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EXHIBIT 10.27
ELECTRICITY SALES AGREEMENT
BETWEEN
ROUGE STEEL COMPANY
AS BUYER
AND
DEARBORN INDUSTRIAL GENERATION, L.L.C.
AS SELLER
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TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS........................................................2
1.01 CERTAIN DEFINED TERMS.............................................2
1.02 INTERPRETATIONS; HEADINGS.........................................6
SECTION 2 REPRESENTATIONS AND WARRANTIES.....................................6
2.01 REPRESENTATIONS AND WARRANTIES OF ROUGE...........................6
2.02 REPRESENTATIONS AND WARRANTIES OF DIG.............................7
SECTION 3 CONDITIONS PRECEDENT...............................................8
3.01 ENFORCEMENT OF DIG'S OBLIGATIONS..................................8
3.02 ENFORCEMENT OF ROUGE'S OBLIGATIONS................................9
SECTION 4 OBLIGATIONS OF THE PARTIES.........................................9
4.01 DESIGN............................................................9
4.02 GOVERNMENTAL PERMITS AND APPROVALS...............................10
4.03 CONSTRUCTION OF THE PROJECT......................................11
4.04 [INTENTIONALLY BLANK]............................................12
4.05 OPERATION AND MAINTENANCE OF THE PROJECT.........................12
4.06 REASONABLE EFFORTS AND COOPERATION...............................13
SECTION 5 SALE AND PURCHASE OF ELECTRICITY..................................14
5.01 REQUIREMENT AND EXCLUSIVE SUPPLIER...............................14
5.02 AMOUNT AND TYPE OF SERVICE.......................................16
5.03 [INTENTIONALLY BLANK] ............................................16
5.04 NOTICE REQUIREMENTS..............................................16
5.05 DISCLAIMER OF WARRANTY...........................................17
5.06 RISK OF LOSS.....................................................18
SECTION 6 MEASUREMENT OF ELECTRICITY........................................18
6.01 MEASUREMENT OF ELECTRICITY.......................................18
6.02 ESTIMATION OF ENERGY WHEN METERING EQUIPMENT IS NOT FUNCTIONING..19
SECTION 7 ELECTRICITY QUALITY...............................................21
7.01 GENERAL STANDARD.................................................21
7.02 LIQUIDATED DAMAGES...............................................21
7.03 QUALITY COMMITMENT...............................................23
SECTION 8 PAYMENT CALCULATIONS..............................................23
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8.01 PAYMENTS.........................................................23
8.02 EXTENSION TERM PRICING...........................................24
8.03 PROPERTY TAX ABATEMENT ADJUSTMENT................................24
8.04 NO OTHER CHARGES.................................................24
8.05 TRANSITION CHARGES...............................................25
SECTION 9 PAYMENTS; BILLING; INTEREST ON PAST-DUE AMOUNTS...................25
9.01 PAYMENTS.........................................................25
9.02 BILLING..........................................................25
9.03 INTEREST ON PAST-DUE AMOUNTS.....................................26
9.04 FAILURE TO PAY...................................................26
9.05 DISPUTED INVOICES................................................27
SECTION 10 COMPLIANCE WITH LAWS.............................................28
10.01 COMPLIANCE WITH LAWS..........................................28
SECTION 11 INSURANCE........................................................28
11.01 INSURANCE.....................................................28
SECTION 12 TERM OF THIS AGREEMENT...........................................29
12.01 TERM OF THIS AGREEMENT........................................29
12.02 DETERMINATION OF COMMENCEMENT DATE............................30
SECTION 13 FORCE MAJEURE....................................................31
13.01 FORCE MAJEURE.................................................31
13.02 RESTRICTIONS..................................................33
13.03 NOTIFICATION OBLIGATIONS......................................33
13.04 OTHER CONSEQUENCES............................................33
13.05 MEETING BETWEEN PARTIES.......................................34
SECTION 14 DEFAULT AND TERMINATION..........................................34
14.01 EVENTS OF DEFAULT.............................................34
SECTION 15 WAIVERS; AMENDMENTS AND MODIFICATIONS............................36
15.01 WAIVERS.......................................................36
15.02 AMENDMENTS AND MODIFICATIONS..................................37
SECTION 16 NOTICES..........................................................37
16.01 NOTICES.......................................................37
SECTION 17 ASSIGNABILITY....................................................38
17.01 NON-ASSIGNABILITY.............................................38
17.02 PERMITTED ASSIGNMENT..........................................39
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SECTION 18 LIABILITIES AND INDEMNITIES; LEGAL FEES; COMPUTATION OF DAMAGES..39
18.01 LIABILITIES AND INDEMNITIES...................................39
18.02 [INTENTIONALLY BLANK].........................................41
18.03 LIMITATION OF LIABILITY.......................................41
18.04 DAMAGES PAYABLE BY DIG........................................41
18.05 DAMAGES PAYABLE BY ROUGE......................................42
18.06 DUTY TO MITIGATE..............................................42
SECTION 19 DISPUTE RESOLUTION PROCEDURES....................................43
19.01 IF A DISPUTE ARISES...........................................43
19.02 ARBITRATION...................................................43
SECTION 20 DIG'S FINANCING..................................................44
20.01 DIG'S FINANCING...............................................44
SECTION 21 MISCELLANEOUS....................................................45
21.01 ENTIRE AGREEMENT..............................................45
21.02 NO DRAFTING PRESUMPTION.......................................45
21.03 INDEPENDENT CONTRACTOR........................................45
21.04 SEVERABILITY..................................................45
21.05 GOVERNING LAW.................................................46
21.06 CONFIDENTIALITY...............................................46
21.07 DAMAGE, DESTRUCTION OR CONDEMNATION...........................47
21.08 COUNTERPARTS..................................................47
EXHIBIT A PROJECT SITE.......................................................1
EXHIBIT B ROUGE SITE.........................................................1
EXHIBIT C POINT OF DELIVERY..................................................1
EXHIBIT D MAXIMUM EMISSION CREDITS...........................................1
EXHIBIT E BASE PROPERTY TAX..................................................1
EXHIBIT F PRICING............................................................1
EXHIBIT G ALLOCATION OF CONTRACT CAPACITY....................................1
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ELECTRICITY SALES AGREEMENT
This ELECTRICITY SALES AGREEMENT, dated as of January 13, 1999, is made
by and between ROUGE STEEL COMPANY, a Delaware corporation ("ROUGE"), having
offices at 0000 Xxxxxx Xxxx, X.X. Xxx 0000, Xxxxxxxx, Xxxxxxxx, 00000, and
DEARBORN INDUSTRIAL GENERATION, L.L.C., a Michigan limited liability company
("DIG"), having offices at 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000.
RECITAL
WHEREAS, ROUGE owns and operates a manufacturing facility in Dearborn,
Michigan, which uses Electricity in its manufacturing operations; and
WHEREAS, ROUGE intends to continue to operate the manufacturing
facility;
WHEREAS, DIG intends to construct an electric and steam generating
facility near ROUGE's facility; and
WHEREAS, DIG will produce Electricity which DIG is willing to sell to
ROUGE to meet ROUGE's operational requirements; and
WHEREAS, ROUGE desires to buy Electricity from DIG.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Electricity Sales Agreement, ROUGE and DIG hereby agree as
follows:
SECTION 1
DEFINITIONS
1.01 CERTAIN DEFINED TERMS.
As used in this Electricity Sales Agreement, the words, phrases and
terms used herein shall be used in the ordinary meaning unless this Agreement
clearly indicates otherwise or unless the same is hereinafter defined, in which
instance, such word, phrase or term shall have the meaning attributed to it or
as defined below:
"Agreement" shall mean this Electricity Sales Agreement, as it may be
amended, modified or supplemented from time to time.
"Billing Distribution" shall mean the portion of the Electricity
delivered to the Point(s) of Delivery which FORD and ROUGE jointly inform DIG
represents the Electricity sold to ROUGE and is to be allocated to ROUGE for
invoice purposes. ROUGE agrees to be bound by such Billing Distribution and DIG
may rely on each such Billing Distribution.
"Circulating Water" shall mean water drawn from the Detroit Industrial
Processing Water Pipeline at the Rouge Site and circulated through closed
channels of various equipment to remove heat without contact with other process
fluids.
"Commencement Date" shall mean the date determined in accordance with
Section 12.02 but in no event later than June 1, 2000; provided however that DIG
shall use its commercially reasonable efforts to achieve a Commencement Date by
April 1, 2000.
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"Companion Agreements" shall mean separate steam sales agreements
between DIG and FORD, and DIG and ROUGE; an Electricity sales agreement between
DIG and FORD; a blast furnace gas purchase agreement between DIG and ROUGE; a
treated water purchase agreement between DIG and ROUGE; a lease for the Project
Site between ROUGE and DIG; environmental indemnity agreement, and necessary
easements between DIG and FORD, ROUGE or both; and all interconnection
agreements (steam, electric, BFG, condensate, circulating water, waste water
discharge, utilities) among those parties which are necessary to carry out the
purposes of the agreements.
