1
Exhibit 10.3a
INTERCONNECTION AGREEMENT
By and Between
NEW YORK STATE ELECTRIC & GAS CORPORATION,
and
AES NY, L.L.C.
Dated as of August 3, 1998
2
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.........................................................2
1.0 Definitions.............................................................2
ARTICLE 2 TERM................................................................10
2.0 Term...................................................................10
ARTICLE 3 CONTINUING OBLIGATIONS AND RESPONSIBILITIES.........................13
3.0 Continuing Obligations and Responsibilities............................13
3.1 Interconnection Service..............................................13
3.2 Access, Easements, Conveyances, Licenses, and Restrictions...........14
3.3 Facility and Equipment Maintenance...................................16
3.4 New Construction or Modifications....................................17
3.5 Inspections..........................................................21
3.6 Information Reporting Obligations....................................22
3.7 Local Services.......................................................23
3.8 NYSEG Provided Local Services........................................25
3.8.1 Substation Service Power........................................25
3.8.2 Building Services...............................................25
3.8.3 Revenue Metering................................................25
3.9 Buyer Provided Local Services........................................27
3.9.1 Substation Service Power........................................27
3.9.2 Building Services...............................................27
3.9.3 Remote Terminal Units...........................................28
3.9.4 Substation Operations...........................................28
3.9.5 Line Operation Information......................................28
3.9.6 Meter Data......................................................28
3.9.7 Storage and Office Space........................................28
3.10 Spare Parts.........................................................29
3.11 Emergency Procedure.................................................29
3.12 Interconnection Service Interruptions...............................30
3.13 Non-Dispatchability Notification....................................31
3.14 Scheduled Maintenance Notification and Coordination.................32
3.14.1 Transmission System Maintenance................................32
3.14.2 Local Routine Inspection and Maintenance......................32
3.15 Safety..............................................................33
3.16 Environmental Compliance and Procedures.............................34
ARTICLE 4 OPERATIONS..........................................................35
4.0 Operations.............................................................35
4.1 General..............................................................35
4.2 Buyer's Operating Obligations........................................36
4.3 Auditing of Accounts and Records.....................................39
ARTICLE 5 COST RESPONSIBILITIES AND BILLING PROCEDURES........................39
5.0 Cost Responsibilities and Billing Procedures...........................39
5.1 Cost Responsibilities for Local Services.............................39
5.2 Billing Procedures...................................................40
5.3 Payment of Invoices..................................................40
5.4 Interest on Unpaid Balances..........................................41
5.5 Default..............................................................41
5.6 Billing Dispute......................................................41
ARTICLE 6 DOCUMENTATION.......................................................41
6.0 Documentation..........................................................41
6.1 Drawings.............................................................41
ARTICLE 7 CONFIDENTIALITY.....................................................42
-i-
3
7.0 Confidentiality.......................................................42
7.1 Confidentiality of NYSEG.............................................42
7.2 Confidentiality of the Buyer.........................................43
7.3 Confidentiality of Audits............................................44
7.4 Remedies.............................................................45
ARTICLE 8 EVENTS OF DEFAULT...................................................45
8.0 Events of Default.....................................................45
..............................................................................45
9.0 Indemnification........................................................48
9.1 Buyer's Indemnification..............................................48
9.2 NYSEG's Indemnification..............................................48
9.3 Indemnification Procedures...........................................49
9.4 Survival.............................................................49
ARTICLE 10 INSURANCE..........................................................49
10.0 Insurance.............................................................49
ARTICLE 11 FORCE MAJEURE......................................................51
11.0 Force Majeure.........................................................51
ARTICLE 12 DISPUTES...........................................................53
12.0 Disputes..............................................................53
ARTICLE 13 REPRESENTATIONS....................................................53
13.0 Representations.......................................................53
13.1 Representations of NYSEG............................................53
13.1.1 Organization..................................................53
13.1.2 Authority Relative to this Agreement..........................53
13.1.3 Regulatory Approval...........................................54
13.1.4 Compliance With Law...........................................54
13.2 Representations of the Buyer........................................54
13.2.1 Organization..................................................54
13.2.2 Authority Relative to this Agreement..........................54
13.2.3 Regulatory Approval...........................................55
13.2.4 Compliance With Law...........................................55
13.3 Representations of Both Parties.....................................55
ARTICLE 14 ASSIGNMENT/CHANGE IN CORPORATE IDENTITY............................55
14.0 Assignment/Change in Corporate Identity...............................56
ARTICLE 15 SUBCONTRACTORS.....................................................57
15.0 Subcontractors........................................................57
ARTICLE 16 LABOR RELATIONS....................................................58
16.0 Labor Relations.......................................................58
ARTICLE 17 INDEPENDENT CONTRACTOR STATUS......................................58
17.0 Independent Contractor Status.........................................58
ARTICLE 18 LIMITATION OF LIABILITY............................................58
18.0 Limitation on Damages.................................................58
ARTICLE 19 NOTICES............................................................59
19.0 Notices...............................................................59
ARTICLE 20 HEADINGS...........................................................60
20.0 Headings..............................................................60
ARTICLE 21 WAIVER.............................................................60
21.0 Waiver................................................................60
ARTICLE 22 COUNTERPARTS.......................................................61
22.0 Counterparts..........................................................61
ARTICLE 23 GOVERNING LAW......................................................61
23.0 Governing Law.........................................................61
23.1 Laws and Regulations................................................61
-ii-
4
ARTICLE 24 SEVERABILITY.......................................................62
24.0 Severability..........................................................62
ARTICLE 25 AMENDMENT..........................................................62
25.0 Amendments............................................................62
ARTICLE 26 ENTIRE AGREEMENT...................................................63
26.0 Entire Agreement......................................................63
ARTICLE 27 NO THIRD PARTY BENEFICIARIES.......................................63
27.0 No Third Party Beneficiaries..........................................63
ARTICLE 28 CONFLICTS..........................................................63
28.0 Conflicts.............................................................63
..............................................................................63
ARTICLE 29 FURTHER ASSURANCES.................................................64
29.0 Further Assurances....................................................64
..............................................................................64
Schedules
Schedule A - NYSEG Interconnection Facilities and Associated
Equipment
Schedule B - NYSEG's Bulletin 86-01
Schedule C - NYSEG's Switching and Tagging Training Manual
Schedule D - Voltage Regulation
Schedule E - Insurance Requirements
Schedule F - NYSEG Maintenance Guide for Electrical
Equipment
-iii-
5
INTERCONNECTION AGREEMENT
This Interconnection Agreement (the "Agreement") dated as of August 3,
1998 by and between New York State Electric & Gas Corporation ("NYSEG"), a New
York corporation with an office for the transaction of business at Corporate
Drive, Kirkwood Industrial Park, Binghamton, New York 13902-5225, and AES NY,
L.L.C. ("Buyer"), a Delaware limited liability company with a principal place of
business located at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000. NYSEG and
the Buyer shall each be considered a "Party" and, collectively, they shall be
referred to as the "Parties."
WITNESSETH:
WHEREAS, NYSEG, NGE Generation, Inc. ("NGE"), an Affiliate of NYSEG,
and the Buyer have entered into an Asset Purchase Agreement ("APA") dated as of
August 3, 1998 for the sale of NGE's fossil-fired generating facilities, and
associated assets and liabilities to the Buyer;
WHEREAS, the Buyer plans to own and operate such generation assets;
WHEREAS, NYSEG intends to continue to operate its transmission and
distribution businesses from their present locations;
WHEREAS, such generation assets are interconnected with NYSEG's
transmission system; and
WHEREAS, NGE and the Buyer have agreed in the APA to execute this
Agreement in order to establish the requirements, terms and conditions for the
interconnection of such generation assets with the transmission system of NYSEG.
NOW THEREFORE, in order to carry out the transactions contemplated by
the APA
6
and this Agreement, and in consideration of the mutual representations,
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.0 Definitions. Wherever used in this Agreement with initial
capitalization, the following terms shall have the meanings specified or
referred to in this Article 1. Any term not defined herein has the meaning set
forth in the APA.
1.1 "Affiliate" shall mean, with respect to a corporation,
partnership, or other entity, each other corporation, partnership, or other
entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such corporation,
partnership, or other entity.
1.2 "Agreement" shall mean this Interconnection Agreement dated as
of August 3, 1998 by and between NYSEG and the Buyer, including all schedules
attached hereto and any amendments hereto.
1.3 "Buyer's Purchased Assets" shall mean the Purchased Assets as
defined in Section 2.1 of the APA, which shall include the Fossil Plants, and
any additions, modifications or replacements thereto.
1.4 "Closing" shall mean the closing of the transactions contemplated
by the APA.
1.5 "Closing Date" shall mean the date and time at which the
Closing actually occurs.
1.6 "Easement Agreement" shall mean, with respect to the Buyer's
Purchased Assets and the Excluded Assets, the Reciprocal Easement Agreement
between the Buyer and NYSEG
-2-
7
containing grants and reservations of easements and other rights with respect to
such assets, which agreement has been executed and dated contemporaneously with
this Agreement and is incorporated into this Agreement as if set forth in this
Agreement.
1.7 "Effective Date" shall mean the date referenced in the first
paragraph of this Agreement.
1.8 "Emergency" shall mean (a) with respect to NYSEG, a condition
or situation which the NYPP, NYISO, the System Operator, or NYSEG deems
immediately likely to (i) endanger life or property, or (ii) adversely affect or
impair the Transmission System, NYSEG's electrical systems or the electrical or
transmission systems of others to which the Transmission System or NYSEG's
electrical system are directly or indirectly connected, which requires , in
accordance with Good Utility Practice, that the output of the Fossil Plants be
adjusted to avoid or mitigate, and (b) with respect to the Buyer, a condition or
situation which the NYPP, NYISO, the System Operator, or the Buyer deems
imminently likely to (i) endanger life or property, or (ii) adversely affect or
impair the Fossil Plants. Such a condition or situation includes, but is not
limited to, overloading or potential overloading, excessive voltage drop or
unusual operating conditions.
1.9 "Environmental Laws" shall mean all present or future Federal,
state and local, provincial and foreign, civil and criminal laws, regulations,
rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders relating to pollution or protection of the environment,
natural resources or human health and safety, including, without limitation,
laws relating to Releases or threatened Releases of Hazardous Substances
(including, without limitation, Releases to ambient air, surface water,
groundwater, land, surface and subsurface
-3-
8
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Substances or of
coal ash. "Environmental Laws" include, without limitation, CERCLA, the
Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the Clean
Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Sections 2601 et seq.), the Oil Pollution Act (33 U.S.C. Sections 2701 et
seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Sections 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.), all state laws analogous to any of the above and the New
York State Environmental Conservation Law.
1.10 "Excluded Assets" shall mean those transmission, distribution,
substation, and communication facilities and related equipment located on the
Buyer's property which will not be sold to the Buyer, but will be retained by
NYSEG, and which are described or referred to in Schedule 2.2(a)(i) of the APA,
including the NYSEG Interconnection Facilities, and any additions, modifications
or replacements thereto.
1.11 "FERC" shall mean the Federal Energy Regulatory Commission, or its
successor.
1.12 "Fossil Plants" shall mean the real and personal property
owned or leased by NGE and transferred to the Buyer through the APA and
constituting (a) the fossil generation plants described in Schedule 2.1(c) of
the APA, and (b) real and personal property used principally for generation
purposes in connection with the fossil generation plants described in Schedule
2.1(c) of the APA, including, but not limited to, the following assets:
(a) the Real Property (including all buildings, structures and
other
-4-
9
improvements thereon) described on Schedule 4.10 of the APA, which Real
Property is associated with the fossil generation plants described in
Schedule 2.1(c) of the APA, (the "Fossil Plants Real Property"); and
(b) the turbines, machinery, equipment, vehicles, furniture
and other personal property located on the Fossil Plants Real Property
on the Closing Date, which property is associated with the fossil
generation plants described in Schedule 2.1 of the APA, and the Joint
Use Facilities described in Schedule A of this Agreement as being
transferred to the Buyer under the APA.
