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RESTATEMENT OF THE
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
COGENTRIX VIRGINIA LEASING CORPORATION
AND
VIRGINIA ELECTRIC AND POWER COMPANY
Dated December 5, 1997
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THIRD AMENDMENT AND RESTATEMENT OF THE
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
COGENTRIX VIRGINIA LEASING CORPORATION
AND
VIRGINIA ELECTRIC AND POWER COMPANY
THIS AGREEMENT, which includes the Exhibits A, B, and C hereto, dated
this 5th day of December 1997, amends and restates the Power Purchase and
Operating Agreement between Cogentrix Virginia Leasing Corporation ("Operator")
and Virginia Electric and Power Company ("Virginia Power"), a corporation
organized and existing under the laws of the Commonwealth of Virginia (with all
amendments prior to the date hereof, the "Existing Agreement").
WHEREAS, Operator owns and operates a Cogeneration facility located
within Virginia Power's certificated retail service area adjacent to the
Clariant Corporation industrial facility in Portsmouth, Virginia, with a total
maximum rating of approximately 115,000 kW at a power factor of .85 (such
facility hereinafter referred to as the "Facility"); and
WHEREAS, Operator wishes to sell the Facility's Net Electrical Output
and Capacity to Virginia Power; and
WHEREAS, the Existing Agreement provides Virginia Power with limited
Dispatch rights; and
WHEREAS, Section 6.10 of the Existing Agreement requires Operator to
negotiate in good faith with Virginia Power to provide additional dispatch
rights to
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Virginia Power if Operator or its affiliates own additional Qualifying
Facilities in the Virginia Power service area; and
WHEREAS, affiliates of Operator now own additional Qualifying
Facilities in the Virginia Power service area; and
WHEREAS, pursuant to Article VII of this Agreement, Operator and
Virginia Power have negotiated such additional Dispatch rights; and
WHEREAS, Section 5.6 of the Existing Agreement contains certain
provisions allocating, in part, the risk of a disallowance by the Virginia State
Corporation Commission ("SCC") to Operator; and
WHEREAS, the SCC has previously disallowed certain payments made by
Virginia Power to Operator relating to Gross Receipts Taxes; and
WHEREAS, Operator is obligated to return such disallowed payments with
interest to Virginia Power pursuant to Section 5.6 of the Existing Agreement;
and
WHEREAS, pursuant to this Agreement Virginia Power is willing to
eliminate Section 5.6 of the Existing Agreement and eliminate the accrued
obligation of Operator to return such disallowed payments with interest to
Virginia Power (the restructured Capacity Payments herein include consideration
for the elimination of the previously disallowed Gross Receipts Tax component of
Operator's compensation hereunder);
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter set forth, Operator and Virginia Power
agree to the following:
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ARTICLE I: DEFINITIONS
1.1 "Agreement" means this Third Amendment and Restatement
of the Power Purchase and Operating Agreement entered into by and between
Virginia Power and Operator, including all exhibits and schedules and any
subsequent modifications thereof or amendments thereto made with the mutual
consent of the Parties hereto.
1.2 "Base Index" means the final value of the Gross Domestic Product
Implicit Price Deflator published by the Bureau of Economic Analysis of the U.S.
Department of Commerce in the Survey of Current Business for December 1997.
1.3 "Breach" means the failure of either Party to meet any of its
obligations under this Agreement.
1.4 "Business Day" means 8:00am through 5:00pm, Monday through Friday
excluding holidays recognized by Virginia Power.
1.5 "Capacity" means the rate (measured in kilowatts) at which the Net
Electrical Output is made available for delivery at the Interconnection Point.
1.6 "Capacity Payment" means the daily amount that Virginia Power shall
pay Operator for the right to Dispatch the Capacity, computed as provided in
Section 5.5.
1.7 "Capacity Purchase Price" means the price per kilowatt per Day that
Virginia Power shall pay Operator for Capacity, as set forth in Section 5.5.
1.8 "Contract Year" means each of (i) the period that begins on the
Effective Date and ends on the following November 30, 1998; (ii) each one-year
period occurring
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after the period in clause (i) above through November 30, 2007; and (iii) the
period that begins on December 1, 2007 and ends on June 7, 2008.
1.9 "Cogeneration" means the sequential production of electricity and
heat, steam or other useful work from the same fuel source.
1.10 "Cold Start" means the condition described in Section 7.2(b).
1.11 "Current Index" means the value of the Gross Domestic Product
Implicit Price Deflator published by the Bureau of Economic Analysis of the U.S.
Department of Commerce in the Survey of Current Business for December of the
current Contract Year as last published before April of such Contract Year.
1.12 "Day" means the 24-hour period beginning and ending at 12:00
midnight the prevailing Eastern Standard or Daylight Savings Time.
1.13 "Dependable Capacity" shall initially be set at 115,000 kW and
shall be reset from time to time (i) by the most recent Test conducted in
accordance with the provisions of Article VIII or (ii) as otherwise provided in
Section 5.6, if applicable.
1.14 "Designee" means the person or entity specified by Virginia Power
or empowered by applicable law, regulation or order to issue Dispatch
Instructions respecting the Facility.
1.15 "Design Limits" means the operating limitations on Operator's duty
to respond to Dispatch Instructions, as provided in Section 7.2.
1.16 "Dispatch" means the right of Virginia Power or its Designee to
commence, increase, decrease or cease the delivery of Net Electrical Output in
conjunction with the distribution of the total Virginia Power requirements of
electrical
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energy among available electric energy sources for optimum system economy, with
due consideration of the operating limitations of the Facility reflected by the
Design Limits, operating limits applicable to other generating units which
Virginia Power operates or from which Virginia Power receives energy and
capacity, incremental Virginia Power generating costs, incremental energy and
capacity purchase costs, incremental transmission losses, load flow
considerations, the availability of other sources of electrical energy and
capacity given scheduled or forced outages, off-system commitments and
opportunities for the sale of electrical energy and capacity and other
operational considerations as determined by Virginia Power.
1.17 "Dispatch Instructions" means the rate of Net Electrical Output
specified from time to time by Virginia Power or its Designee in accordance with
Article VII as communicated orally or in writing.
1.18 "Dispatch Variance" means a discrepancy between the Facility's Net
Electrical Output level and the level specified in the Dispatch Instructions as
defined in Section 5.6(b).
1.19 "Effective Date" means the Effective Date of this Agreement
determined as set forth in Section 2.3.
1.20 "Existing Agreement" means the Power Purchase and Operating
Agreement between the Parties, dated as of July 21, 1986, as amended prior to
the date of this Agreement.
1.21 "Electrical Requirements" means the Operator's requirements of
electricity for utilization in the Facility that are not self-generated by the
Facility.
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1.22 "Energy Purchase Price" means the price per kilowatt-hour Virginia
Power shall pay Operator for the Net Electrical Output, computed as set forth in
Section 5.3 of this Agreement.
1.23 "Facility" means Operator's Cogeneration facility located in
Portsmouth Virginia, including auxiliary equipment, the characteristics of which
are described herein.
1.24 "Force Majeure" means an event as defined in Section 10.4.
1.25 "Hazardous Condition" means a condition that presents a threat of
physical injury or death to persons or physical damage or destruction of
property.
1.26 "Hot stand-by" means the condition of the Facility as described in
Section 7.2(b)(ii).