"Contract Capacity" shall mean the peak MW usage (as measured during a
period of time no greater than the period of time upon which any imbalance or
similar charges imposed by the relevant transmission system provider and
approved by the appropriate regulatory authority are based) that DIG is obliged
to serve to FORD, ROUGE and all Eligible Customers pursuant to Exhibit G which
shall not exceed 400 MW.
"Electricity" shall mean electric energy, measured in kilowatt-hours,
in the form of alternating current, three-phase, 60 Hertz at the appropriate
voltage.
"Electricity Interconnection Facilities" shall mean those facilities of
a quality and type reasonably required to deliver Electricity from the Project
to the Rouge Site including meter supports, meter(s), line(s) and other
facilities of a quality and type reasonably required in order to effectuate the
purposes of this Agreement.
"Firm Power" shall mean a reliable supply of Electricity which will not
be curtailed or interrupted for any reason other than Force Majeure. FORD and
ROUGE receiving firm power under this Agreement are entitled to the highest
level of end-use priority and their supply of electricity will not be
intentionally interrupted or curtailed except to prevent injury or
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property damage. Such priority shall, at all times, be superior to any other
customer purchasing electricity from DIG.
"Force Majeure" shall have the meaning provided for in Section 13.
"FORD" shall mean the Ford Motor Company.
"Governmental Authority" shall mean any federal, state or local
government, any political subdivision or any governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body or entity or
other person or body authorized to make or enforce laws or regulations
applicable to the Project.
"Ladle Met Facilities" shall mean equipment operated by ROUGE that
refines and/or heats steel produced by basic oxygen furnaces prior to casting.
"Laws" or "Law" shall mean all statutes, regulations, orders, decrees
or rulings by any Governmental Authority applicable to the construction,
maintenance and operation of the Project.
"Market Rate" shall mean the greater of (i) the rates shown in Exhibit
F or (ii) a rate calculated by summing the cost incurred by DIG (including any
and all power, transmission, ancillary service, electric loss and energy
imbalance charges) for the delivery of all excess usage and dividing such sum by
the excess usage. Market Rate will be expressed to two (2) decimal places and in
$/MWh (e.g. $52.78/MWh).
"MW" shall mean one million xxxxx.
"MWh" shall mean a unit of electrical energy equivalent to the use of
one megawatt for one hour.
"Party" or "Parties" shall mean a signatory or the signatories to this
Agreement and its or their successors and permitted assigns, as the case may be.
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"Point(s) of Delivery" shall mean the point(s) of connection to the
Rouge Site distribution facilities identified in Exhibit C hereto.
"Powerhouse" shall mean the existing power plant located at the Rouge
Site that is jointly owned by FORD and ROUGE.
"Project" shall mean an approximately 550 MW complex with two natural
gas fired combined cycle units with heat recovery steam generators, three blast
furnace gas/natural gas boilers, one steam turbine and all ancillary
transformers, transmission wires, meters and other associated equipment
necessary to connect to existing infrastructure to be located on or near the
Project Site. The Parties agree that DIG may install an additional gas turbine
generator and ancillary equipment (including heat recovery steam generator) with
a nominal net capacity of approximately 160 MW. This unit shall be excluded from
the definition of Project for purposes of this Agreement, unless specifically
noted otherwise.
"Project Site" shall mean the real property to be leased or purchased
by DIG from ROUGE, located in Dearborn, Michigan, and more particularly
described in Exhibit A hereto.
"Rouge Site" shall mean the property located in Dearborn, Michigan,
within the boundaries shown on Exhibit B.
"Term" shall mean the original term of this Agreement and any
extensions hereto, as set forth in Section 12.01.
"Transition Charge" shall mean a potential charge which does not
currently exist but which may be imposed on one or more end-users in the future
by the Federal Energy Regulatory Commission or the Michigan Public Service
Commission to compensate the relevant public utility for any cost which may be
stranded or otherwise incurred as a result of the advent
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of competition and the transition of the electric industry from a
closed market of regulated monopolies to an open market of free competition
among multiple energy providers.
1.02 INTERPRETATIONS; HEADINGS.
(a) Definitions of terms used herein and in the Exhibits hereto
shall be equally applicable to both the singular and plural forms of the terms
defined.
(b) The Table of Contents and the headings herein and in the
Exhibits hereto are intended for convenience only and shall be disregarded in
construing this Agreement.
(c) The provisions in any Exhibits take precedence over any
provision in the body of this Agreement.
(d) The provisions of this Agreement shall take precedence over any
provision in any of the other Companion Agreements between ROUGE and DIG.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES OF ROUGE.
(a) ROUGE represents that it is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is authorized to do business in the State of Michigan and has full power and
authority to enter into this Agreement and to perform the terms hereof.
(b) ROUGE represents that the persons executing and delivering
this Agreement on ROUGE's behalf are acting pursuant to proper authorization
duly obtained and
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that this Agreement is the legal, valid and binding obligation of ROGUE,
enforceable in accordance with its terms.
(c) ROUGE represents that the making and performance by ROUGE of
this Agreement does not and will not violate the provisions of its Articles of
Incorporation, Bylaws or any law, regulation or order of any Governmental
Authority applicable to ROUGE, or result in a breach of, or constitute a default
under, or require any consent or waiver which has not been obtained under, any
agreement, instrument or document, or the provisions of any order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority affecting ROUGE.
(d) ROUGE represents that as of the date hereof, no suit, action
or arbitration, or legal, administrative or the proceeding is pending or to the
best of its knowledge has been threatened against ROUGE that would affect the
validity or enforceability of this Agreement or the ability of ROUGE to fulfill
its commitments hereunder, or that would, if adversely determined, have a
material adverse effect on the business or financial condition of ROUGE.
2.02 REPRESENTATIONS AND WARRANTIES OF DIG.
(a) DIG represents that it is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Michigan, is authorized to conduct business in the State of Michigan and has
full power and authority to enter into this Agreement and to perform the terms
hereof.
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(b) DIG represents that the persons executing and delivering this
Agreement on DIG's behalf are acting pursuant to proper authorization duly
obtained and that this Agreement is the legal, valid and binding obligation of
DIG, enforceable in accordance with its terms.
(c) DIG represents that the making and performance by DIG of this
Agreement does not and will not violate the provisions of its Articles of
Organization, Operating Agreement or any law, regulation or order of any
Governmental Authority applicable to DIG, or result in a breach of, or
constitute a default under, or require any consent or waiver which has not been
obtained under, any agreement, instrument or document, or the provisions of any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority affecting DIG.
(d) DIG represents that as of the date hereof, no suit, action or
arbitration, or legal, administrative or other proceeding is pending or to the
best of its knowledge has been threatened against DIG that would affect the
validity or enforceability of this Agreement or the ability of DIG to fulfill
its commitments hereunder, or that would, if adversely determined, have a
material adverse effect on the business or financial condition of DIG.
SECTION 3
CONDITIONS PRECEDENT
3.01 ENFORCEMENT OF DIG'S OBLIGATIONS.
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It shall be a condition precedent to DIG's obligations under this
Agreement that by February 1, 1999, or such other date as indicated, the
following events shall have occurred or shall have been waived by DIG:
(a) the timely receipt by DIG of possession of, and such other
property rights as are necessary in the Project Site and the Rouge Site; and
(b) the execution of all of the other Companion Agreements.
3.02 ENFORCEMENT OF ROUGE'S OBLIGATIONS.
It shall be a condition precedent to ROUGE's obligations under this
Agreement that the following events shall have occurred or shall have been
waived by ROUGE: the execution of all of the Companion Agreements.
SECTION 4
OBLIGATIONS OF THE PARTIES
4.01 DESIGN.
(a) DIG shall provide all engineering services for the design and
construction of the Project and Electricity Interconnection Facilities. The
Project design specification shall include the ability to withstand the
simultaneous striking of the arc furnaces at ROUGE's Ladle Met Facilities
without violating the quality standards of Section 7. In addition the
Electricity Interconnection Facilities shall be designed such that no additional
work or replacement to the FORD/ROUGE equipment is required, or, if required by
DIG, will be implemented at DIG's sole expense.
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(b) ROUGE shall make available to DIG in a timely manner (i) all
available plans and drawings, necessary to permit DIG to design the Electricity
Interconnection Facilities and other interconnections of the Project within the
Rouge Site, which include plans and drawings of relevant substations,
interconnect points, and lines and (ii) reasonable access to a location(s) for
the Point(s) of Delivery.
4.02 GOVERNMENTAL PERMITS AND APPROVALS.
(a) DIG will, at its expense, apply for all permits, approvals,
licenses and variances necessary for the construction and operation of the
Project including any permits required to interconnect to FORD or ROUGE
facilities at the Rouge Site, provided, however, FORD/ROUGE will apply for
modification or amendments to any permits, approvals, or licenses if necessary
to allow the Project to use Circulating Water from the Rouge Site. ROUGE will
provide all reasonable assistance to DIG, as requested, on a timely basis in
obtaining all federal, state, and local permits and approvals and provide
information necessary for the regulatory approvals required for the development
and operation of the Project. DIG shall provide all reasonable assistance to
FORD/ROUGE, if requested, with respect to their application for and compliance
of permits, approvals or licenses related to the Circulating Water supply for
the Project from the Rouge Site.
