MANSFIELD POWER SUPPLY AGREEMENT Between The Cleveland Electric Illuminating Company and The Toledo Edison Company, Sellers and FirstEnergy Generation Corp., Buyer
FirstEnergy
Operating Companies Exhibit
10.7
FERC
Electric
Tariff, Second Revised Volume No. 2
Service
Agreement No
_____
[Execution
Copy]
Between
The
Cleveland Electric Illuminating Company
and
The
Toledo Edison Company, Sellers
and
FirstEnergy
Generation Corp., Buyer
This
Mansfield Power
Supply Agreement ("Agreement") dated October 14, 2005, is made by and between
The Cleveland Electric Illuminating Company and The Toledo Edison Company
("Sellers") and FirstEnergy Generation Corp., ("Genco" or "Buyer"). The Sellers
and Genco may be identified collectively as "Parties" or individually as a
"Party." This Agreement is entered into in connection with the transfer of
ownership of The Cleveland Electric Illuminating Company, Ohio Edison Company,
Pennsylvania Power Company, and The Toledo Edison Company’s fossil and pumped
storage generation assets to Genco.
WHEREAS,
Buyer owns
or operates fossil and pumped storage generation facilities formerly owned
by
The Cleveland Electric Illuminating Company, Ohio Edison Company, Pennsylvania
Power Company, and The Toledo Edison Company (collectively "the FirstEnergy
Operating Companies"); and
WHEREAS,
Sellers
lease portions of the Xxxxx Xxxxxxxxx Generating Station, Units 1, 2, and 3
(hereinafter “Leased Mansfield Facilities”) from owner trustees under the
Sale/Leaseback Arrangements; and
WHEREAS,
Genco, an
affiliate of the Sellers, operates the Leased Mansfield Facilities;
and
WHEREAS,
Sellers
wish to sell to Buyer the electrical output of the Leased Mansfield Facilities;
and
WHEREAS,
Buyer is
engaged exclusively in the business of owning and operating generation and
selling Power at wholesale; and
WHEREAS,
Buyer
desires to obtain the entire electric output of the Leased Mansfield Facilities
pursuant to the rates, terms and conditions set forth herein.
It
is agreed as follows:
I.
TERM
| A. |
The
sale and
purchase of Power pursuant to this Agreement shall begin on December
1,
2005, or such later effective date authorized by the FERC, for an
initial
term ending December 31, 2010. This Agreement shall remain in effect
from
year to year thereafter unless terminated by either Party upon at
least
sixty days written notice prior to the end of the calendar year.
|
|
Issued
by: Xxxxx X. Xxxxx, Vice President
|
Effective
Date:
|
|
Issued
on: October 14, 2005
|
December
1, 2005
|
1
| B. |
Notwithstanding
I.A, this Agreement will terminate if the Sale/Leaseback Arrangements
for
the Leased Mansfield Facilities are terminated or assigned to Genco.
Termination of the Agreement under this Section will be effective
no
sooner than the effective date of the termination or assignment of
the
Sale/Leaseback Arrangements. Buyer will give Sellers no less than
sixty
days written notice of the termination of this Agreement under this
Section I.B. In the event of a partial termination or assignment
of the
Sale/Leaseback Arrangements, the Parties will amend this Agreement
to
reflect the revised rates, terms, and conditions for the sale of
Power
from the remaining Leased Mansfield
Facilities.
|
II.
SALE
AND
PURCHASE OF CAPACITY AND ENERGY
| A. |
Sellers
shall
make available to Buyer all of the Capacity, Energy, Ancillary Services,
Emission Allowances, and Renewable Energy Attributes, if any, which
are
available from the Leased Mansfield Facilities identified in Exhibit
C to
this Agreement, and Buyer shall purchase and pay for such Capacity,
Energy, Ancillary Services, Emission Allowances and Renewable Energy
Attributes in accordance with the terms of this Agreement. Sellers
shall
make firm Capacity, Energy, and Ancillary Services available at the
Delivery Points. Buyer shall arrange and will be responsible for
all
transmission, congestion costs, losses, and related services at and
from
the Delivery Points. The Capacity, Energy, Ancillary Services, Emission
Allowances, and Renewable Attributes supplied by Sellers are collectively
referred to as Buyer's "Power Supply Requirements." Electric Capacity
and
Energy supplied shall be sixty-hertz, three phase alternating current.
