NUCLEAR SALE/LEASEBACK POWER SUPPLY AGREEMENT Between Ohio Edison Company and The Toledo Edison Company, Sellers and FirstEnergy Nuclear Generation Corp., Buyer
FirstEnergy
Operating Companies EXHIBIT
10.6
FERC
Electric
Tariff, Second Revised Volume No. 2
Service
Agreement
No.
[Execution
Copy]
NUCLEAR
SALE/LEASEBACK
Between
Ohio
Edison Company and The Toledo Edison Company, Sellers
and
FirstEnergy
Nuclear Generation Corp., Buyer
This
Nuclear
Sale/Leaseback Power Supply Agreement ("Agreement") dated October 14, 2005
is
made by and between Ohio Edison Company and The Toledo Edison Company
("Sellers") and FirstEnergy Nuclear Generation Corp., ("FENGenco" or "Buyer").
The Sellers and FENGenco may be identified collectively as "Parties" or
individually as a "Party." This Agreement is entered into in connection with
the
transfer of the ownership interest of The Cleveland Electric Illuminating
Company, Ohio Edison Company, Pennsylvania Power Company, and The Toledo Edison
Company in the Beaver Valley Power Station, Xxxxx-Xxxxx Nuclear Power Station,
and Perry Nuclear Power Plant (“Nuclear Generating Plants”) to
FENGenco.
WHEREAS,
Buyer is a
newly formed, nuclear generation only company that intends to acquire the
Nuclear Generating Plants owned by The Cleveland Electric Illuminating Company,
Ohio Edison Company, Pennsylvania Power Company, and The Toledo Edison Company
(collectively "the FirstEnergy Operating Companies"); and
WHEREAS,
Buyer will
be a wholly owned subsidiary of FirstEnergy Corp; and
WHEREAS,
Sellers
lease portions of Beaver Valley Power Station Unit 2 and Perry Nuclear Power
Plant (hereinafter “Leased Nuclear Generation Facilities”) from owner trustees
under the Sale/Leaseback Arrangements; and
WHEREAS,
FirstEnergy
Nuclear Operating Company, an Affiliate of the Parties, operates the Leased
Nuclear Generation Facilities; and
WHEREAS,
Sellers
wish to sell to Buyer the electrical output of the Leased Nuclear Generation
Facilities; and
WHEREAS,
Buyer is
engaged exclusively in the business of owning and purchasing generation and
selling Power at wholesale; and
WHEREAS,
Buyer
desires to obtain the entire electric output of the Leased Nuclear Generation
Facilities pursuant to the rates, terms and conditions set forth herein.
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Issued
by: Xxxxx X. Xxxxx, Vice President
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Effective
Date:
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Issued
on: October 14, 2005
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December
1, 2005
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1
It
is agreed as follows:
I.
TERM
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A.
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The
sale and
purchase of Power pursuant to this Agreement shall begin on December
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1,2005,
or such
later effective date authorized by the FERC, for an initial term ending December
31, 2010. This Agreement shall remain in effect from year to year thereafter
unless terminated by either Party upon at least sixty days written notice prior
to the end of the calendar year.
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B.
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Notwithstanding
I.A, this Agreement will terminate if all of the Sale/Leaseback
Arrangements for the Leased Nuclear Generation Facilities are terminated
or assigned to FENGenco. Termination of the Agreement under this
Section
will be effective no sooner than the effective date of the termination
or
assignment of the Sale/Leaseback Arrangements. Buyer will give Sellers
no
less than sixty days written notice of the termination of this Agreement
under this Section I.B. In the event of a partial termination or
assignment of the Sale/Leaseback Arrangements, the Parties will amend
this
Agreement to reflect the revised rates, terms, and conditions for
the sale
of Power from the remaining Leased Nuclear Generation
Facilities.
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II.
SALE
AND
PURCHASE OF CAPACITY AND ENERGY
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A.
