Exhibit 10.33
OPERATION AND MAINTENANCE AGREEMENT
FOR
TRANSMISSION FACILITIES
(Transferred Under Wisconsin "Reliability 2000" Legislation)
Between
American Transmission Company LLC
and
Wisconsin Electric Power Company *
Dated as of December 29, 2000
1. DEFINITIONS AND INTERPRETATION 3
1.1 Definitions, Generally. 3
1.2 Special Definitions. 3
1.2.1 Baseline Maintenance Budget. 3
1.2.2 Baseline Resource Hours. 3
1.2.3 Emergency Response Services. 3
1.2.4 Facilities Maintenance Plan. 3
1.2.5 Good Cause. 4
1.2.6 Good Utility Practice. 4
1.2.7 Key Personnel. 4
1.2.8 Maintenance Resource Budget. 4
1.2.9 Maintenance Resource Hours. 5
1.2.10 Maintenance Services. 5
1.2.11 Operations Date. 5
1.2.12 Operation Services. 5
1.2.13 Party. 5
1.2.14 Parties. 6
1.2.15 Services. 6
1.2.16 Technology. 6
1.2.17 Transmission Facilities. 6
1.2.18 Transmission System. 7
2. TERM 7
2.1 Term of Agreement. 7
2.2 Extension. 7
3. REQUIRED REGULATORY APPROVALS 7
4. RESPONSIBILITIES OF UTILITY CONTRACTOR 7
4.1 Scope of Services. 7
4.2 Performance Standards. 8
4.3 Operation Services. 10
4.4 Maintenance Services. 12
4.5 Utility Contractor Resources. 16
4.6 Facilities Maintenance Plan. 17
4.7 Budget. 19
4.8 Reports. 20
4.9 Training. 20
4.10 Contracts with Third Parties. 21
5. RESPONSIBILITIES OF ATCLLC 22
6. COMPENSATION OF UTILITY CONTRACTOR 23
6.1 Compensation for Operation Services and
Maintenance Services. 23
6.2 Methods of Calculating the Compensation Due. 23
6.3 Minimum Compensation for Maintenance Services. 24
6.4 Compensation for Inventory and Storage. 25
6.5 Billing and Payment. 26
6.6 Audits and Adjustments. 26
7. OWNERSHIP 27
8. DISPUTE RESOLUTION 28
9. FORCE MAJEURE 28
10. LIMITATION ON LIABILITY 29
11. INDEMNITY 30
12. INSURANCE 32
13. SUCCESSORS AND ASSIGNS 34
14. NOTICE 35
15. MISCELLANEOUS 36
15.1 Compliance with Laws. 36
15.2 Entire Agreement. 36
15.3 Counterparts. 36
15.4 Amendment. 37
15.5 Survival. 37
15.6 Independent Contractor. 37
15.7 Confidentiality. 37
15.8 Standards of Conduct. 38
15.9 No Implied Waivers. 39
15.10 No Third-Party Beneficiaries. 39
15.11 Severability. 39
15.12 Governing Law. 40
15.13 Operation and Prospective Planning. 40
15.14 Headings. 40
15.15 Affiliate Status of Parties. 40
OPERATION AND MAINTENANCE AGREEMENT
FOR
TRANSMISSION FACILITIES
THIS OPERATION AND MAINTENANCE AGREEMENT FOR TRANSMISSION
FACILITIES ("Agreement") is entered into as of December 29, 2000
by and between Wisconsin Electric Power Company or WEPCO
("Utility Contractor"), a Wisconsin corporation, and American
Transmission Company LLC ("ATCLLC"), a Wisconsin limited
liability company (Utility Contractor and ATCLLC are individually
referred to as "Party" and collectively as "the Parties").
RECITALS
WHEREAS, Wisconsin Act 9 ("Reliability 2000 Legislation"),
effective October 29, 1999, authorized the organization of a new
company to provide electric transmission service;
WHEREAS, pursuant to the provisions of the Reliability 2000
Legislation, ATCLLC was organized to provide transmission
service;
WHEREAS, the Reliability 2000 Legislation authorized
electric transmission utilities to transfer their transmission
assets to a new company organized to provide transmission
service;
WHEREAS, WEPCO has agreed to transfer its transmission
assets to ATCLLC;
WHEREAS, the Reliability 2000 Legislation requires ATCLLC to
contract with each utility that has transferred transmission
facilities to the new company for the utility to provide
reasonable and cost-effective operation and maintenance services
to ATCLLC for a period of three years after ATCLLC commences
operations;
WHEREAS, Utility Contractor and ATCLLC each desire to use
this Agreement to satisfy said requirement of the Reliability
2000 Legislation.
WHEREAS, in furtherance of said requirement of the
Reliability 2000 Legislation, the Parties desire to reflect
herein their agreement for the provision of Operation Services
and Maintenance Services as defined in this Agreement. The
Parties have also entered into a Forming Party Agreement
Regarding Operating Principles dealing with the performance of
certain functions in operation of the Transmission System and a
Transitional Services Agreement pursuant to which the Parties
have arranged for the provision of additional services upon
commencement of operations by ATCLLC and over a transitional
period.
WHEREAS, since the Parties intend that Utility Contractor
will commit resources to performance of the services contemplated
hereunder and that ATCLLC will develop the nature and level of
maintenance activity to be performed in accordance with the
procedures, and subject to the standards of, this Agreement, the
Parties have provided that ATCLLC will commit to pay for a
certain level of activity in any event. To minimize the
possibility that changes in ATCLLC's maintenance plans will
result in incurrence of this fixed cost obligation, the Parties
have further agreed that ATCLLC may, subject to certain
conditions, including compliance with applicable labor
agreements, use the services of Utility Contractor elsewhere on
its system. For convenience, the Parties have expressed the
foregoing commitment as an obligation to use an annual minimum of
85% of the number of hours of Utility Contractor's own labor used
in a representative year for Transmission Facilities maintenance,
to pay the direct costs of such Utility Contractor's own labor at
an agreed upon rate per hour, and all associated overheads, and
to pay an annual minimum of 85% of the annual expenditure of
Utility Contractor for Transmission Facilities maintenance in a
representative year.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein, the Parties hereby agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions, Generally.
Unless defined in Section 1.2 of this Agreement, the
definition of each defined term used in this Agreement shall be
the same as the definition for that term set forth in the OATT,
the Operating Agreement of ATCLLC, or the Asset Contribution
Agreement between the Parties.
1.2 Special Definitions.
The following capitalized terms used in this Agreement shall
be defined as set forth below:
1.2.1 Baseline Maintenance Budget.
"Baseline Maintenance Budget" shall mean 85% of the
Maintenance Resource Budget.
1.2.2 Baseline Resource Hours.
"Baseline Resource Hours" shall mean eighty-five
percent (85%) of Maintenance Resource Hours.
1.2.3 Emergency Response Services.
"Emergency Response Services" shall have the definition
provided in Section 4.3 of this Agreement and includes those
Services identified on Exhibit A to this Agreement as
"Emergency Response Services."
1.2.4 Facilities Maintenance Plan.
"Facilities Maintenance Plan" shall mean the plan for
the provision of Maintenance Services as defined in Section
4.6 of this Agreement.
1.2.5 Good Cause.
"Good Cause" shall mean (i) misconduct that is or could
be materially detrimental to the Utility Contractor or
ATCLLC, (ii) breach of a material provision of any agreement
to which the Utility Contractor is a party; (iii) the
commission of one or more acts which constitute an
indictable crime under United States Federal, state, or
local law, or (iv) the failure to substantially perform work-
related duties.
1.2.6 Good Utility Practice.
"Good Utility Practice" shall mean any of the
practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry during
the relevant time period, or any of the practices, methods
and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made,
could have been expected to accomplish the desired result at
a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice
is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather is
intended to include acceptable practices, methods, or acts
generally accepted in the region.
1.2.7 Key Personnel.
"Key Personnel" shall mean individuals employed by the
Utility Contractor in the positions of managers and
supervisors and who are designated as the individuals
directly responsible for supervising or managing work to be
performed or services to be provided under this Agreement.
1.2.8 Maintenance Resource Budget.
"Maintenance Resource Budget" shall mean the total
Transmission Facilities maintenance costs established
consistent with Schedule 1 of this Agreement, of Utility
Contractor for the Transmission Facilities for a year
representative of normal conditions, which representative
year shall be based upon a normalized average of such costs
over the past five years or the projected 1/1/2001
Transmission Facilities maintenance budget of Utility
Contractor, as agreed by the Parties.
1.2.9 Maintenance Resource Hours.
"Maintenance Resource Hours" is an annual unit of
measurement that shall mean the number of hours of
transmission maintenance work performed by Utility
Contractor's own employees on the Transmission Facilities in
a year representative of normal conditions, which
representative year shall be based upon an average of such
hours over the past five years or as otherwise agreed by the
Parties. Maintenance Resource Hours does not include any
work performed by Utility Contractor's supervisory or
management employees covered in overhead, or by Utility
Contractor's subcontractors.
1.2.10 Maintenance Services.
"Maintenance Services" shall mean those Services
identified on Exhibit A to this Agreement as "Maintenance
Services and as further defined in Section 4.4."
1.2.11 Operations Date.
"Operations Date" shall mean January 1, 2001 or such
later date on which ATCLLC receives the necessary approvals,
and commences operations.
1.2.12 Operation Services.
"Operation Services" shall mean those Services
identified on Exhibit A to this Agreement as "Operation
Services" and "Emergency Response Services," and as further
defined in Sections 4.3(a) and (b).
1.2.13 Party.
"Party" shall mean either Utility Contractor or ATCLLC.
1.2.14 Parties.
"Parties" shall mean both Utility Contractor and
ATCLLC.
1.2.15 Services.
"Services" shall mean all Operation Services and
Maintenance Services.
1.2.16 Technology.
"Technology" shall mean any ideas, know-how,
inventions, developments, discoveries, trade secrets,
processes, technical information, and improvements relating
in any way to the Services, including without limitations,
machines, manufactures, methods, techniques, systems,
computer software and documentation, data and information
(including, but not limited to, maintenance records,
reports, training materials, findings, charts, tables and
diagrams) (irrespective of whether in human or machine-
readable form), works of authorship, and products, whether
or not patentable, copyrightable, or susceptible to any
other form of protection and whether or not reduced to
practice, and whether or not described in writing.
1.2.17 Transmission Facilities.
"Transmission Facilities" shall mean the facilities for
the transmission of electric energy and ancillary services
transferred to ATCLLC by Utility Contractor pursuant to, and
identified in, the Asset Contribution Agreement between
ATCLLC and WEPCO, dated December 15, 2000, and new
facilities constructed or acquired by ATCLLC to the extent
ATCLLC requests that Utility Contractor provide Services for
such facilities and to the extent Utility Contractor agrees
to provide such Services.
1.2.18 Transmission System.
"Transmission System" shall mean the system of
facilities for the transmission of electric energy and
ancillary services owned or controlled by ATCLLC and which
are covered by the ATCLLC OATT.
2. TERM
2.1 Term of Agreement.
Subject to Article 3, this Agreement shall be effective from
the date of its execution or the Operations Date, whichever is
earlier, and shall continue in effect for an initial term through
the day before the third anniversary of the Operations Date.
2.2 Extension.
This Agreement shall automatically renew for subsequent one
year terms unless sooner terminated in accordance with the terms
of this Agreement or either Party provides written notice of its
intent not to renew at least one year prior to the end of the
then-current term.
3. REQUIRED REGULATORY APPROVALS
The effectiveness of this Agreement is hereby expressly
conditioned upon the receipt by Utility Contractor and ATCLLC of
all permits, regulatory authorizations and regulatory approvals
that shall be required by the Parties to enter into and perform
their obligations under this Agreement in a form acceptable in
the reasonable judgment of the Party affected thereby.
4. RESPONSIBILITIES OF UTILITY CONTRACTOR
4.1 Scope of Services.
(a) Utility Contractor shall perform, or cause to be
performed, the Services in accordance with the terms, conditions
and procedures specified in this Agreement.
(b) Except as specifically provided in this Agreement,
Utility Contractor shall be the exclusive provider of the
Services to the Transmission Facilities during the term of this
Agreement.
(c) ATCLLC shall have the right to direct Utility
Contractor to provide any Operation Services, including Emergency
Response Services, that may be necessary or appropriate, in
accordance with Good Utility Practice, for the operation of any
of the Transmission Facilities.
(d) Utility Contractor shall provide Maintenance Services
for the Transmission Facilities subject to any limitations on
Utility Contractor's obligation or right to provide such services
which are contained in this Agreement.
4.2 Performance Standards.
(a) In meeting their responsibilities hereunder, the
Parties shall at all times follow Good Utility Practice, the
adequacy obligation set forth in Section 2.7 of the Operating
Agreement of ATCLLC, and the requirements of this Agreement.
(b) Utility Contractor shall provide Services in accordance
with ATCLLC direction as necessary to give effect to ATCLLC
policies, plans and business decisions but Utility Contractor
shall be responsible for determining the manner of performance
and for supervision of the work specified by ATCLLC or its duly
authorized designee. With respect to performance of Operation
Services, should Utility Contractor object to following the
specifications or directives of ATCLLC on any basis, Utility
Contractor shall nonetheless follow such directives and
specifications. Where, in the judgment of Utility Contractor,
following the specifications or directives of ATCLLC would pose a
substantial risk to property or human safety, Utility Contractor
shall, where time permits, notify a representative of ATCLLC and
seek relief from the specification or directive. Where Utility
Contractor does not have time to notify an ATCLLC representative
and obtain relief, the Utility Contractor may take reasonable
steps to mitigate damage to property or risk to human safety. In
any non-emergency case in which Utility Contractor objects to
following the directives or specifications of ATCLLC, its Key
Personnel shall so notify ATCLLC in writing or confirm oral
notice in writing. Utility Contractor may, where it has given
the notice required in this Section, subsequently address its
objections under the dispute resolution process set forth in
Article 8 of this Agreement.
(c) Except as directed by ATCLLC and/or the Facilities
Maintenance Plan, Utility Contractor shall make good faith
efforts to maintain the pre-Agreement quality and timeliness of
its performance of the Services in accordance with Good Utility
Practice, including priority of work, maintenance intervals, and
methods.
(d) In providing the Operation Services, and in
implementing the Facilities Maintenance Plan, Utility Contractor
shall, except as directed by ATCLLC and/or provided in Facilities
Maintenance Plans, continue to seek to preserve the useful life
of the Transmission Facilities.
(e) Except as otherwise directed by ATCLLC or as provided
in the Facilities Maintenance Plan, the Budget, or prescribed by
Good Utility Practice, Utility Contractor shall maintain and
operate the Transmission Facilities (i) in accordance with
standards and procedures necessary to preserve coverages under
all insurance policies applicable to the Transmission Facilities;
(ii) in accordance with the procedures required to preserve all
applicable manufacturers' warranties; and (iii) with best efforts
to leave any portion of the Transmission Facilities on which work
is performed in good repair and reliable working order on
completion of the work.
(f) Utility Contractor shall not be deemed to have failed
to adequately perform a specific Service under this Agreement
where (i) Utility Contractor has performed the specific Service
in accordance with Good Utility Practice, the Facilities
Maintenance Plan, or any directive, specification, procedure or
policy of ATCLLC; or (ii) where its ability to adequately perform
a specific Service was constrained by an ATCLLC-imposed budgetary
limitation on that specific Service to which limitation Utility
Contractor objected in writing, or if orally, confirmed in
writing by Key Personnel, at such time as the effect of the
budget restraint became known.
(g) If ATCLLC discovers that any Services performed fail to
conform to this Agreement, Utility Contractor shall, at ATCLLC's
option, promptly correct or re-perform such non-conforming
Services so that they conform to this Agreement. Without
limiting the generality of this provision, Utility Contractor
shall provide the labor, engineering, supervision, equipment,
tools and materials necessary to effect such remedy. Utility
Contractor shall perform its remedial obligations hereunder in a
timely manner consistent with ATCLLC's reasonable requirements.