(b) Unless prevented by a relevant governmental authority, ROUGE
or FORD will transfer any needed emission credits which may be available as a
result of the closure of the Powerhouse, up to the maximum credits listed in
Exhibit D, to DIG for one million dollars ($1,000,000), payable at the
Commencement Date, if they are required for the Project as currently defined,
including the additional gas turbine.
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Should the projected potential emissions of the Project
require the use of emission credits exceeding the amount of credits available
from the shutdown of the Powerhouse, DIG shall either obtain the credits from a
source other than the Powerhouse or obtain the prior approval of ROUGE prior to
the filing of environmental permit applications.
(c) So long as the Project is deemed as "contiguous" with the
Rouge Site or "under the control" of ROUGE or FORD or is otherwise deemed part
of the Rouge Site for environmental regulatory purposes, then prior to any
modification or major modification, (as defined under any federal, state, or
local statutes, rules or ordinances), DIG shall obtain the prior approval of
ROUGE before commencing any permitting activity or any physical changes related
to such modifications. ROUGE reserves the right to veto any modification or
major modification plans at the Project, unless the proposed modification has no
adverse impact on ROUGE.
4.03 CONSTRUCTION OF THE PROJECT.
(a) DIG shall bear the costs of construction, start up, testing,
maintenance and operation of the Project, including all interconnecting
facilities and lines. ROUGE agrees to reasonably cooperate with DIG to
facilitate the installation of electricity lines and all other necessary
interconnection facilities.
(b) DIG will construct the Electricity Interconnection Facilities.
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(c) DIG will use appropriate building trades union labor for the
construction phase of the Project.
(d) DIG will minimize and coordinate with ROUGE any potential
interference with any ROUGE operations during the construction, inter-tie, and
operation of the Project.
4.04 [INTENTIONALLY BLANK].
4.05 OPERATION AND MAINTENANCE OF THE PROJECT.
DIG shall have the responsibility to operate the Project in accordance
with good engineering and safety practices and shall bear all operating costs
and other expenses associated with the Project including any compliance with
environmental or noise regulations applicable to the Project. Without limiting
the generality of the foregoing, DIG will not discharge Circulating Water in
violation of existing or future permit limits and will not discharge in excess
of 312,000 gallons/minute, provided FORD/ROUGE does not modify or agree to
modifications of such limits without DIG's prior consent, which consent shall
not be unreasonably withheld.
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FORD/ROUGE will make available to the Project at least 316,000
gallons/minute of Circulating Water to operate the Project, provided such
quantities of Circulating Water are available to FORD/ROUGE from the portion of
the Circulating Water system located between the Detroit River and the Rouge
Site. In the event there is a reduction in the amount of Circulating Water
available to the Rouge Site, there will be a pro rata reduction in the
quantities FORD/ROUGE must make available to the Project.
DIG shall construct and maintain a minimum of two points of
interconnection, with the Detroit Edison or other third party electric
transmission system, with each circuit having sufficient capacity to transmit
the entire Contract Capacity allocated to the Rouge Site. The location of such
interconnections shall be subject to the reasonable approval of FORD and ROUGE.
DIG will give preferential status to qualified personnel previously at
the Powerhouse when hiring the initial operating personnel of the Project. DIG
will not oppose the United Auto Workers as bargaining representative for the
employees of the Project.
4.06 REASONABLE EFFORTS AND COOPERATION.
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The Parties shall provide such assistance and support as may reasonably
be required in identifying and preparing applications for permits,
authorizations and licenses and making all necessary arrangements for
interconnection with facilities on the Rouge Site.
SECTION 5
SALE AND PURCHASE OF ELECTRICITY
5.01 REQUIREMENT AND EXCLUSIVE SUPPLIER
In accordance with the terms and conditions of this Agreement, on the
Commencement Date and thereafter during the term of this Agreement, DIG shall
sell and deliver to ROUGE and ROUGE shall purchase and accept from DIG, all of
the electrical energy used or required by its operations at the Rouge Site.
Except as provided for in this Agreement, ROUGE shall not, and shall not permit
any third party under its control or with which it has a contractual
relationship, to use electrical energy at the Rouge Site supplied from any
source other than DIG. ROUGE shall use the Electricity delivered by DIG solely
for its operations and shall not re-sell any power received from DIG to any
third party. DIG will be the sole provider of electrical energy to ROUGE at the
Rouge Site for the term of the Agreement with the exception of the following:
(a) Back-up Generators
ROUGE shall have the right to install and use, at its
sole option, generators to provide for life support operations or backup power
in the event that any of the power supplied by DIG under the terms of this
Agreement is interrupted or curtailed.
(b) Powerhouse Generation Pending Receipt of Steam and
Electricity
Until the later of the Commencement Date or such date
as the Project is
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able to achieve reliable delivery of Electricity and steam in sufficient
quantities to fulfill FORD and ROUGE operational requirements which shall be
such date as provided for in 12.02, FORD/ROUGE may continue to generate steam
and electricity through the operation of the Powerhouse.
(c) Temporary Construction Generators
Nominal generation from portable generators shall be
permitted if used solely for temporary power for construction projects.
(d) Batteries and Other Storage
Electricity dispensed from batteries, flywheels or
other storage devices which originally where charged by Electricity
supplied by DIG.
(e) Shaded Area of Exhibit B
The exclusivity provisions shall not apply to the
shaded area of Exhibit B unless it is economical to provide a direct
connection.
(f) Failure to deliver by DIG
In the event DIG interrupts the delivery of
Electricity ROUGE may generate or acquire replacement Electricity.
(g) Electricity in excess of 400 MW
If the Rouge Site exceeds 400 MW of demand, the
increment over 400 MW may be purchased from another supplier, unless
ROUGE and DIG agree to increase the Contract Capacity.
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5.02 AMOUNT AND TYPE OF SERVICE.
(a) Maximum Electricity Delivery. DIG shall not be obligated to
deliver Electricity in excess of the Contract Capacity.
(b) Minimum Electricity Usage. There are no minimum usage
requirements or charges under this Agreement.
(c) Type of Service. All service under this Agreement shall be
Firm Power. The hours of service are 24 hours per day every day.
5.03 [INTENTIONALLY BLANK]
5.04 NOTICE REQUIREMENTS.
(a) Prior to the Commencement Date, DIG and ROUGE shall establish
communication procedures designed to keep both informed at all times as to (i)
the status of the Project's Electricity generating equipment and, (ii) ROUGE's
ability to receive Electricity from the Project.
(b) Not later than sixty (60) days prior to commencement of each
calendar year, ROUGE shall notify DIG of its good faith estimate of the quantity
of Electricity to be delivered during the succeeding 12-month period and provide
a schedule of monthly usage and peak demand for such delivery. Thereafter, ROUGE
shall notify DIG of any known adjustment or modification of said estimated
quantity or schedule not less than five (5) days prior to commencement of each
calendar month. However, the quantity of Electricity to be supplied to ROUGE
pursuant to this Agreement shall not be limited by such estimates.
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(c) ROUGE's designated employee shall notify DIG's designated
employee of any planned changes to any work shift's estimated quantity or
schedule prior to the beginning of any eight (8) hour work shift affected by
such changes.
(d) The Parties recognize that other detailed and continuing
exchanges of information will be necessary in order to optimize the design,
construction, operation and maintenance of their respective systems and
equipment, consistent with their respective rights and responsibilities under
this Agreement. To that end, each Party shall notify the other of the individual
employee or employees responsible for exchanging information with the other
Party and for resolving issues which may arise or be expected to arise affecting
design, construction, operation and maintenance of the Project and delivery of
Electricity under this Agreement. The original designation shall occur within
sixty (60) days of the date of this Agreement. Resolution of such issues
including the procedures for communication specified above shall be in writing,
executed by authorized employees of both Parties.
5.05 DISCLAIMER OF WARRANTY.
Except for meeting the performance guaranty contained in Section 7 and
the specifications contained in Exhibit D hereto, DIG does not in any way
warrant the fitness of the Electricity for the particular purpose for which
ROUGE intends or may intend to use the Electricity.
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5.06 RISK OF LOSS.
All right, title, and interest in and to any Electricity delivered
shall pass from DIG to ROUGE at the Point of Delivery. DIG shall have the risk
of loss of all Electricity to be delivered up to and at the Point of Delivery,
and ROUGE shall have the risk of loss of all Electricity delivered from and
after the Point of Delivery. Liability for all damages caused by or arising out
of the Electricity delivered shall lie with the Party responsible for the risk
of loss in this Section 5.06. Such Party shall indemnify the other Party hereto
for such loss and damage pursuant to Section 18 of this Agreement.
