Exhibit B-2
XXXXXXXXX POWER STATION CONSTRUCTION AND OPERATING
AGREEMENT, dated as of September 15, 1977, among MONONGAHELA
POWER COMPANY, an Ohio corporation ("Monongahela"), THE POTOMAC
EDISON COMPANY, a Maryland and a Virginia corporation
("Potomac"), and WEST PENN POWER COMPANY, a Pennsylvania
corporation ("West-Penn"),
W I T N E S S E T H:
1. Station.
Monongahela, Potomac, and West Penn (the "Companies")
hereby provide for the construction and operation of a steam
electric generating station in Xxxxxxxxx County, West Virginia,
with 2 generating units, each with a name plate capacity of
approximately 626,000 kw (net), (hereinafter called the
"Station") to be owned by the Companies as tenants in common with
undivided ownership interests as follows: Monongahela 25%,
Potomac 30%, and West Penn 45% (each such interest being
hereinafter referred to as its owner's "Ownership Share") all as
contemplated in the deed dated September 16, 1976 and such future
deeds as may be delivered (the "Deeds") from Monongahela to West
Penn and Potomac. The provisions of this Agreement are intended,
as contemplated in the Deeds, to establish among the Companies
more detailed provisions and procedures for carrying out the
provisions of the Deeds.
2. Construction.
Construction of the Station shall be carried out by the
Companies pursuant to their agreements with Allegheny Power
Service Corporation under the general supervision and direction
of that Corporation's Vice President - Bulk Power Supply (the
"Vice President").
The Companies now plan to complete construction and
commence full-scale operation of (a) the first generating unit at
the Station on or before March 1, 1979, and (b) the second
generating unit there on or before March 1, 1980.
The Companies shall enter into contracts (which may be
purchase order contracts) provided for (a) the purchase of
materials, equipment and services for, and the construction of,
the Station and (b) insurance against risks usually insured
against for work under construction. Each such contract shall
provide, among other things, that the performance of the contract
shall be for the account of, and the charges therefor shall be
billed to and paid by, the Companies in proportion to their
respective Ownership Shares.
Books of account and records containing details of the
items of cost applicable to the construction of each unit at the
Station shall be kept under the supervision of the Vice President
and shall be open to examination at any time by any Company or
its representatives. The Vice President shall cause the Companies
to be furnished with counterparts of such books of account and
records as they may request.
3. Operation and Maintenance.
The Station will be operated and maintained by one of
the Companies (hereinafter referred to as the "Operating
Company") under the supervision of the Vice President. Unless
otherwise agreed by all the Companies, Monongahela shall be
the Operating Company. The Operating Company shall not be
liable to the other Companies for loss, damage, or injury
arising out of such operation
or maintenance unless caused by its gross negligence or willful
misconduct. The Operating Company shall keep or cause to be kept
books of account and records containing details of the items of
cost applicable to the operation and maintenance of the Station.
Such books of account and records shall be open to examination at
any time by any Company or its representatives. The Operating
Company shall furnish the Companies with copies of such books of
account and records as they may request.
4. Renewals, Replacements, Additions, and Retirements.
Renewals and replacements necessary for the operation
of the Station shall be made as required in accordance with good
utility operating practice. Other renewals and replacements of,
and any additions to, the Station may be made only upon agreement
of all the Companies. Retirements, sales, and other dispositions
of property shall be effected only in a manner consistent with
the Companies' mortgage indentures, if any. Renewals,
replacements, additions and retirements (and related dispositions
and sales) shall be accomplished by the Operating Company under
the supervision of the Vice President.
5. Title to Property.
Title to all property acquired or constructed in
connection with the Station (including, without limitation,
property acquired for use or consumption in connection with its
construction, operation, or maintenance) shall be in the
Companies as tenants in common in proportion to their Ownership
Shares. Construction, acquisitions, and purchases shall be made
in such manner that title shall vest in accordance with the
foregoing; except that any land required by Monongahela and,in
such event, Monongahela shall convey to Potomac and West Penn
undivided interests therein of 30% and 45% respectively, upon
receipt from them of those percentages of the price it
paid for said land.