1.13 "Good Utility Practice" shall mean any of the applicable
practices, methods, and acts:
(a) required by NERC, NPCC, NYPP, NYSRC, the System Operator,
NYISO, FERC, NYPSC, OSHA, or the successor of any of them, whether or
not the Party whose conduct is at issue is a member thereof;
(b) required by the policies and standards of NYSEG relating
to Emergencies;
(c) set forth in NYSEG's Bulletin 86-01; or
(d) otherwise engaged in or approved by a significant portion
of the electric generation, transmission, and distribution industry in
the region during the relevant time period, or any of the practices,
methods or acts which, in the exercise of reasonable judgment in light
of the facts known at the time the decision is made, could be expected
to accomplish the desired result at a reasonable cost consistent with
law, regulation, 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
-5-
10
others, but rather to practices, methods, or acts generally accepted by
the electric generation, transmission, and distribution industry in the
region.
1.14 "Hazardous Substances" shall mean: (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas other than in the form
of a naturally occurring radioactive material, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid which may contain levels of
polychlorinated biphenyls; (b) any chemicals, materials or substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; or (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
1.15 "Interconnection Service" shall mean the service provided by
NYSEG to interconnect the Fossil Plants with the Transmission System.
Interconnection Service shall not mean the provision of capacity or energy,
transmission service, ancillary services, losses, or any other service which is
available and/or required under the NYPP Agreement, the NYISO Tariff, NYSEG's
Tariff, or any retail wheeling tariff, including any distribution service tariff
or contract, in each case as amended from time to time.
1.16 "Joint Tag List" shall mean the list of personnel approved
from time to time by NYSEG in accordance with Good Utility Practice who meet
NYSEG's requirements to switch, tag, and ground electrical equipment.
-6-
11
1.17 "Joint Use Facilities" shall mean equipment, identified as Joint
Use Facilities in Schedule A, as amended from time to time, which are owned by
either NYSEG or the Buyer, and which are primarily used for generation
operations but are also essential to the operational reliability of the
Transmission System and are, therefore, jointly-operated by NYSEG and the Buyer.
1.18 "Maintain" shall mean construct, reconstruct, install,
inspect, repair, replace, operate, patrol, maintain, use, modernize, expand, or
upgrade, or undertake other similar activities.
1.19 "NGE" shall mean NGE Generation, Inc.
1.20 "NYISO" shall mean the New York Independent System Operator, or
its successor or its equivalent, which has assumed responsibility for the
continued operation of the New York control area and the administration of the
ISO Tariff, subject to regulation by the FERC, as proposed by the NYPP member
systems in their January 27, 1998 filing with the FERC, which filing is subject
to the FERC's review.
1.21 "NYISO Tariff" shall mean the tariff filed with the FERC by
the NYPP member systems on December 19, 1997 in Docket Nos. ER97-1523-000,
ER97-470-000, and ER97-4234-000, as it may be modified, amended, or superseded
from time to time, and related agreements.
1.22 "NYPP" shall mean the New York Power Pool.
1.23 "NYPP Agreement" shall mean the NYPP Agreement filed with the
FERC on October 30, 1991 in Docket No. ER92-142-000, as it may be modified,
amended, or superseded from time to time.
-7-
12
1.24 "NYPSC" shall mean the New York State Public Service Commission.
1.25 "NERC" shall mean North American Electric Reliability Council.
1.26 "NPCC" shall mean Northeast Power Coordinating Council, a
regional reliability governing body, and a sub-council of NERC.
1.27 "NYSEG" shall mean New York State Electric & Gas Corporation.
1.28 "NYSEG Bulletin 86-01" shall mean a copy of NYSEG's current
Bulletin 86-01 attached hereto as Schedule B.
1.29 "NYSEG Tariff" shall mean the NYSEG Open Access Transmission
Tariff, as filed with the FERC on July 6, 1996 in Docket Nos. 0A96-195-000 and
ER96-2438-000 , as it may be modified, amended, or superseded from time to time.
1.30 "NYSEG Interconnection Facilities" shall mean all structures,
facilities, equipment, devices, and apparatus, including those that are
identified as NYSEG Interconnection Facilities and Associated Equipment or as
Joint Use Facilities owned by NYSEG in Schedule A, as amended from time to time,
which facilities are owned or leased by NYSEG and are necessary to facilitate
the interconnection of the Fossil Plants to the Transmission System.
1.31 "NYSRC" shall mean the New York State Reliability Council, or
its successor or equivalent, as proposed by the NYPP member systems in their
December 19, 1997 filing, which is subject to the FERC's review.
1.32 "OSHA" shall mean the Occupational Safety and Health
Administration.
1.33 "Point of Interconnection" shall mean each ownership point of
demarcation where capacity, energy, and ancillary services each are transferred
between the Fossil Plants and the Transmission System. The Points of
Interconnection are specified in Schedule A to this
-8-
13
Agreement.
1.34 "Pool Controlled Facilities" or "PCFs" shall mean those NYSEG
Interconnection Facilities over which the NYPP, NYISO, or any successor entity,
exercises operational control in accordance with the applicable agreement or
tariff, or any successor agreement or tariff, as such facilities are designated
in Schedule A to this Agreement.
1.35 [RESERVED]
1.36 "Qualified Personnel" shall mean individuals trained for their
positions by the Buyer and/or NYSEG pursuant to Good Utility Practice.
1.37 "Release" shall mean release, spill, leak, discharge, dispose
of, pump, pour, emit, empty, inject, xxxxx, dump, or allow to escape into or
through the environment.
1.38 "Revenue Meters" shall mean all kWh, kVARh meters, pulse
isolation relays, pulse conversion relays, transducers used by the NYPP, the
NYISO, or NYSEG for billing purposes, and associated totalizing equipment and
appurtenances (including voltage transformers and current transformers) used to
measure the transfer of capacity, energy or ancillary services between the
Parties.
1.39 "Right-of-Way Access" shall mean gates, roadways, paths, or
other means of access used or required to gain entry to the transmission or
distribution system rights-of-way with respect to a Party's property or
facilities.
1.40 "Routine Inspection and Maintenance" shall mean any inspection
and/or work required pursuant to Good Utility Practice on either Party's
property or facilities to ensure (a) reliable substation, transmission, and
distribution operations, and (b) transmission and distribution system integrity.
-9-
14
1.41 "Secondary Systems" shall mean control or power circuits that
operate below 600 volts, AC or DC, including, but not limited to, any hardware,
control or protective devices, cables, conductor, electric raceways, secondary
equipment panels, transducers, batteries, chargers, and voltage and current
transformers.
1.42 "Spill Prevention Control and Countermeasure Plan (SPCC)"
shall mean a plan to be implemented for on-shore facilities that includes
physical structures and other measures to respond to and to prevent spills of
oil from reaching navigable waters as defined in Section 502(7) of the Federal
Water Pollution Control Act, or adjoining shorelines.
1.43 "Switching and Tagging Training Manual" shall mean NYSEG's
"Switching and Tagging Training Manual," dated April 1997, as amended from time
to time. A copy of NYSEG's current Switching and Tagging Training Manual is
attached hereto as Schedule C.
1.44 "System Operator" shall mean the energy control center staff
responsible for central dispatch as provided in the NYPP Agreement, or the NYISO
Tariff, as amended or superseded.
1.45 "Transmission System" shall mean the facilities, including
PCFs, owned, controlled, or operated by NYSEG for purposes of providing
point-to-point transmission service, network integration service, and
Interconnection Service, including services under the NYPP Agreement, the NYSEG
Tariff, and the NYISO Tariff, which definition shall be subject to the NYPSC
proceeding in Case No. 97-E-0251.
ARTICLE 2
TERM
2.0 Term.
-10-
15
2.1 Except as provided herein, this Agreement shall become
effective as of the Effective Date, or such other effective date as the FERC may
establish, and shall continue in full force and effect with respect to a Fossil
Plant until the retirement date of that Fossil Plant as proposed on the
Effective Date unless terminated on an earlier date by mutual agreement or
otherwise in accordance with the terms of this Agreement; provided however, that
the provisions of Articles 3, 4, 5, and shall become effective upon the Closing
Date. NYSEG shall file this Agreement with the FERC as a Rate Schedule within
the meaning of 18 C.F.R. Part 35. The Buyer agrees to support such filing, to
cooperate reasonably with NYSEG with respect to such filing, and to provide any
information, including the filing of testimony, reasonably required by NYSEG to
comply with applicable filing requirements. This Agreement is subject to any
necessary regulatory acceptance or approval without any material modification or
condition. If any regulatory agency having jurisdiction over this Agreement
requires any modification to, or imposes any condition of acceptance or approval
of, this Agreement, and
(i) such modification or condition could reasonably be
expected to, in the aggregate, create, as to the Buyer, a Buyer Material Adverse
Effect, as defined in Section 5.3(b) of the APA, or, as to NYSEG, a material
adverse effect on the business, assets, operations or conditions (financial or
otherwise) of NYSEG, then the Parties shall engage in good faith negotiations
for a period of thirty (30) days following the issuance of that acceptance or
approval in order to agree to revisions to this Agreement to satisfy, or
otherwise address, such modification or condition. If the Parties fail to agree
mutually to such changes, then the Parties may exercise their rights under
Article 9 of the APA; or
(ii) such modification or condition could not reasonably be
expected to, in the
-11-
16
aggregate, create, as to the Buyer, a Buyer Material Adverse Effect, as defined
in Section 5.3(a) of the APA, or, as to NYSEG, a material adverse effect on the
business, assets, operations or conditions (financial or otherwise) of NYSEG,
then the Parties shall engage in good faith negotiations for a period of thirty
(30) days following the issuance of that acceptance or approval in order to
agree to revisions to this Agreement to satisfy, or otherwise address, such
modification or condition. If the Parties fail to agree mutually to such
changes, then NYSEG may make a unilateral filing to satisfy the modification or
condition, which filing shall attempt to satisfy the intent of the Parties under
this Agreement; provided, however, that the Buyer shall have the right to
protest the manner in which NYSEG has attempted to satisfy such modification or
condition.
2.2 If (a) the FERC, any State or State regulatory commission, the
System Operator, NYPP, or the NYISO implements a change in any law, regulation,
rule or practice, or (b) NYSEG complies with a change in any law, regulation,
rule or practice, which compliance affects, or may reasonably be expected to
affect, NYSEG's performance under this Agreement, then NYSEG and the Buyer shall
negotiate in good faith any amendments to this Agreement that are necessary to
adapt the terms of this Agreement to such change, and NYSEG shall file such
amendments with the FERC. If the Parties are unable to reach agreement on such
amendments, NYSEG shall have the right to make a unilateral filing with the FERC
to modify this Agreement pursuant to Sections 205 or 206 of the Federal Power
Act and the FERC's rules and regulations thereunder; provided that the Buyer
shall have the right to oppose such filing by NYSEG and to participate fully in
any proceeding established by the FERC to address such amendments.
2.3 The applicable provisions of this Agreement shall continue in
effect after
-12-
17
cancellation or termination hereof to the extent necessary to provide for final
xxxxxxxx, billing adjustments, and the determination and enforcement of
liability and indemnification obligations arising from acts or events that
occurred while this Agreement was in effect.
ARTICLE 3
CONTINUING OBLIGATIONS AND RESPONSIBILITIES
3.0 Continuing Obligations and Responsibilities.
3.1 Interconnection Service.
3.1.1 NYSEG shall provide the Buyer with Interconnection
Service over the NYSEG Interconnection Facilities. A separate description of the
NYSEG Interconnection Facilities associated with each Fossil Plant for which the
Buyer is requesting Interconnection Service is set forth as part of Schedule A
to this Agreement. Interconnection Service shall be provided under this
Agreement only with respect to the Fossil Plants, including any addition to,
upgrade of, or repowering of such Fossil Plants, and shall not include the
interconnection to the Transmission System of any other generating unit,
wherever located; provided, however, that such addition, upgrade or repowering
of a Fossil Plant shall not extend the expiration date of this Agreement with
respect to that Fossil Plant.