SECTION 6
MEASUREMENT OF ELECTRICITY
6.01 MEASUREMENT OF ELECTRICITY.
DIG shall install, inspect, operate and maintain at its expense,
metering equipment and instrumentation for the measurement of Electricity sold
to ROUGE and such other data as necessary for the sale of Electricity to ROUGE
and the computation of the invoices required by Section 9.02. At all times the
equipment shall at least meet generally accepted utility standards. The metering
system shall be capable of measuring the aggregate quantity of Electricity
delivered by the Project to the Rouge Site. All measurements of Electricity
shall be at the appropriate voltage as shown in Exhibit C. ROUGE shall have
electronic direct read access to such instrumentation data, but the reading for
invoicing, calibrating and adjusting thereof and changing of the charts shall be
done only by DIG. The determination of the total quantities of Electricity
delivered to the Rouge Site shall be made by DIG's instrumentation. DIG shall
test its metering system at least annually, or more frequently if reasonably
requested by ROUGE with
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such additional tests being at the expense of ROUGE if such test finds that the
equipment readings are within the parameters of Section 6.02(a), and at the
expense of DIG if such test finds that the equipment readings are within the
parameters of Section 6.02(b). ROUGE shall have the right to have a
representative present at all tests. The records from such measuring equipment
shall remain the property of their owner, but upon request, each will submit to
the other its records and charts, together with calculations therefrom, for
inspection and verification, subject to return within ten (10) days after
receipt thereof.
6.02 ESTIMATION OF ELECTRICITY WHEN METERING EQUIPMENT IS NOT FUNCTIONING.
The quantity of Electricity delivered hereunder during periods when the
measuring equipment is out of service or registering inaccurately shall be
estimated as follows:
(a) If, upon test, any measuring equipment, the readings of which
are used in the registration, integration, or computation of quantities of
Electricity hereunder, is found to be in error to the extent that it introduces
not more than two percent (2%) measurement error in the individual measuring
equipment affected, previous records of such equipment shall be considered
accurate.
(b) If, upon test, any such above measuring equipment is found to
be inaccurate to the extent that it causes the registered or computed quantities
of Electricity to be in error by an amount exceeding two percent (2%) at a
recording corresponding to the average hourly rate of flow through the
instrument(s) in the period since the last preceding test, then any
registrations, integration, or computed quantities of such instruments shall be
corrected to zero
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error for any part of the period since the last test in which such error is
known to have existed or which may be agreed upon by representatives of the
Parties. In case the period of such error is not known definitely or agreed
upon, such correction shall be for one-half (1/2) of the quantity of Electricity
delivered since the later of the date of the last test or the last undisputed
invoice.
(c) If no tests have been performed to determine the degree of
inaccuracy, or measuring equipment is out of service, the quantity of
Electricity shall be estimated:
(1) by using the registration of any existing and agreed
upon check equipment (such as meters on the
FORD/ROUGE distribution system) considered by Parties
to be registering accurately, or, in the absence of
such check equipment;
(2) by correcting the error in quantity or percentage of
error as is ascertainable by calibration, test, or
mathematical calculation (including reliance upon
DIG's records of fuel consumption), or if neither of
the two foregoing procedures is applicable;
(3) by relating the quantity of delivery to deliveries
during the periods under similar conditions when the
measuring equipment was deemed to have been
registering accurately.
DIG shall preserve for a period of at least two (2) years at all test
data, charts and other similar records.
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SECTION 7
ELECTRICITY QUALITY
7.01 GENERAL STANDARD.
DIG will deliver Electricity as Firm Power within the quality
parameters described in Section 7.02. It is the further objective of DIG to
provide Electricity of a quality equal to or better than that which is currently
provided to the Rouge Site, with current level of quality provided to the Rouge
Site by the Powerhouse being defined in the interconnection agreement between
DIG, ROUGE, and FORD.
7.02 LIQUIDATED DAMAGES.
DIG will use commercially reasonable efforts to eliminate outages
(momentary and sustained) and voltage sags in the Electricity supplied to ROUGE
under this Agreement. In the event the Project has any sags or outages that
impact upon the ROUGE operations, including the impact, if any, of the ROUGE
rolling xxxxx or the Ladle Met Facility, then DIG shall promptly undertake and
diligently pursue a commercially reasonable quality improvement program. DIG and
ROUGE acknowledge that the Project is required to inter-tie and be synchronized
with the existing Detroit Edison or third-party electric transmission system.
Any voltage sags affecting ROUGE caused by this transmission system shall not be
the responsibility of DIG. DIG shall install meters and other equipment to
measure any voltage sags on the transmission system and, to the extent
practical, insulate ROUGE from such occurrences. The liquidated damages provided
for in this Section are related to voltage sags caused by DIG and the Project.
DIG is responsible for providing sufficient stability of the electrical system
such that
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ROUGE operations at the Rouge Site are not impacted by the normal operations of
the existing or comparable ROUGE xxxxx, including the rolling mill and Ladle Met
Facility. DIG shall not be responsible for any problems caused by the internal
Rouge Site distribution system. Any payments by DIG to ROUGE for outages
(momentary and sustained) and voltage sags are intended to provide economic
incentive to DIG to maintain the reliability of service. For purposes of this
provision, "voltage sag" shall be separated into two levels:
1. Voltage sags of no more than thirty (30) % of nominal voltage on any of
the three phases for one or more cycles. No liquidated damages will be
paid for this type of occurrence.
2. Voltage sags greater than thirty (30 )% of nominal voltage on any of
the three phases. Liquidated damages for each occurrence of this type shall be
$210,000. For the purposes of payment of any liquidated damages, there shall be
no more than one occurrence per fifteen (15) minutes.
The total liquidated damages paid in any calendar year shall not exceed
one million fifty thousand dollars ($1,050,000). Further, DIG shall be not be
liable for payment of liquidated damages for one voltage sag occurrence during
the first two (2) years of operation of the Project, and one voltage sag
occurrence during each four year period thereafter. In the event DIG reaches the
liquidated damages limit during any calendar year, DIG shall promptly undertake
and diligently pursue a quality improvement program including, if necessary,
capital improvements of up to one million dollars ($1,000,000) designed to
prevent the further occurrences each time the limit is reached.
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DIG shall pay for and install at the Points of Delivery, meters at
least equivalent to the accuracy of the Detroit Edison SMC power quality meters.
7.03 QUALITY COMMITMENT
DIG acknowledges ROUGE's desire to purchase from suppliers who exhibit
clearly superior standards of efficiency, quality and value. The parties will
hold quarterly meetings to discuss the business relationship and to review
opportunities for continuous improvement.
SECTION 8
PAYMENT CALCULATIONS
8.01 PAYMENTS.
The amount payable by ROUGE to DIG pursuant to each monthly invoice
shall be equal to the Billing Distribution in MWh multiplied by the applicable
rate in Exhibit F for all usage at or below the Contract Capacity. In the event
that Electricity usage exceeds the Contract Capacity, the applicable charge for
such excess usage shall be the appropriate Market Rate multiplied by the amounts
used in excess of the Contract Capacity. Such amount shall be billed to the
party(ies) exceeding its allocation under the terms of Exhibit G.
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8.02 EXTENSION TERM PRICING
If ROUGE elects to extend this Agreement in accordance with Section 12,
the Parties shall meet to discuss the rates for Electricity for the relevant
extension term. If the Parties cannot agree to a price prior to the end of the
expiring term, price shall be determined in accordance with the formula in
Exhibit F.
8.03 PROPERTY TAX ABATEMENT
DIG shall use all reasonable efforts to obtain a property tax abatement
or otherwise minimize the amount of property tax payable on the Project.
Reasonable efforts shall mean that level of effort normally exercised by
entities similarly situated to DIG for projects of like kind to the Project.
ROUGE shall provide reasonable assistance to DIG in seeking to obtain such
abatement or adjustment. The rates in Appendix F are derived from the base
property tax amounts shown in Exhibit E. In the event that the property tax
payable by DIG and related to the Project (as currently defined) differs from
the amount shown in Exhibit E, DIG shall include the prorated overage or
underage based on the formula shown in Exhibit E in the next invoice prepared in
accordance with Section 9 as either an additional charge or credit.
8.04 NO OTHER CHARGES
The rates shown on Exhibit F are inclusive of all service charges,
surcharges, administrative fees, meter charges, transmission/distribution
charges, load following charges, kVar support charges, stand-by charges and any
and all other charges, surcharges, taxes and fees in existence as of the date of
this Agreement or as may be levied from time to time during the term of this
Agreement.
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8.05 TRANSITION CHARGES
ROUGE shall not be liable for any Transition Charge for sales under
this Agreement to any facility located on the Rouge Site, which is served by the
Powerhouse as of the Commencement Date. DIG will use its good faith efforts to
be classified as a self-service provider as pertains to sales of Electricity to
Double Eagle and the Ladle Met Facilities.
ROUGE shall be liable for any Transition Charge incurred by DIG for
sales of Electricity to the Ladle Met Facilities.
SECTION 9
PAYMENTS; BILLING; INTEREST ON PAST-DUE AMOUNTS
9.01 PAYMENTS.
All calculations for payments due DIG shall be based on a calendar
month.
