Exhibit 00
Xxxxx Xxxxx Project
Operating Agreement
The parties to this Operating Agreement are the owners of the South
Texas Project: CITY OF SAN ANTONIO, Texas, acting through the City Public
Service Board of San Antonio, hereinafter referred to as "San Antonio;" CENTRAL
POWER AND LIGHT COMPANY, a Texas corporation, hereinafter referred to as
"Central;" HOUSTON LIGHTING & POWER COMPANY, a Texas corporation, hereinafter
referred to as "Houston;" CITY OF AUSTIN, hereinafter referred to as "Austin"
(collectively, the "Participants"); and the operator of the South Texas Project,
STP NUCLEAR OPERATING COMPANY, a Texas non-profit corporation (hereinafter
referred to as "Opco").
The parties desire to enter into this Operating Agreement to
set forth the rights and obligations between Participants, on the one hand, and
Opco, on the other, for the licensing, operation, maintenance, modification,
decontamination and decommissioning of the South Texas Project.
RECITALS
A. San Antonio, Central, Houston and Austin have heretofore jointly
licensed and constructed two nuclear-fueled electric generation facilities known
as the South Texas Project and currently operate said facilities for the
production of electric power and energy which is taken by each Participant in
proportion to its ownership interest in such facilities.
B. Such jointly owned facilities were licensed, constructed and
operated under the terms of the Participation Agreement, dated as of July 1,
1973, as amended by three amendments thereto (which Participation Agreement, as
so amended, is hereinafter referred to as the "Prior
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Agreement"). Houston served as Project Manager for all aspects of the South
Texas Project under the terms of said Prior Agreement.
C. Contemporaneously herewith, the Participants are amending and
restating the Prior Agreement (which Prior Agreement, as so amended and
restated, is hereinafter referred to as the "Restated Agreement") in order: (i)
to relieve Houston of its rights and obligations as Project Manager under the
Prior Agreement; (ii) to transfer to Opco responsibilities for the licensing,
operation and maintenance of the South Texas Project, including responsibilities
for repair, modification, decontamination, decommissioning, and the construction
of any additional Generating Unit(s) and support facilities that may from time
to time be constructed at the South Texas Plant Site; and (iii) to amend and
restate certain other terms previously contained in the Prior Agreement.
D. Pursuant to this Operating Agreement, Opco is authorized to act on
behalf of San Antonio, Central, Houston and Austin to maintain and operate the
South Texas Project. Participants agree and Opco acknowledges and agrees that
Participants are severally and not jointly liable for payments that are
chargeable to the South Texas Project hereunder in proportion to each of
Participants' respective undivided ownership interests in the Common Station
Facilities and the respective Generating Units included or to be included in the
South Texas Project, as applicable, as provided in the Restated Agreement,
except as to payments which are required to be allocated to and paid by one or
more Participants other than in proportion to the ownership interests of such
Participant or Participants pursuant to the provisions of Section 9.3 of this
Operating Agreement.
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ARTICLE I
DEFINITIONS
In addition to the previously defined terms, the following terms when
used herein, shall have the meanings specified. Terms defined in the Restated
Agreement, unless otherwise defined herein, shall have the meanings indicated in
that agreement.
1.1 "Costs of Operation" means all costs of Operation and all costs of
Capital Improvements and any related taxes that are incurred by Opco under or
pursuant to or with respect to this Operating Agreement and attributable to the
South Texas Project, including, without limitation, all overhead costs and costs
of maintaining the corporate existence of Opco, all costs of all officers and
employees of Opco (including, without limitation, all pension, medical, welfare
and other employee benefits, compensation and welfare costs) and all obligations
incurred by Opco under and pursuant to employment agreements and indemnity
agreements (including, without limitation, undertakings to indemnify officers
and directors pursuant to the Articles of Incorporation and Bylaws of Opco) in
connection with the directors, officers, employees, agents and contractors of
Opco, all costs of contracts for goods (including, without limitation, Nuclear
Fuel acquired by Opco for the Participants pursuant to this Operating Agreement)
or services entered into by Opco with third parties or individual Participants,
all costs of claims for personal injury or death or damage to or loss or
destruction of property asserted against Opco by any person or party, and all
other costs of operation of Opco of whatsoever nature.
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1.2 "Force Majeure" means any cause which by the exercise of due
diligence such party could not reasonably have been expected to avoid and which
by exercise of due diligence it shall be unable to overcome.
1.3 "Operate" and its derivatives means to possess, use, maintain,
repair, improve, operate, decontaminate and decommission the South Texas
Project.
1.4 "Operating Licenses" means the Facility Operating Licenses No.
NPF-76 for Unit 1 of the South Texas Project and No. NPF-80 for Unit 2 of the
South Texas Project and amendments thereto as issued from time to time by the
NRC.
1.5 "Participants' Approval" or "Participants' Direction" and
derivatives thereof means the written approval or direction of the Owners'
Committee constituting the binding action of all Participants with respect to
such approval or direction under the provisions of the Restated Agreement.
1.6 "Participant's Share" means, with respect to each item of Costs of
Operation and with respect to each Participant, the share of such item of Costs
of Operation which such Participant is required to bear and pay pursuant to the
provisions of the Restated Agreement and this Operating Agreement.
1.7 "South Texas Project" as used in this Operating Agreement shall
have the meaning set forth in the Restated Agreement, except and excluding the
Transmission Corridor, the Construction Power Line and other transmission lines
owned by the respective Participants extending from the switchyard and switching
facilities at the South Texas Project.