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Sellers
shall
provide to Buyer all of the Capacity, Energy, and Ancillary Services
available from the Leased Nuclear Generation Facilities identified
in
Exhibit C to this Agreement, and Buyer shall purchase and pay for
such
Capacity, Energy, and Ancillary Services in accordance with the terms
of
this Agreement. Sellers shall make Capacity, Energy, and Ancillary
Services available at the Delivery Points. Buyer shall arrange and
will be
responsible for all transmission, congestion costs, losses, and related
services at and from the Delivery Points. The Capacity, Energy, and
Ancillary Services supplied by Seller are collectively referred to
as
Buyer's "Power Supply Requirements". Capacity and Energy supplied
shall be
sixty-hertz, three phase alternating current. The Power Supply
Requirements will be provided in accordance with Good Utility Practice,
and where applicable, the provisions of the applicable Transmission
Provider OATT, and the requirements of the NRC.
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X.
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Xxxxxxx
shall
cause the Leased Nuclear Generation Facilities to be operated and
maintained in accordance with Good Utility Practice, the applicable
requirements of the FERC, NRC and NERC, or successor Electric Reliability
Organization, as well as the requirements of the regional reliability
councils or Regional Entity, and Regional Transmission Organizations
where
the Leased Nuclear Generation Facilities are located. Sellers will
enter
into agreements with FirstEnergy Nuclear Operating Company, other
FirstEnergy Affiliates, Transmission Provider, or Government Authority
to
ensure compliance with this Section
II.B.
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2
III.
SCHEDULING
AND SYSTEM PLANNING
| A. |
Sellers
shall
notify Buyer on or before November 1 of each year during the term
of this
Agreement of the amount of Capacity, Energy, and Ancillary Services
it
expects to have available from the Leased Nuclear Generation Facilities
for each day in each month of the next calendar year. The information
provided in this notification shall include, but not be limited to,
the
time and expected duration of any planned outage of the Leased Nuclear
Generation Facilities.
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X.
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Xxxxxxx
shall
update their annual forecast of available Capacity, Energy, and Ancillary
Services for any change or expected change in the operation of the
Leased
Nuclear Generation Facilities that would materially affect the annual
forecast provided to FENGenco. FENGenco shall provide the updated
forecast
for any full month(s) remaining in the calendar year within thirty
days of
becoming aware of the change or expected change in the operation
of the
Leased Nuclear Generation
Facilities.
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| X. |
Xxxxxxx
will
supply FENGenco, upon request, any such information as is necessary
to
meet the requirements of the applicable Transmission Provider OATT,
FERC,
NERC, NRC, Electric Reliability Organization, regional reliability
council, Regional Entity, or Government
Authority.
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IV.
PRICE
Sellers
shall
charge, and Buyer shall pay, for Buyer's Power Supply Requirements, as follows
on a monthly basis.
A.
Charges
Buyer
will pay
Sellers the Monthly Charge under the formula set forth in Exhibit A for the
Power Supply Requirements available from the Leased Nuclear Generation
Facilities identified in Exhibit C.
B.
Billing
and
Payment
Unless
otherwise
specifically agreed upon by the Parties, the calendar month shall be the
standard period for all xxxxxxxx and payments under this Agreement. As soon
as
practicable after the end of each month, the Sellers will render an invoice
to
Buyer for the amounts due for Power Supply Requirements for the preceding month.
Payment shall be due and payable within ten days of receipt of the invoice
or,
if such day is not a Business Day, then on the next Business Day. Buyer will
make payments by electronic funds transfer or by other mutually agreeable
method(s) to the account designated by Sellers. Any amounts not paid by the
due
date will be deemed delinquent and will accrue interest at the Interest Rate
until the date of payment in full.
3
C.
Records
Each
Party shall
keep complete and accurate records of its operations under this Agreement and
shall maintain such data as may be necessary to determine the reasonableness
and
accuracy of all relevant data, estimates, payments or invoices submitted by
or
to it hereunder. All records regarding this Agreement shall be maintained for
a
period of three years from the date of the invoice or payment, or for such
longer period as may be required by law.