3.1.2 NYSEG shall provide Interconnection Service at the
Points of Interconnection specified in Schedule A to this Agreement. NYSEG shall
permit the Buyer to continue to receive Interconnection Service for Fossil
Plants as long as (a) the Buyer continues to Maintain the Fossil Plants in
accordance with Good Utility Practice, and (b) the Buyer has not committed an
event of default under this Agreement.
-13-
18
3.1.3 Except as provided in Section 4.2.1.5, the Buyer shall
be responsible for making arrangements under the applicable tariffs for (a)
transmission and ancillary services associated with the delivery of capacity
and/or energy produced by the Fossil Plants, (b) obtaining capacity and/or
energy to satisfy its station service, or other, requirements, and (c)
transmission, losses and ancillary services associated with the use of the
Transmission System for the delivery of capacity and/or energy to the Fossil
Plants; provided, however, that such addition, upgrade or repairing of a Fossil
Plant shall not extend the expiration date of this Agreement with respect to
that Fossil Plant. NYSEG shall reasonably cooperate with the Buyer's arrangement
for such services.
3.1.4 NYSEG does not guarantee the non-occurrence of, or
warrant against, and the Buyer releases NYSEG from any and all claims or damages
associated with, (a) any interruption in the availability of the NYSEG
Interconnection Facilities or the Transmission System, or (b) damage to the
Buyer's Purchased Assets resulting from electrical transients, including short
circuits (faults), or events of force majeure as defined in Article 11, except
to the extent that such damage is caused by the gross negligence or willful
misconduct of NYSEG.
3.1.5 Except as provided in this Agreement, or the New York
Transition Agreement and the Xxxxxxxx Operating Agreement (as those agreements
are defined in the APA), NYSEG shall be responsible for arranging separately for
the purchase of any capacity, energy, or ancillary services that NYSEG seeks
from the Fossil Plant.
3.2 Access, Easements, Conveyances, Licenses, and Restrictions.
3.2.1 General. Points of Interconnection, and certain
operation procedures and practices for the NYSEG Interconnection Facilities, are
set forth in Schedule A to this
-14-
19
Agreement. NYSEG and the Buyer have granted to each other certain easement,
access and other rights regarding the Buyer's Purchased Assets and the Excluded
Assets, which grant is memorialized in the Easement Agreement.
3.2.2 NYSEG shall be entitled to operate and/or purchase from
the Buyer such DC power systems, protection and metering circuit components,
Supervisory Control and Data Acquisition ("SCADA") equipment, transformers,
Secondary Systems, communications equipment, building facilities, software,
documentation, structural components; and other facilities and appurtenances
that are necessary for NYSEG to Maintain the Transmission System if: (a) the
Buyer shall commence any case under Federal bankruptcy laws or other proceeding
under any similar law of any jurisdiction for the relief of debtors, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator, or receiver for the Buyer or for any substantial part of the Buyer's
Purchased Assets; (b) a decree or order for relief shall be entered in respect
of the Buyer in an involuntary case under Federal bankruptcy laws, or in any
other proceeding under any similar law of any jurisdiction for the relief of
debtors, or a decree or order shall be entered appointing a trustee or other
custodian, liquidator, or receiver for the Buyer or for any substantial part of
the Buyer's Purchased Assets, and such degree or order shall not be dismissed
within sixty (60) days after it is entered; (c) the Buyer shall cease its
operations without having an assignee, successor, or transferee in place, which
cessation shall remain in place for a period of thirty (30) days; or (d) the
Buyer, or the Buyer's assignee, successor, or transferee, shall fail to comply
with the material obligations or duties set forth in this Agreement, which
failure adversely affects the Transmission System and remains uncorrected for a
period of two (2) days.
-15-
20
NYSEG shall give the Buyer or the Buyer's assignee, successor
or transferee written notice, pursuant to Article 19, of its intent to implement
its rights under this Section 3.2.2, which notice shall specify the actual or
alleged failure of the Buyer to comply with its obligations or duties. If the
failure endangers life or property, or impairs or creates a significant risk to
the safety, reliability, stability, or integrity of the Transmission System,
NYSEG may implement this Section 3.2.2 without such prior notice as necessary in
its judgment to avert such condition. NYSEG shall return operational control of
such facilities to the Buyer as soon as practicable after the event permitting
NYSEG to exercise such operational control has ceased, or the underlying default
has been cured. NYSEG shall operate such facilities in accordance with Good
Utility Practice and applicable, material agreements to which the Buyer is a
party.
3.3 Facility and Equipment Maintenance.
3.3.1 NYSEG and the Buyer shall each Maintain its own
property, equipment, facilities, and appurtenances and access thereto in a safe
and efficient manner and pursuant to Good Utility Practice. The Buyer shall
Maintain all common-use roadways and plant accesses in or about the Fossil
Plants Real Property.
3.3.2 At its sole expense, the Buyer shall maintain in full
force and effect all permits, licenses, rights-of-way, and other authorizations
as may be required to Maintain the Buyer's Purchased Assets. Upon NYSEG's
reasonable request, the Buyer shall furnish to NYSEG copies of each permit,
license, right-of-way, and authorization promptly following receipt thereof.
3.3.3 The Buyer shall perform routine inspections,
maintenance, certifications, and tests on the Buyer's Purchased Assets in
accordance with Good Utility Practice and the
-16-
21
requirements specified in Schedules A, B, C and F.
3.3.4 Equipment Testing Obligations.
3.3.4.1 NYSEG may reasonably request, pursuant to
Good Utility Practice, that the Buyer test, calibrate, verify, or validate the
Fossil Plants, and the Buyer shall promptly comply with such a request. The
Buyer shall be responsible for all costs of testing, calibrating, verifying or
validating the Fossil Plants. The Buyer may reasonably request, pursuant to Good
Utility Practice, that NYSEG test, calibrate, verify, or validate the NYSEG
Interconnection Facilities, and NYSEG shall promptly comply with such a request.
NYSEG shall be responsible for all costs of testing, calibrating, verifying or
validating the NYSEG Interconnection Facilities.
3.3.4.2 Pursuant to the foregoing Section 3.3.4.1,
the Buyer shall supply to NYSEG, at NYSEG's request, and at no cost to NYSEG,
copies of inspection reports, installation and maintenance documents, test and
calibration records, verifications, and validations related to the Fossil
Plants, and NYSEG shall supply to the Buyer, at the Buyer's request, and at no
cost to the Buyer, copies of inspection reports, installation and maintenance
documents, test and calibration records, verifications, and validations related
to the NYSEG Interconnection Facilities.
3.4 New Construction or Modifications.
3.4.1 Unless otherwise required by law, regulation, or Good
Utility Practices, NYSEG shall not be required at any time to upgrade or
otherwise modify its Transmission System.
3.4.2 NYSEG may undertake additions, modifications, or
replacements of its
-17-
22
Transmission System, including the NYSEG Interconnection Facilities. If such
additions, modifications, or replacements might reasonably be expected to affect
the Buyer's operation of the Fossil Plants, NYSEG shall provide the Buyer with
sixty (60) days' written notice of the necessity of the addition, modification,
or replacement in a manner consistent with the NYSEG Standards of Conduct
established pursuant to FERC Order No. 889 prior to undertaking such additions,
modifications, or replacements. Any such additions, modifications, or
replacements shall comply with Good Utility Practice. NYSEG shall use reasonable
efforts with respect to such addition, modification, or replacement to minimize
any adverse impact on the Fossil Plants.
3.4.3 In the event the Buyer plans to increase the capacity of
the Fossil Plants, the Buyer shall submit to NYSEG any and all plans and
specifications that NYSEG may reasonably request related to such increase. Such
specifications and plans shall be submitted by the Buyer to NYSEG not later than
twenty-four (24) months prior to the respective commercial operation date for
additions, modifications, or replacements to the Fossil Plants that will result
in such increase, except as otherwise agreed to by NYSEG. Any such additions,
modifications, or replacements shall comply with Good Utility Practice.
3.4.4 If the Buyer plans any additions, modifications, or
replacements to the Buyer's Purchased Assets that will not increase the capacity
of the Fossil Plants, but could reasonably be expected to affect the
Transmission System, the Buyer shall give NYSEG reasonable notice, but not less
than sixty (60) days' prior written notice thereof; provided, however, that the
Buyer shall provide NYSEG with at least twelve (12) months' prior written
notice, and shall submit to NYSEG the plans and specifications for such
additions, modifications, or replacements if they will involve an outage of the
Fossil Plants for thirty (30)
-18-
23
days or more. All such additions, modifications, or replacements shall comply
with Good Utility Practice, must be accompanied by appropriate information and
operating instructions, and shall be subject to the review and approval of NYSEG
which review shall be based on Good Utility Practice and which approval, shall
not unreasonably be withheld.
3.4.5 NYSEG shall inform the Buyer of any additions,
modifications, or replacements to the Transmission System that are necessary as
a result of the addition, modification, or replacement to the Fossil Plants made
pursuant to Sections 3.4.2, 3.4.3 or
3.4.6 The Buyer shall reimburse NYSEG for all reasonable costs
incurred by NYSEG for such additions, modifications, or replacements made to the
Transmission System, including the NYSEG Interconnection Facilities, arising out
of such additions, modifications, or replacements of the Fossil Plants,
regardless of whether the Fossil Plants enter (or have entered into) service, or
are interconnected with the Transmission System. NYSEG shall provide the Buyer
with the estimated cost of such addition, modification, or replacement of the
Transmission System no later than thirty (30) days prior to the initiation of
such addition, modification, or replacement.
3.4.7 NYSEG's acceptance of the Buyer's interconnection plans
and specifications for any proposed addition, modification or replacement of the
Fossil Plants, and NYSEG's participation in interconnected operations with the
Buyer, are not and shall not be construed as: (a) confirmation or endorsement of
the design of the Fossil Plants; (b) a warranty of safety, durability or
reliability of the Fossil Plants; or (c) responsibility for strength, details of
design, adequacy, or capability of the Fossil Plants.
3.4.8 Notwithstanding anything to the contrary set forth
herein, all work performed in connection with the construction, installation,
and maintenance of modifications to
-19-
24
the Buyer's Purchased Assets that requires the performance of any activities on,
or which may physically affect the Transmission System or any part thereof,
shall be performed only by the Buyer or by contractors selected by the Buyer,
subject to the approval of NYSEG, which shall not be unreasonably withheld.
3.4.9 The Buyer shall compensate NYSEG for all reasonable
costs and fees required to enable NYSEG to exercise its rights and to fulfill
its obligations under this Agreement, including any tax liability, any costs of
acquiring land necessary for the NYSEG Interconnection Facilities, the costs and
fees of all permits, licenses, franchises, or regulatory or other approvals
necessary for the construction, maintenance, and operation of any NYSEG
Interconnection Facilities.
3.4.10 The Buyer shall modify, at its sole cost and expense,
the Fossil Plants as may be reasonably required to conform with changes to Good
Utility Practice and additions, modifications, and replacements of the
Transmission System reasonably required by Good Utility Practice or implemented
in accordance with this Agreement, or the Transmission System including, but not
limited to, changes to the voltages at which the Transmission System is
operated.
3.4.11 Upon completion of any addition, modification, or
replacement to the Fossil Plants that may reasonably be expected to affect the
Transmission System, but no later than ninety (90) days thereafter, the Buyer
shall issue "as built" drawings to NYSEG. Upon completion of any addition,
modification, or replacement to the Transmission System that may reasonably be
expected to affect the operation of the Fossil Plants, but no later than ninety
(90) days thereafter, NYSEG shall issue "as built" drawings to the Buyer.