6. Power and Energy.
Subject to Section 9, each Company shall at all times
have full ownership of and available to it at the Station a
portion of the generating capability of the Station, and the
energy associated therewith, corresponding to its Ownership
Share. Each Company shall cause the Operating Company to be kept
informed as to the amount of power it requires be generated for
it at the Station.
Subject to its capability and to necessary or
unavoidable outages, the Station shall be operated so as to
produce continually an electrical energy output equal to the sum
of the power requirements of the Companies therefrom.
7. Expenditures.
All expenditures in respect of the Station shall be
accounted for in accordance with the Uniform System of Accounts
prescribed by the Federal Power Commission for Public Utilities
and Licensees (Class A and B Electric utilities) in effect on the
date of this Agreement and as may be amended from time to time.
All expenditures (other than fuel) for the
construction, operation, and maintenance of the Station
(including, without limitation, all expenditures for
administration, labor, payroll taxes, employee benefits,
research and development, materials, supplies and services) and
all expenditures for renewals, replacements, additions, and
retirements related to the Station shall be shared by the
Companies in proportion to their Ownership Shares.
All expenditures in respect of the Station properly chargeable to
Account 501 (Fuel) of such Uniform System of Accounts for any
period shall be shared by the Companies pro rata according to the
total kilowatt-hours of electrical energy taken from the Station
during such period.
Interest charges on borrowed funds, income taxes, and
property, business and occupation and like taxes related to the
Station imposed upon each Company shall be borne entirely by such
Company; and such items, as well as depreciation, amortization
and interest charged during construction, shall not be deemed
expenditures for purposes of this Section.
8. Joint Account.
The Companies shall maintain one or more joint accounts
(collectively, the "Joint Account") in a bank or banks agreed
upon by them. All expenditures referred to in the second
paragraph of Section 7 hereof shall be paid out of the Joint
Account.
From time to time the Vice President or the Operating
Company through Allegheny Power Service Corporation may request
the Companies to advance to the Joint Account such amount as is
then needed for cash working capital. Within ten days thereafter
the Companies pro rata according to their respective Ownership
Shares, shall deposit in such Joint Account the amount specified
in such request.
As promptly as practicable after the end of each month,
the Operating Company shall cause the aforesaid Vice President to
send, to each of the Companies a statement in reasonable detail
of all expenditures hereunder for such month and the amount of
each Company's share thereof. Within ten days after its receipt
of such statement, each Company shall deposit its share in the
Joint Account.
The Vice President or Operating Company shall cause to
be drawn against the Joint Account, and to be delivered, checks
or drafts in the names of the Companies in payment of
expenditures. Funds shall be disbursed from the Joint Account in
accordance with sound accounting and disbursement procedures. All
persons authorized to handle or disburse funds from the Joint
Account shall be bonded in favor of Monongahela, Potomac, and
West Penn, as their respective interest may appear, for not less
than $500,000.
9. Default.
During any period that a Company is in default in whole
or in part in making a deposit in the Joint Account required
under this Agreement, (a) such Company shall be entitled to no
energy from the Station (but it shall be obligated to pay any
damages to the non-defaulting Companies resulting from such
default) and (b) the non-defaulting Companies shall be entitled
to all of the energy from the Station in proportion of their
Ownership Shares. No such default shall affect any Company's
ownership interest, or any Company's obligations under Section 7
and 8.
10. Arbitration.
Any controversy relating to this Agreement or the Deed
shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association, and judgment upon an award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
11. Term of Agreement.
This Agreement shall continue in full force and effect for
a period of 45 years from the date hereof and for such longer
period as the Companies
shall by agreement continue to operate any of the units at the
Station. Termination of this Agreement shall not terminate the
provisions of Section
12. Successors and Assigns.
This Agreement shall inure to the benefit of and bind
the successors and assigns of the parties hereto, but it may be
assigned in whole or in part only in connection with transfer to
the assign of the assignor's corresponding ownership interest in
the Station.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement
to be duly executed.
MONONGAHELA POWER COMPANY
By_____________/s/_____________________
Vice President
THE POTOMAC EDISON COMPANY
By______________/s/_____________________
Vice President
WEST PENN POWER COMPANY
By_________/s/_________________________
Vice President