The
Power Supply Requirements will be provided in accordance with Good
Utility
Practice, and where applicable, the provisions of the applicable
Transmission Provider OATT, and the requirements of the FERC.
|
| X. |
Xxxxx
will
operate and maintain the Leased Mansfield Facilities in accordance
with
Good Utility Practice, the applicable requirements of the FERC, NERC,
Electric Reliability Organization, as well as the requirements of
the
regional reliability councils or Regional Entity, and Regional
Transmission Organizations where the Leased Mansfield Facilities
are
located.
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III.
SCHEDULING
AND SYSTEM PLANNING
| A. |
Sellers
shall
notify Buyer on or before November 1 of each year during the term
of this
Agreement of the amount of Capacity, Energy, Ancillary Services,
Emission
Allowances, and Renewable Energy Attributes it expects to have available
from the Leased Mansfield Facilities for each day in each month of
the
next calendar year. The information provided in this notification
shall
include, but not be limited to, the time and expected duration of
any
planned outage of the Leased Mansfield
Facilities.
|
| X. |
Xxxxxxx
shall
update their annual forecast of available Capacity, Energy, Ancillary
Services, Emission Allowances, and Renewable Energy Attributes for
any
change or expected change in the operation of the Leased Mansfield
Facilities that would materially affect the annual forecast provided
to
Genco. Sellers shall provide the updated forecast for any full month(s)
remaining in the calendar year within thirty days of becoming aware
of the
change or expected change in the operation of the Leased Mansfield
Facilities.
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2
| X. |
Xxxxxxx
will
supply Genco, upon request, any such information as is necessary
to meet
the requirements of the applicable Transmission Provider OATT, FERC,
NERC,
Electric Reliability Organization, regional reliability council,
Regional
Entity, or Government Authority.
|
.
IV.
PRICE
Sellers
shall
charge, and Buyer shall pay, for Buyer's Power Supply Requirements, as follows
on a monthly basis.
A. Charges
Buyer
will pay
Sellers the Monthly Charge under the formula set forth in Exhibit A for the
Power Supply Requirements Available from the Leased Mansfield Facilities
identified in Exhibit C.
B. Billing
and Payment
Unless
otherwise
specifically agreed upon by the Parties, the calendar month shall be the
standard period for all xxxxxxxx and payments under this Agreement. As soon
as
practicable after the end of each month, the Sellers will render an invoice
to
Buyer for the amounts due for Power Supply Requirements for the preceding month.
Payment shall be due and payable within ten days of receipt of the invoice
or,
if such day is not a Business Day, then on the next Business Day. Buyer will
make payments by electronic funds transfer or by other mutually agreeable
method(s) to the account designated by Sellers. Any amounts not paid by the
due
date will be deemed delinquent and will accrue interest at the Interest Rate
until the date of payment in full.
C.
Records
Each
Party shall
keep complete and accurate records of its operations under this Agreement and
shall maintain such data as may be necessary to determine the reasonableness
and
accuracy of all relevant data, estimates, payments or invoices submitted by
or
to it hereunder. All records regarding this Agreement shall be maintained for
a
period of three years from the date of the invoice or payment, or for such
longer period as may be required by law.
D.
Audit and Adjustment Rights
Buyer
shall have the
right, at its own expense and during normal business hours, to audit the
accounts and records of Sellers that reasonably relate to the provision of
service under this Agreement. If the audit reveals an inaccuracy in an invoice,
the necessary adjustment in such invoice and the payments therefore will be
promptly made. No adjustment will be made for any invoice or payment made more
than one year from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the date of
termination for the purpose of such invoice and payment objections. To the
extent that audited information includes Confidential Information, the Buyer
shall keep all such information confidential under Section VII.C.
3
E.
Section 205 Rights
Nothing
contained
herein shall be construed as affecting in any way the right of the Party
furnishing service under this Agreement to unilaterally make application to
the
FERC for a change in rates under Section 205 of the Federal Power Act and
pursuant to the FERC's Rules and Regulations thereunder. Provided, however,
that
nonrate terms and conditions may be amended only by a written agreement signed
by the Parties.
V.
METERING
Generation
metering
shall be installed, operated and maintained in accordance with the applicable
generator interconnection agreements among the Genco, Transmission Provider,
and
Transmission Owner. Metering between control areas shall be handled in
accordance with the applicable Transmission Provider OATT. Retail metering
shall
be provided in accordance with applicable state law. Nothing in this Agreement
requires Sellers or Buyer to install new metering facilities.
