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Exhibit 10.24
This Brokering and Contract Management Agreement ("Agreement"), is made
and entered into as of December 17, 1999, by and between PP&L EnergyPlus Co.,
LLC, a Pennsylvania limited liability corporation, having its principal business
at Xxx Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, hereinafter referred to as
"EnergyPlus," and PP&L Montana, LLC, a Delaware limited liability company,
having its principal business at 000 X. Xxxxxxxx, Xxxxx 000, Xxxxxxxx, XX,
00000, hereinafter referred to as "PPLM" (individually, the "Party" and
collectively, the "Parties").
WHEREAS, EnergyPlus and PPLM are affiliates, and neither has a franchised
service territory;
WHEREAS, PP&L Global, Inc., the indirect parent company of PPLM, executed
the Asset Purchase Agreements and, pursuant to the assignment provisions of
those agreements, assigned its rights under each of the Asset Purchase
Agreements to PPLM;
WHEREAS, PPLM, acting on its own behalf and through its subsidiaries PP&L
Colstrip I, LLC ("PP&L Colstrip I") and PP&L Colstrip II, LLC ("PP&L Colstrip
II") plans to acquire certain generating assets, related assets and facilities,
and associated rights and obligations from Montana Power Company, Portland
General Electric Company and Puget Sound Energy, Inc., as described in the Asset
Purchase Agreements;
WHEREAS, as of the First Closing Date under the Asset Purchase Agreements,
PPLM desires to make exclusively available to EnergyPlus its Excess Power and
certain transmission rights so that EnergyPlus may broker such Excess Power in a
manner that is beneficial to PPLM;
WHEREAS, as of the closing date of the transaction memorialized in the
Asset Purchase Agreement dated as of October 31, 1998 by and between PP&L
Global, Inc. and The Montana Power Company, PPLM shall acquire through
assignment the rights and obligations of The Montana Power Company under the
Existing Contracts and desires to have EnergyPlus manage the Existing Contracts
and perform related services;
WHEREAS, PPLM may from time to time need to enter into power purchase,
sale, transmission service and/or other related Transactions in order to fulfill
its obligations under the Existing Contracts and Other Wholesale Agreements, and
desires to grant EnergyPlus the authority to enter into such Transactions on
behalf of and as agent for PPLM, consistent with PPLM'S direction;
WHEREAS, PP&L Colstrip I, LLC and PP&L Colstrip II, LLC are authorized to
sell capacity, energy and certain ancillary services solely to PPLM for resale
on an aggregated basis;
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WHEREAS, EnergyPlus is a power marketer authorized by FERC to sell
electric energy and capacity at market-based rates and to resell transmission
rights and associated ancillary services pursuant to EnergyPlus' FERC Electric
Tariff, Volume No. 1;
WHEREAS, PPLM is authorized to sell electric energy and capacity at
market-based rates and to resell transmission rights and associated ancillary
services pursuant to PPLM's FERC Electric Tariff, Volume No. 1; and
NOW THEREFORE, in consideration of the mutual agreements, covenants and
conditions herein contained, and intending to be legally bound, EnergyPlus and
PPLM hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Asset Purchase Agreements" means: (1) the Asset Purchase Agreement dated as
of October 31, 1998 by and between PP&L Global, Inc. and The Montana Power
Company; (2) the Asset Purchase Agreement, dated November 1, 1998, by and
between Puget Sound Energy, Inc. and PP&L Global, Inc.; and (3) the Asset
Purchase Agreement, dated November 1, 1998, by and between Portland General
Electric Company and PP&L Global, Inc.
1.2 "Contract Management" means the performance by EnergyPlus of those
obligations designated by PPLM under the Existing Contracts and Other Wholesale
Agreements, as PPLM's agent and subject to PPLM's direction.
1.3 "Effective Date" means the date on which the term of this Agreement begins,
as set forth in Article 7.
1.4 "Existing Contracts" means those contracts listed in Exhibit 1.
1.5 "Excess Power" means that quantity of energy, and/or capacity in the PPLM
Portfolio in excess of the energy and/or capacity required to satisfy PPLM's
obligations under the Existing Contracts and Other Wholesale Agreements.
1.6 "FERC" means the Federal Energy Regulatory Commission or any successor
agency.
1.7 "First Closing Date" means the date upon which the first of the transactions
memorialized in the Asset Purchase Agreements closes.
1.8 "Other Wholesale Agreements" means all agreements entered into by PPLM for
the purchase or sale of energy, capacity, ancillary services or transmission
service other than the Existing Contracts.
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1.9 "PPLM Portfolio" means (a) the energy and capacity associated with the
generating units acquired by PPLM, PP&L Colstrip I and PP&L Colstrip II pursuant
to the Asset Purchase Agreements; (b) the energy and capacity associated with
the Existing Contracts and with Other Wholesale Agreements; and (c) the rights
to transmission service acquired by PPLM.