If Utility Contractor repeatedly fails, or is unable, to remedy
such non-conforming Services during a period consistent with
ATCLLC's reasonable requirements, ATCLLC may undertake to remedy
the non-conforming Services and in such case Utility Contractor
shall reimburse ATCLLC for any reasonable costs incurred thereby.
This subsection shall be in addition to any other remedies
provided by this Agreement or available at law or equity.
(h) In its performance of Emergency Response Services,
Utility Contractor shall undertake service restoration efforts in
a fashion which does not unduly favor or discriminate against any
distribution system.
4.3 Operation Services.
(a) Operations Services.
Utility Contractor shall perform all of ATCLLC's
requirements for Operation Services identified in Exhibit A as
specified and directed by ATCLLC. Exclusive of Emergency
Response Services, which are addressed separately below,
Operation Services consist of the following:
(i) field switching of transmission equipment,
(ii) investigating system anomalies and performing
other field operational activities necessary or appropriate
for the operation of the Transmission System. Utility
Contractor shall perform these switching and related
activities using its employees who typically perform such
functions.
(b) Emergency Response Services.
Utility Contractor shall perform, or cause to be performed,
all of ATCLLC's requirements for Emergency Response Services.
Emergency Response Services shall mean all services needed for
emergency response, repairs and reporting related to the
Transmission Facilities, including those items designated on
Exhibit A as Emergency Response Services. Utility Contractor
shall maintain an organization and personnel sufficient for 24-
hours per day, seven days per week provision of Emergency
Response Services to ATCLLC. Communications between ATCLLC and
Utility Contractor concerning Emergency Response Services shall
be made using the method or methods appropriate under the
circumstances at the time the communication takes place. In
carrying out such Services:
(1) Utility Contractor shall make timely reports to
ATCLLC Operation Centers of the impact of anticipated and
actual weather and emergency conditions on the Transmission
Facilities, including regular updates as to the actions
taken by Utility Contractor in response thereto.
(2) Utility Contractor shall work closely with ATCLLC
to coordinate communications with customers, public agencies
and the media about emergency conditions and service
restoration efforts.
(3) Utility Contractor shall take prompt and timely
action to prevent or minimize damage to Transmission
Facilities, and to facilitate their restoration to service,
in a weather or other emergency. Utility Contractor shall
seek prior approval of such actions by ATCLLC if
practicable. Such prior approval may be in the form of an
emergency response plan agreed to by ATCLLC and Utility
Contractor.
(4) Unless otherwise directed by ATCLLC, Utility
Contractor shall repair and replace damaged Transmission
Facilities, and promptly restore the Transmission Facilities
to pre-emergency conditions.
(5) If ATCLLC reasonably believes that Utility
Contractor either lacks, or will be unable or unwilling to
deploy, sufficient resources to promptly restore
Transmission Facilities to their pre-emergency condition or
to promptly facilitate their restoration to service, ATCLLC
may, notwithstanding Section 4.1(b), provide such resources
itself or through third parties, consistent with Good
Utility Practice. In such event, and to the extent
available, Utility Contractor shall provide the necessary
equipment, spare parts, materials and supplies to ATCLLC or
its contractors as requested by ATCLLC.
4.4 Maintenance Services.
(a) General.
Except as expressly provided in this Agreement, Utility
Contractor shall perform, or cause to be performed, all
Maintenance Services as described in Exhibit A to this Agreement
and in each Quarterly update of the Facilities Maintenance Plan.
In accordance with each Facilities Maintenance Plan, the work
shall include:
(1) periodic inspection, testing and monitoring;
(2) scheduling and execution of preventive and
corrective maintenance;
(3) scheduling and execution of outages needed to
perform preventive and corrective maintenance;
(4) compiling and maintaining records, reports
and data bases related to preventive and corrective
maintenance activities;
(5) ensuring compliance with quality assurance
policies and procedures of ATCLLC, consistent with Good
Utility Practice; and
(6) forestry work or other work for the maintenance of
Transmission Facilities rights-of-way or easements.
(b) Unscheduled Maintenance.
(1) Utility Contractor shall perform unscheduled
maintenance on the Transmission Facilities when such
maintenance is required by Good Utility Practice. For
substantial unscheduled maintenance that is not covered in
the Facilities Maintenance Plan, Utility Contractor shall
first provide ATCLLC with a description of the work that
Utility Contractor proposes to perform, the resources needed
to carry out the work, a schedule for the work, and an
estimate of the cost of the work to be performed. Utility
Contractor shall proceed with substantial unscheduled
maintenance only after receiving approval from ATCLLC, which
approval may be given orally if promptly confirmed in
writing. For purposes of this paragraph, substantial means
having a cost, as determined in Article 6 of this Agreement,
of more than $2,500.
(c) Limits on Obligation or Right to Take or Provide
Maintenance Services.
(1) Utility Contractor shall not be required to
perform Maintenance Services during any year, the cost of
which exceeds 115% of the Maintenance Resource Budget or to
use its own employees in excess of 115% of the number of
Maintenance Resource Hours.
(2) ATCLLC may provide, either itself or through third
parties, up to 5% of the Baseline Maintenance Budget for the
Transmission Facilities, provided such Maintenance Services
are not typically performed by Utility Contractor's non-
supervisory employees.
(3) Utility Contractor and ATCLLC shall use reasonable
good faith efforts to identify Resource Hours in excess of
115% of Baseline Maintenance Hours which Utility Contractor
may have available to perform Maintenance Services
("Additional Resource Hours"). To the extent such
Additional Resource Hours are identified, ATCLLC, if it
needs or desires more Maintenance Services than could be
obtained using 115% of the Baseline Maintenance Hours, shall
first request Utility Contractor to provide such additional
Maintenance Services. Utility Contractor shall respond to
ATCLLC's request for such additional Maintenance Services as
soon as reasonably possible but within seven days.
(4) Use of Utility Contractor's Employees for
Maintenance Services on the Transmission System: If at any
point in time in a given calendar year ATCLLC reasonably
believes it may not, during the course of that calendar
year, request an amount of Maintenance Services from Utility
Contractor sufficient to exhaust the Baseline Resource Hours
or Baseline Maintenance Budget for work on the Transmission
Facilities, ATCLLC may direct Utility Contractor to perform
Maintenance Services on other transmission facilities owned
by ATCLLC and Utility Contractor shall perform such Services
using either Utility Contractor's own employees or
subcontractors, provided that:
(i) Such employees are otherwise typically
assigned to perform Maintenance Services;
(ii) Such employees are qualified to perform
Maintenance Services on such transmission facilities;
(iii) the provisions of any applicable labor
agreement are not violated;
(iv) subcontractors are not used to perform the
Services unless and until Baseline Resource Hours are
exhausted; and
(v) performance by subcontractors is allowed
under the relevant subcontract.
Utility Contractor shall not enter into any labor contract
or subcontract for any of the Services during the term of this
Agreement that would limit ATCLLC's use of Utility Contractor's
own employees or subcontractors under this Section 4.4(c).
(5) ATCLLC Use of Other Utilities to Perform Maintenance
Services: Utility Contractor agrees that ATCLLC may direct any
other utility which has contributed or will contribute
transmission facilities to ATCLLC (a "Contributing Utility") to
perform Maintenance Services on the Transmission Facilities using
Contributing Utility's employees or subcontractor if each of the
following conditions is satisfied:
(i) ATCLLC reasonably believes that the amount of
Maintenance Services it will request Utility Contractor to
perform during the year will equal or exceed either the
Baseline Resource Hours in the case of using Utility
Contractor's own employees or the Baseline Maintenance
Budget in the case of using Utility Contractor's
subcontractors;
(ii) The amount of Maintenance Services ATCLLC will
request a Contributing Utility to perform under an Operation
and Maintenance Agreement relating to transmission
facilities that it contributed to ATCLLC will be less than
the Baseline Resource Hours or the Baseline Maintenance
Budget provided for in that Operation and Maintenance
Agreement;
(iii) The Contributing Utility's employees are (A)
typically assigned to perform Maintenance Services, and (B)
qualified to perform Maintenance Services on the
Transmission Facilities; and further provided that the
provisions of any applicable labor agreement would not be
violated by Contributing Utility's performance of services
on the Transmission Facilities.
(iv) The provisions of any applicable subcontract
between Contributing Utility and subcontractor would not be
violated.
(v) Subcontractors are not used to perform the
services unless and until Utility Contractor's Baseline
Resource Hours are exhausted.
4.5 Utility Contractor Resources.
(a) Utility Contractor shall maintain and manage the
organizational and physical resources needed to continue to
perform the Services .
(b) Utility Contractor shall maintain an organization and
personnel, including contractors, capable of performing the
Services in a cost effective manner. Qualifications for Key
Personnel assigned to manage the performance of Services shall be
available to ATCLLC at any reasonable time. ATCLLC shall have
the right to interview the Key Personnel proposed by Utility
Contractor to manage the performance of Services and to reject
such Key Personnel for Good Cause at any time during the term of
this Agreement.
(c) Utility Contractor shall maintain and manage the
equipment, spare parts, materials and supplies needed to perform
the Services as required by this Agreement.
4.6 Facilities Maintenance Plan.
(a) As soon as reasonably possible before the anticipated
date for transfer of the Transmission Facilities from Utility
Contractor to ATCLLC, and thereafter at least 90 days before the
beginning of each quarter throughout the term of this Agreement,
ATCLLC will submit in writing to Utility Contractor, for Utility
Contractor's review and comment, a Facilities Maintenance Plan
for the 12 month planning period beginning with such quarter, and
for each month in such planning period, describing ATCLLC's
updated proposed plan for the operation and maintenance of the
Transmission Facilities. It is agreed however that ATCLLC shall
use Utility Contractor's Facilities Maintenance Plan and Budget
for the first 12 month period, subject to quarterly updates and
revisions as provided herein.
(b) The Facilities Maintenance Plan shall include the
information, and follow the format, specified by ATCLLC. The
Facilities Maintenance Plan shall, consistent with Good Utility
Practice and the adequacy standard set forth in Section 2.7 of
the Operating Agreement of ATCLLC, describe the Maintenance
Services that ATCLLC expects Utility Contractor to perform for
the first quarter of the 12 month planning period, and shall
include a good faith estimate of the work ATCLLC proposes to have
performed during the balance of the 12 month period covered by
the plan, and the scheduled outages associated with these
activities. The Facilities Management Plan shall provide for
full utilization of Baseline Resource Hours and Baseline
Maintenance Budget and shall include sufficient detail to permit
Utility Contractor to plan the work, prepare the Budget, and have
available the necessary parts, materials, and supplies to perform
the Maintenance Services.
(c) Utility Contractor shall review, and recommend
revisions as it deems appropriate and are consistent with Good
Utility Practice, and return the Facilities Maintenance Plan to
ATCLLC within 30 days after its submittal. ATCLLC, may, after
review and consultation with Utility Contractor with respect to
work force and material availability issues, revise the plan,
provided that any such revisions are consistent with the
responsibilities of the Parties, and approve and return the plan
to Utility Contractor within 30 days prior to the start of the
next quarter. ATCLLC may at any time, in response to suggestions
made by Utility Contractor or on its own initiative, elect to
revise the Facilities Maintenance Plan to meet the then current
needs of ATCLLC provided that such revisions are consistent with
the responsibilities of the Parties under this Agreement,
including ATCLLC's commitment to fully utilize Baseline Resource
Hours and its commitment to pay the Baseline Maintenance Budget.
If ATCLLC does so elect to revise the Facilities Maintenance
Plan, ATCLLC shall notify Utility Contractor with a change order
in a timely fashion consistent with the circumstances, and if
such notification is given orally, ATCLLC shall promptly confirm
it in writing or via fax or electronic medium; provided, however,
that any costs incurred by Utility Contractor in reasonable
anticipation of performing Services under the Facilities
Maintenance Plan as previously approved by ATCLLC, and which
could not reasonably have been mitigated by Utility Contractor,
shall be borne by ATCLLC. Services performed pursuant to ATCLLC
change orders shall be subject to all applicable terms and
conditions of this Agreement.
(d) The Facilities Maintenance Plan shall avoid, if
possible, scheduling Maintenance Services during anticipated peak
usage of the Transmission System.
4.7 Budget.
(a) As soon as possible before the anticipated date for
transfer of the Transmission Facilities from Utility Contractor
to ATCLLC, and thereafter at least 60 days before the beginning
of each quarter throughout the term of this Agreement, Utility
Contractor shall submit in writing to ATCLLC, for ATCLLC's review
and approval, a budget for the first quarter of the 12 month
planning period, and a good faith cost estimate for the work
ATCLLC proposes to have performed during the balance of the 12
month period covered by the Facilities Maintenance Plan or
updated Facilities Maintenance Plan for that 12 month period
("Budget"). The Budget prepared by Utility Contractor shall
reflect full utilization of Baseline Resource Hours and the
Baseline Maintenance Budget.
(b) The Budget shall include the information, and follow
the format used by Utility Contractor in its budget associated
with its existing plans for the initial 12 month period with such
modification as ATCLLC may reasonably require, including
coordinating the Budget with procedures for centralized ATCLLC
cost accounting and billing.
(c) ATCLLC shall review, consult with Utility Contractor
about work force and materials availability, and revise, as it
deems appropriate, approve and return the Budget to Utility
Contractor within 30 days of its submittal. During the term of
the Budget, ATCLLC may at each quarterly review, in response to
suggestions made by Utility Contractor or on its own initiative,
elect to revise the Budget and the Facilities Maintenance Plan to
meet the then current needs of ATCLLC subject to Good Utility
Practice and the adequacy obligation set forth in Section 2.7 of
the Operating Agreement of ATCLLC and ATCLLC's commitment to
fully utilize Baseline Resource Hours and to pay the amount of
the Baseline Maintenance Budget. If ATCLLC does elect to revise
the Budget and the Facilities Maintenance Plan, ATCLLC shall
communicate the changes made to Utility Contractor in writing, in
a timely fashion; provided, however, that any costs incurred by
Utility Contractor in reasonable anticipation of performing
Services under the Budget as previously approved by ATCLLC, and
which could not reasonably have been mitigated by Utility
Contractor, shall be borne by ATCLLC.
4.8 Reports.
(a) As part of the Services, Utility Contractor shall
prepare and submit the reports described in this Section. Such
reports and data shall be provided to ATCLLC without restriction,
and are subject to the confidentiality provisions of Section 15.7
of this Agreement.
(b) As part of the Services, Utility Contractor shall
prepare, on a quarterly basis within 30 days after the end of the
quarter, a summary of the significant maintenance and inspection
work performed during the previous quarter. Such report shall
include a summary of all material deficiencies in the
Transmission Facilities observed or experienced by Utility
Contractor, and Utility Contractor's proposals for correcting
such deficiencies.
(c) As part of the Services, Utility Contractor shall
prepare, on a monthly basis within 30 days after the end of the
month, a budget variance report setting forth actual and budgeted
expenditures for the period and year to date, together with
Utility Contractor's explanation of any variance.
(d) Utility Contractor shall prepare such other reports,
and provide such other information, as ATCLLC may request
regarding the operation and maintenance of the Transmission
Facilities.
4.9 Training.
(a) As part of the Services, Utility Contractor shall train
its employees and agents appropriately to carry out its
responsibilities to ATCLLC under this Agreement. Upon request,
Utility Contractor shall provide ATCLLC the training materials,
and the course materials used by the Utility Contractor in any
training programs conducted pursuant to this Section.
(b) As part of the Services, Utility Contractor shall
provide training sessions to familiarize ATCLLC employees or
agents with the operation and maintenance of the Transmission
Facilities and the Services provided hereunder. Utility
Contractor shall provide such training sessions at such times and
locations, to such audiences, and with such content, as may be
appropriate and requested by ATCLLC.