VI.
NOTICES
All
notices, requests, statements or payments shall be made as specified below.
Notices required to be in writing shall be delivered by letter, facsimile or
other documentary form. Notice by facsimile or hand delivery shall be deemed
to
have been received by the close of the Business Day on which it was transmitted
or hand delivered (unless transmitted or hand delivered after close in which
case it shall be deemed to have been received at the close of the next Business
Day). Notice by overnight mail or courier shall be deemed to have been received
two Business Days after it was sent. A Party may change its addresses by giving
notice as provided above.
NOTICES
& CORRESPONDENCE:
To
Sellers: FirstEnergy
Service
Company, Vice President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx 00000
To
Buyer:
FirstEnergy
Generation Corp., President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx 00000
INVOICES
& PAYMENTS:
To
Sellers: FirstEnergy
Service
Company, Vice President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx 00000
To
Buyer: FirstEnergy
Generation Corp., President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx 00000
SCHEDULING:
To
Sellers: FirstEnergy
Service
Company, Vice President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx 00000
To
Buyer: FirstEnergy
Generation Corp., President
00
Xxxxx Xxxx Xx.
Xxxxx,
Xxxx
00000
4
VII.
MISCELLANEOUS
A.
Performance Excused
If
either Party is rendered unable by an event of Force Majeure to carry out,
in
whole or part, its obligations hereunder, then, during the pendency of such
Force Majeure but for no longer period, the Party affected by the event shall
be
relieved of its obligations insofar as they are affected by Force Majeure.
The
Party affected by an event of Force Majeure shall provide the other Party with
written notice setting forth the full details thereof as soon as practicable
after the occurrence of such event and shall take all reasonable measures to
mitigate or minimize the effects of such event of Force Majeure. Nothing in
this
section requires Seller to deliver, or Buyer to receive, Power at Delivery
Points other than those Delivery Points designated under this Agreement, or
relieves Buyer of its obligation to make payment under Section IV of this
Agreement.
Force
Majeure shall
be defined as any cause beyond the reasonable control of, and not the result
of
negligence or the lack of diligence of, the Party claiming Force Majeure or
its
contractors or suppliers. It includes, without limitation, earthquake, storm,
lightning, flood, backwater caused by flood, fire, explosion, act of the public
enemy, epidemic, accident, failure of facilities, equipment or fuel supply,
acts
of God, war, riot, civil disturbances, strike, labor disturbances, labor or
material shortage, national emergency, restraint by court order or other
Government Authority, interruption of synchronous operation, or other similar
or
dissimilar causes beyond the control of the Party affected, which causes such
Party could not have avoided by exercising Good Utility Practice. Nothing
contained herein shall be construed to require a Party to settle any strike,
lockout, work stoppage, or other industrial disturbance or dispute in which
it
may be involved or to take an appeal from any judicial, regulatory or
administrative action.
B.
Transfer of Title and Indemnification
Title
and risk of
loss related to the Power Supply Requirements shall transfer to the Buyer at
the
Delivery Points. Sellers warrant that they will deliver the Power Supply
Requirements to Buyer free and clear of all liens, security interests, claims
and encumbrances or any interest therein or thereto by any person arising prior
to the Delivery Points. Each Party shall indemnify, defend and hold harmless
the
other Party from and against any claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period
when
control and title to the Power Supply Requirements is vested in the other Party.
C.
Confidentiality
Neither
Party shall
disclose to third parties Confidential Information obtained from the other
Party
pursuant to this Agreement except in order to comply with the requirements
of
FERC, NERC, Electric Reliability Organization, applicable regional reliability
councils or Regional Entity, Regional Transmission Organization or Government
Authority. Each Party shall use reasonable efforts to prevent or limit the
disclosure required to third parties under this section.
5
D.
Further Assurances
Subject
to the terms
and conditions of this Agreement, each of the Parties will use reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and effectuate the transactions contemplated hereby.
E.
Assignment
No
assignment, pledge, or transfer of this Agreement shall be made by any Party
without the prior written consent of the other Party, which consent shall not
be
unreasonably withheld. No prior written consent shall be required for (i) the
assignment, pledge or other transfer to another company or affiliate in the
same
holding company system as the assignor, pledgor or transferor, or (ii) the
transfer, incident to a merger or consolidation with, or transfer of all (or
substantially all) of the assets of the transferor, to another person or
business entity; provided, however, that such assignee, pledgee, transferee
or
acquirer of such assets or the person with which it merges or into which it
consolidates assumes in writing all of the obligations of such Party hereunder
and provided, further, that either Party may, without the consent of the other
Party (and without relieving itself from liability hereunder), transfer, sell,
pledge, encumber or assign such Party's rights to the accounts, revenues or
proceeds hereof in connection with any financing or other financial
arrangements.
