(*) Confidential information has been omitted and filed separately
with the Commission pursuant to Rule 24b-2.
MH-OTP
POWER SALES AGREEMENT
This MH-OTP POWER SALES AGREEMENT ("Agreement") is entered
into effective as of July 1, 1999, by and between Otter Tail
Power Company ("OTP"), a Minnesota corporation and The Manitoba
Hydro Electric Board ("MH"), a Manitoba Crown Corporation, (each
of the foregoing entities being sometimes referred to
individually as "Party" or collectively referred to as
"Parties").
RECITALS
0.01 WHEREAS, OTP is the owner and operator of electric
generation and transmission facilities in the United States of
America, and MH is the owner and operator of electric generation
and transmission facilities in Canada, and each Party is engaged
in the generation, transmission, distribution and sale of
electric energy;
0.02 WHEREAS, OTP and MH, among others, are parties to the
Mid-Continent Area Power Pool Restated Agreement ("▇▇▇▇ Restated
Agreement"), dated January 12, 1996, and amended to date hereof;
0.03 WHEREAS, the Parties require governmental permits and
approvals for the import and export of electric energy; and
0.04 WHEREAS, OTP and MH, among others, are parties to the
Manitoba - United States Winnipeg - Grand Forks 230 kV
Interconnection Coordinating Agreement, dated January 16, 1969,
as amended.
NOW, THEREFORE, in consideration of the mutual promises and
covenants of each Party to the other contained in this Agreement
and other good and valuable consideration, the receipt of which
is hereby acknowledged, the Parties covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Unless otherwise specified in this Agreement,
all definitions and references to and use of terms and their
abbreviations shall have the meanings which are set out in the
▇▇▇▇ Restated Agreement, as amended to date hereof, or in the
Manitoba - United States Winnipeg - Grand Forks 230 kV
Interconnection Coordinating Agreement, dated January 16, 1969,
as amended. In the event of a discrepancy between the two
agreements, the Manitoba - United States Winnipeg - Grand Forks
230 kV Interconnection Coordinating Agreement shall take
precedence.
Firm Commitments - shall mean capacity and energy intended
to be available at all times during the period covered
by a commitment.
Minimum Monthly Energy - for each month of the contract
term, the Minimum Monthly Energy, in MWh, shall be
calculated as follows:
(A x 16) x 50 MW
where A is the number of Monday to Friday
days in the month.
Monthly Capacity Factor - expressed as a percentage,
shall mean with respect to a particular month:
(a) the energy delivered during the respective month,
divided by;
(b) the product of:
(i) the amount of capacity required to be made
available to a receiving Party in such
month, and
(ii) the number of hours in such month.
Point of Interconnection - as defined in the Manitoba -
United States Winnipeg - Grand Forks 230 kV
Interconnection Coordinating Agreement, dated
January 16, 1969, as amended.
Summer Season - shall mean the period from May 1 through
to the following October 31.
Supplementary Agreement - shall mean an instrument in
writing duly authorized and executed by the Parties
which alters, varies, modifies or waives any provision
of this Agreement.
System Participation Power - shall mean power and energy
sold from a Party's system on a continuously available
basis except when the Party's facilities are temporarily
out of service for scheduled or forced maintenance,
during which time the delivery of energy from other
sources shall be at the seller's option.
Week - shall mean a period of seven consecutive days
commencing on Monday at 12:01 a.m. Central Time.
Winter Season - shall mean the period from November 1
through to the following April 30.
Section 1.02 When required by the context of this Agreement,
the singular shall include the plural, and the plural shall
include the singular.
ARTICLE 2
SERVICE TO BE PROVIDED
Section 2.01 During the period May 1, 2000 through
April 30, 2010, MH shall make available to OTP, at the Point of
Interconnection, 50 MW of System Participation power from MH's
HVDC facilities terminating at the ▇▇▇▇▇▇ Converter Station in
accordance with Section 2.05.
Section 2.02 OTP may schedule delivery of energy associated
with the capacity specified in section 2.01 which will result in
a maximum capacity factor during any twenty-eight day (28) day
period of up to 47.62%.
Section 2.03 Energy associated with the capacity specified
in Section 2.01 may be available in addition to the energy
specified in Section 2.02. The availability of such additional
energy is at the sole discretion of MH.
Section 2.04 At the request of MH, OTP must schedule for
delivery to MH, in any month, an amount of energy up to the
amount of energy OTP scheduled for delivery from MH in that same
month pursuant with Section 2.02. The delivery point for this
energy will be specified by Manitoba Hydro at the time of
scheduling.
Section 2.05 In the event of unavailability of any portion
of MH's HVDC system terminating at the ▇▇▇▇▇▇ Converter Station,
including the DC transmission facilities, and/or Manitoba Hydro's
generating facilities, MH may curtail the System Participation
power specified in Section 2.01 to OTP.