9.02 BILLING.
Beginning with the calendar month immediately following the calendar
month in which the Commencement Date shall occur and until this Agreement shall
terminate pursuant to Sections 12.01 or 14.02, DIG shall deliver to ROUGE within
three (3) days after the first day of each calendar month notice of the total
Electricity delivered to the Rouge Site during the previous month. ROUGE shall
deliver within five (5) days after such notice from DIG the Billing Distribution
to be used for calculating the invoice. DIG shall then deliver to ROUGE an
invoice with respect to ROUGE's Billing Distribution of the deliveries of
Electricity during the preceding calendar month to the Point of Delivery. Each
invoice shall include all necessary information and support documentation for
calculation of the payments required pursuant to
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Section 9. In the event ROUGE fails to deliver the Billing Distribution within
five (5) days, DIG may elect to use the percentage of the total delivery of
Electricity from the previous calendar month that represents the Billing
Distribution from the previous calendar month. In order to be binding upon DIG,
the Billing Distribution of ROUGE plus the Billing Distribution of FORD plus the
Billing Distribution of other third parties on the Rouge Site taking Electricity
as a result of a nomination under Exhibit G must be equal to the quantity
delivered to the Point of Delivery during the previous month.
9.03 INTEREST ON PAST-DUE AMOUNTS.
The net amount due and payable to DIG as stated in the invoice shall be
due and payable within 30 days of receipt in immediately available funds.
Invoices not fully paid shall be subject to interest charges on the unpaid
balance equal to the sum of the prime lending rate as charged from time to time
by Chase Manhattan Bank, or any successor thereto, plus one hundred (100) basis
points per annum compounded annually based upon a 365-day year, from the date of
presentment until the unpaid balance is paid in full. The prime rate in effect
on the first day of any month shall be used in calculating any interest charges
which may be due in that month on unpaid invoices and interest charges.
9.04 FAILURE TO PAY.
If ROUGE fails to pay for Electricity and any interest when due, as set
forth in Section 9.02, DIG will notify ROUGE of the delinquency in writing and
attempt to reach the
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designated party in Section 16 by telephone as a further notice. Thereafter, if
payment in full has not been made within forty-five (45) days of the date of the
delinquency notice, in addition to charging interest pursuant to Section 9.03
and in addition to the provisions of Section 14, DIG may do any one or more of
the following: suspend the supply and delivery of Electricity to ROUGE;
terminate service under this Agreement in accordance with the procedures in
Section 14.01; or take any other action permitted by law or equity.
ROUGE hereby grants to DIG the right to enter upon the Rouge Site
during the term of this Agreement and install and maintain such equipment or
take such other action as may be necessary to physically suspend the delivery of
Electricity to ROUGE in the event DIG may do so under the terms of this Section,
provided DIG has given notice of such entry to FORD at least five days prior to
such entry. The right to isolate ROUGE's facilities from the Rouge Site
distribution system shall continue so long as DIG is delivering Electricity to
the Rouge Site.
9.05 DISPUTED INVOICES
In the event of any dispute as to all or any portion of an invoice,
ROUGE shall nevertheless pay the full amount of all charges when due and may
serve notice upon DIG that the amount of an invoice is in dispute, in which
event the provisions of Section 19 shall be applicable. Any charges which are
returned as a result of such dispute resolution procedures shall bear interest
from the date of payment by ROUGE to the date of refund at the rates provided
for in Section 9.03. Subject to the adjustments provided for in Section 6, ROUGE
hereby waives the right to dispute any invoice after a period of two (2) years
from the date such invoice becomes due and payable.
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SECTION 10
COMPLIANCE WITH LAWS
10.01 COMPLIANCE WITH LAWS.
DIG shall be responsible for the Project's compliance with all current
and future applicable Laws, and, at its own cost, DIG will obtain and maintain
in full force all required permits, approvals and licenses necessary for the
operation of the Project. DIG shall not be responsible for the compliance of any
facilities outside the Electricity Interconnection Facilities and shall not be
liable for any claim of loss or damage (including claims under this Agreement)
due to a failure of such facilities.
SECTION 11
INSURANCE
11.01 INSURANCE.
Prior to DIG or its designated contractor commencing any construction
on the Project Site and at all times thereafter prior to the termination of this
Agreement, DIG or such designated contractor shall maintain insurance in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general
geographical area in which it operates, either with reputable insurance
companies or, in whole or in part, by establishing reserves of one or more
insurance funds, either alone or with other corporations or associations.
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SECTION 12
TERM OF THIS AGREEMENT
12.01 TERM OF THIS AGREEMENT.
The original term of this Agreement shall begin on the earlier of June
1, 2000 or the Commencement Date and shall end on December 31, 2015 (the
"Original Termination Date"). ROUGE may extend the term of this Agreement for
three (3) additional terms of five (5) years each by providing written notice
thereof to DIG no later than eighteen (18) months prior to the Original
Termination Date or the termination date of each such five (5) year extension
period, as applicable and further provided the Steam Sales Agreement between
ROUGE and DIG is also extended without any minimum volume requirements, for the
applicable term.
Upon expiration or termination of this Agreement, ROUGE and
FORD shall have the option to purchase or lease on reasonable terms and
conditions facilities specific to delivery of Electricity to the Rouge Site or
otherwise have a free right of access to all other electrical equipment and
connections from the Rouge Site to the Detroit Edison electrical transmission
and distribution system as the parties may mutually agree.
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12.02 DETERMINATION OF THE COMMENCEMENT DATE
DIG will provide a target date for commencement of regular
Electricity deliveries in a notice given at least sixty (60) days prior to the
targeted date. When DIG is able to provide Electricity on a continuous and
reliable basis, DIG will transmit a second written notice to ROUGE stating that
(i) the Project is ready to commence regular Electricity and steam deliveries
and is ready to accept regular deliveries of blast furnace gas sufficient to
allow for the shut down of the Powerhouse on a Commencement Date to be mutually
agreed upon but not less than fifteen (15) days from the date of such notice and
(ii) all required permits, approvals and variances from any governmental
authority necessary to commence Electricity deliveries from the Project have
been obtained. On and after the Commencement Date, DIG shall supply, and ROUGE
shall accept, delivery of Electricity in accordance with Section 5.01.
In the event that DIG is unable to commence reliable delivery of
Electricity and steam in sufficient quantities to fulfill FORD and ROUGE
operational requirements by the Commencement Date for any reason, DIG will
reimburse ROUGE in an amount equal to the differential between the actual amount
incurred by ROUGE for electricity delivered to the Rouge Site (whether purchased
or self-generated) and the Agreement rates multiplied by the quantity purchased
or self-generated for the period beginning the Commencement Date, through actual
commencement of regular Electricity and steam deliveries. Such amounts shall be
paid in accordance with the payment provisions of Section 9, including timing,
payment of all disputed amounts and interest provisions.
DIG shall have the right to audit records of electricity purchased
or self-generated for a period of two years. Disputes as to actual amounts
delivered or incurred will be settled in
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accordance with the procedures in Section 19 and amounts erroneously charged to
DIG shall earn interest in accordance with Section 9.03.
SECTION 13
FORCE MAJEURE
13.01 FORCE MAJEURE.
(a) "Force Majeure" shall mean any event or circumstance or
combination of events or circumstances that materially and adversely affects
any Party in the performance of its obligations in accordance with the terms of
this Agreement, but only if and to the extent that such events and circumstances
are not within the affected Party's reasonable control, and which the affected
Party could not have prevented through reasonable skill and care but limited to
those circumstances or events which are specifically identified in this Section.
(b) Force Majeure circumstances and events shall be limited to
the following events to the extent that they or their consequences (it being
understood that if a causing event is within the reasonable control of an
affected Party, the direct consequences shall also be deemed to be within such
party's reasonable control) satisfy the above requirements:
(i) act of war (whether declared or undeclared),
hostile or warlike action by an agent of a
government or sovereign power, acts of
foreign enemies of the United States
government (whether accorded diplomatic
recognition or not), revolution, rebellion
or
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insurrection, exercise of military or
usurped power, or any attempt at usurpation
of power;
(ii) the inability to obtain the required
supply of water from the Circulating Water
system at the Rouge Site in sufficient
quantities to operate the Project for the
Rouge Site due to a failure by FORD or
ROUGE to exercise reasonable care in
maintaining or operating the portion of the
Circulating Water system controlled by FORD
or ROUGE;
(iii) any Governmental Agency's unreasonable
delay, denial or refusal to grant or renew,
or any unreasonable revocation of, any
required permit, license, approval or
authorization, including governmental
authorizations, provided that such adverse
governmental action or inaction did not
result from a Party's non-compliance with
any applicable law or any condition to the
granting or maintenance of any such permit,
license, approval or authorization, and
provided that such impacted Party diligently
pursues all reasonable legal remedies
available to alleviate such unreasonable
delay, denial, refusal, or revocation of
such governmental authorization.
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13.02 RESTRICTIONS.
