced Outage continues in the
calculation of HR and FOH for the
preceding Calendar Year, and by excluding
such hours from the calculation of HR and
FOH for the subsequent Calendar Year.
4.4.1.4 When calculating Availability, any partial
derating of the plant from the CNDC shall
be accounted for by converting the number
of hours of partial derating to an
equivalent number of Forced Outage Hours.
The equivalent number of Forced Outage
Hours will be determined by multiplying
the derated operating time (in hours) by
the percentage derating from CNDC.
4.4.1.5 Seller shall report Availability daily to
the Company and maintain appropriate logs
and records sufficient to permit the
calculations required by this Section.
4.4.2 Seller shall be obligated to maintain a minimum
Facility Starting Reliability in accordance with
this Section.
4.4.2.1 Starting with the two hundred and eleventh
(211th) Facility start, and continuing
thereafter, Seller shall be obligated to
maintain a minimum Starting Reliability of
ninety percent (90%), based on the
two hundred (200) most recent Facility
starts. In the event that the Starting
Reliability during such period is less
than ninety percent (90%), Seller shall
have six (6) months in which to increase
the Starting Reliability of the Facility
to ninety percent (90%), based on the
previous one hundred (100) Facility
starts, plus the next one hundred (100)
Facility starts. Provided that the
Company has requested no less than one
hundred (100) Facility starts during such
period, the Company may declare the Seller
to be in default in the
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event that it has not increased the
Starting Reliability of the Facility to
ninety percent (90%) by the end of such
six (6) month period, or such longer
period as is required for the Company to
request one hundred (100) Facility starts.
4.4.2.2 Starting with the thirty-first (31st)
Facility start, Seller's Capacity Payment
shall be subject to reduction in
accordance with the following paragraphs,
provided, however, that if more than one
such paragraph is applicable, only the
paragraph which results in the greatest
reduction shall be applied.
(a) Starting with the thirty-first (31st)
Facility start, in the event that the
Starting Reliability for the twenty (20)
most recent Facility starts during such
period is less than seventy-five percent
(75%), the Capacity Payment that would
otherwise be due under this Agreement for
the period shall be multiplied by a
fraction, the denominator of which is
seventy-five percent (75%), and the
numerator of which is the Starting
Reliability of the Facility during such
period. The reduction shall be applicable
to Capacity Payments for the period
commencing with the first Facility start
that causes the Starting Reliability to be
reduced below seventy-five percent (75%),
and shall continue until the first
Facility start that causes the Starting
Reliability to be increased to or above
seventy-five percent (75%). If the
Starting Reliability changes during any
month in a manner that affects Capacity
Payments pursuant to this paragraph,
Capacity Payments for such month shall be
prorated accordingly.
(b) Starting with the fifty-first (51st)
Facility start, in the event that the
Starting Reliability for the forty (40)
most recent Facility starts during such
period is less than eighty-five percent
(85%), the Capacity Payment that would
otherwise be due under this Agreement for
the period shall be multiplied by a
fraction, the denominator of which is
eighty-five percent (85%),and the
numerator of which is the Starting
Reliability of the Facility during such
period. The reduction shall be applicable
to Capacity Payments for the period
commencing with the first Facility start
that causes the Starting Reliability to be
reduced below eighty-five percent (85%),
and shall continue until the first
Facility start that causes the Starting
Reliability to be increased to or above
eighty-five percent (85%). If the
Starting Reliability changes during any
month in a manner that affects Capacity
Payments pursuant to this paragraph,
Capacity Payments for such month shall be
prorated accordingly.
(c) Starting with the one hundred and eleventh
(111th) Facility start, in the event that
the Starting Reliability for the one
hundred (100) most recent Facility starts
during such period is less than ninety
percent (90%), the Capacity Payment that
would otherwise be due under this
Agreement for the period shall be
multiplied by a fraction, the
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denominator of which is ninety percent
(90%), and the numerator of which is the
Starting Reliability of the Facility
during such period. The reduction shall
be applicable to Capacity Payments for the
period commencing with the first Facility
start that causes the Starting Reliability
to be reduced below ninety percent (90%),
and shall continue until the first
Facility start that causes the Starting
Reliability to be increased to or above
ninety percent (90%). If the Starting
Reliability changes during any month in a
manner that affects Capacity Payments
pursuant to this paragraph, Capacity
Payments for such month shall be prorated
accordingly.
(d) Starting with the two hundred and eleventh
(211th) Facility start, in the event that
the Starting Reliability for the two
hundred (200) most recent Facility starts
during such period is less than
ninety-five percent (95%), the Capacity
Payment that would otherwise be due under
this Agreement for the period shall be
multiplied by a fraction, the denominator
of which is ninety-five percent (95%), and
the numerator of which is the Starting
Reliability of the Facility during such
period. The reduction shall be applicable
to Capacity Payments for the period
commencing with the first Facility start
that causes the Starting Reliability to be
reduced below ninety-five percent (95%),
and shall continue until the first
Facility start that causes the Starting
Reliability to be increased to or above
ninety-five percent (95%). If the
Starting Reliability changes during any
month in a manner that affects Capacity
Payments pursuant to this paragraph,
Capacity Payments for such month shall be
prorated accordingly.
4.4.2.3 Seller shall maintain appropriate logs and
records sufficient to permit the
calculations required by this Section.
4.4.3 The reduction in Capacity Payments and right to
declare Seller in default as provided in this
Section 4.4 shall be the Company's sole and
exclusive remedy for Seller's failure to maintain
Availability or Starting Reliability in the
operation of the Facility.
4.5 Power Characteristics
The Energy to be made available under this Agreement shall be
three-phase, 60 hertz, alternating current, and shall be made
available at the Interconnection Point at a nominal voltage
of 138 KV.
4.6 Parallel Operation
Seller shall operate the Facility with its speed governors,
all applicable protective apparatus, and voltage regulators
in service whenever the Facility is connected to or operated
in parallel with the electric system of the Company. Seller
shall not, in response to the Company system frequency
deviations, cause the Facility to automatically or
instantaneously
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disconnect with the Company system or trip any generating
unit comprising the Facility unless the frequency of the
Company system is below 58.3 hertz or above 63.0 hertz.
4.7 Power Purchases by Seller
4.7.1 All Station Use and losses between the Facility and
the Metering Point shall be generated by the
Facility at all times the Facility is generating
Energy for sale to the Company.
4.7.2 The energy flowing into the Facility (e.g. Back-up
Power, Maintenance Power, and Supplementary Power)
through the Interconnection Point during periods
when the Facility is not generating energy for sale
to the Company shall be a subtraction from Net
Energy Output as recorded at the Metering Point if
the Company was not providing fuel to the Facility
immediately before such period.
4.7.3 The energy flowing into the Facility (e.g. Back-up
Power, Maintenance Power, and Supplementary Power)
through the Interconnection Point during periods
when the Facility is not generating energy for sale
to the Company shall be credited to the Company, at
Seller's option, at either (i) the Company's
applicable electric tariff, or (ii) the displaced
fuel cost, in either case if the Company was
providing fuel to the Facility immediately before
such period. Seller shall notify the Company at the
end of each Billing Cycle which option pursuant to
the preceding sentence is applicable during such
Billing Cycle. For purposes of this Section, the
displaced fuel cost shall be determined in
accordance with the following formula:
DFC = KWH x HRT100 x DFPP
Where:
DFC = displaced fuel cost
KWH = KWH flowing into the Facility during such
period
HRT100 = Tested Plant Heat Rate (as defined in
Exhibit 5.1) at 100% of the CNDC,
expressed in BTU/KWH at the Higher Heating
Value.
DFPP = The Delivered Price of Primary Fuel (as
defined in Exhibit 5.1), expressed in
dollars per BTU.
ARTICLE V: RATES FOR PURCHASE
------------------------------
5.1 Rates for Purchases
The rates to be paid by the Company for purchases of Energy
and Capacity shall be determined as follows:
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5.1.1 Capacity Payment. The Capacity Payment per Billing
----------------
Cycle shall be determined under Exhibit 5.1.
5.1.2 Energy Payment. The Energy Payment per Billing
--------------
Cycle shall be determined under Exhibit 5.1.
Exhibit 5.1 is based upon the assumption that Seller
shall be responsible for the fuel supply for the
Facility. Seller shall procure a source of fuel
necessary to meet its obligations under this
Agreement in accordance with Section 8.4 of this
Agreement.
5.1.3 Fuel Supply.
-----------
5.1.3.1 At any time up to ninety (90) days after
receipt of the CPCN by Seller, the Company
may elect to supply the total fuel
requirements of the Facility for the Term
of this Agreement by providing Seller a
binding written commitment to supply such
fuel.
5.1.3.2 At any time prior to Seller entering into
any contract with a term of one (1) year
or more for the supply of fuel to the
Facility, the Company shall have an
exclusive right to supply the total fuel
requirements of the Facility for the Term
of this Agreement. Seller shall provide
the Company with written notice at least
fifteen (15) days prior to entering into
any such contract. If the Company elects
to exercise its right to supply such fuel,
it shall provide Seller with a binding
written commitment within ten (10) days
from the receipt of Seller's notice to the
Company.
5.1.3.3 Upon providing a binding written
commitment to the Seller, the Company
shall have the right to supply the total
fuel requirements of the Facility for the
remainder of the Term of this Agreement
commencing from the date Seller's fuel
supply contract having the longest
remaining term at the time such notice is
given, expires.
5.1.3.4 The Company shall have the option to
supply natural gas to Seller at any time
that Seller proposes to utilize No. 2 oil
as a fuel in the Facility if the Company
provides Seller with a commitment to
supply natural gas to the Facility for the
term during which Seller had intended to
use No. 2 oil. Any time that Seller
intends to use No. 2 oil as a fuel in the
Facility, it shall provide the Company
with as much advance notice of such intent
as is practicable under the circumstances.
In the event that the Company exercises
its right to supply natural gas to Seller,
Seller shall cease the use of No. 2 oil as
soon as possible after the supply of
natural gas commences.
5.1.3.5 During any period when the Facility is
utilizing fuel supplied by the Company,
the Energy Payment shall be based upon the
price the Seller pays the Company for fuel
supplied by the Company.
5.1.3.6 Fuel Delivery Facilities.
------------------------
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(a) Notwithstanding the Company's election to
supply the total fuel requirements of the
Facility, Seller shall remain obligated to
provide for the permitting, design,
installation, operation and maintenance of
any new facilities required to be
installed for the delivery of natural gas
to the Facility.
(b) Notwithstanding the foregoing, the Company
shall have an exclusive option to build or
purchase, own, operate and maintain any
facilities required to deliver natural gas
to the Facility. Seller shall provide the
Company with written notice at least one
hundred and twenty (120) days prior to
entering into any contract or other
arrangement to build such facilities, and
Seller shall notify the Company of the
Seller's projected cost to build such
facilities. If Seller builds the natural
gas delivery facilities, it shall build
such facilities to natural gas industry
standards; provided, however, that the
Company shall have the option to require
Seller to build such facilities to Company
standards if the Company reimburses
Seller, without a corresponding decrease
in the Capacity Payment, for the
difference in cost between the cost of
building to Company standards and the cost
of building to natural gas industry
standards.
(c) If the Company elects to own, operate and
maintain such facilities and if Seller's
cost to build such facilities is greater
than $1,000,000 escalated using the GDPIPD
from January 1, 1995 to the date of the
Company's exercise of its election
pursuant to this Section, the Company
shall build such facilities, and the
Capacity Payment shall be reduced in
accordance with Exhibit 5.1 based on a Gas
Connection Cost of $1,000,000 escalated as
aforesaid. If the Company elects to own,
operate and maintain such facilities and
if Seller's cost to build such facilities
is less than $1,000,000 escalated as
aforesaid, the Company shall retain Seller
as its general contractor to build such
facilities and the Capacity Payment shall
be reduced in accordance with Exhibit 5.1
based on a Gas Connection Cost equal to
the amount paid to Seller by the Company
for the construction of such facilities.
In the event the Company exercises its
option to own, operate and maintain such
facilities, the Company shall ensure that
the Facility and any equipment providing
steam for Nicolet Paper Mill receive
service that is at least as favorable in
all respects as if Seller had provided
such facilities.
(d) If the Company does not elect to supply
the total fuel requirements of the
Facility, or, at any time, the Company is
in breach of its obligations to supply
fuel to the Facility, Seller shall have
unrestricted access to the natural gas
delivery facilities.
5.1.4 Prepayment of Capacity Payment. Upon twelve (12)
------------------------------
months prior written notice to Seller, the Company
may at any time after the Date of Commercial
Operation, prepay the Capacity Payments for a period
of up to one-half of the then remaining
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Term of this Agreement. Such prepayment shall be
equal to the present value of the Capacity Payments
for the period being prepaid, determined using the
Discount Rate. The balance of the Capacity Payments
shall be paid ratably over the remainder of the Term
of this Agreement in a manner that will maintain the
same present value of the Capacity Payments at the
Discount Rate, measured from the Date of Commercial
Operation, as would have been achieved if there had
been no prepayment.
ARTICLE VI: METERING, INSTRUMENTATION AND BILLING
--------------------------------------------------
6.1 Metering and Instrumentation Devices
6.1.1 The Company shall select, own, install and maintain
all meters, telemeters and associated equipment
necessary for measuring energy deliveries, for
determining payments by the Company to Seller and
for evaluating performance criteria set forth in
this Agreement. Seller may also install remote
check meters, as appropriate, within Seller's
Facility.
6.1.2 The costs associated with the purchase, installation
and maintenance of such metering and measuring
equipment shall be borne by Seller.
6.1.3 The Company shall inspect, test, and calibrate its
equipment at regular intervals as specified within
its rates and regulations on file with the
Commission, and any inaccuracy disclosed by such
tests shall be promptly corrected. Any Party shall
have the right to have any Metering Device tested at
any time at its expense; provided, however, that if
the Metering Device is found to be inaccurate by
more than two (2) percent (%), the Company shall pay
the cost of the test. Representatives of the
Parties shall be afforded a reasonable opportunity
to be present at Metering Device inspections and
tests. If at any time a Metering Device is found
inaccurate by more than two (2) percent (%), an
adjustment shall be made in settlements between the
Parties to compensate for the effect of such
inaccuracy over the thirty (30) days preceding
removal or testing of the Metering Device or over
any shorter period during which such inaccuracy is
determined to have existed. Such adjustments shall
be in accordance with Section 6.1.5 below. If at
any time a Metering Device should fail to register
or its registration should be so erratic as to be
meaningless, the quantities such Metering Device was
intended to record shall be determined from check
meters if available, or otherwise from the best
obtainable data. The Company shall read its meters
on the Date of Commercial Operation and thereafter
at the end of each Billing Cycle as determined by
the Company. Seller shall provide the Company
access to the metering and measuring equipment at
reasonable times for the purposes of reading,
inspecting, testing, and adjusting such equipment.
6.1.4 Seller shall have, upon reasonable notice, the right
of access during the normal working hours of the
Company to all log books and metering records of
power purchases from Seller. Seller shall have the
right, at its expense, to make copies of such books
and records.
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6.1.5 In the event adjustments to billing statements are
required as a result of the correction of
measurements made by inaccurate meters, the Parties
shall use the corrected measurements described in
Section 6.1.3 to compute the amounts due from or to
the Company for the Energy delivered during the
period of inaccuracy. If the total amount, as
computed, due from a Party for the period of
inaccuracy varies from the total amount due as
previously computed, and the payment of the
previously computed amount has been made, the
difference in the amounts shall be paid to the Party
entitled to it within thirty (30) calendar days
after the paying Party is notified of the
recomputation. Alternatively, upon agreement
between the Parties, the Company may credit or debit
subsequent payments to Seller for Energy purchased
from Seller until the adjustment amount is
eliminated.
6.2 Billing and Payment
6.2.1 The Company shall read Seller's meters monthly
during the first three business days of the month,
and shall send a statement, and make a payment to
Seller on or before the fifteenth (15th) calendar
day after the meter is read. If a monthly meter
reading cannot be made, the Company shall estimate
deliveries to the Company for that month, tender
payment accordingly, and make an adjustment for
actual purchases in the next month's statement. The
billing statement will show the kilowatt-hours of
Energy delivered at the Interconnection Point, any
adjustments to the Capacity Payment pursuant to
Sections 4.2.2, 4.4.1.1, 4.4.2.2 and 5.1.4, the
price for such Energy as provided in Article V
herein, the amounts due Seller, and the data
reasonably pertinent to the calculation of the
payment to Seller. Late payments shall carry an
interest charge of one (1) percent (%) per month
calculated from the date the meter is read.
6.2.2 Neither the Company nor Seller shall have the right
to challenge any monthly statement rendered or
received hereunder, to invoke the Dispute Resolution
Process questioning the propriety of any monthly
statement after a period of one (1) year from the
date such monthly statement was rendered. In the
event that any such monthly statement depends in
whole or in part upon estimated data, this one (1)
year limitation period shall be deemed to begin in
the billing month in which such estimated data is
adjusted to actual.
ARTICLE VII: TESTING AND CAPACITY RATINGS
------------------------------------------
7.1 Notice of Projected Rating
Within six (6) months of the Effective Date, the Seller shall
provide the Company with preliminary design information
specifying the latest projected Nameplate Rating for the
Facility during Phase I and Phase II, the manufacturer (or
alternative manufacturers) of the Critical Components of the
Facility, and the principal operating characteristics of the
Facility. The Seller shall provide updated design
information to the Company as it becomes available.
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7.2 Test of Capability
7.2.1 Seller shall be obligated during Phase I to
establish by test the Net Demonstrated Heat Rates
and verify that the Initial Net Demonstrated
Capability (INDC) is within ten (10) percent (%) of
the Design Rating of Phase I, which is equal to
178,885 KW, as tested and adjusted as provided in
Exhibit 7.2. The testing of the INDC of the
Facility shall be held within the sixty (60) day
period prior to the Date of Commercial Operation.
The Seller shall also be obligated during Phase I to
establish by test, as set forth in Exhibit 7.2, that
the Current Net Demonstrated Capability (CNDC) is
within five (5) percent (%) of the INDC. Payment of
the Capacity Payment for Phase I of the Facility
shall commence with respect to periods after the
Date of Commercial Operation.