Section 2.06 Notwithstanding Section 2.05, if conditions
arise which affect MH's ability to make available or deliver the
System Participation power as specified in this Agreement, MH may
curtail availability and deliveries by the amount necessary to
enable MH to meet:
a. Firm Commitments within the province of Manitoba,
including obligations now existing or hereafter
created to retail customers (including retail
customers presently served by MH which are outside
the Province of Manitoba but are located adjacent
to a Province of Manitoba border and any future
customers similarly located, in each case with less
than 10 megawatts peak demand), and obligations now
existing or hereafter created to other electric
suppliers to serve retail customers within the
Province of Manitoba.
b. The 500 megawatt sale to Northern States Power
Company as set out in the original June 14, 1984,
Power Agreement between Northern States Power
Company, The Manitoba Hydro-Electric Board and
The Manitoba Energy Authority.
c. The Island Falls Power and Energy Transfer
Agreement between The Manitoba Hydro-Electric
Board and Saskatchewan Power Corporation dated
January 15, 1985.
d. The August 28, 1987, Electricity Sale Agreement
between The Manitoba Hydro-Electric Board, The
Manitoba Energy Authority and Ontario Hydro.
e. The November 16, 1987, Diversity Exchange
Agreement between Northern States Power Company
and The Manitoba Hydro-Electric Board.
f. The Diversity Exchange Agreement between Northern
States Power Company and The Manitoba Hydro-
Electric Board, effective February 1, 1991.
g. The Diversity Exchange Agreement between United
Power Association and The Manitoba Hydro-Electric
Board, effective February 1, 1991.
h. The Firm Power Agreement between Minnkota Power
Cooperative, Inc. and The Manitoba Hydro-Electric
Board, effective June 3, 1993.
i. The Power Services Agreement between Otter Tail
Power Company and The Manitoba Hydro-Electric
Board, effective September 26, 1993.
j. All Firm Commitments outside the province of
Manitoba entered into after the date first above
written.
ARTICLE 3
SCHEDULING
Section 3.01 Notwithstanding Section 3.02 and Section 3.03,
the following procedures shall apply for scheduling deliveries of
power associated with Section 2.02, Section 2.03 and Section 2.04
of this Agreement:
(a) Monthly Procedure:
For energy associated with Section 2.02 and Section
2.04, the following monthly procedure shall apply
unless mutually agreed to by the Parties:
For energy associated with Section 2.02, OTP shall
provide MH with an estimate of OTP's anticipated energy
usage for the forthcoming month on or before the first
of each month.
For energy associated with Section 2.04, MH shall
provide OTP with an estimate of MH's requirement to
have the energy returned for the forthcoming month on
or before the first of each month.
(b) Weekly Procedure:
For energy associated with Section 2.02, Section 2.03
and Section 2.04, the following weekly procedure shall
apply, unless otherwise mutually agreed to by the
Parties:
For energy associated with Section 2.02, OTP shall
provide MH with a proposed schedule of deliveries for
each clock hour of the following Week on or before 1500
hours Central Time on Thursday of each Week.
For energy associated with Section 2.03, energy will be
scheduled by mutual agreement.
For energy associated with Section 2.04, MH shall
provide OTP with MH's requirement to have the energy
returned on or before 1500 hours Central Time on
Thursday of each Week. The scheduling for this energy
shall be by mutual agreement of the Parties.
(c) Daily Procedure:
The following daily procedure shall apply, unless
otherwise mutually agreed to by the Parties:
For energy associated with Section 2.02, OTP may modify
its hourly schedule, provided in (b) above, by
providing MH with a modified schedule of deliveries for
each clock hour of the following day on or before 1000
hours Central Time of each day.
For energy associated with Section 2.03 and Section
2.04, modification to the hourly schedule, as provided
in accordance with (b) above, will be only by mutual
agreement of the Parties.
Section 3.02 The Parties may schedule energy in accordance
with Section 3.01 subject to the availability of transmission
capability.
Section 3.03 Schedules may be curtailed for the following
reasons:
(i) due to a loss of or capability in the
transmission path between MH and OTP;
(ii) scheduling reductions imposed upon either
Party by the ▇▇▇▇ Security Center;
(iii) by an amount equal to scheduling reductions
necessary on the Manitoba-U.S. interface for
MH to deliver its share of ▇▇▇▇ generation
reserves; or
(iv) in the event of the unavailability of any
portion of MH's HVDC system terminating at
the ▇▇▇▇▇▇ Converter Station, including the
DC transmission facilities, and/or Manitoba
Hydro's generating facilities.
Section 3.04 Each Party will provide as much notice as
possible to the other Party if schedules are curtailed for
reasons provided for in Section 3.03.
ARTICLE 4
PRICING
Section 4.01 The monthly rate for capacity reserved for OTP,
as specified in Section 2.01, is as follows:
Period Monthly Capacity Rate
May 1, 2000 - April 30, 2001 $*/MW-month
May 1, 2001 - April 30, 2002 $*/MW-month
May 1, 2002 - April 30, 2003 $*/MW-month
May 1, 2003 - April 30, 2004 $*/MW-month
May 1, 2004 - April 30, 2005 $*/MW-month
May 1, 2005 - April 30, 2006 $*/MW-month
May 1, 2006 - April 30, 2007 $*/MW-month
May 1, 2007 - April 30, 2008 $*/MW-month
May 1, 2008 - April 30, 2009 $*/MW-month
May 1, 2009 - April 30, 2010 $*/MW-month
Section 4.02 The rate for energy scheduled to OTP in
accordance with Section 2.02 is as follows:
Energy Rate = $*/MW.h x E/F
where:
"E" is *
"F" is *
For example, the energy rate for the period May 1, 2001
through April 30, 2002 would be: $*/MWh. x */*.