F.
Governing Law
The
interpretation and performance of this Agreement shall be according to and
controlled by the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
G.
Counterparts
This
Agreement may
be executed in two or more counterparts and each such counterpart shall
constitute one and the same instrument.
H.
Waiver
No
waiver by a Party of any default by the other Party shall be construed as a
waiver of any other default. Any waiver shall be effective only for the
particular event for which it is issued and shall not be deemed a waiver with
respect to any subsequent performance, default or matter.
I.
No Third Party Beneficiaries
This
Agreement shall
not impart any rights enforceable by any third party other than a permitted
successor or assignee bound to this Agreement.
J.
Severability
Any
provision of this Agreement declared or rendered unlawful by any applicable
court of law or regulatory agency or deemed unlawful because of a statutory
change will not otherwise affect the remaining lawful obligations that arise
under this Agreement.
6
K.
Construction
The
term "including" when used in this Agreement shall be by way of example only
and
shall not be considered in any way to be a limitation. The headings used herein
are for convenience and reference purposes only.
IN
WITNESS WHEREOF, the Parties have caused their duly authorized representatives
to execute this Agreement on their behalf as of October 14, 2005.
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The Cleveland Electric Illuminating Company
The Toleldo Edison Company
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Vice
President, FirstEnergy Service Company
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FirstEnergy Generation Corp.
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President,
FirstEnergy Generation Corp.
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7
EXHIBIT
A
The
Cleveland Electric Illuminating Company
The
Toledo
Edison Company
Monthly
Charge Formula
8
EXHIBIT
B
DEFINITIONS
In
addition to terms defined elsewhere in this Agreement, the terms listed below
are defined as follows:
Affiliate
means,
with respect
to any person, any other person (other than an individual) that, directly or
indirectly, through one or more intermediaries, controls, or is controlled
by,
or is under common control with, such person. For purposes of the foregoing
definition, control means the direct or indirect ownership of more than fifty
percent (50%) of the outstanding capital stock or other equity interests having
ordinary voting power or ability to direct the affairs of the affiliate.
Ancillary
Services
means Reactive
Supply and Voltage Control from Generation Resources, Regulation and Frequency
Response Service, Operating Reserve - Spinning Reserve Service, and Operating
Reserve - Supplemental Service and such additional Ancillary Services as defined
in the Open Access Transmission Tariff of the Transmission Provider and to
the
extent available from the Leased Mansfield Facilities.
Business
Day
means any day on
which Federal Reserve member banks in New York City are open for business.
Capacity
means the resource
that produces electric Energy, measured in megawatts.
Confidential
Information means
any
confidential, proprietary, trade secret, critical energy infrastructure
information, or commercially sensitive information relating to the present
or
planned business of a Party that is supplied under this Agreement, and is
identified as confidential by the Party supplying the information.
Delivery
Point
means where
Capacity, Energy, and Ancillary Services are supplied by the Sellers at the
point of interconnection between the Leased Mansfield Facilities and the
transmission facilities of Transmission Owner.
Electric
Reliability Organization
has the meaning
given in Section 215(a)(2) of the Federal Power Act.
Emission
Allowances
means all present
and future authorizations to emit specified units of pollutants or hazardous
substances, which units are established by the Government Authority with
jurisdiction over the Leased Mansfield Facilities under (i) an air pollution
and
emissions reduction program designed to mitigate global warming, interstate
or
intra-state transport of air pollutants; (ii) a program designed to mitigate
impairment of surface waters, watersheds, or groundwater; or (iii) any pollution
reduction program with a similar purpose. Emission Allowances include
allowances, as described above, regardless as to whether the Governmental
Authority establishing such Emission Allowances designates such allowances
by a
name other than “allowances.”
Energy
means electric
energy delivered under this Agreement at three-phase, 60-hertz alternating
current measured in megawatt hours.
FERC
means The Federal
Energy Regulatory Commission or its regulatory successor.
Force
Majeure
has the meaning
given in Section VII.A.