1.27 "Incremental System Cost (ISC)" means the estimated hourly
incremental system cost that forms the basis for Virginia Power's real time
pricing that Virginia Power offers to certain of its customers on an
experimental basis under a SCC approved experimental tariff pursuant to SCC
Case No. PUE940080. Should Virginia Power's mechanism for determining such
costs as set forth in its current effective tariff be rescinded or amended so
as to alter the calculation of the ISC pursuant to this Agreement, Virginia
Power's Incremental System Cost shall be determined pursuant to a mechanism
that in Virginia Power's determination best replicates Virginia Power's
incremental energy cost for the next Day.
1.28 "Interconnection" means the construction, installation, and
maintenance of all Interconnection Facilities required for Virginia Power to
receive the Net Electrical Output.
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1.29 "Interconnection Costs" means the reasonable costs of connection,
switching, metering, transmission, distribution, safety equipment, and
administrative costs incurred by Virginia Power directly related to the
construction, installation and maintenance of Interconnection Facilities to the
extent that such costs exceed the costs Virginia Power would have incurred to
satisfy Operator's Electrical Requirements.
1.30 "Interconnection Facilities" means all the facilities installed
for the purpose of Interconnection of the Facility to Virginia Power's system,
including, but not limited to, all metering and telemetering equipment, wherever
located; transmission and distribution lines and equipment; transformers and
associated equipment; relay and switching equipment; and safety equipment.
1.31 "Interconnection Point" means the physical point as shown in
Exhibit A where the Facility and Virginia Power's system are connected.
1.32 "Interest" means the compensation to be paid and received for the
accrual of monetary obligations under this Agreement, computed monthly and
prorated daily from the time each such obligation to pay interest arises based
on an annual interest rate equal to the Prime Rate plus two percent. For
purposes hereof, the Prime Rate shall mean the rate of interest from time to
time publicly announced by The Chase Manhattan Bank, N.A., at its principal
office, presently located at 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 10081,
as its prime commercial lending rate, determined for each obligation to pay
interest, at the time such obligation to pay interest arises.
1.33 "Month" means the period beginning at 12:00 midnight on the last
Day of a month and ending at 12:00 midnight on the last Day of the next month.
1.34 "Non-Peak Period" means the months of March, April, May, October
and November and the periods June 1 through June 14 and September 16 through
September 30, inclusive.
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1.35 "Net Electrical Output" means the electrical energy generated by
the Facility (in excess of the Facility's consumption of such electrical
generation) and delivered to Virginia Power at the Interconnection Point
pursuant to Virginia Power's Dispatch Instructions or during a Test conducted in
accordance with Article VIII.
1.36 "Notice of Available Capacity" means the notice provided each Day
prior to 9:00am by Operator to Virginia Power setting the Facility's maximum
available Capacity level subject to Dispatch for the next Day, as required and
further described in Sections 5.5 and 5.6; provided that for the Day on which
Operator provides Virginia Power the notice of closing and evidence required
pursuant to Section 2.3, such notice may be provided at any time prior to 5:00pm
on such Day.
1.37 "Notice Period" means (i) for Tests being conducted after the
Facility has been Dispatched off-line and not maintained in a Hot stand-by
condition, 14 hours and 15 minutes and (ii) for Tests being conducted from a Hot
stand-by condition, 2 hours and 45 minutes.
1.38 "On-Peak Hours" means the period between 7:00am and 10:00pm,
exclusive of any Day that is not a Business Day.
1.39 "Operator Requested Test" means a Test requested by Operator
pursuant to Section 8.3 for determining the Dependable Capacity of the Facility
in accordance with the provisions of Article VIII.
1.40 "Parties" means Operator and Virginia Power.
1.41 "Party" means Operator or Virginia Power.
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1.42 "Peak Period" means the months of December, January, February and
the period from June 15 through September 15, inclusive.
1.43 "Prudent Practices" means the practices generally followed by the
electric industry, as changed from time to time, which generally include, but
may not be limited to, engineering and operating considerations.
1.44 "Qualifying Facility" means a Cogeneration facility, which is a
qualifying facility under Subpart B of Subchapter K, Part 292 of Chapter I,
Title 18, Code of Federal Regulations.
1.45 "SCC" means the Commonwealth of Virginia State Corporation
Commission.
1.46 "Scheduled Outage" means a planned reduction of the Capacity of
the Facility that has been coordinated with Virginia Power and is required for
inspection, preventive maintenance, or corrective maintenance.
1.47 "Term" means the term of this Agreement as provided in Article
III.
1.48 "Test" means an Operator Requested Test or a Virginia Power
Requested Test.
1.49 "Test Period" means the six-hour period beginning with the
expiration of the Notice Period that precedes a Test.
1.50 "Termination" means the cessation by the mutual consent of the
Parties hereto, by termination as provided in Article X, by other operation of
this Agreement, or by law of this contractual relationship between Virginia
Power and Operator.
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1.51 "Virginia Power Requested Test" means a Test requested by Virginia
Power in accordance with Section 8.2 for determining the Dependable Capacity of
the Facility in accordance with the provisions of Article VIII.
ARTICLE II: REPRESENTATIONS AND EFFECTIVENESS
2.1 Each Party warrants and represents to the other that it has
obtained all necessary corporate and regulatory approvals for the execution,
delivery and performance of this Agreement and that the Agreement is binding on
that Party in accordance with its terms, subject to the laws and equitable
principles respecting bankruptcy.
2.2 Operator shall use its best efforts to arrange for and close upon
refinancing of the existing project debt for the Facility by December 31, 1997.
2.3 Within two business days of the closing of such refinancing,
Operator shall notify Virginia Power of such closing and provide evidence
satisfactory to Virginia Power that CIT Group/Equipment Financing, Inc. consents
to this Agreement or has waived Article 3 and Article 8 of the Consent to
Assignment of Power Purchase Agreement provided by Virginia Power dated January
14, 1987 with respect to the Existing Agreement. The Existing Agreement shall
remain in full force and effect until 12:01 am of the later to occur of (a) the
Day following the Day on which the Operator provides notice and evidence
required by the immediately preceding sentence or (b) December 23, 1997 (the
"Effective Date"), whereupon and at which time the Existing Agreement shall be
superseded and replaced by this Agreement. Thereafter, both Parties shall be
discharged of all further obligations under or arising out of the Existing
Agreement except for such obligations that shall exist as of the Effective Date;
provided, however, notwithstanding the foregoing, upon the Effective Date
Operator shall be released and forever discharged of all liability and
responsibility arising out of or accrued pursuant to Section 5.6 of the Existing
Agreement.
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2.4 The duties and obligations created by Articles IV through XI of
this Agreement shall not be effective until the Effective Date.
2.5 If the Effective Date does not occur on or before January 31, 1998,
either Party may terminate this Agreement without further obligation, such
termination to be effective immediately upon delivery of a notice of termination
to the other Party.
ARTICLE III: TERM OF AGREEMENT
Subject to Article II above, this Agreement shall continue in effect
through June 7, 2008.
ARTICLE IV: INTERCONNECTION
4.1 Interconnection shall be made as shown in Exhibit A.
4.2 Operator shall be responsible for the design, construction,
installation, maintenance, and ownership of Operator's Interconnection
Facilities on its side of the Interconnection Point.
4.3 Virginia Power shall be responsible for the design, construction,
installation, maintenance, and ownership of all Interconnection Facilities on
Virginia Power's side of the Interconnection Point, and Virginia Power-owned
metering and telemetering facilities (including CTs and PTs), wherever located.