D.
Audit
and
Adjustment Rights
Buyer
shall have the
right, at its own expense and during normal business hours, to audit the
accounts and records of Sellers that reasonably relate to the provision of
service under this Agreement. If the audit reveals an inaccuracy in an invoice,
the necessary adjustment in such invoice and the payments therefore will be
promptly made. No adjustment will be made for any invoice or payment made more
than one year from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the date of
termination for the purpose of such invoice and payment objections. To the
extent that audited information includes Confidential Information, the Buyer
shall keep all such information confidential under Section VII.C.
E.
Section
205
Rights
Nothing
contained
herein shall be construed as affecting in any way the right of the Party
furnishing service under this Agreement to unilaterally make application to
the
FERC for a change in rates under Section 205 of the Federal Power Act and
pursuant to the FERC's Rules and Regulations thereunder. Provided, however,
that
nonrate terms and conditions may be amended only by a written agreement signed
by the Parties.
V.
METERING
Generation
metering
shall be installed, operated and maintained in accordance with the applicable
generator interconnection agreements between the FENGenco, Transmission
Provider, and Transmission Owner. Metering between control areas shall be
handled in accordance with the applicable Transmission Provider OATT. Retail
metering shall be provided in accordance with applicable state law. Nothing
in
this Agreement requires Sellers or Buyer to install new metering facilities.
VI.
NOTICES
All
notices, requests, statements or payments shall be made as specified below.
Notices required to be in writing shall be delivered by letter, facsimile or
other documentary form. Notice by facsimile or hand delivery shall be deemed
to
have been received by the close of the Business Day on which it was transmitted
or hand delivered (unless transmitted or hand delivered after close in which
case it shall be deemed to have been received at the close of the next Business
Day). Notice by overnight mail or courier shall be deemed to have been received
two Business Days after it was sent. A Party may change its addresses by giving
notice as provided above.
4
NOTICES
& CORRESPONDENCE:
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To
Sellers:
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FirstEnergy
Service Company, Vice President
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00
Xxxxx Xxxx
Xx.
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Xxxxx,
Xxxx
00000
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To
Buyer:
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FirstEnergy
Nuclear Generation Corp., President
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00
Xxxxx Xxxx
Xx.
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Xxxxx,
Xxxx
00000
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INVOICES
& PAYMENTS:
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To
Sellers:
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FirstEnergy
Service Company, Vice President
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00
Xxxxx Xxxx
Xx.
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Xxxxx,
Xxxx
00000
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To
Buyer:
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FirstEnergy
Nuclear Generation Corp., President
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00
Xxxxx Xxxx
Xx.
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Xxxxx,
Xxxx
00000
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SCHEDULING:
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To
Sellers:
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FirstEnergy
Nuclear Service Company, Vice President
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| 00 Xxxxx Xxxx Xx. | |
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Xxxxx, Xxxx 00000 |
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To
Buyer:
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FirstEnergy
Nuclear Generation Corp., President
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00
Xxxxx Xxxx Xx.
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Xxxxx, Xxxx 00000 |
VII.
MISCELLANEOUS
A.
Performance
Excused
If
either Party is rendered unable by an event of Force Majeure to carry out,
in
whole or part, its obligations hereunder, then, during the pendency of such
Force Majeure but for no longer period, the Party affected by the event shall
be
relieved of its obligations insofar as they are affected by Force Majeure.
The
Party affected by an event of Force Majeure shall provide the other Party with
written notice setting forth the full details thereof as soon as practicable
after the occurrence of such event and shall take all reasonable measures to
mitigate or minimize the effects of such event of Force Majeure. Nothing in
his
section requires Seller to deliver, or Buyer to receive, Power at Delivery
Points other than those Delivery Points designated under this Agreement, or
relieves Buyer of its obligation to make payment under Section IV of this
Agreement.