7.2.2 Seller shall be obligated during Phase II to
establish by test the Net Demonstrated Heat Rates
and verify that the Phase II Initial Net
Demonstrated Capability (Phase II INDC) is within
ten (10) percent (%) of the Design Rating of Phase
II, which is equal to 231,675 KW, as tested and
adjusted as provided in Exhibit 7.2. The testing of
the Phase II INDC of the Facility shall be held
within the sixty (60) day period prior to the Phase
II Date of Commercial Operation. Following the
establishment of the Phase II INDC, Seller shall
also be obligated to establish by test, as set forth
in Exhibit 7.2, that the Current Net Demonstrated
Capability (CNDC) is within five (5) percent (%) of
the Phase II INDC. Payment of the Capacity Payment
for Phase II of the Facility shall commence with
respect to periods after the Phase II Date of
Commercial Operation.
7.3 Method of Testing and Results
The procedures to establish the Net Demonstrated Heat Rates
and Net Demonstrated Capability, including the Initial Net
Demonstrated Capability, are set forth in Exhibit 7.2
7.4 Notification of Testing
Seller shall notify the Company in writing ten (10) days
prior to any test of the Net Demonstrated Capability or the
Net Demonstrated Heat Rate, and shall permit the witnessing
of such test by Company representatives if so requested.
Furthermore, Seller shall provide sufficient metering records
to document the test and shall provide copies of such records
to the Company upon request.
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ARTICLE VIII: PRE-OPERATION PERIOD
-----------------------------------
8.1 Permits and Approvals
8.1.1 Prior to the Date of Commercial Operation, Seller
shall, at its expense, acquire and maintain in
effect throughout the Term of this Agreement all
permits and approvals, whether now or hereafter
required, of any local, state or federal
governmental authority or regulatory agency, as
necessary conditions for the lawful construction,
operation and maintenance of the Facility, Seller's
Interconnection Facilities, and the natural gas
delivery facilities, excluding any permit or
approval which, by its nature, is not available
prior to the Date of Commercial Operation. Copies
of said permits and approvals shall be made
available for Company review. Notwithstanding the
foregoing, in the event that the Company exercises
its option pursuant to Section 5.1.3.6 to build,
own, operate and maintain the natural gas delivery
facilities, from the date that the Company exercises
such option, the Company shall be responsible for
maintaining in effect all such permits and approvals
necessary for the natural gas delivery facilities.
8.1.2 The Company shall not be liable for any violation by
Seller of any permit or approval required to be
obtained and maintained by Seller pursuant to this
section.
8.1.3 The Company acknowledges that Seller's ability to
obtain certain permits required pursuant to this
Section may be contingent upon Seller's
demonstration of acceptable environmental impact
associated with the Company's Interconnection
Facilities. The Company agrees to support Seller by
providing, without limitation, information, data,
and analyses regarding proposed and alternate
Company Interconnection Facilities and expected
environmental impacts associated with their
construction and operation. Any delays in the
receipt of Seller's required permits attributable to
the Company's Interconnection Facilities shall
provide an extension in all dates in the
Construction Milestone Schedule, and of the
Commercial Operation Deadline and the Phase II
Commercial Operation Deadline to the extent
necessary to reflect the delay.
8.1.4 The Parties acknowledge that Seller is responsible
for filing the application for the natural gas
delivery facilities and the Company is responsible
for filing the application for a CPCN for the
Company's Interconnection Facilities. The Parties
agree to use their reasonable best efforts to file
such applications in a timely manner so as to permit
the consolidation of such applications with the
Seller's application for the CPCN for the Facility.
8.1.5 Whenever a Party is obligated to obtain a CPCN in
order to perform its obligations pursuant to this
Agreement, that Party shall use its reasonable best
efforts to promptly file and diligently pursue the
receipt of such CPCN.
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8.2 Schedule, Reports and Inspection
Seller shall submit for the Company's review its schedule,
showing all planned design, licensing and construction
activities, within sixty (60) days of the Effective Date and
a start-up and test schedule for the Facility thirty (30)
days prior to start-up and testing of the Facility. Seller
shall submit progress reports in a form reasonably
satisfactory to the Company on the first (1st) day of every
quarter commencing on the Effective Date and ending on the
Commencement of Construction, and every month thereafter
until the Date of Commercial Operation and notify the Company
of any changes to such schedules in a timely manner. The
Company shall have the right to monitor and observe the
construction, start-up and testing of the Facility and Seller
shall comply with all reasonable requests consistent with
Prudent Electrical Practices resulting therefrom, subject to
the Dispute Resolution Process. Seller shall cooperate in
such physical inspections of the Facility as may be
reasonably required by the Company during and after
completion of construction. The Company's technical review
and inspection of the Facility shall not be construed as
endorsing the design thereof nor as any warranty of the
safety, durability or reliability of the Facility.
8.3 Facility Design Data
8.3.1 Seller shall provide the Company with the generator
manufacturer's capability curves and relay types for
Phase I for review and inspection by the Company no
later than three hundred and sixty (360) days before
the Scheduled Date of Commercial Operation. Seller
shall supply the Company with proposed relay
settings ninety (90) days prior to the Contemplated
Energizing Date. Within sixty (60) days of
receiving such information, the Company shall inform
Seller, in writing, if the proposed relay types and
relay settings are acceptable. If these are not
found to be acceptable to the Company, Seller agrees
to comply with any reasonable requests by the
Company, to provide acceptable relay types and relay
settings, subject to the Dispute Resolution Process.
All information must be submitted in a manner
reasonably acceptable to the Company, particularly
the turbine generator data, which shall be used for
the Company's inspections and transient stability
analysis. Turbine generator data for Phase I must
be completely submitted at least one hundred and
twenty (120) days prior to the Scheduled Date of
Commercial Operation.
8.3.2 Seller shall provide the Company with the generator
manufacturer's capability curves and relay types for
Phase II for review and inspection by the Company no
later than three hundred and sixty (360) days before
the Phase II Scheduled Date of Commercial Operation.
Seller shall supply the Company with proposed relay
settings ninety (90) days prior to the Phase II Date
of Commercial Operation. Within sixty (60) days of
receiving such information, the Company shall inform
Seller, in writing, if the proposed relay types and
relay settings are acceptable. If these are not
found to be acceptable to the Company, Seller agrees
to comply with any reasonable requests, by the
Company, to provide acceptable relay types and relay
settings, subject to the Dispute Resolution Process.
All information must be submitted in a manner
reasonably acceptable to the Company, particularly
the turbine generator data, which shall be used for
the Company's inspections and
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transient stability analysis. Turbine generator
data for Phase II must be completely submitted at
least one hundred and twenty (120) days prior to the
Phase II Scheduled Date of Commercial Operation.
8.4 Fuel Supply
8.4.1 Prior to Commencement of Construction Seller shall
provide the Company with its fuel supply plan
showing Seller's proposed fuel supply and
transportation arrangements.
8.4.2 Twelve (12) months prior to the Scheduled Date of
Commercial Operation, and annually thereafter,
Seller will provide the Company with an updated fuel
supply plan.
8.4.3 In addition to the foregoing, Seller agrees to
maintain at all times during the Term of this
Agreement dual fuel capability for the Facility and
agrees that at all times it will be able to operate
the Facility in accordance with this Agreement under
either alternative form of fuel (subject to the
availability of natural gas). Seller further agrees
to obtain, at its expense, all necessary permits,
approvals, and licenses necessary for such dual fuel
capability.
8.5 Water Rights
Prior to the Date of Commercial Operation Seller shall, at
its expense, acquire and maintain in effect throughout the
Term of this Agreement the rights to divert, and use
sufficient water to permit operation of the Facility at its
maximum level of operation, which rights shall be assignable.
8.6 Voltage Schedule
The Company will prepare and submit to Seller a written
voltage schedule no later than thirty (30) days prior to the
Date of Commercial Operation, except that the Company may
change such voltage schedule upon thirty (30) days prior
written notice. Seller shall use such voltage schedule in
the operation of the Facility. This voltage schedule shall
be based on the normally expected operating conditions for
the Facility and the reactive power requirements of the
Company system.
8.7 Notice of Initial Energizing
Unless notified to the contrary by Seller, the Company shall
have the Company's Interconnection Facilities prepared for
the initial energizing at the Interconnection Point four (4)
months before the Scheduled Date of Commercial Operation (the
"Contemplated Energizing Date"). In any case, Seller agrees,
if there is no Date of Commercial Operation, and no
Energizing Date, because Seller either terminates the
Agreement or is in default of the Agreement, to hold the
Company harmless and indemnify the Company against any and
all costs reasonably incurred by the Company in designing,
constructing or purchasing the Company's Interconnection
Facilities, and for and against any and all costs of
obtaining necessary regulatory approvals for such project;
provided, however, in the event the
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Company should subsequently, within eighteen (18) months
after termination of this Agreement, use the Company's
Interconnection Facilities for the benefit of a third party,
the Company shall return to Seller such portion of the amount
paid to the Company pursuant to this indemnification as
equals that portion of the Company's Interconnection
Facilities used for the benefit of such third party. Seller
shall notify the Company in writing thirty (30) calendar days
prior to the expected date of: (a) the initial energizing at
the Interconnection Point; (b) the initial parallel operation
with the Company system; and (c) the initial testing of the
Facility and Interconnection Facilities. The Company and
Seller shall have the right to have a representative present
at the time of such energizing, parallel operation and
testing.
8.8 Energy Delivered During Testing
Seller may conduct such tests of the Facility from
time-to-time prior to the Date of Commercial Operation as
Seller in its discretion may deem appropriate. Subject to
the limitations expressed in Section 8.9, if Seller desires
the Company to accept at the Interconnection Point the Energy
generated by the Facility during any proposed test, Seller
shall so notify the Company in writing within a reasonable
time not less than two (2) days prior to such test, and the
Company shall purchase the Energy delivered. Seller's notice
to the Company shall, at a minimum, include a description of
the approximate time and duration of the test and approximate
amount of the output intended to be delivered to the Company
as a result of such test. For Energy delivered to the
Company during start-up and testing, the Company shall pay
Seller at a rate per KWH equal to the Company's marginal
energy cost at the time of delivery, which rate shall be
computed by the Company as soon as reasonably possible after
such deliveries.
8.9 Preliminary Notice of Commercial Operation
8.9.1 Seller shall notify the Company in writing sixty
(60) days prior to the date of Seller's preliminary
expected Date of Commercial Operation. The Company
shall accept and pay for Energy deliveries during
start-up and testing, and Commercial Operation
unless, in the Company' good faith judgment, any
portion of Seller's Interconnection Facilities which
Seller is responsible for constructing is not
sufficient to accept or meter such deliveries or if
such Facilities are not sufficient to protect the
Company's system, employees or customers from damage
or injury arising out of, or in connection with,
operation of the Facility. In the event the Company
reasonably determines such facilities are not
sufficient to accept or meter such deliveries, the
Company shall give Seller prompt written notice
which shall include a detailed explanation for its
determination.
8.9.2 Seller shall notify the Company in writing sixty
(60) days prior to the expected Phase II Date of
Commercial Operation.
8.10 Notice of Compliance and Verification Prior to Commercial
Operation
Seller shall give the Company written notice no later than
ten (10) days before Seller's expected Date of Commercial
Operation that Seller has complied with all of the
requirements of this Article VIII and all other terms and
conditions of this Agreement
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required to be performed by Seller prior to the Date of
Commercial Operation. In order for the Company to verify
such compliance, Seller shall provide the Company access to
all permits, approvals, contracts, records, studies and other
documents of Seller respecting the design, construction,
operation and maintenance of the Facility and Seller's
Interconnection Facilities, and shall provide all documents
and other requirements specified in Section 8.3 hereof.
Unless the Company reasonably determines and notifies the
Seller in writing within ten (10) days after receiving
Seller's notice of compliance hereunder that Seller has not
complied with all of the requirements of this Article VIII
and all the other terms and conditions of this Agreement
required to be performed by Seller prior to the
Date of Commercial Operation, Commercial Operation may
commence on the date specified in Seller's notice of
compliance.
ARTICLE IX: DESIGN, INSTALLATION, OPERATION
AND MAINTENANCE OF INTERCONNECTION FACILITIES
---------------------------------------------
The Company and Seller shall design, install, maintain, and operate
the Interconnection Facilities as required by the Facility in
accordance with the provisions of Exhibit 9.1. In the event of a
conflict between the provisions of Exhibit 9.1 and the provisions
of this Agreement, the provisions of Exhibit 9.1 will apply. The
Company shall have the same rights and remedies to Seller's
Interconnection Facilities as it does with respect to the Facility
under this Agreement.
ARTICLE X: FORCE MAJEURE
-------------------------
10.1 Conditions of Excuse From Performance
If as a result of Force Majeure a Party hereto is rendered
wholly or partly unable to perform its obligations under this
Agreement, that Party shall be excused, except as
specifically provided elsewhere in this Agreement, from
whatever performance is affected by the Force Majeure to the
extent so affected, provided that:
10.1.1 The Party claiming relief gives the other Party
immediate written notice describing the particulars
of the Force Majeure;
10.1.2 The permitted suspension of performance is of no
greater scope and of no longer duration than is
required by the Force Majeure;
10.1.3 No obligations of a Party hereto under this
Agreement which arose before the Force Majeure are
excused as a result of the Force Majeure; and
10.1.4 If Seller is the Party claiming Force Majeure
(except a Force Majeure resulting from the Company's
non-delivery to Seller of fuel purchased from the
Company or transported by the Company), or during a
period of Force Majeure resulting from any damage to
the Company's transmission system which is dedicated
in its use to interconnecting the Company's
transmission system to the Facility, the Company
shall be excused from any requirement that it take
or pay for any Capacity or Energy to the extent of
the restriction on or access to Capacity of the
Facility caused by the Force Majeure. With respect
to a Force Majeure claimed by the Company due to the
Company's transmission system, Seller shall have the
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option to deem such period, or any portion of such
period, of time to be Forced Outage Hours.
10.1.5 A Force Majeure may continue only so long as the
Party claiming Force Majeure is exercising its best
efforts to eliminate the Force Majeure condition.
10.2 Time Limits
The non-performing Party shall undertake all reasonable
efforts consistent with Prudent Electrical Practices to
remedy its inability to perform as a result of the Force
Majeure.
10.2.1 If at any time during the period of Force Majeure
the non-performing Party fails to undertake or
ceases undertaking all reasonable efforts to
remedy its inability to perform, then the
non-performing Party shall no longer be excused
from its performance pursuant to Section 10.1.
10.2.2 If the Force Majeure shall continue for a period
greater than six (6) months, then the
non-performing Party shall no longer be excused
from its performance pursuant to Section 10.1;
provided, however, that if the non-performing
Party is continuing in good faith to make all
reasonable efforts to remedy the inability to
perform, the non-performing Party shall be
granted an additional six (6) months (or if the
Force Majeure requires major reconstruction of
the Facility, twelve (12) months during Phase I
or sixteen (16) months during Phase II), before
the termination of the Force Majeure excuse will
be effective. If the event of Force Majeure
nevertheless is not remedied upon the completion
of the extension period granted under this
Section 10.2.2, the Party not claiming Force
Majeure shall be entitled to all damages and
rights provided under this Agreement for injury
or damages experienced during that extension
period. This Section 10.2.2 shall not apply with
respect to a Force Majeure affecting Seller and
based on the Company's non-delivery of natural
gas or No. 2 oil during any period when the
Company is obligated to provide natural gas or
No. 2 oil to Seller.
10.2.3 In no event shall a condition of Force Majeure
extend the Term of this Agreement except to the
extent required to accomplish payment of any
Capacity Payment suspended under Section 10.1.4.