-20-
25
3.5 Inspections.
3.5.1 General. NYSEG shall, at its own expense, have the right
to inspect or observe all maintenance activities, equipment tests, installation
work, construction work, and modification work to the Buyer's equipment,
systems, and facilities, including the Buyer's Purchased Assets. If NYSEG
observes any deficiencies or defects with respect thereto that might reasonably
be expected to adversely affect the Transmission System, or NYSEG's
Interconnection Facilities, NYSEG shall notify the Buyer, and the Buyer shall
make immediately any corrections necessitated by Good Utility Practice.
3.5.2 The Buyer shall, at its own expense, have the right to
inspect or observe all maintenance activities, equipment tests, installation
work, construction work, and modification work to NYSEG's Interconnection
Facilities. If the Buyer observes any deficiencies or defects with respect
thereto that might reasonably be expected to adversely affect the Fossil Plants,
the Buyer shall notify NYSEG, and NYSEG shall make immediately any corrections
necessitated by Good Utility Practice.
3.5.3 Joint Use Facilities.
3.5.3.1 Joint Use Facilities are identified in
Schedule A to this Agreement. The Party owning such Joint Use Facilities shall
Maintain those facilities pursuant to Good Utility Practice. Each Party agrees
to perform joint inspections of the Joint Use Facilities one year from the
Closing Date, and annually thereafter, or as otherwise mutually agreed upon.
NYSEG and the Buyer shall bear their respective costs of participating in such
inspections.
3.5.3.2 The Party owning such Joint Use Facilities
shall provide to the other Party copies of the written reports, made by or for
the first Party, to the other Party
-21-
26
summarizing such inspections and describing any loose hardware or foundation
problems, guy, shield or ground wire deficiencies, corrosion or other observed
defects. Unless the Parties agree that an alternative to such correction is
preferable, the Party owning such Joint Use Facilities shall be responsible for
correcting any noted deficiency, corrosion, or observed defects within sixty
(60) days or within such other period mutually agreeable to the Parties) from
the date of the inspection. The Party owning such Joint Use Facilities shall
bear the costs of such correction.
3.6 Information Reporting Obligations.
3.6.1 In order to maintain Interconnection Service, the Buyer
shall promptly provide NYSEG with all relevant information, documents, or data
that would be expected to affect the Transmission System, and which is
reasonably requested by NERC, NPCC, NYPP, the NYISO, the NYPSC, the System
Operator, or by NYSEG, which disclosure shall be subject to reasonable
restrictions, acceptable to NYSEG and the Buyer, regarding the disclosure of
commercially sensitive information provided by the Buyer.
3.6.2 The Buyer shall supply accurate, complete, and reliable
information in response to reasonable data requests necessary for operations,
maintenance, regulatory requirements, and analysis of the Transmission System.
Such information may include metered values for MW, MVAR, voltage, current,
amperage, automatic voltage regulator status, automatic frequency control,
dispatch, frequency, breaker status indication, or any other information
reasonably required by NYSEG for reliable operation of the Transmission System
pursuant to Good Utility Practice.
3.6.3 Information pertaining to generation, transmission, and
distribution operating parameters shall be gathered for electronic transmittal
to NYSEG using one or more of,
-22-
27
but not limited to, the following: SCADA equipment, remote terminal unit ("RTU")
equipment, remote access pulse recorders or analog telemetry. Information
pertaining to generation operating parameters shall be provided to NYSEG's RTUs
in accordance with Schedule A.
3.7 Local Services.
3.7.1 General. NYSEG and the Buyer agree that, due to the
integration of certain control schemes, Revenue Metering applications, and
communication networks, it is cost effective for them to provide each other with
the services set forth in Sections 3.8 and 3.9 below at the prices referenced
therein.
3.7.1.1 NYSEG and the Buyer shall use their best
efforts to ensure that services provided by one Party to the other Party
pursuant to Sections 3.8 and 3.9 shall be available at all times and in the
manner and at the prices specified herein. Notwithstanding the foregoing, either
Party may change such services, provided that (a) there is no cost to the
receiving Party as a result of such change, (b) the quality, reliability, and
integrity of the replacement services are equivalent to the services replaced,
and (c) there is otherwise no materially adverse effect on the receiving Party.
3.7.1.2 Neither NYSEG nor the Buyer shall terminate
any services set forth in Sections 3.8 and 3.9 below without the other Party's
written consent, which shall not be unreasonably withheld, or without, in the
case of the services set forth in Sections 3.9.4 and 3.9.6, at least one (1)
month's prior written notification and, with respect to all other services set
forth in Sections 3.8 and 3.9, at least twelve (12) months' prior written
notification; provided, however, that if either Party no longer needs or desires
a particular service provided under Section 3.8 or 3.9, that Party shall notify
the other Party, and the providing Party shall terminate
-23-
28
that service as soon thereafter as practicable.
3.7.2 Temporary Suspension of Section 3.8 and 3.9 Services.
The Party providing the services set forth in Sections 3.8 and 3.9 below shall
notify and obtain approval, which approval shall not be unreasonably withheld,
from the affected Party of any scheduled temporary suspension of services at
least five (5) working days in advance of such suspension. Such notification
shall include an estimated time duration for a return to normal conditions. The
Party temporarily suspending the service shall use reasonable efforts to
minimize the duration of the suspension.
3.7.2.1 In the event of any unplanned or forced
suspension of the services set forth in Sections 3.8 and 3.9 below, the Party
providing the service shall immediately notify the other Party first verbally
and then in writing in accordance with Article 19. The providing Party shall use
all reasonable efforts to minimize the duration of that suspension.
3.7.2.2 NYSEG and the Buyer agree to use all
reasonable efforts to complete any repairs, modifications, or corrections that
are necessary to restore to the other Party as soon as reasonably practicable,
any services set forth in Sections 3.8 and 3.9 below that have been suspended.
The Party suspending the services shall reimburse the affected Party for the
reasonable costs incurred by the affected Party in obtaining equivalent
services. The affected Party shall use reasonable efforts to mitigate the costs
of obtaining equivalent services.
3.8 NYSEG Provided Local Services.
3.8.1 Substation Service Power. NYSEG shall provide the Buyer,
at the Buyer's request and at no charge, with access to Secondary System
substation service power at the levels, and at the substation locations, at
which such power was provided by NYSEG immediately prior
-24-
29
to Closing. NYSEG shall Maintain, at its expense, the Secondary System
distribution panels and associated circuit breakers or fuses up to, but not
including, the field cables to the Fossil Plants.
3.8.2 Building Services. At no cost to the Buyer, NYSEG shall
provide heating, ventilation, air conditioning, lighting, and other building
services, as and to the extent provided immediately prior to Closing, to the
Buyer's Purchased Assets located within NYSEG's Excluded Assets.
3.8.3 Revenue Metering. NYSEG shall, at the Buyer's expense,
own and Maintain, and have the right to change the location of, all Revenue
Meters, and instrument transformers and appurtenances associated with Revenue
Meters, analog equipment (transducers and telemetry), conduct meter accuracy and
tolerance tests, and prepare all calibration reports required for equipment that
measures energy transfers between the Buyer and NYSEG. All meter accuracy and
tolerance testing hereunder shall be in accordance with Good Utility Practice
and shall be conducted, at the Buyer's request, in the presence of a Buyer's
representative.
3.8.3.1 NYSEG and the Buyer agree that, if the
Revenue Meters and analog equipment and the Point of Interconnection are not at
the same location electrically, the metering data shall be adjusted, or the
Revenue Meters shall be compensated, as NYSEG shall deem appropriate, to record
delivery of electricity in a manner that accounts for the total (load plus
no-load) electrical energy losses occurring between the metering point and the
Point of Interconnection, both when the Fossil Plant is delivering energy to
NYSEG and when NYSEG is delivering station service power to the Buyer for the
Fossil Plants, which adjustment shall be pursuant to the methodology set forth
in Schedule A.
3.8.3.2 If at any time any Revenue Metering and
analog equipment is
-25-
30
found to be inaccurate by a margin of greater than that allowed under the
applicable criteria, rules, and standards, such Revenue Metering and analog
equipment shall be made accurate or replaced at the Buyer's expense. Meter
readings for the period of inaccuracy shall be adjusted insofar as the extent of
the inaccuracy can be reasonably ascertained; provided, however, no adjustment
shall be made for meter readings made prior to the point in time halfway between
the time of the last test that showed the Revenue Metering and analog equipment
in question to be functioning accurately and the time the subsequent inaccuracy
is corrected, except by agreement of the Parties. Each Party shall comply with
any reasonable request of the other concerning the sealing of Revenue Meters,
the presence of a representative of the other Party when the seals are broken
and the tests are made, and other matters affecting the accuracy of the
measurement of electricity delivered from each Fossil Plant. If either Party
believes that there has been a Revenue Meter or analog equipment failure or
stoppage, it shall immediately notify the other Party thereof.
3.8.3.3. The Parties shall each keep and maintain
accurate and detailed records relating to the delivery of energy for a period of
not less than seven (7) years. Such records shall be made available for
inspection by either Party or any governmental agency having jurisdiction with
respect thereto during normal business hours upon reasonable notice.
3.8.3.4. NYSEG shall own and Maintain, at the
Buyer's expense, all additional or updated metering and associated equipment
needed in the reasonable discretion of NYSEG exercised in accordance with Good
Utility Practice.
3.8.3.5. NYSEG shall own and Maintain, at the
Buyer's expense, equipment for real-time communications, real-time reactive
power, hourly kWh information, and
-26-
31
such other information as required by the NYPP, NYISO, and/or the System
Operator, or as reasonably required by NYSEG. The Buyer shall Maintain operating
telephone links to provide information deemed necessary by the NYPP, NYISO,
and/or the System Operator, or as reasonably deemed necessary by NYSEG, to
integrate operation of the Fossil Plants with the Transmission System.
3.9 Buyer Provided Local Services.
3.9.1 Substation Service Power. The Buyer shall provide NYSEG,
at NYSEG's request and at no charge, with access to Secondary System substation
service power at the levels, and at the substation locations, at which such
power was provided from the Fossil Plants immediately prior to the Closing.
3.9.2 Building Services. At no cost to NYSEG, the Buyer shall
provide NYSEG's Excluded Assets located within the Fossil Plants with heating,
ventilation, air conditioning, lighting, and other building services as and to
the extent provided prior to Closing.
3.9.3 Remote Terminal Units. NYSEG shall own RTUs at each of
the Fossil Plants, with the exception of the RTU located in the Xxxxxxxx station
and in the Xxxxxxx station, as specified in Schedule A to this Agreement. The
Buyer shall make available to NYSEG, at no cost to NYSEG, all data collected by
the RTUs necessary for NYSEG to Maintain the Transmission System and to perform
NYPP/NYISO-directed or manual-directed automatic generator control. All RTUs
and other data collection or transmission equipment of the Buyer shall be
approved by NYSEG, which approval shall not be unreasonably withheld. RTUs owned
by the Buyer shall be maintained by the Buyer, at the Buyer's expense, and RTU's
owned by
-27-
32
NYSEG shall be maintained by NYSEG, at NYSEG's expense.
3.9.4 Substation Operations. NYSEG may request that the Buyer
provide NYSEG with substation operating and maintenance services at a mutually
agreed upon cost.
3.9.5 Line Operation Information. NYSEG and the Buyer shall
require remote access to site-specific line operations information within the
Fossil Plants as set forth more fully in Schedule A to this Agreement.
3.9.6 Meter Data. At no cost to, and as requested by NYSEG,
the Buyer shall provide NYSEG with meter data at the locations that require a
manual read as set forth in Schedule A to this Agreement.