1.10 "Transaction" means a particular, specifically agreed to wholesale purchase
or sale of electric energy, capacity, transmission service rights and/or
ancillary services pursuant to enabling agreements entered into between PPLM and
one or more counterparties.
ARTICLE 2
COMMITMENTS OF THE PARTIES
2.1 Designation of EnergyPlus as Agent. Subject to Article 3 and as further
described in Section 2.4, consistent with direction and approval provided by
PPLM, PPLM authorizes EnergyPlus to act as its agent for the following purposes:
(a) to execute Transactions and Transaction confirmations in the name of PPLM;
(b) to schedule and/or confirm the scheduling of energy in connection with such
Transactions; (c) to procure transmission service and associated ancillary
services on behalf of PPLM as required to effectuate such Transactions; and (d)
to perform Contract Management services.
2.2 PPLM as Principal. Notwithstanding Article 2.1, PPLM, as principal, shall
retain ultimate decision-making authority over and responsibility for the
Contract Management services of EnergyPlus and therefore shall: (a) remain the
transmission customer for any transmission service and associated ancillary
services procured by EnergyPlus under Article 2.1(c); (b) remain the power
purchaser or seller under any Transaction executed by EnergyPlus under Article
2.1; and (c) be responsible for all payment obligations associated with such
transmission service, ancillary service and/or power purchase and sale
Transactions.
2.3 PPLM Responsibilities. PPLM shall: (a) provide EnergyPlus in a timely manner
with all information required for PPLM to obtain and continue to receive
necessary transmission service and ancillary services; (b) comply with all
requirements imposed by any applicable transmission tariff; (c) comply with any
directives, requests or orders issued by any applicable Control Area operator
relating to the operation of any generating unit(s) controlled by PPLM; ; and
(d) pay directly to the applicable transmission provider all charges for
transmission and associated ancillary services procured by EnergyPlus under
Article 2.1.
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2.4 EnergyPlus Responsibilities.
(a) EnergyPlus shall:
(i) with assistance and direction from PPLM, negotiate, obtain legal
review of, and execute enabling agreements in the name of PPLM with
counterparties, including power purchase, power sale and reserve
sharing agreements, and agreements to purchase or sell transmission
service and/or ancillary services;
(ii) make all necessary contractual arrangements with applicable
transmission providers and/or Control Area operators to participate
in interchange energy markets operated by the Control Area operator
and/or transmission provider or independent system operator;
(iii) with assistance and direction from PPLM, register PPLM as an active
member in various reliability councils, reserve sharing pools and
other organizations necessary to facilitate the brokering and
management of the PPLM Portfolio;
(iv) assist PPLM in making any required filings with the Federal Energy
Regulatory Commission, any state commission or other regulatory
entity in connection with such power purchase and sale agreements
and enabling agreements;
(v) provide to PPLM scheduling, confirmation and month-end counterparty
checkout services, including the reconciliation of MWh volumes and
payments for Transactions between PPLM and counterparties;
(vi) broker the Excess Power;
(vii) monitor the unit supply status of the PPLM Portfolio;
(viii) negotiate Transactions and execute Transaction confirmations in
accordance with Section 2.1; and
(ix) perform Contract Management.
(b) EnergyPlus shall provide services to PPLM on a 24-hour per day, 7-day
per week basis and shall provide to PPLM such reports as PPLM may reasonably
request from time to time, including, but not limited to an ongoing summary of
the net purchase and/or sale positions associated with Transactions entered into
on behalf of PPLM.
(c) In discharging its responsibilities under this Agreement, including
without limitation the provisions of subsections (a) and (b) of this Section
2.4, Energy Plus shall use commercially reasonable efforts to secure a portfolio
of contracts, including both the Existing Contracts and Other Wholesale
Agreements, designed to optimize PPLM's results of operations, considering both
its revenues and risk exposures, in accordance with the Credit and Risk
Management Protocols attached hereto.
2.5 Cooperation/Information. The Parties will cooperate to establish systems,
procedures and protocols to permit the electronic exchange of financial, supply
and
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operating data and payments due under this Agreement. Each Party shall provide
the other Party with all data reasonably required by the other Party to perform
its obligations under this Agreement and shall update such data as necessary
within a reasonable timeframe. Each Party may rely on the accuracy and
completeness of any data provided to it by the other Party for the purpose of
providing services under this Agreement.
2.6 Wholesale Transactions. This Agreement pertains only to wholesale
Transactions. No retail Transactions may be brokered under this Agreement. The
Parties may negotiate additional transactions outside the scope of this
Agreement consistent with the terms of PPLM's Market-Based Rate Tariff and
EnergyPlus' Market-Based Rate Tariff.