ARTICLE XI: EVENTS OF DEFAULT; REMEDIES
----------------------------------------
11.1 List of Default Events
Except as otherwise provided in this Agreement, this
Agreement may be terminated and/or a Party may be entitled to
Liquidated Damages following written notice, effective upon
receipt, from a non-defaulting Party to the defaulting Party,
upon the occurrence of any of the following events:
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11.1.1 The failure of a Party to make any undisputed
payment due hereunder and such failure shall
continue for ten (10) days after notice demanding
such payment is given;
11.1.2 In the event a Party shall cease doing business
as a going concern, shall generally not pay its
debts as they become due or admit in writing its
inability to pay its debts as they become due,
shall file a voluntary petition in bankruptcy or
shall be adjudicated a bankrupt or insolvent, or
shall file any petition or answer seeking any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under the present or any future federal
bankruptcy code or any other present or future
applicable federal, state or other statute or
Law, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver,
custodian or liquidator of said Party or of all
or any substantial part of its properties or its
interest in the Facility or the Interconnection
Facilities, or shall make an assignment for the
benefit of creditors, or said Party shall take
any corporate action to authorize or that is in
contemplation of the actions set forth above in
this Section 11.1.2;
11.1.3 In the event that within ninety (90) days after
the commencement of any proceeding against either
Party seeking any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution or similar relief under the present
or any future federal bankruptcy code or any
other statute or Law, such proceeding shall not
have been dismissed, or if, within ninety (90)
days after the appointment without the consent or
acquiescence of said Party of any trustee,
receiver, custodian or liquidator of said Party
or of all or any substantial part of its
properties or of its interest in the Facility or
the Interconnection Facilities, such appointment
shall not have been vacated or stayed on appeal
or otherwise, or if, within ninety (90) days
after the expiration of any such stay, such
appointment shall not have been vacated;
11.1.4 The cancellation or permanent abandonment of
Phase I of the Facility by Seller prior to the
Scheduled Date of Commercial Operation or the
failure, for any reason including Force Majeure,
of the Scheduled Date of Commercial Operation to
occur by the Commercial Operation Deadline;
11.1.5 The cancellation or permanent abandonment of
Phase II of the Facility by Seller prior to the
Phase II Scheduled Date of Commercial Operation
or the failure, for any reason including Force
Majeure, of the Phase II Date of Commercial
Operation to occur by the Phase II Commercial
Operation Deadline shall constitute a default of
the Phase II provisions of this Agreement
associated with Incremental Capacity and shall
permit the non-defaulting Party to terminate this
Agreement with respect to the Incremental
Capacity of the Facility; provided, however, that
the rights and obligations of the Parties with
respect to Phase I of the Facility shall be
unaffected by such termination;
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11.1.6 The failure of Seller to provide the Company with
Seller's fuel supply plan as required by Section
8.4 unless, within thirty (30) days after written
notice from the Company notifying Seller of such
failure, Seller cures such failure;
11.1.7 The failure of Seller to adhere to the
Construction Milestone Schedule for Phase I of
the Facility. However, Seller may extend the
Scheduled Date of Commercial Operation as set
forth in Section 15.1.1.2, in which case all
other dates in the Construction Milestone
Schedule shall be adjusted accordingly;
11.1.8 The failure of Seller to adhere to the
Construction Milestone Schedule for Phase II
shall constitute a default of the Phase II
provisions of this Agreement associated with
Incremental Capacity and shall permit the
non-defaulting Party to terminate this Agreement
with respect to the Incremental Capacity of the
Facility; provided, however, that the rights and
obligations of the Parties with respect to Phase
I of the Facility shall be unaffected by such
termination. However, Seller may extend the
Phase II Scheduled Date of Commercial Operation
as set forth in Section 15.1.1.5, in which case
all other dates in the Construction Milestone
Schedule shall be adjusted accordingly;
11.1.9 The failure of Seller to adhere to the provisions
of Section 8.1 through 8.7 unless, within thirty
(30) days after written notice from the Company
specifying the nature of such failure, Seller
cures such failure;
11.1.10 Any of a Party's representations and warranties
contained in Article XII hereof was false or
misleading in any material respect when made,
unless (i) the fact, circumstance or condition
that is the subject of such representation or
warranty is made true within thirty (30) days
after the non-defaulting Party has given notice
thereof to the defaulting Party; provided,
however, that if the fact, circumstance or
condition that is the subject of such
representation or warranty cannot reasonably be
corrected within such thirty (30) day period
and if the defaulting Party within such period
of thirty (30) days commences, and thereafter
proceeds with all due diligence, to correct the
fact, circumstance or condition that is the
subject of such representation or warranty,
said period shall be extended for such further
period not to exceed ninety (90) days as shall
be reasonably necessary for the defaulting
Party to correct the same with all due
diligence, and (ii) such cure removes any adverse
affect on the non-defaulting Party of such fact,
circumstance or condition being otherwise than as
first represented, or such fact, circumstance or
condition being otherwise than as first
represented does not materially adversely
affect the non-defaulting Party;
11.1.11 The failure of Seller to provide the Company's
employees, agents, and other representatives
reasonable access to test, examine or repair
Seller's Interconnection Facilities or metering
devices after receiving notice to do so by the
Company as required under this Agreement unless,
within thirty (30) days after written notice
from the Company specifying the nature of such
failure, Seller cures such failure;
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11.1.12 The failure of Seller to comply with the
operating and maintenance requirements under
Section 3.2.5.2 hereof, and the Company's
election to exercise its rights under
Section 3.2.5.2(c), unless, within thirty (30)
days after written notice from the Company
specifying the nature of such failure, Seller
cures such failure or, if such cure cannot
reasonably be completed within thirty (30) days
and if Seller within such thirty (30) day period
commences, and thereafter proceeds with all due
diligence, to cure such failure, said period shall
be extended for such further period not to exceed
ninety (90) days as shall be necessary for Seller
to cure such failure with all due diligence;
11.1.13 A material default in performance or observance
of any agreement, undertaking, covenant or other
material obligation contained in this Agreement
unless, within thirty (30) days after written
notice from the non-defaulting Party specifying
the nature of such material default, the
defaulting Party cures such default or, if such
cure cannot reasonably be completed within thirty
(30) days and if the defaulting Party within such
thirty (30) day period commences, and thereafter
proceeds with all due diligence, to cure such
default, said period shall be extended for such
further period as shall be necessary for
defaulting Party to cure such default with all
due diligence, provided that the extended cure
period shall not exceed ninety (90) days unless
the defaulting Party's cure does not materially
increase the cost or the obligations of the
non-defaulting Party, or, if the cure causes such
an increase, the defaulting Party makes the
non-defaulting Party whole for any such increase;
11.1.14 Any governmental authority having jurisdiction
takes an administratively final action associated
with the Qualified Facility status of the
Facility or the Exempt Wholesale Generator status
of the Seller in a manner that affects any
material provision of this Agreement to the
material detriment of a Party, unless the terms
of the Agreement are modified by the Parties in
a manner that holds the Party suffering such
material detriment harmless from the detrimental
effects of such action; provided, however, that
the rights provided under Section 11.1 with
respect to this Section 11.1.14 may only be
exercised by the Party suffering such material
detriment;
11.1.15 A default by Seller under Section 4.4.1.3 or
Section 4.4.2.1; or
11.1.16 Notwithstanding the occurrence of any event of
default described in Section 11.1 or the
expiration or unavailability of any cure period
provided herein, the non-defaulting Party shall
not be entitled to terminate this Agreement if,
prior to the defaulting Party's receipt of a
notice of such termination, the defaulting
Party shall have cured the event of default.
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11.2 Company Right to Suspend Performance
At the Company's option, as an alternative to pursuing any
other remedies available to it under generally applicable
Laws or under this Agreement, including Section 3.2.5,
Corrective Action, and Section 11.4 hereof, Liquidated
Damages, the Company shall have the right to disconnect the
Facility and suspend the purchase of Capacity and Energy from
Seller (all payments during the period of such suspension
being forgiven) and discontinue the performance of any of its
duties and obligations hereunder upon the occurrence and
during the continuance of any of the following:
11.2.1 Seller fails to comply with any of the material
terms and conditions of this Agreement including
the installation, construction, maintenance or
operation of the Facility or adherence to any
Exhibit to this Agreement that has or can
reasonably be expected to have a material,
adverse effect on the Company or the Company
system, or fails to comply with any
representation or warranty made by Seller
hereunder in a manner that has or can reasonably
be expected to have a material, adverse effect on
the Company or the Company system and, in such
case, does not cure such failure within thirty
(30) days after written notice of such failure
from the Company or, if such cure cannot
reasonably be completed within thirty (30) days,
if Seller has not commenced efforts to cure such
failure and/or is not diligently pursuing such
cure, or if Seller has not cured such failure
within ninety (90) days; or
11.2.2 Seller fails to conduct regular and required
maintenance or testing of the Facility and
associated equipment pursuant to Section 3.2.2
and Section 7.2 hereof where such failure may
have a material adverse effect on the Company or
the Company system and, in such case, does not
cure such failure within thirty (30) days after
written notice of such failure from the Company
or, if such cure cannot reasonably be completed
within thirty (30) days, if Seller has not
commenced efforts to cure such failure and/or is
not diligently pursuing such cure, or if Seller
has not cured such failure within ninety (90)
days; or
11.2.3 Seller fails to allow the Company employees
reasonable access to test, examine or repair the
Company's Interconnection Facilities or metering
equipment after reasonable notice by the Company
of the need to do so and, in such case, does not
cure such failure within ten (10) days; or
11.2.4 Seller violates any code, regulation or statute
applicable to the construction, installation,
maintenance or operation of the Facility where
such violation may materially threaten the
continued operation of the Facility as required
under this Agreement or may have a material,
adverse effect on the Company or the Company
system and, in such case, Seller does not correct
such violation within thirty (30) days of notice
hereof; or if such violation cannot reasonably be
corrected in such period, if Seller has not
commenced efforts to correct and/or is not
diligently pursuing such correction, or if Seller
has not corrected such violation within ninety
(90) days.
11.3 Seller's Right to Suspend Performance
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At Seller's option, as an alternative to pursuing any other
remedies that may be available to it under generally
applicable Laws or under this Agreement, Seller shall have
the right to suspend deliveries of Energy from the Facility
to the Company and discontinue the performance of any of its
duties and obligations hereunder upon the occurrence but only
so long as the continuance of any of the following:
11.3.1 The Company fails to read the meters necessary
for determining the payments to Seller for two
(2) consecutive months and, in such case, does
not cure such failure within ten (10) days after
written notice of such failure from the Seller
or, if such cure cannot reasonably be completed
within ten (10) days, if the Company has not
commenced efforts to cure such failure and/or is
not diligently pursuing such cure, or if the
Company has not cured such failure within thirty
(30) days; or
11.3.2 The Company fails to make an undisputed payment
due hereunder and such failure continues for ten
(10) days after notice demanding such payment is
given; or
11.3.3 The Company fails to comply with any of the
material terms and conditions of this Agreement
in a manner that has a material, adverse effect
on Seller, or fails to comply with any
representation or warranty made by the Company
hereunder in a manner that has a material adverse
effect on Seller and, in either case, does not
cure such failure within thirty (30) days after
written notice from the Seller or, if such cure
cannot reasonably be completed within thirty (30)
days, if the Company has not commenced efforts to
cure such failure and/or is not diligently
pursuing such cure, or if the Company has not
cured such failure within ninety (90) days.
11.4 Liquidated Damages
If Seller fails to deliver Energy and Capacity as determined
in Article VII herein, or if Seller is in default of this
Agreement under Section 11.1, then the Company and Seller
agree that the Company may suffer actual damages which, as a
result of the dependence of the Company upon the delivery of
Energy and Capacity by Seller in the quantities originally
promised, the Company would be unable to mitigate fully. The
Company and Seller agree that the amount of the actual
damages suffered by the Company would be difficult or
impossible to measure under the circumstances. Therefore,
the Company and Seller agree that Seller shall pay the
Company Liquidated Damages calculated in accordance with the
following procedures, which Liquidated Damages, together with
the reduction of Capacity and Energy Payments, if provided
for under this Agreement, shall be the Company's sole and
exclusive monetary remedy for damages associated with
purchases by the Company of alternative Capacity and Energy:
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11.4.1 Capacity Shortfall
11.4.1.1 In the event that, at any time after the
Date of Commercial Operation and before
the Phase II Date of Commercial Operation,
the CNDC is reduced below 95% of the INDC
determined pursuant to Section 7.2.1,
then, as Liquidated Damages, Seller will
pay the Company $50 per kilowatt of the
difference between 95% of the original
INDC and the CNDC. This amount shall be
escalated monthly using the Gross Domestic
Product Implicit Price Deflator ("GDPIPD")
beginning with the Effective Date. In the
event that Seller pays Liquidated Damages
pursuant to this Section, the INDC
determined pursuant to Section 7.2.1 shall
be reduced to the level of 105.263% of the
CNDC upon which the Liquidated Damages
assessment has been based for purposes of
subsequent Liquidated Damages assessments
pursuant to this Section and Section
11.4.2. Additionally, the Design Rating
for Phase II, as set forth in Section
7.1 and Section 7.2.2 shall be reduced by
the percentage difference between the
Phase I INDC and the CNDC upon which
Liquidated Damages have been assessed
pursuant to this Section. Notwithstanding
anything herein to the contrary, Seller
may, upon twelve (12) month's prior
written notice to the Company, which
notice must be provided at any time up to
two (2) years after Seller becomes
obligated to pay Liquidated Damages
pursuant to this Section, reinstate the
CNDC of the Facility up to the INDC, and
such reinstated CNDC shall be the CNDC for
the purposes of calculating Capacity
Payments and subsequent Liquidated Damages
assessments pursuant to this Section.
11.4.1.2 In the event that, on or after the
Phase II Date of Commercial Operation, the
CNDC is reduced below 95% of the Phase II
INDC determined pursuant to Section 7.2.2,
then, as Liquidated Damages, Seller will
pay the Company $65 per kilowatt of the
difference between 95% of the original
Phase II INDC and the CNDC. This amount
shall be escalated monthly using the
GDPIPD beginning with the Effective Date.
(a) In the event that Seller pays Liquidated
Damages pursuant to this Section, the
Phase II INDC determined pursuant to
Section 7.2.2 shall be reduced to the
level of 105.263% of the CNDC upon which
the Liquidated Damages assessment has been
based for purposes of subsequent
Liquidated Damages assessments pursuant to
this Section.
(b) Notwithstanding anything herein to the
contrary, Seller may, upon twelve (12)
month's prior written notice to the
Company, which notice must be provided at
any time up to two (2) years after Seller
becomes obligated to pay Liquidated
Damages pursuant to this Section,
reinstate the CNDC of the Facility up to
the Phase II INDC, and such reinstated
CNDC shall be the CNDC for the purposes of
calculating Capacity Payments and
subsequent Liquidated Damages assessments
pursuant to this Section.
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11.4.1.3 Option to Purchase
(a) In the event that Phase II is canceled or
permanently abandoned prior to the
Phase II Scheduled Date of Commercial
Operation or the Phase II Date of
Commercial Operation does not occur by the
Phase II Commercial Operation Deadline, or
in the event that the Company is entitled
to purchase the Facility pursuant to
Section 2.7.1.4, then the Company shall
have the option to purchase the Facility.
(b) The purchase price shall be the greater of
(i) the Outstanding Debt at the time of
the closing of the purchase of the
Facility, or (ii) the present value of the
remaining Capacity Payments for Phase I
(including one half of the remaining Fixed
Operation and Maintenance Payments for
Phase I) at the time of the closing of the
purchase of the Facility, determined using
the Discount Rate.
(c) The Company may exercise the option by
providing written notice to Seller within
six (6) months following the occurrence of
an event described in Paragraph (a). In
the event that notice has not been
provided within the time allowed, the
option shall terminate.
(d) In the event that the Company exercises
its option to purchase the Facility, it
shall close the acquisition of the
Facility within three (3) months after the
delivery of the notice pursuant to
Paragraph (c). During the period between
the receipt of the Company's notice
pursuant to Paragraph (c) and the closing,
Seller shall not increase the principal
amount of any Outstanding Debt without the
consent of the Company, which consent
shall not be unreasonably withheld.
(e) The option granted pursuant to this
Section shall be subject to any purchase
option held by International Paper
Company.
(f) The option granted pursuant to this
Section shall be the Company's sole and
exclusive remedy for the events described
in Paragraph (a).
11.4.1.4 In the event that Seller makes the
payments required under this Section,
Seller shall not be in default under
Section 11.1 for any reduction in the CNDC
for Phase I or Phase II of the Facility,
or for the cancellation or permanent
abandonment of Phase II of the Facility.
11.4.2 Termination of Agreement
If (a) Seller terminates this Agreement other than
because of default of the Company or (b) the Company
terminates this Agreement as permitted by its terms
(other than pursuant to Section 12.1.5 or
Section 16.4, or pursuant to Section 11.1 following
the expiration of a period of Force Majeure as
provided in Section 10.2.2), then Seller shall pay the
Company Liquidated Damages as set forth below
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in addition to any extension payments, penalties, or
other Liquidated Damages required by other provisions
of this Agreement.
11.4.2.1 If this Agreement is terminated prior to
the Scheduled Date of Commercial
Operation, Seller shall pay Liquidated
Damages of:
(a) $10 per KW, plus $1 per KW per month from
the Effective Date to the date of
termination or event of default up to a
maximum of $35 per KW, based on the Design
Rating of Phase I, plus
(b) An additional $2 per KW per month from
15 months prior to the Scheduled Date of
Commercial Operation through the Date of
Commercial Operation, up to a maximum of
$30 per KW (maximum total $65 per KW
including $35 per KW above), based on the
Design Rating of Phase I.
11.4.2.2 If this Agreement is terminated after the
Scheduled Date of Commercial Operation,
Seller shall pay Liquidated Damages of
$50 per KW, based on the most recent CNDC,
escalated using the GDPIPD from the
Effective Date, but not in any event to
exceed the present value of the Capacity
Payments for the remainder of the Term,
determined using the Discount Rate.
11.4.3 Security
11.4.3.1 Seller shall provide security for
compliance with Section 11.4 which shall
consist of an unconditional and
irrevocable direct pay letter of credit
issued by a bank acceptable to the Company
in a form substantially similar to
Exhibit 11.4.
11.4.3.2 Security shall be made available by Seller
in the form of an irrevocable letter of
credit in accordance with the following
events and in the following amounts:
(a) $10/KW, based on the Design Rating of
Phase I, which shall be submitted as the
CPCN Development Deposit within thirty
(30) days after the Effective Date and
shall remain in effect until thirty (30)
days after the issuance of the CPCN, at
which time it shall, at Seller's option,
either be refunded to Seller or credited
against the security required under
subparagraph (b) below.
(b) $65/KW as a Contract Development Deposit,
based on the Design Rating of Phase I.
The Contract Development Deposit shall be
due on the later of the thirtieth (30th)
day after the issuance of the CPCN or the
date on which the CPCN Development Deposit
is refunded or credited pursuant to
subparagraph (a), provided, however, that
the Contract Development Deposit shall not
be required to be in effect until the CPCN
Development Deposit has been released.
The
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Contract Development Deposit shall
remain in effect until the Date of
Commercial Operation, at which time it
shall, at Seller's option, either be
refunded to Seller or credited against the
security required under subparagraph (c)
below.
(c) $50/KW as a Contract Performance Deposit,
based on the Initial Net Demonstrated
Capability of the Facility but not in any
event to exceed the present value of the
Capacity payments for the remainder of the
Term, determined using the Discount Rate.
The Contract Performance Deposit shall be
due on the later of the thirtieth (30th)
day after the Date of Commercial Operation
or the date on which the Contract
Development Deposit is refunded or
credited pursuant to subparagraph (b),
provided, however, that the Contract
Performance Deposit shall not be required
to be in effect until the Contract
Development Deposit has been released, and
shall remain in effect until the Phase II
Date of Commercial Operation, at which
time it shall, at Seller's option, either
be refunded to Seller or credited against
the security required under subparagraph
(d) below. In the event that the level of
the security previously provided by Seller
is not equal to the amount required under
this paragraph, the level of the Letter of
Credit shall be adjusted within thirty
(30) days to reflect the revised level of
security. In the event that this Agreement
is terminated for any reason, the security
shall be returned following payment in
full of any amounts due from Seller to the
Company.
(d) $65/KW as a Phase II Contract Performance
Deposit, based on the Phase II Initial Net
Demonstrated Capability of the Facility
but not in any event to exceed the present
value of the Capacity payments for the
remainder of the Term, determined using
the Discount Rate. The Phase II Contract
Performance Deposit shall be due on the
later of the thirtieth (30th) day after
the Phase II Date of Commercial Operation
or the date on which the Contract
Performance Deposit is refunded or
credited pursuant to subparagraph (c),
provided, however, that the Phase II
Contract Performance Deposit shall not be
required to be in effect until the
Contract Performance Deposit has been
released. In the event that the level of
the security previously provided by Seller
is not equal to the amount required under
this paragraph, the level of the Letter of
Credit shall be adjusted within thirty
(30) days to reflect the revised level of
security. In the event that this Agreement
is terminated for any reason, the security
shall be returned following payment in
full of any amounts due from Seller to the
Company.