5
Force
Majeure shall
be defined as any cause beyond the reasonable control of, and not the result
of
negligence or the lack of diligence of, the Party claiming Force Majeure or
its
contractors or suppliers. It includes, without limitation, earthquake, storm,
lightning, flood, backwater caused by flood, fire, explosion, act of the public
enemy, epidemic, accident, failure of facilities, equipment or fuel supply,
acts
of God, war, riot, civil disturbances, strike, labor disturbances, labor or
material shortage, national emergency, restraint by court order or other
Government Authority, interruption of synchronous operation, or other similar
or
dissimilar causes beyond the control of the Party affected, which causes such
Party could not have avoided by exercising Good Utility Practice. Nothing
contained herein shall be construed to require a Party to settle any strike,
lockout, work stoppage, or other industrial disturbance or dispute in which
it
may be involved or to take an appeal from any judicial, regulatory or
administrative action.
B.
Transfer
of Title
and Indemnification
Title
and risk of
loss related to the Power Supply Requirements shall transfer to the Buyer at
the
Delivery Points. Sellers warrant that they will deliver the Power Supply
Requirements to Buyer free and clear of all liens, security interests, claims
and encumbrances or any interest therein or thereto by any person arising prior
to the Delivery Points. Each Party shall indemnify, defend and hold harmless
the
other Party from and against any claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period
when
control and title to the Power Supply Requirements is vested in the other Party.
C.
Confidentiality
Neither
Party shall
disclose to third parties Confidential Information obtained from the other
Party
pursuant to this Agreement except in order to comply with the requirements
of
FERC, NRC, NERC, Reliability Organization, applicable regional reliability
councils or Regional Entity, Regional Transmission Organization or Government
Authority. Each Party shall use reasonable efforts to prevent or limit the
disclosure required to third parties under this section.
D.
Further
Assurances
Subject
to the terms
and conditions of this Agreement, each of the Parties will use reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and effectuate the transactions contemplated hereby.
6
E.
Assignment
No
assignment, pledge, or transfer of this Agreement shall be made by any Party
without the prior written consent of the other Party, which consent shall not
be
unreasonably withheld. No prior written consent shall be required for (i) the
assignment, pledge or other transfer to another company or affiliate in the
same
holding company system as the assignor, pledgor or transferor, or (ii) the
transfer incident to a merger or consolidation with, or transfer of all, or
substantially all, of the assets of the transferor, to another person or
business entity; provided, however, that such assignee, pledgee, transferee
or
acquirer of such assets or the person with which it merges or into which it
consolidates assumes in writing all of the obligations of such Party hereunder
and provided, further, that either Party may, without the consent of the other
Party (and without relieving itself from liability hereunder), transfer, sell,
pledge, encumber or assign such Party's rights to the accounts, revenues or
proceeds hereof in connection with any financing or other financial
arrangements.
F.
Governing
Law
The
interpretation and performance of this Agreement shall be according to and
controlled by the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
G.
Counterparts
This
Agreement may
be executed in two or more counterparts and each such counterpart shall
constitute one and the same instrument.
H.
Waiver
No
waiver by a Party of any default by the other Party shall be construed as a
waiver of any other default. Any waiver shall be effective only for the
particular event for which it is issued and shall not be deemed a waiver with
respect to any subsequent performance, default or matter.
I.
No
Third Party
Beneficiaries
This
Agreement shall
not impart any rights enforceable by any third party other than a permitted
successor or assignee bound to this Agreement.
J.
Severability
Any
provision of this Agreement declared or rendered unlawful by any Government
Authority or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement.
7
K.
Construction
The
term "including" when used in this Agreement shall be by way of example only
and
shall not be considered in any way to be a limitation. The headings used herein
are for convenience and reference purposes only.