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ARTICLE II
OPCO'S AUTHORITY AND RESPONSIBILITY
WITH RESPECT TO OPERATION OF SOUTH TEXAS PROJECT
2.1 Authority for Operation. Opco shall Operate the South Texas Project
and shall have full control over all Operations of and making of Capital
Improvements to the South Texas Project as permitted and required by, and
subject to the provisions and limitations set forth in, this Operating
Agreement. Without limiting the generality of the foregoing, Opco shall provide,
or shall provide for, all labor, supervision, supplies, equipment and services
for the operation, maintenance, repair, replacement, reconstruction,
decontamination and decommissioning of all aspects of the South Texas Project in
order to deliver to the Participants their respective Generation Entitlement
Shares, all in accordance with the Restated Agreement (including Participants'
Direction pursuant to the terms and provisions thereof), this Operating
Agreement, and the terms and conditions of all applicable licenses and permits,
laws and regulations, including the Operating Licenses. In carrying out its
responsibilities, Opco shall have authority, subject to Participants' Direction
from time to time, to take any and all action, in the Participants' names and on
the Participants' behalf, necessary or desirable to obtain and maintain in
effect all licenses and permits issued by the NRC or other regulatory bodies
relating to the South Texas Project and to enter into agreements and make other
commitments on behalf of the Participants necessary or desirable to carry out
its responsibility to provide for Operation. Opco shall act on behalf of
Participants in all matters related to NRC licensing of the South Texas Project
and, on behalf of the Participants, shall Operate, and make Capital Improvements
at, the South Texas Project in accordance with the Operating Licenses and
applicable laws and regulatory
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requirements and Participants' Direction from time to time; provided that Opco
shall have sole authority, as the Operator of the South Texas Project pursuant
to the Operating Licenses, to make all decisions to protect public health and
safety as required by the Operating Licenses and applicable laws and regulations
and as are necessary to comply with applicable laws and regulations. Subject to
the provisions of Sections 2.2 and 2.3 herein, in order to enable Opco fully and
effectively to perform its duties hereunder, Opco shall have, and the
Participants do hereby grant to Opco, subject to the terms and conditions set
forth herein, the power and authority to exercise in accordance with applicable
laws and Participants' Direction from time to time, the rights of the
Participants under, and to execute, modify, amend, enforce or terminate, any
contracts, agreements, purchase orders, licenses, permits and privileges
relating to the Operation of, and making of Capital Improvements to, the South
Texas Project, on behalf of the Participants.
2.2 Limitations: Notwithstanding Section 2.1 above:
A. Opco shall, except in the case of emergency or unexpected
contingencies as provided in Section 5.2 or with the Participant's Approval,
endeavor to avoid incurring Costs of Operation that are either materially
different from or in excess of the budgeted or business plan expenditures
provided for or contemplated in annual Budgets or Five Year Plans adopted and
approved by Participants' Approval.
B. In conducting Operations or making Capital Improvements,
Opco shall conform to annual Budgets and Five Year Plans adopted and approved by
Participants' Approval, except in the case of emergency or unexpected
contingencies as provided in Section 5.2 or unless otherwise authorized by
Participants' Approval.
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C. Opco shall not sell, encumber or otherwise dispose of any
real property or any equipment or personal property comprising the South Texas
Project or acquired by Opco on behalf of Participants pursuant to this Operating
Agreement for use in connection with Operation of or making Capital Improvements
to the South Texas Project, except for sales, encumbrances or dispositions made
in accordance with processes and procedures for which Participants' Approval has
been obtained.
D. Participants, by exercise of Participants' Direction, shall
have exclusive authority to and may direct Opco at any time to retire and
decommission the South Texas Project or any Generating Unit or to operate the
South Texas Project or any Generating Unit at reduced capacity, or to place the
South Texas Project or any Generating Unit in a safe shutdown condition. Opco
shall follow any such Participants' Direction; provided that Opco shall take any
such action in a manner which it determines, in the exercise of the authority
vested in Opco as the Operator under the Operating Licenses and applicable laws
and regulations, is consistent with public safety and health, the Operating
Licenses, and applicable laws and regulations. Further, in the exercise of the
authority vested in Opco as the Operator under the Operating Licenses and
applicable laws and regulations, Opco shall be authorized to Operate the South
Texas Project or any Generating Unit at a reduced capacity or otherwise to place
the South Texas Project or any Generating Unit in a safe shutdown condition at
any time Opco determines such action is necessary to comply with the Operating
Licenses and applicable laws and regulations. All costs incurred by Opco in
taking any such action relating to decommissioning or shutdown of the South
Texas Project or any Generating Unit shall be considered Costs of Operation.
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E. Opco shall conduct no business or activity other than to
carry out its rights and responsibilities under and pursuant to this Operating
Agreement, nor shall Opco engage in any activity seeking profit for itself. Opco
shall never realize or derive a profit from the Operation of or making of
Capital Improvements to the South Texas Project or otherwise under or in
connection with this Operating Agreement. Opco shall not own any interest in the
South Texas Project or be entitled to any electric power therefrom. Any
property, of whatsoever kind or nature, which is acquired by Opco, whether for
Operation, Capital Improvements or otherwise, shall be acquired for the account
and benefit of the Participants and shall be owned by the Participants as
tenants in common under the Restated Agreement, each Participant owning such
right and interest in and bearing such share of the costs associated with such
property as is provided for property of such character in the Restated
Agreement.
2.3 Third-Party Contracts. All contracts entered into by Opco pursuant
to this Operating Agreement with third parties (excluding contracts with
officers, employees and agents of Opco and workers' compensation insurance
policies and other contracts relating to the internal affairs of Opco) in
connection with the Operation of or making of Capital Improvements to the South
Texas Project, including, without limitation, contracts with individual
Participants, contracts for the sale, lease or acquisition of materials,
inventories, supplies, spare parts, equipment, machinery, fuel, Nuclear Fuel
(unless otherwise directed by Participants' Direction), or services, shall be
executed by Opco as agent for and acting on behalf of the Participants and as
the person designated to act for San Antonio and Austin pursuant to the
cooperative purchasing program provided for in Section 2.7 hereof. Each such
contract shall (a) expressly provide that the rights and interests of the
Participants in and to and under such contract and in and to all
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goods and services to be provided to or acquired by Participants under or
pursuant to such contracts are and shall be owned and held by Participants in
undivided interests, in proportion to the respective Participant's Shares of the
obligations and undertakings of the Participants pursuant to such contract, and
(b) expressly provide that the obligations and undertakings of the Participants
under and in connection with such contract are several and not joint and that
each Participant is and shall be liable and responsible only for its
Participant's Share of such obligations and undertakings. The Participants agree
to be severally bound (with each Participant being liable only for its
Participant's Share of the obligations and undertakings of the Participants) by
the terms of all contracts executed by Opco as authorized in this Operating
Agreement (including, without limitation, any provisions that limit or protect
against a third party's liability, provisions granting indemnity to third
parties, and limitations or exclusions of warranties) to the same extent as if
the Participants were original several signatories to such contract. In
addition, if the Participants' signatures are deemed by Opco to be necessary to
induce a third party to enter into such a contract, Participants agree not to
unreasonably refuse to execute such contract.