11.5 Limit on Remedy
Notwithstanding anything in this Agreement to the contrary,
the Company's sole remedy for a default as described in
Section 11.1.5 and 11.1.8 shall be (a) to terminate the
Agreement with respect to the Incremental Capacity of the
Facility; provided, however, that
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the rights and obligations of the Parties with respect to
Phase I of the Facility shall be unaffected by such
termination, or (b) to purchase the Facility as provided
in Section 11.4.1.3.
11.6 No Consequential Damages
In actions arising under Section 11.1 of this Agreement, and
in all other claims arising under this Agreement by either
Party against the other Party, neither Seller nor the Company
shall be liable to the other for indirect, special or
consequential damages.
ARTICLE XII: CONDITIONS, REPRESENTATIONS AND WARRANTIES
--------------------------------------------------------
12.1 Conditions
12.1.1 Commission Approval. If the Commission issues a
-------------------
negative determination in stage two of the CPCN
process for the Facility, and if the Commission
directs that the Parties renegotiate the Agreement,
the Company agrees to use good faith efforts for a
period up to that period required by the Commission,
but not to exceed six (6) months, to renegotiate the
Agreement with Seller to alleviate the concerns
raised by the Commission in stage two of the CPCN
process. Such a renegotiated Agreement shall not,
in any case, exceed in its costs to the ratepayers
of the Company the effective costs of this Agreement
or the bid provided by Seller to the Company in
stage one of the CPCN process. If the Parties are
successful in their efforts to renegotiate the
Agreement, the new agreement shall be submitted to
the Commission for its approval.
12.1.2 Company's Right to Delay Phase I.
--------------------------------
12.1.2.1 Before the Commencement of Construction
after granting of the CPCN by the
Commission, the Company shall have the
right to delay the Scheduled Date of
Commercial Operation by the lesser of
(i) twenty-four (24) months, or
(ii) such period as shall not cause Seller
to lose its air permit or any other permit
required for the Facility. The Company
may request delays in excess of the period
allowed pursuant to the preceding
sentence, provided, however, that Seller
may grant or deny such additional delays
in its sole and exclusive discretion.
12.1.2.2 In exchange for obtaining delays pursuant
to this Section, the Company shall be
required to pay Seller an amount
equivalent to the present value of the
escalation of Capacity Payments,
escalated by the change in the specific
index entitled Other Production Plant -
Gas Turbogenerators as published in the
Handy Xxxxxxx Bulletin No. 138 under Cost
Trends of Electric Utility Construction
North Central Region for the period of
delay, levelized over the Term of this
Agreement, and for its reasonable
additional non-inflation related
costs associated with such delays,
determined using the Discount Rate (see
Exhibit 12.1.2 for a sample calculation).
In addition, if, on the date that would be
the Scheduled Date of Commercial Operation
but for the exercise of the Company's
rights
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under this Section, Seller has entered
into a thermal energy purchase
agreement with International Paper
Company or the then current owner or
operator of the Nicolet Paper Mill, the
Company shall pay International Paper
Company or such then current owner or
operator five hundred thousand dollars
($500,000) for each year of delay pursuant
to this Section, prorated on a daily basis
for partial years, and escalated using the
GDPIPD for the period of such delay.
12.1.2.3 The Company shall exercise its option to
delay by providing written notice to
Seller, provided, however, that the
Company's notice must be provided no later
than six months prior to the financial
closing for the construction financing for
the Facility. Seller shall provide the
Company with its schedule for financial
closing at least seven months prior to the
projected date for financial closing, and
shall revise the schedule from time to
time to reflect any delays in the
projected date for financial closing.
12.1.2.4 Any delays pursuant to this Section shall
result in a corresponding extension of the
dates in the portion of the Construction
Milestone Schedule pertaining to Phase I
and a corresponding adjustment in the
Commercial Operation Deadline. In
addition, if the delay results in the need
for additional extensions due to
circumstances such as seasonal
constraints on construction, an additional
adjustment shall be made to the dates in
the portion of the Construction Milestone
Schedule pertaining to Phase I and the
Commercial Operation Deadline.
12.1.3 Company's Right to Delay Phase II.
---------------------------------
12.1.3.1 Before the Phase II Commencement of
Construction, the Company shall have the
right to delay the Phase II Scheduled Date
of Commercial Operation by the lesser of
(a) twenty-four (24) months, or (b) such
period as shall not cause Seller to lose
its air permit or any other permit
required for the Facility, by giving
Seller written notice of the required
delay. The Company may request delays in
excess of the period allowed pursuant to
the preceding sentence, provided,
however, that Seller may grant or deny
such additional delays in its sole and
exclusive discretion.
12.1.3.2 In exchange for obtaining delays pursuant
to this Section, the Company shall be
required to pay Seller an amount
equivalent to the present value of the
escalation of Capacity Payments,
escalated by the change in the specific
index entitled Steam Production Plant -
Total Steam Production Plant, as published
in the Handy Xxxxxxx Bulletin No. 138
under Cost Trends of Electric Utility
Construction North Central Region, for the
period of the delay, levelized over the
Term of this Agreement, and for its
reasonable additional non-inflation
related costs associated with such delays,
determined using the Discount Rate (see
Exhibit 12.1.3 for a sample calculation).
In addition, if, on the date that would be
the Phase II Scheduled Date of Commercial
Operation but for the exercise of the
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Company's rights under this Section,
Seller has entered into a thermal energy
purchase agreement with International
Paper Company or the then current owner or
operator of the Nicolet Paper Mill, the
Company shall pay International Paper
Company or such then current owner or
operator one million dollars ($1,000,000)
for each year of delay pursuant to this
Section, prorated on a daily basis for
partial years, and escalated using the
GDPIPD for the period of such delay.
12.1.3.3 The Company shall exercise its option to
delay by providing written notice to
Seller, provided, however, that the
Company's notice must be provided no later
than six months prior to the financial
closing for the construction financing for
Phase II of the Facility. Seller shall
provide the Company with its schedule for
financial closing at least seven months
prior to the projected date for financial
closing, and shall revise the schedule
from time to time to reflect any delays in
the projected date for financial closing.
12.1.3.4 Any delays pursuant to this Section shall
result in a corresponding extension of the
dates in the portion of the Construction
Milestone Schedule pertaining to Phase II
and a corresponding adjustment in the
Phase II Commercial Operation Deadline.
In addition, if the delay results in the
need for additional extensions due to
circumstances such as seasonal constraints
on construction, an additional adjustment
shall be made to the dates in the portion
of the Construction Milestone Schedule
pertaining to Phase II and the Phase II
Commercial Operation Deadline.
12.1.4 Limit on Right to Delay.
-----------------------
The Company's right to delay Phase I or Phase II of
the Facility shall be limited to the extent that such
delay could result in material additional delays,
unreimbursed costs, or a risk of cancellation of
Phase I or Phase II of the Facility. Within thirty
(30) days after Seller's receipt of the Company's
notice pursuant to Section 12.1.2.2 or Section
12.1.3.2, Seller shall provide the Company with a
statement indicating whether it believes that the
exercise of the right to delay will cause material
additional delays, unreimbursed costs, or a risk of
cancellation. If the Company does not agree with
Seller's statement, it may exercise its right to
delay, provided, however, that the Company shall
reimburse Seller for any such material unreimbursed
costs, or for the consequences of any such
cancellation or additional delay. If the Parties are
unable to agree upon the effect on Seller of any such
delay, the dispute shall be submitted to Dispute
Resolution.
12.1.5 Receipt of CPCN.
---------------
12.1.5.1 Either Party may terminate the Agreement
without any liability whatever to the
other Party if a CPCN for Phase I of the
Facility has been denied
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or has not been received within thirty-six
(36) months of the Effective Date and any
deposits made by Seller under Section
11.4.3(a) shall be refunded.
12.1.5.2 Either Party may terminate the Agreement
with respect to the Incremental Capacity
of the Facility without any liability
whatever to the other Party if a CPCN for
Phase II of the Facility has been denied
or has not been received within
twenty-four (24) months prior to the
Phase II Scheduled Date of Commercial
Operation; provided, however, that the
rights and obligations of the Parties with
respect to Phase I of the Facility shall
be unaffected by such termination.
12.2 Seller's Warranties and Representations
Seller hereby warrants and represents that:
12.2.1 Organization of Seller
Seller is a limited liability company, duly organized,
validly existing and in good standing under the Laws
of the State of Wisconsin and is duly qualified to do
business in such state. Seller has full power and, to
the knowledge of the Seller, all necessary permits,
licenses, approvals, authorizations, franchises and
registrations to carry on its business as it is now
being conducted.
12.2.2 Authorization; Enforceability
The execution, delivery and performance of this
Agreement by Seller and all of the documents and
instruments required by this Agreement to be executed
by Seller are within the power of Seller and have been
duly authorized by all necessary action by Seller.
This Agreement is, and the other documents and
instruments required by this Agreement to be executed
and delivered by Seller will be, when executed and
delivered by Seller, the legal, valid and binding
obligations of Seller enforceable against Seller in
accordance with their respective terms.
12.2.3 No Violation or Conflict
The execution, delivery and performance of this
Agreement by Seller do not conflict with or violate
any Law applicable to Seller, the Articles of
Organization or Bylaws of Seller or any contract or
agreement to which Seller is a Party or by which it is
bound, including any agreement relating to Seller's
financing of the Facility.
12.2.4 Disclosure
There are no material untrue statements of fact by
Seller contained in this Agreement, nor has Seller
failed to state a material fact in this Agreement
necessary in order to make any other material
statement of fact by Seller in this Agreement not
misleading.
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12.2.5 Litigation
To the knowledge of Seller, there are no actions,
suits or proceedings against Seller by any person
which question the legality, validity or propriety of
the transaction contemplated by this Agreement.
12.2.6 Data and Projections
To the knowledge of Seller, all data and factual
material provided in writing by Seller to the Company
pursuant to this Agreement and relating to the
Facility are correct in material respects. All
estimates or projections so provided were consistent
with estimates or projections contemporaneously used
by Seller at the time the projection or estimate was
delivered to the Company. The Company acknowledges
that such estimates or projections are inherently
difficult to quantify and are subject to change under
a variety of circumstances, many of which are not in
the control of the Seller.
12.2.7 Title to Property
At the time of the execution of this Agreement, to the
best of Seller's knowledge and information, Seller
has, or will be able to obtain for all property
acquired after the Effective Date, good and marketable
title to, or the right to lease or occupy: (a) all
property, real and personal, comprising the Facility,
the Site and the Seller's Interconnection Facilities,
free and clear of all mortgages and of any other liens
and encumbrances except for liens for taxes and
charges incident to construction not yet due and
payable and the easements, conditions and restrictions
and (b) all easements, rights-of-way and other
interests related to that property, which materially
affect Seller's performance under this Agreement.
12.2.8 Representations Regarding the Site and Facility
Seller has received no written notice of any building
code violation or violation of any other Law affecting
the Site or the Facility or of any claim, action, suit
or other proceeding relating to the Site or Facility.
12.2.9 Environmental Matters
As of the Effective Date, Seller has no knowledge,
after due inquiry, that: (a) any hazardous or toxic
substance or hazardous or toxic waste as defined in
any applicable Law has been placed, used, stored,
deposited, treated, recycled or disposed of on, under,
or in the Site which if known to be present would
require cleanup, removal or some other remedial action
under any applicable Environmental Laws; (b) there has
been any prior disposal or deposition in any fashion
on the Site by any prior owner or person using the
Site, whether with or without authorization, of any
hazardous or toxic substances or hazardous or toxic
waste as defined in any applicable Law; (c) the Site
contains asbestos, polychlorinated biphenyl compounds
(PCBs) or underground storage tanks; and (d) there are
any conditions currently existing at the Site which
would subject its owner
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to any damages, penalties, injunctive relief or
cleanup costs in any governmental or regulatory action
or third party claim relating to any hazardous or
toxic substance or hazardous or toxic waste. Seller
further warrants and represents that it is not subject
to any court or administrative proceeding, judgment,
decree, order or citation relating to any hazardous or
toxic substance or hazardous or toxic waste at the
Site. Seller further warrants and represents that in
all material respects as of the Effective Date and
during the Term of this Agreement, it is employing,
and will employ, its reasonable best efforts in
accordance with Prudent Electrical Practices to remain
in material compliance with all applicable
Environmental Laws both as to on-site activities and
as to any substances generated or discharged at the
Facility or on the Facility Site and transported
elsewhere. For purposes of this paragraph, the Site
includes the ground water, surface water, air and any
improvements on, under or above the Site. Seller
further warrants and represents that any permits or
licenses necessary or required to generate, store or
use any hazardous or toxic substance or hazardous or
toxic waste at, in, under, about or in connection with
the Facility will be obtained and be in full force and
effect throughout the Term of this Agreement, and will
be complied with.
12.3 The Company Warranties and Representations
The Company hereby warrants and hereby represents that:
12.3.1 Organization of the Company
The Company is a corporation duly organized, validly
existing and in good standing under the Laws of the
State of Wisconsin and is duly qualified to do
business in such state. The Company has full
corporate power and, to the knowledge of the Company,
all necessary permits, licenses, approvals,
authorizations, franchises and registrations to carry
on its business as it is now being conducted.
12.3.2 Authorization; Enforceability
The execution, delivery and performance of this
Agreement by the Company and all of the documents and
instruments required by this Agreement to be executed
by the Company are within the corporate power of the
Company and have been duly authorized by all necessary
corporate action by the Company. This Agreement is,
and the other documents and instruments required by
this Agreement to be executed and delivered by the
Company will be, when executed and delivered by the
Company, the legal, valid and binding obligations
of the Company enforceable against the Company in
accordance with their respective terms.
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12.3.3 No Violation or Conflict
The execution, delivery and performance of this
Agreement by the Company do not conflict with or
violate any Law applicable to the Company, the
Articles of Incorporation or Bylaws of the Company or
any contract or agreement to which the Company is a
party or by which it is bound.
12.3.4 Disclosure
There are no material untrue statements of fact by the
Company contained in this Agreement, nor has the
Company failed to state a material fact necessary in
order to make other statements by the Company not
misleading.
12.3.5 Litigation
To the knowledge of the Company, there are no actions,
suits or proceedings against the Company by any person
which question the legality, validity or propriety of
the transaction contemplated by this Agreement.
12.3.6 Data and Projections
To the knowledge of the Company, all data and factual
material provided by the Company to Seller, including
that with respect to the Company's avoided costs, were
correct in material respects at the time so submitted.
All estimates or projections so provided to Seller
were consistent with estimates or projections
contemporaneously used by the Company at the time the
projection or estimate was delivered to Seller except
with respect to assumptions utilized which were
requested by Seller or, in certain cases, which
reflect sensitivity analyses using a range of stated
assumptions. Seller acknowledges that such estimates
or projections are inherently difficult to quantify
and are subject to change under a variety of
circumstances, many of which are not in the control of
the Company.
12.4 Opinions of Counsel
The Parties hereto warrant and represent that each of them
shall provide to the other, upon reasonable request, an
opinion of independent legal counsel, in form and substance
reasonably satisfactory to the other Party and its legal
counsel, confirming, to the extent known, the accuracy of any
legal matter addressed in any warranty and representation
made in this Agreement.
ARTICLE XIII: INDEMNITY AND LIMITATION OF LIABILITY
----------------------------------------------------
13.1 Indemnification by Seller
13.1.1 Seller hereby agrees to defend, indemnify and hold
harmless the Company and its officers, directors,
employees and agents from and against any liability,
claim, injury (including death resulting therefrom),
property damage, cost or expense, fine, penalty or
assessment by any public agency, including
reasonable attorneys'
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fees and defense fees, but not including consequential
damages, directly or indirectly related to, associated
with, or arising from any claims against the Company
arising from the failure of Seller to fulfill its
obligations under this Agreement.
13.1.2 Seller hereby agrees to defend, indemnify and hold
the Company harmless for, and assumes all risk of,
damage to the Facility and Seller's Interconnection
Facilities caused by Seller's operation of said
Facility and Seller's Interconnection Facilities.
13.1.3 Seller agrees to indemnify and hold harmless the
Company, its officers, directors, agents, and
employees against all loss, damage, expense, costs
and liability, including reasonable attorneys' fees,
for injury to or death of persons or injury to
property, occurring on Seller's side of the
Interconnection Point proximately caused by Seller's
negligence or willful misconduct in the
construction, ownership, operation, or maintenance
of the Facility and Seller's Interconnection
Facilities.
13.1.4 Seller agrees to indemnify and hold harmless the
Company from and against all losses, liabilities,
claims, injuries (including death resulting
therefrom), property damage, cost, expense, or
obligation arising out of any violation or claimed
violation of any provision of Environmental Law, on
the part of Seller and its employees. This
indemnity shall include but not be limited to any
and all claims, fines, penalties, or assessments by
any public agency or by third parties arising under
any Environmental Law.
13.1.5 Notwithstanding any language to the contrary in this
Agreement, the Company shall have no liability to
Seller with respect to provision of advice,
consultation, proposals or recommendations of the
Company personnel or representatives to Seller
whether occasioned by comments or requests or by the
negligent acts or omissions of employees or
representatives of the Company or otherwise, and
Seller shall indemnify the Company and hold harmless
the Company from and against all such losses,
damages, costs or liabilities.
13.2 Indemnification by the Company
13.2.1 The Company hereby agrees to defend, indemnify and
hold harmless Seller and its officers, directors,
employees and agents from and against any liability,
claim, injury (including death resulting therefrom),
property damage, cost or expense, fine, penalty or
assessment by any public agency, including
reasonable attorneys' fees and defense fees, but not
including consequential damages, directly or
indirectly related to, associated with, or arising
from any claims against Seller arising from the
failure of the Company to fulfill its obligations
under this Agreement.
13.2.2 The Company agrees to indemnify and hold harmless
Seller, its officers, directors, agents, and
employees against all loss, damage, expense, costs
and liability, including reasonable attorneys' fees,
for injury to or death of persons or injury to
property, occurring at the Facility proximately
caused by a negligent act or
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omission or willful misconduct of the Company or its
agents while on the Seller's premises at the Facility.
13.2.3 The Company agrees to indemnify and hold harmless
Seller from and against all losses, liabilities,
claims, injuries (including death resulting
therefrom), property damage, cost, expense, or
obligation arising out of any violation or claimed
violation of any provision of Environmental Law, on
the part of the Company and its employees. This
indemnity shall include but not be limited to any
and all claims, fines, penalties, or assessments by
any public agency or by third parties arising under
any Environmental Law.