Notwithstanding that an event of Force Majeure may otherwise exist, the
provisions of Article 13 shall not in any event excuse any failure to pay or any
delay in paying money due and owing under this Agreement including those
payments contemplated in Section 7 and Section 18.04.
13.03 NOTIFICATION OBLIGATIONS.
(a) The Party claiming Force Majeure shall give notice to the
other Party of any event or circumstance of Force Majeure as soon as reasonably
practicable.
(b) The Party claiming Force Majeure shall give notice to the
other Party of (i) the cessation of the relevant event or circumstance of Force
Majeure and (ii) the cessation of the effects of such event or circumstance of
Force Majeure on the enjoyment by such Party of its rights or the performance by
such Party of its obligations under this Agreement as soon as practicable after
becoming aware of the events described in each of clauses (i) and (ii) above.
13.04 OTHER CONSEQUENCES.
Except as otherwise provided in this Article, neither Party shall be
responsible or liable for any breach or deemed breach of this Agreement due to
its failure or delay in performing its obligations hereunder due to an event of
Force Majeure for such period as the event of Force Majeure continues.
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13.05 MEETING BETWEEN PARTIES.
In the event a Force Majeure event lasts more than 60 days, the Parties
shall meet to discuss and determine whether it would be mutually beneficial to
terminate this Agreement.
SECTION 14
DEFAULT AND TERMINATION
14.01 EVENTS OF DEFAULT.
Any of the following occurrences or events, whether caused by DIG or
FORD, shall constitute a default under this Agreement:
(a) Failure by either Party to make payment of any amounts due the
other Party under this Agreement, which failure continues for a period of thirty
(30) days after receipt of written notice of such nonpayment pursuant to Section
9.04.
(b) Failure by either Party to perform fully any other provision
of this Agreement or any material provision of the Companion Agreements to which
both Parties are a party, and (i) such failure continues without cure for a
period of one hundred twenty (120) days after written notice of such
nonperformance or (ii) if the nonperforming Party shall commence cure within
such one hundred twenty (120) days and shall thereafter proceed with all due
diligence to cure such failure, such failure is not cured within such longer
period as shall be necessary for such Party to cure the same with all due
diligence.
(c) If by order of a court of competent jurisdiction, a receiver
or liquidator or trustee of either Party or of any of the property of either
Party shall be appointed, and such
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receiver or liquidator or trustee shall not have been discharged within a period
of sixty (60) days; or if by decree of such a court, a Party shall be
adjudicated bankrupt or insolvent or any substantial part of the property of
such Party shall have been sequestered, and such decree shall have continued
undischarged and unstayed for a period of sixty (60) days after the entry
thereof; or if a petition to declare bankrupt or to reorganize a Party pursuant
to any of the provisions of the Federal Bankruptcy Act, as it now exists or as
it may hereafter be amended, or pursuant to any other similar state statute
applicable to such Party, as now or hereafter in effect, shall be filed against
such Party and shall not be stayed or dismissed within sixty (60) days after
such filing.
(d) If either Party shall file a voluntary petition in bankruptcy
under any provision of any federal or state bankruptcy law or shall consent to
the filing of any bankruptcy or reorganization petition against it under any
similar law; or, without limitation of the generality of the foregoing, if a
Party shall file a petition or answer or consent seeking relief or assisting in
seeking relief in a proceeding under any of the provisions of the Federal
Bankruptcy Act, as it now exists or as it may hereafter be amended, or pursuant
to any other similar state statute applicable to such Party, as now or hereafter
in effect, or an answer admitting the material allegations of a petition filed
against it in such a proceeding; or if a Party shall make a general assignment
for the benefit of its creditors (other than for DIG to make payments to
financing parties if required under the terms of a financing referred to under
Section 17); or if a Party shall admit in writing its inability to pay its debts
generally as they become due; or if a Party shall consent to the appointment of
a receiver or receivers, or trustee or trustees, or liquidator or liquidators of
it or of all or any party of its property.
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In the event that either Party is in default under this Agreement, the
defaulting Party may, within thirty (30) days following receipt of notice from
the non-defaulting Party of such default, (i) cure the default in the event such
cure requires more than thirty days to complete, initiate and diligently pursue
the curative action, and (ii) in the event of a default specified in paragraphs
(b), (c), or (d) of Section 14.01, provide assurances satisfactory to the
non-defaulting Party of its future performance of its obligations under this
Agreement. If the default is not so cured, or if such assurances are not so
provided; this Agreement may be terminated without obligation to or recourse by
the defaulting Party on thirty (30) day's notice by the non-defaulting Party to
both the defaulting Party and, in the case of a notice to DIG any lender of the
Project which requires such notice.
SECTION 15
WAIVERS; AMENDMENTS AND MODIFICATIONS
15.01 WAIVERS.
No Party shall be deemed to have waived any right hereunder unless such
Party shall have delivered to the other Party hereto a written waiver signed by
an officer of such waiving Party. Any waiver of right under this Agreement shall
be narrowly construed and shall relate only to the specific right and the
specific instance detailed in the written notice of waiver which may be
conditioned in any way. The failure of either Party to insist upon strict
performance of any provision of this Agreement shall not be construed as a
waiver, and no waiver of any provision on any given occasion shall be construed
as a waiver on any other occasion or of any other provision.
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15.02 AMENDMENTS AND MODIFICATIONS.
This Agreement may be amended or modified only by a written instrument
signed by both ROUGE and DIG.
SECTION 16
NOTICES
16.01 NOTICES.
All notices required to be given in writing hereunder shall, unless the
contrary is specified in this Agreement, be given to the respective Parties at
the following address, or at such other addresses as the Parties respectively
may designate in writing to each other by hand-delivery or registered mail:
If to DIG, addressed to: DIG
c/o CMS Generation Co.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Vice President Operations
With a copy to: DIG
c/o CMS Generation Co.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
If to ROUGE, addressed to: Rouge Steel Company
0000 Xxxxxx Xxxx,
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
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With a copy to: Rouge Steel Company
0000 Xxxxxx Xxxx,
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Attn: General Counsel
The Parties shall also notify each other of the address for invoices and routine
billing correspondence.
Any such notice shall be deemed to have been given as of the date so
delivered by hand, or in the case of a mailed or express delivered notice, when
received at the respective addresses referred to above.
SECTION 17
ASSIGNABILITY
17.01 NON-ASSIGNABILITY.
Except as provided in this Section 17, this Agreement shall not be assigned,
transferred or otherwise alienated by either ROUGE or DIG without the prior
written consent of the other party, which consent will not be unreasonably
withheld, and any attempted assignment, transfer or alienation without such
consent shall be void provided, however that ROUGE may assign this Agreement to
any Affiliated Company upon giving 30 days prior written notice to DIG and
further provided that ROUGE shall guaranty the continuing performance of the
assignee for the remaining term of the Agreement. All covenants and provisions
of this Agreement for the
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benefit of the parties shall inure to the benefit of their respective
successors and assigns as permitted by the provisions of this paragraph.
Affiliated Company shall mean any company in which ROUGE controls directly or
indirectly 20% or more of the voting stock.
17.02 PERMITTED ASSIGNMENT.
DIG has the right to mortgage, assign, hypothecate, pledge, or encumber
its interest in this Agreement to a parent or affiliated company (including any
general or limited partnership in which DIG or any affiliate of DIG is a general
partner) or to any financing party. ROUGE hereby consents to such assignment and
to any subsequent assignments by such parent or affiliated company or financing
party or any subsequent assignee, provided that, unless otherwise agreed by
ROUGE and DIG no such assignment shall relieve DIG of its obligations or
liabilities incurred until the effective date of the assignment and provided
further that DIG shall guaranty the continuing performance of the assignee for
the remaining term of the Agreement. ROUGE agrees to execute a written consent
and estoppel certificate to effectuate any assignment permitted under this
Agreement.
SECTION 18
LIABILITIES AND INDEMNITIES; LEGAL FEES;
COMPUTATION OF DAMAGES
18.01 LIABILITIES AND INDEMNITIES.
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(a) DIG shall indemnify and hold harmless ROUGE and its parents
and affiliates, and its or their respective directors, officers,
representatives, agents, employees and contractors, respectively, from and
against any and all liability whatsoever for losses, damages, claims, charges or
expenses, including attorneys' fees, on account of injury to or the death of any
and all persons, and on account of loss of or damage to any and all property,
resulting from or arising out of or in any way connected with the design,
construction, operation or maintenance of the Project, unless caused by the sole
negligence, gross negligence or willful misconduct of an officer, director,
agent, employee or independent contractor of ROUGE. DIG shall further indemnify
ROUGE for any and all tax liabilities (other than taxes on the income of ROUGE)
associated with the ownership of the Project, the sale of steam and/or
Electricity which may be levied on either ROUGE or DIG during the term of this
Agreement.
If the Commencement Date resulting from the second notice required by
Section 12.02 is not within the allotted time by the Michigan Department of
Environmental Quality for concurrent operation of both the Project and the
Powerhouse, then any related penalties levied by a local, state, or federal
governmental authority which result from the continued operation of the
Powerhouse due to DIG's failure to be ready to commence reliable delivery of
Electricity and steam and take blast furnace gas, shall be the sole
responsibility of DIG.
