EXHIBIT B-2
SYSTEM INTEGRATION AGREEMENT
AMONG
FLORIDA POWER & LIGHT COMPANY
AND
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES, INC.
ENTERGY LOUISIANA, INC.
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
ENTERGY SERVICES, INC.
AND
HOLDCO SERVICES COMPANY
SYSTEM INTEGRATION AGREEMENT
THIS SYSTEM INTEGRATION AGREEMENT ("Agreement") is made and entered
into as of the ___ day of _______, 2000 by and among: Florida Power & Light
Company ("FPL"); Entergy Arkansas, Inc. ("Entergy Arkansas"), Entergy Gulf
States, Inc. ("Entergy Gulf States"), Entergy Louisiana, Inc. ("Entergy
Louisiana"), Entergy Mississippi, Inc. ("Entergy Mississippi"), Entergy New
Orleans, Inc. ("Entergy New Orleans") (collectively, the "Entergy Operating
Companies"), Entergy Services, Inc. ("Entergy Services"), as agent for and on
behalf of the Entergy Operating Companies; and HoldCo Services Company ("HoldCo
Services").
WHEREAS, FPL currently owns and operates interconnected electric
generation, transmission and distribution facilities with which it is engaged in
the business of generating, transmitting and selling electric power and energy
to the general public and to other electric utilities; and
WHEREAS, the Entergy Operating Companies currently own and operate
interconnected electric generation, transmission and distribution facilities
with which they are engaged in the business of generating, transmitting and
selling electric power and energy to the general public and to other electric
utilities; and
WHEREAS, the Entergy Operating Companies coordinate the planning,
construction, operation and maintenance of their electric supply facilities on
an integrated basis pursuant to the Entergy System Agreement; and
WHEREAS, FPL Group, Inc., parent company of FPL, and Entergy
Corporation, parent company of the Entergy Operating Companies, have entered
into an Agreement and Plan of Merger dated July 30, 2000 (the "Merger
Agreement"); and WHEREAS, pursuant to the Merger Agreement, FPL Group, Inc. will
be merged with Entergy Corporation, resulting in a newly-formed single holding
company, which has yet to be named and is referred to herein as "Merged
Company," with FPL Group, Inc. and Entergy Corporation to be wholly-owned
subsidiaries of the newly-formed single holding company (the "Merger"); and NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein set forth, the Parties mutually agree as follows:
ARTICLE I
DEFINITIONS
1.1 Agreement means this System Integration Agreement, including all
Service Schedules and attachments hereto.
1.2 Decremental Capacity Cost means the lower of the recipient's cost
of installing capacity, if possible, to meet its capacity needs on a timely
basis, or the Market Price of capacity available to the recipient. The
determination of Market Price shall be based on actual contemporaneous purchases
of capacity with similar characteristics from unaffiliated third parties. In the
event that there are no such purchases, a published index or other reasonable
indicator of capacity market price shall determine the Market Price.
1.3 Decremental Energy Cost means the lower of the recipient's
incremental cost of generating energy or the Market Price of energy available
and deliverable to the recipient. The determination of Market Price shall be
based on actual contemporaneous purchases of energy with similar characteristics
from unaffiliated third parties. In the event that there are no such purchases,
a published index of energy market price shall determine the Market Price.
1.4 Entergy means Entergy Corporation.
1.5 Entergy Arkansas means Entergy Arkansas, Inc.
1.6 Entergy Gulf States means Entergy Gulf States, Inc.
1.7 Entergy Louisiana means Entergy Louisiana, Inc.
1.8 Entergy Mississippi means Entergy Mississippi, Inc.
1.9 Entergy New Orleans means Entergy New Orleans, Inc.
1.10 Entergy Operating Companies for purposes of this Agreement means
the following operating companies of Entergy Corporation, which are parties to
the Entergy System Agreement: Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively.
1.11 Entergy Services means Entergy Services, Inc., which currently
serves as agent for the Entergy Operating Companies for certain transactions.
1.12 Entergy System means the generation and bulk power transmission
facilities of the Entergy Operating Companies.
1.13 Entergy System Agreement means the System Agreement among Entergy
Services and the Entergy Operating Companies, entered into April 23, 1982, as
the same has been or is subsequently modified and supplemented.
1.14 FERC means the Federal Energy Regulatory Commission or a
successor agency having jurisdiction over this Agreement.