2.4 Sales and Use Taxes. Opco recognizes that some Participants may
have exemptions from sales or use taxes imposed by the State of Texas or other
governmental entity or authority which are not available to other Participants,
and Opco agrees to take all actions necessary to assist a Participant in
claiming and sustaining such exemptions. When Opco enters into a contract on
behalf of Participants (or Participants execute a contract at Opco's request),
Opco will make such representations and provide such certificates as are
required to preserve any exemption from sales and use taxes a Participant may
claim and to insure that the assessment and
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payment of any sales and use taxes due from a Participant are assessed and paid
only by that Participant. Participants agree to provide Opco with sufficient
exemptions or other certificates required to claim any exemptions and to provide
for separate payment of sales and use taxes owed by a Participant, and
Participants agree that each will be severally responsible for any expenses in
connection with sustaining an exemption claimed by that Participant and the
payment of any sales and use taxes attributable to the purchase of that
Participant's undivided interest in any goods or services. These expenses or
taxes paid by a Participant shall be disregarded in determining the relative
Participant's Shares of the costs of purchasing or acquiring such goods or
services under the provisions of this Operating Agreement.
2.5 Enforcement of Rights.
A. Subject to the provisions of Section 2.2, and except as
otherwise directed by Participants' Direction from time to time, Participants
delegate to Opco the power, authority and obligation to manage on behalf of the
Participants the defense, prosecution and/or settlement of disputes with third
parties relating in any way to the South Texas Project; provided, however, that
if any Participant is named as a party to any such dispute, it shall have the
right, at its own cost, to defend any claims against it in such dispute.
B. Subject to Article VI, to the extent Opco incurs any
liability to a third party in performing its duties under this Operating
Agreement, amounts paid by Opco because of such liability and Opco's expenses in
defending claims by third parties or prosecuting claims against third parties
shall be considered Costs of Operation.
2.6 Cooperative Purchasing Program. Pursuant to and as authorized
by Sections 271.101 and 271.102 (Subchapter F of Chapter 271 of Title 8) of the
Local Government Code of
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the State of Texas, as such Sections may be amended, revised or supplemented
from time to time, San Antonio and Austin have agreed to and shall participate
in a cooperative purchasing program to purchase and acquire for San Antonio and
Austin, respectively, interests corresponding to their respective Participant's
Shares of and in and to all supplies, fuel, Nuclear Fuel, equipment, machinery
and other goods of any nature whatsoever purchased or acquired by Opco and all
services of third parties (or of other individual Participants) engaged or
acquired by Opco for or in connection with the Operation of and making of
Capital Improvements to the South Texas Project pursuant to and as authorized
and provided for in this Operating Agreement. Pursuant to Subsection
271.102(b)(1) of said Local Government Code, each of San Antonio and Austin
designates Opco as the person to act under the direction of, and on behalf of
San Antonio and Austin, respectively, in all matters relating to such
cooperative purchasing program, subject to the right of San Antonio and Austin
to change such designation if deemed appropriate.
ARTICLE III
PARTICIPANTS' RESPONSIBILITY AND OBLIGATIONS
3.1 Payment. Each Participant hereby severally agrees to pay Opco
for its Participant's Share of Costs of Operation.
3.2 Site Access and Control. In order for Opco to Operate South Texas
Project in accordance with the Operating Licenses and other applicable
regulatory requirements, the Participants, as their interests may appear, grant
Opco possession and use of the property constituting South Texas Project and
agree to provide Opco, its agents, employees and contractors unrestricted access
to the property constituting South Texas Project and, without limitation, the
other real property and the switchyard, facilities, equipment and personal
property
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located on the South Texas Plant Site. As and to the extent required by either
of the Operating Licenses or applicable statutes and regulations, the
Participants further agree that Opco shall have authority to exercise complete
control over the Exclusion Areas as defined in the Updated Final Safety Analysis
Report for each Generating Unit and to determine all activities within such
Exclusion Areas. The respective commitments and responsibilities of the
Participants and Opco regarding the South Texas Project switchyard, substation
and transmission facilities, including the Construction Power Line, are set
forth in Exhibit A hereto (as same may be modified from time to time consistent
with Opco's and the Participants' regulatory obligations).
3.3 Support Services from Participants.
(a) Subject to paragraph 3.3(b), each Participant agrees that
it will provide assistance and cooperation with Opco in Opco's
discharge of its responsibilities under this Operating Agreement.
Specifically, subject to paragraph 3.3(b), each Participant agrees to
provide support to the South Texas Project Emergency Plan and emergency
training and drills and to other activities undertaken by Opco as may
be necessary from time to time to allow Opco to conduct safe, economic,
and efficient operations at the South Texas Project and to otherwise
carry out its responsibilities under this Operating Agreement, the
Operating Licenses, and applicable laws and regulations. Such support
services shall be provided in accordance with the principles described
in Exhibit B hereto (as same may be modified from time to time
consistent with Opco's and the Participants' regulatory obligations).
The Participants agree to provide, subject to reasonable capability and
availability, additional services or assistance required by Opco and
hereafter agreed to by the applicable Participant in writing in
connection with the
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Operation of South Texas Project, including, without limitation, the
following: (1) communications access and support, (2) transportation
support, and (3) other services as may be required in order to allow
Opco to conduct safe, economic and efficient operations at South Texas
Project.
(b) If any services are to be rendered by a Participant to
Opco pursuant to paragraph 3.3(a) in order to assist Opco in the
discharge of its responsibilities under this Operating Agreement, such
services and the amounts to be charged therefor must be described in a
separate written contract hereafter agreed upon and executed by Opco
and such Participant, and all costs of Opco thereunder shall be
considered Costs of Operation.
3.4 No Changes to Facilities, Procedures or Practices. So that Opco
will be capable of Operating South Texas Project in accordance with the
Operating Licenses and applicable regulatory requirements, the Participants
agree that they will not make any changes to facilities, procedures or practices
that may result in failure to comply with NRC regulations or commitments or the
terms of the Operating Licenses, including, but not limited to, physical changes
to the electrical transmission or distribution facilities that directly provide
an off-site power supply to South Texas Project, without prior consultation with
and written consent from Opco, which consent Opco shall not unreasonably
withhold.