3.9.7 Storage and Office Space. The Buyer shall provide to
NYSEG, at no cost to NYSEG, the use of offices, storage areas and building
spaces for spare parts and other administrative uses related to NYSEG
Interconnection Facilities at the locations in place immediately prior to the
Closing.
3.10 Spare Parts.
Where practicable and available, and subject to applicable
regulatory and other approvals, NYSEG and the Buyer shall provide the other
Party with available spare parts in the event of Emergencies or equipment
failures. The Parties shall mutually agree upon payment for, or replacement of,
such spare parts. NYSEG presently occupies a minimal amount of Fossil Plant
space for the purpose of storage of spare substation parts. NYSEG has the right
to maintain the storage of spare parts at the levels as of the time of the
Closing.
3.11 Emergency Procedure.
3.11.1 NYSEG shall provide the Buyer with prompt verbal
notification of
-28-
33
Emergencies affecting the Transmission System that may reasonably be expected to
affect the Buyer's operation of the Fossil Plants or the Buyer's Joint Use
Facilities, and the Buyer shall provide NYSEG with prompt verbal notification of
Emergencies which might reasonably be expected to affect NYSEG's operations.
Such notification shall describe the Emergency, the extent of the damage or
deficiency, the anticipated length of the outage, and the corrective action
taken and/or to be taken, and shall be followed as soon as practicable with
written notification in accordance with Article 19.
3.11.2 If in the good faith judgment of a Party, an Emergency
endangers or might endanger life or property, the Party recognizing the problem
shall take such action as is reasonable and necessary to prevent, avoid, or
mitigate injury, danger, and loss. If, however, the Emergency involves
transmission or distribution electrical equipment, the Buyer shall notify the
System Operator, and shall obtain the consent of such personnel, prior to
performing any switching operations.
3.11.3 NYSEG may, consistent with Good Utility Practice, have
the System Operator take whatever actions or inactions NYSEG deems necessary
during an Emergency to (a) preserve public safety, (b) preserve the integrity of
the Transmission System or NYSEG's distribution system, (c) limit or prevent
damage, and (d) expedite restoration of service. NYSEG shall make reasonable
efforts to minimize the effect of such restoration of service on the Fossil
Plants.
3.12 Interconnection Service Interruptions.
3.12.1 If at any time, in the reasonable exercise of the
System Operator's judgment, or in NYSEG's reasonable judgment exercised in
accordance with Good Utility
-29-
34
Practice, the operation of the Buyer's equipment would have an adverse impact on
the quality of service rendered by NYSEG (including transmission or distribution
service and services provided to end users), or interfere with the safe and
reliable operation of the Transmission System, NYSEG may discontinue
Interconnection Service and/or curtail, interrupt or reduce energy delivered
from the Fossil Plants until the condition has been corrected. Unless the System
Operator, or NYSEG, perceives that an Emergency exists or that the risk of one
is imminent, NYSEG shall give the Buyer reasonable notice of its intention to
discontinue, curtail, interrupt or reduce energy delivery in response to the
interfering condition and, where practical, allow suitable time for the Buyer to
remove the interfering condition before any such discontinuation, curtailment,
interruption or reduction commences. NYSEG's judgment with regard to any
discontinuation, curtailment, interruption or reduction of service under this
paragraph shall be made pursuant to Good Utility Practice. In the event of any
discontinuation, curtailment, interruption or reduction, NYSEG shall promptly
confer with the Buyer regarding the interfering conditions that gave rise to the
discontinuation, curtailment, interruption or reduction, and NYSEG shall give
the Buyer NYSEG's recommendation concerning the timely correction thereof. In
the event energy delivery is discontinued, curtailed, interrupted or reduced
under this paragraph due to the Buyer's failure to Maintain the Buyer's
Purchased Assets pursuant to Good Utility Practice, the Buyer shall compensate
NYSEG for all costs reasonably incurred by NYSEG that are attributable to the
discontinuation, curtailment, interruption or reduction and restoration of
energy delivery. NYSEG shall restore Interconnection Service or, if applicable,
cease the curtailment, interruption or reduction of energy delivery upon
notification by the System Operator that the interfering condition no longer
exists.
-30-
35
3.13 Non-Dispatchability Notification.
3.13.1 If the Buyer anticipates that any generating unit at
its Fossil Plants will not be dispatchable by the System Operator, the Buyer
shall notify NYSEG with as much lead time as practicable, but no less than
seventy-two (72) hours in advance of the expected date at which the Buyer plans
to take such unit off-line, and the Buyer shall give NYSEG notice with as much
lead time as practicable of the expected date and time of on which generation
will be resumed.
3.13.2 In the event of a forced outage of any of the Fossil
Plants, the Buyer, as soon as practicable, shall notify NYSEG of the Fossil
Plant's temporary interruption of generation and the Buyer shall provide NYSEG,
as soon as practical, with written notice of the date on which generation is
expected to resume at the Fossil Plant.
3.14 Scheduled Maintenance Notification and Coordination.
3.14.1 Transmission System Maintenance. Subject to applicable
FERC regulations and policy, and the requirements under the NYPP Agreement or
the NYISO Tariff, NYSEG shall, as soon as practicable, give written notice to
the Buyer regarding the timing of any scheduled maintenance of the transmission
facilities which might reasonably be expected to affect the operation of the
Fossil Plants. NYSEG shall, to the extent practicable, schedule any testing,
shutdown, or withdrawal of those facilities to coincide with the Buyer's
scheduled outages of the Fossil Plants. To facilitate such notification, in June
of each year, or on another date mutually acceptable to the Parties, the Buyer
shall furnish NYSEG with non-binding preliminary maintenance schedules for the
Fossil Plants covering the upcoming two years. The Buyer shall furnish NYSEG
with non-binding updates to such schedules to reflect significant changes
thereto. In the event NYSEG is unable to schedule the outage of its facilities
to coincide
-31-
36
with Buyer's schedule, NYSEG shall use all reasonable efforts to notify the
Buyer in advance of the reasons for the facilities' outage, of the time
scheduled for the outage to take place, and of its expected duration. The Buyer
shall give notice to NYSEG regarding any scheduled maintenance of the Buyer's
Purchased Assets which might reasonably be expected to affect the operation of
NYSEG's Interconnection Facilities or the Transmission System.
3.14.2 Local Routine Inspection and Maintenance. NYSEG and the
Buyer agree that, due to the integration of certain control and protective
relaying schemes between the Buyer's Purchased Assets and NYSEG's
Interconnection Facilities, it will be necessary for them to cooperate in the
inspection, maintenance and testing of these areas of integration. Each Party
shall provide advance notice to the other Party before undertaking any work in
these areas, especially in electrical circuits involving circuit breaker trip
and close control, and current transformers or potential transformers. NYSEG
shall provide advance notice to the Buyer's security personnel before NYSEG's
employees, including contractors or agents, enter the Buyer's facilities. The
Buyer shall provide advance notice by telephone to NYSEG's dispatch personnel
(or equivalent) before the Buyer's employees, including authorized contractors
or agents, enter NYSEG's facilities.
3.15 Safety.
3.15.1 General. NYSEG and the Buyer agree to be solely
responsible for, and assume all liability for, the safety and supervision of
their own employees, agents, representatives, and subcontractors, except that
neither Party shall be responsible or liable hereunder for any injury to the
extent caused by the gross negligence or willful misconduct of the other Party,
or that Party's respective contractors or agents.
-32-
37
3.15.1.1 NYSEG and the Buyer agree that all work
performed by either Party which might reasonably be expected to affect the
operations of the other Party shall be performed in accordance with all
applicable laws, rules, and regulations pertaining to the safety of persons or
property, and Good Utility Practice.
3.15.2 Switching, Tagging, and Xxxx-Up. The Buyer shall comply
with NYSEG's Switching and Tagging Training Manual at all Points of
Interconnection, a current copy of which is attached hereto as Schedule C to
this Agreement. NYSEG will notify the Buyer of any changes in its Switching and
Tagging Training Manual, a current copy of which is attached hereto as Schedule
C to this Agreement.
3.15.2.1 The Buyer shall be responsible for all
switching, tagging and xxxx-ups on the Buyer's side of the Point of
Interconnection, as such point is set forth in Schedule A to this Agreement, and
NYSEG shall maintain and be responsible for all switching, tagging, and xxxx-ups
at the Point of Interconnection, and on NYSEG's side of the Point of
Interconnection.
3.15.2.2 NYSEG and the Buyer, in accordance with
Schedule C, shall be responsible for training and testing their respective
operators for inclusion on a Joint Tag List. Either as changes occur or
annually, each Party shall provide the other Party with an updated list of its
employees qualified for inclusion on the Joint Tag List.
3.16 Environmental Compliance and Procedures.
3.16.1 The Buyer and NYSEG shall each be responsible for (a)
complying with all Environmental Laws applicable to the Buyer's Purchased Assets
and the Excluded Assets, respectively, (b) obtaining and maintaining in force
all applicable and required permits and
-33-
38
approvals under such Environmental Laws and regulations applicable to the
Buyer's Purchased Assets and the Excluded Assets, respectively, and (c) making
all required reports and notifications applicable to the Buyer's Purchased
Assets and the Excluded Assets, respectively, required by those laws and
regulations.
3.16.2 Each Party shall notify the other party first verbally
and then in writing, of any Release of Hazardous Substances, such as, but not
limited to, asbestos or lead abatement, or any type of remediation activities as
soon as possible but no later than twenty-four (24) hours of occurrence, and
shall promptly furnish to the other Party copies of any reports filed with any
governmental agencies covering such events.
3.16.3 Each Party shall not take any actions which might
reasonably be expected to have a material adverse environmental impact upon the
operations of the other Party without prior written notification and agreement
between the Parties.
3.16.4 The Buyer shall not require NYSEG to modify any
substation physical structures, including containment systems, unless required
by law or regulation.
3.16.5 NYSEG and the Buyer agree to coordinate with each other
concerning any regulatory obligations or filings. However, if such coordination
cannot be achieved, each Party will be responsible for assuring compliance with
its individual obligations.
ARTICLE 4
OPERATIONS
4.0 Operations.
4.1 General. NYSEG and the Buyer agree to operate any equipment that
might reasonably be expected to have an impact on the operations of the other
Party in a safe and
-34-
39
efficient manner and in accordance with all applicable Federal, state, and local
laws, and Good Utility Practice.
4.1.1 The Buyer shall be required to comply with the requests,
orders and directives of NYSEG to the extent such requests, orders, or
directives of NYSEG are issued pursuant to Good Utility Practice, and are issued
on a not unduly discriminatory basis and otherwise in accordance with the NYPP
Agreement, the NYSEG Tariff, or the NYISO Tariff.
4.1.2 In the event the Buyer believes that a request, order,
or directive of NYSEG exceeds any of the limitations in Section 4.1.1, it shall
nevertheless comply with the request, order or directive of NYSEG pending
resolution of the dispute under Article 12. The Parties agree to cooperate in
good faith to expedite the resolution of any disputes arising under this Section
4.1.2.
4.2 Buyer's Operating Obligations.
4.2.1 General. The Buyer shall request permission from NYSEG's
dispatch personnel, or the System Operator, prior to opening and/or closing
circuit breakers in accordance with NYSEG's Switching and Tagging Training
Manual. The Buyer agrees to operate the Fossil Plants in accordance with the
directives of NYSEG and the System Operator, and in accordance with Good Utility
Practice.
4.2.1.1 The Buyer shall carry out all switching
orders from NYSEG's dispatch personnel, or the System Operator, in a timely
manner.
4.2.1.2 The Buyer shall keep NYSEG advised of its
Fossil Plants' capabilities, if any, of participation in system restoration
and/or they have black start capability.
4.2.1.3 The electrical supply to the Point of
Interconnection shall be in the
-35-
40
form of three-phase 60 Hz alternating current at the nominal system voltage at
the Points of Interconnection.