4.4 (a) Operator shall pay for all Interconnection Costs as defined in
Section 1.29, by making a continuing monthly facilities charge payment at the
rate calculated for excess transmission facilities (69 kV and above). This
continuing monthly rate is presently calculated at 1.30 percent of the
Interconnection Cost of $5,353,828. Such monthly charge shall be subject to
change if Virginia Power's Interconnection Facilities
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change or if and when the SCC approves a different rate for excess transmission
facilities provided in accordance with Section IV or any successor section of
Virginia Power's Terms and Conditions on file with the SCC from time to time.
(b) In the event any excess Interconnection Facilities are required
which are rated below 69 kV, the charge for such facilities will be based on the
distribution facilities charge rate in effect with the SCC from time to time.
4.5 In addition to payments for excess Interconnection Facilities,
Operator shall pay for any necessary rearrangement or relocation of existing
Virginia Power-owned facilities by making a one-time payment equal to the actual
cost for the rearrangement or relocation of such facilities. Operator will pay
for such work in the same manner as Virginia Power charges its other customers
for similar work. No continuing monthly charge shall be assessed on these
payments.
4.6 In the event it becomes necessary for Virginia Power to alter, add
to, or rearrange the Virginia Power-owned Interconnection Facilities to continue
to conduct interconnected operations in accordance with Prudent Practices,
Operator shall be notified of the alterations, additions or rearrangements
required and of the costs of such work. Operator shall pay Virginia Power the
reasonable cost of such work as additional Interconnection Costs in the manner
prescribed in Sections 4.4 and 4.5 of this Agreement.
4.7 Operator shall provide, at its expense, all Interconnection and
protective devices reasonably required by Virginia Power. Virginia Power
reserves the right to modify or expand its requirements for Interconnection and
protective devices in conformance with Prudent Practices. Virginia Power shall
allow Operator a reasonable time for complying with any such modified or
expanded requirements.
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4.8 Either Party shall notify the other in advance of any changes in
their respective systems that will affect the proper coordination of protective
devices on the two systems.
4.9 Operator shall provide for the purpose of telemetering, at its
expense, a telecommunication circuit to the Regional Operations Center serving
the operating division where the Facility is located.
ARTICLE V: SALE OF ENERGY AND CAPACITY TO VIRGINIA POWER
5.1 Subject to Operator's obligations to its steam host, Operator
agrees to utilize Prudent Practices to maintain the Facility in such a manner as
to have 115,000 kW of Capacity available for Dispatch by Virginia Power at all
times except during Scheduled Outages and Force Majeure events. During the Term
hereof, Operator shall not sell, contract to sell or otherwise provide the
electrical energy generated by the Facility (in excess of the Facility's
consumption of such electrical energy) or its Capacity to any person or entity
other than Virginia Power.
5.2 Operator agrees to sell and Virginia Power agrees to purchase the
Net Electrical Output.
5.3 For each kilowatt-hour of Net Electrical Output, Virginia Power
shall pay Operator an amount equal to the sum of (i) the Variable O&M Component
plus (ii) the Fuel Component, computed as set forth below in this Section 5.3
(the "Energy Purchase Price"):
(a) Initially, the Variable O&M Component shall be
$0.00353/kWh. Commencing April 1, 1999 and each April 1 thereafter, the
initial Variable O&M Component ($0.00353/kWh) shall be adjusted by the
percentage change (rounded to the nearest 0.01 percent) between the
Base Index and the Current Index. If
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such index is materially changed or ceases to be published, a mutually
acceptable successor index shall be substituted.
(b) For any Month, the Fuel Component (expressed in $/kWh)
shall be equal to the product of (i) the Cost of Fuel and (ii) the Heat
Rate divided by 1,000,000. The Cost of Fuel shall be the delivered cost
to Operator of the coal purchased and delivered to the Facility for use
in the generation of electricity, accounted for on a "last in, first
out" basis, including commodity costs, normal transportation costs
(e.g., excluding demurrage payable or reimbursable by Operator), and
costs of freeze protection and other treatment of the coal during
transportation or storage, all reduced to an average charge stated in
$/MMBtu computed in the manner set forth on Exhibit C. Exhibit C
provides a Monthly projection of Operator's Cost of Fuel for the period
from January 1, 1997 to April 30, 2003. Operator shall compute and
provide Virginia Power with the actual Cost of Fuel within 15 days of
the end of each Month. For purposes of computing the Fuel Component,
however, the Cost of Fuel shall not exceed the applicable value set
forth on Exhibit C. In the event that Operator amends, modifies or
replaces its existing fuel or rail agreements or otherwise reasonably
believes that the actual Cost of Fuel will be less than the amounts set
forth on Exhibit C, Operator will forward to Virginia Power a revised
projection of such delivered Cost of Fuel. The Heat Rate used to
compute the Fuel Component shall be 11,100 Btu per kilowatt-hour.
(c) Operator may, with at least one-week prior written notice
to Virginia Power, specify a discount to the Energy Purchase Price,
provided that (i) Operator may not specify more than one discount
factor to be applied to the Energy Purchase Price, (ii) the discounted
Energy Purchase Price must go into effect at 12:01am on any Day and end
at 12:00pm on any Day, and (iii) the discount to the Energy Purchase
Price shall be effective for at least one week. Operator may revise, or
revoke a discount to the Energy Purchase Price with at least one week
written notice to Virginia Power.
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(d) Operator's existing coal supply and transportation
arrangements expire April 11, 2003. Prior to such expiration, Operator
shall arrange for coal supply and transportation contracts for the
remainder of the Term hereof. At the time Operator solicits proposals
for a replacement coal supply, Operator shall invite Virginia Power to
submit a proposal for the supply of coal for use in the Facility during
the remainder of the Term hereof, such coal to be delivered F.O.B.
Lamberts Point, Norfolk, Virginia. If Virginia Power elects to submit a
proposal and such proposal conforms in all material respects to the
material provisions of Operator's general coal supply solicitation,
Operator shall consider Virginia Power's proposal along with other
proposals it may receive. All proposals will be evaluated on a
delivered cost basis.
(e) If Virginia Power's proposal is selected, the delivered
cost of the coal thereafter provided by Virginia Power shall be the
basis for determining the Cost of Fuel hereunder; provided, however,
Virginia Power shall have the option to deliver that portion of the
coal utilized by the Facility that is allocable (in a manner to be
mutually agreed) to the Net Electrical Output purchased and sold
hereunder at no charge to Operator, in which case such Cost of Fuel
shall be reduced to reflect the full amount of such reduction in
Operator's cost.
(f) If Virginia Power submits a proposal which conforms in all
material respects to the material provisions of Operator's general coal
supply solicitation, but Operator selects the proposal of another
supplier, the delivered coal cost derived from Virginia Power's
proposal thereafter shall become the basis for determining the Cost of
Fuel hereunder unless the actual delivered cost of coal results in a
lower Energy Purchase Price hereunder.
(g) If Virginia Power is selected as the coal supplier for the
Facility, Operator will thereafter be excused from any non-performance
under this Agreement and will be entitled to receive Capacity Payments
which would have been earned in the absence of such non-performance to
the extent such non-performance results from Virginia Power's failure
to deliver coal in accordance with its coal supply agreement with
Operator. In addition, such coal supply agreement shall provide
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that to the extent of Virginia Power's non-performance thereof,
Operator shall have the right to purchase replacement coal. The
delivered cost of such replacement coal shall be used in determining
the Cost of Fuel hereunder during any such period of non-performance by
Virginia Power provided Operator uses reasonable efforts to secure the
most economic supply of replacement coal available at that time.