1.15 Foregone Opportunity Cost as it relates to an exchange of
capacity or energy means the price at which the supplier could have sold the
capacity or energy if the exchange of capacity or energy did not take place,
i.e., Market Price. The determination of Market Price shall be based on actual
sales of capacity or energy with similar characteristics to unaffiliated third
parties. In the event that there are no such sales, a published index or other
reasonable indicator of capacity market price or a published index of energy
market price shall determine the Market Price. If the exchange of capacity or
energy requires transmission-related costs in addition to the amount of the firm
transmission entitlements between FPL and the Entergy Operating Companies, such
transmission-related costs will be added to the Foregone Opportunity Cost (i) in
determining whether a capacity exchange is permissible under Section 6.2, or
whether an energy exchange is permissible under Section 6.3, and (ii) in
establishing the transfer price, as provided for in Service Schedule A, for
capacity exchanges, and Service Schedule B, for energy exchanges.
1.16 FPL means Florida Power & Light Company.
1.17 FPL Group means FPL Group, Inc.
1.18 HoldCo Services means HoldCo Services Company, which is a yet to
be formed company that will act as agent for FPL and the Entergy Operating
Companies for certain transactions.
1.19 Merged Company means the newly-formed holding company, of which
FPL Group and Entergy will be wholly-owned subsidiaries.
1.20 Merger means the merger of FPL Group, Inc. and Entergy
Corporation, resulting in the combination into a single holding company, which
has yet to be named and is referred to herein as Merged Company, pursuant to the
terms and conditions of the Merger Agreement.
1.21 Merger Agreement means the Agreement and Plan of Merger between
FPL Group, Inc. and Entergy Corporation dated as of July 30, 2000.
1.22 Native Load Customer for purposes of this Agreement means a
wholesale or retail power customer on whose behalf a Party, by statute,
franchise, regulatory requirement, or firm power supply contract, has undertaken
an obligation to supply electricity to reliably meet the electric needs of such
customer.
1.23 Operating Committee means the administrative body established
pursuant to Article VI for the purposes therein specified.
1.24 Party or Parties means one or more of the following individually
or collectively, as the context warrants: FPL, the Entergy Operating Companies,
Entergy Services, and HoldCo Services.
1.25 Service Schedules means the Service Schedules attached to this
Agreement and those that later may be agreed to by the Parties and accepted for
filing by the FERC.
ARTICLE II
TERM OF AGREEMENT
2.1 Term
This Agreement shall take effect upon consummation of the Merger, and
shall continue in force and effect until terminated by mutual agreement or upon
ninety (90) days written notice from the Operating Committee or its designee to
the other Parties.
ARTICLE III
OBJECTIVES
3.1 Purpose
The purpose of this Agreement is to set forth the parameters within
which the planning, operation and maintenance of the power supply resources of
FPL and the Entergy Operating Companies will be coordinated. This Agreement does
not apply to the transmission facilities owned or operated by FPL or the Entergy
Operating Companies, or a subsequent regional transmission organization.
ARTICLE IV
RELATIONSHIP TO OTHER AGREEMENTS
AND SERVICES
4.1 Governing Provisions
This Agreement is intended to apply in addition to and not in lieu of
the Entergy System Agreement. This Agreement shall not amend, modify or affect
the rights and obligations of the Entergy Operating Companies and Entergy
Services under the Entergy System Agreement. Nothing in this Agreement shall be
construed to add FPL as a party to the Entergy System Agreement, or to provide
FPL any rights or obligations under the Entergy System Agreement.
ARTICLE V
COMPOSITION AND DUTIES OF
THE OPERATING COMMITTEE
5.1 Operating Committee
The Operating Committee is the administrative body created to
administer this Agreement and shall consist of three (3) members. One member
shall be a representative of FPL, one member shall be a representative of the
Entergy Operating Companies, and the third member shall be a representative of
HoldCo Services.
5.2 Meeting Dates
The Operating Committee shall hold meetings at such times, means and
places as the members shall determine from time to time. Minutes of each
Operating Committee meeting shall be prepared and maintained.
5.3 Decisions
All decisions of the Operating Committee shall be by a unanimous vote
of the members present or voting by proxy at the meeting at which the vote is
taken. As necessary, recommendations will be made to the Chief Executive Officer
of Merged Company or his designee.
5.4 Duties
The Operating Committee or its designee shall have the following
duties, unless all or part of such duties are otherwise assigned by a vote of
the Operating Committee to HoldCo Services, in which case HoldCo Services shall
perform any such assigned duties. The Operating Committee will be responsible
for:
(a) administering this Agreement and recommending any amendments
hereto including such amendments which could result from any deregulation of any
of the power supply resources of FPL or the Entergy Operating Companies;
(b) coordinating the planning of the installation and maintenance of
generation and the acquisition of new power supply resources by FPL and the
Entergy Operating Companies;
(c) coordinating the exchange of capacity or energy between FPL and
the Entergy Operating Companies; and
(d) developing all bills and billing information among the Parties
pursuant to this Agreement.