ARTICLE 3
CREDIT AND RISK MANAGEMENT
3.1 Credit and Risk Management. The Parties shall abide by the Credit and Risk
Management Protocols attached as Exhibit 2 to this Agreement. These Protocols
shall establish the credit and risk management parameters for the PPLM
Portfolio, such as limitations on open positions and the magnitude and length of
Transactions entered into pursuant to Article 2.1.
ARTICLE 4
MARKETING
4.1 Marketing. The Parties shall cooperate and engage in joint marketing efforts
designed to attract new wholesale customers to PPLM and retain PPLM's existing
wholesale customers. Such marketing activities may include, but are not limited
to, customer meetings, press releases and the development of written marketing
materials upon such terms and conditions as the Parties may agree.
4.2 PPLM Portfolio. In addition to EnergyPlus' obligations to PPLM, as set forth
in Article 2, EnergyPlus shall, in consultation with PPLM, have the following
specific obligations with respect to the PPLM Portfolio:
(a) Use commercially reasonable efforts to further the marketing and
sales of the PPLM Portfolio;
(b) Promptly respond to all inquiries from counterparties or potential
counterparties, including the timely processing of all requests,
orders, contract negotiations, and other matters relating to the
ability of PPLM to deliver energy from the PPLM Portfolio.
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ARTICLE 5
TRANSACTIONS BETWEEN THE PARTIES
5.1 Transactions Between the Parties. Nothing in this Agreement shall prohibit
power purchase or sale Transactions between the Parties at arms-length terms and
conditions that fairly represent then-prevailing market terms. In any such
Transaction, EnergyPlus shall not act as PPLM's agent, and PPLM shall have the
sole discretion to enter into any such Transaction under which both EnergyPlus
and PPLM are parties.
ARTICLE 6
CONTRACT PRICE
6.1 Contract Price. PPLM shall pay EnergyPlus a fixed monthly fee for the
services performed by EnergyPlus under this Agreement based on the projections
set forth in Exhibit 3, subject to reconciliation as provided in Section 6.2.
Such fixed monthly fee shall only cover the fixed and operating costs incurred
at EnergyPlus' Allentown, Pennsylvania and Butte, Montana offices that are
directly associated with, or otherwise indirectly allocated on a
non-discriminatory basis to, the performance of EnergyPlus' obligations under
this Agreement. The projected fixed monthly fee is set forth in Exhibit 3 on a
monthly basis for the first twelve months and on an estimated annual basis
thereafter. EnergyPlus shall submit to PPLM by October 15 of each year during
the term of this Agreement a draft projected budget for the following year.
6.2 Reconciliation. Beginning twelve months after the Effective Date, the fixed
monthly fee paid by PPLM shall be reconciled on an annual basis with the actual
monthly fixed and operating costs incurred at EnergyPlus' Allentown,
Pennsylvania and Butte, Montana offices that are associated with the performance
of EnergyPlus' obligations under this Agreement. To the extent that the sum of
the actual monthly costs for a given year exceed the sum of the monthly fees
billed to PPLM for that year, PPLM shall pay EnergyPlus the difference between
the two amounts. To the extent that the sum of the actual monthly costs for a
given year is less than sum of the monthly fees paid by PPLM for that year,
EnergyPlus shall refund to PPLM the difference between the two amounts. At least
five (5) days prior to the end of each calendar quarter, EnergyPlus shall
provide to PPLM a variance analysis relative to the projection or annual budget
upon which the fixed monthly fee is annually determined.
ARTICLE 7
TERM OF AGREEMENT
7.1 TERM. Subject to Article 9 of this Agreement, the term of this Agreement
shall commence at 0001 hours on the day following the First Closing Date
("Effective Date"). This Agreement shall continue in effect until sixty (60)
days following the date by which either Party receives from the other Party
written notice of termination
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of this Agreement; provided, however, that no such notice of termination shall
take effect prior to the end of one (1) year following the Effective Date.
ARTICLE 8
ASSIGNMENT
8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder; provided, however, that either Party may assign this Agreement to an
affiliate of PP&L Resources, Inc., but not sooner than twelve months after the
Effective Date. Provided, however, EnergyPlus shall not assign the Agreement to
any affiliate unless such affiliate has comparable expertise in power marketing
and a comparable financial condition.