5.4 In addition to the Energy Purchase Price, the Operator shall be
paid the following cycling charge and stand-by charges:
(a) A cycling charge of $1,406 (per generating unit) for each
time the Facility is Dispatched off-line (hereinafter "off-line" is
considered to mean "to a Net Electrical Output level of zero") and (i)
is not directed to maintain a Hot stand-by condition or (ii) goes
off-line at the expiration or termination of a Hot stand-by condition.
This cycling charge shall not be payable if the Facility is taken
off-line by Operator other than in accordance with the Dispatch
Instructions.
(b) A Hot stand-by charge of $94.48/hour for each hour or part
thereof that the Facility is held in Hot stand-by per the Dispatch
Instructions.
Commencing April 1, 1999 and each April 1 thereafter, the cycling charge and Hot
stand-by charge each shall each be adjusted by the percentage change (rounded to
the nearest 0.01 percent) between the Base Index and the Current Index. If such
index is materially changed or ceases to be published, a mutually acceptable
successor index shall be substituted.
5.5 Subject to the exceptions and limitations provided in Section 5.6,
for each Day that the Operator provides Capacity from the Facility, Virginia
Power shall pay Operator an amount equal to the product of (a) the lesser of (i)
the Dependable Capacity for such Day and (ii) the Capacity for such Day
specified in Operator's Notice of Available Capacity and (b) the applicable
Capacity Purchase Price for such Day
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("Capacity Payment"). The applicable Capacity Purchase Price shall vary each
calendar year and for the Peak Period and the Non-Peak Period of each calendar
year as follows:
Capacity Purchase Price (per kW per Day)
Calendar Year Peak Period Non-Peak Period
1997 thru 1999 $1.40736 $1.00512
2000 thru 2002 $1.34448 $0.96048
2003 thru 2008 $0.40488 $0.2892
5.6 The Capacity Payments shall be subject to the following conditions
and limitations:
(a) No Capacity Payment shall be payable for any Day in which
the Facility is not made available by Operator for Dispatch on-line for
any reason (including the occurrence of a Force Majeure event declared
by Operator).
(b) No Capacity Payment shall be payable for any Day on which
Virginia Power records a Dispatch Variance. As used herein, a
"Variance" shall mean a metered variation in the Net Electrical Output
of the Facility greater than plus or minus 5.0 percent of the level
then specified in the Dispatch Instructions (taking into account
applicable "ramp up" and "ramp down" rates set out in the Design
Limits). A "Dispatch Variance" shall occur any time that there are two
Variances during any Day but only if (i) Virginia Power notifies
Operator of each such Variance (by telephone or facsimile), (ii) the
second such Variance is recorded by Virginia Power at 30 minutes after
the time of the notice given to Operator respecting the first such
Variance and (iii) Virginia Power provides notice of the second
Variance within a reasonable time after it is recorded (but in no event
later than four hours after it is recorded).
(c) Following a Dispatch Variance as described in Section
5.6(b) above, the Dependable Capacity of the Facility for subsequent
Days shall be deemed to equal the highest two hour average Net
Electrical Output achieved during the remainder of the Day on which
such Dispatch Variance occurred (i.e., following Operator's receipt of
the second notice of Variance) and Capacity
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Payments shall be made based on this level; provided that if during the
remainder of such Day the Facility operates at the level specified in
the then-current Dispatch Instructions for a period of at least two
consecutive hours without receiving notice of a Variance and continues
operating without notice of a Variance until the Facility is Dispatched
off-line, then subject to there being no subsequent Dispatch Variance
as described in Section 5.6(b), the Dependable Capacity of the Facility
shall be the level set in the last Test conducted in accordance with
Article VIII.
(i) If the Facility does not operate for two
consecutive hours following the occurrence of a Dispatch
Variance, then the Dependable Capacity shall be reset at zero.
(ii) A Dependable Capacity level set as a result of a
Dispatch Variance shall apply until reset in accordance with
this Section 5.6(c) or as the result of a Test in accordance
with Article VIII.
(iii) At any time that the Dependable Capacity for
the Facility is set at a level lower than 115,000 kW, Operator
shall continue to provide daily Notices of Available Capacity,
and if in accordance with any such notice the Facility is
Dispatched to a Net Electrical Output level greater than the
current Dependable Capacity level and as a result Operator
demonstrates that the Facility is able to operate continuously
at such Net Electrical Output level without receiving notice
of a Variance for a period of not less than two consecutive
clock hours (i.e., as measured by Virginia Power's meters used
to determine payment) and maintain such level until Dispatched
to a different Net Electrical Output level or off-line, then
the Dependable Capacity shall be reset at such Net Electrical
Output level in computing the Capacity Payments payable by
Virginia Power for future Days, again until the Dependable
Capacity of the Facility is reset as the result of a Test or
until there is a subsequent Dispatch Variance.
(iv) Nothing herein shall be deemed to obligate
Virginia Power or its Designee to Dispatch the Facility
on-line to any Net Electrical Output
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level or to increase the Net Electrical Output level specified
in the Dispatch Instructions for the purpose of allowing
Operator a "demonstration period" in which to increase the
level of Capacity Payments otherwise payable hereunder.
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(d) The aggregate of the Capacity Payments to be made in any
Contract Year shall not exceed the applicable Capacity Payment Cap set
forth below:
Annual Capacity
Contract Year Ending Payment Cap
November 30, 1998 $40,680,000*
November 30, 1999 $43,290,000
November 30, 2000 $41,525,000
November 30, 2001 $41,361,000
November 30, 2002 $41,361,000
November 30, 2003 $14,910,000
November 30, 2004 $12,455,000
November 30, 2005 $12,455,000
November 30, 2006 $12,455,000
November 30, 2007 $12,455,000
June 7, 2008 $6,483,000
*The cap set forth above for the Contract Year ending November 30, 1998 shall be
reduced by the product of (i) 1.10 and (ii) the sum of the following amounts:
(a) 0.04327 $/kWh for each kilowatt-hour of Net Electrical Output
generated by the Facility from December 23, 1997 to December
31, 1997, inclusive, and purchased by Virginia Power under the
Existing Agreement at the on-peak energy price for 1997 set
forth in Section 5.2(b) of the Existing Agreement;
(b) 0.00277 $/kWh for each kilowatt-hour of Net Electrical Output
generated by the Facility from December 23, 1997 to December
31, 1997, inclusive, and purchased by Virginia Power under the
Existing Agreement at the off-peak energy price for 1997 set
forth in Section 5.2(b) of the Existing Agreement;
(c) 0.07528 $/kWh for each kilowatt-hour of Net Electrical Output
generated by the Facility on or after January 1, 1998 and
purchased by Virginia Power under the Existing Agreement at
the on-peak energy price for 1998 set forth in Section 5.2(b)
of the Existing Agreement;
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(d) 0.00355 $/kWh for each kilowatt-hour of Net Electrical Output
generated by the Facility on or after January 1, 1998 and
purchased by Virginia Power under the Existing Agreement at
the off-peak energy price for 1998 set forth in Section 5.2(b)
of the Existing Agreement;
ARTICLE VI: OPERATION AND MAINTENANCE
6.1 By September 1 of each Contract Year, Operator shall initiate
discussion with Virginia Power to establish Scheduled Outage periods for the
next Contract Year. The Scheduled Outage periods, which in the aggregate shall
not exceed 30 Days per generating unit in any Contract Year and shall be limited
to the Non-Peak Period, will be finalized to Virginia Power's reasonable
satisfaction by October 31 of each Contract Year; provided, however, if the
Parties cannot agree as to the Scheduled Outage periods for the next Contract
Year by October 31, Virginia Power shall establish the Scheduled Outage periods
for the next Contract Year during the Non-Peak Period closest to the period(s)
requested by Operator when the outages can be scheduled consistent with
maintaining Virginia Power's ability to meet its overall service obligations and
contractual commitments with other suppliers and purchasers of electrical energy
and capacity.