13.3 Worker's Compensation
Nothing contained in this Agreement is intended or shall be
construed as a waiver, either expressed or implied, of any
provision of the Worker's Compensation Laws of the State of
Wisconsin (Chapter 102, Wis. Stats.) and any successor
statutes or as an assumption by contract, expressed or
implied, of any responsibility or liability greater than that
imposed by said Laws or, in particular, inconsistent with the
exclusive remedy provisions of said Law.
13.4 Joint Negligence
In the case of joint or concurring negligence of the Parties
giving rise to a loss or claim against either one or both,
each shall have rights or contribution against the other
Party in proportion to their comparative negligence as
determined by the court or arbitrators trying or arbitrating,
as the case may be, the matter in dispute. Each Party shall
promptly notify the other Party of the assertion of any claim
against which such other Party may be required to provide
indemnity hereunder and shall give the other Party an
opportunity to defend such claim. These indemnification
provisions are for the protection of the Parties hereto only
and shall not establish, of themselves, any liability to
third parties.
13.5 No Partnership
The Parties do not by this Agreement effect a joint
undertaking and do not intend to create any joint or several
obligations to third parties. Neither this Agreement nor any
grant or license related thereto, shall be construed to
create a new entity, such as a partnership or a joint
venture, or constitute an agency relationship. Neither Party
shall be under control of or be deemed to control the other
Party and no Party shall have the right or power to bind any
other Party.
13.6 Responsibility for Employees
The Parties agree that, as between themselves, each Party
shall be responsible for the acts and omissions of, and any
claims by, its employees and agents, irrespective of any
limitation on the amount or type of damages, compensation or
benefits payable by or for such Party under workers' or
workmen's compensation acts, disability benefit acts or other
employee benefit acts; provided, however, that the foregoing
is not intended to create third party beneficiary rights in
any party not a Party to this Agreement. Each Party shall
indemnify
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the other Party from and against all liabilities, claims,
damages, suits, fines or judgments for injury or death to
third persons and damage to or destruction of property of
third persons, to the extent caused by such Party's employees
or agents.
ARTICLE XIV: INSURANCE
-----------------------
14.1 Specified Coverages
During the Term of this Agreement, Seller or its contractors
and subcontractors, as applicable, shall procure, pay
premiums for and maintain in full force and effect the
insurance coverages described below. With the exception of
the coverages required by Section 14.1.1 and Section 14.1.6,
all such insurance coverages shall include the Company as an
additional insured and shall be primary in all instances
without regard to like coverage, if any, maintained by the
Company. For all types of coverages set forth below, any
exclusions which are not standard for such coverages, or
which are added by manual endorsements and restrict coverage,
must be approved by the Company, which approval shall not be
unreasonably withheld. In the event that Seller reasonably
determines that any such policy of insurance is no longer
available at commercially reasonable rates, Seller shall not
be obligated to continue to carry such insurance, and shall
use its reasonable best efforts to obtain substitute
insurance which is as nearly identical as possible to the
policy of insurance which it is intended to replace.
Disagreements over the availability of any such policy of
insurance at commercial rates, the extent of Seller's efforts
to obtain substitute insurance and the adequacy of such
substitute insurance shall be subject to Dispute Resolution.
14.1.1 Worker's Compensation Insurance as required by the
Laws of the State of Wisconsin, and Employer's
Liability with limits established by state or
federal Law if applicable.
14.1.2 Occurrence Form Comprehensive General Liability
insurance, including coverage for
(a) premises/operations, (b) independent contractor,
(c) products and completed operation, (d) broad form
contractual liability, (e) broad form property
damage, (f) explosion, collapse and underground
damage exclusion deletion, and (g) personal injury,
all with limits of not less than $25,000,000 each
occurrence and in the aggregate.
14.1.3 Comprehensive Vehicle Liability Insurance, covering
all licensed or unlicensed vehicles and automobiles
whether owned, leased, or rented when used in
connection with performance of the Agreement and
including coverage for Bodily Injury and Property
Damage in an amount not less than $1,000,000 per
person, $2,000,000 per accident.
14.1.4 All Risk Property Coverage and Boiler and Machinery
Coverage against damage to the Facility during the
Term of this Agreement, including without
limitation, damage during the construction or
operation of the Facility, in an amount not less
than the full replacement cost of the Facility and
subject to a deductible not to exceed $500,000.00.
Expediting coverage in an amount of not less than 10
percent (%) of the full replacement cost of the
Facility must also be provided.
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14.1.5 All Risk Builder's Risk Insurance upon the entire
work at the Site to the full insurable value
thereof, insuring against, but not limited to, the
perils of fire, extended coverage, vandalism and
malicious mischief.
14.1.6 Professional Liability/Errors and Omissions
Insurance in the amount of $10,000,000 for the
period from the Commencement of Construction through
the Date of Commercial Operation and for the period
from the Phase II Commencement of Construction
through the Phase II Date of Commercial Operation.
14.2 Insurance Certificates
Seller shall provide certificates of insurance from insurance
companies having a Best rating of A or better that the
insurance coverages required herein are maintained. Such
certificates shall provide, inter alia, that the Company be
listed as an additional insured and be given 30 days written
notice by the insurer of any cancellation or significant
change in any required coverage provided by such insurer as
evidenced by the certificates. If requested by the Company,
Seller will provide the Company with copies of its policies.
14.3 Coverage For Full Term
All required coverages shall remain in full force and effect
during the Term of this Agreement. Seller's liability under
the Agreement shall not be limited to the insurance coverages
contained in this Article XIV.
14.4 Insurance Proceeds
In the event of loss occurring after the termination of the
construction and permanent financing of the Facility, all
insurance proceeds realized as a result therefrom shall be
applied to repair of the Facility unless the Parties agree
otherwise.
ARTICLE XV: TERM
-----------------
15.1 Term
15.1.1 Subject to the terms and conditions of this
Agreement, this Agreement shall commence on the
Effective Date and shall continue in effect through
the 25th anniversary ("Termination Date") of the
Date of Commercial Operation; provided, however, that
the Termination Date shall be extended beyond the 25th
anniversary of the Date of Commercial Operation by an
amount of time equal to the amount of any delay in the
Phase II Date of Commercial Operation requested by the
Company pursuant to Section 12.1.3 or any delay in the
Phase II Date of Commercial Operation purchased by
Seller in accordance with Section 00.0.0.0:
15.1.1.1 If, for any reason, the Date of Commercial
Operation has not occurred by the
Scheduled Date of Commercial Operation,
and the Scheduled Date of Commercial
Operation has not been revised in
accordance with the terms
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of this Agreement, the Company may
terminate the Agreement under the terms
and provisions of Section 11.1.
15.1.1.2 Seller shall be entitled to extend the
Scheduled Date of Commercial Operation by
specifying a revised Scheduled Date of
Commercial Operation and by complying with
the conditions specified below:
(a) By no later than thirty (30) days prior to
the Scheduled Date of Commercial
Operation, Seller shall certify to the
Company its revised Scheduled Date of
Commercial Operation.
(b) With such certification, Seller shall pay
the Company an extension fee. The
extension fee shall equal $30 per kilowatt
divided by 12 multiplied by the number of
months or partial months extended,
multiplied by the Design Rating of
Phase I.
(c) No more than 3 extensions will be allowed
and the final revised Scheduled Date of
Commercial Operation shall be no later
than eighteen (18) months after the
original Scheduled Date of Commercial
Operation.
15.1.1.3 In the event that a revised Scheduled Date
of Commercial Operation is established in
accordance with the terms of this
Agreement, all other dates in the
Construction Milestone Schedule for
Phase I and the Commercial Operation
Deadline shall be adjusted accordingly.
15.1.1.4 If, for any reason, the Phase II Date of
Commercial Operation has not occurred by
the Phase II Scheduled Date of Commercial
Operation, and the Phase II Scheduled Date
of Commercial Operation has not been
revised in accordance with the terms of
this Agreement, then, pursuant to
Section 11.1, the Company may terminate
this Agreement with respect to its
obligation to purchase the Incremental
Capacity of the Facility; provided,
however, that the rights and obligations
of the Parties with respect to Phase I of
the Facility shall be unaffected by such
termination.
15.1.1.5 Seller shall be entitled to extend the
Phase II Scheduled Date of Commercial
Operation by specifying a revised Phase II
Scheduled Date of Commercial Operation and
by complying with the conditions specified
below:
(a) By no later than thirty (30) days prior to
the Phase II Scheduled Date of Commercial
Operation, Seller shall certify to the
Company its revised Phase II Scheduled
Date of Commercial Operation.
(b) With such certification, Seller shall pay
the Company an extension fee. The
extension fee shall equal $30 per kilowatt
divided by 12 multiplied by the number of
months or partial months extended,
multiplied by the Design Rating of
Phase II. The thirty dollar ($30)
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per kilowatt fee shall be escalated
monthly using the GDPIPD from the original
Phase II Scheduled Date of Commercial
Operation to the revised Phase II
Scheduled Date of Commercial Operation.
(c) No more than 3 extensions will be allowed
and the final revised Phase II Scheduled
Date of Commercial Operation shall be no
later than eighteen (18) months after the
original Phase II Scheduled Date of
Commercial Operation.
15.1.1.6 In the event that a revised Phase II
Scheduled Date of Commercial Operation is
established in accordance with the terms
of this Agreement, all other dates in the
Construction Milestone Schedule for
Phase II and the Phase II Commercial
Operation Deadline shall be adjusted
accordingly.
15.1.2 Extensions.
15.1.2.1 The Company shall have the option, upon at
least twelve (12) months written notice
prior to the Termination Date, to extend
this Agreement for one (1) five-year
renewal term. During such renewal term,
the Company shall make Energy Payments and
Capacity Payments in accordance with the
terms and conditions of this Agreement.
15.1.2.2 The Company shall have the option, upon at
least twelve (12) months written notice
prior to the expiration of the renewal
term pursuant to Section 15.1.2.1, to
extend this Agreement for one (1)
additional five-year renewal term.
During such renewal term, the Company
shall make Energy Payments and Capacity
Payments in accordance with the terms and
conditions of this Agreement.
15.1.2.3 During any renewal term pursuant to this
Section, Sections 3.2.8.2 and 3.2.8.3
shall not apply.
ARTICLE XVI: COMPANY'S OPTION TO PURCHASE
------------------------------------------
16.1 Option to Purchase Upon Seller Default
The Company shall have the option, but not the obligation, to
purchase the Facility upon the termination of this Agreement
following the occurrence of a default by Seller under Section
11.1 of this Agreement (other than a default under Section
11.1.5 or Section 11.1.8) which is not cured in accordance
with the provisions of this Agreement. Such option shall be
in addition to all claims the Company may have for Liquidated
Damages or other damages under this Agreement or otherwise by
Law. Notice of exercise of the option must be given by the
Company to Seller within two (2) months of the expiration of
any applicable cure period for Seller's default under this
Agreement or of the termination of this Agreement. The
purchase price for the Facility and the closing date shall be
determined in the same manner as provided in Section 16.1.1.
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16.1.1 The purchase price for the Facility shall be the
present value of the remaining Capacity Payments
(including Fixed Operation and Maintenance Payments,
less personnel costs) at the time of the purchase of
the Facility, determined using the Discount Rate.
Closing of the purchase shall occur within sixty
(60) days of the exercise date.
16.1.2 The Company may not exercise its option pursuant to
this Section if a Project Lender shall have cured
the default pursuant to Section 21.2, or if the
Company has entered into a New Agreement with any
Project Lender or its designee pursuant to Section
21.2.1(e).
16.2 Limit on Option
The right granted pursuant to Section 16.1 shall be subject
to any purchase option held by International Paper Company.
16.3 Right of First Refusal
16.3.1 The Company shall have an exclusive right of first
refusal to purchase any Transfer Interest on the
terms and conditions set forth herein; provided,
however, and subject to the Company's prior written
consent, which may not be unreasonably withheld,
Seller may grant the steam buyer a right of first
refusal to purchase any Transfer Interest, which
right shall be prior to the Company's right of first
refusal. Any such right of first refusal granted to
the steam buyer shall be in form and substance
reasonably satisfactory to the Company and shall
require the steam buyer to continue operating the
Facility in accordance with the provisions of this
Agreement.
16.3.2 If Seller or any of its subsidiaries, affiliates or
other related entities ever desire to dispose of its
or their right, title, or interest in the Facility,
or any part thereof (hereinafter referred to as a
"Transfer Interest"), other than by the mortgage or
sale and leaseback of the Facility to provide
financing for the Facility, or if Seller receives a
bona fide offer to purchase or lease the Facility,
or any part thereof (hereinafter also referred to as
a "Transfer Interest"), which offer Seller is prepared
to accept, it shall give notice thereof in writing to
the Company (the "Notice"). The Notice shall
(a) specify the terms under which Seller is prepared
to dispose of the Transfer Interest, including the
purchase price of the Transfer Interest, or
(b) include a copy of the acceptable offer received by
Seller, as the case may be.
16.3.3 If the steam buyer has been granted a right of first
refusal as set forth above, the Seller shall offer
the Transfer Interest to the steam buyer in
accordance with the terms of the steam buyer's right
of first refusal. If the steam buyer waives its
right with respect to the Transfer Interest or the
steam buyer does not have a right of first refusal,
Seller shall offer the Transfer Interest to the
Company on the terms set forth in the Notice and a
price equal to the lesser of (a) the fair market
value of the Transfer Interest or (b) the price set
forth in the Notice.
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16.3.4 For a period of ninety (90) days after receipt by
the Company of the Notice, or ninety (90) days after
the Company receives notice from the Seller that the
steam buyer has waived its right of first refusal,
whichever is longer, the Company shall have the
right to exercise its right of first refusal with
respect to the Transfer Interest by giving written
notice thereof to Seller.
16.3.5 In the event the Company elects not to exercise its
right of first refusal pursuant to the foregoing
provisions and a sale or lease of the Transfer
Interest is not fully consummated, in accordance
with the terms and conditions set forth in the
Notice, within one year from the date the Company
receives the Notice, Seller agrees that the
Company's right of first refusal to purchase or
lease the Facility, or any part thereof, shall
continue on the terms and conditions contained
herein. Any sale of any Transfer Interest shall not
extinguish the Company's right of first refusal with
respect to any portion of the Facility or the
Seller, as the case may be, not transferred pursuant
to such sale. Any lease of any Transfer Interest
shall not extinguish the Company's right of first
refusal with respect to any extensions of such lease
or with respect to any other leases, sales or other
dispositions of any Transfer Interest.
16.3.6 If the Company elects to exercise its right of first
refusal with respect to the Transfer Interest, the
Parties shall fully consummate the transfer of the
Transfer Interest within sixty (60) days after the
Company exercises its right of first refusal. If a
disagreement arises relating to the fair market
value of the Transfer Interest, the Dispute
Resolution Process shall be used.
16.3.7 The Company's right of first refusal shall apply to
any transfer or sale of any interest in the Seller
(other than a pledge or other assignment of any
interest in the Seller in connection with the
financing for the Facility) if the transfer or sale
is proposed to be made to any entity other than
Allstate Insurance Company, Energy Initiatives,
Inc., or International Paper Company, or an entity
which is, directly or indirectly, controlled by, in
control of, or under common control with, the
Seller, Allstate Insurance Company, Energy
Initiatives, Inc., or International Paper Company,
(hereinafter also referred to as a "Transfer
Interest"). Notwithstanding the foregoing, in the
event of a voluntary or involuntary transfer of an
interest which represents less than one hundred
percent (100%) of the interest in Seller, the
Company agrees not to exercise its right of first
refusal if, but only if, (a) the Company's ownership
of such interest in Seller or the Facility would
cause the loss of the Seller's status as an Exempt
Wholesale Generator under PUHCA or the Facility's
status as a "Qualifying Cogeneration Facility" under
PURPA, and (b) the transfer of such interest shall
be made to a party reasonably acceptable to the
Company.
16.3.8 For so long as Seller is an Exempt Wholesale
Generator under PUHCA, the Company shall not
exercise its right of first refusal with respect to
a Transfer Interest which represents less than one
hundred percent (100%) of the interests in the
Facility or the Seller unless and until the
determinations required under Section 32(k)(2) of
PUHCA have been made and are final and non-appealable.
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16.3.9 The Seller covenants and agrees to sign, execute and
deliver, or cause to be signed, executed and
delivered, and to do or make, or cause to be done or
made, upon the written request of the Company, any
and all agreements, instruments, papers, deeds, acts
or things, supplemental, confirmatory or otherwise,
as may be required by the Company for the purpose of
or in connection with the right of first refusal
established hereby.
16.4 Termination
In the event that the Company purchases the Facility pursuant
to this Agreement, this Agreement shall terminate. In the
event that any thermal energy sale agreement for the sale of
the thermal energy produced by the Facility (a) does not
impose greater obligations on the Company than would have
been imposed on Seller if it had continued to perform the
agreement, and (b) includes pricing provisions for the energy
component of the thermal energy price which escalate on the
basis of generally accepted indices, and pricing provisions
for the fixed component which do not decline over time, the
Company shall assume and perform any obligations of Seller
under such thermal energy sale agreement. In the event that
any thermal energy sale agreement for the sale of the thermal
energy produced by the Facility does not meet the criteria
described in the preceding sentence, the Company shall not be
obligated to perform any obligations of Seller under such
agreement, but the Company shall offer to negotiate in good
faith to enter into a new thermal energy sale agreement with
the thermal energy purchaser under the original thermal
energy sale agreement with the Seller; provided, however,
that the total steam price pursuant to such new agreement
shall not exceed the base steam price, escalated for periods
after the effective date of the new agreement using the
GDPIPD. The base steam price shall be, (i) in the case of
periods on or before the tenth anniversary of the
commencement of service under the thermal energy sale
agreement, the average thermal energy sale price since the
commencement of service under the thermal energy sale
agreement, expressed in constant dollars for the year in
which service commences, or (ii) in the case of periods after
the tenth anniversary of the commencement of service under
the thermal energy sale agreement, the average thermal energy
sale price during the first ten years following the
commencement of service under the thermal energy sale
agreement, expressed in constant dollars for the year in
which service commences, and escalated for periods after the
tenth anniversary at GDPIPD.
ARTICLE XVII: RECORDS
----------------------
17.1 Company Records
The Company shall maintain for a period of not less than five
(5) years from the date of preparation thereof complete and
accurate records of: (a) all interconnection costs incurred
by the Company; (b) all measurements by Metering Devices of
Net Energy Output delivered pursuant to this Agreement, and
(c) all other data and information necessary to calculate
payments as provided in this Agreement, including invoices,
receipts, charts, printouts, and other materials and
documents. Seller or its representatives shall be permitted
to inspect such records upon request during normal business
hours and copies of such records shall be provided, if
requested, within 30 days of Seller's request.