ARTICLE VI
COORDINATED OPERATION
6.1 Resources
FPL, on one hand, and the Entergy Operating Companies, on the other
hand, each shall continue to have full responsibility for all costs relating to
its respective power supply resources that were in commercial operation prior to
the effective date of the Agreement. The cost of new power supply resources that
are acquired or installed after the effective date of the Agreement to serve the
needs of FPL shall be assigned to FPL. The cost of new power supply resources
that are acquired or installed after the effective date of the Agreement to
serve the needs of the Entergy Operating Companies shall be assigned to the
Entergy Operating Companies and shall be allocated pursuant to the Entergy
System Agreement.
6.2 Capacity Exchange
Whenever either FPL or the Entergy System has surplus capacity
relative to its capacity planning reserve requirements or otherwise has capacity
available for sale, and the other Party has insufficient capacity relative to
its capacity planning reserve requirements, the Party with surplus capacity
shall make its surplus capacity available to the other Party for periods of one
(1) year or less. Such capacity exchanges shall be made only when the seller's
Foregone Opportunity Cost to sell capacity is lower than the buyer's Decremental
Capacity Cost for capacity having similar characteristics.
6.3 Energy Exchange
Whenever either FPL or the Entergy System has energy available for
sale, the Party with such energy shall make it available to the other Party for
the purposes of and to the extent required by this Agreement. Such energy
exchanges shall be made only when the seller's Foregone Opportunity Cost to sell
energy is lower than the buyer's Decremental Energy Cost.
ARTICLE VII
ASSIGNMENT OF COSTS AND BENEFITS
OF COORDINATED OPERATIONS
7.1 Service Schedules
The costs and revenues associated with coordinated operations as
described in Article VI shall be distributed in the manner provided in the
following Service Schedules attached to, and incorporated by reference into,
this Agreement:
Schedule A: Pricing for System Capacity Exchanges; and
Schedule B: Pricing for System Energy Exchanges.
ARTICLE VIII
BILLING PROCEDURES
8.1 Records
The Operating Committee or its designee shall keep such records as may
be necessary for the efficient administration of the Agreement, and shall make
such records available to any Party on request.
8.2 Monthly Statements
As promptly as practicable after the end of each calendar month, the
Operating Committee or its designee shall prepare a statement setting forth the
monthly summary of costs and revenues allocated or assigned to the Parties in
sufficient detail as may be needed for settlements under the provisions of this
Agreement. As required, the Operating Committee or its designee may provide such
statements on an estimated basis and then adjust those statements for actual
results.
8.3 ▇▇▇▇▇▇▇▇ and Payments
The Operating Committee or its designee shall handle all billing
between the Parties pursuant to this Agreement. Payment among the Parties shall
be by making remittance of the net amount billed or by making appropriate
accounting entries on the books of the Parties.
8.4 Taxes
Should any federal, state, or local tax, surcharge or similar
assessment, in addition to those that may now exist, be levied upon the
capacity, energy or service to be provided in connection with this Agreement, or
upon the provider of service as measured by the capacity, energy or service, or
the revenue therefrom, such additional amount shall be included in the net
billing as described in Section 8.3.
ARTICLE IX
GENERAL
9.1 No Third Party Beneficiaries
This Agreement does not create rights of any character whatsoever in
favor of any person, corporation, association, entity or power supplier, other
than the Parties, and the obligations herein assumed by the Parties are solely
for the use and benefit of said Parties. Nothing in this Agreement shall be
construed as permitting or vesting, or attempting to permit or vest, in any
person, corporation, association, entity or power supplier, other than the
Parties, any rights hereunder or in any of the resources or facilities owned or
controlled by the Parties or the use thereof.
9.2 Waivers
Any waiver at any time by a Party of its rights with respect to a
default under this Agreement, or with respect to any other matter arising in
connection with this Agreement, shall not be deemed a waiver with respect to any
subsequent default or matter. Any delay, short of the statutory period of
limitation, in asserting or enforcing any right under this Agreement, shall not
be deemed a waiver of such right.
9.3 Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
Parties only, and their respective successors and assigns, and shall not be
assignable by any party without the written consent of the other Parties except
to a successor in the operation of its properties by reason of a merger,
consolidation, sale or foreclosure whereby substantially all such properties are
acquired by or merged with those of such a successor.