6.2 The Net Electrical Output shall be 60 hertz, three-phase
alternating current at a nominal voltage of 230,000 volts. The Net Electrical
Output shall be metered at the Interconnection Point. Each electrical generator
at the Facility has a nameplate rating of 67,500 kVA at .85 power factor and
shall be operated, within the design limits of the generating units, at the
voltage specified by Virginia Power.
(a) Operator shall not change, alter, modify or tamper with
Virginia Power-owned Interconnection Facilities. If Operator changes, alters,
modifies or tampers with Virginia Power-owned Interconnection Facilities without
the prior written consent of Virginia Power, Operator shall repay to Virginia
Power immediately upon demand all overpayments determined by Virginia Power to
have been paid to Operator for Net
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Electrical Output or Capacity not actually delivered or available (as the case
may be), subject, however, to the provisions of Section 6.2(b).
(b) If Operator disputes any allegation by Virginia Power that
Operator has changed, altered, modified or tampered with Virginia Power-owned
Interconnection Facilities, such dispute shall be resolved in a proceeding in
the appropriate judicial or regulatory forum. During the pendency of any such
proceeding, Virginia Power shall continue to accept and pay for Net Electrical
Output from the Facility pursuant to the terms of this Agreement. If Operator is
found, by final adjudication of such judicial or regulatory forum, to have
changed, altered, modified or tampered with Virginia Power-owned Interconnection
Facilities, Operator shall immediately repay to Virginia Power the overpayments
referred to in Section 6.2(a) together with Interest from the date Virginia
Power first demanded repayment.
6.3 Operator's Interconnection Facilities shall be subject to
reasonable inspection by Virginia Power or by Virginia Power's authorized
representative during business hours after reasonable notice to Operator. Such
inspection shall not be construed as approval by Virginia Power of Operator's
method of operation and maintenance, and such inspection shall not impose on
Virginia Power any notice obligations or other responsibilities to Operator with
respect to the adequacy or appropriateness of Operator's operation and
maintenance practices.
6.4 Operator shall have its protective relays calibrated and the
protective circuits operationally checked in the presence of authorized Virginia
Power personnel at least once every two years by a person qualified to perform
such service. Virginia Power shall be notified in writing by Operator of the
results of these operational checks. Operator will give Virginia Power 15 days
advanced notice of relay calibrations and operational checks of the protective
circuits.
6.5 The Parties shall maintain communications which shall include, but
not be limited to, system paralleling or separation, scheduled or unscheduled
shutdowns,
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equipment clearances, periodic load reports, maintenance schedules, tagging of
Interconnection interrupting devices, meter tests, relay tests, billing, and
other routine communication. The Parties shall develop mutually acceptable
methods of notification and designate their respective personnel who are to
receive notices.
6.6 Virginia Power shall have the right to disconnect temporarily
without notice Operator's Interconnection Facilities if, in Virginia Power's
opinion, a Hazardous Condition exists and such disconnection appears reasonably
necessary to protect Virginia Power's customers, employees or agents, or the
property of any of them. Such temporary interruptions or reductions shall end as
soon as possible consistent with Prudent Practices.
6.7 Virginia Power, with reasonable notice to Operator, may construct,
install, open, maintain, repair, replace, investigate, inspect, or test any part
of Operator's Interconnection Facilities or any of Virginia Power's
Interconnection Facilities, equipment, or any other part of Virginia Power's
system that can affect the Facility's operation.
6.8 From time to time, unusual system conditions may exist during which
Operator can assist Virginia Power in maintaining the integrity of the Virginia
Power system. Operator shall cooperate with Virginia Power whenever Virginia
Power notifies Operator of such condition or problem.
6.9 The effectiveness of this Agreement is expressly conditioned and
contingent upon Operator's Facility being a Qualifying Facility pursuant to the
FERC regulations in effect as of the date of this Agreement.
6.10 The Parties agree to revise the operating procedures to reflect
this Agreement no later than 30 Days after the Effective Date hereof.
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6.11 Operator shall provide Virginia Power with Facility performance
and event data in a format consistent with the then NERC Generating Availability
Data Systems reporting standards. The frequency of such performance and event
data submittals shall be as specified by Virginia Power from time to time.
ARTICLE VII: DISPATCH
7.1 Subject to Section 7.2, Operator shall operate the Facility at the
Net Electrical Output levels specified from time to time in the Dispatch
Instructions.
7.2 Notwithstanding Section 7.1, Operator's duty to operate or alter
the operation of the Facility in accordance with the Dispatch Instructions shall
be subject to the following conditions and limitations (hereinafter the "Design
Limits"):
(a) When the Facility is Dispatched any Day, whether from an
off-line or on-line condition, the Dispatch Instructions shall specify
a Net Electrical Output level not lower than the lesser of (i) 82
megawatts or (ii) 90 percent of the Capacity level specified in the
Notice of Available Capacity for such Day.
(b) If the Facility has been off-line for any reason, it shall
not be required to be synchronized and achieve a Net Electrical Output
level of 82 megawatts sooner than the applicable "ramp up" periods
indicated below:
(i) Cold Starts. From a Cold Start condition i.e.,
any time the Facility has been Dispatched off-line and is not
being maintained in a Hot stand-by condition, the Facility can
be synchronized with Virginia Power's system within nine hours
of receipt of Dispatch Instructions requiring Net Electrical
Output and can achieve a Net Electrical Output level of 82
megawatts within 14 hours of receipt of such Dispatch
Instructions.
(ii) Hot Starts. From a "Hot stand-by" condition, the
Facility can achieve a Net Electrical Output level of 82
megawatts within 2.5 hours of receipt of Dispatch
Instructions.
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(c) Reduction from an on-line Net Electrical Output level to
an off-line condition can take place within 1.5 hours of receipt of
such Dispatch Instructions.
(d) The "ramp-up" of the Facility from 82 megawatts to a
higher Dispatch level can be accomplished at a rate of two
megawatts/minute. The "ramp down" from a previous Dispatch level to a
level of 82 megawatts or above can be accomplished at a rate of three
megawatts/minute.
(e) Operator shall not synchronize the Facility with the
Virginia Power system sooner than the time specified in Virginia
Power's then-current Dispatch Instructions. If no time is designated in
the Dispatch Instructions, then Operator shall synchronize the Facility
with Virginia Power's system no sooner than the applicable Design
Limits.
(f) Once the Facility has been Dispatched on-line, the
Facility shall not be required to be off-line sooner than 5.5 hours
after the Facility is required to achieve the lesser of 82 megawatts or
the Net Electrical Output level specified in the Dispatch Instructions.