IN
WITNESS WHEREOF, the Parties have caused their duly authorized representatives
to execute this Agreement on their behalf as of October 14, 2005.
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Ohio
Edison Company
The
Toleldo Edison company
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Vice President, FirstEnergy Service Company |
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FirstEnergy
Nuclear Generation Corp.
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President, FirstEnergy Nuclear Generation Corp. |
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8
EXHIBIT
A
Ohio
Edison
Company
The
Toledo
Edison Company
Monthly
Charge Formula
EXHIBIT
B
DEFINITIONS
In
addition to terms defined elsewhere in this Agreement, the terms listed below
are defined as follows:
Affiliate
means,
with respect
to any person, any other person (other than an individual) that, directly or
indirectly, through one or more intermediaries, controls, or is controlled
by,
or is under common control with, such person. For purposes of the foregoing
definition, control means the direct or indirect ownership of more than fifty
percent (50%) of the outstanding capital stock or other equity interests having
ordinary voting power or ability to direct the affairs of the affiliate.
Ancillary
Services
means Reactive
Supply and Voltage Control from Generation Resources, Regulation and Frequency
Response Service, Operating Reserve - Spinning Reserve Service, and Operating
Reserve - Supplemental Service and such additional Ancillary Services as defined
in the Open Access Transmission Tariff of the Transmission Provider and to
the
extent available from the Leased Nuclear Generation Facilities.
Business
Day
means any day on
which Federal Reserve member banks in New York City are open for business.
Capacity
means the resource
that produces electric Energy, measured in megawatts.
Confidential
Information means
any
confidential, proprietary, trade secret, critical energy infrastructure
information, or commercially sensitive information relating to the present
or
planned business of a Party that is supplied under this Agreement, and is
identified as confidential by the Party supplying the information.
Delivery
Point
means where
Capacity, Energy, and Ancillary Services are supplied by the Sellers at the
point of interconnection between the Leased Nuclear Generation Facilities and
the transmission facilities of the Transmission Owner.
Electric
Reliability Organization
has the meaning
given in Section 215(a)(2) of the Federal Power Act.
Energy
means electric
energy delivered under this Agreement at three-phase, 60-hertz alternating
current measured in megawatt hours.
FERC
means The Federal
Energy Regulatory Commission or its regulatory successor.
Force
Majeure
has the meaning
given in Section VII.A.
Good
Utility
Practice
means any of the
practices, methods and acts engaged in or approved by a significant portion
of
the electric utility industry during the relevant time period or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, and expedition. Good Utility
Practice includes compliance with the standards adopted by NRC, NERC, its
applicable regional councils, an Electric Reliability Organization or Regional
Entity as approved by the FERC. Good Utility Practice is not intended to be
limited to the optimum practice, method or act to the exclusion of all others,
but rather to be acceptable practices, methods or acts, generally accepted
in
the region and consistently adhered to by utilities in the region.
Government
Authority
means any federal,
state, local, municipal or other governmental entity, authority or agency,
department, board, court, tribunal, regulatory commission, or other body,
whether legislative, judicial or executive, together or individually, exercising
or entitled to exercise any administrative, executive, judicial, legislative,
policy, regulatory or taxing authority or power over Buyer or
Seller.
Interest
Rate
means the lesser of
Prime Rate plus two percent and the maximum rate permitted by applicable law.
Leased
Nuclear Generation Facilities means
Ohio Edison
Company’s 21.66%
leasehold
interest in the Beaver Valley Power Station, Unit 2 and 12.58% leasehold
interest in the Perry Nuclear Power Plant, and The Toledo Edison Company’s
18.26% leasehold interest in the Beaver Valley Power Station, Unit
2.
NERC
means The North
American Electric Reliability Council or any superseding organization with
responsibility for establishing reliability standards for the interstate
grid.
NRC
means the Nuclear
Regulatory Commission or its regulatory successor.
Power
means
Capacity
and/or Energy.