4.2.1.4 The Buyer's equipment shall conform with
industry standards for harmonic distortion and voltage fluctuation.
4.2.1.5 Until the earlier of (a) such time as the
Buyer can schedule and settle directly with NYPP or NYISO, or (b) six (6) months
from the commencement of operation of the "Real Time Market" as that market is
defined in the NYISO Tariff, (1) Buyer shall (AA) schedule transactions with
NYPP or the NYISO through the NYSEG Energy Control Center, and (BB) comply with
all applicable scheduling requirements of NYPP or the NYISO, and (2) deviations
between scheduled transaction amounts and output shall be settled monthly so
that NYSEG and the Buyer are placed in substantially the same economic position
as if the Buyer had scheduled and settled directly with NYPP or the NYISO. The
settlement methodology shall be determined in NYSEG's reasonable discretion.
4.2.2 Voltage or Reactive Control Requirements. Unless
otherwise agreed to by the Parties, the Buyer shall operate the Fossil Plants
with automatic voltage regulation equipment in service at all times The voltage
regulation equipment will control voltage at the Points of Interconnection
consistent with the range of voltages set forth in Schedule D of this Agreement
as may be amended by NYSEG, or the System Operator, from time to time. NYSEG, or
the System Operator, may require the Buyer, at no charge to NYSEG, to provide
reactive power from any of the Buyer's Fossil Plants, or to absorb reactive
power from the Transmission System, provided that, in either case, the Fossil
Plant is operating within its reactive generating capability and not violating
any electric constraints.
-36-
41
4.2.2.1 If the Buyer fails to operate a Fossil Plant
in accordance with Schedule D and to the extent the Fossil Plant is operating
within its reactive generating capability and not violating any electric
constraints, NYSEG will provide written notice to the Buyer of NYSEG's intent to
remedy that failure. If the Buyer does not promptly commence appropriate action
after receiving such notice, NYSEG may then take necessary action at the Buyer's
expense to remedy such failure, including the installation of capacitor banks or
other reactive compensation equipment necessary to ensure the proper voltage or
reactive supply at the Fossil Plant. NYSEG shall take, to the extent feasible,
reasonable efforts to minimize the impact of such action on the operation of the
Fossil Plants.
4.2.2.2 The Buyer shall notify the System Operator,
to the extent required by the System Operator, if a Fossil Plant(s) reaches a
VAR limit, if there is any deviation from the assigned voltage schedule, or if
any automatic voltage regulator is removed from or restored to service.
4.2.2.3 In addition to voltage regulation, the Buyer
shall adhere to the System Operator's service restoration plan and black start
criteria, as amended from time to time, which plan and criteria shall be
provided to the Buyer by NYSEG..
4.2.3 NYSEG or the System Operator may from time to time
reasonably request, order, or direct the Buyer to adjust generator controls that
impact the Transmission System, such as excitation, droop, and automatic
generation control settings. The Buyer agrees to comply with such requests,
orders, or directions.
4.2.4 Buyer acknowledges that the System Operator may have the
right to require reduced or increased generation of the Fossil Plants in
accordance with the NYPP Agreement, or
-37-
42
the NYISO Tariff, as applicable, or in accordance with applicable rules of the
System Operator.
4.2.5 The Buyer shall provide regulation and frequency
response service to NYSEG in an amount equal to the product of (a) NYSEG's share
of the total NYPP requirement as established by the NYPP, and (b) the ratio of
the sum of the response rates (in units of MW/minute) for each of the Fossil
Plants to the sum of all the response rates (in units of MW/minute) for all of
the Fossil Plants designated below purchased by all bidders in NYSEG's auction
of generation assets]. For the purpose of calculating this service, the
designated Fossil Plants shall be the following generating stations: Kintigh,
Goudey, Xxxxxxxxx, and Xxxxxxxx. If either the Hickling or Xxxxxxxx generating
stations, or both, are enhanced or upgraded to provide regulation and frequency
response, that station, or both stations, shall be included in the list of
Fossil Plants designated for the purpose of calculating the cost of this
service.
4.3 Auditing of Accounts and Records. Within two (2) years following a
calendar year, the Buyer and NYSEG shall have the right, during normal business
hours, to audit each other's accounts and records pertaining to transactions
under this Agreement at the offices where such accounts and records are
maintained; provided, however, that appropriate notice shall have been given
prior to any audit, and provided further that the audit shall be limited to
those portions of such accounts and records that relate to services provided
under this Agreement for that calendar year. The Party being audited will be
entitled to review the audit report and any supporting materials. To the extent
that audited information includes confidential information, the auditing Party
shall designate an independent auditor to perform such audit.
ARTICLE 5
-38-
43
COST RESPONSIBILITIES AND BILLING PROCEDURES
5.0 Cost Responsibilities and Billing Procedures.
5.1 Cost Responsibilities for Local Services.
5.1.1 Each Party shall be responsible for the costs for
services provided to the other Party in Sections 3.8 and 3.9 as set forth in
those sections.
5.1.2 For services which have identified price/rate schedules
set forth herein, said payment shall be in accordance with said schedules as in
effect from time to time. For services which require reimbursement but do not
have identified price/rate schedules, the Parties shall, to the extent
practicable, agree upon the price/rate to be paid prior to the performance or
provision of said services.
5.2 Billing Procedures.
5.2.1 General. Within ten (10) days after the first day of
each month, each Party shall prepare an invoice for those reimbursable services
provided to the other Party under this Agreement during the preceding month.
5.2.2 Each invoice shall delineate the month in which the
services were provided, shall fully describe the services rendered, and shall be
itemized to reflect the services performed or provided.
5.2.3 The invoice shall be paid within thirty (30) days of
issuance. All payments shall be made in immediately available funds payable to
the other Party, or by wire transfer to a bank named and account designated by
the invoicing Party.
5.2.4 Disputed amounts shall be placed in an interest-bearing
escrow account, subject to resolution.
-39-
44
5.3 Payment of Invoices. Payment of an invoice shall not relieve the
paying Party from any responsibilities or obligations it has under this
Agreement, nor shall such payment constitute a waiver of any claims arising
hereunder.
5.4 Interest on Unpaid Balances. Interest on any unpaid amounts
(including amounts placed in escrow) shall be calculated in accordance with the
methodology specified for interest on refunds in FERC's regulations at 18 C.F.R.
Section 35.19a(a)(2)(iii). Interest on delinquent amounts shall be calculated
from the due date of the xxxx to the date of payment. When payments are made by
mail, bills shall be considered as having been paid on the date of receipt by
the other Party.
5.5 Default. In the event either Party fails to make payment to the
other Party on or before the due date as described above, and such failure of
payment is not corrected within thirty (30) calendar days after the Party
notifies the Party in default to cure such failure, in the event of a default by
said Party shall be deemed to exist and the provisions of Article 8.0 shall
apply.
5.6 Billing Dispute. In the event of a billing dispute between NYSEG
and the Buyer, each Party shall continue to provide services as long as the
other Party (a) continues to make all payments not in dispute, and (b) pays into
an escrow account the portion of the invoice in dispute, pending resolution of
such dispute.
ARTICLE 6
DOCUMENTATION
6.0 Documentation.
6.1 Drawings.
6.1.1 Drawings that exclusively describe the Buyer's Purchased
Assets and are not the proprietary information of third parties will be
transferred by NYSEG to the Buyer prior
-40-
45
to the Closing. Drawings that exclusively describe the Excluded Assets,
including NYSEG's Interconnection Facilities, will be retained by NYSEG, and
drawings of the Transmission System shall be made available to Buyer upon
reasonable request. Drawings describing the Fossil Plant and the Excluded Assets
on the same drawing will be identified and marked as "common drawings." NYSEG
shall retain a copy of the common drawings and shall provide a copy of same to
the Buyer prior to the Closing. A list of drawings common to both Parties will
be developed prior to the Closing.
6.1.2 Each Party shall be responsible for updates and
corrections to its respective drawings and shall provide copies thereof to the
other Party as soon as practicable after the updates or corrections are made.
Before the Closing, the Parties shall develop mutually agreeable procedures for
updating drawings.
6.1.3 Except as otherwise noted on the document or drawing,
NYSEG makes no representations as to the accuracy, detail, or completeness of
the documents or drawings provided to the Buyer at or before the Closing, and
the Buyer hereby releases NYSEG from any liability arising as a result of the
Buyer's use of such documentation or drawings.
ARTICLE 7
CONFIDENTIALITY
7.0 Confidentiality.
7.1 Confidentiality of NYSEG. NYSEG shall hold in confidence, unless
compelled to disclose by judicial or administrative process or other provisions
of law, all documents and
-41-
46
information furnished by the Buyer in connection with this Agreement. Except to
the extent that such information or documents are (a) generally available to the
public other than as a result of a disclosure by NYSEG, (b) available to NYSEG
on a non-confidential basis prior to disclosure to NYSEG by the Buyer, or (c)
available to NYSEG on a non-confidential basis from a source other than the
Buyer, provided that such source is not known, and by reasonable effort could
not be known, by NYSEG to be bound by a confidentiality agreement with the Buyer
or otherwise prohibited from transmitting the information to NYSEG by a
contractual, legal or fiduciary obligation, NYSEG shall not release or disclose
such information to any other person, except to its employees on a need-to-know
basis, in connection with this Agreement who has not first been advised of the
confidentiality provisions of this Section 7.1 and has agreed in writing to
comply with such provisions. In no event shall such information be disclosed in
violation of the requirements of FERC Orders 889 and 889-A, and any successor
thereto. NYSEG shall promptly notify the Buyer if it receives notice or
otherwise concludes that the production of any information subject to this
Section 7.1 is being sought under any provision of law. NYSEG may utilize
information subject to this Section 7.1 in any proceeding under Article 12,
subject a to confidentiality agreement with the participants.
7.2 Confidentiality of the Buyer. The Buyer shall hold in confidence,
unless compelled to disclose by judicial or administrative process or other
provisions of law, all documents and information furnished by NYSEG in
connection with this Agreement. Except to the extent that such information or
documents are (a) generally available to the public other than as a result of a
disclosure by the Buyer, (b) available to the Buyer on a non-confidential basis
prior to disclosure to the Buyer by NYSEG, or (c) available to the Buyer on a
non-confidential
-42-
47
basis from a source other than NYSEG, provided that such source is not known,
and by reasonable effort could not be known, by the Buyer to be bound by a
confidentiality agreement with NYSEG or otherwise prohibited from transmitting
the information to the Buyer by a contractual, legal or fiduciary obligation,
the Buyer shall not release or disclose such information to any other person,
except its employees on a need-to-know basis in connection with this Agreement
who has not first been advised of the confidentiality provisions of this Section
7.2 and has agreed to comply in writing with such provisions. The Buyer shall
promptly notify NYSEG if it receives notice or otherwise concludes that the
production of any information subject to this Section 7.2 is being sought under
any provision of law. Buyer may utilize information subject to this Section 7.2
in any proceeding under Article 12, subject to a confidentiality agreement with
the participants.
7.3 Confidentiality of Audits.
The independent auditor performing any audit, as referred to
in Section 4.3, shall be subject to a confidentiality agreement between the
auditor and the Party being audited. Such audit information shall be treated as
confidential except to the extent that its disclosure is required by regulatory
or judicial order, for reliability purposes pursuant to Good Utility Practice,
pursuant to applicable FERC rules and regulations, as amended from time to time,
or as required by NYSEG. Except as provided herein, neither Party will disclose
the audit information to any third party without the other Party's prior written
consent. Audit information in the possession of the Party not being audited
shall be subject to all provisions of this Article, as applicable.