(b) ROUGE shall indemnify and hold harmless DIG, and its parents
and affiliates, and their respective assignees and its or their respective
directors, officers, representatives, agents, employees and contractors,
respectively, from and against any and all liability whatsoever for losses,
damages, claims, charges or expenses, including attorneys' fees,
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on account of injury to or the death of any and all persons, and on account of
loss of or damage to any and all property, resulting from or arising out of or
in any way connected with the performance or failure to perform any of ROUGE's
obligations hereunder, unless caused by the sole negligence, gross negligence or
willful misconduct of an officer, director, agent, independent contractor or
employee of DIG.
18.02 [INTENTIONALLY BLANK]
18.03 LIMITATION OF LIABILITY.
Neither Party shall be liable to the other Party in contract, tort,
warranty, strict liability or any other legal theory for any indirect,
consequential, incidental, punitive or exemplary damages sustained by the other
Party except as expressly provided for in this Agreement.
18.04 DAMAGES PAYABLE BY DIG.
In addition to the other remedies provided for in this Agreement, in
the event DIG fails to deliver Electricity to Point of Delivery as provided for
in Section 7.01, for any reason excluding Force Majeure, after the Commencement
Date, DIG shall reimburse ROUGE in an amount equal to the differential between
the actual amount incurred by ROUGE for electricity delivered to the Rouge Site
(whether purchased or self-generated) and the Agreement rate for the relevant
time period multiplied by the quantity purchased or self-generated for the
period of non-delivery. In the event of a Force Majeure event, the Parties shall
bear the cost of such differential equally. Provided, however, DIG shall not be
responsible for any costs if such failure is due to
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the sole negligence or willful misconduct of FORD or ROUGE, their employees,
agents, or contractors, or other third parties located upon the Rouge Site.
18.05 DAMAGES PAYABLE BY ROUGE
In the event ROUGE uses electrical energy in violation of the
exclusivity provisions of this Agreement, ROUGE shall pay to DIG the product of
two hundred (200%) percent of the differential between (i) the product of the
applicable rate in Exhibit F and the actual usage in violation of the
exclusivity provisions of this Agreement and (ii) the total revenue received in
mitigation sales by DIG, if any. No payment will be due if such differential is
negative. Such amounts shall be payable monthly. DIG shall be entitled to retain
any revenues described herein. In the event DIG terminates this Agreement due to
a default of ROUGE, this Section 18.05 shall survive such termination for a
period of time equal to the time remaining in the then current term.
Provided ROUGE has cured all defaults and paid made timely payments of
all amounts due under this Section 18.05, ROUGE shall have the right to request
the reinstatement of this Agreement upon twelve months notice. If DIG does not
agree to such reinstatement, then ROUGE shall be released from the
post-termination obligations of this Section 18.05.
18.06 DUTY TO MITIGATE
Each Party shall use reasonable efforts to mitigate the effects of any
event or circumstance which causes a claim of damages or liability under this
Agreement and to cooperate to develop and implement a plan of remedial and
reasonable alternative measures to remove the
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event. Upon the cessation of the event, the Party affected thereby shall make
its best efforts to resume normal performance of its obligations under the
Agreement as soon as possible.
SECTION 19
DISPUTE RESOLUTION PROCEDURES
19.01 IF A DISPUTE ARISES
If a dispute arises between the parties relating to this Agreement, the
following procedure shall be followed except that either party may seek
injunctive relief from a court where appropriate in order to maintain the status
quo while this procedure is being followed:
(1) Meeting - The parties shall hold a meeting promptly, attended by
persons with decision-making authority regarding the dispute, to attempt in good
faith to negotiate a resolution of the dispute; provided, however, that no such
meeting shall be deemed to vitiate or reduce the obligations and liabilities of
the parties or be deemed a waiver by a party of any remedies to which such party
will otherwise be entitled hereunder.
(2) Alternate Dispute Resolution - If, within thirty (30) days after
such meeting, the parties have not succeeded in negotiating a resolution of the
dispute, they agree to meet to select an appropriate form of alternative dispute
resolution to resolve the matter in a timely and mutually satisfactory way.
19.02 ARBITRATION
If the parties are not successful in negotiating a resolution to the
dispute, or can not select an appropriate form of alternative dispute resolution
within a reasonable time, or such alternative dispute resolution fails to settle
the dispute, then the parties agree to submit the
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dispute to binding arbitration in accordance with the commercial rules of
arbitration of the American Arbitration Association by a sole arbitrator and to
bear equally the costs of the arbitration. Arbitration shall take place in the
City of Dearborn, unless otherwise agreed by the parties. The substantive and
procedural law of the State of Michigan shall apply to the proceedings.
Equitable remedies shall be available in any arbitration. Punitive damages shall
not be awarded. This section is subject to the Federal Arbitration Act, 9 USC
ss.1 et seq. and judgment upon the award rendered by the Arbitrator, if any, may
be entered by any court having jurisdiction thereof.
SECTION 20
DIG'S FINANCING
20.01 DIG'S FINANCING.
ROUGE recognizes that DIG will be obtaining non-recourse financing to
construct and operate the Project, which financing may be from investors or from
one or more financial institutions, and hereby agrees to provide DIG with such
information, documents and records as DIG may reasonably request in connection
with DIG's efforts to obtain such financing, and the Parties agree to meet to
discuss and to attempt to come to mutually satisfactory agreements for
amendments to the Agreement which may be made upon the reasonable request of
such investors or financial institutions, provided such request does not
materially affect the economic benefits to or risk undertaken by a Party under
this Agreement.
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SECTION 21
MISCELLANEOUS
21.01 ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto and made a
part hereof, supersedes and cancels any and all previous agreements, discussions
or negotiations between the Parties and contains the entire agreement of the
Parties with respect to the subject matter of this Agreement.
21.02 NO DRAFTING PRESUMPTION.
No presumption shall operate in favor of or against any Party as a
result of any responsibility that any Party may have had for drafting this
Agreement.
21.03 INDEPENDENT CONTRACTOR.
Each Party hereto shall be deemed to be an independent contractor in
the performance of its obligations hereunder. The Parties hereto expressly agree
that this Agreement shall not create an agency, joint venture or partnership
relationship.
21.04 SEVERABILITY.
If any term or provision of this Agreement, or the application thereof
to any person or circumstance is rendered or declared illegal for any reason and
shall be invalid or unenforceable, such portion shall be ineffective to the
extent of such invalidity or unenforceability but the remainder of this
Agreement and the application of such term or provision to other persons or
circumstances shall not be affected thereby but shall remain in full force and
effect and shall be enforced to the greatest extent permitted by applicable law
unless such an event materially alters the Parties' intent as expressed in this
Agreement.
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21.05 GOVERNING LAW.
This Agreement, and all provisions hereof, shall be governed by and
interpreted in accordance with the laws of the State of Michigan, without regard
to its choice of law provisions.
21.06 CONFIDENTIALITY
The Parties hereto agree that the prices, terms and conditions
contained in this Agreement ("Confidential Information") shall not be disclosed
to third parties without the prior written consent of the other party; provided,
however, disclosure is permitted to the extent such disclosure is required by a
party providing financing to DIG, independent financial auditors of a Party, or
construction contractor for the Project, and such party is bound by
non-disclosure obligations at least as stringent as those contained in this
Section, or as required by rule of law, court or governmental agency order or
subpoena but only to the extent so ordered, and provided that the party so
ordered shall attempt to obtain a protective order, or rule of a recognized
stock exchange.
The Parties will use at least a reasonable degree of care to prevent
disclosure of such Confidential Information to others. (Reasonable care means
that degree of care each party uses to prevent unauthorized disclosure of its
own confidential information to third parties.) Such obligation shall not apply
to information which:
(a) becomes publicly known through no wrongful act of a Party;
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(b) is explicitly approved for release by written authorization of
the other Party. Such obligation shall terminate upon the expiration or
termination of this Agreement.
21.07 DAMAGE, DESTRUCTION OR CONDEMNATION
This section shall apply in the event that all or any portion of the
Project or Electricity Interconnection Facilities or the Project Site is
condemned, appropriated, damaged or destroyed.
(a) to the extent that it is feasible for DIG, it will use all
reasonable efforts to replace any portion of the Project, Project Site or
Electricity Interconnection Facilities, which has been damaged, destroyed or
condemned.
(b) to the extent that it is not feasible to replace any portion of the
Project, the parties will enter into negotiations to amend the Agreement, if
appropriate.
21.08 COUNTERPARTS.
This Agreement may be executed in one or more counterparts which, taken
together, shall constitute a single instrument.
IN WITNESS WHEREOF, the Parties have executed multiple originals of
this Agreement as of the date first set forth above.