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17.2 Seller Records
17.2.1 Operation & Maintenance
Seller shall maintain for a period of not less than
five (5) years from the date of preparation thereof an
accurate and up-to-date operating log at the Facility
with records of: real and reactive power production
for each hour, changes in operating status, scheduled
outages and any unusual conditions found during
inspections. The Company shall be permitted to
inspect such operating log upon request during normal
business hours and copies of such log shall be
provided, if requested, at the Company's expense,
within 30 days of such request. Except with respect
to such operating log, Seller shall maintain for the
duration of this Agreement, all permits, approvals,
contracts, studies and other documents respecting the
construction, operation and maintenance of the
Facility. The Company shall be permitted to inspect
such documents upon request during normal business
hours and copies of such documents shall be provided,
if requested, at the Company's expense, within 30 days
of such request.
17.2.2 As-Builts
Seller shall at all times cause an accurate and
complete set of the "as-built" plans and
specifications relating to the Facility to be
maintained at the Facility and available for
inspection by Company, which plans and specifications
shall be amended from time to time to reflect on a
current basis all material improvements, additions and
modifications to the Facility.
ARTICLE XVIII: NOTICES
-----------------------
18.1 Certain Notices
18.1.1 Seller, promptly upon obtaining knowledge of any of
the following, shall provide notice to Company of:
18.1.1.1 The occurrence of a material default or
event of default under (i) any agreement
to which the Seller and any lender are
parties, (ii) the lease of the Site and
(iii) any steam purchase agreement;
18.1.1.2 The occurrence of any material default
or event or default under any other
agreement, including any agreement for
the purchase or transportation of fuel;
18.1.1.3 Any litigation, investigation or
proceeding which may exist at any time
between Seller and any governmental
authority;
18.1.1.4 Any material adverse change in the
properties, business, operations,
prospects or financial or other condition
of the Seller and of any change of Law,
rule or regulation which has or could
reasonably be expected to have such a
material adverse effect;
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18.1.1.5 Any loss or damage to the Facility in
excess of $100,000; and
18.1.1.6 Any event constituting, or that could
reasonably be expected to constitute, an
event of Force Majeure.
Each notice pursuant to this Section 18.1 shall be
accompanied by a statement of a senior officer of Seller
setting forth details of the occurrence referred to therein,
the anticipated duration thereof, and stating what action
Seller proposes to take with respect thereto.
Notwithstanding anything to the contrary in this
Section 18.1, Seller agrees to provide the Company with
any notice of default it receives under any agreement
described in Section 18.1.1.1 hereof.
18.2 Notices in Writing
18.2.1 All notices or other communications which are
required or permitted under this Agreement shall be
effective if they are in writing and delivered
personally or by certified mail, postage prepaid,
overnight delivery service, or telecopy or other
confirmable form of electronic delivery, to the
following address:
18.2.1.1 if to Seller:
DePere Energy LLC
x/x Xxxxxx Xxxxxx Xxxxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxxxxx Center
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: President
18.2.1.2 if to the Company:
Wisconsin Public Service Corporation
000 Xxxxx Xxxxx
Xxxxx Xxx, XX 00000-0000
Attn: Senior Vice-President-Power Supply
and Engineering
18.2.1.3 or to such other person or address as the
addressee may have specified in a notice
duly given to the sender as provided
herein.
18.3 Date of Notification
All notices or communications duly delivered or mailed and
postmarked to a Party hereto as provided in Section 18.2
shall be effective as of the date of receipt.
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18.4 Oral Notice in Emergency
Notwithstanding the provisions of Section 18.2, any notice
required hereunder with respect to a System Emergency or
other occurrence requiring prompt attention, may be made
orally, by telephone or otherwise, provided such notice shall
be confirmed in writing immediately thereafter. Seller shall
make such oral notice directly to the System Operating office
at the Company.
18.5 Primary Contact
The Company and Seller shall establish a primary contact to
act for each Party in the implementation of, and the
operation under, the Agreement.
ARTICLE XIX: DISPUTE RESOLUTION
--------------------------------
19.1 Negotiation
In the event of a dispute between the Parties respecting any
of the terms and conditions of this Agreement, the Parties
shall in good faith attempt to resolve such dispute by
negotiations. If a controversy or claim should arise, the
respective Project Managers designated by the Parties, or
their respective successors in the positions they now hold
(herein called the "Project Managers"), will meet at least
once and will attempt to resolve the matter. Either Project
Manager may request the other to meet within seven (7) days,
at a mutually agreed time and place. Such request must be in
the form of a written notice which sets forth the nature of
the controversy or claim. If the matter has not been
resolved within thirty (30) days of their first meeting, the
Project Managers shall refer the matter to Senior Executives,
who shall have authority to settle the dispute (herein called
the "Senior Executives"). There upon, the Project Managers
shall promptly prepare and exchange memoranda stating the
issues in dispute and their positions, summarizing their
negotiations which have taken place and attaching relevant
documents. The Senior Executives will meet for negotiations
within thirty (30) days of the end of the thirty-day period
referred to above, at a mutually agreed time and place.
19.2 Mediation
If the matter in dispute has not been resolved within thirty
(30) days of the meeting of the Senior Executives, the
Parties will attempt in good faith to resolve the controversy
or claim by inviting a single mediator, experienced in the
particular subject matter, to make a recommendation as to
resolution of the dispute.
19.3 Binding Arbitration
In a dispute other than under Section 19.1 and/or if the
matter has not been resolved pursuant to the mediation
procedure set forth in Section 19.2 within sixty (60) days of
commencement of such procedure or if either Party will not
participate in mediation, either Party may elect to have the
dispute resolved by binding arbitration by giving the other
Party written notice of the election setting forth the point
or points in dispute. Such arbitration shall be conducted
before a single arbitrator agreed upon by the Parties. If
the Parties are
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unable to agree upon a single arbitrator, the arbitration
shall be conducted before a panel of three arbitrators, of
whom each Party shall appoint one, with the third arbitrator
to be selected by the first 2 arbitrators from the list
maintained by the American Arbitration Association. The
arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration
Association. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Section 1-16, and
judgment upon the award rendered by the arbitrator or
arbitration panel may be recognized and enforced by any court
having jurisdiction thereof. The arbitrator or arbitrators
shall be competent by virtue of education and experience in
the particular subject matter in dispute. The Parties may
utilize discovery to the same extent as afforded by the
Federal Rules of Civil Procedure.
The Parties shall equally share the cost of the fee or
honorarium of the arbitrator or arbitrators. Both Parties
agree to pay their own legal fees, including stenographic
costs and other hearing-related expenses, such as travel,
lodging, and any service charges required by the American
Arbitration Association. The arbitrator shall have
jurisdiction or authority only to interpret or determine
compliance with the provisions of this Agreement in so far as
shall be necessary to the determination of issues properly
appealed to the arbitrators. The arbitrators shall not have
any jurisdiction or authority to add to, detract from, or
alter in any way the provisions of this Agreement. The
arbitrator or arbitrators are not empowered to award
consequential, exemplary or punitive damages. Pending the
final decision of the arbitrator or arbitrators of a dispute
hereunder, both Parties agree to proceed diligently with the
performance of all contractual obligations, including the
payment of all sums required by this Agreement and not in
dispute.
19.4 Deadlines
All deadlines specified in this Article XIX may be extended
by mutual agreement.
19.5 Exclusive Procedure
Subject to Article XI of this Agreement, the procedures
specified in this Article XIX shall be the sole and exclusive
procedure for the resolution of disputes between the Parties
arising out of or relating to this Agreement; provided,
however, that a Party may seek a preliminary injunction or
other preliminary judicial relief if in its judgment such
action is necessary to avoid irreparable damage. Despite
such action the Parties will continue to participate in good
faith in the procedures specified in this Article XIX. All
applicable statutes of limitation shall be tolled while the
procedures specified in this Article XIX are pending. The
Parties will take such action, if any, required to effectuate
such tolling.
19.6 Survival of Procedure
This Article XIX shall survive the termination of this
Agreement and shall operate to resolve any controversy,
claim, counterclaim, dispute, difference or misunderstanding
arising out of or relating to this Agreement subsequent to
the termination of this Agreement.
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19.7 Binding Upon Parties
In the resolution of any controversy or claim pursuant to
this Article XIX, each of the Parties, their Project
Managers, and Senior Executives, and any mediators or
arbitrators designated pursuant hereto, shall give effect to
Article XI of this Agreement.
ARTICLE XX: CONFIDENTIALITY
----------------------------
20.1 Non-Disclosure to Third Parties
Except in any proceeding to enforce this Agreement, Seller
and Company will not disclose to any third party without the
prior written consent of the other Party: (a) the terms or
conditions of this Agreement or any other Agreement required
hereby or referred to herein; or (b) any confidential or
proprietary information or data, whether oral or written,
received from the other Party. Information which is
considered confidential or proprietary in nature must be
identified as such by stamping each page with the word
"Confidential" when such information is in tangible form.
20.2 Disclosure Permitted
Notwithstanding Section 20.1, Seller or Company may disclose:
(a) such information as may be required by any applicable
Law, regulation, or governmental order; (b) such information
as may reasonably be required by independent accountants,
attorneys, other professional consultants, or prospective
lenders or investors, subject to reasonable procedures and
other safeguards to protect the confidentiality of the
information disclosed; (c) any information which is publicly
known, other than by breach of this Agreement;
(d) information which becomes available to one of the Parties
without restriction from a third party; or (e) information
which is at any time developed by the receiving Party
independently of any disclosures hereunder. In addition, the
Company may use the confidential information in connection
with its dealings with the Commission or other regulatory
authorities of competent jurisdiction. In connection with
any such use, the Company agrees to request confidential
treatment of the information.
20.3 Survival of Confidentiality
The provisions of this Article XX shall survive the
Termination Date for a period of five (5) years.
ARTICLE XXI: ASSIGNMENT
------------------------
21.1 Restriction on Assignment
This Agreement shall inure to the benefit of and be binding
upon the Company and Seller and their respective successors.
Neither Seller nor the Company shall assign its rights or
delegate its duties under this Agreement, or any part of such
rights or duties, without the prior written consent of the
other, which consent shall not be unreasonably withheld, and,
in the case of Seller, notification by the Company that its
right of first refusal under Section 16.3 has been waived.
Any such assignment or delegation made without such prior
written
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consent shall be null and void; provided however, the
requirement of written consent to an assignment shall not
apply to either Party if it merges into another entity with
which it is related as a parent, subsidiary or affiliate,
provided that such entity is or at the date of such merger
becomes bound by all of the obligations under this Agreement.
21.2 Finance Assignments
21.2.1 Seller shall have the right to assign this Agreement
to any Project Lender. If Seller shall assign this
Agreement, then so long as any such assignment, or
any consolidation, modification or extension of any
such assignment shall remain outstanding, the
following provisions shall apply:
(a) Provided that the Company shall have received
written notice of such assignment, the Company
shall, upon serving upon Seller any notice
pursuant to Sections 2.3, 3.2.5.1, 11.1 or 11.2,
also serve a copy of such notice upon the
assignee under the assignment, at the address
provided for in the notice referred to above. No
notice issued by the Company pursuant to Sections
2.3, 3.2.5.1, 11.1 or 11.2 shall be deemed to
have been duly given unless and until a copy
thereof shall have been so served.
(b) From and after the date that such notice has been
given to an assignee, said assignee shall have
the same period for remedying or commencing the
remedy of any alleged default, or causing the
same to be remedied, or for taking any other
action required under the notice, as is given to
Seller pursuant to the terms of this Agreement to
remedy, commence remedying, or cause to be
remedied the default specified in any such
notice, or take any other action required in the
notice. The Company shall accept such
performance by or on behalf of such assignee as
if the same had been done by Seller. Neither the
Company nor Seller shall interpose any objection
if any assignee takes such action or enters the
Facility or the Site for such purpose.
(c) The making of an assignment pursuant to this
Section shall not be deemed to constitute an
assignment or transfer of this Agreement, nor
shall any assignee, as such, be deemed to be an
assignee or transferee of this Agreement so as to
require such assignee, as such, to assume the
performance of any of the terms or conditions on
the part of Seller to be performed hereunder; but
the purchaser at any sale of this Agreement in
any proceedings for the foreclosure of any
assignment, or the assignee or transferee of this
Agreement under any instrument of assignment or
transfer in lieu of the foreclosure of any
assignment, shall be deemed to be an assignee or
transferee within the meaning of this Subsection
and shall be deemed to have agreed to perform all
of the terms, covenants and conditions on the
part of Seller to be performed hereunder from and
after the date of such purchase and assignment.
(d) Notwithstanding any other provision of this
Agreement, (i) any sale of this Agreement in any
proceeding for the foreclosure of any assignment,
or the assignment or transfer of this Agreement
in lieu of the foreclosure of any assignment
shall be deemed to be a permitted sale, transfer
or assignment of
-180-
Page 76 of 82
---- ----
this Agreement, and this Agreement shall continue
in full force and effect following any such sale,
transfer or assignment, and (ii) Section 16.3
shall not apply to any sale of any interest in the
Seller or the Facility in any proceeding for the
foreclosure of any assignment or mortgage of the
Facility or the ownership interests in the Seller,
or the assignment or transfer of any of the
foregoing in lieu of the foreclosure of any such
assignment; provided that the transferee or
assignee in any such case has the experience and
the financial capability to perform the Seller's
obligations under this Agreement.
(e) In the event of the termination of this Agreement
by the Company for any reason, the Company shall,
in addition to providing a copy of the notice
provided pursuant to Section 11.1 as required
above, provide each assignee with written notice
that this Agreement has been terminated, together
with a statement of all sums which would at that
time be due under this Agreement but for such
termination or foreclosure, and of all other
defaults, if any, then known to the Company. The
Company shall enter into a new agreement (the
"New Agreement") with any such assignee or its
designee for the remainder of the Term, effective
as of the date of termination on the same terms
and conditions as this Agreement, provided:
(i) Such assignee or designee shall make
written request upon the Company for such
New Agreement within one hundred and
twenty (120) days after the date such
assignee receives the Company's notice of
termination given pursuant to the
provisions of this Section.
(ii) Such assignee or designee shall pay or
cause to be paid to the Company at the
time of execution and delivery of such New
Agreement, any and all sums which would at
the time of execution and delivery thereof
be due pursuant to this Agreement but for
such termination or foreclosure, and, in
addition thereto, all reasonable expenses,
including reasonable attorneys' fees,
which the Company shall have incurred by
reason of such termination and the
execution and delivery of the New
Agreement and which have not otherwise
been received by the Company from Seller
or any other party in interest under
Seller.
(iii) Such assignee or its designee shall agree
to remedy any of Seller's defaults of which
said assignee was notified by the Company's
notice of termination, and which are
reasonably susceptible of being so cured by
such assignee or its designee.
(iv) If more than one assignee shall request a
New Agreement, the Company shall enter into
such a New Agreement only with the assignee
having the lien most senior in priority.
-181-
Page 77 of 82
---- ----
(f) Paragraphs (d) and (e) shall not be applicable
unless the Project Lenders shall have first
provided the Company an opportunity to offer to
purchase the Facility or the interest in the
Seller, as the case may be.
(i) In the event that the Company makes an
offer to purchase the Facility or an
interest in the Company, (A) the Company's
offer must remain outstanding for at least
six (6) months, and (B) paragraphs (d) and
(e) shall not apply to any transfer of the
Facility or an interest in the Company to
a transferee other than the Company unless
the Project Lenders determine that the
price and commercial terms of such
transfer, taken as a whole, are more
favorable to the Project Lenders than the
price and commercial terms of the
Company's offer.
(ii) In the event that the six-month period
described in (i) above expires, this
paragraph shall apply to any subsequent
transfer of the Facility or an interest in
the Seller pursuant to Paragraphs (d) and
(e).
(iii) In the event that the Project Lenders
accept the Company's offer, the Company
shall close the acquisition of the Facility
or the interest in the Seller within sixty
(60) days after the acceptance of the
offer.
(iv) The right granted pursuant to this Section
shall be subject to any purchase option
held by International Paper Company.
(g) In the event of any casualty or condemnation with
respect to the Facility, and notwithstanding
anything to the contrary contained in this
Agreement, the provisions of the assignment most
senior in priority shall control with respect to
the use of the Seller's share of such proceeds.
(h) No agreement between the Company and Seller
modifying, amending, canceling or surrendering
this Agreement shall be effective without the
prior written consent of all assignees.
ARTICLE XXII: MISCELLANEOUS
----------------------------
22.1 Lack of Precedent
The provisions set forth in this Agreement are applicable
only to this Agreement and the Capacity and Energy proposed
to be sold and purchased hereunder. The Parties specifically
agree that this Agreement is not intended to set a precedent
or constitute a recommendation: (a) regarding the adoption
of a methodology for determining an avoided cost or a rate
for purchase of power from a qualifying facility, (b) as
evidence of the Parties' position with
-182-
Page 78 of 82
---- ----
respect to the determination of an avoided cost or a rate for
purchase of power from a qualifying facility, or (c) with
respect to any of the other terms and conditions herein, for
any other contract entered into by the Company, whether it be
with Seller or any other party, or to any amendment that may
be made to this Agreement.
22.2 Compliance with Laws
Each Party shall at all times conform to all applicable Laws.
Each Party shall give all required notices, shall procure and
maintain all necessary governmental permits, licenses and
inspections necessary for its performance of this Agreement,
and shall pay all charges and fees in connection therewith.
22.3 Governing Law
Subject to applicable federal Law, this Agreement shall be
governed by the Laws of the State of Wisconsin.
22.4 Entire Agreement; Amendment
This Agreement and the documents referred to in this
Agreement and to be delivered pursuant to this Agreement
constitute the entire agreement between the Parties
pertaining to the subject matter of this Agreement, and
supersede and terminate any letters of intent and all prior
and contemporaneous agreements, understandings, negotiations
and discussions with the Parties, whether oral or written,
and there are no warranties, representations or other
agreements between the Parties in connection with the subject
matter of this Agreement, except as specifically set forth in
this Agreement. NEITHER PARTY TO THIS AGREEMENT MAKES ANY
REPRESENTATION, WARRANTY OR INDEMNITY, EXPRESS OR IMPLIED, TO
THE OTHER PARTY TO THIS AGREEMENT EXCEPT FOR THE
REPRESENTATIONS, WARRANTIES AND INDEMNITIES EXPRESSLY SET
FORTH IN THIS AGREEMENT. No amendment, supplement,
modification, waiver or termination of this Agreement shall
be binding unless executed in writing by the Party to be
bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar,
nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
22.5 Modification
This Agreement and any of its terms can only be amended,
supplemented, waived, or modified by an instrument in writing
signed by the Parties.