3.5 Off-Site Power Supply. In order for Opco to operate the South Texas
Project in accordance with the Operating Licenses and applicable regulatory
requirements, each Participant agrees to provide off-site power to the South
Texas Project through the Participant's transmission lines connecting into the
South Texas Project and the Participant's interconnections with other systems
through the interconnected power grid of the Electric Reliability Council of
Texas, Inc.
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("ERCOT"), or its successors. Appropriate adjustments shall be made in the
allocation of electric energy available to the respective Participants through
the interconnected power grid of ERCOT (or any successor power grid through
which the generating facilities of the Participants are interconnected) or
through the South Texas Project switchyard, so as to cause each Participant to
bear and provide a net percentage share of off-site power for the South Texas
Project corresponding to its Plant Ownership Interest.
ARTICLE IV
OWNERSHIP
4.1 Ownership of Capacity and Energy. In accordance with the provisions
of the Restated Agreement, the Participants shall be and remain the owners of,
and shall be entitled to all of, the Capacity and Energy from South Texas
Project, with each Participant to take and receive that Participant's entire
Generation Entitlement Share of all electric Power and Energy generated from the
respective Generating Units.
4.2 Plant Property. Opco shall have no ownership interest in the South
Texas Project or any supplies, equipment or other property acquired in
connection therewith. All such property shall be owned by the Participants as
tenants-in-common in accordance with the terms of the Restated Agreement. As
between Opco and the Participants, all risks associated with ownership or loss
of such property and all benefits inuring from ownership shall be vested with
the Participants.
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ARTICLE V
PAYMENT; AUDIT AND INSPECTION RIGHTS
5.1 Opco Submittals and Participant Approvals. On or before November 1
(or such other date at Participants' Direction) of each year during the term of
this Operating Agreement, Opco will submit the following for Participants'
Approval: (1) annual revisions to the South Texas Project Five Year
Operating/Outage and Fuel Procurement Plans; (2) annual revisions to the South
Texas Project Five Year Business Plan; (3) the annual budget for Costs of
Operation; and (4) the annual budget for costs of Nuclear Fuel. Opco will keep
Participants timely informed and obtain Participants' Approval in advance for
projects which are reasonably anticipated to cause a material change to the then
current Five Year Plans or annual Budgets as previously approved by
Participants' Approval. Notwithstanding the foregoing, during an emergency or
other unexpected contingency, Opco is authorized to make such expenditures and
take such other action, whether budgeted or not, as Opco shall determine to be
reasonably necessary in order to comply with applicable laws and regulations,
the Operating Licenses and any other applicable licenses or permits or otherwise
to maintain the South Texas Project in a safe condition. If any such unbudgeted
costs and expenditures are incurred, Opco shall promptly notify the Participants
of such action, specifying the full particulars of the events giving rise to
such costs and expenditures, and shall promptly submit revised annual Budgets to
encompass such costs and expenditures incurred, as well as those expected to be
incurred, as a result of such emergency or other unexpected event, and such
costs and expenditures shall be Costs of Operation.
5.2 Payment Obligations. If as a result of accounting or billing
errors or otherwise any Participant shall at any time pay more than its
Participant's Share of any Costs of Operation,
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thus resulting in allocation to and payment by one or more other Participants of
less than its or their Participant's Share of such Costs of Operation, each
Participant which has paid less than its Participant's Share of such Costs of
Operation will, promptly upon demand, remit such deficiency to Opco, and, upon
receipt thereof, Opco shall promptly transmit and refund same to the Participant
who has thus paid more than its Participant's Share of such Costs of Operation.
It is expressly stipulated and agreed, however, that no Participant shall have
the right to require that Opco refund to such Participant, or that any other
Participant pay to Opco or to such first-mentioned Participant, any overpayment
of Costs of Operation made by such first-mentioned Participant unless such
first-mentioned Participant shall have given written notice and demand for
refund of such overpayment to Opco prior to the expiration of two years after
the end of the year during which such overpayment was made.
5.3 Payment Default. Consistent with Section 21 of the Restated
Agreement and without prejudice to the rights of the non-defaulting Participants
against the defaulting Participant under the Restated Agreement on account of
such default, in the event any Participant fails to make any payment at the time
and in the manner required by this Operating Agreement, and if none of the
non-defaulting Participants elect to cover the default, Opco shall take whatever
action and make whatever expenditures, whether budgeted or not, that it
determines to be reasonably necessary to protect public health and safety as
required by the Operating Licenses and applicable laws and regulations and to
comply with applicable licenses or permits and to place and maintain the South
Texas Project in a safe, shut-down condition. All Participants remain obligated
to pay for these expenditures in proportion to their Generation Entitlement
Shares for each affected Generating Unit. If one or more Participants default on
this safe, shutdown obligation, the other Participants are obligated to increase
their contributions to Opco to cover the safe, shut-down obligation default (in
the proportion that their respective Generation Entitlement Shares in the
affected Generating Unit bear to the aggregate Generation Entitlement Shares of
all non-defaulting Participants in such Unit) without prejudice to the rights of
the non-defaulting Participants against the defaulting Participant under the
Restated Agreement on account of such default.
5.4 Payment and Billing. Subject to Sections 5.1 and 5.2 above and in
accordance with procedures as may be agreed upon in writing by the parties, Opco
hereby agrees to furnish Participants with requests for funds to pay Costs of
Operation. Each Participant shall pay its share of Costs of Operation in
accordance with requests for funds submitted by Opco. Payments for the Costs of
Operation in accordance with Opco's requests for funds shall be made
notwithstanding the availability or lack of availability of the South Texas
Project to produce Energy.