(g) Virginia Power or its Designee shall have the right to
direct Operator to hold the Facility in a Hot stand-by condition for up
to 12 hours from the time in which the Facility goes off-line by so
notifying Operator as part of the Dispatch Instructions directing the
Facility off-line. Virginia Power or its Designee may direct that the
Facility be removed from a "Hot stand-by" condition at any time through
appropriate Dispatch Instructions. Notwithstanding the provisions of
Section 7.2(e), the Facility may be synchronized with Virginia Power's
system during Hot stand-by.
7.3 On Friday of each week Virginia Power or its Designee will provide
Operator a non-binding schedule of anticipated Dispatch Instructions for the
following Week.
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7.4 Operator shall provide the Notice of Available Capacity by
facsimile to Virginia Power's System Operations Center or to the operations
center of Virginia Power's Designee, as applicable, as well as Virginia Power's
Capacity Acquisition Department.
7.5 Operator may, from time to time, upon written notice request
Virginia Power to allow the Facility to generate electricity in order for
Operator to test and/or evaluate its equipment ("Operator Requested
Generation"). Such Operator Requested Generation shall be scheduled at least
three Business Days in advance with Virginia Power and shall be subject to the
approval of Virginia Power. Payments for the Net Electrical Output during an
Operator Requested Generation period shall equal (on a kWh basis) the lower of:
(i) the Energy Purchase Price; or (ii) the lowest fossil fuel-fired generating
cost (excluding variable operation and maintenance expenses) achieved at a
Virginia Power fossil-fueled power station at the time Virginia Power approves
Operator's request (hereinafter defined as the "Operator Requested Generation
Price"). If Virginia Power determines Dispatch is necessary, and this
determination is made before or during a Virginia Power approved Operator
Requested Generation period, then Virginia Power may cancel or interrupt, as the
case may be, the Operator Requested Generation period and subsequently Dispatch
the Facility as it deems appropriate, in which case the compensation for Net
Electrical Output shall be the Energy Purchase Price.
ARTICLE VIII: TESTING FOR DEPENDABLE CAPACITY
8.1 The Facility's Dependable Capacity shall be set initially at
115,000 kW and may change from time to time pursuant to the provisions of this
Article VIII.
8.2 Virginia Power shall have the right to request Virginia Power
Requested Tests to reset the Facility's Dependable Capacity from time to time as
set forth below:
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(a) Virginia Power Requested Tests shall be limited to six per
Contract Year, exclusive of any Virginia Power Requested Tests which
result in a Tested Capacity less than the Capacity level indicated in
the Notice of Available Capacity for the Day on which Virginia Power
requested the Test be performed. The maximum number of permitted
Virginia Power Requested Tests will be prorated for Contract Years
which are less than 365 Days based on the number of Days in the
Contract Year, with the prorated number to be rounded up to the next
whole number.
(b) If Virginia Power requests a Test, the Test Period shall
be deemed to begin immediately following expiration of the applicable
Notice Period.
(c) The Net Electrical Output level of the Facility shall not
be limited by Dispatch Instructions during a Virginia Power Requested
Test.
(d) The duration of each Virginia Power Requested Test will be
six hours unless the Test is terminated earlier by Virginia Power.
(e) Virginia Power shall not request a Test during (i) a
Scheduled Outage or (ii) on any Day after a Dispatch Variance has
occurred or (iii) on any Day that the Facility's maximum available
Capacity has been set at zero per Operator's Notice of Available
Capacity.
(f) During a Virginia Power Requested Test, Operator will be
paid for Net Electrical Output in accordance with Section 5.3 and will
be paid the cycling charge, if applicable, pursuant to Section 5.4.
8.3 Operator shall have the right to request Operator Requested Tests
to reset the Facility's Dependable Capacity from time to time. Operator
Requested Tests shall be initiated and conducted by Virginia Power in a manner
consistent with the following:
(a) Operator may request an Operator Requested Test by
providing an oral or written request to Virginia Power by 5:00pm on any
Day. The Test will be performed on a subsequent Day but not later than
the end of the fifth Day following the Day on which the Test was
requested. Virginia Power shall notify
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Operator prior to the start of any test, after which the Test Period
shall commence following the applicable Notice Period.
(b) The Net Electrical Output level of the Facility will not
be limited by Dispatch Instructions during an Operator Requested Test.
(c) The duration of each Operator Requested Test shall be six
hours unless terminated earlier by Virginia Power.
(d) During an Operator Requested Test, Operator will be paid
for Net Electrical Output delivered at a level equal to the lesser of
(i) $0.001/kWh lower than Virginia Power's ISC in effect during such
test or (ii) the applicable Energy Purchase Price. Operator will not be
entitled to receive a cycling charge following any Operator Requested
Test unless the Facility had been Dispatched on-line prior to the start
of the Test.
(e) Virginia Power will perform Operator Requested Tests
during On-Peak Hours.
8.4 Following any Test, the Dependable Capacity of the Facility shall
be reset at a level equal to the average hourly Net Electrical Output level of
the Facility recorded during the Test Period, except that for hours in which the
Capacity level so recorded exceeded 115,000 kW the Capacity level shall be
deemed to have equaled 115,000 kW. If the Test is terminated prior to the end of
the Test Period by Virginia Power, or if Virginia Power fails to perform an
Operator Requested Test within five Days from Operator's request for such Test,
the Dependable Capacity shall be reset to 115,000 kW. The Dependable Capacity
established by any Test shall be reset effective 12:01am on the Day following
the Day on which Virginia Power provided notice of the Test or on which Operator
requested such Test.
ARTICLE IX: METERING AND BILLING
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9.1 Virginia Power shall own and maintain all meters and metering
devices used to measure the delivery and receipt of electrical energy and
Capacity for purposes of computing payments due hereunder.
9.2 Virginia Power shall install, own, and maintain telemetering
equipment at Operator's expense as an Interconnection Cost. Operator shall
reimburse Virginia Power for these costs as provided in Section 4.4. Operator
agrees to contract for separately and pay for all costs associated with the
lease of a dedicated telephone line for telemetering purposes from the telephone
company serving the Facility.
9.3 All meters and metering equipment used to determine the Net
Electrical Output and Capacity level of the Facility shall be sealed, and the
seals broken only by Virginia Power personnel when the meters are to be
inspected, tested, or adjusted; provided, however, that Operator shall receive
prior notice thereof and shall have the right to be present.
9.4 On a regular schedule and, in addition, upon reasonable request by
Operator, Virginia Power will test the meter(s) in accordance with the
provisions for meter testing in Virginia Power's approved Terms and Conditions
for Supplying Net Electrical Output as filed with the SCC. Operator shall have
the right to have a representative present during any metering inspection, test,
or adjustment. When, as a result of such a test, a meter is found to be no more
than two percent fast or slow, no adjustment will be made in the amount paid to
Operator for energy, or energy and Capacity, delivered to Virginia Power. If the
meter is found to be more than two percent fast or slow because of incorrect
calibration, Virginia Power will calculate the correct amount delivered to
Virginia Power for a period equal to one-half of the time elapsed since the most
recent test, but in no case for a period in excess of 12 months. The previous
payments by Virginia Power for this period shall be subtracted from the amount
of payments that are calculated to have been owed under this Agreement. If the
difference is a positive number, that difference shall be paid by Virginia Power
to
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Operator; if the difference is a negative number, that difference shall be paid
by Operator to Virginia Power. Unless better data are available from a
mutually-acceptable source, the percentage registration of a meter will be
calculated by the "weighted average" of light load and full load, which is
calculated by giving a value of 1 to the light load and a value of 4 to the full
load.
