THIRD AMENDMENT TO PILGRIM POWER SALE AGREEMENT
BETWEEN BOSTON EDISON COMPANY AND
MONTAUP ELECTRIC COMPANY
Boston Edison Company ("Boston Edison") and Montaup Electric Company
("Montaup") (Boston Edison and Montaup referred to hereafter as "Party" or
"Parties" as the context requires) hereby enter into this Agreement dated this
18th day of November, 1998.
RECITALS
WHEREAS, Boston Edison owns a nuclear power plant in Plymouth, Massachusetts
called Pilgrim Unit 1; WHEREAS, Boston Edison and Montaup are parties to an
agreement dated August 1, 1972, as subsequently amended by agreements dated
December 7, 1984 and December 21, 1989 providing for the sale of power by
Boston Edison from Pilgrim Unit 1 to Montaup (" Power Sale Agreement");
WHEREAS, Boston Edison currently contemplates the sale of Pilgrim Unit 1
without assigning the aforesaid Power Sale Agreement to the buyer pursuant to
the terms and conditions of a certain purchase and sale agreement (the
"Purchase and Sale Agreement ") dated November 18, 1998 by and between Boston
Edison and Entergy Nuclear Generation Company ("Entergy" or "Buyer");
WHEREAS, Boston Edison and Montaup contemplate that in connection with such
sale a substitute power purchase agreement between Montaup and Buyer will be
necessary; NOW, THEREFORE, Boston Edison and Montaup hereby amend the Power
Sale Agreement as follows:
1. Allocation of Proceeds of Sale. On the Effective Date, as defined in
Paragraph 10 below, Boston Edison shall credit eleven percent (11%) of the net
sale proceeds for Pilgrim Xxxx 0 to Montaup. For purposes of this Amendment,
"net sale proceeds" means the Pilgrim Unit 1 purchase price as set forth in the
Purchase and Sale Agreement ("Purchase Price") less the costs of sale and
adjustments to the Purchase Price as approved by the Massachusetts Department
of Telecommunications and Energy ("MD TE"), in any order concerning in any
respect the sale of, or the purchase of power from, Pilgrim Unit 1, ("Approval
Order"), including but not limited to (a) out-of-pocket costs associated with
the sale of Pilgrim Unit 1, provided that for purposes o f this Amendment such
out-of-pocket costs shall not include Boston Edison internal labor or
attorneys' fees incurred in connection with (i) the preparation of this
Amendment, or (ii) seeking and obtaining any necessary regulatory approvals
required relative to this Amendment and the Purchase and Sale Agreement with
the sole exception of such regulatory approvals required to be obtained from
the Nuclear Regulatory Commission ("NRC"), (b) severance and employee
transition costs, and (c) payments by Boston Edison to the Buyer relating to
the remittance of Pilgrim Unit 1 fixed operating costs; provided that Montaup
may, at its option, elect to make any payments related to Pilgrim Xxxx 0 fixed
operating costs pursuant to Paragraph 8 hereof, rat her than as part of the
calculation of net sale proceeds. A description and estimate of such costs to
be netted from the gross sale price is attached as Appendix A hereto. The
Parties agree that the adjustments described in this Paragraph 1 shall reflect
payments made by Montaup to Boston Edison pursuant to the Power Sale Agreement
with respect to the items described in this Paragraph 1 prior to the Effective
Date. To the extent any cost under this Paragraph is calculated on the
Effective Date on the basis of an estimate, such estimate shall be trued-up
within sixty (60) days and shall be charged or credited, as the case may be,
through the provisions of Paragraph 8 hereof.
2. Decommissioning Costs. On the Effective Date, Montaup shall pay eleven
percent (11%) of the amount determined in accordance with Appendix B hereto to
Boston Edison for deposit into the "Decommissioning Trust" and the "Provisional
Trust" as provided under Section 5.21 of the Purchase and Sale Agreement (or at
Montaup's option, directly to said trusts); provided, however, the foregoing
amount shall be reduced by payments made by Montaup for Decommissioning
Expenses (as that term is defined in Section C-6.2.5 of the Power Sale
Agreement) and associated earnings from the inception of the Power Sale
Agreement to the Effective Date. To the extent any cost under this Paragraph
is paid on the Effective Date on the basis of an estimate, such estimate shall
be trued-up within sixty (60) days and shall be charged or credited, as the
case may be, through the provisions of Paragraph 8 hereof.
3. Balance of Net Unit Investment. Montaup shall pay Boston Edison eleven
percent (11%) of the net unit investment determined as of the Effective Date.