4.10 Contracts with Third Parties.
ATCLLC acknowledges that Utility Contractor may have entered
into contracts with third parties for the maintenance or
operation of the Transmission Facilities. ATCLLC further
acknowledges that Utility Contractor may wish in the future to
enter into contracts with third parties to perform some of the
Services. All such third-party contracts shall be subject to the
following provisions.
(a) Existing contracts. As soon as practicable before the
Operations Date, Utility Contractor shall provide ATCLLC, for its
review, subject to the confidentiality provisions of Section
15.7, copies of all third-party contracts then currently in
effect and under which the amounts payable are expected to exceed
$100,000 annually, for Services covered by this Agreement.
During the term of this Agreement, Utility Contractor shall not
modify any of these third-party contracts without the prior
written approval of ATCLLC, which approval ATCLLC shall not
unreasonably withhold or delay.
(b) Future Contracts. Utility Contractor may enter into
contracts with qualified third parties for the provision of
Services, provided that Utility Contractor obtains ATCLLC's prior
written approval of all proposed contractors and contracts under
which the amounts payable are reasonably expected to exceed
$100,000 annually, which approval ATCLLC shall not unreasonably
withhold or delay.
(c) Utility Contractor may not split any contracts to avoid
the $100,000 approval threshold.
(d) Contract Invoices. Utility Contractor shall pass all
invoices it receives for third-party contract work used to
provide Services under this Agreement directly through to ATCLLC,
with no additional charges or markups, except as may be
specifically authorized under this Agreement.
5. RESPONSIBILITIES OF ATCLLC
During the term of this Agreement, ATCLLC shall, at its cost
and expense, and in a manner consistent with Good Utility
Practice, perform or provide the following at the times required
to support the provision of the Services:
(a) ATCLLC shall develop and maintain policies and
procedures necessary for maintenance of reliable, cost effective
transmission service and maximizing the useful life of the
Transmission System, and shall implement those policies through
the establishment of the Facilities Maintenance Plan and its
directives to Utility Contractor.
(b) ATCLLC shall provide Utility Contractor with all
necessary access to the Transmission Facilities and ATCLLC
properties upon which such Transmission Facilities are located.
(c) ATCLLC shall, with the concurrence and assistance of
Utility Contractor as may be necessary or appropriate, procure
and maintain in effect all permits, certificates and licenses
needed by the owner of the Transmission Facilities for the
operation and maintenance of such Transmission Facilities.
(d) ATCLLC shall prepare and submit to Utility Contractor,
review with Utility Contractor, revise, approve and update
Facilities Maintenance Plans, as described in Section 4.6 hereof.
ATCLLC shall review, revise and approve Budgets, as described in
Section 4.7 hereof. All such Facilities Maintenance Plans,
revisions to Facilities Maintenance Plans, Budgets, and revisions
to Budgets shall be reasonable, consistent with Good Utility
Practice, in accordance with the adequacy language contained in
Section 2.7 of the Operating Agreement of ATCLLC, and subject to
ATCLLC's commitment to fully utilize Baseline Resource Hours and
the Baseline Maintenance Budget. Approvals of Facilities
Maintenance Plans and Annual Budgets shall not be unreasonably
withheld or delayed.
(e) ATCLLC shall provide training sessions to familiarize
Utility Contractor personnel with the processes and procedures
relating to the Services that are developed by ATCLLC during the
term of this Agreement for application by ATCLLC throughout the
ATCLLC Transmission System.
(f) ATCLLC shall provide Utility Contractor with such other
information, oversight and direction reasonably required by
Utility Contractor to fulfill Utility Contractor's
responsibilities under this Agreement.
6. COMPENSATION OF UTILITY CONTRACTOR
6.1 Compensation for Operation Services and Maintenance
Services.
As full and complete compensation for Utility Contractor's
provision of Operation Services and Maintenance Services, ATCLLC
shall pay Utility Contractor all of the reasonable direct and
indirect costs incurred by Utility Contractor in performing such
Services. Direct and indirect costs include but are not limited
to labor costs with loadings, which shall include labor costs for
tasks such as recording costs and invoicing ATCLLC and the cost
of materials and supplies; return of and on the cost of property
employed; and payments to contractors, plus all overheads
directly associated with any and all of these costs.
6.2 Methods of Calculating the Compensation Due.
The methods and procedures for determining, recording,
allocating, billing and auditing of Utility Contractor's costs is
set forth in Schedule 1 hereto.
6.3 Minimum Compensation for Maintenance Services.
(a) Utility Contractor and ATCLLC shall in connection with
the preparation of the initial Facilities Maintenance Plan
determine the Maintenance Resource Budget.
(b) The Parties shall identify that portion of the
Maintenance Resource Budget that is attributable to Maintenance
Resource Hours.
(c) Section 6.1 notwithstanding, as minimum compensation
for the performance of the Maintenance Services by Utility
Contractor under this Agreement, ATCLLC shall annually pay
Utility Contractor (i) the amount attributable to unused Baseline
Resource Hours as determined pursuant to Section 6.3(d) below;
and (ii) the amount of the Baseline Maintenance Budget less any
amount that ATCLLC pays for unused Baseline Resource Hours
pursuant to Section 6.3(d).
(d) ATCLLC agrees to annually utilize all of the Baseline
Resource Hours. Utility Contractor agrees to limit the use of
subcontractors to the extent that use of subcontractors would
result in Baseline Resource Hours not being fully utilized,
except as agreed by ATCLLC. If ATCLLC does not fully utilize the
Baseline Resource Hours, ATCLLC shall pay Utility Contractor for
the unused Baseline Resource Hours, calculated as the product of
the number of unused Baseline Resource Hours times an
appropriately weighted annual average hourly cost, which shall be
calculated as the actual annual charge for Maintenance Services
rendered and as determined under Section 6.1, less supplies,
materials, and subcontractor payments, divided by the number of
hours spent by Utility Contractor's own employees in providing
the Maintenance Services.
(e) If payments of compensation under Section 6.1 are less
than the minimum payments required by Section 6.3(c), ATCLLC
shall pay Utility Contractor the difference.
(f) Where the total cost of Maintenance Services rendered
exceeds the Baseline Maintenance Budget payment, ATCLLC's
obligation to pay for unused Baseline Resource Hours is
conditioned upon Utility Contractor's compliance with its
obligation under Section 6.3(d) to limit the use of
subcontractors to the extent that their use would result in
underutilization of Baseline Resource Hours.
(g) Where the parent of Utility Contractor is a registered
holding company under the Public Utility Holding Company Act of
1935, as amended ("PUHCA"), the minimum payment obligation set
forth in Section 6.3(c) shall apply only to the extent allowed by
PUHCA, or authorized pursuant to an exemption granted thereunder
by the Securities and Exchange Commission.
(h) To the extent that Force Majeure prevents Utility
Contractor from performing Maintenance Services during the
calendar year or prevents ATCLLC from taking Maintenance Services
during the calendar year, ATCLLC shall receive a ratable credit
against its obligation to utilize Baseline Resource Hours and its
obligation to pay the amount of the Baseline Maintenance Budget.
6.4 Compensation for Inventory and Storage.
(a) Upon cancellation or expiration of this Agreement,
ATCLLC agrees to purchase the inventory of materials and supplies
under the provisions of Section 3.8 of the Asset Contribution
Agreement.
(b) ATCLLC shall have the option to lease from Utility
Contractor, or rent at cost, the warehouse space and other
facilities and systems used by Utility Contractor to maintain and
manage such materials and supplies.
6.5 Billing and Payment.
Utility Contractor shall provide invoices to ATCLLC each
month, setting forth the costs incurred by Utility Contractor
during the previous month to provide the Services, and
identifying costs accrued for Services by the Utility Contractor
during the previous month, which accrued costs will be invoiced
at a later date. ATCLLC shall pay each invoice within 15 days of
receipt from Utility Contractor. Within 60 days after the end of
each calendar year of this Agreement, Utility Contractor shall
calculate the amount due under Section 6.3(c) above and shall
provide ATCLLC with an invoice reflecting that amount. Billing
and payment disputes that cannot be resolved in the normal course
of business shall be resolved using the dispute resolution
procedures described in Article 8.
6.6 Audits and Adjustments.
Utility Contractor shall maintain and retain for such time
as ATCLLC may reasonably direct, but not for longer than six
years, the books and other records needed to document the costs
Utility Contractor incurs as a result of fulfilling its
obligations under this Agreement. Utility Contractor shall
respond to any reasonable request from ATCLLC for information
related to a cost charged by Utility Contractor to ATCLLC by
providing ATCLLC the information reasonably needed by ATCLLC to
verify the cost in question. From time to time, ATCLLC may
conduct, and Utility Contractor shall permit ATCLLC to conduct or
cause to be conducted by its authorized agents, at ATCLLC's
expense, audits of the books and records of Utility Contractor
that relate to the Services provided under this Agreement. Such
audits will be conducted at reasonable, mutually agreed upon
times, provided that ATCLLC must contest invoices within one year
of receipt and must complete any audit relating to a contested
invoice within a reasonable period of time thereafter. Any
adjustment identified to be made as a result of an audit and that
is payable under Section 5 of Schedule 1 shall be made to the
billing statement next issued following the conclusion of the
audit.
7. OWNERSHIP
For the purpose of this Agreement:
(a) Rights in ATCLLC Independently Developed Technology:
Any Technology prepared, developed or acquired solely by the
ATCLLC shall be owned solely by ATCLLC (hereinafter, "ATCLLC
Owned Technology"). Except as provided for herein, nothing
herein shall imply a license in the ATCLLC Owned Technology.
(b) Rights In Utility Contractor Independently Developed
Technology: Any Technology prepared, developed or acquired solely
by Utility Contractor shall be owned solely by Utility Contractor
(hereinafter, "Utility Contractor Owned Technology"). Except as
provided for herein, nothing herein shall imply a license in the
Utility Contractor Owned Technology. (c) Rights In Jointly
Developed Technology: Any Technology jointly prepared, developed
or acquired by the ATCLLC and Utility Contractor, shall be
jointly owned (hereinafter, "Joint Technology"). The ownership
rights granted under this paragraph shall be limited to the Joint
Technology only and, except as provided for herein, does not
grant any rights, license or otherwise in either the ATCLLC Owned
Technology or Utility Contractor Owned Technology that may be
necessary to utilize the Joint Technology.
(d) Grant Of Rights In ATCLLC Owned Technology: To the
extent any ATCLLC Owned Technology is needed by a Utility
Contractor in furtherance of performing the Services or any
aspect thereof, the ATCLLC hereby grants to Utility Contractor a
full and complete, world-wide, royalty-free, fully paid-up, non-
exclusive license to use, without the right to grant sublicenses,
the ATCLLC Owned Technology.
(e) Grant Of Rights In Background Utility Contractor
Technology: To the extent that background or underlying
technology of Utility Contractor used by Utility Contractor in
its performance of Services hereunder is required by ATCLLC to
make use of ATCLLC Owned Technology or the Joint Technology in
order to operate and maintain the Transmission Facilities,
Utility Contractor hereby grants to the ATCLLC a full and
complete, world-wide, royalty-free, fully paid-up, non-exclusive
license to use the background or underlying technology of the
Utility Contractor, for the term of this Agreement and afterwards
but only for the purposes and to the extent used during the term
of this Agreement, without the right to grant sublicenses.
(f) Shared Rights in Joint Technology: The ATCLLC and
Utility Contractor shall retain perpetually full and complete
rights to (e.g., make, use or sell) the Joint Technology.
Neither party may assign or otherwise transfer any rights in the
Joint Technology, by license or otherwise, to the detriment of
the other.
8. DISPUTE RESOLUTION
Any dispute arising out of or in connection with this
Agreement shall be resolved according to the dispute resolution
procedures set forth in Exhibit B to the Operating Agreement of
American Transmission ATCLLC.
9. FORCE MAJEURE
(a) Neither Party shall be responsible or liable, or deemed
in breach hereof, to the extent the performance of its respective
obligations hereunder is prevented or delayed due solely to
circumstances beyond the reasonable control and without the fault
or negligence of the party experiencing such impediment to
performance, including but not limited to acts of God; war;
riots; strikes, lockouts or other labor disturbances; labor or
material shortages, including unavailability of Utility
Contractor resources required for Operation Services or required
for fulfillment of the Facilities Maintenance Plan; actions or
failures to act on the part of governmental authorities
preventing or delaying performance; inability despite due
diligence to obtain required licenses; or fire (such causes
hereinafter called "Force Majeure").
(b) The Party experiencing the Force Majeure shall exercise
due diligence in endeavoring to overcome any Force Majeure
impediment to its performance, but settlement of its labor
disturbances shall be entirely within its discretion. The Party
experiencing the Force Majeure shall promptly give written
notification to the other Party. This written notification shall
include a full and complete explanation of the Force Majeure and
its cause, the status of the Force Majeure, and the actions such
Party is taking and proposes to take to overcome the Force
Majeure. ATCLLC shall have the right, upon written notice to
Utility Contractor, to obtain alternate contractors to perform
the Services during any event of Force Majeure that prevents or
delays Utility Contractor's performance hereunder if the Force
Majeure has or, in ATCLLC's reasonable judgment, threatens to
have an adverse effect on ATCLLC's ability to conduct its
operations.
10. LIMITATION ON LIABILITY
With respect to claims by and between the Parties under this
Agreement, the measure of damages at law or in equity in any
action or proceeding shall be limited to direct actual damages
only, such direct actual damages shall be the sole and exclusive
remedy and all other remedies or damages at law or in equity are
waived and neither Party shall be liable in statute, contract, in
tort (including negligence), strict liability, warranty or under
any other legal theory or otherwise to the other Party, its
agents, representatives, and/or assigns, for any special,
incidental, punitive, exemplary or consequential loss or damage
whatsoever, including, but not limited to, loss of profits or
revenue on work not performed, for loss of use of or under-
utilization of the other Party's facilities, loss of use of
revenues, attorneys' fees, litigation costs, or loss of
anticipated profits, resulting from either Party's performance or
non-performance of an obligation imposed on it by this Agreement,
without regard to the cause or causes related thereto, including
the negligence of any party. The Parties expressly acknowledge
and agree that this limitation shall apply to any claims for
indemnification under Article 11 of this Agreement. The
provisions of this section shall survive the termination or
expiration of this Agreement.
11. INDEMNITY
(a) Utility Contractor's Indemnification. Subject to the
provisions of Article 10, Utility Contractor shall indemnify,
hold harmless and defend ATCLLC, and its officers, directors,
employees, affiliates, managers, members, trustees, shareholders,
agents, contractors, subcontractors, affiliates' employees,
invitees and successors, from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs,
losses, judgments, damages and expenses (including the reasonable
costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements, and compromises relating
thereto, reasonable attorneys' and expert fees and reasonable
disbursements in connection therewith) for damage to property,
injury to any person or entity, or death of any individual,
including ATCLLC's employees and affiliates' employees, Utility
Contractor's employees, or any other third parties, to the extent
caused wholly or in part by any act or omission, negligent or
otherwise, by Utility Contractor or its officers, directors,
employees, agents, contractors, subcontractors and invitees
arising out of or connected with Utility Contractor's performance
or breach of this Agreement, or the exercise by Utility
Contractor of its rights hereunder; provided, however, that the
provisions of this Section shall not apply if any such injury,
damage or death is held to have been caused by the negligence or
intentional wrongdoing of ATCLLC, its agents or employees. In
furtherance of the foregoing indemnification and not by way of
limitation thereof, Utility Contractor hereby waives any defense
it otherwise might have under applicable workers' compensation
laws.