22.6 No Implied Waiver
The failure or delay of any Party hereto to enforce at any
time any of the provisions of this Agreement, or to require
at any time performance of a Party hereto of any of the
provisions hereof, shall neither be construed to be a waiver
of such provisions nor affect the validity of this Agreement
or any part hereof or the right of such Party thereafter to
enforce each and every such provision.
-183-
Page 79 of 82
---- ----
22.7 Captions
All indices, titles, subject headings, and similar items are
provided for the purpose of reference and convenience and are
not intended to be construed as interpretations of text.
22.8 Payment of Taxes
Seller shall be responsible for payment of all federal, state
and local taxes applicable to Seller and relating to the
performance of its obligations under this Agreement.
22.9 Severability
If any term or provision of this Agreement or the application
thereof to any person, entity or circumstance shall to any
extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to
persons, entities or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by
Law. The Parties agree to negotiate a replacement provision
or provisions in an effort to place the Parties in the same
or similar position reflected in the Agreement when
originally signed.
22.10 No Exclusivity/Dedication of Facilities
This Agreement is not intended to be an exclusive arrangement
between Company and Seller. No undertaking by a Party hereto
to the other Party hereto under any provision of this
Agreement shall constitute the dedication of that Party's
system or any portion thereof to the other Party or to the
public.
22.11 Emission Standards
As may be required by government agencies, the Company will
include emission constituents from the Facility in its
inventory during the Term of this Agreement. Seller will
assure the Company that emissions from the Facility will not
adversely affect the ability of the Company to comply with
the limits imposed by any existing Law.
22.12 Expenses
Except as expressly provided for herein, each Party shall pay
the fees and expenses of its respective counsel, accountants,
brokers, consultants, investment bankers and other experts
incident to the negotiation and preparation of this
Agreement.
22.13 No Reliance
Except for the Parties to this Agreement, and except as
otherwise specifically provided herein with respect to the
Project Lenders and International Paper Company: (a) no other
person is entitled to rely on any of the representations,
warranties and agreements of the Parties contained in this
Agreement; and (b) the Parties assume no liability to any
other
-184-
Page 80 of 82
---- ----
person because of any reliance on the representations,
warranties and agreements of the Parties contained in this
Agreement.
22.14 Individual Responsibility
This Agreement shall not be construed to create or give rise
to any partnership, joint venture, agency or other
relationship between Seller and the Company other than that
of purchaser and seller. Each Party shall be solely and
individually responsible for its own covenants, obligations
and liabilities as herein provided. The Parties shall not be
liable as partners. Neither this Agreement, nor any grant,
lease or license related thereto, shall create any new entity
nor be construed to create a new entity, such as a
partnership, association or joint venture.
22.15 Exhibits
If a document or matter is incorporated in any Exhibit to
this Agreement, it shall be deemed to be incorporated for all
purposes of this Agreement without the necessity of specific
repetition or cross-reference.
22.16 Further Assurances
22.16.1 The Company agrees to provide such information and
documentation as may be reasonably requested by
any Project Lender or prospective Project Lender,
including (i) financial statements, evidence of
corporate existence, and evidence of incumbency of
persons executing this Agreement; (ii) an opinion
of its counsel confirming the enforceability of
this Agreement against the Company and the
accuracy of the representations set forth in
Section 12.2, and addressing such other matters as
may be requested by any such Project Lender or
prospective Project Lender, (iii) a consent to the
collateral assignment of this Agreement to any
such Project Lender, and (iv) any other consents,
estoppel certificates or other documents
reasonably required in connection with the
financing of the Facility. Seller shall reimburse
the Company for its reasonable expenses incurred
in performing its obligations under this Section
(excluding obligations described in Section 12.5).
22.16.2 In the event that Seller or any Project Lender or
prospective Project Lender determines that any
amendment or modification to this Agreement is
required or as a condition to the financing or
refinancing of the Facility, the Company and
Seller shall negotiate in good faith, and in
consultation with any such Project Lender or
prospective Project Lender, the terms of, any such
amendment or modification; provided, however, that
a failure to agree shall not represent a breach of
this Agreement by either Party.
22.17 Survival
The applicable provisions of this Agreement shall continue in
effect after the expiration of the Term, to the extent
necessary to provide for final billing and adjustment, and to
make other appropriate settlements hereunder. Without
limiting the generality of the foregoing,
-185-
Page 81 of 82
---- ----
the following provisions shall survive the expiration or
termination of this agreement: Article XIII, Section 12.1.1,
Section 12.1.4, Section 16.4, and Section 21.2.
-186-
Page 82 of 82
---- ----
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed on its behalf by its duly authorized
officer on this 8th day of February, 1996.
--- -------- --
DePere Energy LLC
(Seller)
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxx
----------------------------- ----------------------------
Witness (Title)
The obligations of Wisconsin Public Service Corporation under this
Agreement are conditioned upon the Public Service Commission of
Wisconsin issuing an order explicitly finding that: 1) it is prudent
for the Company to execute the Agreement at this time; 2) the
Commission will be considering evidence for the need for the Facility
at the time it takes up the stage two proceeding for the Certificate
of Public Convenience and Necessity ("CPCN") for the Facility; and
3) the Commission will, when and if a CPCN order is issued, explicitly
include findings that at the time of that order the Facility is
necessary to satisfy the reasonable needs of the public for an
adequate supply of electric energy. The Parties acknowledge that the
Commission has made these three findings in an order and has satisfied
the condition in the preceding sentence.
Wisconsin Public Service
Corporation (Company)
/s/ L. L. Xxxxxx By: /s/ Xxx Xxxxxx
----------------------------- ----------------------------
Witness (Title)
Accepted and agreed this 8th day
---
of February, 1996.
-------- --
DePere Energy LLC
By: /s/ Xxxxxxx Xxxxxx
--------------------------
(Title)
-187-
EXHIBIT 2.1.A
Site
----
The Site is located on Nicolet Paper Mill property at 000 Xxxx
Xxxxxx in the City of DePere, Xxxxx County, Wisconsin. The
location is shown on attached Figure 2-1. The main plant will be
located in the parking area. It is bounded by the Nicolet Paper
Mill plant to the east, additional parking for the mill to the
north, and vacant Nicolet Paper Mill property to the west. The
Nicolet Paper Mill property extends from the proposed Site, east
and north to the Fox River, and west of the Site where it is
bounded by commercial and residential districts. Auxiliary
structures (cooling tower, etc.) will be located off the main plant
area. No later than one hundred and eighty (180) days after the
Effective Date, Seller shall provide the Company with a complete
legal description of the Site.
-188-
FIGURE 2-1
(Map showing the proposed cogeneration facility site location on
Nicolet Paper Mill property at 000 Xxxx Xxxxxx in the City of
De Pere, Wisconsin.)
-189-
PAGE
EXHIBIT 2.1.B
Description of Facility
-----------------------
A. Plant Design
The Facility will be a dual fuel combined cycle plant
consisting of one combustion turbine/generator set as
the prime mover, steam turbine/generator, heat
recovery steam generator, condenser/cooling tower,
inlet air chilling system, switch gear and the
necessary auxiliary systems. The Facility will be
implemented in two phases. In Phase I, a simple cycle
combustion turbine unit will be installed. In Phase
II, the remaining equipment required to convert to a
combined cycle Facility will be installed.
The Facility to be constructed shall be generally in
accordance with the Facility described in the Seller's
Project Proposal, dated February 14, 1994, taking into
account major technological developments.
B. Phase I
The Facility will consist of the following major
components:
(1) One (1) combustion turbine/generator set complete
with inlet air and exhaust systems
(2) Combustion turbine inlet air chilling system
(3) One No. 2 oil storage facility
(4) Water treatment system (on or off site) and
storage tank
(5) Control building housing the control room,
maintenance area, chillers, water treatment, and
electrical room
(6) One (1) 13.8 KV to 138 KV transformer
(7) Continuous emission monitoring system
(8) Fire protection system
(9) Battery system and UPS
(10) Control system for auxiliary equipment
-190-
C. Phase II
--------
The Seller will install the following additional
Phase II combined cycle equipment:
(1) One (1) Heat Recovery Steam Generator
(2) One (1) Steam Turbine/Generator
(3) Cooling and Condensing System
(4) Demineralized Water Treatment System
(5) Deaerating and Condensate System
(6) Controls for Phase II Equipment
-2-
-191-
PAGE
EXHIBIT 2.4
CRITICAL COMPONENTS
-------------------
Phase I - Simple Cycle Operation
-------
Combustion Turbine and Generator
Main Step-Up Transformer
Control Systems
Inlet Air Chilling Device
Phase II - Combined Cycle Operation
--------
Heat Recovery Steam Generator
Steam Turbine and Generator
Condenser
Cooling Tower
Control System
-192-
PAGE
EXHIBIT 2.6
Construction Milestone Schedule
-------------------------------
Pursuant to Section 2.6 of the Agreement, the following is a schedule
of milestones to be completed by Seller by the dates corresponding to
such events as follows:
For Phase I:
Description of Event Date
-------------------- ----
1. Effective Date. [ 11/30/95 ]
-------------
2. Obtain binding commitments for
construction and permanent
financing. [ 9/1/97 *]
-------------
3. Commencement of Construction. [ 11/1/97 *]
-------------
4. Seller's Interconnection Facilities
are ready for energizing. [ 10/1/98 *]
-------------
5. Date of Commercial Operation. [ 2/1/99 *]
-------------
* Milestone dates indicated in the schedule are based on a
CPCN issuance date of 11/1/96. In addition to other delay
provisions in the Agreement, the dates for achieving
milestones subsequent to CPCN issuance shall be advanced or
delayed by a number of days equal to the number of days
between 11/1/96 and the actual date of CPCN issuance.
For Phase II:
Description of Event Date
-------------------- ----
1. File application for CPCN (if
required) and air permit. [ 9/1/2001 ]
-------------
2. Obtain binding commitments for
construction and permanent
financing. [ 7/1/2002 ]
-------------
3. Phase II Commencement of
Construction. [ 9/1/2002 ]
-------------
4. Seller's Interconnection Facilities
are ready for energizing. [10/1/2003 ]
-------------
5. Phase II Date of Commercial
Operation. [ 1/1/2004 ]
-------------
-193-
EXHIBIT 5.1
(Twelve Pages)
(This exhibit is confidential. It has been omitted and filed
separately with the SEC.)
-194-
EXHIBIT 7.2
Procedure to Establish Net Demonstrated Capability and Net
----------------------------------------------------------
Demonstrated Heat Rate
----------------------
All defined terms herein shall have the same meaning as provided in
the Agreement.
A. Performance Curves
------------------
1. The Design Performance Curves shall include Design Net
Capability Performance Curves and Design Net Heat Rate
Performance Curves for Facility operation under
various load conditions that the Facility is designed to
operate given an expected range of ambient temperatures and
relative humidity levels.
2. The Design Performance Curves shall be developed and provided
to the Company within a reasonable period of time not to
exceed six (6) months after issue of the letter of intent to
purchase from the generation equipment manufacturers. The
Facility's Design Performance Curves shall be developed by
the Seller based on the manufacturers' design information for
the equipment and shall be approved (for reasonableness in
accordance with established industry standards for the type
of equipment installed) by the Parties hereto and shall be
part of this Agreement as the standard for measuring the
Facility's ability to comply with the performance criteria as
set forth in the Agreement. If the Parties cannot agree
within sixty (60) days of Seller's notification to the
Company as to the Design Performance Curves, then the Design
Performance Curves shall be determined through the Dispute
Resolution Process.
3. Upon approval of the Facility's Design Performance Curves by
the Company, the Seller shall not modify the Facility in any
way that will cause the Design Net Capability Performance
Curve or Design Net Heat Rate Performance Curves to change
prior to the Date of Commercial Operation without the
Company's consent, which consent shall not be unreasonably
withheld. The Parties agree that any change, other than a
Technological Modification, in the maximum capability of the
Facility after the Date of Commercial Operation, shall in no
way affect the Design Performance Curves or the Nameplate
Rating as established prior to the Date of Commercial
Operation nor shall any such change alter or affect the basis
of any calculations of the performance criteria under the
Agreement.
4. The Parties agree that Phase II Design Performance Curves
will be created prior to the Phase II Commencement of
Construction and in accordance with substantially similar
terms as described in Sections A.1 through A.3 of this
Exhibit 7.2. The Parties agree that any change, other than a
Technological Modification, in the maximum capability
of the Facility after the Phase II Date of Commercial
Operation shall in no way affect the Nameplate Rating, or
the Phase II Design Performance Curves as established prior
to the Phase II Date of Commercial Operation nor shall
any such change alter or affect the basis of any calculations
of the performance criteria under the Agreement.
-195-
5. At any time, as the result of testing or actual operating
experience, Seller concludes that any Design Performance
Curve does not accurately depict the variation in the
Facility's performance as a function of ambient temperature
and relative humidity, Seller may submit an Adjusted
Performance Curve for review and approval by the Company
under substantially similar terms to those described in
Section A.2 of this Exhibit 7.2. Upon approval by the
Company, the Adjusted Performance Curve shall replace the
applicable Design Performance Curve as the basis for
measuring the Facility's ability to comply with the
performance criteria as set forth in the Agreement.
B. Net Demonstrated Capability
---------------------------
1. The Design Net Capability Performance Curves for Phases I and
II shall indicate the variation in the Facility's net
electrical output (KW) as a function of ambient temperature
and relative humidity over the expected range of temperature
(including but not limited to 0, 20, 59, and 90 degrees
Fahrenheit) and relative humidity (including but not limited
to 30, 60, and 80%) when the Facility is in its 100% (full
load) baseload mode of operation. The Design Net Capability
Performance Curves will be used to correct the tests of Net
Demonstrated Capability from the actual ambient temperature
and relative humidity during any tests to 90 degrees
Fahrenheit and 60% relative humidity.
2. The tests of Net Demonstrated Capability, to determine the
Initial Net Demonstrated Capability and the Current Net
Demonstrated Capability, shall run for a period of not
less than 4 continuous On-Peak Hours and not more than
24 continuous hours. The Net Demonstrated Capability shall
be calculated as the Facility's Net Energy Output during
the test period divided by the number of hours in the test
period, corrected from the average ambient conditions during
the test period to a temperature of 90 degrees Fahrenheit and
a relative humidity of 60% using the Net Capability
Performance Curve. At the time of testing, all equipment
necessary for the operation of the Facility in accordance
with this Agreement shall be operating in order to deliver
full output baseload electric generation capacity and all
Station Use and losses between the Facility and Metering
Point shall be generated by the Facility. The test of Net
Demonstrated Capability shall take place only when the
Facility is fully available.
3. The Seller shall be obligated to demonstrate by test that the
Initial Net Demonstrated Capability is in compliance with the
requirements of Section 7.2.
4. In the event that the Current Net Demonstrated Capability,
determined by testing pursuant to Section B.2 of this
Exhibit 7.2, is greater than 105% of the Initial Net
Demonstrated Capability, then the Current Net Demonstrated
Capability shall be set equal to 105% of the Initial Net
Demonstrated Capability for the purposes of the Agreement.
5. The Seller shall also be obligated to demonstrate that the
Current Net Demonstrated Capability is in compliance with
Section 7.2 by test every January and July (or if the
-2-
-196-
Facility is not available in January or July, as soon as
practical thereafter) after the Date of Commercial Operation,
which determination shall be made by application of the
following formula:
CNDC
% of Initial Net Demonstrated Capability = ------ x 100
INDC
where:
CNDC equals the Current Net Demonstrated Capability; and,
INDC equals the Initial Net Demonstrated Capability.
C. Net Demonstrated Heat Rate
1. The Design Net Heat Rate Performance Curves shall indicate
the variation in the Facility's net heat rate (fuel
requirement, in BTU, per net unit output, in KWH) as a
function of ambient temperature and relative humidity over
the expected range of ambient temperatures (including but not
limited to 20, 59 and 90 degrees Fahrenheit) and relative
humidity (including but not limited to 30, 60 and 80%). The
Design Net Heat Rate Performance Curves shall indicate this
variation when the Facility is in its 25%, 60%, 80% and 100%
of full output baseload mode of operation in Phase I and 45%,
60%, 80%, and 100% of full output baseload mode of operation
in Phase II. The Design Net Heat Rate Performance Curves
will be used to correct the tests of Net Demonstrated Heat
Rates from the actual ambient temperature and relative
humidity during any tests to 90 degrees Fahrenheit and 60%
relative humidity.
2. The tests of Net Demonstrated Heat Rate shall be conducted in
substantially the same manner as, and may be conducted in
conjunction with, the tests of Net Demonstrated Capability as
described in Section B.2 of this Exhibit 7.2. During
Phase I, tests shall be conducted at 25%, 60%, 80%, and 100%
of Current Net Demonstrated Capability as limited by Section
B.4 of this Exhibit 7.2. During Phase II, tests shall be
conducted at 45%, 60%, 80%, and 100% of Current Net
Demonstrated Capability as limited by Section B.4 of this
Exhibit 7.2, and shall be conducted while the Facility is
operating in its full condensing (no steam to process) mode
of operation. During the tests, the Net Demonstrated Heat
Rate shall be calculated as the fuel consumption of the
Facility's combustion turbine and HRSG during the test,
divided by the Facility's Net Energy Output during the test,
corrected from the average ambient conditions during the test
period to a temperature of 90 degrees Fahrenheit and a
relative humidity of 60% using the applicable Net Heat Rate
Performance Curve.
-3-
-197-
3. The results of the Net Demonstrated Heat Rate tests will be
used to establish Heat Rate Adjustment Factors (AFs) for
calculation of the billable fuel consumption pursuant to
Exhibit 5.1. After each test, the following AFs shall be
calculated by dividing the guaranteed 90 degrees
Fahrenheit/60% relative humidity heat rates below (HRG) by
the Net Demonstrated Heat Rate determined by the test for the
applicable load point.