5.5 Audit and Adjustment. Opco shall maintain books and records to
support the Costs of Operation, which books and records shall be maintained by
Opco for such periods of time as Participants shall direct by Participants'
Direction. As soon as practical, but no later than ninety (90) days after the
end of each calendar year, Opco shall prepare and deliver to each Participant a
report prepared by an independent public accounting firm selected by
Participants by Participants' Direction reflecting the results of an audit of
the books and records of Opco. The cost of preparing such audit reports shall be
Costs of Operation. Further, from time to time, any of the Participants may, at
the applicable Participant's cost and expense, conduct or cause to be conducted
by others, including regulatory authorities having jurisdiction, audits of the
books and
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records of Opco. Such audits shall be conducted at reasonable mutually agreed
upon times, with agreement not being unreasonably withheld. Opco shall credit
each Participant with its Participant's Share of recoveries, whenever received,
from third parties and shall charge each Participant with its appropriate share
of any underpayments of Costs of Operation and promptly transmit and refund
amounts received in payment of such underpayments to the Participant or
Participants who have made overpayments with respect to such Costs of Operation
as provided for in Section 5.2 hereof.
ARTICLE VI
LIABILITY
6.1 Release of Opco. In no event shall Opco be liable to any
Participant for any direct, indirect, incidental or consequential damages,
including, without limitation, damages for loss of profits or loss of use or
cost of replacement power, and each Participant hereby releases Opco for any
damages arising out of Opco's performance or failure to perform this Operating
Agreement. The parties recognize that Opco is a nonprofit corporation formed,
controlled and financed by the Participants solely for the purpose of acting on
behalf of Participants in carrying out the responsibilities which are described
herein. Opco does not assume liability or responsibility to the Participants for
loss, cost or expense that may be suffered by any Participant as a result of any
action or inaction of Opco; provided, however, that nothing herein shall relieve
any person or party other than Opco from any responsibility to Opco or to the
Participants, whether assumed by contract or by operation of law.
6.2 Indemnity. The Participants shall severally, each to the extent
only of its Participant's Share, protect, indemnify and hold Opco free and
harmless from and against any and
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all damages, liabilities, claims, demands, causes of action, suits or other
proceedings (including all costs in connection therewith and in connection with
the defense thereof, including attorneys' fees) of every kind and character,
directly or indirectly connected with Opco's Operation of the South Texas
Project or making of Capital Improvements to the South Texas Project or for any
damage thereto, whether arising in or based upon tort, fraud, contract, strict
liability, negligence, breach of fiduciary duty or any other theory of legal
liability or as a result of fines or other penalties imposed by the NRC or other
governmental authority.
6.3 Allocations of Liability Among Participants. All losses, damages,
expenses, penalties, liabilities and claims (including those in respect of
property damages, personal injury, and fines or penalties imposed upon Opco by
the NRC or other governmental authority) asserted by third parties against Opco
in connection with, or arising out of, the Operation of or making of Capital
Improvements to the South Texas Project or any portion thereof, including,
without limitation, the expenses of defending against or disposing of such
claims and liabilities and the costs and expenses covered by the indemnity under
Section 6.2, attributable to any property, policy, system, design or process in
existence at or prior to the time that responsibility for the Operation of the
South Texas Project is transferred to Opco or developed after such transfer, or
which is attributable to any former employee of any Participant who is employed
by Opco upon or incident to such transfer, or to any employee hired by Opco
after such transfer, and which are not covered in full by insurance procured in
accordance with Article VII (or any successor insurance arrangement), shall be
treated as Costs of Operation.
6.4 Scope of Indemnity and Release. EACH PARTICIPANT SEVERALLY
ACKNOWLEDGES TO OPCO THAT THE PROVISIONS OF SECTIONS 6.1, 6.2 AND 6.3
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HEREOF WHICH RELEASE OPCO OR PROVIDE FOR THE INDEMNIFICATION BY THE PARTICIPANTS
(SEVERALLY) OF OPCO ARE INTENDED BY THE PARTICIPANTS, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW FROM TIME TO TIME, TO RELEASE AND SAVE AND HOLD
HARMLESS AND INDEMNIFY OPCO FROM THE CONSEQUENCES OF OPCO'S OWN NEGLIGENCE
(WHETHER ORDINARY OR GROSS, SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE) AND
RECKLESS OR INTENTIONAL CONDUCT OR STRICT LIABILITY OF OPCO, ANY OF WHICH ARISES
OUT OF OR RELATES TO THE OPERATION OF OR MAKING OF CAPITAL IMPROVEMENTS TO THE
SOUTH TEXAS PROJECT OR ANY PORTION THEREOF.
ARTICLE VII
INSURANCE
With respect to the South Texas Project, Opco shall recommend and,
subject to the Participants' Direction, shall procure and maintain or cause to
be procured and maintained, in the name of and on behalf of the Participants,
Opco, and the Participants' respective mortgagees, if required, as their
respective interests may appear, protection through insurance or otherwise
covering the Participants' and Opco's obligations to pay damages because of
personal injury, death or property damage, including, without limitation,
obligations under applicable workers' compensation laws, and protection through
insurance or otherwise covering nuclear property and nuclear liability and other
insurance and financial protection in accordance with customary industry
practice and as necessary to comply with all applicable laws and regulations and
the provisions of the Restated Agreement and applicable mortgages and credit
arrangements of any of the Participants. All insurance policies obtained
pursuant to this Operating Agreement shall
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be issued, subject to Participants' Direction, with the Participants, Opco, and
the Participants' respective mortgagees, if required, as named or additional
insureds or loss payees, as their interests may appear, as appropriate to the
particular coverage and as directed by Participants' Direction. Opco, subject to
prior Participants' Approval, shall determine the coverage limits and
deductibles for any insurance policies obtained pursuant to this Operating
Agreement.
Subject to the Participants' Direction, Opco will establish necessary
procedures, cooperate with the insurers and otherwise comply with requirements
of the insurers to maintain coverages in effect and to obtain payment of claims
recoverable under such insurance applicable to the South Texas Project.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. This Operating Agreement shall become effective concurrent
with the Restated Agreement, and unless sooner terminated as provided
hereinafter, it shall remain in effect, subject to Section 8.2 below, until all
Generating Units shall have been retired and decommissioned in accordance with
all applicable regulatory and governmental requirements and the parties hereto
agree in writing, with agreement not to be unreasonably withheld, that all
responsibilities hereunder have been fulfilled.