9.4 Section Headings
The descriptive headings of the Articles and Sections of this
Agreement are used for convenience only, and shall not modify or restrict any of
the terms and provisions thereof.
9.5 Notice
Any notice or demand for performance required or permitted under any
of the provisions of this Agreement shall be deemed to have been given on the
date such notice, in writing, is deposited in the U.S. mail, postage prepaid,
certified or registered mail, addressed to:
HOLDCO SERVICES COMPANY
[Address To Be Inserted]
or in such other form or to such other address as the Parties may stipulate.
ARTICLE X
REGULATORY APPROVAL
10.1 Regulatory Authorization
This Agreement is subject to and conditioned upon acceptance for
filing without material condition or modification by the FERC. In the event that
this Agreement is not so accepted for filing in its entirety, any Party may
terminate this Agreement immediately.
10.2 Changes
It is contemplated by the Parties that it may be appropriate from time
to time to change, amend, modify or supplement this Agreement, including the
Schedules and attachments which are a part of this Agreement, to reflect changes
in operating practices or costs of operations or for other reasons. Any such
changes to this Agreement shall be in writing executed by the Parties, subject
to necessary regulatory authorizations.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and attested by their duly authorized officers on the day and year
first above written.
FLORIDA POWER & LIGHT COMPANY
By:
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Title:
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ENTERGY ARKANSAS, INC.
By:
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Title:
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ENTERGY GULF STATES, INC.
By:
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Title:
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ENTERGY LOUISIANA, INC.
By:
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Title:
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ENTERGY MISSISSIPPI, INC.
By:
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Title:
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ENTERGY NEW ORLEANS, INC.
By:
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Title:
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ENTERGY SERVICES, INC.
By:
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Title:
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HOLDCO SERVICES COMPANY
By:
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Title:
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SERVICE SCHEDULE A
PRICING FOR SYSTEM CAPACITY EXCHANGES
A1 - Duration This Service Schedule A shall become effective and binding when
the System Integration Agreement becomes effective, and shall continue in full
force and effect throughout the duration of such Agreement, except as provided
in Section 10.2 of the Agreement. This Service Schedule A is a part of the
Agreement and, as such, the use of terms in this Service Schedule A that are
defined in the Agreement shall have the same meanings as set forth in the
Agreement.
A2 - Capacity Transfer Price Capacity made available by either FPL or the
Entergy Operating Companies pursuant to Section 6.2 of the Agreement shall be
priced at one-half the sum of (i) the supplier's Foregone Opportunity Cost to
sell capacity and (ii) the recipient's Decremental Capacity Cost, as determined
by the Operating Committee or its designee. If such capacity transfer requires
transmission-related costs in addition to the amount of the firm transmission
entitlements between FPL and the Entergy Operating Companies, such
transmission-related costs will be added to the Foregone Opportunity Cost in
determining the capacity transfer price. The supplier shall be responsible for
paying any such transmission-related costs.
SERVICE SCHEDULE B
PRICING FOR SYSTEM ENERGY EXCHANGES
B1 - Duration This Service Schedule B shall become effective and binding when
the System Integration Agreement becomes effective, and shall continue in full
force and effect throughout the duration of such Agreement, except as provided
in Section 10.2 of the Agreement. This Service Schedule B is a part of the
Agreement and, as such, the use of terms in this Service Schedule B that are
defined in the Agreement shall have the same meanings as set forth in the
Agreement.
B2 - Energy Transfer Prices Energy made available by either FPL or the Entergy
Operating Companies to the other pursuant to Section 6.3 of the Agreement shall
be priced in accordance with the following provisions:
(a) Economic transfers of energy between FPL and the Entergy Operating
Companies up to the amount of firm transmission entitlements between
FPL and the Entergy Operating Companies shall be priced at one-half of
the sum of the supplier's Foregone Opportunity Cost and the
recipient's Decremental Energy Cost.
(b) Economic transfers of energy between FPL and the Entergy Operating
Companies in excess of the amount of firm transmission entitlements
between FPL and the Entergy Operating Companies shall be priced at
one-half of the sum of the supplier's Foregone Opportunity Cost and
the recipient's Decremental Energy Cost. If such energy transfer
requires additional transmission-related costs, such
transmission-related costs will be added to the Foregone Opportunity
Cost in determining the energy transfer price. The supplier shall be
responsible for paying any such transmission-related costs.
The Operating Committee or its designee shall make any determinations necessary
to implement the foregoing pricing provisions.
