EXHIBIT 2
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is entered into
effective as of the last date of execution as set forth below
(the "Effective Date") and sets forth the understanding between
Entergy Operations Services, Inc. (hereinafter referred to as
"EOSI") and Entergy Thermal, L.L.C ("ETLLC") regarding the
project planning and development, general management, and other
administrative services to be performed by EOSI relating to
Entergy Thermal's District Energy System currently under
development in New Orleans (the "System")
1) It is the intent of EOSI and ETLLC to enter into a contract
(the "Contract") whereby EOSI will perform certain project
planning, development, management, and other administrative
services (the "Services") relating to ETLLC development and
operations of the System.
2) EOSI and ETLLC shall enter into good faith negotiations in
order to produce the Contract, on terms and conditions acceptable
to each party in its discretion.
3) Both parties shall sign the Contract within 90 days after
the Effective Date (the "Contract Deadline").
4) If the Contract is not fully executed on or prior to the
Contract Deadline, this MOU shall be of no further force or
effect, except that ETLLC shall be obligated to pay EOSI's
reasonable costs (the "Pre-Contract Costs"), subject to the terms
and conditions set forth below, of performing the Pre-Contract
Services (defined below) within thirty (30) days after receipt of
invoice from EOSI.
5) If the Contract is fully executed on or prior to the
Contract Deadline, this MOU shall be of no further force or
effect, and any unpaid Pre-Contract Costs shall be paid within
thirty (30) days after receipt of invoice from EOSI.
6) Each party's obligations under this MOU and the Contract, if
executed, are subject to and shall be governed by any and all
applicable provisions of the Public Utility Holding Company Act
of 1935, including without limitation, the requirement thereunder
that EOSI provide services to ETLLC at cost, without profit or
other xxxx-up.
7) Prior to the execution of the Contract, EOSI may, as
requested by ETLLC, assist in the following types of activities
("the Pre-Contract Services"):
a) Developing a capital improvement plan for the Charity
Hospital District Energy plant.
b) Developing System operating policies, processes, and
procedures to include maintenance, operations, and environmental
processes and policies.
c) Establishing customer interface processes.
d) Developing safety processes and procedures.
e) Develop System performance reporting.
f) Developing various business systems such as billing
processes.
g) Developing System staffing plans, including position
descriptions, and hiring criteria/screening criteria.
h) Establishing System staff training and development programs.
i) Working with NOVA/TIC and other System contractors to ensure
a smooth transition from construction to operations.
8) The Pre-Contract Costs will be billed on an at-cost basis.
Detail support documentation will accompany all invoices
submitted by EOSI to ETLLC. Any services to be performed by EOSI
personnel must be approved by ETLLC before the services are
provided. Additional expenses will be limited to EOSI's
reasonable out-of-pocket expenses as well as agreed allocations
of overhead-type costs related to performance of the Pre-Contract
Services. EOSI will not incur costs on behalf of ETLLC that
exceed the monthly amounts indicated in the monthly 1999 EOSI
Operations and Maintenance budget, a copy of which is attached
hereto as Attachment A without prior written approval from ETLLC.
9) The Services set forth in the Contract, if executed, shall
contain services similar to the activities identified in the
"Scope of Work" which is attached hereto as Attachment B.
Notwithstanding the foregoing, the parties shall not be bound by
the Scope of Work set forth in Attachment B and specifically
agree that certain services may be added thereto or excluded
therefrom in the course of negotiating the Contract. The parties
further specifically agree that the Services shall be negotiated
on such terms and conditions as to ensure that ETLLC complies
with all of its third-party contractual obligations.10. .
APPROVED AND ACCEPTED ON BEHALF OF
ENTERGY OPERATIONS SERVICES, INC.
By: ___________________________________
Title: ___________________________________
Date: ___________________________________
APPROVED AND ACCEPTED ON BEHALF OF
ENTERGY THERMAL, L.L.C.
By: ___________________________________
Title: ___________________________________
Date: ___________________________________
ATTACHMENT A
1999 EOSI Operations and Maintenance Budget
Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99
Plant Manager 6,667 6,667 6,667 6,667 6,667 6,667
Incentive Amortization 1,000 1,000 1,000 1,000 1,000 1,000
Payroll Taxes 7.7% 590 590 590 590 590 590
Benefits $9,360/Employee/Year 780 780 780 780 780 780
O&M Gen. And Admin. (EOSI) 8,333 8,333 8,333 8,333 8,333 8,333
Mobilization/Startup (EOSI) 16,667 16,667 16,667 16,667 16,667 16,667
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Total Pre Contract Cost 34,037 34,037 34,037 34,037 34,037 34,037
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ATTACHMENT B
SCOPE OF WORK
Mobilization Items Delivery Dates
Assist ETLLC in meeting all of ETLLC's
contractual obligations related to O&M of
the System. Ongoing
Develop, for approval, a capital
improvement plan for the Charity plant
related to modifications, operations, &
maintenance of the facility. 8/99
Develop job descriptions on all System
personnel. 11/99
Participate in the staffing decisions on
all System personnel to include transition
plan for eventual personnel hired from the
Charity plant & LSU central plant. 1/2000
Develop and maintain a training program for
System staff. 1/2000
Develop and maintain System environmental
compliance and communications policies and
procedures. 2/2000
Develop and maintain an effective System
safety program. 3/2000
Develop and maintain System contingency
planning for uncontrollable events
affecting delivery of steam, chilled water
or interruptible electricity loss 3/2000
Develop and maintain detailed Operational
Plans, Policies and Procedures for the
System. 4/2000
Develop and maintain a System security
policy and procedure. 4/2000
Develop and maintain Maintenance Plans,
Policies, Procedures and Processes for the
System. 5/2000
Develop and maintain System customer
billing processes. 5/2000
Establish Customer Service
interfaces/policies and procedures. 5/2000
Develop awareness of all connected and
contracted customer load facilities. 6/2000
Develop Customer Service performance
levels, response times, service standards,
etc. 6/2000
Develop invoice & remittance processing
procedures utilizing Entergy Corporate 6/2000
Systems.
Oversee & Monitor System equipment testing
and performance measures pre & post
installation 7/2000
Operational Items:
(May be included in EOSI/ETLLC contract agreement)
- Provide direction and supervision of ETLLC's employees
and/or contractors for the day-to-day System operations.
- Develop and maintain System asset preservation Plans,
Policies and Procedures.
- Assist ETLLC in developing the annual and long-term
System expense budget.
- Assist ETLLC in developing the annual and long-term
System capital budget.
- Develop, for approval, a set of System Performance
indicators.
- Maintain key System process performance indicators and
provide monthly and annual System performance reports to
ETLLC.
- Manage employee performance management processes and
procedures ETLLC System employees.
- Pre-approve plant O&M invoices for ETLLC's final
approval.
- Order approved supplies/levels of supplies.
- Assist in sales initiatives on an as needed basis.
- Interface with customers and suppliers; promote good
community relations.
- Facilitate owner's user group committee meetings held
quarterly or on as needed basis.
- Maintain documentation control of turnover packages
from contractors.
- Develop the outage maintenance schedule for approval.
- Implement approved maintenance outages.
- Utilize Louisiana Job Service and/or other venues to
help ETLLC obtain optimal benefits from the Louisiana sales
tax rebate program.
- Operate & maintain temporary District Energy services
as required.
- Procure and maintain Assist ETLLC in procuring and
maintaining required operating permits, licenses, and staff
certifications.
_______________________________
This Scope of Work covers following non-comprehensive list
of work required to properly manage the operation and
maintenance of ETLLC's System.