Phase I
AF25 @ 25% of Full Load HRG25 = 17,779 XXX/XXX
XX00 @ 60% of Full Load HRG60 = 12,775 XXX/XXX
XX00 @ 80% of Full Load HRG80 = 12,204 BTU/KWH
AF100 @ 100% of Full Load HRG100 = 11,102 BTU/KWH
Phase II
AF45 @ 45% of Full Load HRG45 = 9,742 XXX/XXX
XX00 @ 60% of Full Load HRG60 = 8,755 XXX/XXX
XX00 @ 80% of Full Load HRG80 = 8,306 BTU/KWH
AF100 @ 100% of Full Load HRG100 = 7,761 BTU/KWH
4. The Seller shall also be obligated to demonstrate by test
prior to the Date of Commercial Operation and prior to the
Phase II Date of Commercial Operation, and each January and
July (or, if the Facility is not available in January or
July, as soon as practical thereafter) after the Date of
Commercial Operation, the Net Demonstrated Heat Rates at the
points in Section C.3 and calculate the AF factors
accordingly.
D. Company's Right to Request Additional Tests
1. Upon the written request of the Company, the Seller shall be
obligated to demonstrate by test (limited to one test between
semi-annual tests without reasonable basis for suspecting
performance degradation) the Net Demonstrated Capability and
the Net Demonstrated Heat Rates for the four load levels in
Section C.3 for Phase I or Phase II. If the additional test
results in heat rates which differ by more than 2% from the
Net Demonstrated Heat Rates established in the last
semi-annual test, then the Net Demonstrated Heat Rates shall
be reset according to the latest test, and adjustments
shall be made to the Energy Payment in accordance with
Exhibit 5.1.
2. The Company will periodically calculate the expected fuel
consumption using the heat rates established in the most
recent demonstration tests. If the expected fuel consumption
varies more than 3% from the metered fuel consumption, the
Company may request and Seller shall perform additional tests
to determine whether performance degradation has occurred.
If such additional tests result in heat rates which differ by
more than 2% from the Net Demonstrated Heat Rates established
in the last semi-annual test, then the Net
-4-
-198-
Demonstrated Heat Rates shall be reset according to the
latest test, and adjustments shall be made to the Energy
Payment in accordance with Exhibit 5.1.
The Seller shall make available to the Company sufficient
operational data, on a real-time basis, to determine if there
is reasonable justification to suspect performance
degradation (a shift in the Net Heat Rate or Net Fuel
Chargeable to Electric Generation) has occurred. The
operational data shall include, but is not limited to:
- Facility net output (MW)
- Ambient temperature (degrees Fahrenheit)
- Relative humidity (%)
- Fuel flow to combustion turbine/HRSG
- natural gas (cfm)
- No. 2 oil (gpm)
- Process steam to Nicolet Paper Mill
- flow (lbs/hr)
- temperature (degrees Fahrenheit)
- pressure (psig)
- Nicolet Paper Mill process steam demand
- flow (lbs/hr)
- temperature (degrees Fahrenheit)
- pressure (psig)
- Condensate return from Nicolet Paper Mill
- flow (lbs/hr)
- temperature (degrees Fahrenheit)
E. Seller's Right to Perform Additional Tests.
If the Seller is unsatisfied with the results of a test of Net
Demonstrated Capability or Net Demonstrated Heat Rate, the Seller
shall have the right to perform up to two additional tests
establishing the Net Demonstrated Capability or Net Demonstrated
Heat Rate within a twelve month period following the
unsatisfactory test. The Net Demonstrated Capability will be set
according to the results of the unsatisfactory test until an
additional test is performed that is satisfactory to the Seller;
however, Liquidated Damages shall not be paid pursuant to
Section 11.4.1 of this Agreement until a test that is satisfactory
to the Seller is completed or the Seller has exhausted its rights
pursuant to this Section E. Liquidated Damages, if any, shall be
calculated pursuant to Section 11.4.1 of this Agreement based on
the satisfactory test or, if none of the tests are satisfactory to
the Seller and Seller has exhausted its rights pursuant to this
Section E, based on the unsatisfactory test designated by the
Seller. If the Seller elects to perform additional tests,
the Company shall be obligated to pay for energy delivered to the
Company at a rate equal to the Company's actual marginal energy
costs during the tests.
-5-
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F. Test Procedures
Procedures for the test of Net Demonstrated Capability and Net
Demonstrated Heat Rate shall be developed and approved by the
Parties hereto based on the ASME Gas Turbine Power Plant
Performance Test Codes PTC 22-1985 (with the instrument tolerance
assumed to be zero) and shall be part of the Agreement. The test
procedures shall include a description of test conditions which
will simulate normal operating conditions for various auxiliary
systems (e.g. lighting, CEM, HVAC, etc.). All testing procedures
shall use station instrumentation to the greatest extent possible;
provided that the use of station instrumentation does not
materially increase the cost of testing.
-6-
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EXHIBIT 9.1
Interconnection Facilities
--------------------------
1. POINT OF INTERCONNECTION
------------------------
1.1 For each connection between the Facility and the Company's
138 KV switchyard bus, the Interconnection Point shall be at
the bus side of the disconnecting device on Seller's side
located nearest the 138 KV bus, as illustrated in
Figure 9-1.
1.2 The Company agrees to accept delivery of the Net Energy
Output made available under this Agreement between the
Company and Seller at the Interconnection Point at a
nominal phase-to-phase voltage of 138 KV.
1.3 Power and energy flowing into the Interconnection Point from
the Company shall be for Station Use only.
2. TECHNICAL SPECIFICATIONS FOR THE DESIGN OF THE INTERCONNECTION
--------------------------------------------------------------
FACILITIES
----------
2.1 Seller shall design all of the Seller's Interconnection
Facilities, subject to the following requirements:
2.1.1 Seller shall design, construct, operate, and maintain
the Seller's Interconnection Facilities in accordance
with Prudent Electrical Practices.
2.1.2 Seller shall install synchronizing devices in its
Facility or Seller's Interconnection Facilities to
ensure proper synchronization of the energized
Facility to the Company's system when putting
the Facility on line.
2.1.3 Seller shall install automatic control equipment to
allow the Facility to respond appropriately to small
frequency and voltage deviations from nominal for the
purpose of maintaining synchronism and regulating
voltage.
2.1.4 Seller shall install appropriate protective equipment
on its Facility and Seller's Interconnection
Facilities. Seller shall cooperate with the
Company to provide interface information transfer
between protective equipment supplied by one Party
which requires input information (such as relay
inputs) available from equipment installed by
the other Party.
2.1.5 Seller shall design the Facility to provide up to
20 MVAR of reactive power to the Interconnection
Point.
-201-
2.1.6 Seller's Facility or Seller's Interconnection
Facilities shall not deliver an unreasonable amount
of voltage or current harmonics into the Company's
system.
2.1.7 Seller shall design and operate the Facility and
Seller's Interconnection Facilities so as to limit
voltage unbalance of the three phases at the
Interconnection Point caused by the Facility to no
greater than 2 percent (%).
2.1.8 Seller shall design and operate the Facility and
Seller's Interconnection Facilities so that Seller can
continue to deliver the required real and reactive
power to the Interconnection Point for any voltage at
the Interconnection Point within 10 percent (%) of the
nominal 138 KV interconnection voltage.
2.1.9 Seller shall provide the Company with the necessary
land, easements, and rights of access on Seller's
property for the Company to construct and maintain the
Company's Interconnection Facilities.
3. OWNERSHIP AND OPERATION OF INTERCONNECTION FACILITIES
-----------------------------------------------------
3.1 Seller shall install, maintain, and own all of Seller's
Interconnection Facilities.
3.2 The Company shall install, maintain, and own all of the
Company's Interconnection Facilities, including the
interconnection metering equipment. Seller shall reimburse
the Company for the reasonable costs the Company incurs in
establishing the Company's Interconnection Facilities to
accommodate the delivery of the Net Energy Output from the
Facility. The Company's Interconnection Facilities shall
consist of:
3.2.1 A 138 KV transmission line with circuit breakers,
circuit switchers and other related terminal equipment
required to connect the Facility to the Company's
nearest feasible substation,
3.2.2 Metering Devices at the Interconnection Point, as
described in Section 6.1, and
3.2.3 Remote-terminal communication equipment to transmit
real-time MW, MVAR, and voltage data to the Company's
System Operation Office.
3.3 The Company and Seller shall provide each other with timely
notice of any change (physical or status) in their respective
system which may affect the proper coordination of safety
devices on the 2 systems, and shall notify each other
immediately in the event hazardous or unsafe conditions
associated with operations pursuant to this Agreement
are discovered to exist. The Company and Seller shall
also notify each other of the cessation
-2-
-202-
of such conditions. Any such changes by Seller must first be
reviewed and approved by the Company.
3.4 Upon reasonable notice appropriate for the circumstances, the
Company shall have access to the Company's Interconnection
Facilities and Metering Devices on the Company's side of the
Interconnection Point for the purposes of conducting
necessary examinations, tests, calibrations, and maintenance
of the Company's Interconnection Facilities and Metering
Devices, provided, however, that the Company shall use its
reasonable efforts not to disrupt or otherwise interfere with
the normal operations of Seller.
3.5 Seller shall annually reimburse the Company for the
reasonable costs the Company incurs in maintaining all of the
Company's Interconnection Facilities shown on Figure 9-1.
3.6 For the purpose of regulating voltage, Seller shall deliver
reactive power (VARS) to the Interconnection Point in
accordance with instructions from remote terminal units
located in the Company's System Operating Office. The
Company could request that Seller deliver as much as 20 MVAR
or as little as 0 MVAR to the Interconnection Point. The
Company will not require Seller to absorb reactive power from
the Company at the Interconnection Point.
4. COMPLIANCE WITH INTERCONNECTION SPECIFICATIONS AND MODIFICATIONS
----------------------------------------------------------------
4.1 Seller shall comply with all reasonable Company requirements
as to: (a) the design, installation, purchase, operation and
maintenance of all of Seller's Interconnection Facilities
necessary to connect the Facility to the Company's system and
(b) the protection of the Company's system, employees and
customers from damage or injury arising out of, or in
connection with, Seller's operation of Seller's
Interconnection Facilities.
4.2 The Company shall construct necessary facilities in a timely
manner consistent with the construction schedule so long as
Seller makes payments in accordance with this Agreement.
4.3 Seller shall submit the specifications for Seller's
Interconnection Facilities for the Company's review and shall
thereafter submit periodic progress reports and will use its
reasonable best efforts to notify the Company of any changes
to such schedules in a timely manner.
4.4 The Company shall have the right to review the specifications
for Seller's Interconnection Facilities, including, without
limitation, improvements, additions, modifications,
replacements or other changes to equipment, electrical
drawings and one-line diagrams, provided, however, that the
Company completes its review of such specifications and
provides comments to Seller within a reasonable time period.
The Company's review of
-3-
-203-
Seller's specifications, drawings and one-line diagrams shall
not be construed as confirming or endorsing the design of
Seller's Interconnection Facilities, or as a warranty of
safety, durability or reliability thereof.
4.5 Seller shall make payments to the Company for the Company's
Interconnection Facilities provided by the Company as
follows: one-half of the estimated total costs shall be due
within thirty (30) days after the Company sends written
notice that it has begun engineering on the Company's
Interconnection Facilities, and one-half of the estimated
total costs shall be paid within ninety (90) days
after the Company sends written notice that it has begun
construction of the Company's Interconnection Facilities.
In lieu of this payment approach, the Company may grant
Seller the option to pay for the Company's Interconnection
Facilities pursuant to a reasonable amortization schedule
based on the useful life of the Company's Interconnection
Facilities. A reconciliation between the amounts paid by
Seller and the actual costs shall be made upon completion of
construction.
4.6 When Seller no longer needs the Company's Interconnection
Facilities for which it has paid, Seller shall receive
payment for the net salvage value of the Company's
Interconnection Facilities dedicated to the Company's use.
If the Company is able to make use of these facilities to
serve other customers, Seller shall receive the fair
market value of the facilities determined as of the date that
Seller decides no longer to use said facilities. Payments
will be made within a reasonable period.
-4-
-204-
PAGE
FIGURE 9-1
Interconnection Facilities
Figure 9-1 is a diagram of the substation and interconnecting lines
associated with the DePere Energy Center (DEC). Three lines are
connected to the DEC - two are generator outputs from the plant (one
for Phase 1 and one for Phase 2) and one is an auxiliary feed to the
plant for station loads. The three DEC lines each attach to a
transformer and a circuit breaker/circuit switcher prior to connecting
to the 138 KV bus. The Company's transmission system is attached to
the 138 KV bus, through a circuit breaker, by a line to Red Maple (or
Lost Dauphin) substation and a line, noted as future, to
Ashland substation.
The points of interconnection between the Seller-owned equipment and
the Company-owned equipment are indicated as the ties to the 138 KV
bus for the three lines connected to the DEC.
-205-
PAGE
EXHIBIT 11.4
[BANK LETTERHEAD]
IRREVOCABLE LETTER OF CREDIT
----------------------------
, 19
--------------- --
Irrevocable Letter of Credit No.
Wisconsin Public Service Corporation
000 Xxxxx Xxxxx
Xxxxx Xxx, XX 00000-0000
Dear Sirs:
At the request and on the instruction of our customer, ,
---------------
we hereby establish our irrevocable letter of credit No.
-------------
in your favor for the account of and authorize you to
----------------
draw on Bank an amount not to exceed
----------------------------
Dollars ($ ).
--------------------- --------------
Funds under this letter of credit are available to you against a sight
draft on us, which must be marked "Drawn under
-----------------------
Bank Irrevocable Letter of Credit No. dated ."
---------- -------------
Each draft must be accompanied by: (1) a written statement by your
duly authorized officer that there is then payable to you from
DePere Energy LLC an amount of Liquidated Damages pursuant to
Section 11.4 of the Power Purchase Agreement between DePere Energy
LLC and Wisconsin Public Service Corporation equal to the amount of
such draft; and (2) the original of this letter of credit which will
be returned to you following notation hereon by the Bank of the amount
of such draft, or, if the amount of the draft is in the full amount of
this letter of credit, the letter of credit will be retained by the
Bank.
Drafts so drawn and accompanied will be honored by this Bank if
presented to our main office in prior to the close
-------------------
of business on the expiration date. The expiration date of this
letter of credit is .
------------------------
Under the payment to you of any amount demanded hereunder, we shall be
fully discharged on our obligation under this letter of credit with
respect to such amount, and we shall not thereafter be
-206-
obligated to make any further payments under this letter of credit
in respect of such amount to you or to any other person.
This letter of credit sets forth in full our understanding, and such
understanding shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred
to herein.
This letter of credit is subject to the Uniform Customs and Practice
for Documentary Credits, 1983 Revision, ICC Publication No. 400 (the
"Uniform Customs"). This letter of credit shall be deemed to be a
contract made under the Laws of the State of Wisconsin and shall, as
to matters not governed by the Uniform Customs, be governed by and
construed in accordance with the Laws of said State.
Very truly yours,
BANK
------------------------------
By:
-----------------------------------
Its:
-----------------------------------
-2-
-207-
PAGE
EXHIBIT 12.1.2
(One Page)
(This exhibit is confidential. It has been omitted and filed
separately with the SEC.)
-208-
PAGE
EXHIBIT 12.1.3
(One Page)
(This exhibit is confidential. It has been omitted and filed
separately with the SEC.)
-209-
PAGE
(WISCONSIN PUBLIC SERVICE CORPORATION LETTERHEAD)
February 18, 1997
DePere Energy LLC
c/x Xxxxxx Energy Corporation
Xxxxx Corporate Center
Suite 150
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: President
Gentlemen:
Reference is made to that certain Power Purchase Agreement, dated
November 8, 1995 (the "Agreement"), between DePere Energy LLC
("Seller") and Wisconsin Public Service Corporation ("Company").
Capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Agreement.
Seller and Company hereby agree that, in the event a CPCN with respect
to the Facility is issued by the Commission, the Agreement shall be
deemed amended upon the effective date of that CPCN as follows:
1. Section 11.4.3.2(b). The dollar amount, "$65," in the phrase,
-------------------
"$65/KW as a Contract Development Deposit," in the first sentence
of Section 11.4.3.2(b) of the Agreement, shall be deleted, and in
its place, the dollar amount, "$10," shall be inserted.
2. Section 11.4.3.2(c). The dollar amount, "$50," in the phrase,
-------------------
"$50/KW as a Contract Performance Deposit," in the first sentence
of Section 11.4.3.2(c) of the Agreement, shall be deleted, and in
its place, the dollar amount, "$25," shall be inserted. The
penultimate sentence of Section 11.4.3.2(c) shall be amended to
read:
In the event at any time during the term of this Agreement
that the level of security previously provided by Seller is
not equal to the amount required under this paragraph,
whether because of draws against the security from time to
time to pay liquidated damages or otherwise, the level of
the Letter of Credit shall be adjusted within thirty (30)
days to provide the required level of security.
-210-
DePere Energy LLC
February 4, 1997
Page 2
3. Section 11.4.3.2(d). The dollar amount,"$65," in the phrase,
-------------------
"$65/KW as a Phase II Contract Performance Deposit," in the
first sentence of Section 11.4.3.2(d) of the Agreement, shall
be deleted and in its place, the dollar amount, "$32.50,"
shall be inserted. The penultimate sentence of Section
11.4.3.2(d) shall be amended to read the same as the
penultimate sentence of Section 11.4.3.2(c) as amended by
paragraph 2 above.
4. Exhibit 5.1. (Exhibit 5.1 is confidential. It has been
omitted and filed separately with the SEC.)
Except as expressly amended by this letter agreement, all of the terms
and conditions of the Agreement shall remain in full force and effect.
All references in the Agreement to "this Agreement" shall be deemed to
refer to the Agreement as amended hereby.
The execution of this letter agreement shall not be deemed to be a
waiver of any default or event of default under the Agreement, whether
or not known to the Company and whether or not existing on the date of
this letter agreement.
This letter agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall
constitute one and the same instrument.
Please signify your agreement to the foregoing amendments by executing
a duplicate copy of this letter and returning the same to the
undersigned.
Sincerely,
WISCONSIN PUBLIC SERVICE CORPORATION
/s/ L. L. Xxxxxx
Xxxxx X. Xxxxxx
President and Chief Operating Officer
dle
-211-
DePere Energy LLC
February 4, 1997
Page 3
Accepted and agreed this 28 day of February, 1997.
--
DEPERE ENERGY LLC
BY: /s/ Xxxxxxx Xxxxxx
------------------
Name:
Title: /s/ President
-212-