ARTICLE 9
DEFAULT
9.1 Default. In the event either Party ("Defaulting Party") defaults in payment
or performance of any obligation to the other Party under this Agreement, such
default in payment or performance shall be deemed an Event of Default under this
Article if not cured within ten (10) Business Days following written notice by
the non-defaulting Party of such default in payment or performance. If an Event
of Default occurs, the non-defaulting Party, upon written notice given no later
than sixty (60) days after the discovery of the Event of Default, has the right
to (i) suspend performance under this Agreement; (ii) terminate this Agreement;
and/or (iii) withhold any payment due under this Agreement.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties. As a material inducement to entering into
this Agreement, each Party, with respect to itself, hereby represents and
warrants to the other Party as of the Effective Date as follows:
(a) it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation and is qualified to conduct its
business in those jurisdictions necessary to perform this Agreement;
(b) it has all regulatory authorizations, licenses and permits necessary
for it to legally perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement are within
its statutory and corporate powers, have been authorized by all necessary action
and do not violate any of the terms and conditions of its governing documents or
any law, rule, regulation, order, writ, judgment, decree or other legal or
regulatory determination applicable to it;
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(d) this Agreement constitutes a legal, valid and binding obligation of
such Party enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, and other laws affecting creditors' rights generally;
(e) there are no bankruptcy, insolvency or receivership pending or being
contemplated by it or, to its knowledge, threatened against it;
(f) there are no suits, proceedings, judgments, rulings or orders by or
before any court or governmental authority that materially adversely affect its
ability to perform this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Compliance with Laws. It is understood by the Parties that this Agreement
and performance hereunder is subject to all present and future valid and
applicable laws, orders, statutes, and regulations of courts or regulatory
bodies (state or federal) having jurisdiction over EnergyPlus, PPLM, or this
Agreement. Each Party agrees to use reasonable efforts to secure and retain all
local, state or federal approvals, grants or permits as may from time to time be
necessary with respect to such performance.
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11.2 Notices. Any notice given pursuant to this Agreement shall be in writing,
unless otherwise noted, and delivered to the following:
EnergyPlus;
NOTICES, CORRESPONDENCE and INVOICES PAYMENTS
------------------------------------ --------
PP&L EnergyPlus Co., LLC PP&L EnergyPlus Co., LLC
00 Xxxxx Xxxxx Xxxx Two Xxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000 Xxxxxxxxx, XX 00000-0000
Attn (notices and correspondence): Contract Attn: Cash Receipts (GENN1)
Administration
Attn (invoices): Accounting
FAX: (000) 000-0000 FAX: (000) 000-0000
with a copy of notices to:
PP&L, Inc.
Office of General Counsel
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
FAX: (000) 000-0000
PPLM:
NOTICES & CORRESPONDENCE INVOICES/PAYMENTS
------------------------ -----------------
PP&L Montana, LLC PP&L Montana, LLC
000 X. Xxxxxxxx 000 X. Xxxxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
FAX: (000) 000-0000 FAX: (000) 000-0000
11.3 Entire Agreement. This Agreement and any Exhibits hereto constitute the
entire agreement between the Parties. There are no prior or contemporaneous
agreements or representations affecting the same subject matter other than those
herein expressed.
11.4 Amendment. Except for those matters which, in accordance with this
Agreement, may be resolved by the Parties and documented electronically, it is
further agreed that no amendment, modification or change herein shall be
enforceable, except as specifically provided for in this agreement, unless
produced in writing and executed by both Parties.
11.5 Governing law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflict of
law principles.
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11.6 Severability. Except as otherwise stated herein, any provision, article or
section of this Agreement that is declared or rendered unlawful by a court of
law or regulatory agency with jurisdiction over the Parties, or deemed unlawful
because of statutory change, will not otherwise affect the lawfulness,
enforceability and applicability of the remaining Sections of this Agreement,
nor shall it affect the obligations that arise under this Agreement.
11.7 Third Party Beneficiaries. This Agreement is intended solely for the
benefit of the Parties hereto. Nothing in the Agreement shall be construed to
create any duty, or standard of care with reference to or any liability to any
person not a Party to this Agreement (third-party beneficiary), including
without limitation any PPLM counterparty.
11.8 Survival. Cancellation, expiration or early termination of the Agreement
shall not relieve the Parties of obligations that by their nature survive such
cancellation, expiration or termination, including without limitation
warranties, remedies, promises of indemnity and confidentiality.
11.9 Recording. Each Party acknowledges and consents to the monitoring and
recording of all telephone conversations between its representatives and the
representatives of the other Party.
11.10 Section Headings. The section headings herein are for convenience only and
shall have no interpretive or substantive meaning.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in
duplicate originals to be effective as of the day and year first written above.
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OFFICE OF
GENERAL COUNSEL
BY: /s/ DR
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DATE: 12/12/99
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PP&L Montana, LLC PP&L Energy Plus Co., LLC
By: /s/ XX Xxxxxxxx By: /s/ Xxxxxxxx X. Xx Xxxxxx
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Name: XX Xxxxxxxx Name: Xxxxxxxx X. Xx Xxxxxx
---------------------------- -------------------------------
Title: President Title: President
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