8.2 Termination. This Operating Agreement may be terminated prior to
the expiration of the term set forth in Section 8.1 above, subject to receipt of
any and all necessary regulatory approvals, by Participants' Direction; provided
that this Operating Agreement may not be terminated prior to the expiration of
the term set forth in Section 8.1 unless and until a successor Operator of all
Generating Units in the South Texas Project shall have been designated
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and selected by unanimous agreement of the Participants and shall have qualified
and been designated as operator of the Generating Units pursuant to Operating
Licenses issued by the NRC. Opco, as contemplated by Section 11.1 of the
Restated Agreement, agrees that any and all licenses, permits, books, records,
privileges or rights acquired by Opco relating to the South Texas Project shall
be assigned or otherwise transferred to the Participants or as directed by
Participants' Direction upon any termination of this Operating Agreement.
8.3 Survival. The indemnification, release, and limitation of liability
provisions contained in Article VI shall survive termination to the extent they
pertain to events giving rise to such indemnification, release and liability
that occurred during the term of this Operating Agreement. Further, it is agreed
that in no event shall this Operating Agreement terminate unless all payments
required to have been made by the Participants to Opco shall have been made and
all necessary regulatory approval for decommissioning or transfer of
responsibility for the South Texas Project shall have been obtained.
ARTICLE IX
INFORMATION PROVIDED TO PARTICIPANTS
9.1 Reports to Participants. Opco shall provide data and/or reports to
the Participants to support Costs of Operation. Such data and reports shall be
in such form, content and detail as the Participants may from time to time
direct by Participants' Direction. Such data and reports shall include reports
relating to all receipts and disbursements of Opco.
9.2 Site Access. The Participants or their designees shall have access
to the South Texas Project, subject to Opco's obligation to limit such access
pursuant to the Operating Licenses or the applicable rules and regulations of
the NRC or other regulatory authorities.
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9.3 Assistance to Individual Participants. At the request of any
Participant from time to time, Opco shall provide such Participant with data and
assistance as may be requested by such Participant to enable such Participant to
satisfactorily discharge, as a co-owner of the South Texas Project, such
Participant's responsibilities with regard to the South Texas Project, including
such Participant's responsibilities to its security holders, to regulatory
authorities and others. Opco shall maintain records of all direct costs and
expenses incurred by Opco in providing data and assistance to a Participant
pursuant to this Section 9.3. Those costs and expenses shall be included in
Costs of Operation but shall be directly assigned and charged to and borne and
paid solely by the particular Participant for whom such data and assistance was
provided.
ARTICLE X
OPCO PERSONNEL
It is contemplated that Opco will make offers of employment to
substantially all the employees of Houston (who may be selected by Opco in its
sole discretion) stationed at the South Texas Project who have been engaged in
the operation and management of the South Texas Project as employees of Houston
in its capacity as Project Manager, to become effective upon the transfer of
responsibility for the Operation of the South Texas Project from Houston to
Opco. All such employees of Houston who accept such offers of employment by Opco
shall be discharged by Houston and shall become employees of Opco effective as
of such transfer of responsibility and shall thereafter be the employees of Opco
until such employment is terminated for any reason and shall not be employees,
representatives or agents of any Participant, or be considered for any purpose
to be acting as employees of Opco at the request of Houston or any
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other Participant, and shall perform services designated by Opco in accordance
with Opco's rules, regulations, and safety or health procedures. Costs of any
and all compensation and benefits provided by Opco to any employees of Opco
(whether formerly employed by Houston or otherwise) are Costs of Operation. This
Operating Agreement is not, however, intended to, nor shall it, confer any right
or benefit upon any Houston employee or any other person to receive an offer of
employment by or to be employed by Opco in any capacity or for any amount or
nature of compensation or benefits or for any particular term.
ARTICLE XI
SOURCE OF PAYMENTS BY AUSTIN
11.1 It is expressly stipulated and agreed that neither Opco nor any of
the other Participants nor any of their successors or assigns shall ever have
the right to demand or require payment of any amount becoming due from Austin
under or in connection with or pursuant to any term or provision of this
Operating Agreement out of any funds raised or to be raised by taxation, or from
any source whatsoever other than the sources specified in Section 11.2 below,
and no such amount shall ever constitute a claim, debt, liability or general
obligation of Austin required to be paid from any other revenues or assets of
Austin.
11.2 Austin covenants and agrees that any and all amounts becoming due
from Austin under or in connection with or pursuant to any term or provision of
this Operating Agreement shall be payable from the Revenues of the Austin
Utilities Systems (as defined in Section 11.3 below) and from the proceeds of
the sale of Debt Obligations hereafter issued by Austin for such purpose.
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11.3 As used in this Article XI, the following terms shall have the
meanings hereinafter specified, to wit:
(a) Austin Utilities Systems shall mean collectively the
Electric Light and Power System and the Waterworks and Sewer System.
(b) Debt Obligations shall mean all bonds, notes and other
evidences of indebtedness for borrowed money which (i) have been or are
issued, incurred or assumed by Austin pursuant to express charter or
statutory authority heretofore or hereafter adopted or enacted and (ii)
are payable from or secured by a lien or pledge on Revenues of the
Austin Utilities Systems or of the Electric Light and Power System or
the Waterworks and Sewer System.
(c) Electric Light and Power System shall mean the entire
electric light and power plants and systems and all property of every
kind appurtenant to and used or acquired in connection with said
electric light and power plants and systems owned by Austin, together
with all property of every kind now or hereafter owned or acquired by
Austin as a part of or for use in the operation of Austin's electric
light and power plants and systems; provided that, notwithstanding the
foregoing, and to the extent now or hereafter authorized or permitted
by law, the term "Electric Light and Power System" shall not include
facilities of any kind (including any electric power generating and
transmission facilities) which are declared not to be a part of the
Electric Light and Power System, are not a then existing material and
functioning part of the Electric Light and Power System at the time of
such declaration and which are acquired or constructed by Austin, alone
or in participation with others, with the proceeds from the issuance of
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"Special Facilities Bonds," which are hereby defined as being special
revenue obligations of Austin which are not entitled to be paid from or
secured by any liens on or pledges of any Revenues of the Austin
Utilities Systems.
(d) Revenues shall mean, with respect to the Electric Light
and Power System or the Waterworks and Sewer System, all income and
revenues from the operation of the respective system, excluding
refundable meter deposits, restricted gifts and grants, and income,
receipts, revenues, proceeds or payments from facilities acquired or
constructed with "Special Facilities Bonds."