7.4 Remedies.
The Parties agree that monetary damages would be inadequate to
compensate a
-43-
48
Party for the other Party's breach of its obligations under this Article 7. Each
Party accordingly agrees, subject to Section 18.0, that the other Party shall be
entitled to equitable relief, by way of injunction or otherwise, if the first
Party breaches or threatens to breach its obligations under this Article, which
equitable relief shall be granted without bond or proof of damages, and the
receiving Party shall not plead in defense that there would be an adequate
remedy at law.
ARTICLE 8
EVENTS OF DEFAULT
8.0 Events of Default.
8.1 Any one of the following shall constitute an event of default under
this Agreement:
(a) The failure to pay any amount when due;
(b) A breach of any material term or condition of this
Agreement, including but not limited to any material breach of a representation,
warranty or covenant made in this Agreement, including the Appendices. Failure
by a Party to provide any required schedule, report or notice hereunder may
constitute a material breach hereof if such failure is not cured within thirty
(30) days after notice to the defaulting Party;
(c) The appointment of a receiver or liquidator or trustee for
either Party or of any property of a Party, and such receiver, liquidator or
trustee is not discharged within sixty (60) days;
(d) The entry of a decree adjudicating a Party or any
substantial part of the property of a Party bankrupt or insolvent, and such
decree is continued undischarged and unstayed for a period of sixty (60) days;
-44-
49
(e) The filing of a voluntary petition in bankruptcy under any
provision of any Federal or state bankruptcy law by a Party; or
(f) The failure or refusal of the Buyer to permit NYSEG's
representatives access to information, or the Fossil Plants, as necessary for
NYSEG to operate its Transmission System in order to examine, inspect and test
such information and Fossil Plants.
8.2 (a) Upon the occurrence of an event of default, the Party not in
default may give written notice of the default to the defaulting Party. Such
notice shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the steps necessary to cure such default. Except
with respect to a payment default as described in Section 8.1(a), the defaulting
Party shall have thirty (30) days following receipt of such notice either to (i)
cure such default, or (ii) commence in good faith all such steps as are
reasonable and appropriate to cure such default in the event such default
cannot, in the reasonable judgment of such non-defaulting Party, be completely
cured within such thirty (30) day period. With respect to the payment default
described in Section 8.1(a), the defaulting party, shall have ten (10) days from
receipt of such default notice to cure such default.
(b) If the defaulting Party fails to cure such default or take
such steps as provided under subparagraph (a) above, this Agreement may be
terminated by written notice to the Party in default hereof. This Agreement
shall thereupon terminate and the non-defaulting Party may exercise all such
rights and remedies as may be available to it to recover damages, subject to
Article 18 of this Agreement, caused by such default.
(c) Notwithstanding the foregoing, upon the occurrence of any
such event of default, the non-defaulting Party shall be entitled (i) to
commence an action to require the
-45-
50
defaulting Party to remedy such default and specifically perform its duties and
obligations hereunder in accordance with the terms and conditions hereof, and
(ii) to exercise such other rights and remedies as it may have at equity or at
law.
8.3 Notwithstanding anything in this Agreement to the contrary, the
Buyer's failure to comply with the provisions of Section 4.1 or 4.2 of this
Agreement shall constitute an event of default, and if such event of default is
reasonably likely to have an immediate and material adverse effect on NYSEG or
the Transmission System, (a) NYSEG shall have no obligation to permit the Buyer
an opportunity to cure that event of default, and (b) NYSEG shall have the right
to take immediately all reasonable steps and/or to exercise immediately all
remedies available under this Agreement, or at law or in equity, including the
right to disconnect the Fossil Plants from the Transmission System, in order to
cure such default, and (c) the Buyer shall be liable to NYSEG, despite the
provisions of Section 18.0, for all damages, costs and expenses incurred by
NYSEG (including damages, costs, and expenses related to a claim by a third
party) as a result of such event of default.
8.4 If the Buyer fails to perform any obligation under this Agreement,
NYSEG may cure the default, and any funds expended to effect such cure shall be
due and payable on demand together with interest at the prime rate.
ARTICLE 9
INDEMNIFICATION
9.0 Indemnification.
9.1 Buyer's Indemnification.
-46-
51
The Buyer shall indemnify, hold harmless, and defend NYSEG,
its parent, Affiliates, and successors, and their respective officers,
directors, employees, agents, subcontractors, and successors, from and against
any and all claims, demands, liabilities, costs, losses, judgments, damages, and
expenses (including, without limitation, reasonable attorney and expert fees,
and disbursements incurred by NYSEG in any action or proceeding between NYSEG
and a third party, the Buyer, or any other party) for damage to property, injury
to or death of any person, including NYSEG's employees, the Buyer's employees
and their affiliates' employees, or any third parties, to the extent caused
wholly or in part by any act or omission, negligent or otherwise, by the Buyer
and/or its officers, directors, employees, agents, contractors and
subcontractors arising out of or connected with this Agreement.
9.2 NYSEG's Indemnification.
NYSEG shall indemnify, hold harmless, and defend the Buyer,
its parent, affiliates, and successors, and their respective officers,
directors, employees, agents, subcontractors, and successors from and against
any and all claims, liabilities, costs, damages, and expenses (including,
without limitation, reasonable attorney and expert fees and disbursements
incurred by the Buyer in any action or proceeding between the Buyer and third
party, NYSEG, or any other party) for damage to property, injury to or death of
any person, including NYSEG's employees, the Buyer's employees and their
Affiliates' employees, to the extent caused wholly or in part by any act or
omission, negligent or otherwise, by NYSEG and/or its officers, directors,
employees, agents, and subcontractors arising out of or connected with this
Agreement.
9.3 Indemnification Procedures.
-47-
52
If either Party intends to seek indemnification under this
Article 9.0 from the other Party, the Party seeking indemnification shall give
the other Party notice of such claim within ninety (90) days of the commencement
of, or 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 without the prior consent of the other Party,
which consent shall not be unreasonably withheld or delayed.
9.4 Survival. The indemnification obligations of each Party under this
Article 9.0 shall continue in full force and effect regardless of whether this
Agreement expires, terminates or is canceled. Such obligations shall not be
limited in any way by any limitation on insurance, by the amount or types of
damages, or by any compensation or benefits payable by the parties under
Worker's Compensation Acts, disability benefit acts or other employee acts, or
otherwise.
ARTICLE 10
INSURANCE
10.0 Insurance.
10.1 The Parties agree to maintain, at their own cost and expense,
fire, liability, worker's compensation, and other forms of insurance relating to
their property and facilities in the manner, and amounts, and for the durations
set forth in Schedule E to this Agreement as both Parties may from time to time,
agree to amend.
-48-
53
10.2 The Parties agree to furnish each other with certificates of
insurance evidencing the insurance coverage set forth in Schedule E, and the
Parties agree to notify and send copies to the other of any policies maintained
hereunder written on a "claims made" basis. Each Party may require the other
Party to maintain tail coverage for five years on all policies written on a
"claims made" basis.
10.3 Every contract of insurance providing the coverages required in
Schedule E shall contain the following or equivalent clause:"No reduction,
cancellation or expiration of the policy shall be effective until ninety (90)
days from the date written notice thereof is actually received by said Party."
Upon receipt of any notice of reduction, cancellation or expiration, the Party
shall immediately notify the other Party in accordance with Article 19.
10.4 Each Party, and its Affiliates, shall be named as additional
insureds on the general liability insurance policies set forth in Schedule E as
regards liability under this Agreement.
10.5 Each Party shall provide and shall continue to provide to the
other Party during the term of this Agreement (including any extensions), by
delivering to the other Party properly executed and current certificates of
insurance relative to insurance policies. 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.
(iii) A statement indicating that the insureds shall receive
at least ninety (90) days prior written notice of cancellation or reduction of
liability limits with respect to said insurance policies, and
(iv) To the extent applicable, a statement indicating that the
appropriate parties
-49-
54
have been named as an additional insureds.
10.6 A copy of each insurance policy, certified as a true copy by an
authorized representative of the issuing insurance company, or in lieu thereof
or in addition thereto, at a Party's discretion, a certificate in form
satisfactory to that Party certifying to the issuance of such insurance, shall
be furnished to that Party not less than ten (10) days prior to the
interconnection of the Fossil Plant and fifteen (15) days prior to the
expiration date of each such policy and/or certificate.
10.7 Each Party shall 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.
ARTICLE 11
FORCE MAJEURE
11.0 Force Majeure.
11.1 Notwithstanding anything in this Agreement to the contrary,
neither the Buyer nor NYSEG shall be liable in damages, or otherwise responsible
to the other, for its failure to carry out any of its obligations under this
Agreement, other than any obligation to pay an amount when due, if and only to
the extent that it is unable to so perform or is prevented from performing by an
event of force majeure.
11.2 The term "force majeure" as used herein means those causes beyond
the reasonable control of the Party affected, which by the exercise of
reasonable diligence, including Good Utility Practice, that Party is unable to
prevent, avoid, mitigate, or overcome, including the following: any act of God,
labor disturbance (including a strike, or other labor dispute), act of the
public enemy, war, insurrection, riot, fire, storm or flood, explosion, solar
magnetic or other electric system disturbance, order, regulation or restriction
imposed by governmental, military or
-50-
55
lawfully-established civilian authorities, or any other cause of a similar
nature beyond a Party's reasonable control.
11.3 If a Party shall rely on the occurrence of an event or condition
described above as a basis for being excused from performance of its obligations
under this Agreement, then the Party relying on the event or condition shall:
(a) provide prompt written notice of such force majeure event or condition to
the other Party giving a detailed written explanation of the event, including an
estimation of its expected duration and the probable impact on the performance
of its obligations hereunder; (b) exercise all reasonable efforts in accordance
with Good Utility Practice to continue to perform its obligations under this
Agreement; (c) expeditiously take action to correct or cure the event or
condition excusing performance; provided, however, that settlement of labor
disputes will be completely within the sole discretion of the Party affected by
such labor dispute; (d) exercise all reasonable efforts to mitigate or limit
damages to the other Party; and (e) provide prompt notice to the other Party of
the cessation of the event or condition giving rise to its excuse from
performance.
ARTICLE 12
DISPUTES
12.0 Disputes.
12.1 Any disagreement between NYSEG and the Buyer as to their rights
and obligations under this Agreement shall first be addressed by the Parties. In
the event that representatives of the Buyer and NYSEG are unable in good faith
to resolve their disagreement satisfactorily, they shall refer the matter to
their respective senior management. If after using their good faith, best
efforts to try to resolve the dispute, senior management can not resolve the
-51-
56
dispute in thirty (30) days, either Party may exercise any right or remedy
available under this Agreement, at law or in equity.
12.2 Nothing in this Article 12 shall restrict the right of either
Party to file a complaint with the FERC under relevant provisions of the Federal
Power Act.
ARTICLE 13
REPRESENTATIONS
13.0 Representations.
13.1 Representations of NYSEG. NYSEG represents and warrants to the
Buyer as follows:
13.1.1 Organization. NYSEG is a corporation duly organized,
validly existing, and in good standing under the laws of the State of New York ,
and NYSEG has the requisite corporate power and authority to carry on its
business as now being conducted.
13.1.2 Authority Relative to this Agreement. NYSEG has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required corporate action. The Agreement has been duly and validly executed and
delivered by NYSEG and, assuming that it is duly and validly executed and
delivered by the Buyer, constitutes a legal, valid and binding agreement of
NYSEG.
13.1.3 Regulatory Approval. NYSEG has obtained any and all
approvals of, and given any notices to, any public authority that are required
for NYSEG to execute and deliver this Agreement.
13.1.4 Compliance With Law. NYSEG represents and warrants that
it is not in
-52-
57
violation of any applicable law, statute, order, rule, regulation promulgated or
judgment entered or entered by any Federal, state, or local governmental
authority, which violation would affect NYSEG's performance of its obligations
under this Agreement. NYSEG represents and warrants that it will comply with all
applicable material laws, rules, regulations, codes, and standards of all
Federal, state, and local governmental agencies having jurisdiction over NYSEG
or this Agreement.