(b) ATCLLC's Indemnification. Subject to the provisions of
Article 10, ATCLLC shall indemnify, hold harmless and defend
Utility Contractor, its parent and its officers, directors,
employees, affiliates, managers, members, trustees, shareholders,
agents, contractors, subcontractors, invitees and successors,
from and against any and all claims, demands, suits, obligations,
payments, liabilities, costs, losses, judgments, damages and
expenses (including the reasonable costs and expenses of any and
all actions, suits, proceedings, assessments, judgments,
settlements, and compromises relating thereto, reasonable
attorneys' and expert fees and reasonable disbursements in
connection therewith) for damage to property, injury to any
person or entity, or death of any individual, including Utility
Contractor's employees and affiliates' employees, ATCLLC's
employees, or any other third parties, to the extent caused
wholly or in part by any act or omission, negligent or otherwise,
by ATCLLC or its officers, directors, employees, agents,
contractors, subcontractors and invitees arising out of or
connected with ATCLLC's performance or breach of this Agreement,
or the exercise by ATCLLC of its rights hereunder; provided,
however, that the provisions of this Section shall not apply if
any such injury, damage or death is held to have been caused by
the negligence or intentional wrongdoing of Utility Contractor,
its agents or employees. In furtherance of the foregoing
indemnification and not by way of limitation thereof, ATCLLC
hereby waives any defense it otherwise might have under
applicable workers' compensation laws.
(c) Indemnification Procedures. Any Party seeking
indemnification under this Agreement shall give the other Party
notice of such claim as soon as practicable but in any event on
or before the thirtieth (30th) day after the Party's actual
knowledge of such claim or action. Such notice shall describe
the claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the claim that has been, or may be
sustained by, said Party. To the extent that the other Party
will have been actually and materially prejudiced as a result of
the failure to provide such notice, such notice will be a
condition precedent to any liability of the other Party under the
provisions for indemnification contained in this Agreement.
Neither Party may settle or compromise any claim for which
indemnification is sought under this Agreement without the prior
consent of the other Party; provided, however, said consent shall
not be unreasonably withheld or delayed. Each Party's
indemnification obligation will survive expiration, cancellation
or early termination of this Agreement.
12. INSURANCE
(a) The Parties agree to maintain, at their own cost and
expense, general and automobile liability, worker's compensation,
and other forms of insurance relating to their operations for the
life of this Agreement in the manner, and amounts, at a minimum,
as set forth below,
(i) Workers' Compensation Insurance in accordance with all
applicable state, federal and maritime law, including
Employer's Liability Insurance in the amount of
$1,000,000 per accident;
(ii) Commercial General Liability Insurance, including
Contractual Liability Coverage for liabilities assumed
under this Agreement, and Personal Injury Coverage in
the amount of $25,000,000 per occurrence for bodily
injury and property damage. Utility Contractor's
policy shall include ATCLLC and ATC Management Inc. as
additional insureds and ATCLLC's policy shall include
Utility Contractor as an additional insured;
(iii) Automobile Liability Insurance for all owned,
non-owned, and hired vehicles with bodily injury limits
of no less than $5,000,000 per person, $5,000,000 per
accident; and property damage limits of no less than
$5,000,000 per accident. Utility Contractor's policy
shall include ATCLLC and ATC Management Inc. as
additional insureds and ATCLLC's policy shall include
Utility Contractor as an additional insured;
(iv) Where a Party has more than $100 million in assets it
may, at its option, self insure all or part of the
insurances required in this Article; provided, however,
the self-insuring Party agrees that all other
provisions of this Article, including, but not limited
to, waiver of subrogation, waiver of rights of
recourse, and additional insured status, which provide
or are intended to provide protection for the other
Party and its affiliated and associated companies under
this Agreement, shall remain enforceable. A Party's
election to self-insure shall not impair, limit, or in
any manner result in a reduction of rights and/or
benefits otherwise available to the other Party and its
affiliated and associated companies through formal
insurance policies and endorsements as specified in the
above parts of this Article. The self-insuring Party
agrees that all amounts of self-insurance, retentions
and/or deductibles are the responsibility of and shall
be borne by the self-insuring Party.
(b) Within fifteen (15) days of the Effective Date, and
each anniversary of the Effective Date, during the term of this
Agreement, (including any extensions), each Party shall provide
to the other Party, properly executed and current certificates of
insurance with respect to all insurance policies required to be
maintained by such Party under this Agreement. Certificates of
insurance shall provide the following information:
(i) Name of insurance company, policy number and expiration
date;
(ii) The coverage required and the limits on each, including
the amount of deductibles or self-insured retentions,
which shall be for the account of the Party maintaining
such policy;
(iii) A statement indicating that the other Party shall
receive at least thirty (30) days prior written notice
of cancellation or expiration of a policy, or reduction
of liability limits with respect to a policy; and
(iv) A statement identifying and indicating that additional
insureds have been named as required by this Agreement.
(c) At a Party's request, in addition to the foregoing
certifications, the other Party shall deliver to the first Party
a copy of applicable sections of each insurance policy.
(d) Each Party shall have the right to inspect the original
policies of insurance applicable to this Agreement at the other
Party's place of business during regular business hours.
(e) If any insurance is written on a "claims made" basis,
the respective Party shall maintain the coverage for a minimum of
seven years after the termination of this Agreement.
(f) To the extent permitted by the insurer and commercially
reasonable, each Party shall obtain waivers of subrogation in
favor of the other Party from any insurer providing coverage that
is required to be maintained under this Article 12, except for
the coverage required under Section 12(a)(i). A Party shall not
be required to obtain a waiver of subrogation if the other Party
is not able to obtain a waiver of subrogation from its insurance
carrier.
13. SUCCESSORS AND ASSIGNS
This Agreement and each and every covenant, term and
condition hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. Utility
Contractor shall not assign its rights or obligations hereunder
without express written approval of ATCLLC, except it may assign
its rights or obligations to a purchaser (or an affiliate) who
will own all or substantially all of Utility Contractor's
distribution assets or equity interests and who shall then be
bound by all of the provisions of this Agreement. ATCLLC shall
not assign its rights or obligations hereunder without express
written approval of Utility Contractor, except it may assign its
rights and obligations to a purchaser (or an affiliate) who will
own all or substantially all of ATCLLC's transmission assets and
who shall then be bound by all of the provisions of this
Agreement.
14. NOTICE
(a) All certificates or notices required hereunder shall be
given in writing and addressed or delivered to the
representative(s) specified in this Agreement. Notices shall be
deemed received (i) upon delivery, when personally delivered;
(ii) upon receipt, when sent via registered or certified mail;
(iii) the next business day, when sent via overnight courier; and
(iv) upon transmittal, when sent via facsimile. Copies of all
general correspondence regarding this Agreement shall also be
sent to these representative(s).
(b) Notices submitted hereunder shall be directed to the
following individuals:
Notices to Utility Contractor:
Attn: Xxxxxx X. Xxxxxxx
Corporate Secretary
Wisconsin Electric Power Company
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Notices to ATCLLC:
Attn: Xxxxxx Xxxxxxx
Vice President, Legal and Secretary
American Transmission Company, LLC
N16 W23217 Xxxxx Xxxxx Xxxxx
X.X. Xxx 00
Xxxxxxxx, XX 00000-0000
All other communications relating to this Agreement should
be submitted to:
Xxxxx X. Xxxxxxx
Vice President - Operations
American Transmission Company, LLC
N16 X00000 Xxxxx Xxxxx Xxxxx
X.X. Xxx 00
Xxxxxxxx, XX 00000-0000
(c) ATCLLC or Utility Contractor may change their
respective representative(s) designated to receive notice
hereunder by written notice to the other Party. All
correspondence and transmittals between the Parties shall be
executed pursuant to coordination procedures that shall be
developed by the Parties.
15. MISCELLANEOUS
15.1 Compliance with Laws.
Throughout the term of this Agreement, each Party shall
perform its obligations hereunder in compliance with all present
and future federal, state and local statutes, ordinances, rules
and regulations, including, but not limited to those pertaining
to human safety, protection of property, non-discrimination, and
protection of the environment.
15.2 Entire Agreement.
This Agreement, together with the Appendices and Exhibits
attached hereto, is the entire understanding of the Parties
regarding the subject matter hereof, and supersedes all prior
oral or written discussions, negotiations and agreements the
Parties may have had with respect to the subject matter hereof.
15.3 Counterparts.
This Agreement may be executed in any number of
counterparts, and each counterpart shall have the same force and
effect as the original instrument.
15.4 Amendment.
No amendment, modification or waiver of any term hereof
shall be effective unless set forth in a writing signed by both
ATCLLC and Utility Contractor.
15.5 Survival.
All warranties, remedial obligations, indemnities and
confidentiality rights and obligations provided for herein shall
survive the cancellation, expiration or termination hereof.
15.6 Independent Contractor.
Utility Contractor at all times shall be deemed to be an
independent contractor and none of its employees or the employees
of its sub-contractors shall be considered to be employees of
ATCLLC during the term of this Agreement. Utility Contractor
shall have no authority to act on behalf of ATCLLC or bind ATCLLC
in any manner except as expressly set forth in this Agreement.
The Parties acknowledge that neither this Agreement nor any of
its provisions are intended to create any partnership or joint
venture between the Parties.
15.7 Confidentiality.
(a) "Confidential Information", as used in this Section
15.7, shall mean all information or documentation disclosed or
made available by either Party to the other, including but not
limited to correspondence between the Parties, business plans,
financial information, policies and procedures, computer
programs, reports and analyses, or other information which a
Party in good faith designates as "Trade Secrets" as that term is
defined in Wis. Stat. 134.90(1)(c).
(b) In consideration of the disclosure by one Party of
Confidential Information to the other Party, the Parties agree
that each of them shall undertake in good faith to accomplish the
following additional actions with respect thereto:
(i) to use the Confidential information for the
sole purpose of fulfilling the obligations of the
Parties pursuant to this Agreement;
(ii) to safeguard and hold in strict confidence
all Confidential Information, limiting disclosure of
Confidential Information to employees, contractors or
agents who have a need to know;
(iii) to protect Confidential Information from
disclosure to anyone not a party to this Agreement
without the prior approval of the disclosing Party; and
(iv) upon the request of the disclosing Party and
in any event upon cancellation or expiration of this
Agreement, to return all Confidential Information, or
to certify that such Confidential Information has been
destroyed.
(c) The restrictions of this Section do not apply to any
information which is already known by the receiving party,
possessed by a third party prior to disclosure, acquired from
anyone not a party to this Agreement without restriction, or
which is publicly available.
(d) Each Party retains all right, title and interest in and
to any Confidential Information disclosed by the party hereunder.
(e) In the event that either Party is required by
applicable law to disclose any Confidential Information of the
other Party, such party shall promptly notify the other Party of
such requirement and cooperate with the other Party to protect
the Confidential Information from any disclosure not required by
law.
(f) The obligations of this Section shall survive for a
period of 3 years following any expiration or cancellation of
this Agreement.
15.8 Standards of Conduct.
If the performance of this Agreement requires ATCLLC to
disclose information about the Transmission System to Utility
Contractor, the dissemination of which by Utility Contractor
would have been subject to FERC's Standards of Conduct
requirements, 18 C.F.R. Part 37, prior to the transfer of the
Transmission Facilities, such information shall not be disclosed
by Utility Contractor or ATCLLC to any persons that would not
have been entitled to receive such information prior to such
transfer.
15.9 No Implied Waivers.
The failure of a Party to insist upon or enforce strict
performance of any of the provisions of this Agreement shall not
be construed as a waiver or relinquishment to any extent of such
Party's right to assist or rely upon any such provisions, rights
and remedies in that or any other instance; rather, the same
shall be and remain in full force and effect.
15.10 No Third-Party Beneficiaries.
This Agreement is intended to be solely for the benefit of
ATCLLC and Utility Contractor and their successors and permitted
assigns and is not intended to and shall not confer any rights or
benefits on any third party (other than successors and permitted
assigns) not a signatory hereto.
15.11 Severability.
In the event that any provision of this Agreement is deemed
as a matter of law to be unenforceable or null and void, such
unenforceable or void portion of such provision shall be deemed
severable from this Agreement unless the removal of the
unenforceable provision materially alters the obligations of
either Party hereunder. Even if there is a material alteration
in the remainder of the Agreement, the Agreement shall continue
in full force and effect as if such provision was not contained
herein., but the Parties shall negotiate in good faith new
provisions in relation to the deleted provision that will to the
extent practicable restore the benefit of the bargain contained
in such provision, and that are consistent with Good Utility
Practice and the adequacy obligation set forth in Section 2.7 of
the Operating Agreement of ATCLLC.
15.12 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, with the
exception of any choice of laws provisions.
15.13 Operation and Prospective Planning.
Recognizing that the Parties have to prepare a Facilities
Maintenance Plan and Budget prior to the Operations Date, the
Parties will operate under the standards of this Agreement to
prepare a Facilities Maintenance Plan, calculate Baseline
Resource Hours, calculate a Maintenance Response Budget, and
develop a Budget adhering as closely as possible to the
timetables established for the first year after the Operations
Date.
15.14 Headings.
The headings set forth herein are inserted for convenience
and shall have no effect on the interpretation or construction of
this Agreement.
15.15 Affiliate Status of Parties.
For purposes of Articles 10, 11, and 12, neither Party shall
be treated as an affiliate of the other.
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed by their duly authorized representatives,
effective as of the date first written above.
AMERICAN TRANSMISSION COMPANY LLC
BY______________________________________
TITLE___________________________________
WISCONSIN ELECTRIC POWER COMPANY
BY______________________________________
TITLE___________________________________
EXHIBIT A
OPERATION SERVICES AND MAINTENANCE SERVICES
MAINTENANCE SERVICES MAINTENANCE SERVICES
(continued)
(a) For Line Equipment Analysis (System
(c) For ATCLLC
* Inspection
* Station Property
* aerial/walk/climb/infra-red Grass Maintenance
* underground * Station Property
Vegetation Control
* submarine cable * Station Property
* Painting Building Maintenance
* Wood Pole * Station Property
Inspection/Treatment/Repair Snow Removal
* Station Property
(some replacements Gravel
may be capital in * Station Property
nature) Access Maintenance
* Line Repair * Station Property
(Insulation/Founda Security Checks
tion/Hardware/Conductor)
* Grounding (d) Miscellaneous
* Corrosion Control * Special
Maintenance Projects
* Maintenance of * Grounding Repair
insulating * Radio/TV
fluids/gases, pumps, Interference
valves and protective * Major Equipment
devices) Repair
* Right of Way
Vegetation Control
* Right of Way
Access Maintenance
* Right of Way
Security Checks
(b) For Station Equipment
* Inspection
* Painting/Switches/Bus
* Structure/Foundation
Repair
* Breaker
* DC System
* Transformer
* SF6 Management
* Relay
Test/Maintenance
System (System
Protection)
* Communications
Repair (System
OPERATION SERVICES
(a) Operations
* Inspection
* Field Switching
* Communications
Repair
(b) Emergency
Response Services
* Field Response
* Emergency
Cleanup Spill
Response
* Post-Emergency
Repair
SCHEDULE 1
(ATTACHED TO OPERATION & MAINTENANCE AGREEMENT)
1. General Description.
Utility Contractor shall invoice to ATCLLC the actual costs
of providing Services for the previous month. The invoice will
also identify any costs for Services accrued during the previous
month by Utility Contractor with the understanding that these
accrued costs will be invoiced for payment at a later date (as
they are paid by Utility Contractor). Utility Contractor's
invoices to ATCLLC will be in a consistent format and provided
monthly together with the Utility Contractor's detailed billing
reports supporting the invoice.
2. Methods of Calculating Costs to Be Paid by ATCLLC.
(a) Direct Costs. Costs incurred by the Utility
Contractor that are solely and directly attributable to
Transmission Facilities services shall be directly billed to
ATCLLC in full. These directly billed costs shall be recorded as
incurred by Utility Contractor to internal bookkeeping accounts
designated as transmission billing accounts. The direct cost for
materials and supplies shall be their book value.
(b) Indirect Costs. Costs incurred by the Utility
Contractor for activities that support the entire company or
which support Transmission Facilities and services to
Transmission Facilities plus other divisions of the company will
be identified and a portion of these costs will be charged to
ATCLLC. Utility Contractor will identify and aggregate all of
these costs into recognizable categories and, in cooperation with
ATCLLC, shall develop methods for calculating the portion of each
cost category that should be allocated to ATCLLC. The method for
determining the share allocable to ATCLLC may vary from cost
category to cost category. A document describing the methods for
allocating categories of costs to ATCLLC, including any
allocation formulas, will be attached to this Schedule 1.