(e) Waterworks and Sewer System shall mean the entire
waterworks and sewer system operated and maintained by Austin for the
supply, treatment and transmission of treated potable water and the
collection, treatment and disposal of water- carried wastes and all
property of every kind appurtenant to and used or acquired in
connection with said waterworks and sewer system owned by Austin,
together with all property of every kind now or hereafter owned or
acquired by Austin as a part of or for use in the operation of Austin's
waterworks and sewer system; provided, however, that notwithstanding
the foregoing, and to the extent now or hereafter authorized or
permitted by law, the term "Waterworks and Sewer System" shall not
include facilities of any kind which are declared not to be a part of
the Waterworks and Sewer System, are not a then existing material and
functioning part of the Waterworks and Sewer System at the time of such
declaration and which are acquired or constructed by or on behalf of
Austin with the proceeds from the issuance of "Special Facilities
Bonds," which are hereby defined as
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being special revenue obligations of Austin which are not entitled to
be paid from or secured by any liens on or pledges of any Revenues of
the Austin Utilities Systems.
ARTICLE XII
SOURCE OF PAYMENTS BY SAN ANTONIO
12.1 It is expressly stipulated and agreed that neither Opco nor any of
the other Participants nor any of their successors or assigns shall ever have
the right to demand or require payment of any amount becoming due from San
Antonio under or in connection with or pursuant to any term or provision of this
Operating Agreement out of any funds raised or to be raised by taxation, or from
any source whatsoever other than the sources specified in Section 12.2 below,
and no such amount shall ever constitute a claim, debt, liability or general
obligation of San Antonio required to be paid from any other revenues or assets
thereof.
12.2 San Antonio covenants and agrees that any and all amounts becoming
due from San Antonio under or in connection with or pursuant to any term or
provision of this Operating Agreement shall be payable from the Revenue of the
San Antonio Electric and Gas Systems and from the proceeds of the sale of Debt
Obligations issued for that purpose.
12.3 As used in this Article XII, the following terms shall have the
meanings hereinafter specified, to wit:
(a) Debt Obligations shall mean all bonds, notes and other
evidence of indebtedness for borrowed money which (i) have been or are
issued, incurred or assumed by San Antonio pursuant to express charter
or statutory authority heretofore or hereafter adopted or enacted and
(ii) are payable from or secured by a lien or pledge on net Revenues of
the San Antonio Electric and Gas Systems.
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(b) Revenue shall mean all income and revenues from the
operation of the San Antonio Electric and Gas Systems.
(c) San Antonio Electric and Gas Systems shall mean the entire
electric light and power plants and systems and gas distribution system
and all property of every kind appurtenant to and used or acquired in
connection with said electric light and power plants and systems and
gas distribution system owned by San Antonio, together with all
property of every kind now or hereafter owned or acquired by San
Antonio as a part of or for use in the operation of San Antonio's
electric light and power plants and systems and gas distribution
system.
ARTICLE XIII
MISCELLANEOUS
13.1 Confidentiality. Any party may, from time to time, come into
possession of information of another party that is confidential or proprietary
(including, without limitation, Safeguards Information as defined in 10 C.F.R.
Part 73). Any party having any such information which another party has advised
it is confidential or proprietary will not reproduce, copy, or disclose (except
upon prompt and prior notification to the other party of the event precipitating
such disclosure and notice to the affected parties that such disclosure is
required by law) any such information in whole or in part for any purpose
without the prior written consent of the other party. Safeguards Information
relative to the South Texas Project shall be controlled and protected in
accordance with 10 C.F.R. 73.21.
13.2 Restricted Data. The parties agree that, unless otherwise
required by law, they will not permit any person to have access to Restricted
Data, as defined in 42 U.S.C. ss. 2014.y,
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until the Federal Office of Personnel Management shall have made an
investigation and report to the NRC on the character, associations and loyalty
of such person and the NRC shall have determined that permitting such person to
have access to Restricted Data will not endanger the common defense and
security.
13.3 Assignment and Successors. This Operating Agreement shall not be
assignable by Opco without the prior written unanimous consent of the
Participants and without first obtaining all necessary regulatory approval, and
any attempted assignment without such consent and approval shall be void. Any
Participant that assigns or transfers its rights or interest in the South Texas
Project in accordance with the terms of the Restated Agreement shall also assign
a proportionate interest in this Operating Agreement and shall cause the
assignee thereof to execute an agreement to be bound by the terms of this
Operating Agreement as a condition to the effectiveness thereof. Subject to the
preceding provisions of this Section, this Operating Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns.
13.4 Governing Law. This Operating Agreement shall be governed by
the laws of the State of Texas, except as to matters exclusively controlled by
the Constitution and statutes of the United States of America.
13.5 No Delay in Payments. No disagreement or dispute of any kind
between or among the parties concerning any matter, including, without
limitation, the amount (if any) of any payment due from any Participant to Opco
or from Opco to any Participant, as the case may be, or the correctness of any
charge made or statement submitted by Opco to a Participant, or any reason,
excuse or circumstance, including Force Majeure, shall permit or authorize any
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Participant to delay or withhold payment of any statement or charge submitted or
made by Opco to such Participant pursuant to this Operating Agreement; provided
that a Participant shall not waive any rights, including its rights to conduct
audits in accordance with Section 5.6 and to receive refunds of overpayments
pursuant to Section 5.2, by making payments to Opco.
13.6 Notification. Any notice, demand or request provided for or given
in connection with this Operating Agreement shall be in writing and shall be
delivered in person or sent by registered or certified mail, postage prepaid and
return receipt requested, or transmitted in written form by electronic means to
the respective parties at their applicable address specified below, and shall be
deemed given when received by such addressee at its address as follows:
City of Austin
P. O. Xxx 0000
Xxxxxx, Xxxxx 00000
Attention: Director, Electric Utility Department
Telecopy:
City of San Antonio-City Public Service Board
P. O. Xxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Office of the General Manager,
City Public Service Board
Telecopy: 000-000-0000
Central Power and Light Company
P. X. Xxx 0000
Xxxxxx Xxxxxxx, Xxxxx 00000
Attention: Office of the President
Telecopy:
Houston Lighting & Power Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Office of the President
Telecopy:
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STP Nuclear Operating Company
South Texas Project Electric Generating Station
P. O. Xxx 000
Xxxxxxxxx, Xxxxx 00000
Telecopy:
Any party may, at any time, by written notice to all other parties, designate
different or additional persons or different addresses for the giving of notices
hereunder.