13.2 Representations of the Buyer. The Buyer represents and warrants to
NYSEG as follows:
13.2.1 Organization. The Buyer is a limited liability company
organized, validly existing, and in good standing under the laws of the State of
Delaware, and the Buyer has the requisite power and authority to carry on its
business as now being conducted.
13.2.2 Authority Relative to this Agreement. The Buyer has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required action. This Agreement has been duly and validly executed and delivered
by the Buyer and, assuming that it is duly and validly executed and delivered by
NYSEG, constitutes a legal, valid and binding agreement of the Buyer.
13.2.3 Regulatory Approval. The Buyer has obtained any and all
approvals of, and given any notices to, any public authority that are required
for the Buyer to execute and deliver this Agreement.
13.2.4 Compliance With Law. The Buyer represents and warrants
that it is not in violation of any applicable law, statute, order, rule,
regulation or judgment promulgated or
-53-
58
entered by any Federal, state, or local governmental authority, which violation
would affect Buyer's performance of its obligations under this Agreement. The
Buyer represents and warrants that it will comply with all applicable material
laws, rules, regulations, codes, and standards of all Federal, state, and local
governmental agencies having jurisdiction over the Buyer or this Agreement.
13.3 Representations of Both Parties. The representations and
warranties in Sections 13.1.4 and 13.2.4 shall continue in full force and effect
for the term of this Agreement.
ARTICLE 14
ASSIGNMENT/CHANGE IN CORPORATE IDENTITY
14.0 Assignment/Change in Corporate Identity.
14.1 This Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the Parties and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned, except to an Affiliate of
NYSEG that owns the Transmission System or to an Affiliate of the Buyer that
owns the Buyer's Purchased Assets, by either Party hereto, whether by operation
of law or otherwise, without the prior written consent of the other Party, which
consent shall not be unreasonably withheld. Any assignment of this Agreement in
violation of the foregoing shall be, at the option of the non-assigning Party,
void. Notwithstanding the foregoing, the Buyer may assign, transfer, pledge or
otherwise dispose of its rights and interests hereunder to a trustee or lending
institution(s) for the purposes of financing or refinancing the acquisition of
the Buyer's Purchased Assets, including upon or pursuant to the exercise of
remedies under such financing or refinancing, or by way of assignments,
transfers, pledges, conveyances or dispositions in lieu thereof; provided,
however, that no such assignment, transfer, pledge, conveyance, or disposition
-54-
59
shall relieve or in any way discharge the Buyer from the performance of its
duties and obligations under this Agreement. NYSEG agrees to execute and
deliver, at the Buyer's expense, such documents as may be reasonably necessary
to accomplish any such assignment, transfer, pledge, conveyance, or disposition
of rights hereunder for purposes of the financing or refinancing of the
acquisition of the Buyer's Purchased Assets, so long as NYSEG's rights under
this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
14.2 No assignment, transfer, pledge, conveyance, or disposition of
rights or obligations under this Agreement by a Party shall relieve that Party
from liability and financial responsibility for the performance thereof after
any such assignment, transfer, conveyance, pledge, or disposition unless and
until the transferee or assignee shall agree in writing to assume the
obligations and duties of that Party under this Agreement and the non-assigning
Party has consented in writing to such assumption and to a release of the
assigning Party from such liability.
14.3 If either Party terminates its existence as a corporate entity by
merger, acquisition, sale, consolidation, or otherwise, or if all or
substantially all of such Party's assets are transferred to another person or
business entity without complying with this Article 14, the other Party shall
have the right, enforceable in a court of competent jurisdiction, to enjoin the
first Party's successor from using the property in any manner that interferes
with, impedes, or restricts such other Party's ability to carry out its ongoing
business operations, rights, and obligations. Where applicable, NYSEG shall have
the right, as set forth in Section 3.2.2, to operate such equipment set forth in
Section 3.2.2 which is necessary for NYSEG to Maintain the Transmission System.
ARTICLE 15
-55-
60
SUBCONTRACTORS
15.0 Subcontractors.
15.1 Nothing in this Agreement shall prevent a Party from utilizing the
services of such subcontractors as it deems appropriate to perform its
obligations under this Agreement; provided, however, that each Party shall
require its subcontractors to comply with all applicable terms and conditions of
this Agreement in providing such services.
15.2 The creation of any subcontractor relationship shall not relieve
the hiring Party of any of its obligations under this Agreement. Subject to
Article 18, each Party shall be fully responsible to the other Party for the
acts and/or omissions of any subcontractor it hires as if no subcontract had
been made. Any applicable obligation imposed by this Agreement upon a Party
shall be equally binding upon, and shall be construed as having application to,
any subcontractor of such Party.
ARTICLE 16
LABOR RELATIONS
16.0 Labor Relations.
NYSEG and the Buyer agree to notify immediately the other Party
verbally, and then in writing, of any labor dispute (including a strike) or
anticipated labor dispute of which its management has actual knowledge that may
reasonably be expected to affect the operations of the other Party with respect
to this Agreement.
ARTICLE 17
INDEPENDENT CONTRACTOR STATUS
17.0 Independent Contractor Status.
-56-
61
Nothing in this Agreement shall be construed as creating any
relationship between NYSEG and the Buyer other than that of independent
contractors.
ARTICLE 18
LIMITATION OF LIABILITY
18.0 Limitation on Damages.
Except for indemnity obligations set forth in Article 9, and as set
forth in Section 8.3, neither NYSEG nor the Buyer, nor their respective
officers, directors, agents, employees, parents, affiliates, successors or
assigns, nor their respective officers, directors, agents, employees, successors
or assigns shall be liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees, successors or assigns for
claims, suits, actions or causes of action or otherwise for incidental,
punitive, special, indirect, multiple or consequential damages (including,
without limitation, attorneys' fees or litigation costs) connected with, or
resulting from, performance or non-performance of this Agreement, or any actions
undertaken in connection with or related to this Agreement, including, without
limitation, any such damages which are based upon causes of action for breach of
contract, tort (including negligence and misrepresentation), breach of warranty
or strict liability. The provisions of this Section 18.0 shall apply regardless
of fault and shall survive termination, cancellation, suspension, completion, or
expiration of this Agreement.
ARTICLE 19
NOTICES
19.0 Notices.
-57-
62
19.1 On or prior to the Effective Date, each Party shall indicate to
the other Party, by notice, the appropriate person and their telephone numbers
during each eight-hour work shift to contact in the event of an Emergency, a
scheduled or forced interruption, or reduction in services. The notice last
received by a Party shall be effective until modified in writing by the other
Party.
19.2 Except as otherwise provided herein, all notices, requests,
claims, demands, invoices, and other communications hereunder shall be in
writing and shall be given (and except as otherwise expressly provided herein,
will be deemed to have been duly given if so given) by hand delivery, cable,
telecopy (confirmed in writing) or telex, or by mail (registered or certified,
postage prepaid) to the respective Parties as follows:
New York State Electric & Gas Corporation
Corporate Drive
Kirkwood Industrial Park
Binghamton, New York 13902-5225
Attn: Xxxxx X. Xxxxxxx, Senior Vice President
Energy Operating Services
AES NY, L.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Project Manager
or such other address as is furnished in writing by such Party; and any such
notice or communication shall be deemed to have been given as of the date so
mailed.
ARTICLE 20
HEADINGS
20.0 Headings.
The descriptive headings of the Articles and Sections of this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
-58-
63
ARTICLE 21
WAIVER
21.0 Waiver.
Except as otherwise provided in this Agreement, any failure of a Party
to comply with any obligation, covenant, agreement, or condition herein may be
waived by the Party entitled to the benefit thereof only by a written instrument
signed by such Party granting such waiver, but such waiver shall not operate as
a waiver of, or estoppel with respect to, any subsequent failure of the first
Party to comply with such obligation, covenant, agreement, or condition.
ARTICLE 22
COUNTERPARTS
22.0 Counterparts.
This Agreement may be executed in two or more counterparts, all of
which will be considered one and the same Agreement, and each of which shall be
deemed an original.
ARTICLE 23
GOVERNING LAW
23.0 Governing Law.
23.1 Laws and Regulations.
This Agreement and all rights, obligations, and performances
of the Parties hereunder, are subject to all applicable Federal and state laws,
and to all duly-promulgated orders and other duly-authorized action of
governmental authorities having jurisdiction.
23.2 When not in conflict with or preempted by Federal law, this
Agreement will be governed by and construed in accordance with the law of the
State of New York , without giving
-59-
64
effect to the conflict of law principles thereof. Except for those matters
covered in this Agreement that are jurisdictional to the FERC or the appellate
courts having jurisdiction over FERC matters, any action arising out of or
concerning this Agreement must be brought in the Federal or state courts of the
State of New York . Both Parties hereby consent to the exclusive jurisdiction of
the State of New York for the purpose of hearing and determining any action not
preempted by Federal law or not within the jurisdiction of the FERC.
ARTICLE 24
SEVERABILITY
24.0 Severability.
In the event that any of the provisions of this Agreement are held to
be unenforceable or invalid by any court or regulatory authority of competent
jurisdiction, the Parties shall, to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement with a view toward effecting the
purpose of this Agreement, and the validity and enforceability of the remaining
provisions hereof shall not be affected by such holding.
ARTICLE 25
AMENDMENT
25.0 Amendments.
25.1 Except as provided under Section 2.2, the rates, terms, and
conditions contained in this Agreement are not subject to change under Sections
205 or 206 of the Federal Power Act, as either section may be amended or
superseded, absent the mutual written agreement of the Parties. It is the intent
of this Section 25.1 that, to the maximum extent permitted by law, the rates,
terms and conditions in this Agreement shall not be subject to change,
regardless of
-60-
65
whether such change is sought (a) by the FERC acting sua sponte on behalf of a
Party or third party, (b) by a Party, (c) by a third party, or (d) in any other
manner.
25.2 This Agreement may be amended, modified, or supplemented only by
written agreement of both NYSEG and the Buyer.
ARTICLE 26
ENTIRE AGREEMENT
26.0 Entire Agreement.
This Agreement constitutes the entire understanding between the
Parties, and supersedes any and all previous understandings, oral or written,
which pertain to the subject matter contained herein or therein.
ARTICLE 27
NO THIRD PARTY BENEFICIARIES
27.0 No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to confer on any person, other than the Parties, any
rights or remedies under or by reason of this Agreement.
ARTICLE 28
CONFLICTS
28.0 Conflicts. Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall not affect any of the Buyer's or NYSEG's rights
or obligations under (a) the APA, (b) the Xxxxxxxx Operating Agreement between
NYSEG and the Buyer, dated as of August 3, 1998 (c) the NYPP Agreement, (d) the
NYISO Tariff and related agreements, or (e) applicable
-61-
66
FERC orders, regulations or policy (such agreements, orders, regulations, tariff
and policy referred to collectively as the "Ancillary Documents"). In the event
of a conflict between the provisions of this Agreement and the provisions of one
or more Ancillary Documents, which conflict is not permissible or has not been
waived by the appropriate regulatory agency, the provisions of the Ancillary
Document shall control.
ARTICLE 29
FURTHER ASSURANCES
29.0 Further Assurances. The Parties hereto agree to execute and
deliver promptly, at the expense of the Party requesting such action, any and
all other and further information, instruments and documents that may be
reasonably requested in order to effectuate the transactions contemplated
hereby, including but not limited to, such instruments or documents to
establish, if necessary, an alternative arrangement, for access to services
under this Agreement.
IN WITNESS WHEREOF, the Parties have caused their authorized
representatives to execute this Agreement as of the date first above written.
NEW YORK STATE ELECTRIC
& GAS CORPORATION
------------------------
Xxxxxxx X. Xxxxxxxx
Executive Vice President
AES NY, L.L.C.
------------------------
Xxxxx Xxxxxxx
Manager
-62-