For purposes of this Amendment, the "net unit investment" equals gross unit
investment on Boston Edison's books for Montaup as of the Effective Date less
the depreciation as of the Effective Date as adjusted on Boston Edison's
invoices to Montaup and as determined in accordance with Federal Energy
Regulatory Commission (FERC) regulations and Generally Accepted Accounting
Principles. In addition, Montaup shall pay an eleven percent (11%) share of
post retirement benefits, under-recovered pension costs, and National Energy
Policy Act costs, all as determined as of the Effective Date and a s approved
by the MDTE, in an Approval Order and less a contract adjustment of $3.5
million. An estimate of costs payable under this Paragraph is attached as
Appendix C hereto. The Parties agree that the amount paid by Montaup pursuant
to this Paragraph 3 shall reflect payments made by Montaup to Boston Edison
pursuant to the Power Sale Agreement with respect to the items described in
this Paragraph 3 prior to the Effective Date. To the extent any cost under
this Paragraph is paid on the Effective Date on the basis of an estimate, such
estimate shall be trued-up within sixty (60) days and shall be charged or
credited, as the case may be, through the provisions of Paragraph 8 hereof.
4. Charges Incurred Prior To the Effective Date. Boston Edison has prepared a
statement, attached as Appendix D hereto, of estimated charges to be billed to
Montaup pursuant to the Power Sale Agreement through the Effective Date.
5. Obligation to Purchase Pilgrim Output After Sale. Coincident with the
execution of this Amendment, Montaup shall execute a Power Purchase Agreement
(the "PPA") with Entergy. Subject to the terms and conditions set forth
therein and the conditions precedent provided below, the PPA shall be
effective on the Effective Date. A copy of the PPA is attached hereto as
Appendix E.
6. Billing and Accounting. The Parties' respective rights and obligations
associated with billing, payment, accounting and refunds for charges incurred
by Montaup pursuant to the Power Sale Agreement prior to the Effective Date
shall be determined in accordance with Section C-8 of the Power Sale Agreement.
Boston Edison agrees to issue a final accounting of all amounts so due under
the Power Sale Agreement within sixty (60) days of the Effective Date.
7. Termination of Remaining Rights and Obligations Under Power Sale Agreement.
To the extent that continuation or survival of the rights and obligations of
Boston Edison and Montaup under the Power Sale Agreement are not expressly
provided for in this Amendment, they are hereby extinguished.
8. Residual Liabilities and Claims. Boston Edison may incur liability to
government entities or to private parties arising from its ownership or
operation of Pilgrim Xxxx 0 prior to the Effective Date, including, but not
limited to payments pursuant to M.G.L. c. 59, 38H(c). To the extent that any
such liability is imposed on Boston Edison and Boston Edison is not entitled to
indemnification, compensation or other reimbursement from the Buyer, or an
insurer or any other party, Montaup shall remain responsible for eleven percent
(11%) of all such liability. Provided, however, to the extent any claim
described in this Paragraph 8 is brought against Montaup, Boston Edison shall
indemnify, hold harmless and defend Montaup with respect to such claim, and
Montaup's liability with respect thereto shall be limited to the
eleven percent (11%) share of the amount paid by Boston Edison with respect to
such claim as described in this Paragraph. To the extent Boston Edison
receives refunds, credits, reimbursement or other compensation from government
entities or private parties associated with its ownership or operation of
Pilgrim Xxxx 0 prior to the Effective Date or under the terms of the Purchase
and Sale Agreement, Boston Edison shall remit to Montaup eleven percent (11%)
of any and all such amounts, net of eleven percent (11%) of the costs of
obtaining any such recoveries. A description of the matters under this
Paragraph for which Montaup would have either a residual liability obligation
or an entitlement to refunds, credits, reimbursement or other compensation, and
an estimate of costs and recoveries associated therewith is attached as
Appendix F hereto.
9. No Double Recovery. Montaup shall not ultimately be obligated to pay any
amount under this Amendment which Boston Edison has previously collected from
Montaup, or has recovered from any other person.
10. Conditions precedent; "Effective Date." This Amendment shall not become
effective until all of the following shall have occurred:
(a) FERC issues a final and non-appealable order acceptable to Montaup, in its
sole discretion, expressly approving its recovery of "Costs," as defined
immediately hereafter, as just and reasonable pursuant to the provisions of
Montaup's right to "Contract Termination Charges" ("CTC") as charges are
defined in that certain settlement filed with FERC in Docket Nos. ER97-2800 et
al., which settlement FERC approved with conditions on December 19, 1997.