13.7 Amendments. This Operating Agreement may be amended only by a
written instrument duly executed by and delivered to all of the parties hereto
and with any and all necessary regulatory approvals previously obtained.
13.8 Relationship of Parties. The covenants, obligations and
liabilities of the Participants to each other and to Opco under this Operating
Agreement shall be several and not joint or collective. Each Participant shall
be individually responsible for its own covenants, obligations and liabilities
as herein provided. It is not the intention of the parties to create, nor shall
this Operating Agreement be construed as creating, a partnership, association,
joint venture or trust, as imposing a trust or partnership covenant, obligation
or liability on or with regard to any one or more of the parties or as rendering
the parties liable as partners or trustees. Neither Opco nor any Participant or
group of Participants shall be under the control of or shall be deemed to
control any other Participant or Opco, or Opco and the Participants as a group.
No Participant shall be the agent of or have a right or power to bind any other
Participant, and Opco shall have only such powers to act on behalf of the
Participants as are expressly set forth in this Operating Agreement. If, for
federal income tax purposes, this Operating Agreement and the operations
hereunder are regarded as a partnership, each of the parties hereto elects to be
excluded from the application of all of the provisions of Subchapter "K,"
Chapter 1, Subtitle "A," of the Internal
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Revenue Code of 1986, as amended ("Code"), as permitted and authorized by
Section 761 of the Code and the regulations promulgated thereunder. Opco is
authorized and directed to execute on behalf of each party hereto such evidence
of this election as may be required by the Secretary of the Treasury of the
United States or the Federal Internal Revenue Service, including specifically,
but not by way of limitation, all of the returns, statements, and the data
required by Treasury Regulations ss. 1.761. Should there be any requirement that
each party hereto give further evidence of this election, each such party shall
execute such documents and furnish such other evidence as may be required by the
Federal Internal Revenue Service or as may be necessary to evidence this
election. No such party shall give any notices or take any other action
inconsistent with the election made hereby. If any present or future income tax
laws of the State of Texas or any future income tax laws of the United States
contain provisions similar to those in Subchapter "K," Chapter 1, Subtitle "A,"
of the Code, under which an election similar to that provided by Section 761 of
the Code is permitted, each party hereto shall make such election as may be
permitted or required by such laws. In making the foregoing election, each party
hereto states that the income derived by such party from operations hereunder
can be adequately determined without the computation of partnership taxable
income.
13.9 Counterparts. This Operating Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
13.10 Force Majeure. In the event of any party being rendered unable,
wholly or in part, by Force Majeure to perform any of its obligations under this
Operating Agreement (other than obligations to pay amounts due and owing), upon
such party giving notice and full particulars of
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such Force Majeure in writing or by telephone to the other parties as soon as
reasonably possible after the occurrence of the cause relied upon, the
obligations of the party giving such notice, so far as they are affected by such
Force Majeure, shall be suspended during the continuance of any inability of
performance so caused, but for no longer period. Telephone notices given under
the provisions of this Section 13.10 shall be confirmed in writing as soon as
reasonably possible and shall specifically state full particulars of the Force
Majeure, the time and date when the Force Majeure occurred, and when the Force
Majeure ceased. This Operating Agreement shall not be terminated by reason of
any such cause but shall remain in full force and effect. Nothing contained
herein shall be construed so as to require a party to settle any strike,
lockout, work stoppage or other industrial disturbance or dispute in which it
may be involved. Any Participant rendered unable to fulfill any of its
obligations under this Operating Agreement by reason of Force Majeure shall
exercise due diligence to remove such inability with all reasonable dispatch.
13.11 Captions. The captions and headings appearing in this Operating
Agreement are inserted merely to facilitate reference and shall have no bearing
upon the interpretation thereof.
13.12 Severability. Each term, covenant and condition of this Operating
Agreement is deemed to be an independent term, covenant and condition, and the
obligation of any party to perform all of the terms, covenants and conditions to
be kept and performed by it is not dependent on the performance by the other
parties of any or all of the terms, covenants and conditions to be kept and
performed by them. In the event that any of the terms, covenants or conditions
of this Operating Agreement, or the application of any such term, covenant or
condition shall be held invalid as to any person or circumstance by any court
having jurisdiction
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in the premises, the remainder of this Operating Agreement, and the application
of its terms, covenants or conditions to such persons or circumstances shall not
be affected thereby.
13.13 No Third-Party Beneficiaries. The parties hereto do not intend to
create rights in or to grant remedies to any third party as a beneficiary of
this Operating Agreement or of any duty, covenant, obligation or undertaking
established therein.
13.14 Nonwaiver. Any waiver at any time by any party of its rights with
respect to a default or any other matter arising in connection with this
Operating Agreement shall not be deemed a waiver with respect to any subsequent
or other default or matter.
13.15 Entire Agreement. This Operating Agreement, including Exhibits A
and B, shall constitute the entire agreement between Opco and the Participants
with respect to the subject matter hereof as of the date hereof, but it shall
not supersede or control the separate Restated Agreement as between or among the
Participants or modify the rights of the Participants thereunder as between or
among the Participants. In the event of any conflict between any term or
provision of this Operating Agreement and any term or provision of the Restated
Agreement, then solely as between and among the Participants the terms and
provisions of the Restated Agreement shall govern and control. In the event of
any conflict between any term or provision of this Operating Agreement and any
term or provision of Exhibit A or Exhibit B hereto, the terms and provisions of
this Operating Agreement shall govern and control.
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IN WITNESS WHEREOF, the parties hereto have caused this Operating
Agreement to be executed to be effective as of the Effective Date.
STP NUCLEAR OPERATING COMPANY
By:
ATTEST:
CITY OF AUSTIN, TEXAS
By:
ATTEST:
CITY OF SAN ANTONIO,
acting through the City Public
Service Board of San Antonio
By:
ATTEST:
CENTRAL POWER AND LIGHT COMPANY
By:
ATTEST:
HOUSTON LIGHTING & POWER COMPANY
By:
ATTEST:
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