(c) Labor Loadings. Loadings that account for pension
and employee benefit costs, payroll taxes and costs, and the
expense of non-productive time (paid leaves plus, if not a
separate cost category, training) shall be added to any direct or
indirect labor costs billed to ATCLLC. A document describing the
methods Utility Contractor will use to calculate and apply labor
loadings will be attached to this Schedule 1.
(d) Extraordinary Costs. Subject to Article 4 of the
Agreement, costs incurred by Utility Contractor that are unusual,
special or extraordinary may require unique treatment. Utility
Contractor will notify ATCLLC in advance of incurring such costs
whenever possible and as soon as possible after incursion of the
cost if advance notice is not possible, but in any event prior to
sending ATCLLC an invoice that includes the cost.
(e) Utility Contractor's System for
Recording Its Costs. Utility Contractor will notify ATCLLC in
advance of any changes to its system of recording and tracking
its costs that will significantly impact the calculation or
appearance of invoices to ATCLLC. Utility Contractor will, at
ATCLLC's expense, provide for the transfer to ATCLLC of
electronic billing data in a form usable by ATCLLC's electronic
systems for recording and tracking costs of the Services.
3. True-ups and Reviews.
Amounts that have been billed based on estimates will be
adjusted to the Utility Contractor's actual costs after actual
costs are known and ATCLLC will pay more or receive a credit, as
appropriate, for any true-up. Such true-ups may be performed at
any time, but at least one annual true-up will be performed by
the Utility Contractor for the previous year before the
expiration of the first quarter of the following year. In
addition, formulas, procedures and allocations may be revised by
either Party if the Party proposing the revision can demonstrate
to the other Party that new facts have come to light or that it
has discovered or developed an improved formula, procedure or
method for accurately determining or invoicing actual costs. Any
such revision to a formula, procedure or allocation will not be
applied retroactively. Amounts previously billed in error,
however, will be corrected in accordance with Section 4 below;
error here includes the long or short-term misapplication of an
approved formula. Where refunds or additional amounts are owed
due to a true-up or correction, the refund or additional amount
shall appear on the next monthly billing following identification
of the adjustment.
4. Contested Statements.
ATCLLC may contest, and Utility Contractor may correct, any
particular items included in any Utility Contractor invoice
within one year of ATCLLC's receipt of the invoice. This
provision does not limit ATCLLC's right to audit Utility
Contractor under Section 6.6 of the Agreement.
5. Adjustments.
Utility Contractor shall promptly reimburse or credit ATCLLC
for any charges that should not have been billed to ATCLLC as
provided in the Agreement and which either Party identifies
within 12 months of the ATCLLC's receipt of the invoice
containing such charges. Such reimbursements shall be set forth
in the appropriate section of the invoice. Utility Contractor
shall xxxx ATCLLC for any charges that were not billed but should
have been billed to ATCLLC as provided in this Agreement and
which either Party identifies within 12 months of the month that
the charges were incurred.
The amount of any adjustment under this Section shall
reflect interest from the date such amounts were due at the
published prime interest rate of Firstar Bank on the last
business day of the preceding month.
_______________________________
* A Transmission Utility that has transferred Transmission
Facilities to the American Transmission Company LLC.
TRANSITIONAL SERVICES AGREEMENT
FOR
TRANSMISSION FACILITIES
(Transferred Under Wisconsin "Reliability 2000" Legislation)
Between
American Transmission Company LLC
and
Wisconsin Electric Power Company
Dated as of December 29, 2000
ARTICLE 1 DEFINITIONS AND INTERPRETATION 2
1.1 Definitions, Generally 2
1.2 Special Definitions 2
1.2.1 Administrative Services 3
1.2.2 Budget 3
1.2.3 Day One 3
1.2.4 Day 181 3
1.2.5 Good Utility Practice 3
1.2.6 Key Personnel 3
1.2.7 Party 4
1.2.8 Parties 4
1.2.9 Service Schedules 4
1.2.10 Services 4
1.2.11 System Control Services 4
1.2.12 Transmission Facilities 4
1.2.13 Transmission System 5
ARTICLE 2 TERM 5
2.1 Term of Agreement 5
2.2 Extension 5
ARTICLE 3 REQUIRED REGULATORY APPROVALS 5
ARTICLE 4 GENERAL PROVISIONS REGARDING SERVICES TO BE
PROVIDED BY UTILITY CONTRACTOR 6
4.1 Services on Day One 6
4.2 Exclusions of Services on Day One 6
4.3 Exclusion of Services After Day 181 7
4.4 Development of Service Schedules 7
ARTICLE 5 RESPONSIBILITIES OF UTILITY CONTRACTOR 11
5.1 Scope of Services 11
5.2 Performance Standards 11
5.3 Utility Contractor Resources 13
5.4 Budget 14
5.5 Reports 15
5.6 Training 15
5.7 Contracts with Third Parties 16
ARTICLE 6 COMPENSATION OF UTILITY CONTRACTOR 17
6.1 Compensation. 17
6.2 Methods of Calculating the Compensation Due. 17
6.3 Compensation for Inventory and Storage. 17
6.4 Billing and Payment. 18
6.5 Audits and Adjustments. 18
ARTICLE 7 RESPONSIBILITIES OF ATCLLC 19
ARTICLE 8 SERVICES AVAILABLE TO ATCLLC DURING TRANSITION 20
8.1 General 20
8.2 Control Center Services 20
8.3 Real Estate 20
8.4 Project Services 22
8.5 Environmental Services 22
8.6 Supply Chain Services 22
8.7 Engineering Services 23
8.8 Planning Services 23
8.9 Miscellaneous Services 23
ARTICLE 9 SPECIALIZED CONSTRUCTION SERVICES 24
ARTICLE 10 OWNERSHIP 24
ARTICLE 11 DISPUTE RESOLUTION 26
ARTICLE 12 FORCE MAJEURE 26
ARTICLE 13 LIMITATION OF LIABILITY 27
ARTICLE 14 INDEMNITY 27
ARTICLE 15 INSURANCE 30
ARTICLE 16 SUCCESSORS AND ASSIGNS 32
ARTICLE 17 NOTICE 33
ARTICLE 18 MISCELLANEOUS 34
18.1 Compliance with Laws 34
18.2 Entire Agreement 34
18.3 Counterparts 34
18.4 Amendment 34
18.5 Survival 35
18.6 Independent Contractor 35
18.7 Confidentiality 35
18.8 Standards of Conduct 36
18.9 No Implied Waivers 37
18.10 No Third-Party Beneficiaries 37
18.11 Severability 37
18.12 Governing Law 37
18.13 Interpretation. 38
18.14 Headings 38
18.15 Modification of Agreement by Service Schedules 38
18.16 Affiliate Status of Parties 38
TRANSITIONAL SERVICES AGREEMENT
FOR
TRANSMISSION FACILITIES
THIS TRANSITIONAL SERVICES AGREEMENT FOR TRANSMISSION
FACILITIES ("Agreement") is entered into as of December 29, 2000
by and between Wisconsin Electric Power Company or WEPCO
("Utility Contractor"), a Wisconsin corporation, and American
Transmission Company LLC ("ATCLLC"), a Wisconsin limited
liability company (collectively, the "Parties"). Utility
Contractor and ATCLLC are referred to individually as a "Party"
and collectively as the "Parties."
RECITALS
WHEREAS, Wisconsin Act 9 ("Reliability 2000 Legislation"),
effective October 29, 1999, authorized the organization of a new
company to provide electric transmission service;
WHEREAS, pursuant to the provisions of the Reliability 2000
Legislation, ATCLLC was organized to provide transmission
service;
WHEREAS, the Reliability 2000 Legislation authorized
electric transmission utilities to transfer their transmission
assets to a new company organized to provide transmission
service;
WHEREAS, WEPCO has agreed to transfer its transmission
assets to ATCLLC;
WHEREAS, the Parties intend that ATCLLC will commence
operation of the Transmission System on January 1, 2001 ("Day
One").
WHEREAS, ATCLLC is in the process of searching for and
employing personnel needed to staff the functions necessary for
its operations from and after Day One, which may include
personnel currently employed by Utility Contractor and performing
those functions for Utility Contractor. Of necessity, on Day
One ATCLLC must obtain services so as to ensure continuation of
high quality, reliable service.
WHEREAS, the Parties desire to reflect herein their
agreement for the provision of certain services. The Parties
have also entered into a Forming Party Agreement Regarding System
Operating Procedures dealing with the performance of certain
functions in operation of the system and a Facilities Operation
and Maintenance Agreement ("Facilities O & M Agreement") pursuant
to which the Parties have arranged for the provision of Operation
and Maintenance Services upon commencement of operations of
ATCLLC.
WHEREAS, the Parties desire to provide in this Agreement
for the provision by Utility Contractor of the services needed on
Day One for ATCLLC to provide uninterrupted, reliable, cost
effective transmission service. The Parties further desire to
commit in this agreement to a cooperative approach to the
necessary analysis, coordinated planning, construction, and other
measures necessary to meet ATCLLC's needs for a transition from
functional control to full control of all aspects of the
Transmission System, while accommodating the need of Utility
Contractor to plan, supervise and conduct its continuing
distribution operations after Day One.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions, Generally
Unless defined in Section 1.2 of this Agreement, the
definition of each defined term used in this Agreement shall be
the same as the definition for that term set forth in the OATT,
the Operating Agreement of American Transmission Company, LLC, or
the Asset Contribution Agreement between the Parties.
1.2 Special Definitions
The following defined terms used in this Agreement shall be
defined as set forth below:
1.2.1 Administrative Services
"Administrative Services" shall mean those categories and
subcategories of Services described in Sections 8.3, 8.5, 8.6,
8.7, 8.8, and 8.9 of this Agreement.
1.2.2 Budget
"Budget" shall mean the budget to be prepared by Utility
Contractor pursuant to Section 6.3 hereof.
1.2.3 Day One
"Day One" shall mean the date on which ATCLLC commences
operations, and has the same meaning as the term Operations Date
as that term is used in the Operation and Maintenance Agreement
between the Parties.
1.2.4 Day 181
"Day 181" shall mean 180 calendar days after Day One.
1.2.5 Good Utility Practice
"Good Utility Practice" shall mean any of the practices,
methods and acts engaged in or approved by a significant portion
of the electric utility industry during the relevant time period,
or any of the practices, methods and acts which, in the exercise
of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Good Utility
Practice is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather is
intended to include acceptable practices, methods, or acts
generally accepted in the region.
1.2.6 Key Personnel
"Key Personnel" shall mean individuals employed by the
Utility Contractor in the positions of managers and supervisors
and who are designated as the individuals directly responsible
for supervising or managing work to be performed or services to
be provided under this Agreement.
1.2.7 Party
"Party" shall mean either Utility Contractor or ATCLLC.
1.2.8 Parties
"Parties" shall mean both Utility Contractor and ATCLLC.
1.2.9 Service Schedules
"Service Schedules" shall mean the schedules described in
Section 4.4 of this Agreement.
1.2.10 Services
"Services" shall mean any combination of the categories
and/or sub-categories identified in Article 8 of this Agreement
that are provided pursuant to this Agreement or any of the
Service Schedules between the Parties.
1.2.11 System Control Services
"System Control Services" shall mean those categories and
subcategories of Services described in Sections 8.2 and 8.4 of
this Agreement.
1.2.12 Transmission Facilities
"Transmission Facilities" shall mean the facilities for the
transmission of electric energy and ancillary services
transferred to ATCLLC by Utility Contractor pursuant to, and
identified in, the Asset Contribution Agreement between ATCLLC
and WEPCO, dated December 15, 2000, and new facilities
constructed by ATCLLC for its Transmission System which ATCLLC
and Utility Contractor have agreed will be Transmission
Facilities for purposes hereof.
1.2.13 Transmission System
"Transmission System" shall mean the system of facilities
for the transmission of electric energy and ancillary services
owned or controlled by ATCLLC and which are covered by the ATCLLC
OATT.
ARTICLE 2
TERM
2.1 Term of Agreement
Subject to Article 3, this Agreement shall be effective from
Day One and shall continue in effect as modified or supplemented
by the Service Schedules. This Agreement terminates on the date
that the last Service Schedule is terminated or when - in the
absence of Service Schedules - the Agreement is terminated under
the notice provision set forth in Section 4.4.
2.2 Extension
This Agreement may be extended upon the mutual agreement of
the Parties, subject to renegotiation (at the option of either
Party) of the terms of this Agreement.
ARTICLE 3
REQUIRED REGULATORY APPROVALS
The effectiveness of this Agreement is hereby expressly
conditioned upon the receipt by Utility Contractor and ATCLLC of
all permits, regulatory authorizations and regulatory approvals
that shall be required by the Parties to enter into and perform
their obligations under this Agreement in a form acceptable in
the reasonable judgment of the Party affected thereby.
ARTICLE 4
GENERAL PROVISIONS REGARDING SERVICES TO BE PROVIDED BY UTILITY
CONTRACTOR
4.1 Services on Day One
Except to the extent that the Parties agree otherwise and
reflect in the Service Schedules contemplated in Section 4.4
below, each of the Services described in detail in Article 8 of
this Agreement other than those excluded by ATCLLC pursuant to
Section 4.2 and listed on Schedule 4.2 shall be provided to
ATCLLC pursuant to this Agreement by Utility Contractor
commencing on Day One. Utility Contractor shall continue to
provide such Services until either the termination of the
Services pursuant to Section 4.4(d), or the date a Service
Schedule sets for termination of Services covered by that Service
Schedule. Termination of Services under a Service Schedule shall
be in accordance with the termination provisions in such Service
Schedule. When a Service Schedule terminates, the Agreement
terminates as to the Service covered by that Service Schedule.
4.2 Exclusions of Services on Day One
(a) Administrative Services. At least 30 days prior to Day
One, after consultation with Utility Contractor, ATCLLC shall
identify in writing to Utility Contractor each of the
Administrative Services that will not be provided by Utility
Contractor on Day One. This list shall be attached as Schedule
4.2 to this Agreement.
(b) System Control Services. At least 45 days prior to Day
One, after consultation with Utility Contractor, ATCLLC shall
identify in writing to Utility Contractor those System Control
Services which ATCLLC intends and is able to reliably and
effectively provide for itself or through a third party
consistent with the requirements of the Forming Party Agreement
Regarding System Operating Procedures. No later than 15 days
prior to Day One, after consultation with ATCLLC, Utility
Contractor shall notify ATCLLC in writing whether it agrees that
ATCLLC is capable of providing the identified Services consistent
with the requirements of the Forming Party Agreement Regarding
System Operating Procedures. Such agreement from Utility
Contractor shall not be unreasonably withheld or delayed.
4.3 Exclusion of Services After Day 181
Not later than 60 days after Day One, after consultation
with Utility Contractor, ATCLLC shall identify in writing which
of the Administrative Services it will no longer take from
Utility Contractor after Day 181. At this time, ATCLLC shall
also identify which of the System Control Services ATCLLC intends
to no longer take from Utility Contractor after Day 181 and which
ATC intends and is able to reliably and effectively provide after
Day 181 for itself or through a third party consistent with the
requirements of the Forming Party Agreement Regarding System
Operating Procedures. Not later than 90 days after Day One,
after consultation with ACTLLC, Utility Contractor shall notify
ATCLLC in writing whether it agrees that ATCLLC is capable of
providing the identified Services consistent with the
requirements of the Forming Party Agreement Regarding System
Operating Procedures. Such agreement from Utility Contractor
shall not be unreasonably withheld or delayed. ATCLLC's
identification of Services under this subsection shall satisfy
the Termination notice requirements in Section 4.4(d) as to those
Services.