"Costs" for purposes of this subparagraph shall mean (a) the costs Montaup
incurs under and in connection with the PPA and (b) the net costs Montaup
incurs to dispose of its rights and obligations with respect to the Power Sale
Agreement as provided under this Amendment;
(b) FERC issues a final and non-appealable order approving this Amendment
without modification or conditions or 15 days from the date FERC issues a final
and non-appealable order approving this Amendment with modifications and
conditions acceptable to Boston Edison and Montaup, in each Party's sole
discretion; provided, that notification of the unacceptability of such order
shall be given to the other Party within 15 days from the date such order
issues;
(c) the closing of the sale of Pilgrim Unit 1 to Entergy;
(d) the determination by Montaup, in its sole discretion, that the actual
costs which would be incurred by Montaup as described in this Amendment would
not significantly exceed the amounts estimated by Boston Edison as stated on
the several Appendices hereto;
(e) FERC issues a final and non-appealable order approving the PPA without
modification or conditions or 15 days from the date FERC issues a final and
non-appealable order approving the PPA with modifications and conditions
acceptable to Montaup and Entergy, in each Party's sole discretion; provided
that notification of the unacceptability of such order shall be given to the
other Party within 15 days from the date such order issues;
(f) financing for payments to Boston Edison under this Amendment has been (i)
arranged on terms acceptable to Montaup, in its sole discretion, at a rate no
greater than eight percent (8%) and (ii) approved in an order issued by the
MDTE acceptable to Montaup, in its sole discretion; provided, however, it is
understood and agreed that Montaup shall be under no obligation to seek such
financing prior to the time at which Montaup or its retail affiliates, in their
sole discretion, receive an acceptable final and non-appealable financing order
from the MDTE and the Rhode Island Public Utilities Commission ("RIPUC") for
the fixed component of Montaup's CTC; and
(g) receipt of an order by the NRC that the minimum amount required by NRC
regulations for the decommissioning of Pilgrim Unit 1 does not require funding
in excess of the amounts shown on Schedule 5.21 of the Purchase and Sale
Agreement, which is contained in Appendix B attached hereto. The first day
following the date on which all of the conditions described in (a), (b), (c),
(d), (e), (f) and (g) of this paragraph are satisfied (or waived by the
Parties) shall be considered the "Effective Date" of this Amendment; provided,
however, that in the event each and every condition is not satisfied (or waived
by the Parties) on or before June 30, 2000, this Amendment shall be deemed null
and void.
11. Support for Regulatory Approval. The Parties shall diligently provide
reasonable support and assistance and take all reasonable actions necessary to
expedite and to effect issuance of such regulatory authorizations and the
occurrence of other such conditions precedent as may be required under this
Amendment.
12. Other Agreements. If Boston Edison enters into any agreement, amendment
to an agreement, or makes an offer to or other commitment with any other
wholesale electricity purchaser of Pilgrim Unit 1 (excepting any municipal
electric company), Boston Edison shall promptly provide Montaup with a copy
of the form of such agreement or amendment, or a document detailing the terms
of such offer or other commitment. If upon review of the same Montaup, in its
sole discretion, believes that such other agreement, amendment, offer or
commitment contains terms more favorable to such other purchaser than the terms
of this Amendment, then Boston Edison agrees to offer such terms to Montaup.
Montaup may accept such terms in lieu of the terms of this Amendment, and this
Amendment shall be considered null and void.
13. Assignment. The rights and obligations of the Parties under Section D-3.1
of the Power Sale Agreement shall continue in full force and effect. In
addition, Montaup shall have the right to assign the Power Sale Agreement,
including any and all of the rights and obligations enumerated in this
Amendment to an affiliated entity; provided that such entity has the financial
capacity necessary to satisfy any and all obligations so assigned.
14. Notice. Except as otherwise provided herein, any notice, invoice or other
communication which is required or permitted by this Amendment shall be in
writing and delivered by personal service, telecopy, or mailed certified or
registered first class mail, postage prepaid, properly addressed as follows:
a) In the case of Montaup to:
Montaup Electric Company
x/x XXX Xxxxxxx Xxxx.
X. Xxxxxxxxxxx, Xxxxxxxxxxxxx. 00000 X.X.X.
Attention: Manager, Power Resource Administration
Telecopy No: 508-583-2356
(b) In the case of Boston Edison to:
Boston Edison Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director of Financial and Regulatory Planning
Telecopy No: 000-000-0000
Another address or addressee may be specified in a notice duly given as
provided. Each notice, invoice or other communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given and received for all purposes at such time as it is
delivered to the address (with return receipt, the delivered receipt, the
affidavit of the messenger or with respect to a telecopy, the answer back,
being deemed conclusive evidence of such delivery) or at such time as delivery
is refused by the addressees upon presentation.
15. Reservation of Rights. Montaup reserves all rights and defenses that
exist pursuant to the Power Sale Agreement and prior settlements between the
Parties with respect to any amounts paid by Montaup pursuant to this Amendment,
including but not limited to such costs that are incurred by reason of Boston
Edison's negligence, willful misconduct, or violation of any law or regulation.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by their
duly authorized representatives as of the date first above written.
BOSTON EDISON COMPANY
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President and General Counsel
MONTAUP ELECTRIC COMPANY
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President