ROUGE STEEL COMPANY
By:_______________________________________
Name:____________________________________
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Title:_____________________________________
DEARBORN INDUSTRIAL GENERATION, LLC
By: CMS Generation Co., Member
By:______________________________________
Name:____________________________________
Title:_____________________________________
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EXHIBIT A
PROJECT SITE
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EXHIBIT B
ROUGE SITE
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EXHIBIT C
POINT OF DELIVERY
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EXHIBIT D
MAXIMUM EMISSION CREDITS
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EXHIBIT E
BASE PROPERTY TAX
Year Base Tax ($000) Actual Tax Depreciation Factor
1999 * 442 To be .94
2000 1,661 Supplied .83
2001 3,328 By DIG .74
2002 3,523 As Soon As .68
2003 3,201 Information .63
2004 2,970 Becomes .59
2005 2,796 Available .56
2006 2,658 .54
2007 2,557 .52
2008 2,489 .50
2009 2,431 .48
2010 2,373 .46
2011 2,315 .44
2012 2,494 .42
2013 3,497 .40
*Deviations from base amounts will be
Applied in 2000.
FORMULA FOR SECTION 8.03 ADJUSTMENT:
2/3 [(AT-BT) *A/B] + 1/3 [(AT-BT) *X/Y]
AT = actual taxes from the table
BT = base tax from table for a
given year
A = MWh sold to ROUGE and entities sponsored by ROUGE under Exhibit G
B = total MWh delivered by the Project
X = steam sold to ROUGE
Y = total steam delivered by the Project
Note: Based on a 550MW Project.
BT calculated on a $134M SEV (10% real with 3% escalation; 90%
personal) at 1998 millage rates assuming 12 year abatement and
depreciation according to the table above. Depreciation is by phase,
and not concurrent for the entire Project.
AT is to be calculated at one time based on 1998 millage rates and
actual SEV and abatement status.
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EXHIBIT F
PRICING
Year $/MWh
2000 $ 40.00
2001 $ 29.62
2002 $ 30.03
2003 $ 30.46
2004 $ 30.88
2005 $ 31.19
2006 $ 31.50
2007 $ 31.82
2008 $ 32.14
2009 $ 32.46
2010 $ 32.94
2011 $ 33.60
2012 $ 34.44
2013 $ 35.84
2014 $ 36.84
2015 $ 37.88
EXTENSION TERM PRICING FORMULA
Electric Price = EN = $29.62 x 1.05 x ( (RG x .70) + (RC x .30 ) )
EN = Electric price in year N
RG = Escalation in gas price from year 2001 to year N
RG = GN/G1
G1 = Average natural gas price in year 2001 on the NYMEX
GN = Average natural gas price in year (N-1) on the NYMEX
RC = Compound CPI rate from year 2001 to year N
* the arithmetic average of the daily settlements on the last three trading days
of each month of the front month Xxxxx Hub contract
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EXHIBIT G
ALLOCATION OF CONTRACT CAPACITY
G.1 Definitions.
The following definitions shall apply to this Exhibit G:
"Direct Supplier" shall mean an entity which directly contracts with
ROUGE to provide materials used in ROUGE's production process or provides
additional processing to ROUGE's manufactured products, or an entity which
directly contracts with FORD to provide equipment or parts, or materials used in
FORD's original equipment manufacturing process.
"Eligible Customer" shall mean FORD or any facility owned by FORD which
is on the Rouge Site, ROUGE or any facility owned by ROUGE which is on the ROUGE
Site, any Direct Supplier or Affiliate located on the Rouge Site, FORD World
Headquarters, Regent Court, the Research and Engineering Center, Double Eagle
Steel Coating Company, Bing Blanking, LLC, Delaco Supreme Tool and Gear Company
("Delaco"), Spartan Steel in Frenchtown Township, and Praxair in Ecorse all
without regard to the Eligibility Requirements; and FORD, or any facility owned
by FORD which is not on the ROUGE Site, ROUGE or any facility owned by ROUGE
which is not on the Rouge Site, and any Affiliate or Direct Supplier which meets
the Eligibility Requirements and is located within the Service Area.
"Eligibility Requirements" shall mean, for all facilities or entities
not on the Rouge Site, a minimum demand of 2 MW, and a load factor of at least
55%. All Eligible Customers, except FORD and ROUGE, shall be subject to
providing credit ratings or credit support acceptable to DIG such acceptance not
to be unreasonably withheld.
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"Full Commercial Operation Date" shall mean the date when the full MW
capacity of the Project is commercially available, but not later than January 1,
2002.
"Service Area" shall mean all properties within the state of Michigan.
Additionally, any other entity or facility located outside of the state of
Michigan provided such service to, or a sales contract with, such an entity or
facility does not prevent DIG's ultimate parents or affiliates from qualifying
for an exemption under the Public Utility Holding Company Act of 1935, as may be
amended from time to time, (15 USCA 79, et seq) or any successor statutes.
Further provided that DIG does not come under the jurisdiction (including taxing
authority) of any additional local, state or federal regulatory authority as a
result of such service to, or a sales contract with any entity or facility
outside of the state of Michigan.
"Sponsor(s)" shall mean either FORD or ROUGE or both as to each
Eligible Customer which it nominates.
G.2. ELECTRICITY ALLOCATION:
Inclusion in Allocation:
The Sponsors may request an increase in the total peak MW usage or
service for a new Eligible Customer by including such increase or Eligible
Customer in a jointly executed notice and nominating a peak MW usage at least
seventy-five (75) days prior to the commencement of the next calendar year. Once
nominated, such nominated peak MW demand for facilities not within the Rouge
Site shall be included in each allocation for the entire contract term but the
Eligible Customer may be changed, or the peak demand, or any portion of the peak
demand may be re-allocated for the Rouge Site. The Sponsors may elect to change
peak MW
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allocations to Eligible Customers currently included in an allocation
form by submitting an amended form no more than twice annually with no minimum
notice requirement.
Separate Contract:
Electricity sales will be pursuant to a separate electricity sales
agreement between DIG and any Eligible Customer.
The initial service shall begin on the Commencement Date for the Rouge
Site and Double Eagle Steel Coating Company. The initial service date for all
others shall be when the full Project has achieved final completion, but no
later than January 1, 2002.
The Parties shall cooperate and take all reasonable measures to enable
a facility to meet the load factor Eligibility Requirement and, if economically
mutually beneficial, to maximize the average load factor of all the nominated
Eligible Customers.
G.3. REQUIREMENT TO SERVE.
Neither DIG nor FORD or ROUGE shall be required to construct any
transmission facilities to serve an entity other than to the Points of Delivery
as specified in Exhibit C. DIG will, however, provide additional
interconnections at the customer's expense, if requested.
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DIG shall not be required to enter into an electricity sales
agreement with any entity which requires third-party transmission services
unless the following conditions are satisfied:
1. Such third-party transmission provider shall comply with the
appropriate regulatory authority's requirements for retail
wheeling.
2. Electronic, direct-read meters are available to provide real-time
readings to DIG's, at its option.
3. DIG shall not be required to contract for third-party transmission
or distribution services to serve Eligible Customers not located in
the Rouge Site. Such responsibility shall lie with the Eligible
Customer.
4. DIG shall not be liable for any charges or penalties related to
sending Electricity via third-party transmission or distribution
systems unless levied solely due to the failure of DIG to perform
its obligations under the energy sales contract.
5. In the event "dynamic" or real-time scheduling adjustments are not
authorized by the relevant third-party transmission provider, the
Eligible Customer shall be invoiced and pay for all Electricity
scheduled by the Eligible Customer and generated by DIG.
DIG will waive the Eligibility Requirements for up to a total of
ten (10) Direct Suppliers (including Delaco) nominated by FORD or
ROUGE which are categorized as either economically or socially
disadvantaged, or for community development purposes, further
provided that the total demand of such nominees does not exceed ten
(10) MW.
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G.4. TERMS OF SERVICE.
Any Electricity allocated under this Agreement shall be for the sole
use of the Eligible Customer at their facilities according to its allocation.
Under no circumstances shall an Eligible Customer re-sell, transfer or assign
the Electricity delivered to the Point of Delivery under this Agreement. In the
event of a breach of this covenant, in addition to monetary damages to which it
may be entitled, DIG shall be entitled to terminate the agreement with the
Eligible Customer.
DIG shall be the exclusive supplier for all Eligible Customers within
the Rouge Site. In the event it is authorized by the relevant regulatory
authority and appropriate metering capability is available, DIG will release
each Eligible Customer not located on the Rouge Site from the exclusive supplier
provision, if the Electricity sold to such Eligible Customer is considered the
first Electricity through the meter
The Point of Delivery for all Eligible Customers receiving Electricity
via a third-party transmission system shall be at DIG's point of interconnection
with the Detroit Edison transmission system.
The agreements between DIG and each Eligible Customer shall be on the
same terms and conditions of this Agreement except it is agreed that Sections 4,
7, 8 (excluding 8.01 and 8.02), 12, 13, and 18 are subject to adjustment. The
notice provisions of Section 6 shall
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apply unless modifications are necessary to comply with the scheduling
requirements approved by Michigan Public Service Commission.
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