4.4 Development of Service Schedules
From and after Day One, the Parties shall, using the process
set forth below, work in good faith to develop mutually
acceptable Service Schedules for the continuation, reduction or
termination of each of the categories of Services described in
Article 8 by Utility Contractor and which ATCLLC is taking under
this Agreement. That arrangement shall be reflected in one or
more of the Service Schedules contemplated in this Article 4.4
and in Article 8. The Parties shall employ the following
procedure for developing the Service Schedules:
(a) Information and Analysis. As soon as practicable
before Day One, Utility Contractor shall provide to ATCLLC
sufficient reasonably available information on its staffing
and supervision of the Services described in Article 8, a
description of all systems employed in performing the
Services, and information on plans for staffing and
operation of its distribution business to the extent such
plans impact its ability to continue to provide the Services
described in Article 8. ATCLLC shall provide comparable
information regarding its plans and requirements and its
analysis of the process for modification and coordination of
systems data transfers, software requirements, and like
matters.
(b) ATCLLC Proposal of Service Schedules. At least 30
days prior to Day 181, on the basis of information exchanged
pursuant to Section 4.4(a), ATCLLC shall, for each of the
Services it is receiving on Day 181, do one of the
following:
(i) propose Service Schedules for Utility
Contractor's continued provision of some or all such
Services after Day 181;
(ii) If ATCLLC has been unable to complete the
analysis contemplated in Section 4.4(a), it
nevertheless may notify Utility Contractor that ATCLLC
desires to enter into a Service Schedule for the
Service and provide Utility Contractor with a proposal
for the Service Schedule no later than 60 days after
Day 181.
(iii) For an Administrative Service, provide
written notice of termination pursuant to Section
4.4(d);
(iv) For a System Control Service which ATCLLC is
able to provide reliably and effectively for itself or
through third parties consistent with the Forming Party
Agreement Regarding System Operating Procedures,
provide written notice of termination pursuant to
Section 4.4(d); or
No later than 60 days after Day 181, after consultation
with ATCLLC, Utility Contractor shall notify ATCLLC in
writing whether it agrees that ATCLLC is capable of
providing the System Control Services noticed for
termination under (iv) above consistent with the
requirements of the Forming Party Agreement Regarding System
Operating Procedures. Such agreement from Utility
Contractor shall not be unreasonably withheld or delayed.
ATCLLC's identification of Services under this subsection
shall satisfy the termination notice requirements in Section
4.4(d) as to those Services.
(c) Negotiation. Promptly after delivery of proposals
for Service Schedules, the Parties shall meet to consider
them and shall negotiate in good faith toward adoption of
mutually agreeable Service Schedules on the matters
addressed in the proposal.
(d) Utility Contractor's Termination of Services. If
and to the extent that the Parties do not agree on Service
Schedules or Agreements covering a matter or matters
included in an ATCLLC proposal within 120 days after the
delivery of the proposal, or if ATCLLC fails to make a
proposal in accordance with this Section 4.4, Utility
Contractor, may, as to any Service on which there has been
no Service Schedule, notify ATCLLC that after a specified
date it will no longer provide the Service. At this time,
ATCLLC may, for any Administrative Service for which there
has been no Service Schedule, notify Utility Contractor that
after a specified date ATCLLC will no longer procure the
services from Utility Contractor.
(e) ATCLLC Termination of Services. If and to the
extent that the Parties do not agree on Service Schedules or
Agreements covering a matter or matters included in an
ATCLLC proposal within 120 days after the delivery of the
proposal, ATCLLC may notify Utility Contractor that after a
specified date it will no longer procure any Administrative
Service or any System Control Service that ATCLLC intends
and is able to reliably and effectively provide for itself
or through third parties consistent with the Forming Party
Agreement Regarding System Operating Procedures. No later
than 30 days after notification under this Section regarding
a System Control Service, Utility Contractor shall, after
consultation with ATCLLC, notify ATCLLC in writing whether
it agrees that ATCLLC is capable of providing the System
Control Service consistent with the requirements of the
Forming Party Agreement Regarding System Operating
Procedures. Such agreement from Utility Contractor shall
not be unreasonably withheld or delayed. ATCLLC's
identification of Services under this subsection shall
satisfy the termination notice requirements in this Section
4.4(d) as to those Services.
(f) Sufficiency of Notice. The date specified by
Utility Contractor in any notice of termination under
Section 4.4(d) or (e) hereof shall be such as will afford
ATCLLC a reasonable opportunity to obtain the service from a
third party or Parties. The date specified by ATCLLC in any
notice of termination under Section 4.4(d) or (e) hereof
shall be such as will afford Utility Contractor a reasonable
opportunity to redeploy the resources Utility Contractor
used to perform any Service discontinued pursuant to this
Section. A period of six months shall in any event be
deemed a reasonable period for purposes of such notice by
either Party.
ARTICLE 5
RESPONSIBILITIES OF UTILITY CONTRACTOR
5.1 Scope of Services
Utility Contractor shall perform, or cause to be performed,
the Services in accordance with the terms, conditions and
procedures specified in this Agreement.
5.2 Performance Standards
(a) In meeting their responsibilities hereunder, the
Parties shall at all times follow Good Utility Practice, the
requirements of this Agreement, and all directives and
specifications of ATCLLC or its duly authorized designees.
(b) Utility Contractor shall provide Services in accordance
with ATCLLC direction as necessary to give effect to ATCLLC
policies, plans and business decisions, but Utility Contractor
shall be responsible for determining the manner of performance
and for supervision of the work specified by ATCLLC or its
authorized designee. Should Utility Contractors object to
following the specifications or directives of ATCLLC on any
basis, Utility Contractor shall nonetheless follow such
directives and specifications. Where, in the judgment of Utility
Contractor, following the specifications or directives of ATCLLC
would pose a substantial risk to property or human safety,
Utility Contractor shall, where time permits, notify a
representative of ATCLLC and seek relief from the specification
or directive. Where Utility Contractor does not have time to
notify an ATCLLC representative and obtain relief, the Utility
Contractor may take reasonable steps to mitigate damage to
property or risk to human safety. In any non-emergency case in
which Utility Contractor objects to following the directives or
specifications of ATCLLC, it shall so notify ATCLLC in writing or
confirm oral notice in writing by Key Personnel. Utility
Contractor may, where it has given the notice required in this
Section, subsequently address its objections under the dispute
resolution process set forth in Article 11 of this Agreement.
(c) Except as directed by ATCLLC, Utility Contractor shall
make good faith efforts to maintain the pre-Agreement quality and
timeliness of its performance of the Services in accordance with
Good Utility Practice, including priority of work and methods.
(d) The Utility Contractor acknowledges that ACTLLC has
ultimate responsibility for the Transmission System and has the
obligation to manage the Services. To that end, ATCLLC has the
right, upon proper notice to Utility Contractor, to secure non-
construction Services by adding ATCLLC personnel and/or
contractors into project teams and determining the functions such
ATCLLC personnel or contractors shall perform. If ATCLLC elects
to add personnel or contractors, it shall make appropriate
reassignment of responsibility so as to minimize any interference
with the management and supervision by Utility Contractor of the
work for which Utility Contractor is responsible and ATCLLC shall
pay the cost incurred by Utility Contractor resulting from
measures reasonably required of it to redeploy resources in
response to such ATCLLC direction.
(e) Utility Contractor shall not be deemed to have failed
to adequately perform a specific Service under this Agreement
where (i) Utility Contractor has performed the specific Service
in accordance with Good Utility Practice, or any directive,
specification, procedure or policy of ATCLLC; or (ii) where its
ability to adequately perform a specific Service was constrained
by an ATCLLC-imposed budgetary limitation on that specific
Service to which limitation Utility Contractor objected in
writing, or if orally, confirmed in writing by Key Personnel, at
such time as the effect of the budget restraint became known.
(f) If ATCLLC discovers that any Services performed fail to
conform to this Agreement, Utility Contractor shall, at ATCLLC's
option, promptly correct or perform such non-conforming Services
so that they conform to this Agreement. Without limiting the
generality of this provision, Utility Contractor shall provide
the labor, supervision, equipment, tools and materials necessary
to effect such remedy. Utility Contractor shall perform its
remedial obligations hereunder in a timely manner consistent with
ATCLLC's reasonable requirements. If Utility Contractor
repeatedly fails, or is unable, to remedy such non-conforming
Services during a period consistent with ATCLLC's reasonable
requirements, ATCLLC may undertake to remedy the non-conforming
Services and in such case Utility Contractor shall reimburse
ATCLLC for any reasonable costs incurred thereby. This
subsection shall be in addition to any other remedies provided by
this Agreement or available at law or equity.
(g) In its performance of the Services, Utility Contractor
shall undertake its efforts in a fashion which does not unduly
favor or discriminate against any distribution system.
5.3 Utility Contractor Resources
(a) Utility Contractor shall maintain and manage the
organizational and physical resources needed to perform the
Services.
(b) Utility Contractor shall maintain an organization and
personnel, including contractors, capable of performing the
Services in a cost effective manner. Qualifications for Key
Personnel assigned to manage the performance of Services shall be
available to ATCLLC at any reasonable time. ATCLLC shall have
the right to interview the Key Personnel proposed by Utility
Contractor to manage the performance of Services and to reject
such Key Personnel for Good Cause at any time during the term of
this Agreement. The Services shall be managed by such parts of
Utility Contractor's organization as may be necessary to assure
the cost-effective performance of the Services in accordance with
this Agreement or any Service Schedule.
(c) Utility Contractor shall maintain and manage the
equipment, spare parts, materials and supplies needed to perform
the Services in a cost-effective manner.
5.4 Budget
(a) As soon as possible before Day One, and thereafter at
least 60 days before the beginning of each quarter throughout the
term of this Agreement, Utility Contractor shall submit in
writing to ATCLLC, for ATCLLC's review and approval, a budget
for the 6 (six) months beginning with such quarter, and for each
month in such 6 (six) month period, setting forth Utility
Contractor's proposed expenditures for the Services not excluded
by ATCLLC under Sections 4.2 or 4.3, or terminated pursuant to
Sections 4.4.
(b) The Budget shall include the information, and follow
the format used by Utility Contractor in its budget associated
with its existing plans for the initial 6 (six) month period with
such modifications as ATCLLC may reasonably require or as may be
required to coordinate the Budget with procedures for cost
accounting and billing set forth in this agreement. The Budget
shall describe in adequate detail the estimated expenditures
associated with each of the Services ATCLLC is taking under this
Agreement for the Budget period.
(c) ATCLLC shall review, consult with Utility Contractor
about work force and materials availability, and revise, as it
deems appropriate, approve and return the Budget to Utility
Contractor within 30 days of its submittal. During the term of
the Budget ATCLLC may at each quarterly review, in response to
suggestions made by Utility Contractor or on its own initiative,
elect to revise the Budget to meet the then current needs of
ATCLLC subject to any limitation set forth in Article 4 on
ATCLLC's discretion to exclude or terminate Utility Contractor's
provision of Services. If ATCLLC does elect to revise the
Budget, ATCLLC shall communicate the changes made to Utility
Contractor in writing, in a timely fashion; provided, however,
that any costs incurred by Utility Contractor in reasonable
anticipation of performing Services under the budget as
previously approved by ATCLLC, and which could not reasonably
have been mitigated by Utility Contractor, shall be borne by
ATCLLC.
5.5 Reports
(a) As part of the Services, Utility Contractor shall
prepare and submit the reports described in this Section. Such
reports and data shall be provided to ATCLLC without restriction,
and are subject to the confidentiality provisions of Section 18.7
of this Agreement.
(b) As part of the Services, Utility Contractor shall
prepare, on a quarterly basis within 30 days after the end of the
quarter, a summary of the Services provided during the previous
quarter. Such report shall include a summary of all material
deficiencies in the systems, records, or assets that are the
subject of the Services, and Utility Contractor's proposals for
correcting such deficiencies.
(c) As part of the Services, Utility Contractor shall
prepare, on a monthly basis within 30 days after the end of the
month, a budget variance report setting forth actual and budgeted
expenditures for the period and year to date, together with
Utility Contractor's explanation of any variance.
(d) Utility Contractor shall prepare such other reports,
and provide such other information, as ATCLLC may request
regarding the Services.
5.6 Training
(a) As part of the Services, Utility Contractor shall train
its employees and agents appropriately to carry out its
responsibilities to ATCLLC under this Agreement. At ATCLLC's
expense, Utility Contractor shall provide ATCLLC training
materials and course materials used by Utility Contractor in any
training programs conducted pursuant to this Section.
(b) As part of the Services, Utility Contractor shall
provide training sessions to familiarize ATCLLC employees or
agents with the Services provided under this Agreement. Utility
Contractor shall provide such training sessions at such times and
locations, to such audiences, and with such content, as may be
appropriate and requested by ATCLLC.
5.7 Contracts with Third Parties
ATCLLC acknowledges that Utility Contractor may have entered
into contracts with third parties for some or all of the
categories of Services described in Article 8. ATCLLC further
acknowledges that Utility Contractor may wish in the future to
enter into contracts with third parties to perform some of the
Services. All such third-party contracts shall be subject to the
following provisions.
(a) Existing contracts. As soon as practicable before the
Operations Date, Utility Contractor shall provide ATCLLC, for its
review, subject to the confidentiality provisions of Section
18.7, copies of all third-party contracts then currently in
effect and under which the amounts payable are expected to exceed
$50,000 annually for Services covered by this Agreement. During
the term of this Agreement, Utility Contractor shall not modify
any of these third-party contracts without the prior written
approval of ATCLLC, which approval ATCLLC shall not unreasonably
withhold or delay.
(b) Future Contracts. Utility Contractor may enter into
contracts with qualified third parties for the provision of
Services, provided that Utility Contractor obtains ATCLLC's prior
written approval of all proposed contractors and contracts for
contracts under which the amounts payable are reasonably expected
to exceed $50,000 annually, which approval ATCLLC shall not
unreasonably withhold or delay.
(c) Utility Contractor may not split any contracts to avoid
the $50,000 approval threshold.
(d) Contract Invoices. Utility Contractor shall pass all
invoices it receives for third-party contract work used to
provide Services directly through to ATCLLC, with no additional
charges or markups, except as may be authorized under this
Agreement.
ARTICLE 6
COMPENSATION OF UTILITY CONTRACTOR
6.1 Compensation.
As full and complete compensation for Utility Contractor's
provision of the Services, ATCLLC shall pay Utility Contractor
all of the reasonable direct and indirect costs incurred by
Utility Contractor in performing such Services. Direct and
indirect costs include but are not limited to labor costs with
loadings which shall include labor costs for tasks such as
recording costs and invoicing ATCLLC and the cost of materials
and supplies; return of and on the cost of property employed; and
payments to contractors, plus all overheads directly associated
with any and all of these costs.
6.2 Methods of Calculating the Compensation Due.
The methods and procedures for determining, recording,
allocating, billing and auditing of Utility Contractor's costs is
set forth in Schedule 1 hereto.
6.3 Compensation for Inventory and Storage.
(a) Upon cancellation or expiration of this Agreement,
ATCLLC agrees to purchase the inventory of materials and supplies
under the provisions of Section 3.8 of the Asset Contribution
Agreement.
(b) ATCLLC shall have the option to lease from Utility
Contractor, or rent at cost, the warehouse space and other
facilities and systems used by Utility Contractor to maintain and
manage such materials and supplies.
6.4 Billing and Payment.
Utility Contractor shall provide invoices to ATCLLC each
month, setting forth the costs incurred by Utility Contractor
during the previous month to provide the Services, and
identifying costs accrued for Services by the Utility Contractor
during the previous month, which accrued costs will be invoiced
at a later date. ATCLLC shall pay each invoice within 15 days of
receipt from Utility Contractor. Billing and payment disputes
that cannot be resolved in the normal course of business shall be
resolved using the dispute resolution procedures described in
Article 8.