Section 4.03 The rate for energy scheduled in accordance
with Section 2.03 shall be determined by mutual agreement between
the Parties.
Section 4.04 The rate for energy scheduled in accordance
with Section 2.04 will be OTP's cost including losses and any
associated transmission charges, plus *%. OTP's cost will
include opportunity cost.
Section 4.05 The amount payable by OTP to MH in each month
shall be the sum of:
(a) the capacity rate in dollars per MW-month in
accordance with Section 4.01 multiplied by the
capacity reserved in accordance with Section 2.01;
plus
(b) the energy rate in dollars per MW.h determined in
accordance with Section 4.02 multiplied by the
greater of:
i) the energy scheduled for delivery in accordance
with Section 2.02; and
ii) the Minimum Monthly Energy for the billing month
less any energy quantity which could not have
been delivered during HE 07:00 through to
HE 22:00 Monday through Friday in accordance
with Section 3.02 and Section 3.03;
plus
(c) the energy rate in dollars per MW.h determined in
accordance with Section 4.03 multiplied by the energy
scheduled for delivery in accordance with Section 2.03;
minus
(d) the energy rate in dollars per MW.h determined in
accordance with Section 4.04 multiplied by the energy
scheduled for delivery in accordance with Section 2.04.
Section 4.06 All rates stated and all rates calculated shall
be in lawful money of the United States of America.
ARTICLE 5
CONDITIONS OF SALE AND PURCHASE
Section 5.01 OTP is responsible for all and any applicable
costs incurred in the U.S. including but not limited to
transmission service charges, with the exception of:
any ▇▇▇▇ assessed Schedule F transmission charges
associated with energy scheduled from OTP to MH in
accordance with Section 2.04; and
any transmission losses associated with energy
identified in Section 2.02 and Section 2.03, to
the extent that these losses are not greater than
those losses incurred by transporting the energy
from MH directly to OTP.
OTP is not responsible for transmission service costs in the
Province of Manitoba.
Section 5.02 MH is responsible for all costs incurred in
Canada as a result of this Agreement, and any ▇▇▇▇ assessed
Schedule F transmission charges associated with energy scheduled
from OTP to MH in accordance with Section 2.04. MH is
responsible for any transmission losses associated with this
Agreement to the extent that these losses are not greater than
those losses incurred by transporting the energy from MH directly
to OTP. OTP is responsible for any transmission losses over and
above this quantity.
Section 5.03 In the event OTP fails to schedule the
Minimum Monthly Energy during any month, and any such failure was
not allowed in accordance with Sections 3.02 or 3.03 or MH's
failure to perform in accordance with the terms of this
Agreement, then OTP will pay MH an amount for each MWh of such
deficiency as if the energy were delivered.
Section 5.04 Except as provided within the terms of this
agreement, energy transactions may not be curtailed by either
Party for economic reasons.
ARTICLE 6
GENERAL
Section 6.01 This Agreement shall be conditional upon
receiving:
the approvals of applicable regulatory authorities,
including but not limited to, National Energy Board
of Canada approval and the U.S. Federal Energy
Regulatory Commission approval;
▇▇▇▇ accreditation; and
transmission service between MH's and OTP's system.
Section 6.02 Except as otherwise provided herein, the
provisions of the Manitoba - United States Winnipeg - Grand Forks
230 kV Interconnection Coordinating Agreement, dated January 16,
1969, as amended, shall apply to this Agreement and are hereby
incorporated by reference.
Section 6.03 This Agreement represents the entire agreement
between the Parties with respect to the subject matter hereof and
terminates and supersedes all prior oral and written proposals
and communications pertaining hereto. There are no representations,
conditions, warranties or agreements, express or implied,
statutory or otherwise, with respect to or collateral to this
Agreement other than those contained herein or expressly
incorporated herein. Unless otherwise specifically provided
herein, this Agreement may be altered, modified or varied, in
whole or in part, only by Supplementary Agreement.
ARTICLE 7
CONTRACT TERM
Section 7.01 Subject to Section 6.01 of this Agreement, this
MH-OTP POWER SALES AGREEMENT shall become effective on July 1,
1999, and shall continue until the later of April 30, 2010, and
the date upon which all obligations under this Agreement are
discharged.
THE MANITOBA HYDRO-ELECTRIC BOARD
DATE: July 7, 1999
/s/ ▇.▇. ▇▇▇▇▇
▇.▇. ▇▇▇▇▇
Manager, Export Power Marketing
OTTER TAIL POWER
DATE: July 9, 1999
/s/ ▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Vice-President Operations