Prime
Rate
means for any date,
the per annum rate of interest announced from time to time by Citibank, NA
as
its prime rate for commercial loans, effective for such date as established
from
time to time by such bank.
Regional
Entity
has the meaning
given in Section 215(a)(7) of the Federal Power Act.
Regional
Transmission Organization
has the meaning
given in Section 3(27) of the Federal Power Act.
Sale/Leaseback Arrangements
means the Facility
Leases identified in Exhibit D to this Agreement.
Taxes
means all
ad
valorem,
property,
occupation, utility, gross receipts, sales, use, excise and other taxes,
governmental charges, licenses, permits and assessments, other than taxes based
on net income or net worth.
Transmission
Owner
means the entity
that owns facilities used for the transmission of Power from the Leased Nuclear
Generation Facilities.
Transmission
Provider
means the utility
or utilities, including Regional Transmission Organizations, transmitting Power
on behalf of Buyer from the Delivery Point(s) under this Agreement.
Transmission
Provider OATT
means the Open
Access Transmission Tariff, Open Access Transmission and Energy Markets Tariff,
or any other tariff of general applicability on file at the FERC under which
the
Transmission Provider offers transmission service.
EXHIBIT
C
Leased
Nuclear Generation Facilities
NDC
in
XX
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Xxxxxx
Valley
Power Station, Unit 2
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332
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Perry
Nuclear
Power Plant
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159
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Total
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491
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EXHIBIT
D
Nuclear
Facility Leases
The
separate Facility Leases, each dated as of March 16, 1987, as heretofore
amended, modified and supplemented, between Ohio Edison Company, as Lessee,
and
U.S. Bank National Association, as Lessor in its capacity as successor Owner
Trustee under separate trusts for the benefit of each of the following Owner
Participants, relating to the lease by the Lessee of certain undivided interests
in the Perry Nuclear Power Plant Unit 1 located in North Perry Village, Ohio:
Perry One Alpha Limited Partnership, Perry One Beta Limited Partnership, Perry
One Delta Limited Partnership, Perry One Gamma Limited Partnership and Security
Pacific Capital Leasing Corporation.
The
separate Facility Leases, each dated as of September 15, 1987, as heretofore
amended, modified and supplemented, between Ohio Edison Company, as Lessee,
and
U.S. Bank National Association, as Lessor in its capacity as successor Owner
Trustee under separate trusts for the benefit of each of the following Owner
Participants, relating to the lease by the Lessee of certain undivided interests
in the Beaver Valley Power Station Unit No. 2 nuclear generating unit located
in
Shippingport, Pennsylvania: Perry One Alpha Limited Partnership, Perry One
Delta
Limited Partnership (Trust A), Perry One Delta Limited Partnership (Trust B),
Chrysler Consortium Corporation, Mission Funding Alpha (formerly Associated
Southern Investment Company), Beaver Valley Two Pi Limited Partnership, Beaver
Valley Two Sigma Limited Partnership and Security Pacific Capital Leasing
Corporation.
The
separate Facility Leases, each dated as of September 15, 1987, as heretofore
amended, modified and supplemented, among The Toledo Edison Company and The
Cleveland Electric Illuminating Company, as Lessees, and U.S. Bank National
Association, as Lessor in its capacity as successor Owner Trustee under separate
trusts for the benefit of each of the following Owner Participants, relating
to
the lease by the Lessees of certain undivided interests in the Beaver Valley
Power Station Unit No. 2 nuclear generating unit located in Shippingport,
Pennsylvania: Perry One Delta Limited Partnership (Trust A), Perry One Delta
Limited Partnership (Trust B), Perry One Gamma Limited Partnership, Beaver
Valley Two Rho Limited Partnership, PNC Commercial Corp., Chrysler Consortium
Corporation, Mission Funding Beta (formerly Associated Southern Investment
Company), Xxxxxxxxx Xxxxxxxx Life Insurance Company of America and Beaver
Valley, Inc.