6.5 Audits and Adjustments.
Utility Contractor shall maintain and retain for such time
as ATCLLC may reasonably direct, but not for longer than six
years, the books and other records needed to document the costs
Utility Contractor incurs as a result of fulfilling its
obligations under this Agreement. Utility Contractor shall
respond to any reasonable request from ATCLLC for information
related to a cost charged by Utility Contractor to ATCLLC by
providing ATCLLC the information reasonably needed by ATCLLC to
verify the cost in question. From time to time, ATCLLC may
conduct, and Utility Contractor shall permit ATCLLC to conduct or
cause to be conducted by its authorized agents, at ATCLLC's
expense, audits of the books and records of Utility Contractor
that relate to the Services provided under this Agreement. Such
audits will be conducted at reasonable, mutually agreed upon
times, provided that ATCLLC must contest invoices within one year
of receipt and must complete any audit relating to a contested
invoice within a reasonable period of time thereafter. Any
adjustment identified to be made as a result of an audit and that
is payable under Section 5 of Schedule 1 shall be made to the
billing statement next issued following the conclusion of the
audit.
ARTICLE 7
RESPONSIBILITIES OF ATCLLC
During the term of this Agreement, ATCLLC shall, at its cost
and expense, and in a manner consistent with Good Utility
Practice, perform or provide the following at the times required
to support the provision of the Services:
(a) ATCLLC shall provide Utility Contractor with all
necessary access to the Transmission Facilities and ATCLLC
properties upon which such Transmission Facilities are located,
and records.
(b) ATCLLC shall, with the concurrence and assistance of
Utility Contractor as may be necessary or appropriate, procure
and maintain in effect all permits, certificates and licenses
needed by the owner of the Transmission Facilities for provision
of the Services.
(c) ATCLLC shall review, revise and approve Budgets, as
described in Section 5.3 hereof. All Budgets shall be reasonable
and consistent with Good Utility Practice, subject to any
limitation in Article 4 on ATCLLC's discretion to exclude or
terminate Services, and any approvals of Budgets shall not be
unreasonably withheld or delayed.
(d) ATCLLC shall provide training sessions to familiarize
Utility Contractor personnel with the processes and procedures
relating to the Services that are developed by ATCLLC during the
term of this Agreement for application by ATCLLC throughout the
ATCLLC Transmission System.
(e) ATCLLC shall provide Utility Contractor with such other
information, oversight and direction as is needed by Utility
Contractor to fulfill Utility Contractor's responsibilities under
this Agreement.
ARTICLE 8
SERVICES AVAILABLE TO ATCLLC DURING TRANSITION
8.1 General
The categories and subcategories of Services available to
ATCLLC under this Agreement include those described in Sections
8.2 to 8.10 below as modified from time to time in accordance
with Service Schedules adopted pursuant to this Agreement.
8.2 Control Center Services
(a) Control Center Services comprise:
(i) Necessary functions for operation of control
center facilities and for transmission related system use.
(ii) Provision and supervision of control center system
operator labor.
(iii) Dispatch of field operations personnel.
(iv) Necessary functions for restoration/blackstart
operations.
(b) Transitional Considerations for Development of Service
Schedule.
(i) Any further terms and conditions governing the
provision of Control Center Services shall be set forth in
Service Schedule 8.2.
(ii) The Parties contemplate that work on preparation
of Service Schedule 8.2 will have high priority.
8.3 Real Estate
(a) Real Estate Services comprise:
(i) Performance of real estate records management
functions for the Transmission Facilities, including real
estate and but excluding all financial accounting records
and reports.
(ii) Negotiating, drafting, executing, and maintaining
records relating to easements, licenses, permits, etc., for
the Transmission Facilities.
(iii) Monitoring and taking appropriate action
regarding encroachments by or upon Transmission Facilities
real estate interests of ATCLLC.
(iv) Real estate negotiation, acquisition, and
condemnation functions for the Transmission Facilities.
(v) Property owner relations functions.
(vi) Lease management, billing and collection.
(vii) Subject to any other agreement between the
Parties, Joint Facility management (CATV), telephone, fiber,
etc.) including billing, collection, pole attachment
documentation, and make-ready process.
(vii) Federal, State and local highway/road use,
relocation, reimbursement.
(ix) Support for Public Service Commission of Wisconsin
proceedings on Certificates of Public Convenience and
Necessity and Certificates of Authority, including data
gathering, and public meetings.
(x) Route planning, siting and selection.
(b) Transitional Considerations for Development of Service
Schedule.
(i) The Utility Contractor shall maintain real estate
records as requested by ATCLLC in Utility Contractor's
integrated records system.
(ii) The nature and pace of the transition will depend
on decisions by ATCLLC as to the records system it desires,
development of data transfer processes, protocols and
software, systems compatibility, and other matters which the
Parties have only begun to analyze.
8.4 Project Services
(a) Project Services comprise functions necessary for the
design, functioning and construction of capital projects,
including engineering, protection and control design, procurement
and construction.
(b) Transitional Considerations for Development of Service
Schedule.
(i) Service Schedule 8.4 shall list the projects or
type of projects for which Utility Contractor has a right or
obligation to provide Project Services.
(ii) Service Schedule 8.4 or schedules thereto shall
specify the specific level of Project Services required for
each project.
(iii) Service Schedule 8.4 shall specify the period
of time during which Utility Contractor will provide Project
Services.
8.5 Environmental Services
Environmental Services comprise:
(a) Functions necessary to support preparation of
environmental assessments and species management and for all
technical services related to environmental matters not included
in the Operations and Maintenance Agreement between the Parties.
(b) Agency relations functions with federal, state or local
governmental or regulatory bodies having environmental
responsibilities.
8.6 Supply Chain Services
Supply Chain Services comprise:
(a) Sourcing and logistic functions.
(b) Inventory and warehousing functions.
(c) Contract requirements and legal requirements functions
subject to ATCLLC approval.
8.7 Engineering Services
Engineering Services comprise:
(a) Functions supporting ATCLLC's standards development.
(b) Records management functions including as built
drawing, CAD services, Storage, reproduction and mapping/GIS.
(c) Performance of special studies, as requested.
8.8 Planning Services
Planning Services comprise:
(a) Functions related to special studies requested by
ATCLLC.
(b) Functions related to running special software as
requested by ATCLLC.
8.9 Miscellaneous Services
Miscellaneous Services comprise:
(a) Provision of management and professional staff to work
under ATCLLC direction as supplemental ATCLLC staff to the extent
available from Utility Contractor.
(b) Provision of accounting services and associated records
management.
(c) To the extent not included as part of other Services,
Legacy Software Services, including:
(i) Functions relating to transferring or
obtaining licenses for ATCLLC for software as required.
(ii) Functions relating to enhancements to
software developed by Utility Contractor in-house as
approved by ATCLLC.
(iii) Functions relating to management of data
base provided for ATCLLC use.
(d) Such other Services as may be agreed from time to time.
ARTICLE 9
SPECIALIZED CONSTRUCTION SERVICES
The Parties recognize that the Utility Contractor may have
employees who perform specialized construction services. For the
purposes of this Article, specialized construction services mean
non-supervisory direct construction work on capital projects.
Notwithstanding any provisions to the contrary in this
Agreement, ATCLLC agrees to utilize all of the specialized
construction services employee time available to ATCLLC for a
period of three years and, after three years, to offer to
employees who are necessary for these functions employment under
conditions which meet the requirements of Wis. Stat.
196.807(3).
ARTICLE 10
OWNERSHIP
For the purpose of this Agreement:
(a) Rights in ATCLLC Independently Developed
Technology: Any Technology prepared, developed or acquired
solely by the ATCLLC shall be owned solely by ATCLLC
(hereinafter, "ATCLLC Owned Technology"). Except as
provided for herein, nothing herein shall imply a license in
the ATCLLC Owned Technology.
(b) Rights In Utility Contractor Independently
Developed Technology: Any Technology prepared, developed or
acquired solely by Utility Contractor shall be owned solely
by Utility Contractor (hereinafter, "Utility Contractor
Owned Technology"). Except as provided for herein, nothing
herein shall imply a license in the Utility Contractor Owned
Technology.
(c) Rights In Jointly Developed Technology: Any
Technology jointly prepared, developed or acquired by the
ATCLLC and Utility Contractor, shall be jointly owned
(hereinafter, "Joint Technology"). The ownership rights
granted under this paragraph shall be limited to the Joint
Technology only and, except as provided for herein, does not
grant any rights, license or otherwise in either the ATCLLC
Owned Technology or Utility Contractor Owned Technology that
may be necessary to utilize the Joint Technology.
(d) Grant Of Rights In ATCLLC Owned Technology: To the
extent any ATCLLC Owned Technology is needed by a Utility
Contractor in furtherance of performing the Services or any
aspect thereof, the ATCLLC hereby grants to the Utility
Contractor a full and complete, world-wide, royalty-free,
fully paid-up, non-exclusive license to use, without the
right to grant sublicenses, the ATCLLC Owned Technology.
(e) Grant Of Rights In Background Utility Contractor
Technology: To the extent that background or underlying
technology of Utility Contractor used by Utility Contractor
in its performance of Services hereunder is required by
ATCLLC to make use of its ATCLLC Owned Technology or the
Joint Technology, the Utility Contractor hereby grants to
the ATCLLC a full and complete, world-wide, royalty-free,
fully paid-up, non-exclusive license to use the background
or underlying technology of the Utility Contractor for the
term of this Agreement and afterwards but only for the
purposes and to the extent during the term of this Agreement
without the right to grant sublicenses.
(f) Shared Rights in Joint Technology: The ATCLLC and
the Utility Contractor shall retain perpetually full and
complete rights to (e.g., make, use or sell) the Joint
Technology. Neither party may assign or otherwise transfer
any rights in the Joint Technology, by license or otherwise,
to the detriment of the other.
ARTICLE 11
DISPUTE RESOLUTION
Any dispute arising out of or in connection with this
Agreement shall be resolved according to the dispute resolution
procedures set forth in Schedule B of the Operating Agreement of
American Transmission ATCLLC.
ARTICLE 12
FORCE MAJEURE
(a) Neither Party shall be responsible or liable, or deemed
in breach hereof, to the extent the performance of its respective
obligations hereunder is prevented or delayed due solely to
circumstances beyond the reasonable control and without the fault
or negligence of the party experiencing such impediment to
performance, including but not limited to acts of God; war;
riots; strikes, lockouts or other labor disturbances; labor or
material shortages; actions or failures to act on the part of
governmental authorities preventing or delaying performance;
inability despite due diligence to obtain required licenses; or
fire (such causes hereinafter called "Force Majeure").
(b) The Party experiencing the Force Majeure shall exercise
due diligence in endeavoring to overcome any Force Majeure
impediment to its performance, but settlement of its labor
disturbances shall be entirely within its discretion. The Party
experiencing the Force Majeure shall promptly give written
notification to the other Party. This written notification shall
include a full and complete explanation of the Force Majeure and
its cause, the status of the Force Majeure, and the actions such
Party is taking and proposes to take to overcome the Force
Majeure. ATCLLC shall have the right, upon written notice to
Utility Contractor, to obtain alternate contractors to perform
the Services during any event of Force Majeure that prevents or
delays Utility Contractor's performance hereunder if the Force
Majeure has or, in ATCLLC's reasonable judgment, threatens to
have an adverse effect on ATCLLC's ability to conduct its
operations.
ARTICLE 13
LIMITATION OF LIABILITY
With respect to claims by and between the Parties under this
Agreement, the measure of damages at law or in equity in any
action or proceeding shall be limited to direct actual damages
only, such direct actual damages shall be the sole and exclusive
remedy and all other remedies or damages at law or in equity are
waived and neither Party shall be liable in statute, contract, in
tort (including negligence), strict liability, warranty or under
any other legal theory or otherwise to the other Party, its
agents, representatives, and/or assigns, for any special,
incidental, punitive, exemplary or consequential loss or damage
whatsoever, including, but not limited to, loss of profits or
revenue on work not performed, for loss of use of or under-
utilization of the other Party's facilities, loss of use of
revenues, attorneys' fees, litigation costs, or loss of
anticipated profits, resulting from either Party's performance or
non-performance of an obligation imposed on it by this Agreement,
without regard to the cause or causes related thereto, including
the negligence of any party. The Parties expressly acknowledge
and agree that this limitation shall apply to any claims for
indemnification under Article 14 of this Agreement. The
provisions of this section shall survive the termination or
expiration of this Agreement.
ARTICLE 14
INDEMNITY
(a) Utility Contractor's Indemnification. Subject to the
provisions of Article 13, Utility Contractor shall indemnify,
hold harmless and defend ATCLLC, and its officers, directors,
employees, affiliates, managers, members, trustees, shareholders,
agents, contractors, subcontractors, affiliates' employees,
invitees and successors, from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs,
losses, judgments, damages and expenses (including the reasonable
costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements, and compromises relating
thereto, reasonable attorneys' and expert fees and reasonable
disbursements in connection therewith) for damage to property,
injury to any person or entity, or death of any individual,
including ATCLLC's employees and affiliates' employees, Utility
Contractor's employees, or any other third parties, to the extent
caused wholly or in part by any act or omission, negligent or
otherwise, by Utility Contractor or its officers, directors,
employees, agents, contractors, subcontractors and invitees
arising out of or connected with Utility Contractor's performance
or breach of this Agreement, or the exercise by Utility
Contractor of its rights hereunder; provided, however, that the
provisions of this Section shall not apply if any such injury,
death or damage is held to have been caused by the negligence or
intentional wrongdoing of ATCLLC, its agents or employees. In
furtherance of the foregoing indemnification and not by way of
limitation thereof, Utility Contractor hereby waives any defense
it otherwise might have under applicable workers' compensation
laws.
(b) ATCLLC's Indemnification. Subject to the provisions of
Article 13, ATCLLC shall indemnify, hold harmless and defend
Utility Contractor, its parent and its officers, directors,
employees, affiliates, managers, members, trustees, shareholders,
agents, contractors, subcontractors, invitees and successors,
from and against any and all claims, demands, suits, obligations,
payments, liabilities, costs, losses, judgments, damages and
expenses (including the reasonable costs and expenses of any and
all actions, suits, proceedings, assessments, judgments,
settlements, and compromises relating thereto, reasonable
attorneys' and expert fees and reasonable disbursements in
connection therewith) for damage to property, injury to any
person or entity, or death of any individual, including Utility
Contractor's employees and affiliates' employees, ATCLLC's
employees, or any other third parties, to the extent caused
wholly or in part by any act or omission, negligent or otherwise,
by ATCLLC or its officers, directors, employees, agents,
contractors, subcontractors and invitees arising out of or
connected with ATCLLC's performance or breach of this Agreement,
or the exercise by ATCLLC of its rights hereunder; provided,
however, that the provisions of this Section shall not apply if
any such injury, death or damage is held to have been caused by
the negligence or intentional wrongdoing of Utility Contractor,
its agents or employees. In furtherance of the foregoing
indemnification and not by way of limitation thereof, ATCLLC
hereby waives any defense it otherwise might have under
applicable workers' compensation laws.
(c) Indemnification Procedures. Any Party seeking
indemnification under this Agreement shall give the other Party
notice of such claim as soon as practicable but in any event on
or before the thirtieth (30th) day after the Party's actual
knowledge of such claim or action. Such notice shall describe
the claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the claim that has been, or may be
sustained by, said Party. To the extent that the other Party
will have been actually and materially prejudiced as a result of
the failure to provide such notice, such notice will be a
condition precedent to any liability of the other Party under the
provisions for indemnification contained in this Agreement.
Neither Party may settle or compromise any claim for which
indemnification is sought under this Agreement without the prior
consent of the other Party; provided, however, said consent shall
not be unreasonably withheld or delayed. Each Party's
indemnification obligation will survive expiration, cancellation
or early termination of this Agreement.