9.5 Whenever it is found that, for any reason other than incorrect
calibration or tampering, the metering apparatus has not registered the true
amount of Net Electrical Output which has been delivered by Operator to Virginia
Power, the Net Electrical Output delivered during the entire period of incorrect
registration shall be estimated, based upon all known pertinent facts, and the
amount of Net Electrical Output so estimated will be used in calculating the
corrected amounts to be paid to Operator. The adjusted amount will be for a
period equal to one-half of the time elapsed since the most recent test of the
metering apparatus, but in no case for a period in excess of 12 months. Any
overpayments or underpayments by Virginia Power for energy, or energy and
Capacity, delivered by Operator to Virginia Power shall be corrected in the
manner described in Section 9.4.
9.6 Meters shall be read, and bills rendered, according to the meter
reading and billing schedule established by Virginia Power but no less often
than every 40 days. Payment for Net Electrical Output, delivered to Virginia
Power and Capacity made available to Virginia Power during the billing period
shall be made on the third Business Day of the second Month after the Month such
Net Electrical Output and Capacity was provided to Virginia Power via wire
transfer to an account specified by notice from Operator and its lender. If the
third Business Day occurs on the lender's holiday, payment will be wired on the
next Business Day.
9.7 Operator agrees to pay an administrative charge to Virginia Power
to reflect all reasonable costs incurred by Virginia Power for meter reading and
billing. The monthly meter reading and billing charge will equal the basic
customer charge in
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Schedule 6 - Large General Service. Such charge shall change from time to time
when the SCC approves a different rate in Schedule 6.
ARTICLE X: TERMINATION AND BREACH
10.1 Termination of this Agreement shall occur only upon the expiration
of the Term, or upon a material breach of this Agreement by either Party that is
not cured within 60 days (30 days in the case of a failure to make a required
payment hereunder) following receipt of written notice of such breach to the
breaching Party from the non-breaching Party, provided, however, that if any
such breach (other than a failure to make any required payment hereunder) cannot
by the exercise of due diligence be cured within such 60-day period, the
non-breaching Party shall not have the right to terminate this Agreement so long
as the breaching Party, within such 60-day period, has commenced and continues
to diligently proceed with the cure of such breach so as to effect such cure as
soon as possible but in no event later than 90 days following receipt of the
written notice of breach referred to in this Section 10.1.
10.2 Refusal by Virginia Power to purchase Net Electrical Output from
Operator's Facility in accordance with Sections 6.6 or 6.7 of this Agreement
shall not be a breach of this Agreement.
10.3 If this Agreement is terminated for any reason other than breach
by Virginia Power prior to the end of the Term, Operator shall, in addition to
any amounts then due and owing hereunder and any other liabilities, be liable to
Virginia Power for the total difference (including accrued Interest) between the
payments for Capacity already made, if any, by Virginia Power to Operator and
the payments for Capacity that should have been paid to Operator for short term
Capacity furnished at the rate set forth in Schedule 19 or any successor
schedule in effect at the time the contract is entered into. For the sole
purpose of the calculation set forth in the immediately preceding sentence, the
payments "already made" for Capacity by Virginia Power subsequent to the
Effective
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Date shall be deemed to equal the lesser of (i) $14 million per calendar year or
(ii) the actual Capacity Payments made by Virginia Power to Operator during such
calendar year pursuant to Section 5.5. Notwithstanding anything contained in
this Agreement to the contrary but without limiting the foregoing provisions of
this Section 10.3, neither Party shall be liable to the other for the other's
cost of replacement power, loss of profits, or other consequential or incidental
damages arising out of a termination or breach of this Agreement.
10.4 Either Party shall be excused from performance of this Agreement
or from a delay in performance if and to the extent that it shall be prevented
from performing or delayed by storm, flood, lightning, earthquake, explosion,
unavoidable shortages of material or supplies, civil disturbance, labor dispute,
act of God or the public enemy, action of a court, or any other cause beyond the
reasonable control of such Party (hereinafter considered events of "Force
Majeure"). If either Party asserts that a Force Majeure event affecting its
performance has occurred, that Party must notify the other Party as soon as
practicable by telephone and within 48 hours after telephone notification, in
writing of the cause of the event and the expected duration of the Force
Majeure. In the event the Facility is rendered unavailable for Dispatch due to a
Force Majeure event declared by Operator, Virginia Power's obligation to make
Capacity Payments shall cease during those hours.
10.5 Should Operator or any of its affiliates ever desire to dispose of
its right, title, or interest in the Facility (hereinafter called "Transfer
Interest") other than the sale and leaseback of the Facility to provide
financing for the Facility, it shall offer the Transfer Interest to the steam
buyer if the steam buyer has the right of first refusal, with the intent that
the steam buyer shall continue to operate the Facility in accordance with the
provisions of this Agreement pursuant to an assignment of this Agreement. If the
steam user shall decline to purchase the Transfer Interest, or the steam buyer
does not have a right of first refusal, Operator will offer to sell such
interest to Virginia Power at its fair market value, not to exceed the net
investment in the Facility, which shall be
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determined as the initial investment less any investment tax credits less
accumulated depreciation calculated on a straight line basis over the design
life of the Facility. If Virginia Power agrees to purchase the Transfer Interest
and there is disagreement as to the fair market value of the Transfer Interest,
then either Party shall be entitled to submit the dispute to a panel of three
arbitrators. If the Parties are unable to agree as to the terms and conditions
of such contract, then either Party would be entitled to submit the dispute to a
panel of three arbitrators. Each of the Parties would pick one arbitrator and
the two arbitrators would pick the third arbitrator. The decision of the
arbitrators would be binding upon the Parties. The expenses of such arbitration,
excluding attorneys' fees, shall be equally divided among the parties. The
arbitration shall be held in Richmond, Virginia or such other place as the
Parties may mutually agree. The arbitrators shall initiate the hearing as
promptly and expeditiously as possible after their selections (and both Parties
shall cooperate to this end) and shall conclude the hearings within thirty days
of their commencement unless the arbitrators expressly find that additional time
is necessary for completion of the hearings for reasons in the best interest of
the Parties. The award of the arbitrators shall be made no later than thirty
days from the date of the closing of the hearings.
Notwithstanding anything herein contained to the contrary, the
provisions of this Section 10.5 shall only be binding on the Operator (Cogentrix
Virginia Leasing Corporation) and its affiliates (it being understood and agreed
that the foregoing paragraph shall not apply to any transfer by Operator to any
affiliate of Operator so long as such affiliate agrees to be bound by the
foregoing paragraph) and not on any successor or assign, and, without limiting
the generality of the foregoing, the sale, lease or other transfer of the
Facility by one or more lenders holding a lien on the Facility or by a lessor of
the Facility, or by the Operator or an affiliate thereof upon request of such
lender or lenders or lessor, or by a court pursuant to foreclosure or other
proceedings, or by a trustee in bankruptcy or receiver of Operator or any
affiliate thereof, shall not be subject to the provisions of this Section 10.5
and upon any such sale, lease or transfer the provisions of this Section 10.5
shall terminate and be null and void.
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ARTICLE XI: MISCELLANEOUS
11.1 This Agreement shall be interpreted in accordance with the laws of
the Commonwealth of Virginia.