Good
Utility
Practice
means 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 includes compliance with the standards adopted by NERC, its applicable
regional councils, an Electric Reliability Organization or Regional Entity
as
approved by the FERC. Good Utility Practice is not intended to be limited to
the
optimum practice, method or act to the exclusion of all others, but rather
to be
acceptable practices, methods or acts, generally accepted in the region and
consistently adhered to by utilities in the region.
Government
Authority means
any federal,
state, local, municipal or other governmental entity, authority or agency,
department, board, court, tribunal, regulatory commission, or other body,
whether legislative, judicial or executive, together or individually, exercising
or entitled to exercise any administrative, executive, judicial, policy,
regulatory or taxing authority or power over Buyer or Seller.
Interest
Rate
means the lesser of
Prime Rate plus two percent and the maximum rate permitted by applicable law.
Leased
Mansfield Facilities means
The Cleveland
Electric Illuminating Company and The Toledo Edison Company’s respective
leasehold interests in Xxxxx Xxxxxxxxx Generating Station, Units 1, 2, and
3 as
identified in Exhibit C.
NERC
means The North
American Electric Reliability Council or any superseding organization with
responsibility for establishing reliability standards for the interstate
grid.
Power
means
Capacity
and/or Energy.
Prime
Rate
means for any date,
the per annum rate of interest announced from time to time by Citibank, NA
as
its prime rate for commercial loans, effective for such date as established
from
time to time by such bank.
Regional
Entity
has the meaning
given in Section 215(a)(7) of the Federal Power Act.
Regional
Transmission Organization
has the meaning
given in Section 3(27) of the Federal Power Act.
Renewable
Energy Attributes
means any credits,
offsets, benefits, or tradable instrument created by law and related to
generation of Power from the Leased Mansfield Facilities.
Sale/Leaseback
Arrangements
mean the Facility
Leases identified in Exhibit D to this Agreement.
Taxes
means all
ad
valorem,
property,
occupation, utility, gross receipts, sales, use, excise and other taxes,
governmental charges, licenses, permits and assessments, other than taxes based
on net income or net worth.
Transmission
Owner
means the entity
that owns facilities used for the transmission of Power from the Leased
Mansfield Facilities.
Transmission
Provider
means the utility
or utilities, including Regional Transmission Organizations, transmitting Power
on behalf of Buyer from the Delivery Point(s) under this Agreement.
Transmission
Provider OATT
means the Open
Access Transmission Tariff, Open Access Transmission and Energy Markets Tariff,
or any other tariff of general applicability on file at the FERC under which
the
Transmission Provider offers transmission service.
EXHIBIT
C
Leased
Mansfield Facilities
NDC
in
MW
|
Unit
|
Cleveland
Electric
|
Toledo
Edison
|
Leasehold
MW
|
|
BM1
|
6.50%
|
--
|
51
|
|
BM2
|
28.60%
|
17.30%
|
358
|
|
BM3
|
24.47%
|
19.91%
|
355
|
|
Total
|
764
|
EXHIBIT
D
Xxxxx
Xxxxxxxxx Facility Leases
The
separate Facility Leases, each dated as of September 30, 1987, as heretofore
amended, modified and supplemented, among The Cleveland Electric Illuminating
Company and The Toledo Edison Company, as Lessees, and [Wachovia], as Lessor
in
its capacity as successor Owner Trustee under separate trusts for the benefit
of
each of the following Owner Participants, relating to the lease by the Lessees
of certain undivided interests in the Xxxxx Xxxxxxxxx Plant Units 1, 2 and
3
located in Shippingport, Pennsylvania:
Key
Leasing (as successor to Midwest Power Company) (Trust A)
Ford
Motor Credit
Company (Trust B)
Bank
of America (as
successor to Maryland National Leasing Corporation) (Trust C)
Key
Leasing (as successor to CT Leasing Company) (Trust D)
Chrysler
Capital
Corporation (Trust E)
Barclays
American
(as successor to Irving Leasing Corporation) (Trust F)
Bank
of New York (as
successor to Irving Leasing Corporation) (Trust G)
CitiCorp
Lescaman,
Inc. (Trust H)
CitiCorp
Lescaman,
Inc. (Trust I)
ComCast
Corp. (as
successor to U S West Financial Services, Inc.) (Trust J)
ComCast
Corp. (as
successor to U S West Financial Services, Inc.) (Trust K)
ComCast
Corp. (as
successor to U S West Financial Services, Inc.) (Trust L)