ARTICLE 15
INSURANCE
(a) The Parties agree to maintain, at their own cost and
expense, general and automobile liability, worker's compensation,
and other forms of insurance relating to their operations for the
life of this Agreement in the manner, and amounts, at a minimum,
as set forth below,
(i) Workers' Compensation Insurance in accordance with all
applicable state, federal and maritime law, including
Employer's Liability Insurance in the amount of
$1,000,000 per accident;
(ii) Commercial General Liability Insurance, including
Contractual Liability Coverage for liabilities assumed
under this Agreement, and Personal Injury Coverage in
the amount of $25,000,000 per occurrence for bodily
injury and property damage. Utility Contractor's
policy shall include ATCLLC and ATC Management Inc. as
additional insureds and ATCLLC's policy shall include
Utility Contractor as an additional insured.
(iii) Automobile Liability Insurance for all owned,
non-owned, and hired vehicles with bodily injury limits
of no less than $5,000,000 per person, $5,000,000 per
accident; and property damage limits of no less than
$5,000,000 per accident. Utility Contractor's policy
shall include ATCLLC and ATC Management Inc. as
additional insureds and ATCLLC's policy shall include
Utility Contractor as an additional insured.
(iv) Where a Party has more than $100 million in assets it
may, at its option, self insure all or part of the
insurances required in this Article; provided, however,
the self-insuring Party agrees that all other
provisions of this Article, including, but not limited
to, waiver of subrogation, waiver of rights of
recourse, and additional insured status, which provide
or are intended to provide protection for the other
Party and its affiliated and associated companies under
this Agreement, shall remain enforceable. A Party's
election to self-insure shall not impair, limit, or in
any manner result in a reduction of rights and/or
benefits otherwise available to the other Party and its
affiliated and associated companies through formal
insurance policies and endorsements as specified in the
above parts of this Article. The self-insuring Party
agrees that all amounts of self-insurance, retentions
and/or deductibles are the responsibility of and shall
be borne by the self-insuring Party.
(b) Within fifteen (15) days of the Effective Date, and
each anniversary of the Effective Date, during the term of this
Agreement, (including any extensions), each Party shall provide
to the other Party, properly executed and current certificates of
insurance with respect to all insurance policies required to be
maintained by such Party under this Agreement. Certificates of
insurance shall provide the following information:
(i) Name of insurance company, policy number and expiration
date;
(ii) The coverage required and the limits on each, including
the amount of deductibles or self-insured retentions,
which shall be for the account of the Party maintaining
such policy;
(iii) A statement indicating that the other Party shall
receive at least thirty (30) days prior written notice
of cancellation or expiration of a policy, or reduction
of liability limits with respect to a policy; and
(iv) A statement identifying and indicating that additional
insureds have been named as required by this Agreement.
(c) At a Party's request, in addition to the foregoing
certifications, the other Party shall deliver to the first Party
a copy of applicable sections of each insurance policy.
(d) Each Party shall have the right to inspect the original
policies of insurance applicable to this Agreement at the other
Party's place of business during regular business hours.
(e) If any insurance is written on a "claims made" basis,
the respective Party shall maintain the coverage for a minimum of
seven years after the termination of this Agreement.
(f) To the extent permitted by the insurer and commercially
reasonable, each Party shall obtain waivers of subrogation in
favor of the other Party from any insurer providing coverage that
is required to be maintained under this Article 15, except for
the coverage required under Section 15(a)(i). A Party shall not
be required to obtain a waiver of subrogation if the other Party
is not able to obtain a waiver of subrogation from its insurance
carrier.
ARTICLE 16
SUCCESSORS AND ASSIGNS
This Agreement and each and every covenant, term and
condition hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. Utility
Contractor shall not assign its rights or obligations hereunder
without express written approval of ACTLLC, except it may assign
its rights or obligations to a purchaser (or an affiliate) who
will own all or substantially all of Utility Contractor's
distribution assets or equity interests and who shall then be
bound by all of the provisions of this Agreement. ATCLLC shall
not assign its rights or obligations hereunder without express
written approval of Utility Contractor, except it may assign its
rights and obligations to a purchaser (or an affiliate) who will
own all or substantially all of ATCLLC's transmission assets and
who shall then be bound by all of the provisions of this
Agreement.
ARTICLE 17
NOTICE
(a) All certificates or notices required hereunder shall be
given in writing and addressed or delivered to the
representative(s) specified in this Agreement. Notices shall be
deemed received (i) upon delivery, when personally delivered;
(ii) upon receipt, when sent via registered or certified mail;
(iii) the next business day, when sent via overnight courier; and
(iv) upon transmittal, when sent via facsimile. Copies of all
general correspondence regarding this Agreement shall also be
sent to these representative(s).
(b) Notices submitted hereunder shall be directed to the
following individuals:
Notices to Utility Contractor:
Attn: Xxxxxx X. Xxxxxxx
Corporate Secretary
Wisconsin Electric Power Company
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Notices to ATCLLC:
Attn: Xxxxxx Xxxxxxx
Vice President, Legal and Secretary
American Transmission Company, LLC
N16 W23217 Xxxxx Xxxxx Xxxxx
X.X. Xxx 00
Xxxxxxxx, XX 00000-0000
All other communications relating to this Agreement
should be submitted to:
Xxxxx X. Xxxxxxx
Vice President - Operations
American Transmission Company, LLC
N16 X00000 Xxxxx Xxxxx Xxxxx
X.X. Xxx 00
Xxxxxxxx, XX 00000-0000
(c) ATCLLC or Utility Contractor may change their
respective representative(s) designated to receive notice
hereunder by written notice to the other Party. All
correspondence and transmittals between the parties shall be
executed pursuant to coordination procedures that shall be
developed by the parties.
ARTICLE 18
MISCELLANEOUS
18.1 Compliance with Laws
Throughout the term of this Agreement, each Party shall
perform its obligations hereunder in compliance with all present
and future federal, state and local statutes, ordinances, rules
and regulations, including, but not limited to those pertaining
to human safety, protection of property, non-discrimination, and
protection of the environment.
18.2 Entire Agreement
This Agreement, together with any Service Schedules,
Exhibits, and Schedules attached hereto, is the entire
understanding of the Parties regarding the subject matter hereof,
and supersedes all prior oral or written discussions,
negotiations and agreements the Parties may have had with respect
to the subject matter hereof.
18.3 Counterparts
This Agreement may be executed in any number of
counterparts, and each counterpart shall have the same force and
effect as the original instrument.
18.4 Amendment
No amendment, modification or waiver of any term hereof
shall be effective unless set forth in a writing signed by both
ATCLLC and Utility Contractor.
18.5 Survival
All warranties, remedial obligations, indemnities and
confidentiality rights and obligations provided for herein shall
survive the cancellation, expiration or termination hereof.
18.6 Independent Contractor
Utility Contractor at all times shall be deemed to be an
independent contractor and none of its employees or the employees
of its contractors shall be considered to be employees of ATCLLC
during the term of this Agreement. Utility Contractor shall have
no authority to act on behalf of ATCLLC or bind ATCLLC in any
manner except as expressly set forth in this Agreement. The
Parties acknowledge that neither this Agreement nor any of its
provisions are intended to create any partnership or joint
venture between the Parties.
18.7 Confidentiality
(a) "Confidential Information", as used in this Section
18.7, shall mean all information or documentation disclosed or
made available by either Party to the other, including but not
limited to correspondence between the Parties, business plans,
financial information, policies and procedures, computer
programs, reports and analyses, or other information which a
Party in good faith designates as "Trade Secrets" as that term is
defined in Wis. Stat. 134.90(1)(c).
(b) In consideration of the disclosure by one Party of
Confidential Information to the other Party, the Parties agree
that each of them shall undertake in good faith to accomplish the
following additional actions with respect thereto:
(i) to use the Confidential information for the
sole purpose of fulfilling the obligations of the
Parties pursuant to this Agreement;
(ii) to safeguard and hold in strict confidence
all Confidential Information, limiting disclosure of
Confidential Information to employees, contractors or
agents who have a need to know;
(iii) to protect Confidential Information from
disclosure to anyone not a party to this Agreement
without the prior approval of the disclosing Party; and
(iv) upon the request of the disclosing Party and
in any event upon cancellation or expiration of this
Agreement, to return all Confidential Information, or
to certify that such Confidential Information has been
destroyed.
(c) The restrictions of this Section do not apply to any
information which is already known by the receiving party,
possessed by a third party prior to disclosure, acquired from
anyone not a party to this Agreement without restriction, or
which is publicly available.
(d) Each Party retains all right, title and interest in and
to any Confidential Information disclosed by the party hereunder.
(e) In the event that either Party is required by
applicable law to disclose any Confidential Information of the
other Party, such party shall promptly notify the other Party of
such requirement and cooperate with the other Party to protect
the Confidential Information from any disclosure not required by
law.
(f) The obligations of this Section shall survive for a
period of 3 years following any expiration or cancellation of
this Agreement.
18.8 Standards of Conduct
If the performance of this Agreement requires ATCLLC to
disclose information about the Transmission System to Utility
Contractor, the dissemination of which by Utility Contractor
would have been subject to FERC's Standards of Conduct
requirements, 18 C.F.R. Part 37, prior to the transfer of the
Transmission Facilities, such information shall not be disclosed
by Utility Contractor or ATCLLC to any persons that would not
have been entitled to receive such information prior to such
transfer.
18.9 No Implied Waivers
The failure of a Party to insist upon or enforce strict
performance of any of the provisions of this Agreement shall not
be construed as a waiver or relinquishment to any extent of such
Party's right to assist or rely upon any such provisions, rights
and remedies in that or any other instance; rather, the same
shall be and remain in full force and effect.
18.10 No Third-Party Beneficiaries
This Agreement is intended to be solely for the benefit of
ATCLLC and Utility Contractor and their successors and permitted
assigns and is not intended to and shall not confer any rights or
benefits on any third party (other than successors and permitted
assigns) not a signatory hereto.
18.11 Severability
In the event that any provision of this Agreement is deemed
as a matter of law to be unenforceable or null and void, such
unenforceable or void portion of such provision shall be deemed
severable from this Agreement unless the removal of the
unenforceable provision materially alters the obligations of
either Party hereunder. Even if there is a material alteration
in the remainder of the Agreement, the Agreement shall continue
in full force and effect as if such provision was not contained
herein., but the Parties shall negotiate in good faith new
provisions in relation to the deleted provision that will to the
extent practicable restore the benefit of the bargain contained
in such provision, and that are consistent with Good Utility
Practice.
18.12 Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, with the
exception of any choice of laws provisions.
18.13 Interpretation.
If there is any inconsistency between this Agreement and the
Operating Agreement of ATCLLC or the Asset Contribution
Agreement, that other agreement shall prevail to the extent of
the inconsistency.
18.14 Headings
The headings set forth herein are inserted for convenience
and shall have no effect on the interpretation or construction of
this Agreement.
18.15 Modification of Agreement by Service Schedules
Service Schedules are intended to specify further terms and
conditions of Utility Contractor's provision of Services. Such
agreements may modify or supercede the terms and conditions of
this Agreement only to the extent that the Parties obtain any
required PSCW approval under Wis. Stat. 196.52.
18.16 Affiliate Status of Parties
For purposes of Articles 13, 14, and 15, neither Party shall
be treated as an affiliate of the other.
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed by their duly authorized representatives,
effective as of the date first written above.
AMERICAN TRANSMISSION COMPANY, LLC
BY /s/Xxxxx Xxxxxxx
-------------------------
TITLE Vice President Operations
WISCONSIN ELECTRIC POWER COMPANY
BY /s/Xxxxxxx Xxxx
-----------------------
TITLE Vice President -
Distribution Operations
SCHEDULE 1
(ATTACHED TO TRANSITIONAL SERVICES AGREEMENT)
1. General Description.
Utility Contractor shall invoice to ATCLLC the actual costs
of providing Services for the previous month. The invoice will
also identify any costs for Services accrued during the previous
month by Utility Contractor with the understanding that these
accrued costs will be invoiced for payment at a later date (as
they are paid by Utility Contractor). Utility Contractor's
invoices to ATCLLC will be in a consistent format and provided
monthly together with the Utility Contractor's detailed billing
reports supporting the invoice.
2. Methods of Calculating Costs to Be Paid by ATCLLC.
(a) Direct Costs. Costs incurred by the Utility
Contractor that are solely and directly attributable to the
Services shall be directly billed to ATCLLC in full. These
directly billed costs shall be recorded as incurred by Utility
Contractor to internal bookkeeping accounts designated as
transmission billing accounts. The direct cost for materials and
supplies shall be their book value.
b) Indirect Costs. Costs incurred by the Utility
Contractor for activities that support the entire company or
which support the Services plus other divisions of the company
will be identified and a portion of these costs will be allocated
to ATCLLC. Utility Contractor will identify and aggregate all of
these costs into recognizable categories and, in cooperation with
ATCLLC, shall develop methods for calculating the portion of each
cost category that should be allocated to ATCLLC. The method for
determining the share allocable to ATCLLC may vary from cost
category to cost category. A document describing the methods for
allocating categories of costs to ATCLLC, including any
allocation formulas, will be attached to this Schedule 1.
(c) Labor Loadings. Loadings that account for pension
and employee benefit costs, payroll taxes and costs, and the
expense of non-productive time (paid leaves plus, if not a
separate cost category, training) shall be added to any direct or
indirect labor costs billed to ATCLLC. A document describing the
methods Utility Contractor will use to calculate and apply labor
loadings will be attached to this Schedule 1.
(d) Extraordinary Costs. Subject to Article 5 of the
Agreement, costs incurred by Utility Contractor that are unusual,
special or extraordinary may require unique treatment. Utility
Contractor will notify ATCLLC in advance of incurring such costs
whenever possible and as soon as possible after incursion of the
cost if advance notice is not possible, but in any event prior to
sending ATCLLC an invoice that includes the cost.
(e) Utility Contractor's System for
Recording Its Costs. Utility Contractor will notify ATCLLC in
advance of any changes to its system of recording and tracking
its costs that will significantly impact the calculation or
appearance of invoices to ATCLLC. Utility Contractor will, at
ATCLLC's expense, provide for the transfer to ATCLLC of
electronic billing data in a form usable by ATCLLC's electronic
systems for recording and tracking costs of the Services.
3. True-ups and Reviews.
Amounts that have been billed based on estimates will be
adjusted to the Utility Contractor's actual costs after actual
costs are known and ATCLLC will pay more or receive a credit, as
appropriate, for any true-up. Such true-ups may be performed at
any time, but at least one annual true-up will be performed by
the Utility Contractor for the previous year before the
expiration of the first quarter of the following year. In
addition, formulas, procedures and allocations may be revised by
either Party if the Party proposing the revision can demonstrate
to the other Party that new facts have come to light or that it
has discovered or developed an improved formula, procedure or
method for accurately determining or invoicing actual costs. Any
such revision to a formula, procedure or allocation will not be
applied retroactively. Amounts previously billed in error,
however, will be corrected in accordance with Section 4 below;
error here includes the long or short-term misapplication of an
approved formula. Where refunds or additional amounts are owed
due to a true-up or correction, the refund or additional amount
shall appear on the next monthly billing following identification
of the adjustment.
4. Contested Statements.
ATCLLC may contest, and Utility Contractor may correct, any
particular items included in any Utility Contractor invoice
within one year of ATCLLC's receipt of the invoice. This
provision does not limit ATCLLC's right to audit Utility
Contractor under Section 6.5 of the Agreement.
5. Adjustments.
Utility Contractor shall promptly reimburse or credit ATCLLC
for any charges that should not have been billed to ATCLLC as
provided in the Agreement and which either Party identifies
within 12 months of ATCLLC's receipt of the invoice containing
such charges. Such reimbursements shall be set forth in the
appropriate section of the invoice. Utility Contractor shall
xxxx ATCLLC for any charges that were not billed but should have
been billed to ATCLLC as provided in this Agreement, and which
either Party identifies within 12 months of the month that the
charges were incurred.
The amount of any adjustment under this Section shall
reflect interest from the date such amounts were due at the
published prime interest rate of Firstar Bank on the last
business day of the preceding month.