11.2 Operator shall not assign or transfer this Agreement or any claims
or interest therein without the prior written consent of Virginia Power, which
shall not be withheld unreasonably.
11.3 During the Term of this Agreement and for a period of five years
following the Termination or expiration hereof, Virginia Power or its designated
third-party auditors shall have access to all of Operator's books and records
relating to this Agreement (including but not limited to records related to
components of Operator's delivered cost of fuel to the Facility) during any
Business Day and shall be entitled to make any copies of these records as
necessary to conduct thorough and complete audits of the components of the
payment made by Virginia Power hereunder.
11.4 Each Party shall keep complete and accurate records and all other
data required by each of them for the purpose of proper administration of this
Agreement.
(a) All such records and data shall be maintained for a
minimum of five years after the creation of such records or data and
for any additional period required by regulatory agencies with
jurisdiction over the Parties; provided, however, that Operator shall
not dispose of or destroy any such records or data even after five
years without 30 Days prior notice to Virginia Power
(b) Operator shall maintain an accurate and up-to-date
operating log at the Facility with records of: (i) real and reactive
power production for each clock hour; (ii) changes in operating status,
including outages and Scheduled Outages; and (iii) any unusual
conditions found during inspections.
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(c) Either Party shall have the right from time to time upon
14 Days written notice to the other Party, to examine the records and
data of the other Party relating to this Agreement any time during the
period the records or data are required to be maintained.
11.5 The failure of either Party to enforce at any time any of the
provisions of this Agreement, or to require at any time performance by the other
Party of any provisions hereof, shall not be construed to be a waiver of such
provisions nor to affect the validity of this Agreement or any part hereof or
the right of such Party thereafter to enforce each and every such provision.
11.6 The termination or expiration of this Agreement shall not
discharge either Party hereto from any obligation it owes to the other Party
under this Agreement by reason of any transactions, loss, cost, damage, expense
or liability which shall occur or arise (or the circumstances, events, or basis
of which shall occur or arise) prior to such termination or expiration. The
Parties intend that any such obligation owed (whether the same shall be known or
unknown at the termination or expiration of this Agreement or whether the
circumstances, events, or basis of the same shall be known or unknown at the
termination or expiration of this Agreement) shall survive the termination or
expiration of this Agreement.
11.7 The Parties understand and agree that this Agreement and any
amendments thereto may be filed in accordance with applicable law and may be a
matter of public record. Operator and Virginia Power shall use all reasonable
efforts to maintain the confidentiality of the negotiations relating to the
preparation and execution of this Agreement; provided, however, that nothing
herein shall prohibit the disclosure of any such information (a) to the extent
required by statute, rule, regulation or judicial process and (b) to counsel and
auditors of Operator or Virginia Power, to any party in connection with the
financing of Operator's Facility and to their respective counsel, accountants or
to independent engineers or experts with whom any of the foregoing parties may
consult
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and who have agreed to maintain the confidentiality of this Agreement and the
terms hereof.
11.8 Subject to the provisions of Section 11.11, each Party agrees to
defend, indemnify and hold harmless the other Party against any and all claims,
liability, loss, damage, or expense to the extent caused by or resulting from
the negligent acts or omissions of that Party, its employees, or its agents,
with respect to claims asserted by persons or entities that are not Parties.
11.9 This Agreement is not binding until executed by a duly authorized
representative of each Party.
11.10 Operator shall keep current during the Term of this Agreement
adequate liability insurance coverage, all necessary licenses, permits, and
approvals for the ownership, construction, operation, and maintenance of its
Facility and Interconnection Facilities from the FERC and from any and all other
federal, state, and local agencies, commissions, and authorities with
jurisdiction over Operator and/or Operator's Facility and Interconnection
Facilities.
11.11 Operator shall maintain during the Term of this Agreement, (a)
such liability insurance coverage as shown in Exhibit B (such insurance to be
evidenced by an insurance certificate providing that such insurance shall not be
canceled or terminated without 30 days written notice to Virginia Power), and
(b) all licenses, permits and approvals for the ownership, operation and
maintenance of its Facility and Interconnection Facilities from the FERC and
from any and all other federal, state and local agencies, commissions and
authorities with jurisdiction over Operator and/or Operator's Facility and
Operator's Interconnection Facilities; provided however, that the failure of the
Operator to comply with the provisions of the foregoing clause (b) shall not
constitute a default by Operator under this Agreement if either (x) such failure
does not affect the ability of Operator to operate or maintain the Facility and
provide Net Electrical
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Output in accordance with the Dispatch Instructions or (y) if requested by
Virginia Power, Operator suspends operation of the Facility until such failure
is cured and agrees that it shall receive no Capacity Payments hereunder during
such period of suspension.
11.12 Whenever under this Agreement, future agreement of the Parties is
required, but such agreement cannot be reached, either Party may petition the
SCC for arbitration of the issue and the SCC's decision shall be final and
binding on the Parties.
11.13 During the Term hereof, Operator shall purchase its Electrical
Requirements from Virginia Power at the applicable tariff rate selected by
Operator or such other rate as the Parties may agree.
11.14 This Agreement constitutes the entire agreement between Operator
and Virginia Power with respect to the subject matter herein and supersedes any
prior or contemporaneous agreements or understandings between the Parties.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized officers this 5th day of December 1997.
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ X. Xxxx Xxxxxx
---------------------------
Name: X. Xxxx Xxxxxx
Title: VP - Regulation
COGENTRIX VIRGINIA LEASING CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Assistant VP - Results
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EXHIBIT B
Operator shall keep current during the term of this Agreement the
following insurance coverage:
a) Workers' compensation insurance which complies with the laws of the
Commonwealth of Virginia and employers' liability insurance with limits of
$100,000 for each accident, and $500,000 in the aggregate for each
employee-disease.
b) Comprehensive general liability insurance including but not limited to
coverage for premises, operations and independent contractors with a limit of
$1,000,000 each occurrence.
c) Excess umbrella liability insurance with a limit of $1,000,000 per occurrence
and in aggregate.
Virginia Power shall be named as an additional insured on the policies required
in b) and c) above, and the policies shall provide that the coverage thus
afforded Virginia Power shall be deemed primary and not supplementary to any
other coverage Virginia Power may obtain or maintain.
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EXHIBIT C
Cogentrix Virginia Leasing Corporation
Projected Cost of Fuel
Jan,1998- May,1998- Jan,2003-
1997 Apr,1998 Dec,1998 1999 2000 2001 2002 Apr,2003
---------------------------------------------------------------------------------
Coal & Rail Cost ($/ton) 69.71 73.13 70.60 74.07 77.71 81.53 85.55 89.76
Dumping Charge ($/ton) 0.53 0.56 0.56 0.59 0.62 0.65 0.68 0.67
Docking Charge ($/ton) 0.11 0.11 0.11 0.12 0.13 0.13 0.14 0.16
Barge Freight ($/ton) 0.89 0.92 0.92 0.96 1.00 1.04 1.08 1.08
Ship's Agent ($/ton) 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03
Freezing Proofing & Testing ($/ton) 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
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Cost of Fuel ($/ton) 71.28 74.77 72.24 75.78 79.49 83.39 87.49 91.72
Fuel Heating Value (Btu/lb of coal) 12,649 12,649 12,649 12,649 12,649 12,649 12,649 12,649
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Cost of Fuel ($/MMBtu) 2.8176 2.9556 2.8555 2.9954 3.1423 3.2965 3.4584 3.6258
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